WildEarth Guardians

Tuesday, November 30, 2010
Waste from Oil and Gas Drilling in Rocky Mountain West Costing U.S. Millions

Government Accountability Office Challenges Interior Dept. to Embrace Win-Win Solutions to Reducing Methane
Contact: Jeremy Nichols (303) 573-4898 x1303

Denver—Venting and flaring of methane, otherwise known as natural gas, by the oil and gas industry costs the U.S. millions in lost royalty revenue every year, according to the Government Accountability Office (GAO).



And that estimate is considered to be conservative.



In a report released today, the GAO highlighted extensive opportunities for the Interior Department to significantly reduce the waste of methane from oil and gas drilling, while at the same time safeguarding the climate, increasing royalty revenue, and enhancing the profitability of industry.  The report note that readily available and cost-effective technologies exist to reduce wasted methane by at least 40%, although it noted that greater reductions are possible. 



“This is beyond no-brainer,” said Jeremy Nichols, Climate and Energy Program Director with WildEarth Guardians.  “With this kind of opportunity at hand, there’s simply too much at stake to keep ignoring this problem.”  



The GAO noted that in 2008, 126 billion cubic feet (Bcf) of methane was wasted from onshore oil and gas drilling operations, enough natural gas to heat 1.7 million homes during a year.  At a price of around $4.00 per thousand cubic feet (Mcf), this amounts to a loss of more than $500 million.



Methane is not only a valuable product, it’s a potent greenhouse gas with more than 20 times the heat-trapping capability of carbon dioxide.  The GAO notes that capturing just 40% of the wasted methane would be like removing 3.1 million passenger vehicles from our roadways, or shutting down four average-sized coal-fired power plants.



The report highlights the opportunities that exist in the Rocky Mountain West.  The report reviewed data from four major oil and gas producing regions in Colorado, New Mexico, and Utah, finding that nearly Bcf of natural gas was wasted, at a value of nearly $100 million.  See table below (from pp. 14 and 49-50).  Using economical controls and practices, some of which are already being used by companies within these areas, significant reductions in methane could be achieved.  In some cases a 99% reduction in wasted methane has been reported by companies (see e.g., report at p. 23).



But the GAO noted the Interior Department, whose agency the Bureau of Land Management oversees onshore oil and gas leasing, is doing nothing to ensure that wasted natural gas is captured.  The GAO noted that this costs the U.S. at least $23 million in lost royalty revenue, although this estimate is conservative. 



The report left the Interior Department with key recommendations, including:

• ...the Secretary of the Interior should direct BLM…to revise its guidance to operators to make it clear that technologies should be used where they can economically capture sources of vented and flared gas, including gas from liquid unloading, well completions, pneumatic valves, and glycol dehydrators.
• …the Secretary of the Interior should direct BLM…to assess the potential use of venting and flaring reduction technologies to minimize the waste of natural gas in advance of production where applicable, and not solely for purposes of air quality.


Several environmental groups, including WildEarth Guardians and the Western Environmental Law Center, have been pushing the Interior Department to start taking responsibility for limiting methane emissions from federal leases.  In Colorado, Montana, New Mexico, and Wyoming, groups have challenged the failure of the BLM to consider reducing methane as a condition of issuing oil and gas leases.  A report recently commissioned by Earthjustice, WildEarth Guardians, and the San Juan Citizens Alliance documents that overall methane reductions of 90% or more are achievable throughout the industry using proven and cost-effective emissions controls that could save $1 billion.

Today’s report emboldens those groups’ efforts and emphasizes the win-win solutions that are available to the Department.



“The Interior Department has no excuse to keep dodging this issue anymore,” said Erik Schlenker-Goodrich, Climate and Energy Director for the Western Environmental Law Center.  “These are simple solutions and given what’s at stake, it’s certainly not too much to ask for the BLM to start taking some responsibility.”