Stronger Methane Rules for Oil and Gas

Summary#

The federal government published proposed Regulations Amending the Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector) on December 16, 2023. The changes would tighten rules on methane and related pollutants from onshore oil and gas sites, with new inspection, repair, venting and monitoring requirements phased in starting 2027 and fully applying by 2030. The document is a proposal, not a final law, and invited comments for 60 days after publication.

What it does#

• Sets a clear target and purpose: aims to help achieve at least a 75% reduction in oil and gas methane emissions by 2030 (compared with 2012 levels).
• Bans routine venting of natural gas to the atmosphere, while keeping limited exceptions for safety, very poor gas quality, or to avoid interrupting gas supply.
• Requires equipment that would otherwise release gas to be tied to systems that either conserve the gas or destroy it (for example, combustion devices with a minimum carbon conversion efficiency of 98%; catalytic oxidizers allowed at 85% for very small flows up to 60 m3/day).
• Tightens flaring rules: routine flaring must be avoided where feasible and, except in emergencies, be justified by an engineering study.
• Strengthens leak detection and repair:
  • Introduces a risk-based inspection schedule: “Type 1” facilities inspected quarterly; “Type 2” facilities inspected annually.
  • Comprehensive inspections must use instruments with a minimum detection capability of 500 ppm.
  • Repair timelines depend on leak size (for example, high-rate leaks must be fixed within 24 hours or 7 days; very small leaks under 1 kg/hr can be scheduled over months under conditions).
• Adds an optional performance-based compliance path that lets sites use continuous monitoring systems:
  • Sensors must detect emissions with a 90% probability at rates of 1 kg/hr or more.
  • For Type 1 sites sensors must read at least every 15 minutes; for Type 2 at least every 12 hours.
  • A management trigger at 10 kg/hr requires event analysis.
• Removes the specific application of these federal rules to offshore facilities (so offshore will be covered under separate proposed rules).
• Phasing: many inspection and monitoring rules come into force on January 1, 2027, with full sector coverage by January 1, 2030.

Who's affected#

• Operators of onshore oil and gas facilities across Canada, including upstream production sites, midstream facilities and transmission stations.
• Facility types specifically named include compressors, storage tanks, flares, separators, glycol dehydrators, pneumatic devices and wells with venting issues.
• The proposal estimates it would affect roughly 730 companies, of which 484 are small businesses.
• Provinces that previously had equivalency with federal rules—Alberta, British Columbia, and Saskatchewan—are relevant because their agreements expire before 2027, meaning federal measures could apply unless new equivalency arrangements are made.
• Consumers and households are not expected to see large direct price impacts, according to the analysis. The rules mostly affect industry operators.

Why it matters#

• Methane is a potent, short-lived greenhouse gas. Cutting methane yields relatively quick climate benefits. The proposal is designed to help Canada meet international and domestic climate commitments by targeting the sector that produced about 28% of Canada’s greenhouse gases in 2021.
• The government’s assessment estimates industry incremental costs of about $15.4 billion from 2027 to 2040, and estimated greenhouse gas reductions of about 217 Mt CO2e over that period. The avoided social cost of those emissions is estimated at $27.8 billion, producing a net benefit of about $12.4 billion in the regulatory analysis.
• The rules would also reduce volatile organic compounds (VOCs) and some toxic air pollutants (like benzene), which can improve local air quality and public health.
• The proposal includes a performance-based option and phased timelines. That gives companies some flexibility and time to adopt newer monitoring technologies while aiming for large emission cuts by 2030.
• This is a proposed regulation under public consultation. It could change before becoming final.