Myth vs. Fact on the BLM Methane Venting and Flaring Rule

Last week, the House of Representatives passed a resolution to overturn the Bureau of Land Management’s (BLM) duplicative and burdensome methane and flaring rule by a vote of 221-191. With the Senate set to take up the measure in the coming weeks, opposition groups have been on a mission to perpetrate a number of myths about what would happen if the rule were to be repealed.

As usual, the facts paint a very different picture. Let’s take a closer look:

Myth: BLM’s methane rules are needed because large quantities of methane are emitted during oil and gas production

FACT:  Reducing methane emissions is in the best interest of every oil and natural gas producer. Methane is the product companies sell, so they have every incentive to capture and sell as much of their product as possible to American consumers, rather than letting it escape into the atmosphere.

This claim is just not in line with the science. Nearly every reputable study — including those by the Environmental Defense Fund, show leakage rates during oil and gas production are extremely low, ranging from just 1.2 percent to 1.6 percent of production.  It’s also why data from the U.S. Energy Information Administration (EIA) show that “Flaring rates and volumes have significantly decreased as North Dakota’s total natural gas production has continued to grow.”

Producers have made great strides in reducing emissions, but there is also a lack of infrastructure and gathering lines to collect gas at the wellhead and bring all of the product to market. This is largely due to the current backlog of right-of-way applications to build pipelines and other infrastructure that would allow drilling operations to greatly reduce flaring. More on that in a bit.

Myth: BLM methane rules will ensure “a fair return to U.S. taxpayers”

FACT: BLM claims taxpayers are losing royalty revenues due to methane not being captured. Aside from the fact that methane emissions are low and continuing to plummet, BLM does not consider the fact that its rules will actually have a negative effect of reducing production on federal lands even further.

It’s well known that production on federal lands has significantly declined in recent years, primarily due to added regulations and costly red tape. This rule would further drive down production, meaning the government will miss out on considerable royalty payments when operators are forced to reduce production in order to meet the rule’s new limitations — or stop production all together.

An editorial from the Farmington Daily-Times rightly explains the impact of these regulations on taxpayers this way:

“Once a low producing well is abandoned, it is unlikely it will be restarted. That means no royalties and no profits from wells producing on BLM land, which would mean no royalties for the government. These new rules could cost the government millions in lost royalties.” (emphasis added)

To put it in plain terms, BLM claims that the rule would lead to an addition $23 million in royalties by capturing vented or flared gas. But according to an analysis from economist John Dunham, the rule would actually shut down the production of about 112.4 million barrels of oil, which is worth $6.1 billion.  That means that, even in the best-case scenario, taxpayers would actually miss out on about $114 million in federal and state taxes.

At worst, the rule could cost a staggering $1.26 billion to implement, according to the Dunham economic study.

Myth: BLM rules are necessary to regulate an unregulated industry

FACT: States are already regulating oil and gas production on federal lands effectively. They’ve been doing it for over 60 years. Every state and energy play has different needs and requirements. What might work for North Dakota’s public lands may be impossible to recreate on Alaska’s public lands. The States understand their geology, hydrology, and local geographies the best and they have a proven record of experience. That is why this top-down, Washington-knows-best regulation is duplicative, burdensome and unnecessary.  Further, regulating the country’s air quality is not in BLM’s Congressionally-given authority – that jurisdiction has been mandated by Congress to the Environmental Protection Agency (EPA). Therefore, BLM has exceeded its authority by issuing this rule.

Myth: The BLM rule will eliminate venting and flaring

FACT: There are several reasons that venting and flaring have been occurring on federal lands. The first is safety: Venting is sometimes necessary to release pressure and ensure that workers are operating in a safe environment. The second reason is capacity: BLM has consistently delayed issuing permits for pipelines that are necessary to capture the gas and reduce flaring.

In fact, if the proper infrastructure were in place, we would not even be having a conversation about a venting or flaring rule.  The agency would do better to spend its time permitting the necessary infrastructure to reduce venting and flaring (which would lead to a boon in tax revenue), rather than focusing on perpetrating rule that will take a hundreds of millions in revenue off the table.

