U.S. to tackle oil and gas methane waste on public lands: sources

WASHINGTON (Reuters) - The Obama administration is expected to propose new rules as soon as Friday to curb methane leaks from oil and natural gas production, its latest attempt to reduce greenhouse gas emissions from energy production under its control, sources familiar with the plan said.

The Interior Department’s Bureau of Land Management (BLM) wants to limit venting and flaring natural gas at wells on public land, practices that let methane into the atmosphere.

Methane is the second most prevalent greenhouse gas after carbon dioxide. Though it only lasts in the atmosphere for 20 years, methane is 84 times more potent than carbon dioxide at trapping heat, and environmental groups have pressed the administration for tighter restrictions leaks.

A major methane leak from a natural gas storage site near Los Angeles that forced thousands of people to evacuate their homes for months is causing the public to demand stronger oversight, environmental groups said.

The Interior department is expected to present the new rules as a way to ensure that taxpayers receive full value in royalties from fossil fuel production on public lands, citing the lost revenues from methane that could be captured and sold commercially.

Under current rules, oil and gas companies are exempt from paying royalties on gas that is vented into the atmosphere or flared at the wellhead. The BLM proposal is expected to target existing oil and gas facilities, which account for the majority of methane emissions.

An Interior Department spokeswoman declined to comment.

“A strong BLM rule would ensure that industry has an incentive to capture and sell a valuable resource, ensuring taxpayers get the royalties that they deserve in return,” said Chris Saeger, director of the Western Values Project, a grassroots group based in the Rocky Mountain region that advocates responsible, and profitable, energy development on federal land.

The BLM oversees 250 million acres of public land and manages royalties from oil, gas and coal leases. In 2014, there were over 23,000 producing oil and gas leases on federal lands, which accounted for 14 percent of total U.S. natural gas production.

Last week, the BLM announced it will freeze new leases for coal production while the Interior Department undertakes the first major review of the country’s coal program in three decades to ensure a “fair return to American taxpayers and takes into account its impacts on climate change.”

The proposed new rule on methane leaks forms part of the broader Obama administration strategy announced last January to reduce oil and gas sector methane emissions by up to 45 percent from 2012 levels by 2025.

The strategy includes an Environmental Protection Agency proposal announced in August targeting methane emissions from new or modified oil and gas processing and transmission facilities and wells.

A major snow storm predicted for Washington may cause the government to shut down on Friday, which could delay the release of the rule.

Reporting by Valerie Volcovici; Editing by Lisa Shumaker