A group of 50 investors representing nearly $4 trillion AUM have signed a statement expressing support for Pennsylvania’s proposed regulations to lower methane emissions from oil and gas production, while urging regulators to go even further.
Pennsylvania is one of the U.S.’ major energy production regions, responsible for nearly 7 trillion cubic feet of natural gas in 2019, second only to Texas. Methane released from gas production, however, can be a major contributor to GHG emissions, with methane an even more potent GHG than carbon dioxide.
The Pennsylvania Department of Environmental Protection has proposed new regulations aimed at reducing methane emissions from existing oil and gas infrastructure. The regulations will establish more stringent requirements for storage vessels, natural gas driven pneumatic controllers, natural gas-driven diaphragm pumps, reciprocating and centrifugal compressors, and fugitive emissions components.
The investor group statement welcomes the new regulations, while making suggestions for further environmental improvements to the proposed rules, noting that approximately a quarter of man-made methane emissions—which have more than 80 times the global warming potential than carbon dioxide—come from the oil and gas sector, driving a need to comprehensively address the sector’s emissions.
The signatories state that they while they recognize the financial risks posed by climate change, the transition to low-carbon energy brings opportunities as well, and that strong environmental standards can enable the state’s energy sector to benefit. According to the letter:
“As Pennsylvania’s oil and gas industry experiences strong production and looks to increase export levels, strong methane standards support global competitiveness in a world with increasingly stringent climate policies and corporate supply chain emissions-reduction goals.”
The letter notes that investor engagement has had a positive effect in moving companies to improve their environmental performance, there are still a number of underperformers, and these may threaten the broader industry:
“Without a level playing field, the poorest performers will shape the public narrative on natural gas, overshadowing proactive measures of industry leaders and risking the industry’s social license to operate. As the second largest producer of natural gas in the country, Pennsylvania plays a key role in setting leading standards for other states to follow.”
Finally, the signatories put forward two improvements to the proposed methane rules:
- Extending the regulations to include low-producing wells. More than half of Pennsylvania’s oil and gas-related methane emissions come from low-producing wells. Yet, DEP’s own analysis shows that only a few hundred of the 71,000 low-producing wells in the state would be required to conduct regular inspections under the draft regulations.
- Maintaining a frequency of quarterly leak detection and repair (LDAR) inspections. Research has shown that increasing the frequency of inspections can greatly reduce emissions at reasonable cost by limiting the number of unaddressed leaks between surveys.
Click here to see the full text of the letter and the full list of signatories.