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Trump Rolls Back Methane Rule as Bankrupt Permian Drillers Ignore Venting Flares

Even as production lags, drillers are enriching executives and neglecting flares blasting methane into the atmosphere.

Fugitive methane emissions vent from unlit flare in the Permian Basin on March 6, 2020.

Part of the Series

On Thursday, the Trump administration rolled back Obama-era rules designed to rein in fugitive methane emissions, a powerful greenhouse gas routinely vented from leaking oil and gas infrastructure — commonly from unlit flares that, when ignited, are designed to burn off methane as carbon.

Methane emissions, which have 80 times the heat-trapping power of carbon dioxide over 20 years, are so damaging to the planet that even though there is 225 times less methane in the atmosphere than carbon, methane disproportionately contributes about a quarter of all the human-caused planetary warming.

The Environmental Protection Agency’s (EPA) new rules rescind 2016 Obama administration limits on industry emissions of methane and prevent future regulation at sites built before 2015. They also weaken remaining requirements for oil and gas companies to locate and fix venting flares and wells.

The rollback is the latest move in a larger effort to exploit the pandemic to weaken environmental safeguards. That effort has targeted a number of other critical environmental rules, including relaxing controls on releases of pollution from coal-fired plants, tailpipes and industrial soot. Last month, the administration gutted the nation’s landmark conservation law, the National Environmental Policy Act, to expedite permitting processes for federal infrastructure projects like pipelines and power plants.

The new methane rules worsen an already grim situation in one of the world’s largest regional climate emissions bombs in West Texas and southeast New Mexico’s sprawling Permian Shale Basin. After dipping below negative for the first time in April, oil prices have rebounded to around $40 a barrel — still below what most drillers need to break even.

As oil and gas extraction and demand continue to drag, emissions in the Permian are still amassing critical levels as cash-strapped and bankrupt drillers take advantage of unprecedented bailouts, bond buyback schemes, subsidies, tax breaks and regulatory “relief” to enrich executives and cut even more corners, abandoning unprofitable wells altogether or refusing to fix venting tanks or broken flares.

According to the data from the Railroad Commission of Texas, which regulates oil and gas, extraction in the state dropped 13 percent in May 2020 compared to June 2019, while the total volume of gas flared fell about 82 percent during the same timeframe. The problem, though, isn’t the region’s reduced overall extraction and flaring; it’s unignited flares left to blast methane into the atmosphere.

“Picture the worst thing you can think of, and that’s how the Permian was before the crash. Then multiply that by 10.”

In June, environmental watchdog Environmental Defense Fund (EDF) flew specially equipped helicopters above hundreds of Permian drilling sites as part of its Permian Methane Analysis Project, or PermianMAP. Researchers found that more than one in 10 flares in the Permian Basin could be unlit or malfunctioning, accounting for a majority of the 300,000 tons of methane vented from the region every year. The amount of vented methane is three times the annual total the EPA reports.

Claus Zehner of the European Space Agency told The New York Times that Permian methane concentrations measured in March and April suggest a substantial overall increase, despite the region’s decreasing rates of extraction. Now, the Trump administration’s lifting of methane rules is set to amplify those emissions even more — by 370,000 tons through 2025, according to federal government projections.

Reeling after more than 100,000 job losses since February, the industry was already enjoying the suspension of some federal and state inspections. Even before the lifting of federal methane rules, the Permian Basin had long been a Wild West for down-and-out drillers, whose incentive to spend money on hunting down and fixing gushing flares was laughable before the crash and has now been all but abandoned.

Wild West Texas

Sharon Wilson, a senior field advocate for the Oil and Gas Accountability Project at the environmental watchdog Earthworks has seen just how much methane is spewing into the air since the onset of the pandemic and subsequent oil crash. Wilson is a certified optical gas imaging thermographer and has extensively documented such pollution over the years by using specialized cameras to record methane pollution normally invisible to the naked eye.

The Oil and Gas Accountability Project has conducted more than 1,000 field investigations revealing the industry and state regulators’ negligence and malfeasance in facilitating massive levels of methane emissions. Additional research published this year confirms what both EDF and Earthworks have found, suggesting methane pollution in the Permian is about 60 percent higher than other shale plays in the nation.

Wilson visited the region in early March and described the situation as dire. “Picture the worst thing you can think of, and that’s how the Permian was before the crash. Then multiply that by 10,” Wilson told Truthout. “It’s hard to comprehend in the face of rapidly accelerating climate change, that this could be going on anywhere. The amount of methane coming out of most of these unlit flares is unimaginable.”

“It’s hard to comprehend in the face of rapidly accelerating climate change, that this could be going on anywhere.”

Wilson noticed an uptick in venting from unlit flares, storage tanks and compressor vent pipes even before the crash. EDF’s surveys have shown, respectively, that 11 and 12 percent of at least 312 active flares measured in the region had issues that could cause abnormally high methane emissions.

“It looks like what [producers] started doing when the price of gas plummeted — it cost them more to transport it in a pipeline to market than what they can get for it, so it looks like they just started dumping it into the air,” Wilson said. “We’ve got just a horrible mess out there.”

Wilson says she has made hundreds of complaints to the Texas Commission on Environmental Quality (TCEQ) over the years documenting venting with thermal imaging, and several since the onset of the price collapse. Even if a driller manages to fix a malfunctioning flare, she says, it doesn’t always stay fixed.

