Identifies Equipment Backlog and Worker Shortages in Meeting Proposed Rule Timeline

WASHINGTON, September 20, 2023 – The American Petroleum Institute (API) today called on the Biden administration to issue a final methane rule that achieves methane emissions reductions without sacrificing American energy production. In a letter to U.S. Environmental Protection Agency (EPA) Administrator Michael Regan, API urged EPA to align its complex methane regulations that apply to U.S. natural gas and oil operations and adopt a timeline for the final methane rule that accounts for the reality of supply chain delays for critical equipment needed in thousands of facilities in producing basins across the country.

“This methane rulemaking marks an important opportunity to build on our industry’s innovation and progress in reducing U.S. emissions,” API President and CEO Mike Sommers said. “We are concerned that a rushed approach to finalization and implementation of this sweeping regulation could stifle innovation, diminish American energy production, and ultimately harm consumers with higher costs and less reliable energy.”

In a new study, companies identified supply chain delays and challenges in procuring the methane reduction equipment needed to comply with EPA’s draft regulation on the timeline EPA proposed. The study conducted by API, the American Exploration and Production Council (AXPC), the Interstate Natural Gas Association of America (INGAA), Independent Petroleum Association of America (IPAA), and GPA Midstream finds that the current backorder times for methane reduction equipment components range from 6 months to more than two years, and implementation of the proposed methane rule is expected to increase current backorder times by an additional 6 months or more. The study identified ongoing COVID-induced supply chain delays, including labor shortages, raw material sourcing, chip/semiconductor shortage, steel tariffs, and components sourced outside the U.S. as reasons for the backorder times. 

Without a compliance timeline that recognizes the supply chain delays for critical equipment, operators could be forced to shut in existing production or delay new production to avoid the risk of noncompliance. This loss of production could diminish domestic energy supply, potentially leading to higher costs for consumers, weakening U.S. energy security and hampering the U.S.’s ability to support the climate and energy goals of allies abroad. 

API provided detailed analysis and comment on EPA’s proposed timeline and rulemaking “Standards of Performance for New, Reconstructed, and Modified Sources and Emissions Guidelines for Existing Sources: Oil and Natural Gas Sector Climate Review” in February. 

“The natural gas and oil industry has been and continues to be a willing partner in crafting a durable final methane rule that is cost-effective and technically feasible,” Sommers added.  “I urge EPA to adopt a final rule with a reasonable compliance timeline that avoids negative unintended consequences for American consumers.”

Today’s letter and supply chain study follows the release of The Environmental Partnership’s fifth annual report, which highlights key actions the U.S. natural gas and oil industry is taking to reduce methane emissions, improve detection methods and share best practices across the industry. The Partnership’s participating companies, which represent nearly 70% of U.S. onshore oil and gas operations, reduced flare volumes by 14%, even as oil and natural gas production increased by 5.6% and 4% respectively over the past year. Industry initiatives like The Environmental Partnership have contributed to average methane emissions intensity declining by nearly 66% across all seven major producing regions from 2011 to 2021.