U.S. Methane Tax Announcement

The U.S. Environmental Protection Agency (EPA) created a new methane tax rule to combat methane emissions in the oil and gas sector. The rule will assess a charge on certain large emitters of waste methane that exceed emissions levels set by congress.

How much is the tax?

The tax starts in 2024 at $900 per ton of methane and increases to $1,500 per ton by 2026.

  • $900 / metric ton of methane in 2024
  • $1,200 / metric ton of methane in 2025
  • $1,500 / metric ton of methane in 2026+
Which facilities are covered?

Applicable ‘facilities’ are those that report more than 25,000 metric tons of CO2e of greenhouse gases per year.

The significance of this comes in how EPA subpart W defines the word ‘facilities’. The definition notes that all onshore petroleum and natural gas production equipment associated with all wells that an entity owns or operates in a basin are considered one facility.

By this definition, most oil and gas producers will be impacted by the methane tax.

If you are a US oil and gas producer, check here to see if your operations exceeded the 25,000 tCO2e threshold in 2020 based on a report we ran using EPA’s GHG Flight tool.

What are the thresholds?

Reported methane emissions from each ‘Facility’ above the following thresholds will be taxed:

    1. For offshore or onshore upstream production, either

        • 0.2% of natural gas sold from the facility or

        • 10 metric tons of methane per million barrels of oil if no natural gas was sold.

      2. For natural gas compression, transmission, and storage, 0.11% of natural gas sold from the facility

      3. For natural gas gathering and processing and LNG facilities, 0.05% of natural gas sold from the facility

      How are the emissions measured?

      Methane emission values will be those reported through the EPA’s greenhouse gas reporting program (GHGRP). This data is currently reported using inventories and emissions factors rather than empirical measurements. The data is available to the public and can be accessed through the EPA’s GHG Flight Tool.

      What can be done to reduce methane emissions?

      Convrg is your partner in navigating these changes the North American leader in eliminating methane emissions from pneumatic devices. Our EPOD reduces emissions from the pneumatic system by around 99.5%. A typical EPOD installation eliminates around 40 tons of methane emissions per year. At $1500 per ton, a single EPOD has the potential to reduce your tax burden by around $60,000 per year.

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