Providing coverage of Alaska and northern Canada's oil and gas industry
March 2016

Vol. 21, No. 12 Week of March 20, 2016

US, Canada tackle climate

Agree to apply science-based standards to Arctic exploration, ‘robust’ well control


For Petroleum News

Greater protection of Arctic regions against oil and gas exploration and drastic reduction of methane emissions from petroleum industry operations figure large in an agreement by the United States and Canada.

Getting ahead of formal discussions at the White House between President Barack Obama and Prime Minister Justin Trudeau, the two countries launched joint efforts to tackle climate change in the Arctic and wage a bilateral campaign to slash methane emissions by 40 percent-45 percent below 2012 levels over the next decade.

A joint March 10 statement said oil and gas exploration in the Arctic must align with science-based standards and include “robust and effective” well control and emergency response measures.

Later, the two leaders pledged themselves to ratify the climate change deal reached at the Paris summit in December “as soon as possible,” noting they consider the Paris accord to be a “turning point” in global efforts to combat climate change.

EPA, Environment Canada

Under the agreement, the U.S. Environmental Protection Agency and Environment Canada will immediately develop regulations governing methane emissions from existing oil and gas sources, with the EPA requiring companies operating in the U.S. to provide information about their emissions.

Canada said it “intends to publish an initial phase of proposed regulations by early 2017,” working in collaboration with its provinces, territories and indigenous peoples.

The joint plan also involves cooperating on clean energy through collaboration on expanding, wind, solar and other renewable energy sources and on research.

It said the new partnership will “embrace the opportunities and to confront the challenges in the changing Arctic.”

That includes protecting at least 17 percent of land area and 10 percent of marine areas by 2020 and ideally going beyond those goals by engaging with other Arctic nations to develop a pan-Arctic marine protection area network.

The plan also aims to build a sustainable Arctic economy by allowing commercial activities only when the highest safety and environmental standards are met. Shipping routes will be developed to have as little impact as possible on the environment.

Mounting pressure in Canada

Oil and gas producers in Canada have been under mounting pressure to capture the methane that is released from wells and field equipment.

The Alberta government has set a goal of eliminating 45 percent of emissions from 2012 levels by 2025 and British Columbia Premier Christy Clark said her province will match the Alberta effort.

The Canadian Association of Petroleum Producers has urged the Canadian government to regulate new facilities to ensure standardization of emission levels across provinces, but insists provinces are better positioned to deal with existing sources, through a voluntary program, or, failing that, with regulation.

It is not clear whether the two governments will also act on a World Bank call to end the practice of flaring methane from oil wells that are not connected to gas-gathering systems.

The full extent of methane emissions from drilling, extraction and processing of unconventional shale oil and gas deposits is not known, but some scientists are arguing that, unless measures are taken, the use of natural gas to generate power is no better than coal from a climate standpoint.

Election issue

The two Democratic presidential hopefuls - former Secretary of State Hillary Clinton and U.S. Sen. Bernie Sanders - said at one debate in March that they oppose hydraulic fracturing to extract resources from shale rock, putting a question mark over the future of the unconventional industry.

But the American Petroleum Institute was quick to lash out at the proposed new regulations on methane, arguing that emissions are already being curbed and that the shale energy revolution has lowered energy costs for American consumers by $700 a year the pump and $1,200 in home utility bills.

API Vice President of Regulatory and Economic Policy Kyle Isakower said the Obama administration is catering to “environmental extremists at the expense of American consumers.”

He said the U.S.is leading the world in cutting carbon dioxide emissions to 20-year lows even as oil and gas production has climbed dramatically.

“The last thing we need is more duplicative and costly regulations that could increase the cost of energy for Americans and that could potentially drive up greenhouse gas emissions,” Isakower said.

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