Federal Government Finalizes Major Amendments to Methane Regulations for Upstream Oil and Gas Facilities

On December 12, 2025, the Federal Government announced amendments (the Amendments) to the Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector) (the Federal Methane Regulations), which are issued pursuant to s. 93 of the Canadian Environmental Protection Act, 1999 (CEPA). On December 31, 2025, the Federal Government published the finalized version of the Amendments in the Gazette.^[1]

Key Takeaways:

• The Amendments impose stricter restrictions on methane emissions from regulated oil and gas facilities, including restrictions on fugitive emissions management, prohibiting venting, and limiting hydrocarbon gas destruction, while also requiring regular inspections and maintenance.
• The Amendments also offer an alternative compliance option for facilities that commit to keeping facility emissions intensity below a prescribed limit.
• The Amendments will apply to new facilities as of January 1, 2028, and to all facilities by 2030.
• The Federal Government will reassess its equivalency agreements with BC, Alberta, and Saskatchewan – which provide that the Federal Methane Regulations do not apply to provincial undertakings in those provinces – to determine whether those equivalency agreements should continue.
• The Amendments immediately provide that the Federal Methane Regulations no longer apply to offshore upstream oil and gas facilities, which are regulated by new and separate regulations.

Further details are set out below. Please feel free to contact Lawson Lundell if you have further questions about the Amendments and their applicability.

Amendments Overview

The Amendments will impose stricter restrictions on methane emissions from regulated oil and gas facilities (which include gathering pipelines, transmission pipelines, natural gas gathering and boosting stations, natural gas transmission compressor stations, and natural gas processing plants) by setting broad requirements for fugitive emissions management, prohibiting venting emissions from facilities, with limited exceptions, limiting hydrocarbon gas destruction, and requiring regular inspections and repair.

At the same time, the Amendments offer an alternative compliance option whereby upstream oil and gas facilities can implement an emission monitoring system designed to focus on emissions outcomes, rather than prescribing a specific compliance action. Facilities committing to the alternative compliance option would be required to keep facility emissions intensity below a prescribed limit and take corrective actions when emissions are higher.

Under either option, facility emission reductions will depend on production and operational characteristics at each site. The Amendments do not require operators to meet a specific emission reduction target associated with the Government’s sector-wide policy objective for oil and gas methane emissions by 2030.

These Amendments come into force on January 1, 2028, with some grandfathering for existing facilities, who will not need to comply with the Amendments until 2030. However, as of January 1, 2030, the Federal Methane Regulations will apply to all upstream oil and gas facilities, not just those that produce and/or receive more than 60 000 m³ of hydrocarbon gas per year.

The Amendments also (with immediate effect) remove the application of the Federal Methane Regulations to offshore upstream oil and gas facilities, which are now regulated by the Canada-Newfoundland and Labrador Offshore Area Petroleum Operations Framework Regulations and the Canada-Nova Scotia Offshore Area Petroleum Operations Framework Regulations that came into force in October 2024.

Finally, the Amendments will require the Federal Government to reassess the equivalency agreements it made with BC, Alberta, and Saskatchewan that exempted provincial undertakings in those provinces from the application of the Federal Methane Regulations. Unless those provinces secure new equivalency agreements, provincial upstream oil and gas facilities will likely be subject to the Federal Methane Regulations in 2028.

Federal Methane Regulations - Overview

The Regulation making powers under CEPA give Cabinet broad powers to regulate toxic substances, provided that the regulations do not regulate an aspect of the substance that is regulated by any other federal law that, in Cabinet’s opinion, provides sufficient protection to the environment and human health.

The Federal Methane Regulations are designed to reduce emissions of methane and certain volatile organic compounds from the oil and gas sector, to fulfill Canada’s commitment to reduce those emissions by 40% to 45% below 2012 levels by 2025 (which Canada subsequently revised to a commitment to at least a 75% reduction by 2030). The Federal Methane Regulations target capture and conservation of 95% of the hydrocarbon gas that is routed to hydrocarbon gas conservation equipment at an upstream oil and gas facility, which include gathering pipelines, transmission pipelines, natural gas gathering and boosting stations, natural gas transmission compressor stations, and natural gas processing plants.

More specifically, the Federal Methane Regulations currently apply to facilities that:

• produce and/or receive more than 60 000 m³ of hydrocarbon gas per year;
• compress natural gas;
• undertake hydraulic fracturing during well completions outside of British Columbia and Alberta with gas-to-oil ratios of at least 53:1.

  Part 1 of the Federal Methane Regulations:

• mandates Leak Detection & Repair (LDAR) programs to find and fix hydrocarbon leaks;
• requires annual checks to ensure emission control systems on compressors are working effectively;
• limits continuous venting from pneumatic controllers and pumps, requiring operators to switch to low-bleed or zero-bleed alternatives;
• limits the use of venting and flaring, promoting instead the capture and use of the gas;
• mandates emission control equipment on storage tanks and loading racks for facilities handling petroleum liquids.

The emission reduction targets in the Federal Methane Regulations are outcome-based rules, allowing for flexible options like new technologies or practice changes in order to meet those targets.

