In mid-August, the Environmental Protection Agency released new proposed measures aimed at severely curtailing the emissions of methane nationwide. To be sure, the ultimate goal in reducing methane emissions is to decrease environmental damage that leads to climate change, as well as to “reduce air pollution that harms public health.”
Of course, because methane is a key component in natural gas, many industry players saw this move as an affront to their livelihoods. In reality, however, these proposed measures may actually prove to be beneficial not only for natural gas producers, but for mineral rights holders as well.
The Benefits for Natural Gas Producers
How, exactly, will natural gas producers benefit from these federal limits on methane emissions? Here, it is important to note that the EPA is only requesting a decrease in methane emissions, and not natural gas production overall; these are not entirely synonymous. To be sure, it is estimated that U.S. natural gas facilities leak 100 billion cubic feet of natural gas per year; and that number is on top of the significant amount of gas that escapes each year due to leaks and flaring, which is believed to be worth nearly $2 billion.
To answer the aforementioned question, the guidelines will not force companies to stop producing natural gas, but instead will require them to produce natural gas more efficiently. And the added cost of compliance will likely only be minimal; in fact, officials in Colorado, a state already in compliance, asserted the price tag amounted to no more than 0.4 percent of annual revenues.
The Benefits for Mineral Rights holders
The benefits for natural gas producers are visible then: as natural gas becomes a safer and more efficient fuel source than coal, it will become a more popular alternative nationwide as the country attempts to fight environmental damage.
And, as such, mineral rights holders should benefit as well; more natural gas producers searching for resources leads to a higher demand, which ultimately translates into a thicker paycheck for those who own the mineral rights.
As of now, with the proposed guidelines only a month old, it is not quite certain how the natural gas industry will ultimately respond. But, if all players get on board with these proposed changes, mineral rights holders may be able to expect a financial windfall in the not-so-distant future.