The EU’s Methane Regulations Will Impact U.S. Oil And Gas Producers

The European Union’s methane regulations will soon come into full force, prompting oil, gas, and coal companies to monitor, measure and report their emissions. The same restrictions will also apply to energy imports. That impacts the United States, the EU’s largest liquefied natural gas supplier.

EU Regulators could restrict access to European markets if a country fails to comply. This is significant as the continent weans itself off Russian oil and gas and opens to global imports. However, those producers rising to the challenge could gain competitive advantages. By contributing to cleaner air, they might attract more investment, leading to progress in leak detection and methane capture technologies.

“Methane is the second highest contributor to global warming and air pollution after CO2, accounting for around a third of greenhouse gas emissions, harming both our environment and our health,” said European Commission for Energy Kadri Simson in a release. “With the final EU adoption of the methane regulation, we now have means to get clearer insight into the main sources of methane emissions in the energy sector. This will increase transparency and provide the tools necessary to reduce these potent emissions, both in the EU and globally.”

The new rules require EU gas, oil, and coal operators to:

• Stop Routine Flaring and Limit Venting: Allowed only in emergencies, technical malfunctions, or for safety reasons.
• Implement Advanced Monitoring: Use satellites and technologies to detect and report methane leaks.
• Adopt Best Practices: Although the EU must still determine “maximum methane intensity values.”

While the standard does not set an exact number by which producers must cut their emissions, earlier versions of the rule aimed to reduce methane levels by 35% by 2030 compared with 2005. This goal aligns with the EU’s broader climate neutrality target by 2050.

According to BP, oil and gas contribute a fifth of all global methane emissions tied to human activity. Methane levels have been rising 0.8% since 2022. The challenge: Natural gas, which results in about half the emissions as coal, is now the most widely used fuel to generate electricity in the United States.

“According to the Global Flaring and Methane Reduction Partnership, if we can deploy the full potential of methane reduction, the world could avoid roughly 0.1° Celsius of warming by mid-century. To put that in context, it’s roughly equivalent to switching off the emissions of every car and truck in the world,” said BP’s Fuzzy Bitar in a speech.

Millions In Investments

Major oil and gas producers are already investing in mitigation efforts to curtail their methane releases. Moreover, companies like Shell, Equinor, BP, Total, Statoil, and EQT are thinking long-term: without methane controls, the world can’t limit temperature increases, which then dampens the prospects for natural gas usage; methane is a byproduct of the fuel that has economic value if recaptured.

For example, BP has measured and reported methane levels for roughly four years. The goal is to cut methane intensity by 50% in the coming years. It will achieve this by implementing new technologies and positioning more people in the field. “We’re doing everything from deploying drone-mounted measurements to advanced predictive algorithms to deploying exciting new flow measurement technologies,” said Bitar.

The EU and U.S. launched the Global Methane Pledge at the COP26 UN Climate Conference in Glasgow in 2021. The International Energy Agency estimates that the industry can reduce worldwide emissions by 75%.

How much methane escapes during operations? About 75 million metric tons. Some gas is also flared because it can’t reach production facilities. However, capturing and reselling methane can offset the cost of new technologies.

San Francisco-based Paxon Energy recaptures about 20 million standard cubic feet of methane annually during pipeline maintenance, which utilities can then sell. “We recover 95% to 99% of the natural gas that would otherwise get burned off or released into the atmosphere,” says CEO Nooshin Behroyan.

The United States aims to reduce its methane emissions by 30% by 2030, giving it a head start on the new EU regulations. Nevertheless, the standards will push oil and gas producers worldwide. Smaller producers with less capital may need help, but those companies that do comply will capture market share and increase their access to capital, driving sustainability and innovation in the industry.