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Details Slim on BLM Rule For NatGas Flaring, Venting on Public Lands

Details of a proposed federal rule governing flaring and venting of associated natural gas on public lands are currently slim, but two stakeholders expect publication of the rule soon, followed by an opportunity to comment.

The rule, which was proposed by the Interior Department's Bureau of Land Management (BLM), was received by the White House Office of Management and Budget (OMB) on Friday. BLM’s Steve Wells, division chief for fluid minerals, confirmed to NGI's Shale Daily that the rule [RIN 1004-AE14] is undergoing a review by the OMB Office of Information and Regulatory Affairs (OIRA).

"We hope for a quick review but understand these rules take time and coordinated review by other agencies," Wells said Tuesday. "As with all proposed rules, [there is] no timetable [and we are still working] to secure permission to move forward and publish."

According to an abstract posted on the OMB website, the rule "would update decades-old standards to reduce wasteful venting, flaring, and leaks of natural gas from onshore wells located on federal and Indian oil and gas leases. The proposed standards would establish requirements and incentives to reduce waste of gas and clarify when royalties apply to lost gas."

Although details of the BLM rule are currently unknown, stakeholders believe the Obama administration has offered some hints as to where they may be going.

Last year, the White House unveiled a strategy to reduce methane emissions and tapped the U.S. Environmental Protection Agency (EPA), and the Energy and Interior departments to develop rules to that end (see Daily GPIMarch 28, 2014). The administration then followed up with a plan to cut methane emissions from new and modified sources in the oil and gas industry by 40-45%, compared to 2012 levels, by 2025 (see Daily GPI, Jan. 14).

To meet the 40-45% reduction goal, the EPA in August published a list of proposals it said could cut methane emissions by 2025 by up to 400,000 short tons (see Shale DailyAug. 18).

Lee Fuller, executive vice president of the Independent Petroleum Association of America (IPAA), told NGI's Shale Daily he has not seen the proposed rule or met with OMB officials, but he anticipates doing so in the near future.

"We're developing our responses, and we'll try to meet with the agency to talk about our concerns and why we would recommend alternatives to what may be up there in the package," Fuller said Tuesday. "But that requires us to have enough knowledge about what they're proposing to do, and we just don't have that yet."

Fuller said one of the main issues IPAA will be looking at is whether the proposed BLM rule covers only new, or new and existing, sources of methane emissions.

"We have a whole series of EPA regulations on new sources that we'll have to comply with when those are finalized," Fuller said. "If it's the same regulatory package [from BLM], then the same issues will be created.

"If it applies to existing sources, then that's a different set of wells that become a part of the program. The technology requirements could be more complicated to implement in those areas because of their cost, their effectiveness or the amount of the emissions. Those are all issues we have with the EPA's packages that are out there.

"But [since this pertains to] venting and flaring structure, I don't know if [BLM] will follow the same pattern [as EPA] or do something entirely different."

Kathleen Sgamma, vice president of government and public affairs for the Western Energy Alliance (WEA), said her organization is "anticipating some changes through their authority under their notice to lessees.

"We can't really confirm it, but we think [BLM] is also thinking of something similar to what EPA is doing with leak detection, which raises the question of why they would duplicate what another federal agency is doing," Sgamma said Tuesday. "That would be controversial. They don't have any regulatory jurisdiction over air quality. If they stick to things that they can do as far as royalties on natural gas, then that's well within their purview. But were they to start duplicating what EPA is doing, I think that would be a problem."

Fuller said IPAA had briefings with the BLM before the rule was submitted to the OMB, but he said the meetings were vague and federal officials didn't go into too many details. "It was really hard to get a good sense of the nature of their proposals," he said.

"At this point in time, I don't know what the structure of meetings with them will be. Will they have a meeting specifically on each regulation? Will they meet us collectively on a batch of regulations? Those are questions we have to ask OIRA when we try to arrange a meeting."

Sgamma said she doesn't think there was good dialogue between WEA and BLM as the latter crafted the proposed rule.

"It's pretty murky at this point. OMB has up to 90 days to review the rule, and I guess they would take more, rather than less, of that time," she said, adding that WEA anticipates seeing the rule unveiled toward the end of the year.

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