Obama Proposal Could Cut Methane Emissions But Boost Energy Costs
New Jersey has become increasingly reliant on cheap natural gas, but administration rule could raise prices by requiring companies to reduce leaks
The Obama administration is proposing new rules to curb methane emissions, a potent form of greenhouse-gas emissions, a step that may help deal with climate change but could hamper the fast-growing natural-gas sector.
The proposal, made public on Friday by the U.S. Department of Interior, would mostly affect oil and gas drilling on public lands. But it also would require the industry to do a better job of monitoring leaks in pipelines delivering the fuel to customers.
Both industry lobbyists and environmental groups said the proposal could raise energy costs, an outcome with implications in New Jersey, which has become increasingly reliant on natural gas not only to heat homes during the winter, but also to produce much of the electricity used here.
“The boom in natural-gas production has not only kept energy costs low, but has also brought new life to America’s manufacturing sector,’’ said Thomas Pyle, president of the Institute for Energy Research, an industry trade group. “(The Department of Interior’s) regulation threatens this progress by hindering production, raising energy costs, and killing jobs.’’
But the spurt of growth of new natural-gas plants in New Jersey and an expansion of pipelines from newly exploited deposits of the fuel in neighboring states has generated heated controversy. Many of the pipeline proposals traverse public land previously set aside with taxpayers’ dollars, or go through relatively affluent suburbs.
“We hope this rule moves forward because it will help regulate methane leaks from fracking, while making it costlier for the gas and oil industry to operate and propose pipelines in our state,’’ said Jeff Tittel, director of the New Jersey Sierra Club. He noted there are at least 15 pipelines that have either been proposed or approved in the state.
According to the Bureau of Land Management, which proposed the rule, it would cost the industry $126 million to $161 million a year. Under the old rules, only new pipelines were subject to increased monitoring for leaks, according to Doug O’Malley, director of Environment New Jersey. “It’s a huge loophole. Existing pipelines are a big source of methane,’’ he said.
In proposing the new rule, DOI estimated that between 2009 and 2014 enough natural gas was lost through venting, flaring, and leaks into the atmosphere tomore than 5 million homes for a year. In addition, the Government Accountability Office said as much as $23 million annually in revenue is lost to the federal government and states. New technology can reduce the waste, federal officials said.
“By asking operators to take simple, common-sense actions to reduce waste -- like swapping out old equipment and checking for leaks -- we expect to cut this waste almost in half,’’ said Neil Kornze, director of the Bureau of Land Management.
But Pyle said companies have the incentive to capture methane as a valuable commodity. “The industry is already reducing methane emissions on its own and doesn’t need the federal government to come in and tell them how to conduct their business,’’ he said.
The rules would be phased in over several years to allow operators to make the transition more cost efficiently, according to the Bureau of Land Management.