4 reasons a national methane policy will be good for business

Ben N. Ratner

After months of anticipation, the Obama Administration released its new methane emissions strategy in January – a plan that opens up new opportunities for industry at large, and especially for operators that want to cut waste and get ahead.

The centerpiece of the strategy are imminent rules that will help us meet a new national goal to reduce harmful methane pollution from oil and natural gas operations by 45 percent by 2025.

But the rules also bring direct industry benefits. Here are four reasons the new methane emissions strategy is a boon, rather than bane, for America’s $1.2-trillion oil and gas sector:

1. It builds trust and benefits the bottom line.

Recent polling by the American Lung Association found that while less than a quarter of Americans have a favorable view of the oil and gas industry, two-thirds support new federal limits on methane emissions.

Hydraulic fracturing bans in New York and Denton, Texas, reinforce that industry simply must do more to earn public trust.

Welcoming rigorous rules would. That’s one reason oil and gas companies in Colorado actively supported the ground-breaking policy enacted last year to begin limiting methane emissions. Getting behind well-designed policies is good business.

2. It cuts $1.8 billion in waste and adds market certainty.

Leaky infrastructure and unnecessary venting across the oil and gas value chain cost an estimated $1.8 billion in wasted product and lost revenue annually.

The new rules require companies to include up-to-date controls as they build out new and modified infrastructure, keeping gas in the pipeline while making new facilities more efficient.

Research shows such investments would cost industry no more than a penny on average per one thousand cubic feet of natural gas produced, and even save money in some cases.

The new rules also help bring market certainty. As Goldman Sachs has pointed out, methane regulations are needed to address investor concerns.

3. It sorts industry winners from losers.

This first iteration of the national methane rules will only set requirements for new and modified infrastructure. To achieve the national target, existing sources will need to be regulated as well, and indeed, they already are in Colorado and parts of Ohio.

Leading companies will get ahead of the curve and of their competitors by bringing existing facilities up to the standards of new facilities before they’re required to do so.

Companies such as Southwestern Energy have demonstrated a drive to excel with their use of infrared cameras for leak detection and repair, among many other control strategies. Others such as EQT Corp. responded to the White House announcement saying it’s committed to going beyond the White House plan “by targeting potential emissions at existing sources.” 

4. It can help operators attract critical talent. 

There is a well-known battle for talent in the hyper-competitive oil and gas sector. As environmental concerns swell – particularly for skilled young people in the labor force – companies can seize competitive advantage by supporting solutions-oriented environmental policies of which employees can feel proud.

With the methane strategy now announced, companies in the oil and gas sector face a choice.

They can seize an opportunity and help build a clean energy future. Or they can cling to old ways of doing business that fuel uncertainty and lingering doubts about their license to operate.

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