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Mexico Regulations Could Curb Methane Emissions at ‘No Net Cost,’ Says EDF

Draft regulations to curb methane emissions from Mexico’s oil and gas sector hold up in terms of veracity against similar rules already in place in other jurisdictions, and could be done at no net cost to the industry, according to a new white paper.

The Environmental Defense Fund (EDF) published the research on Wednesday. The group, which often works in conjunction with the U.S. energy sector to curb methane emissions from onshore operations, consulted when the rules were drafted with Mexico’s Agencia de Seguridad, Energía y Ambiente (ASEA), the environmental protection department for the oil and gas sector.

“This is important because as the Mexican oil and gas industry is opened up to private investment, the expectation is that there will be more production, and getting these regulations in place now will mean that production is being done in a cleaner way,” EDF’s Drew Nelson, director for international affairs, told NGI’s Mexico Gas Price Index.

“And if production increases, the methane pollution won’t increase,” Nelson added. “One of the concerns that we had, and I think [it was] shared by the Mexican government, is that increased methane from increased production could actually undermine some of the broader Mexican government climate goals. And should these draft regulations be finalized, we don’t think that will happen.”

Methane is the primary component of natural gas and has more than 80 times the climate warming impact of carbon dioxide over a 20-year span, according to EDF research, and “is responsible for approximately 25% of the warming we feel today.”

The proposed regulations in their current form apply to the entire oil and gas supply chain, and to both new and existing developments. The rules would mandate quarterly inspections of “well sites, gas processing plants, compressor stations, [and] tank batteries,” as well as “comprehensive inspections that apply to all sources with the potential to leak, unintentionally vent or abnormally operate,” according to the white paper.

Although flaring methane to convert it to the less potent carbon dioxide is preferable from a climate perspective compared to venting it, capturing the methane lessens the greenhouse effect even further.

The draft rules “prioritize capture over flaring, which is good from the environmental perspective, but also good from an energy security perspective because it means there’s that much more gas that will be brought into the market,” Nelson said.

A widely cited study published this year in the journal Science found that methane emissions from the U.S. oil and gas industry were 60% higher than estimated by the Environmental Protection Agency.

Despite the Trump administration’s efforts to roll back federal methane regulations, California, Colorado, Ohio, Pennsylvania and Wyoming have been spearheading a global push to regulate methane emissions from the oil and gas supply chain, Nelson said. Many U.S. exploration and production companies also are involved in efforts to reduce emissions.

“It’s both red and blue states that are moving forward on this because these are just common-sense things that are pretty cost-effective and pretty impactful,” Nelson said, explaining that certain US jurisdictions were used as examples for ASEA to follow.

Citing figures from the International Energy Agency, the global energy watchdog, EDF researchers said “globally, the oil and gas industry can cost-effectively reduce up to 75% of its emissions, and 50% of global methane reductions can be realized at zero net cost. This level of reduction delivers the same long-term climate benefit as immediately closing all the coal plants in China.”

Mexico’s 2013 constitutional energy reform, which opened up the formerly state-dominated energy industry to private sector competition, created ASEA and gave it authority to regulate atmospheric emissions from energy companies.

National oil company Petróleos Mexicanos (Pemex) accounts for effectively all of Mexico’s hydrocarbon production, and is one of 10 oil and gas companies that comprise the Oil and Gas Climate Initiative (OGCI), along with oil majors that include ExxonMobil Corp., BP plc and Royal Dutch Shell plc.

In a joint statement in 2017, the 10 OGCI CEOs pledged to work toward “near zero methane emissions from the gas value chain,” and are expected to announce further details later this year on how they will do so. Spokespeople for Pemex and for Mexico’s oil and gas trade association Amexhi, did not respond to emailed requests for comment for this story.

The draft regulations are open to public consultation for 30 working days as of July 27, the date they were published on ASEA’s website. ASEA will aim to finalize their implementation by the end of the current administration on Dec. 1, Nelson said.

In 2016, President Obama, Canadian Prime Minister Justin Trudeau and Mexico President Enrique Peña Nieto pledged to reduce methane emissions from the North American oil and gas industry by up to 45% by 2025.

If Mexico’s final regulations “track closely to the proposal, Mexico “will be well on its way to meeting its national commitment to reduce [the] country’s methane emissions by 40-45% by 2025,” EDF said.

The regulations would be the first of their kind in Latin America, according to ASEA. The proposal to regulate methane emissions follows a call earlier this year by three civil society groups to expand Mexico’s carbon dioxide tax to include natural gas.

 

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