House Republicans took aim at the Biden administration’s new methane tax and performance standards Wednesday, arguing that the final rule poses a serious threat to many domestic oil and gas operators and will drive up energy costs at a time of supply disruptions and geopolitical uncertainty.
The EPA’s final rule, announced at the United Nations Climate Change Conference last month, builds on the agency’s previous actions under the Clean Air Act to more aggressively crack down on methane emissions from the nation’s oil and gas sector — the largest source of industrial methane emissions in the U.S., EPA officials said in a statement.
But Republicans argued that any benefits from the EPA’s rule are far outweighed by its costs, which they say will include higher energy prices for consumers and lower production from small- and medium-sized companies.
Speaking Wednesday at a hearing of the House Energy and Commerce Subcommittee on Environment, Manufacturing, and Critical Materials, the head of the subcommittee, Rep. Bill Johnson (R-OH), said the EPA’s final rule threatens an “unworkable regulatory structure” for many of the smaller U.S. producers, due in large part to the high compliance costs required.
There are about 9,000 independent oil and gas operators in the United States, he noted, which are responsible for developing 91% of oil and gas wells across the country. These companies also produce the lion’s share of U.S. oil and natural gas, at 83% and 90%, respectively.
“These companies are not ‘Big Oil,’ as is so often described,” Johnson said. “On average, they employ just 12 people.”
“This fleet of methane regulations would crush them,” he added of the EPA’s new rule.
The EPA’s final methane rule, released in December, seeks to more aggressively combat emissions from methane, a potent greenhouse gas with roughly 80 times as much heat-trapping power as carbon dioxide.
It will require U.S. oil and gas operators to perform comprehensive monitoring for leaks at their facilities, eliminate methane routine flaring over the next two years, and establish new emissions reduction standards for certain high-emitting equipment.
Biden administration officials estimate that the new rule will prevent up to 58 million tons of methane emissions from escaping into the air through 2038 — or the equivalent of the combined CO2 emitted from all U.S. coal-fired power plants in a single year.
But opponents argue that the EPA’s new regulations are overly broad and duplicative — failing to take into consideration steps that producers have already taken to reduce their methane emissions and comply with existing state regulations.
Witnesses at Wednesday’s hearing echoed these concerns.
Patrick Montalban, the head of a small oil and gas company in Montana, described what he saw as a disconnect between the EPA’s new rule and the operations of his company and other small producers in the state. Montalban Oil and Gas Operations has just 15 employees.
Montalban told lawmakers Wednesday that the dozens of new EPA reporting requirements alone would be enough to put his small company out of business due to the time and manpower that would be needed to comply.
They also duplicate data his company and other producers already report to the Montana Board of Oil and Gas and the Bureau of Land Management. Overall, he said, EPA’s methane emissions regulation is “reckless in its approach to the potential impact on people’s livelihoods and the economy.”
The hearing comes after the Independent Petroleum Association of America, a trade group that represents thousands of independent and small U.S. producers nationwide, estimated last month that the new EPA rule could cause as many as 300,000 of the nation’s 750,000 low-production wells to shut down.
IPAA President Jeff Eshelman criticized the EPA’s rule Wednesday as an “overbearing regulatory regime” that he argued will “undoubtedly harm America’s oil and natural gas producers, increase energy supply costs, and harm the economy.”
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“Independent oil and natural gas producers are committed to effectively managing their methane and volatile organic compounds (VOC) emissions,” he told the Washington Examiner in a statement ahead of the hearing. “At issue is developing appropriate techniques that reflect both the emissions profile and the economic challenges of each segment of the industry from large to small.”
“The federal government should not use the regulatory process to eliminate much needed sources of energy,” Eshelman added.
