Newspaper article THE JOURNAL RECORD

New EPA Methane Rules Could Mean Higher Costs for Energy Companies

Newspaper article THE JOURNAL RECORD

New EPA Methane Rules Could Mean Higher Costs for Energy Companies

Article excerpt

For many in the oil and gas business, additional rules mean additional cost.

Exploration and production companies will have to install equipment to control methane gases on new wells to comply with a tighter air quality standard, the Environmental Protection Agency announced in April. The cost of the additional equipment is relative, said William Robinson, founder and chief operating officer of CAVU Resources, a small Tulsa-based independent oil driller.

"For the deeper wells, the methane recovery is not so much a bigger cost," he said in a telephone interview from a well site in rural Pauls Valley. "But shallow wells are lower-cost wells, so it is proportionately higher. (The EPA rule) makes it more expensive and cuts profitability down."

The costs aren't enough to put CAVU out of business; his company subcontracts with a company that installs equipment to minimize methane emissions. But the costs will be passed on to the consumers eventually, Robinson said.

"We want to protect the environment, but there is a cost related to that."

As long as people are willing to pay that cost for a cleaner environment, it makes sense to operate in a way that protects natural resources, he said.

CAVU has about 50 wells that are actively producing and about 50 more that need to be reworked, Robinson said. Because the company anticipated the new rules, it prepared to have the methane capture equipment installed for its next three wells it is drilling. This equipment will help keep methane pollution out of the air, but it also helps prevent the risk of explosion, from buildup of this flammable gas.

"There is no reason why you can't drill for oil and gas and not be a good neighbor in the environment," he said.

The new regulations will give the EPA an opportunity to increase revenue from fines, if people are out of compliance, Robinson said. Subcontractors that operate wells will also have a new business opportunity, not only to install equipment, but also to train staff on the record keeping necessary. But, he said, the rules seem like a common-sense move, because many in the industry were already using this equipment. …

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