- President Donald Trump is set to unveil an Environmental Protection Agency plan to dial back Biden-era requirements designed to slash methane emissions from oil and gas operations, Bloomberg reported. He is expected to announce the proposed rule at a campaign rally in Lubbock, Texas, on Tuesday, according to an administration official.
- The Trump EPA estimates the proposal would yield about $45 billion in savings while enabling production of an additional 210 million barrels of oil and 1.41 trillion cubic feet of natural gas between 2027 and 2050, which works out to roughly $1.9 billion a year over 24 years (Lumida calculation).
- In a major shift, the agency will single out marginal, low-output wells producing no more than 15 barrels of oil equivalent per day for extra relief. About 79% of the roughly 1 million oil and gas wells in the US are considered marginal, or around 790,000 wells (Lumida calculation).
- The plan would also end the Methane Super Emitter Program and ease Biden-era limits on routine flaring, proposing 95% efficient flaring or other control devices as the best system of emission reduction under the Clean Air Act. Under Biden, the EPA had estimated the rules would avoid about 58 million tons of methane emissions and yield $98 billion in net climate and ozone health benefits from 2024 to 2038.
What Happened?
The EPA proposal targets Biden administration requirements that forced energy companies to replace leak-prone equipment and regularly search for escaping gas. EPA Administrator Lee Zeldin said earlier this month that it would lift “unnecessary burdens” on oil and gas production and make it less costly for Americans to heat their homes and drive their cars. The relief for marginal wells responds to smaller independent producers that say compliance costs can overwhelm the economics of older wells and force them to shut production. The proposal comes as Trump seeks to ease voter concerns about higher oil, gasoline and diesel costs tied to Russia’s war on Ukraine and the US war against Iran, ahead of next week’s midterm elections.
Why It Matters?
For US oil and gas producers, especially smaller independents with older, low-output wells, the rule would lower compliance costs and could keep some production online that might otherwise be shut. That supports the administration’s goal of more domestic supply at a time of high energy prices. The trade-off is environmental: former EPA officials and activists warn that low-producing wells can be a major source of methane, a gas with roughly 80 times the warming potential of carbon dioxide over 20 years, and the oil and gas sector is the largest industrial source of methane in the US.
What’s Next?
The measure is a proposed rule, and the EPA is expected to justify ending the super emitter program by questioning its necessity and citing legal concerns. Investors will watch how far the final version goes, since oil industry leaders have urged the administration against a wholesale repeal in favor of more modest changes. Some larger producers prize their methane reductions as a competitive advantage as other nations crack down on methane-intense gas imports, so the rule’s impact may differ between small independents and exporters.
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Source: Bloomberg
