Don’t Like the Numbers? Just Inflate Them

by Ryan Streams, Regulatory Affairs Analyst on August 24, 2016 - 12:45pm

EPA Uses Revisionist History, Ignores Recent Studies

Perhaps the oil and natural gas industry has become a victim of its own success. In the face of an onslaught of new methane regulations, Western Energy Alliance has pointed repeatedly to industry’s success in reducing methane emissions without cumbersome federal rules. To make that point, we used EPA’s own greenhouse gas inventory data. According to EPA’s 2015 Greenhouse Gas Inventory, the industry reduced methane emissions from oil and natural gas production by 21% since 1990 while total gas production skyrocketed by 47%.

Evidently, this message struck a chord. In the 2016 Greenhouse Gas Inventory EPA released earlier this year, methane emissions were notably higher for the oil and natural gas production segments. The changes to the inventory seemed to play directly into EPA’s hands for justifying new rules and ran counter to our arguments about industry’s success with reducing emissions. However digging a little deeper, EPA’s changes don’t hold up under closer scrutiny.

To understand how EPA’s new inventory is hiding the ball, first a little about what changed in the inventory. The key changes were in two areas, EPA’s estimated count of equipment in the field, and the rate at which that equipment emits methane.

It’s impractical to go out and count every single pneumatic controller, pump and other equipment at each of the 1.04 million oil and natural gas wells across the country. So instead, the inventory takes a sample of facilities and uses that to estimate equipment counts across the entire industry. The problem is that EPA used large facilities that report under the Greenhouse Gas Reporting Program as the basis for equipment counts. Facilities that emit less than 25,000 tons of CO2 equivalent greenhouse gases per year aren’t required to report their emissions. EPA, in its own fact sheet on the program acknowledges, “Most small businesses fall below the 25,000 metric ton threshold and are not required to report [greenhouse gas] emissions to EPA.”

What EPA has done by treating all oil and natural gas facilities like those that report under the Greenhouse Gas Reporting Program is akin to using five bedroom, three-car garage McMansions to estimate the energy consumption of the average residence in the United States. EPA has obviously skewed the data by treating these larger facilities as average, when the exact opposite is true. About 70% of American oil and natural gas wells are considered marginal, generally producing less than 15 barrels of oil equivalent per day. Some of these wells are included in Greenhouse Gas Reporting, but many other supporting facilities fall under the reporting threshold. These sites are generally older and less complex, and will generally have fewer components and emissions than larger facilities that handle more oil and/or natural gas production.

The second key problem with the 2016 inventory is how it calculates the rate at which field equipment emits methane. Equipment like pneumatic controllers vary from device to device in terms of their actual emissions, so coming up with “typical” pneumatic controller emissions requires some averaging. In the Greenhouse Gas Inventory, EPA uses an average emissions rate based on a sampling of the equipment, and turns that average into an emission factor. Individually, some pieces of equipment will emit more, some less. But on the whole, an emission factor should represent a reasonable ballpark for the typical device.

In the 2016 inventory, EPA ignored new research that directly measured large representative samples of well sites and calculated more accurate emission factors that happened to be lower than previously thought. Instead, of using these large sample sizes, EPA doubled down on old emission factors that were developed in the 1990s based on only 19 measurements taken in Canada. It strains credulity to think that a decades old study based on a handful of measurements taken outside of the country is more representative of current industry practices than recently published studies with combined sample sizes of over 1,000 devices.

The 2016 Greenhouse Gas Inventory update is a case of EPA selectively incorporating facts to fit its narrative. The problem is, even with new, cherry-picked data, the narrative doesn’t hang together. Even using inflated emissions estimates, EPA still shows that oil and natural gas production emissions are just 0.6% of total natural gas production volumes, well below the rate believed to negate the greenhouse gas benefits of natural gas. The clear trend is that oil and natural gas producers are continuing to improve the rate at which they capture and utilize natural gas. That’s good for energy consumers, good for the environment, and has happened all without federal rules.

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