OREANDA-NEWS. President Barack Obama's administration today released first-time regulations requiring US oil and gas companies to limit methane emissions from new and modified equipment.

The regulations from the US Environmental Protection Agency (EPA) represent the first step in the administration's goal to cut oil and gas sector methane emissions by 40-45pc by 2025. EPA has said new rules are needed to reverse a recent trend of rising methane emissions from the oil and gas sector.

Efforts to combat climate change have focused on reducing CO2 emissions, but methane is a more powerful if less prevalent greenhouse gas. Methane's warming effect is 84 times that of carbon dioxide over a 20-year period, according to EPA.

The Obama administration today also launched its efforts to develop more complex rules limiting methane from existing oil and gas sources, which account for about 33pc of US emissions of the potent greenhouse gas. EPA will require oil and gas companies to provide information on their operations, which the agency will use to write regulations.

But EPA said it does not plan to conclude that information collection request until "the first part of 2017," making it unlikely the Obama administration will have time to propose methane regulations for existing oil and gas sources before the end of its term in January 2017.

Oil and gas companies have fought to block federal methane restrictions over concerns they will add unnecessary costs and regulatory burdens. Industry trade group the American Petroleum Institute (API) said the final rule could threaten production from shale, which from 2010 to 2015 contributed to a more than 70pc increase in US crude production.

"It does not make sense that the administration would add unreasonable and overly burdensome regulations when the industry is already leading the way in reducing emissions," API regulatory and economic policy vice president Kyle Isakower said today.

EPA in the rule finalized today has required oil and gas companies to limit methane from new and modified compressors, pneumatic controllers and other equipment used in upstream and midstream operations. Oil and gas companies will also have to regularly inspect for and repair leaks from new and modified equipment, and to capture natural gas from hydraulically fractured oil and gas wells.

EPA in the final rule removed an exemption it had proposed to provide for marginal oil and gas wells, and also required oil and gas companies to double the frequency of leak detection inspections at compressor stations. But the agency added a provision that will let companies potentially align the regulations with comparable states-specific requirements.

EPA expects the final standards will cut methane emissions by 510,000 tons/yr (462,000 metric tonnes/yr) by 2025. The agency found the $690mn/yr in estimated climate benefits provided by that year will outweigh regulatory costs of $530mn/yr. EPA did not quantify the air quality benefits the rule will provide by cutting emissions of volatile organic compounds and air toxics.