Using the Regulatory Process for Monetary Gain

by Kathleen Sgamma, Vice President of Government and Public Affairs on July 7, 2015 - 12:31pm

There’s something distasteful about companies that try to use the regulatory process for monetary gain. Rather than competing in a free market on the strength of their products and services, some companies turn to the government to try to get a leg up on their competitors.

One recent example is the newly created Center for Methane Emissions Solutions (CMES), headed by a staffer of former Senator Jeff Bingaman (D-NM). As reported by Morning Consult, the organization consists of seven member companies in the “methane mitigation industry.” The article lists two, FLIR Systems Inc., which actively advocates for regulations like Colorado’s Leak Detection and Repair (LDAR) rules, and Colorado-based Apogee Scientific Inc. Federal regulators are planning to use Colorado’s LDAR requirements as a national model, despite the fact that the rule is not well-suited as such.

By owning patents for technologies originally developed for the military, FLIR has a near U.S. monopoly on infrared cameras used for LDAR. Not content with that competitive advantage and a growing market as more and more companies use FLIR technology, either in response to regulation or at their own initiative, the company seems to be a driving force behind CMES.

CMES is meeting with the Environmental Protection Agency (EPA) and Bureau of Land Management (BLM) to advocate for new methane capture and flaring and venting rules. As we’ve reported before, we don’t need new federal rules to force companies to do what they’re already doing. Without regulation, our industry has been continuously innovating and developing new technologies to reduce emissions, and we’ve reduced methane emissions by 40% since 2006 even as natural gas production has skyrocketed. According to a study by the University of Texas, Austin, methane emitted from natural gas production sites represents just 0.42% of production volumes.

Note what’s going on here besides trying to use the regulatory process to gain advantage…a larger tactic of divide and conquer. The oil and natural gas industry is the industry that has developed the technologies that have reduced methane emissions dramatically. We’re the ones responsible for the dramatic drop in U.S. greenhouse gas emissions, as abundant, affordable natural gas has displaced increasing amounts of coal-fired electricity. Oil and natural gas companies are the ones that developed “green completions” technology, for example, and we were rapidly adopting its use before EPA jumped on the bandwagon to make it mandatory. 

Let’s look at the background information being used by this new organization. It’s using a report by Datu Research, a firm specializing in “sustainable” agriculture, not energy, policy, commissioned by the Environmental Defense Fund (EDF). The report identifies 76 firms with an aggregate market cap of $445 billion that are engaged in methane mitigation, defined as leak detection services, rod-packing and rod seal replacement, low-emissions valves, low/no-bleed pneumatic controllers, solar and electric pumps, reduced emissions completions, plunger lifts and velocity tubing, and vapor recovery units. Some of the companies listed are members of the Alliance, but Datu’s lack of experience with our industry means there are obvious omissions from the list.

“The oil and natural gas industry” is a broad industry, consisting not just of the producers, but all of us working together to provide abundant, affordable energy for Americans. By segregating and compartmentalizing the industry into competing factions, those seeking to neutralize and control our industry would prevent us from working together to provide real solutions.

We welcome all companies working together to provide abundant and affordable energy, including those that provide environmental solutions. We’re proud that our membership includes environmental consultants and service companies that help companies capture methane and improve their bottom lines and the environment.

By working together, we expand production and make the pie bigger for all. Conversely, red tape, like EPA’s recently enacted air quality requirements, diverts resources away from productive work and into regulatory compliance to prove what we were already doing to reduce emissions. That may increase opportunities for some in the short term, but in the long term the overall opportunities are reduced.

Paul Wehnert, a senior vice president at Heath Consultants, has it right in the face of CMES recruitment efforts… “we don’t want to join a group that’s purely interested in their own personal gain… we don’t want to be looked at as an ambulance chaser.” We welcome Paul and others providing methane capture solutions to join us instead.

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