CMES Testimony
Utah Air Quality Hearing
19 October 2017

INTRO: The Center for Methane Emissions Solutions provides a voice for the American businesses and their more than 500 locations across 45 states — including many here in Utah — that develop and deploy technologies to cut methane waste and pollution. [expand on basic rap about CMES]

Cutting waste and pollution, including methane, from oil and gas wells is a triple for oil and gas industry, taxpayers, the methane mitigation industry, and our air. The Utah Department of Environmental Quality’s proposed rule revisions are a step in the right direction, and with a few key improvements, can set the course toward cleaner air, a more diverse Utah economy, and a more efficient oil and gas industry.

• Reducing oil and gas air pollution reduces methane waste – the main component of natural gas. This means more energy for companies to sell, and more money they and the state can earn.
• More than 130 companies with upwards of 590 manufacturing, sales, and support locations – including more than a dozen here in Utah – are already working to reduce ozone-related, methane, and other air emissions in the oil and gas sector. The mitigation industry continues to grow, and Utah has only just begun to unlock its potential. These rule revisions will help this industry grow and provide more Utah jobs.

But in order to maximize the potential of these rules, the Utah Department of Environmental Quality should make a few key changes to the proposal to better align them with requirements federally and in neighboring states.

• Require operators to check for gas leaks at least twice a year at all facilities.
• Apply rules to all hydrocarbons that make up natural gas.

KEY IMPROVEMENTS

Strengthen leak inspection requirements:

• DAQ should strengthen the leak detection and repair provisions in the draft rules to require operators to conduct leak inspections at least twice a year at all production facilities. The current proposal exempts certain facilities from this important inspection requirement.
• Frequent inspection of facilities with modern leak detection equipment is a proven method to reduce leaks and maximize product recovery. According to the Environmental Protection Agency, quarterly inspections can reduce leaks by 80% semi-annual inspections can cut leaks by 60%.
• Semi-annual inspections are also highly cost-effective and can result in significant operator savings by ensuring that natural gas stays in pipelines rather than being leaked to the atmosphere. One of the primary operators in Wyoming’s Upper Green River Basin, Jonah Energy, has reported cumulative gas savings exceeding $5 million dollars over a six-year period due to implementing monthly leak inspections at its production facilities.
• Both EPA and Bureau of Land Management rules require operators to inspect their facilities twice a year. Neighboring states require even more frequent inspections. Both Colorado and Wyoming require operators to inspect mid-sized well sites quarterly. Increasing Utah’s minimum inspection frequency to semi-annual will harmonize federal and state rules and reduce jurisdictional confusion.

Broaden the applicability of the rules to address all forms of hydrocarbon air pollution:

• The department should also strengthen the proposal by expanding the control requirements to apply to the full suite of hydrocarbon pollutants contained in natural gas emissions. As currently drafted, the rules will exclude the bulk of natural gas emissions which consist of methane – both the main product of the natural gas industry and a powerful greenhouse gas that contributes to climate change.
• Federal requirements require Uintah Basin operators to control both methane and VOCs, as do requirements in Colorado. Expanding the scope of the rules to apply to total hydrocarbons (Volatile Organic Compounds, or VOCs, and methane) will ensure maximum product recovery and will harmonize Utah’s requirements with federal requirements and those of neighboring states.

THE OPPORTUNITY

The natural gas and petroleum industries will benefit from this improved regulatory framework, as will consumers.

• America loses nearly $2 billion worth of natural gas every year due to faulty equipment or inefficient practices such as venting, flaring, and leaks at oil and gas well sites. In Utah, taxpayers lost out on over $31 million in royalties from 2009 to 2014 because of wasted natural gas on federal/tribal lands.
• The technology to address this issue is very cost-effective since reducing waste leads to more product the oil and gas industry can sell.
• A recent case study of oil and gas producers and service providers in Colorado showed that the majority (70%) have found that state’s efforts to cut methane emissions to be very cost effective.
• Let’s not forget safety – Reducing leaks contributes to the safety of operations in the oil and gas industry. Also to cleaner air in areas like Utah’s Uintah basin that are struggling with high ozone pollution levels.

As this industry continues to grow and develop it will benefit the economy.

• As the methane mitigation industry grows, so will the number of American jobs, including in Utah.
• According to a recent report from the business consulting firm Datu, companies have already experienced up to 30% business growth in states with methane regulations.
• The industry anticipates future growth and hiring, though the rate of growth will depend on the regulatory direction at the federal and state levels.
• Jobs within the LDAR industry promise upward mobility, with annual salaries of up to $113,110.
• Cutting methane waste will help increase tax and royalty revenues that help fund education, local governments, and infrastructure projects, therefore spinning off yet more Utah jobs and economic development.

SUCCESS IN OTHER STATES
Colorado :

• First state in the nation to pass comprehensive, statewide rules to reduce oil and gas methane emissions.
• State regulators have reported a 75% decrease in reported leaks since these rules went into effect and importantly, have not reported receiving any complaints from industry.

Wyoming:

• Like the Uintah Basin, Wyoming has struggled with an oil and gas related ozone pollution problem in one region of the state.
• New rules to reduce emissions are having a positive impact, air quality is improving.
• Major producer in the basin (Jonah Energy) was an early adopter of qemissions reduction technologies. They have reported a 75% reduction in emissions and a program that pays for its own labor and material costs via recovered product (FLIR Report).

CONCLUSION
Utah has an opportunity with this rulemaking to modernize and improve the way it regulates the oil and gas industry in a manner that is a win for the state’s economy, taxpayers and the air. By making some key improvements and finalizing its draft rules, that triple win is within reach and the methane mitigation industry stands ready to help with the implementation of these improved requirements.