Colorado Methane Rule Held Up as Model for California, Nation

DENVER — Methane emissions have been a hot topic so far in 2016, not just in the national environmental media but also in the mainstream press with the Aliso Canyon leak and the Obama administration’s concerted push to more stringently regulate the gas.

But in Colorado, a state often out front on fossil fuel production regulations, methane emissions are old news. The Colorado Air Quality and Control Commission in 2014 made the state the first in the nation to seek to limit methane emissions by the oil and gas industry.

Colorado’s methane rules, which compel the oil and gas industry to seek out and stop methane leaks and install equipment to capture 95 percent of methane and volatile organic compounds, are now being held up as a model for the federal government and other states, including California, which was already considering new rules even before Aliso Canyon.

Methane, the main component of natural gas, is 25 times more potent as a heat-trapping greenhouse gas than carbon dioxide, although it doesn’t stay in the atmosphere as long. It’s the second-most prevalent greenhouse gas, according to the U.S. Environmental Protection Agency, and the oil and gas industry is the largest single human-caused source at 29 percent.

Both the EPA and the U.S. Bureau of Land Management have proposed rules similar to Colorado’s aimed at limiting methane emissions from existing and proposed oil and gas production facilities, and the EPA earlier this month expanded its proposed rule. Officials in Colorado have praised the federal government for following in the state’s regulatory footsteps.

“We're pleased to see that elements of the BLM's proposed regulations on flaring, venting and leak prevention are modeled from Colorado's rules, and will minimize the waste of natural gas while reducing harmful emissions,” Colorado Gov. John Hickenlooper said, when the BLM first proposed its new rules in January.

But the Western Energy Alliance, a lobbying group representing oil and gas production companies in 13 western states, does not feel the Colorado methane rules have been worth the money spent by industry to implement them.

“We don’t really believe that Colorado’s rule is necessarily a model for the entire country,” said Kathleen Sgamma, WEA’s vice president of government and public affairs. “States are 50 different independent laboratories … and we certainly don’t agree that it’s a cost-effective method.”

By seeking out and minimizing leakage, “these oil and gas control measures are estimated to reduce [volatile organic compound] emissions by approximately 93,500 tons per year and methane/ethane emissions by approximately 65,000 tons per year, at a cost of approximately $42.5 million per year,” according to the state.

The VOCs are critical as the state grapples with tougher new EPA ozone standards. Methane reduction is key to combating global climate change, according to state officials and environmental groups, which also argue that oil and gas companies directly benefit from keeping methane out of the atmosphere and putting it into production.

“It’s the best bargain in air-pollution reduction today,” said former state lawmaker Dan Grossman, the Rocky Mountain regional director of the Environmental Defense Fund. “Unlike putting a scrubber on a power plant, which is only a cost, these measures put more product in the pipeline and offset a lot of the cost burdens on the operators to begin with.”

Sgamma counters that the state’s estimates are just that, estimates, and even those only equate to a very small amount of methane captured and returned to the production loop.

“What the [state] was claiming would be saved from the regulation comes out to less than a day’s worth of Colorado production—one day’s worth out of a year,” Sgamma said. “That’s the high estimate; it’s less than a day of production, and it’s very unlikely that even that estimate would be met.”

Asked to quantify the amount of methane Colorado’s new rules have kept out of the atmosphere through reduced leakage or venting, Will Allison, the director of the Air Pollution Control Division of the Colorado Department of Public Health and Environment, did not offer a set number. But he did say the program is working.

“Colorado inspectors are finding fewer leaks at oil and gas sites since the state adopted its methane rules in early 2014,” Allison said. “Because Colorado companies are required to find and fix leaks, this has led to improved operation and maintenance in the field.”

He added that operators are now required to implement robust storage-tank emission plans and that many operators are using improved tank technology and facility design to reduce leaks, including routing multiple oil and gas wells to a centralized facility in order to reduce the number of storage tanks. Overall, that’s leading to less methane leaking into the skies over Colorado.

“We did it right here, and both the EPA and the BLM are right in looking at Colorado as a model, as are a bunch of other states, including Pennsylvania and California,” EDF’s Grossman said. “Some of them are doing it as a frontal assault on greenhouse gas emissions and some of them are doing it to address ozone. What’s important is that these other states are recognizing that the control strategy that Colorado implemented is reasonable and cost-effective.”

If in fact Colorado’s estimate of reducing methane emissions on the production end by 65,000 tons a year proves true, that number still pales in comparison to what spewed into the air around suburban Los Angeles starting in October and ending on Feb. 18. The Aliso Canyon underground storage leak from a bad well pumped nearly 100,000 tons of methane into the atmosphere and forced the evacuation of thousands of people from the Porter Ranch area.

Gov. Jerry Brown ordered Southern California Gas Co. to find ways to offset the greenhouse gas emissions over the next five to 10 years, but the disaster put a white-hot spotlight on the issue of aging oil and gas infrastructure that utilizes failing pipelines and suspect underground storage at a time when demand for gas is down, supplies are abundant and prices are low.

Sgamma says the federal government would be better served permitting improved pipeline, processing and storage capacity across the West than cracking down on leakage, flaring and venting on the production end. When storage is full and there’s no infrastructure to get gas to market, then it has to be flared, she said. As for Aliso Canyon, that issue is outside her purview.

“When a mistake like that occurs, that company is going to fix it,” Sgamma said. “Luckily, what we’re focusing on [in Colorado] is really small leaks and also, by happenstance, Western Energy Alliance covers 13 states in the West but not California.”

Could there be another Aliso Canyon just waiting to happen in Colorado or some other oil and gas producing state? The Environment Defense Fund certainly thinks so. But state regulators say storage is primarily a federal issue.

“From an operations standpoint, we can do things California did here if a situation were to arise that suggested such actions to shut off flow where needed,” said Todd Hartman, spokesman for the Colorado Oil and Gas Conservation Commission—the state agency that oversees drilling. “More generally, the COGCC's role in regulating natural gas storage fields is relatively limited.”

Hartman says there are currently 11 active storage sites in the state and one closed location and that the state does require permits for storage wells to ensure wellbore integrity and does some inspection and testing at those sites.

“However, our regulatory role is generally limited because many of these facilities are under the oversight of [the Federal Energy Regulatory Commission],” Hartman added.