Myth: Energy producers can easily afford these rules

FACT:  The economic justification provided by BLM for the rule is outdated: its cost estimates come from a 2014 carbon limits study, which assumes that natural gas will be sold at $4/mcf – that estimate is 25 percent higher than current natural gas prices, which have been hovering around $3/mcf. This means producers profit about $2.25 for their product after paying taxes and royalties on it.  ICF International has since released a report looking at what the projections would be at $2.25/mcf gas and found they would be five times greater than if gas were at the $4/mcf price.

Myth: Repealing BLM’s methane rule will be a “present for Big Oil”

FACT: By mandating that EVERY WELL (exploratory and low-production wells included) install new and incredibly expensive technology, BLM is essentially ensuring a shutdown of low-production marginal wells.  Marginal wells produce 15 barrels or less per day, or 90 mcf or less of natural gas per day. However, operators of marginal wells only average about 2.7 barrels per day of oil and 22 mcf per day of gas.

The blow to good American jobs and paychecks would be significant. The Interstate Oil and Gas Compact Commission’s (IOGCC) released a report last year, which finds the loss of small oil and gas wells developed in 2015 would trigger an estimated direct loss of 57,560 jobs in the oil and gas sector and $4.4 billion in direct earnings within the survey’s 29 states. Yet this report actually only looks at “stripper wells,” which are wells producing 10 barrels or less per day and 60 mcf or less of natural gas per day. So, if you were to evaluate job and GDP losses from eliminating all marginal wells, the impact would be even greater.

Far from a “present for Big Oil,” as activists groups like Friends of the Earth claim, eliminating the BLM rule will be a lifeline for marginal producers.

Comments

  1. Thanks for the straightforward, easy to follow information. Here’s another fact: Removing the unnecessary, duplicative and expensive BLM rule will be a huge step forward to help New Mexico’s struggling economy and increase opportunities for much needed jobs. With some of the highest unemployment and worst poverty in the nation, New Mexico Business Coalition supports using the CRA to repeal the BLM Venting and Flaring Rule.

  2. Its time to eliminate BLM! we are so over regulated and if they don’t realize every land fill has the capability of capturing methane and as the case of People Gas Company in Chicago blends 15% methane gas from Waste Management’s landfill on I-294 with the natural gas supplied to the city to reduce emission. BLM must have there heads up their asses because if all landfill had the capacity to do so it reduce flaring by, 80% to the atmosphere. In Jackson I’m the one who set up the burners at Siouxland Ethanol for blending the methane recovered from Gill Landfill. And I worked at Getty Synthetic Fuels in Chicago and Blue Island as an Instrumentation Technician. So I know a little about methane.

  3. All we need is a little funding and the common sense to run gas lines to power plants, as well as Union 76 Refinery in Joliet Illinois could not run a pipe line to the power plant within 1.5 miles to sell butane to them because of EPA. Sometimes it’s just a bunch of people who refuse to think outside the box, they don’t care because it’s their job to eliminate common sense.

  4. Andrea lehman says:

    President Obama was a thoughtful and careful Harvard law grad and president who made decisions fairly and with respect for our countries natural resources and future generations who will inherit these lands. Our decisions are vastly important and it would be wrong to not consider other options for the production of energy. We are supposed to be moving towards clean and green technology. Let us stay on track and continue our focus of a cleaner and sustainable planet. We have a responsibility and must proceed accordingly.
    Andrea

    • Ann Holt says:

      Totally agree! We must be forward thinking in creating jobs that do not compromise our natural resources. Sorry but history provides too many horrific examples of unregulated industries putting profits before safety and preservation. It is no wonder folks don’t trust what energy industry spokespeople profess!…we’ve witnessed too many irresponsible practices with our own eyes.

    • Pat Ferguson says:

      Nice response, Andrea

    • Karen says:

      We are moving towards sustainable energy sources. Texas is a leader in wind energy. There is a long way to go before we can do without fossil fuels and needlessly expensive and ineffective regulations do not help.

