BLM Proposal Would Stimulate Pipeline Construction

April 2016, Vol. 243, No. 4

New proposed limits on flaring and venting of natural gas from wells on federal lands could be a boon to the pipeline construction industry. The Bureau of Land Management (BLM) proposed new limits in February to reduce atmospheric emissions of methane.

Kyle Danish, a partner at Van Ness Feldman, explains, “A significant amount of venting and flaring occurs when a resource is developed, but there is no gathering or pipeline infrastructure available for the produced gas. So, greater restrictions on flaring and venting could result in more incentives to get infrastructure in place and get it there faster.” But he notes that many types of infrastructure projects are running into various permitting and local access roadblocks. “Ideally, the federal government would see that streamlining permitting for such projects is another way to prevent flaring and venting of gas.”

But BLM does allude to any permitting reforms in its proposed rule, the Methane and Waste Control Rule. This now takes its place besides a separate Environmental Protection Agency proposed rule issued last fall focusing on reducing oil and gas industry emissions of methane everywhere, not just on federal lands. That proposal is limited as it focuses on “new” sources.

That so-called Subpart OOOOa proposed rule would affect units that are modified, constructed, or reconstructed after the Sept.18, 2015 proposal date. That proposal has produced consternation among pipeline companies because of provisions requiring an extensive leak-detection and repair (LDAR) regime to decrease methane emissions from compressor stations.

The potential brake on the rule’s stimulation of pipeline construction is that technologies for capturing and using gas without a pipeline are increasingly available. They may include: separating out NGLs or liquefying the natural gas (LNG), allowing the resulting liquids to be trucked off location; converting the gas into compressed natural gas (CNG) for use onsite or to be trucked off location; and using the gas to run micro-turbines to generate power for use onsite or for sale back to the grid.

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