“A month later, [the flare] can be just how it was. So the TCEQ is turning their head. They’re looking the other way,” she says. Leasing laws also complicate matters: Many companies may be unable to shut off flaring rigs or stop extracting even when its uneconomical to do so because they are bound by leases.

Wilson has made several complaints to TCEQ regarding oil and gas firm MDC Energy’s venting at a particular site she says has been blasting methane since November, when the company first filed for bankruptcy. TCEQ’s website shows it has issued six violations against MDC related to harmful emissions at the site.

TCEQ spokesperson Brian McGovern told Truthout that the agency’s Midland Region has received 14 complaints related to sites operated by MDC. The agency has completed three investigations addressing seven of the complaints and is in the process of investigating the other seven.

The agency doesn’t directly regulate methane as an air pollutant in any case, he says, except as required through specific federal programs, such as the Prevention of Significant Deterioration program. Trump’s rollback does not affect that program.

“We’ve got just a horrible mess out there.”

Still, the administration’s rollback highlights a serious flaw in the way flaring was monitored in the first place: State and federal regulators often rely on drillers themselves to monitor and report on their own flares. Now, under federal law, broke and bankrupt drillers won’t even have to. Worse, without TCEQ flagging a violation, there’s no way to ensure companies spend a portion of their court-appointed budget on fixing problems.

As Reuters reports, “more than 50 oil and gas firms have filed for bankruptcy since oil prices crashed in March.” Smaller drillers were already filing for Chapter 11 even before the crash. Raul Rodriguez, who is superintendent for MDC Texas Energy, told Truthout that a bankruptcy judge establishes the company’s budget every 13 weeks. “Some work has been postponed or pushed back, depending on our budget,” Rodriguez said.

When asked how the company’s budget constraints impact its ability to tamp down methane emissions, Rodriguez simply said, “I can’t talk about that.” Still, he insisted, the company is trying to do everything by the book. “It’s a work in progress. With the coronavirus and the drop in oil prices, it’s a double-edged sword for us.”

The company’s main lender, French bank Natixis, later alleged in bankruptcy court that in the months before the MDC filed for bankruptcy, it shelled out $8.5 million in consulting fees to its chief executive. Other Permian drillers have acted similarly, asking bankruptcy judges to authorize millions in bonuses to executives. Many that have lost billions for shareholders are still rewarding CEOs with lavish pay packages.

“With the coronavirus and the drop in oil prices, it’s a double-edged sword for us.”

With billions in CARES Act tax breaks and loans in hand, large oil and gas companies are gambling on a recovery fueled by automation and increased consolidation as large producers engulf cheap assets. The industry is looking to technological fixes not only to address methane emissions but also to speed extraction, hoping new innovations will make for leaner operations.

In May, the Railroad Commission convened a task force of industry insiders wielding new innovations to provide recommendations for combating flaring. During a meeting on August 4, commissioners approved a number of the task force’s recommended changes to state rule that oversees flaring, including providing incentives for companies to deploy new technologies to reduce the practice.

Environmental groups say the commission must do more than simply rely on companies voluntarily reduce their own flaring, especially now that federal requirements for companies to install equipment and technologies to detect methane leaks has been shredded.

Plugging the Permian

A Democratic sweep in November may be the only way to undo Trump’s methane regulatory rollbacks. If Democrats control the Senate, they could reverse the rule changes in the first 60 legislative days under a Senate procedure known as the Congressional Review Act.

While Biden has refused to endorse a Green New Deal, he has championed several far-reaching Sanders-Biden unity task force recommendations on climate. His $2 trillion climate plan includes putting people to work plugging thousands of abandoned oil and gas wells but does not include a national fracking ban.

“We need strong federal rules to protect the rest of the world from Texas.”

Climate activists, who are working to pressure Biden to more aggressively target the industry are increasingly hopeful given this week’s announcement that Sen. Kamala Harris will be joining the presidential ticket. Harris endorsed both a Green New Deal and a fracking ban, and has said she would seek to end the Senate’s filibuster rules to pass a Green New Deal.

“The next president and states individually will need to double down with drastic measures to protect the public and climate,” Wilson says. “We need strong federal rules to protect the rest of the world from Texas.”

Beyond simply reversing the rollbacks and strengthening regulations, calls are growing to nationalize an industry that has been a debt-ridden financial house of cards for more than a decade, as has happened in the U.S. during other national crises. In fact, despite the technological improvements the sector has heralded over the last decade, few drillers have ever been able to turn a profit — even when prices were above $50 a barrel.

Now, nationalization and a managed decline of extraction along a science-based timeline is not only the best way to keep the shale bubble from bursting any further; it’s the best way to keep the methane bubble from bursting the climate.

“The oil and gas industry is in its death throes and this would be a perfect time for renewables to take over.”

At the state level, the crash provides an opportunity to expand the state’s renewable energy sector — something a majority of Texas Republicans have supported in the past. Their passage of Senate Bill 20 in 2005 vastly transformed the state’s wind energy sector into a force that now provides nearly a fifth of the state’s power.

According to the U.S. Department of Energy, Texas could produce more electricity from wind than any other state in the country. Combined with its growing solar industry, a Green New Deal in Texas could make the state a national leader while providing a just transition to thousands of oil and gas workers facing layoffs now or in the future as the industry automates.

“I think the oil and gas industry is in its death throes and this would be a perfect time for renewables to take over,” Wilson says. “But everything is chaotic, and we need it to be more managed.”

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