The Oil and Gas industry has seen several regulatory updates in 2024 and 2025 that are reshaping operations and creating both challenges and opportunities. Understanding these changes is key for investors looking to make smart decisions and stay ahead in this evolving sector. Regulatory changes are often influenced by US energy demand, as evolving policies aim to balance domestic energy needs with industry growth.

New Methane Emission Standards from the Environmental Protection Agency

In March 2024, the U.S. Environmental Protection Agency (EPA) introduced comprehensive regulations to reduce methane emissions from oil and gas operations. The EPA proposed these regulations as part of a broader regulatory initiative to strengthen air quality standards and address emissions from the sector. These rules apply to both new and existing facilities, mandating the use of advanced technologies for more frequent detection and repair of leaks.

Operators must also adhere to stricter reporting requirements, which means added costs for monitoring and compliance. The EPA’s proposed rule was issued under the authority of the Clean Air Act, and the agency also issued an interim final rule to extend compliance deadlines for certain facilities. The Biden administration’s EPA extended compliance deadlines for oil and gas regulations to provide more realistic timelines for industry operators across the country. While these changes mean higher short-term expenses for companies, they also open the door to improved environmental performance and reduced risks of penalties in the future. Companies that proactively adapt could gain a competitive edge.

These regulatory changes have significant implications for the natural gas industry, particularly in terms of compliance and operational adjustments.

California’s Senate Bill 1137

On a state level, California has taken significant steps to regulate oil and gas operations near residential and sensitive areas with Senate Bill 1137)). This law requires companies to phase out wells near schools, homes, and other sensitive locations. The legislation also impacts land management practices and the rights of mineral owners in affected areas, as it may restrict access to resources and change how mineral rights are exercised. Operators in California now face higher compliance costs or may need to relocate operations entirely.

For companies with assets in California, this legislation could lower production in affected areas. Additionally, it may influence oil and gas leasing and gas leasing activities by imposing new restrictions on lease issuance and development, potentially affecting future exploration and production opportunities. On the other hand, companies already complying or operating outside of these zones may benefit from a more level playing field. Investors should carefully assess how companies in their portfolio are responding to this law and its potential impact on their bottom line.

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Federal Initiatives Supporting Energy Development

In July 2024, Senators John Barrasso and Joe Manchin introduced the Energy Permitting Reform Act to streamline the approval process for energy projects, including oil and gas developments. The federal government plays a central role in regulating oil and gas leasing and gas leasing on federal lands, overseeing the permitting and management of these resources. The legislation includes specific provisions to reduce bureaucratic delays and make the permitting process more efficient. One of its key measures is setting a 150-day deadline for judicial reviews of energy projects, which would prevent lengthy legal challenges from stalling development. It also prioritizes streamlining approvals for projects on federal lands, which could lead to faster deployment of drilling and production activities. By simplifying these processes, the legislation aims to encourage investment in energy infrastructure, boost domestic oil and gas output, and strengthen the overall energy supply chain. These changes could help companies bring projects online more quickly, translating into faster returns for investors.

While the act has drawn support for promoting domestic energy development, it has also raised concerns about environmental impacts. Investors should pay attention to how this legislation evolves, as it could influence project timelines and create opportunities for companies to move quickly. The economic impact of regulatory changes can extend to consumer prices, as increased operational costs may be passed on to consumers. The act could also impact the approval process for crude oil and liquified natural gas projects, with free trade agreements potentially facilitating energy exports and shaping international trade policies.

Regional Changes Impacting Operations

Other states have implemented policies to address environmental concerns and resource management. For example, New Mexico upheld its rule targeting ozone pollution, which indirectly affects oil and gas operations in the state. This rule requires operators to capture more emissions, which may lead to higher operating costs. Notably, the rule specifically targets emissions from natural gas production and natural gas wells, including both associated gas and non-associated gas sources, to ensure comprehensive regulation of all natural gas sources. However, it also aligns with broader goals to minimize the environmental footprint of energy production.

In Texas, the Railroad Commission continues to focus on balancing regulatory oversight with encouraging a favorable business environment for the oil and gas industry. In July 2024, the RRC launched the State Tracking and Reporting (LoneSTAR) system, a significant technological advancement designed to streamline the filing process for operators. This system allows for online submissions of essential forms, reducing administrative burdens and enhancing efficiency for both operators and the Commission. Storage facilities play a crucial role in managing natural gas output, and their operation is subject to regulatory oversight by agencies such as the Hazardous Materials Safety Administration to ensure safety and compliance.

Texas continues to be a hub for innovation in the oil and gas sector. Companies are turning to advanced technologies, like artificial intelligence (AI), to improve operational efficiency and maintain regulatory compliance. In the Permian Basin, AI is being used to increase oil production while lowering costs and manpower needs, improving both operational efficiency and safety.

By integrating these advanced technologies, operators can optimize production processes, minimize environmental impact, and adhere to regulatory requirements more effectively. This approach not only aligns with the RRC’s commitment to safety and environmental protection but also positions Texas as a leader in the energy sector.

