Neighboring states a world apart on methane regulations
While the federal government tries to roll back rules that affect the oil and gas industry, emissions data from New Mexico and Colorado illustrate the impact strict laws can have at the state level
Little more than a change in title separates the border between New Mexico and Colorado north of Farmington. The landscape remains an expanse of low, brown hills spotted with stout juniper trees. Untamed Siberian elms burgeon along La Plata River, which runs between the two states. Oil rigs speckle both horizons, and, floating unseen in the air above, is a cloud of methane the size of Delaware.
The biggest change that occurs at the state line is in the policies that govern the air pollution both states share. North of the border, Colorado has one of the nation’s most rigorous laws for the oil and gas industry to limit methane emissions, rules that the federal government — under the Obama administration — and other states used as the gold standard on which to model their own regulations.
But for wells operated south of the state line, there are zero state-level requirements on the amount of methane they can release into the environment. While New Mexico does require companies to report the amount of gases vented or flared into the atmosphere from their wells, producers have been slow to comply, and penalties are negligible, state documents show.
“You don’t just turn on the faucet and keep it running,” said Gwen Lachelt, director of the Western Leaders Network, a nonprofit aimed at uniting local policymakers in Western states. “Nobody does that, except New Mexico, and now the federal government — who say the oil and gas companies can pollute the air and diminish our natural resources.”
Methane is considered a distant second to carbon dioxide as a contributor to global warming. It is far more potent, however, trapping over 20 times more heat in Earth’s atmosphere in the first 20 years after it is released than carbon dioxide, according to the EPA.
Under former President Barack Obama’s administration, two sets of regulations were established by the federal Bureau of Land Management and the Environmental Protection Agency that, together, required companies on private, state, federal and tribal land to limit methane emissions and install leakdetection monitors. The rules would have required oil and gas companies in all states to comply with methane requirements similar to Colorado’s beginning in June and would have helped the U.S. meet its obligations to limit greenhouse gas emissions under the international Paris climate accord.
The implementation of these regulations also might have helped the nation better document specific sources of methane emissions.
But President Donald Trump’s administration has embarked on an aggressive rollback of federal environmental regulations, not only withdrawing from the climate agreement, but suspending the requirements for companies to comply with the BLM and EPA methane rules until pending litigation has been resolved and reviews and revisions of the rules have been completed — a process expected to last at least two years.
The Trump administration’s actions have launched a series of federal lawsuits. On July 2, the U.S. Court of Appeals for the District of Columbia ruled that the administration could not enact a 90-day stay on the EPA’s methane regulation, already in effect, while conducting a review of the rule. While the agency had the right to review the rule, the court said, it could not postpone the date for
the regulation to come into effect — and for companies to become compliant with the rule — while that review was underway.
The court is separately considering the EPA’s proposal to delay the rule’s effective date, not just 90 days but two years.
This month, a number of parties, including New Mexico Attorney General Hector Balderas and environmental groups such as the Sierra Club, filed a suit against the U.S. Department of the Interior, challenging its authority to stay the BLM’s methane rule.
Trump’s rollback efforts are putting more responsibility on states to regulate methane and other greenhouse gases.
In New Mexico, the regulatory environment has become crucial, with more than $13 billion invested in the last six months in the Permian Basin, which straddles Southern New Mexico and Texas. Environmentalists fear the consequences of this impending drilling, without any regulations to limit methane emissions, could be catastrophic.
How Colorado and New Mexico’s differing policies are impacting the amount of methane leaking into the air from oil and gas production is hard to know. Federal laws do not require individual oil and gas wells to report methane emissions, so data on emissions per well, state to state, do not exist.
Even if these measures were reported, the amount of methane produced by each state would have to be compared with the amount of oil and gas extracted that year, because emissions inherently fluctuate with production levels.
But between 2011 and 2015, collective methane emissions reported for both states — including from power plants, refineries, minerals, waste and other sources — dropped by 1.5 million tons per year in Colorado, a 30 percent decrease, while rising 0.6 million tons in New Mexico, a 38 percent increase.
Jon Goldstein of the Environmental Defense Fund said using such measures to understand emissions is problematic, because they exclude both small sources of emissions, like individual wells, and “super emitters” — wells that leak a large amount of gas.
Still, he said, “New Mexico would benefit greatly from sensible methane waste and pollution requirements like Colorado has put in place.” Such rules would reduce pollution, improve public health and boost the economy, he added.
“With the great deal of uncertainty that is going on at the federal level, it makes sense for states like New Mexico to step forward and create certainty,” Goldstein said.
States lead climate action
Since 2014, 13 states, in addition to Colorado, have adopted methanecapture or leak-detection regulations to limit methane in the environment. California adopted the nation’s most aggressive methane regulations in May, and policies have been crafted in New York and Pennsylvania since the federal rollbacks began. In addition, 12 states have joined a climate alliance, committing them to remain in the Paris climate agreement and strive to lower greenhouse gas emissions at the local level.
