Could Tighter Federal Ozone Standards Slow Oil & Gas Production in Eagle Ford Shale?

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Surging oil & gas production in the Eagle Ford Shale could create federal regulatory problems for the greater Houston, Dallas and San Antonio metropolitan areas in the coming years. Oil & gas production, transportation, storage or processing releases volatile organic compounds (VOCs), nitrogen oxides (NOx) and carbon monoxide (CO). VOCs can cause respiratory and neurological problems. Some VOCs, such as benzene, can cause cancer. A chemical reaction between NOx and VOCs in the presence of sunlight creates ground-level ozone, which is regulated by the U.S. Environmental Protection Agency (EPA) (Washington, D.C.) under the Clean Air Act's National Ambient Air Quality Standards (NAAQS).

Texas' largest metropolitan areas--Dallas and Houston--were designated non-attainment areas for ground-level ozone under NAAQS the last time the EPA updated that standard, in 2008. The Clean Air Act requires NAAQS to be updated every five years, but the EPA missed its 2013 deadline for a new NAAQS rule. The agency is under a federal court order to propose a new ozone standard by December 1 of this year, with a final effective date of October 1, 2015. The current ground-level ozone standard is 75 parts per billion (PPB), but in late June, the EPA's Clean Air Scientific Advisory Committee recommended the agency lower that level to between 60 PPB and 70 PPB.

NAAQS measures concentrations of six health-threatening pollutants, including ground-level ozone, in urban areas. Oil and gas production in the Eagle Ford Shale takes place in a mostly rural 20-county area around San Antonio. The fast-rising oil and gas production in the Eagle Ford Shale may contribute to a deterioration of air quality in the greater San Antonio area. But the larger impact may be felt in Dallas and Houston, where future industrial activity may have to be curtailed if the federal government adopts tougher ground-level ozone standards.

Click on the image at right to see a graphic of rising crude oil production from the Eagle Ford Shale in Texas.

The Alamo Area Council of Governments (AACOG) (San Antonio) recently released its first-ever inventory of emissions tied to oil and gas production in the Eagle Ford Shale. The inventory, prepared for and in cooperation with the Texas Commission on Environmental Quality (TCEQ) (Austin, Texas), said oil and gas production in the Eagle Ford put 66 tons of NOx and 101 tons of VOC emissions into the air each day during the ozone season in 2011. Those emissions rose to an estimated 111 tons of NOx and 229 tons of VOC per ozone season day in 2012. Though the study does not state this, it seems reasonable to assume those emissions have grown as oil production in the Eagle Ford has grown since 2012.

The AAOG study projected VOC, NOx and CO emissions through 2018 based on how rapidly oil and gas development in the Eagle Ford continues. The agency modeled emissions according to three development scenarios: Low, Moderate and Aggressive.

In the "Low Development" scenario, by 2018, emissions of VOCs per ozone season day will rise about 48% from 2012 levels. NOx and CO emissions will rise less dramatically than VOCs over that time in that case.

In the "Moderate Development" case, by 2018, VOC emissions will increase by 138% from 2012 levels. And in the "Aggressive Development" scenario, VOC emissions soar 281% by 2018. The current pace of oil and gas development in the Eagle Ford, if extended through 2018, would place the area's emissions profile somewhere between the "moderate" and "aggressive" scenarios forecast by AACOG, a staffer at the agency told Industrial Info.

Neither the emissions inventory, which was accepted by the TCEQ April 4, nor an earlier analysis of photochemical modeling, also prepared by AACOG, contains policy recommendations for lowering the future increase of VOC emissions from the oil and gas activity in the Eagle Ford. AACOG is only authorized to investigate matters that lie within the 13-county metropolitan San Antonio area, and nearly all of the Eagle Ford shale lies outside AACOG's border.

"We're not in a position to advise Eagle Ford counties because they are out of our jurisdiction," Peter Bella, AACOG's director of natural resources, told Industrial Info in an interview.

Bella was unwilling to speculate on how emissions from oil and gas operations in the Eagle Ford could affect other metropolitan areas like Dallas and Houston. But he pointed to AACOG's earlier photochemical modeling study, which showed wind patterns have brought emissions from the Eagle Ford to Houston, Dallas and other metropolitan areas.

"Wind patterns are complex," he said. "If you ask me if Eagle Ford emissions affect the greater San Antonio area, the answer is yes. The greater San Antonio area has its ground-level ozone challenges, but we're not thinking that we're not meeting federal ozone standards because of the Eagle Ford."

Burgeoning oil and gas production from the Eagle Ford, as well as brisk industrial activity in the greater Houston area and legendary traffic congestion in the Dallas metroplex, could pose federal problems for all three areas in the coming years. According to the EPA, under section 107(d) of the Clean Air Act, the agency must designate an area "nonattainment" if it is violating the 2008 ground-level ozone NAAQS or if it is contributing to a violation of that standard in a nearby area.

The EPA, working with states, has a wide range of options it could pursue to lower ozone levels in urban areas. Curtailing industrial activity that emits VOCs is one option. Bella said it most likely will be up to the state of Texas to decide what to do about the environmental consequences of oil and gas production in the Eagle Ford, as well as industrial activity in the state's other major metropolitan areas.

For years, utilities and other industrial concerns have lobbied against tighter EPA regulation of ground-level ozone. In 2010, the last time the EPA revisited ozone standards under NAAQS, the agency estimated it would cost between $19 billion and $90 billion per year by 2020 to implement a tighter ground-level ozone standard. Back then, the agency estimated the new rule would create between $13 billion and $100 billion of public-health benefits.

Business and industry groups were particularly irked over the costs and potential impacts of tighter ozone regulation. Tighter standards would throw hundreds of American counties out of compliance with the Clean Air Act, which would limit the future operation of industrial facilities in those counties. Plant expansions or grassroot construction of new factories would be made more difficult. To meet more stringent ozone requirements, existing or planned power plants, oil and gas wells, cement factories and other industrial facilities would have to close or install pollution-control equipment.

Business interests have pressed for a cost-benefit test for EPA regulation of ground-level ozone, but a 2001 decision by the U.S. Supreme Court said that the EPA was not permitted to consider costs when setting air quality standards that would protect public health.

In 2011, the Obama administration decided to postpone updating NAAQS, largely because the agency was scheduled to update those standards in 2013. For more on the Obama administration 2011 decision, see September 8, 2011, article-- Business Groups Cheer EPA's Withdrawal of Draft Rule on Ground-Level Ozone. However, the EPA missed that 2013 deadline, and a federal court has ordered the EPA to propose new standards by this December, with final effective date of October 1, 2015.

Back in 2011, when President Obama decided to postpone updating NAAQS, the EPA had proposed lowering the ground-level ozone standard from 75 parts per billion to between 60 and 70 parts per billion. That's exactly the same level contained in the June 26, 2014, letter from the EPA's clean air advisory panel to EPA Administrator Gina McCarthy.

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