Tighter Methane Rules for Oil and Gas

Summary#

This is a proposed set of changes to the Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector) under the Canadian Environmental Protection Act, 1999. The amendments would tighten rules for onshore oil and gas sites, add new inspection and repair requirements, and create a performance‑based compliance option with continuous monitoring to help meet a target of 75% methane reduction by 2030.

What it does#

• Prohibits routine venting of natural gas to the air, with limited exceptions for safety, poor gas quality, or to avoid interrupting public gas supply.
• Requires equipment to be tied to gas‑conservation or gas‑destruction systems (capture, combustors, vapour recovery units).
• Sets efficiency and equipment rules for gas destruction: combustion systems must meet 98% carbon conversion efficiency (smaller catalytic systems allowed at 85% for volumes up to 60 m3 per day).
• Tightens flaring rules: non‑emergency flaring needs an engineering study showing recovery/use is not feasible. Routine flaring is to be eliminated where feasible.
• Strengthens leak detection and repair:
  • A risk‑based inspection schedule: “Type 1” sites inspected quarterly; “Type 2” sites inspected annually.
  • Screening checks monthly when staff visit.
  • Instruments for comprehensive inspections must meet a minimum detection standard (about 500 ppm) and follow U.S. EPA methods.
  • Repairs must meet faster timelines for larger leaks (for example, within 24 hours for very large leaks; shorter timeframes for mid‑sized leaks; smaller leaks may be scheduled later).
• Adds an opt‑in performance pathway where facilities use continuous monitoring sensors. That pathway requires prompt mitigation and further analysis of big events (management trigger at 10 kg/hr).
• Removes specific offshore requirements so offshore work can follow separate rules under another federal initiative.
• Phases the new measures in: many inspection and monitoring rules would begin on or after January 1, 2027, with full sector application by January 1, 2030.
• Administrative and housekeeping changes to the existing regulation text.

Who's affected#

• Operators and owners of onshore upstream oil and gas facilities, including production, midstream and transmission sites. The analysis estimates inspection requirements would apply across roughly 607,700 sites (sector‑wide average used in modelling).
• The oil and gas industry as a whole: about 730 companies were identified as affected, of which about 484 are considered small businesses.
• Provinces that regulate oil and gas (notably Alberta, British Columbia, and Saskatchewan) because federal and provincial rules interact through equivalency agreements; those agreements expire before the new rules fully kick in.
• Communities near oil and gas facilities could notice more equipment being installed and more frequent inspections.
• It is a proposal, not final law, and the notice indicates a public comment window of 60 days.

Why it matters#

• Methane is a powerful short‑lived greenhouse gas. These changes are designed to help Canada meet its specific oil‑and‑gas methane goal of 75% below 2012 levels by 2030, delivering faster near‑term climate benefits.
• Government analysis projects the rule would cut about 217 Mt CO2‑equivalent from 2027 to 2040, conserve roughly 686 PJ of natural gas, and reduce volatile organic compounds by about 1,485 kt — which can improve local air quality and health.
• The federal cost‑benefit estimate finds incremental compliance costs of about $15.4 billion from 2027 to 2040, monetized climate benefits of about $27.8 billion, and an estimated net benefit of $12.4 billion (average cost about $71 per tonne CO2e).
• For people in practice: companies will need to invest in capture, destruction, or monitoring systems and speed up repairs. The government says these costs are unlikely to materially raise consumer fuel prices, but they will shift costs and work within the industry and create new inspection and maintenance activity.
• There is uncertainty. Methane measurement methods and technology costs are changing, and the final rule could differ after the consultation period.