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First-in-the-U.S. rules that give oil and gas industry leeway in slashing emissions OK’d in Colorado

Not everyone is happy about the latitude the state Air Quality Control Commission gave operators, but the goal is to cut methane, “not vilify the oil and gas industry.”

Fracking site walls and equipment are pictured in this aerial image of oil and gas activity on the Mae J, Papa Jo and Yellowhammer pads in the Colliers Hill neighborhood of Erie, Colorado, on March 3, 2021. New state rules intended to reduce methane emissions will change the frequency at which wells like this are inspected. (Handout)
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Colorado air regulators have adopted a sweeping set of rules to slash methane emissions from oil and gas operations, including a controversial, first-in-the nation program giving industry a freer hand in determining how to cut pollution.

The “intensity program,” under which operators will have to reduce emissions by set percentages based on the amount of oil and gas they produce, was strongly supported by the industry and opposed by environmental groups concerned it would be ineffective.

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The environmental and community groups pressed for regulations to increase inspections and curb emissions from specific operations such as unloading liquids and cleaning pipelines.

The regulations were adopted Friday by the state’s Air Quality Control Commission to help meet statutory requirements for Colorado to cut its greenhouse gas emissions from 2005 levels by 26% by 2025, 50% by 2030 and 90% by 2050.

“This definitely gets us closer to where we want to be but more needs to be done,” said Joro Walker, an attorney with the environmental group Western Resource Advocates.

Industry officials hailed the adoption of the intensity program and lamented some of the other provisions adopted by the AQCC.

“The commission’s adoption of an emissions intensity program, the centerpiece of this rulemaking, is the first of its kind at the state level and allows operators the flexibility to reduce emissions proactively and innovatively, rather than via top-down mandates,” said Lynn Granger, executive director of API Colorado, an industry trade group.

The mandated programs, such as inspections and performance testing, will be costly, Dan Haley, CEO of the Colorado Oil and Gas Association, a trade group, said in a statement.

The Air Pollution Control Division, which drafted the rules, estimated the package of eight new regulations – which will be phased in with some going into effect next February and others not until 2023 – will cost the industry a total of $59 million to $142 million.

“Colorado cannot solve global climate change alone and certainly not by squeezing a single industry into arbitrary reduction goals for resources that Coloradans will rely on for decades to come,” Haley said.

Since 2014, the oil and gas industry has been the subject of eight rounds of AQCC rulemaking aimed at cutting emissions from pollution sources such as tanks, gas lines and control devices.

The goal of the rulemaking, commissioner Elise Jones said, “is to reduce methane emissions not vilify the oil and gas industry.”

The oil and gas industry is the third largest source of greenhouse gases in Colorado after transportation and electricity generation.

The main greenhouse gas emitted by oil and gas operations is methane, which is 30 times more potent than carbon dioxide, the prime greenhouse gas, but shorter lived in the atmosphere. The oil and gas sector is the source of 60% of all the methane emitted in the state, according to the state air pollution regulators.

Under the state’s Greenhouse Gas Pollution Reduction Roadmap, the oil and gas sector has to cut its emissions by 30% from 2005 levels by 2025 and 60% by 2030. The industry is already on track to meet its 2025 target.

To meet the 2030 goal, the APCD calculated that the industry must cut methane emissions by 140,000 metric tons a year.

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The biggest share – 64,000 metric tons or 46% – would come from the heightened inspection and repair program.

Under the new rules, wells producing more than 20 tons of oil equivalent a year (a measure of oil and gas) will be inspected monthly, as will sites near disproportionately impacted communities, such as low-income neighborhoods and operations within 1,000 feet of occupied areas.

Many other well sites will be inspected on schedules ranging from bimonthly to quarterly, but every well site in the state will be inspected at least once a year. 

“There are increased protections for disproportionately impacted communities and people living near oil and gas activity and now 12,000 smaller but leak-prone wells will get inspected,” said Matt Garrington, state campaign manager for the Environmental Defense Fund, which pushed for more frequent inspections.

Reduction targets set based on production

The next largest tranche of reductions – 55,000 tons or 39% – would come from the intensity program which sets an emission limit per 1,000 barrels of oil equivalent (defined as oil plus natural gas) produced. There would be a target for large operators and a less restrictive one for small operators.

The APCD added even tighter standards for emissions from wells than the large operator standard for new wells and wells operating in disproportionately impacted communities – those where at least 40% of the households are low-income, people of color, burdened by housing costs or have suffered from a history of environmental racism.

“The intensity program will really push the industry to show what they can do,” commissioner Martha Rudolph said.

Environmental and community groups, along with some local officials voiced concern that the intensity program could be manipulated and that verifying the emission inventories for each operation and the emission reductions would be difficult to do.

“It all comes down to verification and the inventories and if there is one thing, we are squirrely about, this is it,” Jones said. “This thing will succeed or fail based on how we measure it.”

Oil and gas companies are supposed to file their intensity plans in 2022, but it will be at least another year before the standard for evaluating those plans are in place.

The Air Pollution Control Division will spend the next year working through aerial surveys of emissions it conducted this summer and working with stakeholder groups to develop the best data for showing the emission reductions are being met, Robyn Wille, the division’s chief strategy officer, said in an interview.

The division is scheduled to submit a reporting and verification rule proposal to the AQCC in 2023. “We are aiming for transparency and accuracy,” Wille said.

The third largest reduction is slated to come from rules to limit emissions from pigging and blowdown operations, techniques for cleaning and maintaining pipelines. The reductions are estimated to equal 9,600 metric tons a year or 7% of the total required decrease in emissions for the sector.

The rules apply statewide. “In the past the West Slope was treated differently than the Front Range and we pushed hard to get the regulations to be uniform across the state and we got that,” said Rodger Steen, chairman of the Western Colorado Alliance’s oil and gas committee. “Citizens got a big win with these regulations.”