Association for Public Policy Analysis & Management

Methane (CH₄), the prime constituent of natural gas and 10% of the total greenhouse gas (GHG) emissions in the U.S., could be problematic as the U.S. has enjoyed dramatic growth in natural gas development. CH₄ has been responsible for 20% of global warming since pre-industrial times (Kirschke et al. 2013) and is more potent at trapping energy than carbon dioxide (CO₂), which contributes to more than 80% of U.S.’s GHG emissions (Yvon-Durocher et al. 2014). CH₄ emissions from petroleum and natural gas systems, which accounted for 31% of the U.S.’s CH₄ emissions over the last fifteen years, are primarily associated with onshore and offshore crude oil and natural gas production, processing, and transportation.

The collective state experience of Oklahoma, which has been a market leader on the policy, law, and economics of developing the fossil fuel industry (David et al. 2008), with regard to methane emissions management could be instructive. CH₄ emissions in Oklahoma increased by 12% from 2011 to 2015 (EPA 2017), meanwhile, Oklahoma has the third largest proved natural gas reserves in the country and the fourth largest proved shale gas reserves (EIA 2016). Furthermore, the recent rise in earthquakes in Oklahoma triggered by the disposal of wastewater from oil and natural gas production (Oklahoma Geological Survey 2017), has reignited concerns about CH₄ emissions. The Oklahoma Corporation Commission (OCC), Oklahoma’s oil and gas regulator, for the first time added state-wide limits on fracking in December 2016 to reduce earthquake activity (OCC, 2016). Petroleum and natural gas systems were the second largest anthropogenic source category of CH₄ emissions in Oklahoma in 2015, with 0.66 Million Metric Tons (MMT) CO₂ Eq., an increase of 63% since 2011 (EPA 2017). The cause of rising CH₄ emissions is the steady increase in Oklahoma’s shale production, from 476 Billion Cubic Feet (bcf) in 2011 to 993 bcf in 2015 (EIA 2016).

This case study’s primary goal is to analyze how state governments, such as the OCC and the Oklahoma Department of Environmental Quality, formulate and implement CH₄ emissions policies. Key questions are how governments have attempted to control CH₄ over the last ten years, including their release of public data, and what are the differences compared to the national best practice model of Colorado, which became the first state in 2014 to require companies to find and fix CH₄ leaks from oil and gas drilling. Colorado’s rule has reduced the amount of CH₄, improved air quality, and enhanced profitability and worker safety, by providing incentives for oil and gas companies to capture gas that would otherwise be lost during production (Becker 2016). I also plan to examine local and state media, as well as legislative data, to analyze tax implications in Oklahoma concerning CH₄ emissions, such as relationships between the Oklahoma’s driller-friendly tax rates (the lowest in the country), Oklahoma’s current budget shortfall, and its Revenue Stabilization Fund. Lastly, I plan to propose viable strategies to improve the effectiveness of methane emissions management in Oklahoma.