At least 274 mayors have signed on at the city level, including Santa Fe Mayor Javier Gonzales.
New Mexico Gov. Susana Martinez, who has received more than $1 million from the oil and gas industry in campaign contributions since 2010, mostly has kept silent on climate change and problems regarding methane emissions. But earlier this year, she wrote to the House of Representatives, asking for a repeal of the BLM’s methane rule using the Congressional Review Act. She said the costs for companies to comply would hurt the state and its schoolchildren, who rely on oil and gas royalties, in part, to fund public education.
Martinez has declined to answer a number of questions regarding her stance on whether the state should have its own methane regulations to offset a lack of federal policy. A spokesman for her office simply said her letter asking Congress to repeal the law was not related to campaign contributions. He referred further questions to the state’s energy and environment departments.
Before Martinez took office in 2011, New Mexico was one of the states leading the charge on climate action. But since then, she has shifted New Mexico’s climate-change and greenhouse gas monitoring policies significantly.
“Elections matter when it comes to the environment,” said Lachelt, with the Western Leaders Network. Before she started the nonprofit, Lachelt served as a county commissioner in Colorado’s La Plata County, which shares the largest portion of the methane cloud with New Mexico.
She worked with Democrat Bill Richardson on climate policies when he was governor of New Mexico. Methane regulations don’t need to be partisan, she said, but Martinez’s agenda is “very in line with the oil and gas industry.”
“Susana Martinez was elected and just slowly began eroding the great policies we put in place or simply left things unenforced,” Lachelt said.
New Mexico policies
In 2005, then-Gov. Richardson issued an executive order for New Mexico to take action on climate change and reduce greenhouse gas emissions. He said the state was committed to joining other states, specifically California and then-Gov. Arnold Schwarzenegger, in “assuming a leadership role in addressing the risks of climate change.”
Richardson said the state would reduce its emissions of methane 20 percent by 2020. He established the Climate Change Action Council, to be led by the state’s environment and energy departments, and the New Mexico Climate Change Advisory Group to help the state reach an ultimate goal of lowering all greenhouse gas emissions 75 percent below 2000 levels by 2050.
Under Richardson, the state Environmental Improvement Board approved regulations on greenhouse gas reporting, a greenhouse gas reduction program and cap-and-trade program.
The state encouraged oil and gas companies to enroll in a voluntary methane-reduction program through the EPA, called Gas STAR, and said more than 70 percent of companies operating in the state were enrolled as of 2007.
But within her first year as governor, Martinez appointed new members to the Environmental Improvement Board, and the revamped panel repealed all of Richardson’s climate and emissions rules; his climate action committees went defunct.
In 2016, the Environmental Improvement Board went further, repealing part of New Mexico’s 1978 air quality regulations, which were intended “to minimize emissions from petroleum or natural gas processing facilities.” The board said the regulations were redundant.
Only 10 natural gas producers out of more than 600 operating in New Mexico are still voluntarily complying, according to EPA data and the Western Environmental Law Center.
Still, the state says emissions have gone down.
Beth Wojahn, a spokeswoman with the New Mexico Energy, Minerals and Natural Resources Department, said in an email, “The Department is dedicated to protecting our natural resources while helping our economy grow and thrive. We’ve worked with stakeholders to improve New Mexico’s oversight of venting in a way that both protects our economy and creates jobs.”
From May 2016, when the plan went into effect, to May 2017, she said, the amount of methane flared compared to total production was reduced to 0.89 percent from 1.5 percent, and the amount of gas flared was reduced by more than 10 billion cubic feet per day.
An inventory of New Mexico’s greenhouse gas emissions published in December 2016 also found that emissions in the state decreased between 2000 and 2013.
But these reductions were “likely a result of reduced production in response to lower gas prices and decreases in total natural gas and condensate wells count since 2010,” the report said.
The state lost 10,000 natural gas and condensate wells between 2000 and 2011, the report said, which accounted for lower methane levels.
But how much released methane the state effectively tracks is unclear.
State air quality monitored by the New Mexico Environment Department is based on compliance with a 1995 regulation, which only requires reporting from large emitters — companies that release more than 100 tons per year of air pollution or 10 tons per year of hazardous air pollutants, like mercury or lead. The rule does not set specific emissions limits for individual oil and gas operators.
Air quality monitors in the state track nitrogen dioxide, ozone, sulfur dioxide and particulate matter — but not methane.
In 2016, the state Energy, Minerals and Natural Resources Department’s Oil Conservation Division began requiring companies to submit a gas-capture plan. But as of March 2017, only 51 operators out of 603 were complying with reporting requirements, according to a news release signed by David Catanach, director of the Oil Conservation Division.
The gas-capture plan, which came into effect in January 2016, is a two-page form that asks for well location, the amount of gas produced and the amount flared or vented. The document says it is intended to limit venting and flaring of operators, but it does not set limits on how much gas can be vented or flared.
Gov. Martinez declined through a spokesperson to comment on her position on methane regulations and said the comments made by the state energy department fully reflected the administration’s position.
