Regulations for the reduction of methane releases in the upstream oil and gas sector: frequently asked questions

Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector)

1. What is the purpose of these regulations?
2. What are the key elements of these regulations?
3. How do these regulations affect Canadian businesses?
4. What is the timeline for implementation?
5. Where can I get more information?

1. What is the purpose of these regulations?

The primary purpose of the Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector) [the regulations] is to reduce releases of both methane and volatile organic compounds (VOC) to the atmosphere. Reducing methane, a potent greenhouse gas, from the oil and gas sector will limit climate change impacts. Reducing VOCs will improve air quality and lead to environ­mental and human health benefits.

The regulations fulfill Canada’s commitment to regulate the oil and gas sector to reduce emissions of methane by 40% to 45% below 2012 levels by 2025. The regulations are an important element of the Pan Canadian Framework on Clean Growth and Climate Change and will also contribute to Canada’s GHG emissions reduction target under the Paris Agreement.

2. What are the key elements of these regulations?

These regulations offer the oil and gas sector a dynamic approach to reduce their emissions. It allows industry to evaluate the potential emissions in order to focus attention where it is most needed. The regulations permit industry to introduce and remove emission controls over time as gas production changes.

These regulations provide a flexible approach that allows industry to differentiate action based on their facility design and production profile. Multiple compliance pathways are available, allowing industry to plan and implement strategic company-wide solutions, introducing new technology, updating existing equipment, or adapting operating practices, where and when it makes sense.

These regulations are designed with innovation in mind, focused on emissions outcomes, allowing technology development and operational insight to provide solutions.

For facilities with less natural gas production or processing, the regulations require fewer actions. When there is a higher potential to emit, the regulations will introduce operating and maintenance standards to have industry regularly inspect their equipment ensuring no unintentional emissions. These preventative measures focus on two specific actions:

• a general inspection program that requires industry to scan their systems three times each year for leaks or operating problems
• a compressor maintenance check-up once each year to determine whether  there is significant deterioration of the emission control system

Further, these regulations will introduce limits to deliberate venting:

• a general, facility-level restriction of on-going venting, to be controlled through increased efforts to collect and sell the methane as an energy source, to use it on-site, or to convert the methane to carbon dioxide to lower its contribution to climate change
• a specific, equipment-level restriction on the use of higher emitting pneumatic devices, to be controlled as above by managing the vent gas, or by changing the equipment to lower or non-emitting systems
• an obligation to eliminate temporary venting during well completions after hydraulic fracturing operations, when possible, by proactively connecting to sales gas systems before initiating the completion, or by converting the methane to carbon dioxide to lower its contribution to climate change

The regulations efficiently rely on provincial reporting systems for oil and gas facility information. There is a requirement for facilities to retain information for record-keeping purposes, but there are no required recurring reporting requirements.

3. How do these regulations affect Canadian businesses?

Between 2018 and 2035, the oil and gas sector will be impacted by the costs required to comply with these regulations. The total cost of the regulations is estimated to be $3.9 billion, which will be offset in part by the recovery of 351 petajoules (PJ) of natural gas, with a market value of $1.0 billion, resulting in expected net benefits of $8.9 billion. The regulations have been designed to impact specific sites where there is significant natural gas present. The regulations have several design elements which allow for flexibilities, these flexibilities were incorporated to minimize cost to Canadian businesses as well as to ensure efficient results. These flexibilities are expected to reduce the cost of the regulations for small businesses by $112,000 per small business, over the next 18 years. The regulations will result in cumulative costs of approximately $30 million for small businesses, or $53,000 per small business. Smaller facilities with low gas production are exempt from certain regulatory requirements.

The regulations will also create business opportunities for consulting firms to determine emission reduction strategies as well as provide contractors with greater opportunities to supply equipment and services to control methane emissions.

4. What is the timeline for implementation?

The regulations include specific requirements to address fugitive equipment leaks, and venting from well completions, and compressors which will take effect in 2020, and facility production venting restrictions and venting limits for pneumatic equipment will take effect in 2023.

5. Where can I get more information?

More information on the regulations can be found on the Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector) web page.

Inquiries on the regulations can be made by emailing methane-methane@ec.gc.ca.

For more information

• Federal regulatory management
• The Cabinet Directive on Regulatory Management
• The Canada-United States Regulatory Cooperation Council

To learn about upcoming or ongoing consultations on proposed federal regulations, visit the Canada Gazette and consulting with Canadians websites.