Trump's methane rule divides the oil and gas industry

HOUSTON – We could have expected oil and gas producers to welcome the decision to relax regulations on their activities. But their reaction to the Trump administration's decision to lower the methane emission rules revealed at least tactical divisions in climate policy.

Opposing voices quickly emerged between supporters of the initiative on Thursday as a benefit to domestic energy production and those who saw it as a counterproductive measure that would tarnish the reputation of natural gas as a clean fuel.

Global oil and gas companies have generally distanced themselves from the decision of the administration, while smaller domestic companies struggling to make profits while oil and gas prices are low have said that they supported the reduction.

This gap reflected divergent visions of the future of the industry in light of growing concerns about the greenhouse gas emissions responsible for climate change.

Natural gas is often leaking unburned during production and distribution, and its essential component – methane – is 80 times more potent than carbon dioxide in capturing the heat of the earth's atmosphere for 20 years. it takes to dispel. The administration's decision would ease methane regulations for pipelines, storage tanks and wells.

Without constraints on harmful emissions, some industry players believe that they will be less effective in arguing that gas should replace coal in energy production. And this would reinforce the need to focus on sources such as wind and solar energy, rather than gas, to control global warming.

"What some industry members do not understand, but that others are starting to understand, is that we are moving to a low-carbon economy," he said. Mark Boling, former executive vice president of Southwestern Energy and consultant for the oil companies. monitor emissions in Colorado. "If natural gas is to replace coal, we need to show climate benefits."

Natural gas has replaced coal as the most important energy fuel in the United States in recent years, largely because it is cheap and far less polluting. Proponents say that gas can be a "bridge fuel" that can save wind turbines when the wind is not blowing and solar panels when the sun is not shining.

Critics point out, however, that the leakage problem may be underestimated to the point that the environmental benefits of the gas have been overestimated. Large companies that offer to ship gas around the world in the form of pipelines and chilled liquids want to counter this argument in order to increase their exports to countries like India and China.

Under increasing pressure from shareholders, activists and their own employees, BP, Shell, Exxon Mobil and several other international oil companies have joined the Oil and Gas Climate Initiative, which is committed to reducing gas emissions. This is part of the growing recognition of the industry that climate change and future regulation pose a threat.

"Shell has long supported direct regulation of methane when this regulation is effective and encourages innovation," said Gretchen Watkins, president of Shell for US operations. "Even though the law may change in this case, our environmental commitments will be maintained."

BP said Thursday that the Environmental Protection Agency was to regulate methane emissions from new and existing sources of energy. "We need to reduce methane emissions from natural gas to realize our full energy potential," said Susan Dio, president and president of BP America.

But the industry's main professional organization, the American Petroleum Institute, has taken a different approach. The group, which represents all facets of the sector, from production to refining, expressed support for the Trump administration's action and said the companies control leaks without government intervention.

Erik Milito, vice president of the institute, said the organization praised the "smart regulations" that "provide the flexibility to develop and deliver affordable and reliable US energy."

The thousands of small-scale producers who pump oil from Texas, Oklahoma, and Louisiana from small wells that sometimes produce just 10 barrels a day are among the critics of the government's methane regulation. They say that they can not afford higher compliance costs.

"They want us to comply with extremely expensive equipment and procedures that would prevent us from making a profit," said Darlene S. Wallace, president of Columbus Oil, an Oklahoma-based company, which advocated for higher standards. strict rules adopted under the Obama regime. "Most of the people who have marginal wells are rural, and all the regulation is going to do is make a lot of people live."

Patrick Montalban, president of Montalban's oil and gas operations in Montana, said that a tighter regulation involved "a huge amount of unnecessary administrative and land expenses," adding, "You do not save the money." environment by doing so. "

The administration's decision is sure to appeal to many oil sector workers who are skeptical about climate change and considering the regulation as a threat to their jobs. However, many oil sector officials have shown little enthusiasm for administrative initiatives that would pave the way for exploration at the Arctic National Wildlife Refuge in Alaska and in the deepwater areas of the Atlantic Coast. They cite an overabundance of supply and many exploration opportunities in existing shale fields. They also privately expressed their concern that the trade war with China could limit their oil and gas exports in the future.

And to address environmental concerns, some large companies are looking at technology solutions again. Chevron and Occidental are investing in a Canadian company that is designing a way to remove carbon dioxide from the air to produce clean fuel.

Leaders are also beginning to talk more openly about climate change, and in support of the 2016 Paris climate deal that President Trump abandoned.