North America Energy Capital Assembly Takeaways
The Evolving Landscape of the US Oil and Gas Industry in the Era of Methane Emission Regulations
Published 7 February 2024
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.
The new rule will prevent an estimated 58 million tons of methane emissions from 2024 to 2038, equivalent to 1.5 billion metrics tons of carbon dioxide
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
- Emissions can be reduced through measures such as leak detection, repair programs and upgrading equipment 75%
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.
North American Energy Capital Assembly 2023:
Key Takeaways Report
Unlock insights from the 2023 North American Energy Capital Assembly, delving into the recent O&G M&A boom, funding shifts in the upstream sector, and the evolving fundraising landscape for O&G companies. Explore strategies for navigating impending methane regulations and gain investor perspectives on assessing operator performance.
Download now for a comprehensive view of fueling future growth and shaping oil and gas companies of the future.
North America Energy Capital Assembly
October 16 - 17, 2024 | Houston
The most senior & influential finance and investment meeting for the North American E&P sector.
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