IPAA: New, Costly Methane Regulations Are at the Expense of American Taxpayers

IPAA: New, Costly Methane Regulations Are at the Expense of American Taxpayers

WASHINGTON, D.C. – Today, Independent Petroleum Association of America (IPAA) Senior Vice President of Government Relations and Political Affairs Dan Naatz released the following statement in response to the Department of the Interior’s proposed emissions mandate on oil and natural gas producers who operate on federal and Indian lands, in the name of equitable return to the taxpayer and under the pretext of climate change.

“Reduction of emissions through limited venting and flaring is in the government and the industry’s best interest. Financially, no oil or natural gas producer would choose to lose valuable resources that could otherwise be sold. And when the product is sold, the U.S. treasury receives a royalty. Further, increased natural gas production and use have resulted in cleaner air for the United States. We are concerned that these new rules could create a regulatory regime that prevents the extension of the financial and important environmental benefits generated by American oil and natural gas production.

“This is the latest in the string of bad policies released by this administration showing a lack of knowledge of how the oil and gas industry truly works. Imposing these new regulations will make it more expensive and harder for independent producers to operate, reducing America’s total energy production and preventing additional receipts from going back to the United States Treasury. Making matters worse, lifting the royalty rate ceiling simply leaves the door open for the federal government to increase rates on producers down the road. This will change the predictability and certainty for operators on federal lands, making it harder to plan and commit to long-term projects. With oil and natural gas prices currently at their lowest in decades, now is the worst time to raise fees on America’s independent producers.

“The Obama Administration’s continued regulatory onslaught on American producers begins to call into question the president’s commitment to mineral production on federal lands. It appears that when the president talks about American oil and gas production, he is ‘all hat and no cattle.’

“With effective state regulations already in place, the recent EPA regulations on methane, and voluntary initiatives by companies eager to capture and sell natural gas, today’s federal mandates are duplicative and unnecessarily costly. As an industry, we will continue to look for smart ways to reduce industry emissions. And we hope the government, in promulgating new regulations, will recognize the financial, environmental and safety benefits of American oil and natural gas exploration and production processes. IPAA and its member companies will review and submit formal comments on this proposed regulation,” Naatz concluded.

Background:

America’s independent producers are small businesses that develop 90 percent of the nation’s oil and natural gas wells and send more than $10 billion in additional revenue to the United States Treasury each year in the form of royalties, taxes, and other payments. An estimated 100,000 wells on federal and Indian lands will be affected by these new regulations.

Impressive advancements in technologies used in hydraulic fracturing and horizontal drilling have made the United States a top global oil and natural gas producer, while emissions have dramatically dropped to near 20-year lows. These cutting-edge technologies help squeeze all of the natural gas they can out of every well, ensuring the most profitable return for consumers and the American taxpayers while improving our air quality by reducing the escape of methane.

Thanks to industry leadership and investment in new technologies, America’s shale energy producers have cut methane emissions by 13.3 percent since 2008 while increasing production by a staggering 400 percent. In fact, all oil and gas exploration and production accounts for slightly more than one percent of total U.S. greenhouse gas emissions.

Flaring is the practice of releasing excess gas and emissions from oil and natural gas wells. Industry makes every effort to reduce the flaring of gases but sometimes must do so for safety reasons, regulatory requirements, or lack of sufficient infrastructure to move the natural gas to market. For example, flaring is necessary in drilling operations to divert any gas bubbles that may move up the borehead. Natural gas processing plants rely on safety flares in emergency situations in which piping becomes over-pressurized. Less than one percent of all natural gas is flared in the United States.

With low market conditions already impacting production, these new federal mandates are unnecessarily costly and could shut down the production of oil and natural gas wells. Shutting down production will ultimately reduce America’s overall energy production and prevent receipts from going back to the United States Treasury, costing American taxpayers.

About the Independent Petroleum Association of America
The Independent Petroleum Association of America (IPAA) is a national upstream trade association representing thousands of independent oil and natural gas producers and service companies across the United States. Independent producers develop 90 percent of the nation’s oil and natural gas wells. These companies account for 54 percent of America’s oil production, 85 percent of its natural gas production, and support over 2.1 million American jobs.

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