When asked by The New Mexican about state-level climate action, she said, “the issues are being dealt with” and that the state has “measures in place” to address climate change.
She was referring to the state’s 2015 Energy Plan.
That 48-page document makes no mention of climate change and just one mention of greenhouse gases, but only in reference to the EPA rules for carbon dioxide emissions from power plants.
Allison Majure, a spokeswoman for the state Environment Department, declined multiple requests to answer questions about the state’s air quality regulations, saying she had hundreds of emails she needed to address first.
Colorado policies
Colorado’s methane regulations are still relatively new, but state officials are optimistic that they are working to improve air quality.
In 2014, the state finished a yearlong rule-making process to bring parts of the state into compliance with federal ozone requirements.
Jeremy Neustifter, air quality planner and spokesman for the Colorado Department of Public Health and Environment, said methane reduction was the added benefit of that policy.
“We are trying to clean up the air in the Denver area and reduce the ozone,” he said. “And as a co-benefit, we got a pretty large reduction of methane.”
The regulations include limiting emissions from existing petroleum storage tanks; adding gas-capture devices to those tanks; requiring leak detection; repairing existing wells and compressor facilities; adding flare-control devices and requiring that gas streams be connected to a pipeline.
Based on a two-year pilot project conducted by Colorado to determine the rule’s impact, the number of leaking oil and gas facilities fell by 75 percent between July 2013 and June 2015, Neustifter said, adding that the industry was very involved in creating the rule.
Colorado says the cost to the oil and gas industry is negated by the benefits.
According to a state-produced costbenefit analysis in 2014, the industry would see a $42.5 million annual cost, with a one-time cost of $2 million to fix existing leaks in wells. But, the analysis said, there would be a reduction of about 93,500 tons per year of volatile organic compounds, which contain carcinogenic chemicals and build ozone, and a reduction of 65,000 tons per year in methane and ethane emissions.
The industry’s costs average about $453 per ton of reduced volatile organic compounds, the document said. Neustifter said the costs would have to exceed $5,000 per ton to outweigh the benefits.
Advocates of methane regulations say complying with requirements to limit emissions will increase companies’ profits. They say the methane captured by fixing leaks and limiting venting practices can be resold on the market, allowing companies to make more money, which would, in turn, increase royalties and taxes that states collect from mineral extraction on state and federal land.
Opponents of methane rules say the cost of compliance would hurt profits.
In 2014, Colorado’s oil and gas industry generated $15.8 billion, according to the Colorado Oil and Gas Association. That means the industry’s total cost for leak controls was far less than 1 percent of its profits that year.
But Kathleen Sgamma, president of the Western Energy Alliance, an industry group that has been a vocal opponent of the federal methane regulations and is involved in litigation, said New Mexico’s gas capture plan is “more collaborative with industry” and more cost-effective for the industry than Colorado’s.
“The beauty of states is there are 50 different laboratories,” she said. “So what has worked in Colorado may or may not work in North Dakota or New Mexico.”
The industry is already incentivized to capture methane, she said, and has been effectively self-regulating and reducing emissions without regulation.
“The leak-detection repair approach that Colorado has taken results in very high costs for very low additional methane capture,” Sgamma said, “and when costs are so out of proportion with the environmental benefits, then you put at risk job creation and economic growth needlessly.”
This is a key argument of the oil and gas industry in New Mexico and across the nation. But advocates of methane regulations say Colorado’s policies have created job growth, rather than loss.
Colorado says it doesn’t have data to definitively prove either argument yet.
“There are many variables that affect how an oil and gas company performs financially, such as the price of oil and natural gas,” Neustifter said.
The state does not have more information on profit analysis since the costbenefit analysis report, he said.
The Colorado Oil and Gas Association also hasn’t released a profit statement since 2015.
In February, U.S. Sen. Tom Udall, D-N.M., asked Jack Gerard, president and CEO of the American Petroleum Institute, if he could provide evidence that methane regulations would contribute or have contributed to job losses, based on existing regulations in Colorado and Wyoming. Gerard was not able to provide evidence at the hearing.
“There’s no evidence that there has been any job loss in Colorado as a result of Regulation 7, and also, the Colorado Business Review in 2016 took a look at this issue and found that there wasn’t any job loss,” Udall, who supports the federal methane regulations, told Gerard.
The Environmental Defense Fund, a supporter of methane research, has funded studies that show leak-capturing requirements have created jobs specific to the work of finding and fixing methane leaks.
Other research points out that capturing methane does lead to increased profits.
The EPA’s Natural Gas STAR program, after a decade of companies voluntarily complying to reduce methane, found in 2016 that installing devices that lower the bleed rate of pressurized natural gas valves (part of Colorado’s rule) would save between 50 million cubic feet and 260 million cubic feet of natural gas each year.
The report said partners in the program had collectively saved $254.8 million worth of gas by installing the devices.
Contact Rebecca Moss at 505-986-3011 or rmoss@sfnewmexican.com.