    • Danny says:

      Do you dispute any of the arguments above. Pres Obama’s eight years were quite painful in the construction industry. People are really needing some relief now. I don’t want to hurt the planet but really our energy policies have been foolish in the extreme.

  5. Mark says:

    In one breath you say that regulation isn’t needed because it is in the producer’s “interest” to capture as much methane for consumer use before it escapes into the atmosphere, and in the next breath you say producers are unable to do this because of lack of technology. All this double-speak only points to the credibility gap of the energy industry. And we are supposed to trust you with our health? Since when?

    • How to grill with you buddy they even said that there’s an inexpensive part that they can put on their well so they can capture even more methane I don’t understand some of this at all sounds to me like they’re trying to run up the oil prices again

    • Obama was/is a mouthpiece for the NWO overseen by the UN. His also a supporter of Muslim extremists and anyone else bent on destroying our way of life here in The United States. A hater of Christians, a liar with a smile and a knife behind his back and the most corrupt President ever to hold the office. Anything he did or does has to be taken with a grain of salt and investigated to see what’s in it for him. Thank our God he is out of office. May his policies be overturned and his legacy show what an unmitigated idiot he truly was.

      • Trevor says:

        Your god is a work of fiction. Go to college and read some real books dummy.

      • Tornadochaser says:

        Thank you!

    • Danny says:

      What I read was they needed easements for piping to transport the gas. yes no?

    • Allen N Wollscheidt says:

      Mark — Exactly : Whenever a Dollar is speaking, it is 95% certain that you are being schmuzzled. . NO, make that 110-% certain ! ! !

      Money does NOT talk — IT SHOUTS ! ! !

  6. Richard Crenna says:

    This is why the left is apoplectic. The Trump machine is taking away their toys but they refuse to go home. These duplicative/regressive rules are much of the reason people distrust the federal government and why they voted for DT. I don’t know if he can succeed or not but he did speak the language they wanted to hear. Economic growth, secure borders, less intrusive government, accountability.

  7. EnergyInvestor says:

    I’m pro-energy, and have significant investments in energy, but this article is outrageous.

    “Only” 1.6% leakage is how you characterize and attempt to minimize it it? Would anyone tolerate “only” 1.6% fuel leaking from their car or from underground storage tanks? Of course not. Would you allow your family live next to a gas field that “only” leaked 1.6%??

    Gas producers do a simple cost-benefit analysis. Sure, they’d like to capture all their production in theory, but if they see it costs more than they earn from that 1.6% loss, they don’t bother. It’s short-sighted, irresponsible and should not be allowed. Either drastically lower the leakage rate or stop producing. It’s not rocket science to stop the leakage – simply takes better equipment, procedures and a lack of tolerance of any leaks. Safety and basic health considerations should not be decided thru a pathetic cost-benefit analysis.

    As for the bald faced allegation that new regulations were somehow responsible for declining production, such a claim is ludicrous codswallop of the highest order. The massive supply brought on by fracking heretofore nonproductive formations caused production to zoom higher, leading to a price collapse and a modest decline in production as high cost wells were shut-in. Regulations had nothing to do with a decline in production whatsoever.

    This author is simply a shill for the worst and least efficient operators – pimping himself for a few shekels. Disgusting and contemptible.

    • mark says:

      You are absolutely right. The oil industry invests in the least to benefit shareholders the most. This article is bias and facts are twisted.

  8. John VonderHaar says:

    We need clean energy period. Venting and flaring is wasteful. By having rules against venting and flaring we help our health and environment. A no brainer for those who have a brain and aren’t just greedy.

  9. Starr says:

    The regulations are not put into place without forethought. We need to be moving away resources that cause harm to the environment and move towards renewable and green energy production. Many jobs can be formed in move to clean energy. I look forward to the day when this regulation is meaningless because this form of energy is not used. Gas companies need to move towards investing in new energy technologies and further their investments into the future of clean energy.

    • Quinton says:

      Some regulations are needed. Like the regulations that prevent fairing due to overproduction at Philadelphia Energy Solutions, or “cleaning” the stack. A stack which is located in a densely populated area.
      They also produce Benzine , which is proven to cause Cancer.

