American Oil and Gas Reporter - December 2016 - 33

and restores congressionally authorized
flexibility to set royalty rates at or above
12.5 percent of the value of production,
consistent with the Mineral Leasing Act's
statutory authority. The department adds
that regulations now specify a 12.5 percent
rate with no discretion to adjust it to meet
changing conditions.
Under the new regulations, operators
will be required to capture most of their
gas after accounting for specified volumes
of allowed flaring. The capture targets
phase in from 2018 to 2026, increasing
from 85 percent to 98 percent of associated gas produced from development oil
wells, DOI says. Capture targets do not apply to "flaring allowable" volumes, which
decrease from 5.4 million cubic feet a well
in 2018 to 750 Mcf in 2025. According to
DOI, those targets could be met lease-bylease or through averaging statewide
across all of an operators' operations on
federal and Indian leases.
Under the rule, DOI says operators may
comply with proposed flaring limits by:
* Expanding gas-capture infrastructure, such as installing compressors to increase pipeline capacity or connecting
wells to infrastructure through gathering
lines;
* Adopting alternative on-site capture
technologies, including gas compression,
or stripping out natural gas liquids and
trucking the product to a gas processing
plant; or
* Temporarily slowing well production to minimize losses until capture infrastructure is installed.
Operators will be required to replace
high-bleed continuous pneumatic controllers with low/zero-bleed units within one
year, and also within a year replace pneumatic diaphragm pumps with solar pumps,
if adequate for the function, or route the
pumps to a flare if one is available on site.
Also within that time, the new rules require
operators to capture or flare gas from
storage tanks that vent more than six tons
of volatile organic compounds annually.
Other provisions of the Methane and
Waste Prevention Rule include:
* Excess flaring beyond the capture
target requires royalty payments, and is
subject to enforcement.
* Provisions for alternative requirements if meeting capture targets would
cause an operator to cease production and
abandon significant recoverable reserves
under a lease.
* Operators are required to measure
flared volumes through meters, or calculations based on gas-to-oil ratios when
flared volumes reach 50 Mcf/d.
* Operators must use instrumentbased leak detection programs to find and
repair leaks, using infrared cameras;

portable analyzers backed by audio, visual or olfactory inspections; or other BLMapproved methods.
* All sites except compressor stations
must be inspected semiannually; compressor stations must be inspected quarterly.
Other Objections
The BLM's rush to regulate something
already regulated at state and federal levels is an example of poor government policy, responds Erik Milito, director of upstream and industry operations for the
American Petroleum Institute. He warns
the new regulations could stifle the innovations that have led to the nation's environmental successes.
"Even as America is leading the world
in oil and natural gas production, methane
emissions have fallen, thanks to industry
leadership and investment in new technologies," Milito says. "U.S. carbon emissions
now are near 20-year lows because of increased use of natural gas, and the U.S. energy renaissance has saved drivers $550
in fuel costs and saved American households an average of $1,337 in energy expenditures in 2015."
If BLM's goal is to prevent emissions
rather than impede U.S. energy production,
the bureau should focus on fixing permitting, infrastructure and pipeline delays that
slow the capture of natural gas, Milito urges.
The Montana Petroleum Association
points out the final venting and flaring
rules would, according to BLM's most ambitious estimates, reduce U.S. greenhouse
gas emissions by 0.0092 percent.
"Oil and gas producers are reeling from
the effects of the most serious downturn
in nearly 40 years. (These) rules will place
a tremendous economic burden on energy development without any real benefit,"
MPA argues. "According to EPA, the entire oil and natural gas industry represents
a mere 3.4 percent of total U.S. GHG
emissions. Methane emissions from exploration and production represent only 1.07
percent of total GHG emissions in the
United States."
Adds MPA Executive Director Alan Olson, "Our industry has made great strides
over the past several years to manage emissions through rules implemented at the state
level, but we need infrastructure to capture
and move gas to markets. That means
pipelines. To build pipelines, we need a predictable regulatory climate, which is something (the Obama) administration has
robbed from business owners."
The rule, and its regulatory impact
analysis and environmental assessment, are
available at http://www.blm.gov/programs/energy-and-minerals/oil-andgas/operations-and-production/methaneand-waste-prevention-rule.
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American Oil and Gas Reporter - December 2016

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