Biden's Methane Crackdown Yields Fruit in Permian Basin

President Joe Biden's crackdown on methane emissions appears to be paying off, with a new study revealing a sharp drop in methane leaks from the sprawling Permian Basin, according to the Financial Times. The Permian Basin, located in Texas and New Mexico, is responsible for almost half of US oil production and has seen methane emissions plummet by 26% in 2023.

This significant reduction, equivalent to approximately 18.5 million tonnes of CO2, is attributed to increased industry efforts to detect and repair leaks in oil and gas infrastructure. The consultancy S&P Global Commodity Insights and Insight M, which conducted aerial detection surveys for the report, attributes the change to "societal impetus" and "regulatory pressures."

"Companies are taking action and it's working," said Raoul LeBlanc, vice-president of upstream at S&P, to the Financial Times. "People have gotten after [methane] because of the societal impetus and because of the regulatory pressures – and they now have the tools and the data."

Methane, a potent greenhouse gas with a much higher warming potential than carbon dioxide over a shorter period, is often released from leaky infrastructure in the oil and gas industry. The Biden administration has prioritized reducing methane emissions, enacting new regulations that require producers to find and fix leaks in existing infrastructure and impose stricter requirements on new facilities. The administration also levied a "methane fee" on polluters exceeding certain emission thresholds.

Despite the progress indicated by the S&P study, there are concerns that the new Republican administration under Donald Trump may roll back these regulations. Environmental groups anticipate the repeal of the methane fee, which has drawn criticism from some in the oil industry and Congress.

However, analysts express optimism that industry incentives beyond US regulations will continue to drive methane reduction efforts. These incentives include new European Union rules on the methane footprint of imported fossil fuels and investor-driven environmental targets.

"I don't think that the industry is going to go backwards from what they've learned and put in place," said Kevin Birn, an analyst at S&P, to the Financial Times. "The pressures are not solely isolated or coming from the US government. The pressures are also international as well. They've made commitments to their shareholders, they've set a plan in place, they've allocated capital."