Environmental Protection and Control Devices

As environmental concerns take center stage, the oil and gas industry is under increasing pressure to reduce methane emissions and other greenhouse gas emissions from natural gas facilities and oil and gas production operations. Regulatory agencies like the Environmental Protection Agency (EPA) and the Federal Energy Regulatory Commission (FERC) have introduced a series of rules and guidelines aimed at minimizing the environmental impact of energy production, particularly in the natural gas sector. The Biden administration reinstated and expanded methane standards for new and existing oil and natural gas sources that were revoked during the Trump administration, signaling a renewed focus on stringent environmental regulations.

A cornerstone of these efforts is the deployment of advanced control devices and monitoring technologies. Optical gas imaging (OGI) has become a standard tool for detecting fugitive emissions from natural gas equipment, pipelines, and storage vessels. This technology enables operators to quickly identify and repair leaks, significantly reducing methane emissions and improving compliance with federal regulations. Additionally, the use of drones is being adopted in offshore oil and gas inspections to reduce risks and improve compliance with safety regulations.

The EPA’s final rule on methane emissions requires both new and existing oil and gas sources to implement emissions guidelines, including the use of vapor recovery units (VRUs), flare gas capture systems, and enclosed combustion devices. These control devices are designed to capture or destroy methane and volatile organic compound (VOC) emissions before they can escape into the atmosphere. Additionally, the EPA’s 2024 final rule includes New Source Performance Standards to reduce methane and smog-forming volatile organic compounds from new, modified, and reconstructed sources. In addition, the EPA has proposed continuous monitoring requirements for net heating value (NHV) and is moving toward a zero-emission standard for new and modified oil and gas sources.

FERC has also played a pivotal role by issuing guidelines for the construction and operation of liquefied natural gas (LNG) facilities, mandating the use of high-efficiency control devices to minimize emissions from natural gas operations. These measures are particularly important as the U.S. expands its LNG infrastructure to meet growing domestic and international energy demand.

While these regulations are driving significant improvements in environmental protection, they also present operational and financial challenges. The Independent Petroleum Association and other industry groups have raised concerns about higher operating costs and potential impacts on gas output. However, many in the oil and gas sector recognize that investing in advanced technologies and control devices can enhance operational efficiency, reduce regulatory risks, and support long-term economic growth.

As the regulatory landscape continues to evolve, the oil and gas industry must remain agile, adopting new technologies and best practices to demonstrate compliance and reduce methane emissions. The ongoing collaboration between federal agencies, state governments, and industry stakeholders will be crucial in achieving environmental protection goals while supporting the continued development of domestic energy resources. Investor pressure is prompting companies to balance growth and shareholder value, influencing operational and capital allocation decisions. For investors, companies that proactively address these regulatory requirements and invest in emissions-reducing technologies are likely to be better positioned for future success in the dynamic oil and gas sector.

What These Changes Mean for Investors

Regulatory changes in the oil and gas industry are positively influencing the future of energy investments. For investors, understanding how companies respond to these changes is vital. Businesses that adopt new technologies and meet higher standards can gain a competitive advantage and position themselves for sustained growth. While compliance may involve upfront costs, these efforts often result in increased efficiency and improved long-term performance. The growth of renewable energy is also influencing investment strategies and shaping the future energy mix.

These regulations also create new opportunities. Streamlined permitting processes could accelerate project timelines, allowing companies with well-prepared development pipelines to grow faster. Additionally, companies that adopt cleaner production methods may attract a broader range of investors, including those focused on sustainability.

Diversifying investments remains a smart strategy. Since policies vary across regions, spreading investments among companies operating in different states or sectors can help balance risks. US natural gas and the export of natural gas produced domestically are key factors for investors considering diversification in the energy sector. By focusing on companies that are proactive and adaptable, investors can benefit from a more stable and promising energy market.

Looking Ahead

As 2024 comes to a close, the oil and gas industry continues to evolve, presenting exciting opportunities for forward-thinking investors. Regulatory changes are pushing companies to innovate and adopt better, more sustainable practices. Previous regulatory shifts, such as those during the Trump administration, have shaped the current regulatory environment and continue to influence industry practices. The Trump administration’s approach to oil and gas regulations included efforts to pause methane emissions collection and eliminate the legal foundation for regulating greenhouse gases under the Clean Air Act. The Biden administration signed a Congressional Review Act resolution to revoke the Trump administration’s methane rule, reinstating stricter regulations. The regulatory environment for the oil and gas industry is expected to undergo significant shifts following the 2024 election, with potential reversals of current climate policies. A significant wave of new LNG export capacity is under construction globally, primarily in the U.S. and Qatar, expected to come online by 2028. For investors, this creates opportunities to spot strong companies and benefit from their growth.

To stay informed and make confident investment decisions, including learning about the best oil and gas investments in Dallas Texas, explore the latest insights and strategies at DW Energy Group’s Oil & Gas Investing Insights page.