  10. Richard Hurst says:

    But leave it to the democRATS they’d rather see job loss wealdair increases and lower GDP growth! All the while spending billions on foreign oil which is a total bogus and unligitimit excuse! Thank God Clinton didn’t win the whitehouse we’d all be speaking a foreign language before her first term was over! MAGA! Go POTUS!

    • Quinton says:

      You support a President who stiffles freedom of the press…one of the amendments of the Constitution? Treating the Whitehouse like a nightclub?

  11. Jon says:

    To any thoughtful person in America and across the planet, mans’ activities are slowly and invariably trashing our environment. As this recognition sinks in, alternative and renewable sources of energy are being developed. These sources are slow to develop in implement due to the greed of those who make money on the fossil fuel side. Certainly one can rationalize the continued use of fossil fuels. They are “cheaper” and can provide more “jobs”, but in the long run, this mindset is slowly killing us – with pollution and toxic by-products that are altering our environment and making us less healthy. (look at what China discovered after ramping up its use of coal). The oil companies do recognize the truth of the unsustainability of fossil fuel extraction and have quietly started spending more on renewables research. Many people on the Right also recognize a change of direction is necessary, but are afraid to go against their party. Unfortunately though, Trump is going to revive drilling which will create many short-term jobs in the industry which will continue to dirty our air and pollute our groundwater. Bu like lemmings rushing to the sea, at least we will all die with jobs!

    • Kelly Marsh says:

      its people like you who put an apocalyptic twist on everything. will u be the first to give up your electricity, hot water, or water for that matter? we can do both. we can lift some regulations which in turn make money, which in turn free up money for making the renewable energy happen faster.

  12. eastiefrank says:

    i have to laugh at all you folks like andrea who state that obummers 8 years were so “thoughtfull” and “lawful” and that he’s a harvard grad! people like andrea are fools and its time to fix obummers mess. Imagine, you cant even get acopy of the green pea in chiefs transcripts! Jeffrey washington said much of what many of us know and liberalism has tried to kill my America but hopefully DT will start toturn obummers mess around. the bottom line on energy…we must keep jobs and keep the environ clean as much as we can and say “EFF” the nwo!

  13. eastiefrank says:

    as libs like Jon lecture us and talk about being thoughtful it speaks to the bulloney on the left. jon fancies himself an environmentalist but have you ever seen the absolute messes his buddies leave wherever they protest? where these self righteous jerky folks are protesting keystone is causing stunning amounts of pollution and threats to water supplies! Maybe Jon can explain why his “thoughtfull” buddies (theres that word again) would pollute like that. “Thoughtful” people wouldnt be lying about global warming facts either Jon and I’ll diaregard your lib end of days warning and your typical lib smarminess.

  14. George Caskey says:

    There is a way to produce propane. The technology in procuring and producing is not there yet. However reports from Wall Street show there is an interest and big money is being poured into research. We stand at the base of great renewable energy source if we continue to unravel the red tape that prevents us to getting there. Know one knows for sure but the green house gas gurus and EPA, are looking closely at producing propane. Cooler heads and scientist, engineers need to collectively figure what is needed to facilitate it’s production. This could be the largest energy and financial boom in US. history. Presently we have two plants operating and only one operates sufficiently. Production, shipping, and fueling ships at the present is a slow go. However, can anyone conceive the necessity for this type of energy and what it would mean to the economy. It’s a win win for us globally. Stayed tuned.
    T

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  1. […] as the U.S. Senate is expected to vote soon on repealing the Bureau of Land Management (BLM) venting and flaring rule aimed at regulating methane emissions on federal lands. The U.S. House of representatives voted to […]

  2. […] as the U.S. Senate is expected to vote soon on repealing the Bureau of Land Management (BLM) venting and flaring rule aimed at regulating methane emissions on federal lands. The U.S. House of representatives voted to […]

  3. […] as the U.S. Senate is expected to vote soon on repealing the Bureau of Land Management (BLM) venting and flaring rule aimed at regulating methane emissions on federal […]

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