NEW YORK: The U.S. Environmental Protection Agency’s proposal to crack down on methane leaks from the oil and gas industry left some green groups wanting more and industry warning of unnecessary regulation.
But a few dozen companies and some labor groups welcomed rollout of the EPA’s proposed regulations because they will create demand for new technologies and jobs focused on preventing leaks of methane and other pollutants.
“The methane mitigation industry offers readily deployable, American-made technologies that can support a solution that is a true win-win for both the environment and the oil and gas supply chain,” said Patrick Von Bargen, director of the Center for Methane Emissions Solutions, a newly formed trade group representing technology firms and service providers focused on detecting and preventing those leaks.
The proposed rules for new and modified oil and gas facilities are part of a broader Obama administration strategy to cut methane emissions from the sector by 40 percent to 45 percent below 2012 levels in the next 10 years.
Methane is the main component of natural gas, but when it is released into the atmosphere, it becomes a greenhouse gas that is more potent than the more prevalent carbon dioxide.
A report released Tuesday by Colorado State University said the EPA has underestimated the amount of natural gas wasted after it is collected and gathered from well sites across the country.
It said around 100 billion cubic feet of natural gas per year seeps out during the process, at a cost of $300 million.
The EPA estimates the capital costs of the proposed rule would be around $280 million to $330 million in 2025.
Industry groups said Tuesday companies were being saddled with new “costly” regulations even as methane emissions from hydraulic fracturing have declined amid rising production levels.
The proposed requirements will create demand for technologies like infrared cameras that can detect leaked methane, which is invisible.
There are more than 75 companies that either manufacture equipment that detects leaks, captures methane or both.
Until now, suppliers such as infrared camera company FLIR Systems Inc and leak detection firm Apogee Technology Inc served companies that face mandatory methane standards in states like Colorado and California, and those that plugged their methane leaks voluntarily.
Federal rules will encourage companies to invest in technologies despite their added costs, said Scott Howard, a sales manager for energy services company John Crane at its Golden, Colorado, offices.
“People who buy equipment are looking for a low price and they may not be thinking about emissions. Unless you have regulations stating that you need to capture it, they are not going to choose the best available technology,” he said.
The company, a subsidiary of UK company Smiths Group Plc , makes gas seals for natural gas compressor stations, which are addressed in the EPA proposal, which prevent any liquid from leaking into the atmosphere.
But despite the apparent boost to companies, the 10-year timeframe of the rule’s rollout stopped investors from reacting immediately.
RBC Capital Markets analyst Kurt Hallead noted that oilfield services companies that stand to benefit have been trading down because recent declines in crude oil prices have hurt their businesses.
For example shares in National Oilwell Varco Inc, a supplier of equipment and components used in oil and gas drilling and production, were up 0.4 percent on Tuesday but have fallen 39.7 percent so far this year while energy technology supplier FMC Technologies Inc has seen its shares fall 29.8 percent and other oil and gas equipment maker Exterran Holdings Inc was down 1.2 percent on Tuesday but has fallen 28.5 percent to date this year.
Shares in pump supplier Flowserve Corp have fallen 20.4 percent year-to-date. Emerson Electric Co shares have fallen 18.5 percent so far this year.
