Last year, New Mexico’s state government worked with federal regulators to document aerial footage of oil and gas sites.
The verdict: Permian Basin storage tanks and flares were leaking methane and other air pollutants at “higher than expected rates.”
Before this year, industry self-reporting of venting and flaring natural gas to New Mexico regulatory agencies has lacked specific emissions data. Operators also did not have to report the specific reasons for flaring or venting, and inspections were limited.
“It’s clear that self-policing is not the answer,” said James Kenney, cabinet secretary of the New Mexico Environment Department.
When New Mexico banned routine venting and flaring of natural gas earlier this year, it became the first oil-producing state to regulate methane at all production sites, pipelines and gathering facilities.
The move comes at a critical time for addressing industry pollution.
The latest United Nations Intergovernmental Panel on Climate Change report focuses on methane, not just carbon dioxide, as a major factor in climate change.
“Sustained methane mitigation reduces global surface ozone, contributing to air quality improvements and also reduces surface temperature in the longer term,” the report’s technical summary reads.
Zeroing in on methane
Methane accounts for 31% of New Mexico’s greenhouse gas emissions, according to a 2020 state climate report.
Since the Obama administration, federal courts and Congressional legislation have waged a back-and-forth battle over regulating methane emissions from oil and gas operations on federal lands.
Methane accounted for 10% of U.S. greenhouse gas emissions in 2019. The U.S. Environmental Protection Agency considers methane to have a shorter “lifetime” in the atmosphere than carbon dioxide, but methane is more effective at trapping heat in the short-term than carbon dioxide.
In July, President Biden signed into law a Congressional resolution that reinstated Obama-era industry methane standards regulating pollution from storage facilities and transmission lines.
New Mexico is one state charting its own methane mitigation path aside from federal rules.
The state’s Congressional Democrats sent a letter to the U.S. Environmental Protection Agency earlier this month, urging federal regulators not to “undercut” New Mexico’s progress on methane pollution.
“With the climate crisis accelerating, we can’t afford to let oil and gas producers off the hook for harmful methane pollution,” the lawmakers wrote.
In a January 2019 executive order on climate change, Gov. Michelle Lujan Grisham tasked New Mexico’s two agencies that oversee oil and gas activity to “jointly develop a statewide, enforceable regulatory framework to secure reductions in oil and gas sector methane emissions to prevent waste from new and existing sources and enact such rules as soon as practicable.”
The Energy Minerals and Natural Resources Department regulations view methane as industry waste.
Under new rules, operators will be required to capture 98% of gas by the end of 2026.
Routine flaring and venting of natural gas are now a no-go.
Operators must report emissions data to determine their progress toward the gas capture target.
Companies can earn “credits” toward the target by locating and addressing methane leaks before the state steps in.
The proposed Environment Department rules target methane as an air pollutant.
Finding and fixing equipment leaks is a major aspect of the proposals, which the state Environmental Improvement Board will consider in September.
Oil and gas equipment emits volatile organic compounds and nitrous oxides, the main ingredients in ozone gas that causes smog.
By retrofitting equipment that emits those pollutants, NMED can also slash the smaller amounts of methane emissions that often accompany the chemicals.
Key players in New Mexico’s methane debate
Industry: Brooks Pearce
MAZE Environmental CEO
New Mexico’s methane regulations set gas capture targets for operators and mandate more equipment inspections to find and fix leaks.
But the state doesn’t mandate which technology operators must use to meet those goals.
That flexibility has spurred innovation in the Permian Basin’s “methane mitigation” industry.
Brooks Pearce, CEO of MAZE Environmental, said his company’s equipment and redesign plans help operators who may be “scrambling” to comply with state regulations.
“My clients are changing the way they operate,” Pearce said. “First we focus on the fixes that will have the largest climate impacts, then we can focus on the smaller emissions problems.”
MAZE’s stabilizer helps eliminate the need for oil field sites to use flares to reduce pressure.
“We work with companies to see what equipment they can get rid of that will help them reduce emissions and keep more oil in the tank,” Pearce said.
Regulation: Adrienne Sandoval
NM Oil Conservation Division
The first stage of the Energy, Minerals and Natural Resources Department methane regulations is emissions data collection.
Data collected from October 2021 to April 2022 will help determine the progress individual operators need to make each year toward a 98% gas capture rate by the end of 2026.
Adrienne Sandoval, the New Mexico Oil Conservation Division director, said early estimates show that reducing venting and flaring could result in an additional $10 million in royalties added to the state budget every year.
“It’s a wild card, because we don’t have a great understanding and reporting of all the gas that is being lost now,” Sandoval said. “The dollar estimate could go up quite a bit as we get an understanding of how much gas is being lost in the system.”
For operators who fail to meet their yearly gas capture targets, the OCD could issue penalties, shut in wells or refuse additional permits.
“But for a company who’s right on that cusp and really close to attaining gas capture, we incentivize things like flyovers, finding and stopping leaks,” Sandoval said. “Every operator’s going to be different, and the rule provides flexibility to do what is best for their businesses but still have them meet those metrics and targets.”
Environment: Lesley Fleischman
Clean Air Task Force
Methane emissions don’t always correlate with how much oil or natural gas a company is producing, according to a 2021 study from the Clean Air Task Force.
The report found that 195 companies that fall outside of the nation’s top 100 producers, are responsible for 22% of reported methane emissions. But those companies only contribute about 10% of the nation’s total hydrocarbon production.
Lesley Fleischman, a technical analyst with the Clean Air Task Force, said the data shows that finding and fixing methane leaks for all operators, regardless of size or production, should be a priority in methane regulations.
“There are a lot of those small producers that are committing a disproportionately high level of emissions,” Fleischman said. “But at the same time, there are some larger producers that have high levels of emissions as well.”
Fleischman said the New Mexico Environment Department rules should target devices that control emissions from pipes, flare stacks and tanks.
“Even in the best situation, pneumatic devices emit methane,” Fleischman said. “And in the worst case, they’re malfunctioning and emitting more than they’re supposed to. That’s a big reason why we’re calling for regulations that would require zero-bleed pneumatic devices.”