The Evolving Landscape of the US Oil and Gas Industry in the Era of Methane Emission Regulations

In a notable move towards environmental accountability, US oil and gas companies are under heightened scrutiny for their substantial role in contributing to the nation's methane emissions—making up nearly one-third of the total. The Inflation Reduction Act (IRA) introduces the Methane Emissions Reduction Program under Section 136 of the Clean Air Act, marking a pivotal transformation in the regulatory framework for the petroleum and natural gas sector. Here are the pivotal facets to navigate through this evolving landscape:

1: Expansion of the Greenhouse Gas Reporting Program:

The IRA significantly expands the Greenhouse Gas Reporting Program, specifically “Subpart W.” This empowers the Environmental Protection Agency (EPA) to assess a fee on “excess” methane emissions, referred to as the Methane Fee.

2: Charges and Timelines:

• Charges commence at USD 900 per metric ton of methane reported for calendar year 2024.
• A progressive increase is set, reaching USD 1500 for 2026 and subsequent years.
• The fee is designed to target major methane emitters, exempting smaller operators and those in compliance with the EPA's final methane standards.

3: EPA Revisions and Large Emitter Events:

• In August 2023, the EPA proposed revisions that include large emitter events, bringing substantial impact to the oil and gas industry.
• Higher accuracy in reporting will result in increased emissions, consequently intensifying pressure from stakeholders.
• The IEA estimates that around 70% of methane emissions from fossil fuel operations could be reduced with existing technology.

4: Technological Advancements:

• The EPA's revisions underscore advancements in satellite and aerial emissions detection
• Innovations from EDF and Carbon Mapper enhance global emissions detection, with a specific focus on super-emitter events

5: Operator Readiness

• Recognizing the transformative impact of the Methane Reduction Program, operators are actively enhancing their readiness levels.
• Companies excelling in methane emissions management are strategically positioning themselves for a competitive edge in asset acquisition.

These substantial changes are poised to reshape the landscape of the US oil and gas industry, introducing a paradigm shift towards environmental sustainability and regulatory compliance. To gain deeper insights into the future of oil and gas.

Explore the North American Energy Capital Assembly report for a comprehensive analysis of emerging trends and industry dynamics.