In early February, the U.S. House of Representatives voted in favor of a Congressional Review Act resolution that would repeal the Bureau of Land Management’s (BLM’s) Methane and Waste Prevention Rule, more commonly referred to as the Venting and Flaring Rule (the Rule). BLM’s stated goal for the Rule, which went into effect on Jan. 17, 2017, is to reduce waste from natural gas flaring on federal lands, but many industry observers have criticized the rule as an effort to impose air quality standards in a manner that exceeds BLM’s statutory authority. The Rule was implemented despite the fact that, even without a formal rule, methane emissions from domestic oil and gas production facilities have dropped significantly over the past decade, notwithstanding the dramatic spike in production attributable to the shale revolution.
Opponents of the Rule emphasize that, among other flaws, compliance with the Rule will have severe cost consequences to producers that could lead to shut-in wells. Tracee Bentley, the Colorado Petroleum Council’s executive director, noted in a Feb. 23 press conference that the added costs of compliance with the Rule could result in 40 percent of the wells on federal lands that are currently being flared to become uneconomical, compelling producers to permanently shut in those wells. The Rule’s critics emphasize that instead of increasing royalties paid to the federal government, the Rule could actually cause significant decreases in royalties if producers are forced to shut in wells or if compliance costs discourage operators from drilling wells in areas with less-developed midstream infrastructure. Continue Reading