Alliance Executive Vice President John Tintera told members of the Texas Senate Natural Resources Committee on September 28 that EPA’s methane rule will severely impact the Texas oil and gas industry and state revenues.
He said the Alliance opposes this rule and has joined a lawsuit against EPA with 25 other state oil and gas associations. Additionally, the Alliance supports the RRC and TCEQ in the motion for reconsideration with EPA filed by the Texas Attorney General.
- Policy Flaws:
- Diminishing returns: cost vs results (methane emissions from oil field makes up less than 3.5% of total GHG emissions (which includes methane).
- Methane emissions from Nat Gas is already declining, 14.8% since early 1990s.
- This regulation will not measurably improve global warming concerns and will have little to no impact on local conditions (global temperature impact – four one-thousandths of one degree, of avoided warming by the year 2100.* EID March 2016)
- The rule treats all wells as the same, does not exempt marginal wells regardless of volume and pressure and if expanded to all existing production as projected, it will become an economic deterrent resulting in the loss of thousands of productive wells.
- Economic analysis:
- Stripper (marginal) Well contributions to Texas production and Texas economy.
- 127,000 oil wells under 10 BOPD / 70,000 gas wells under 250 mcfgd
- Production is approximately 20% of Texas production
- Percentage of marginal wells will grow with drilling slowdown since all wells eventually are marginal.
- Cost for small producer to implement will be high. Will require additional equipment and personnel which are significant expenses to individual small operator.
- FLIR camera- $80,000 ($120,000 if personnel training is included)
- 3rd Party contractor to film and report costs $700 per well and $1000 plus per E&P facility, like tank batteries
- Twice per year but with repair and reporting, it becomes a year round endeavor.
- 26 separate pieces of equipment including every valve and flange
- No throughput, pressure or production volume exemptions
- Estimated cost to comply for only marginal wells in Texas totals to almost $300,000,000 per year
- Pending ICR (Information Collection Request from EPA) is unnecessary, poorly planned, and does not utilize existing State data bases.
- Current Technical and Regulatory oversight
- Venting methane is rare in Texas,
- RRC declines to issue venting permits. Instead issues flaring permits. (Currently: 460 Flaring permits, 15 venting permits)
- Flares are 99% effective. Combusts methane into CO2 and soot. Flaring is a good effective and corrective tool.
- TCEQ conducts flyovers in selected counties with Flir cameras in the Barnett Shale, in the Permian Basin and in South Texas counties in the Eagle Ford. When they do find facilities (hot spots or complaints) that are deemed a problem, the operator is contacted and the problem is fixed.
- Additionally, the Barnett Shale 19 county area is perhaps the best monitored area in the nation with multiple auto-chromatographs and TCEQ is finding no increase in emissions and reports that there is not a short or long term health problem.
- TCEQ monitors South Texas, south of San Antonio in Karnes and Wilson counties with auto- chromatographs. These emissions levels can be accessed on the TCEQ website in almost real time. Again, TCEQ reports no ongoing levels of health concerns according to the toxicology reports.
Conclusions: Severely negative impact on Texas Independents Oil Companies and State Revenue.
- Methane emissions declining already.
- Oil and gas small portion of total emissions.
- Texas regulations and oil field monitoring already in place.
Compliance very expensive and time consuming, especially for marginal production – will significantly raises bottom line cost of production, disrupt existing economics, and likely cause plugging of many marginal wells whose production makes up 20 % of oil production in Texas.
To watch the full testimony on video, CLICK HERE. John’s testimony starts at the 31:09 mark.