Contraventions of some of the Federal Methane Regulations provisions constitute serious offences pursuant to the Regulations Designating Regulatory Provisions for Purposes of Enforcement (Canadian Environmental Protection Act, 1999).

Amendments to the Federal Methane Regulations

The Amendments are set to come into force in three tranches.

The first tranche of Amendments, which come into force when the finalized version is published in Part II of the Canada Gazette (expected to occur on December 31, 2025) removes compliance requirements for offshore facilities, to avoid duplication with the Canada-Newfoundland and Labrador Offshore Area Petroleum Operations Framework Regulations and the Canada-Nova Scotia Offshore Area Petroleum Operations Framework Regulations that came into force in October 2024, and regulate methane emissions from offshore oil and gas facilities.

The second tranche of Amendments comes into force on January 1, 2028, with some grandfathering that would see the Amendments apply to some facilities in 2030. These Amendments:

• divide facilities into Type 1 and Type 2 facilities, with Type 1 capturing facilities undertaking higher risk activities such as compressing natural gas or storing liquid hydrocarbons that are more likely to have fugitive methane emissions;
• introduce new requirements to conduct, comprehensive, screening, and annual inspections for fugitive emissions (i.e., unintentional emissions of hydrocarbon gas from the facility) using specified optical gas-imaging instruments, with more frequent inspections required for Type 1 facilities. The Amendments also require any equipment emitting fugitive emissions to be repaired within specified timelines, unless the timeline is extended pursuant to an application to the Minister;
• impose stricter requirements for LDAR programs, venting hydrocarbon gas, and emissions associated with destruction of hydrocarbon gas, as set out in Part 1 of the Federal Methane Regulations. Venting and destruction of hydrocarbon gas will be limited to circumstances where it is necessary to prevent serious risk to human health or safety, as well as a few other exceptions for venting. Combustion systems utilized for gas destruction to comply with the Amendments will have to achieve a minimum carbon conversion efficiency of 98%, and the system will be required to operate continuously. There is some grandfathering for facilities operating prior to January 1, 2028, but all facilities will be subject to these requirements by 2030;
• introduce a new Part 2 to the Federal Methane Regulations, that allow facilities to commit to the use of an emission monitoring system that would require the facility to keep emissions intensity below a prescribed limit and take corrective actions when emissions are higher. The prescribed limits range from 0.05% for processing facilities, 0.11% for transmission facilities, and 0.2% for production facilities. By committing to the Part 2 scheme, facilities would be exempt from the application of Part 1 of the Federal Methane Regulations;
• amend the registration provisions of the Federal Methane Regulations to register with the Minister no later than 120 days after the later of January 1, 2028 and the day on which operations at the facility begin (for those facilities that registered under the current registration provisions, a supplementary registration notice is required by April 30, 2028)

In addition to the grandfathering of provisions that will come into force on January 1, 2030, further amendments that come into force on that date will remove the 60,000 m³ production/receiving threshold for application of the Federal Methane Regulations, meaning that it will apply to all upstream onshore oil and gas sector facilities, unless they meet a specified exception.

The Amendments also revise the Regulations Designating Regulatory Provisions for Purposes of Enforcement (Canadian Environmental Protection Act, 1999), which designate provisions for which there can be offences pursuant to s. 272 of CEPA.

Provincial Undertakings in BC, Alberta, and Saskatchewan are exempt from the Application of the Federal Methane Applications

The Federal Methane Regulations do not currently apply to provincial undertakings in BC, Alberta, and Saskatchewan, as the Federal Government has entered into equivalency agreements pursuant to s. 10(3) of CEPA that acknowledge that those Provinces have enacted equivalent restrictions on methane at the provincial level.^[2]

However, pursuant to the equivalency agreements, the Federal Government will reassess the equivalency of the provincial regulation of methane emissions with the amended form of the Federal Methane Regulations. In the event the reassessment shows ongoing equivalent outcomes, it may form the basis of a renewed equivalency agreement and a renewed order pursuant to s. 10(3) of CEPA. If the reassessment does not show continued equivalency, the Federal Government will terminate the equivalency agreement, at which point any provincial undertaking that had previously been exempted from the application of the Federal Methane Regulations would become subject to those Regulations.

The equivalency agreements had contemplated that this reassessment would be complete in time for the Federal Government to terminate the equivalency agreements by December 31, 2026 (in advance of the contemplated coming into force of the second tranche of amendments on January 1, 2027). Given the revised coming into force date for the first tranche of amendments (i.e., January 1, 2028), the Federal Government will presumably have more time to reassess equivalency – and BC and Saskatchewan will have more time to enact any amendments necessary to re-establish equivalency.

However, as part of the Canada-Alberta Memorandum of Understanding from November 27, 2025, the Federal Government and Alberta have committed to enter into a methane equivalency agreement by April 1, 2026, with a 2035 target date and a 75% reduction target relative to 2014 levels. As a result, we expect the Federal Government and Alberta will move quickly to finalize an equivalency agreement, which would provide Alberta a further 5 years to meet methane reduction targets.