Released June 07, 2016 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The U.S. Environmental Protection Agency (EPA) (Washington, D.C.) last month finalized first-ever rules to reduce emissions of methane from new, modified and reconstructed sources in the Oil & Gas Industry. That rule also set new standards for emissions of volatile organic compounds (VOCs) and other air toxics, some of which were originally regulated in 2012. With its May 12 announcement, the agency also started a process to assess, and potentially reduce, those emissions from existing sources in the Oil & Gas industry.
The EPA estimated the rule would reduce methane emissions from the Oil & Gas Industry by 510,000 short tons by 2025. The rule also is expected to remove 210,000 short tons of ozone-forming VOCs in 2025, along with 3,900 tons of air toxics such as benzene, toluene and ethylbenzene, the agency added. It projected the final rule would produce $690 million of benefits by 2025 against costs of about $530 million.
The new rules are part of the Obama administration's goal of reducing methane emissions from the Oil & Gas Industry by 40% to 45% from 2012 levels by 2025. EPA recently revised upward its estimate of methane emissions from all sources. It said about 33% of those emissions come from the Oil & Gas Industry. Methane has a higher short-term impact on global climate change than carbon dioxide (CO2), though it dissipates faster than CO2.
"The final rule establishes methane standards for emissions sources already regulated under the (EPA's) 2012 New Source Performance Standard (NSPS) for VOCs and for additional sources, including hydraulically fractured gas well completions, equipment leaks at natural gas processing plants and equipment downstream from the wellhead, including pipelines," noted law firm Beveridge & Diamond PC (Washington, D.C.). "The final rule also extends current VOC standards to sources and equipment not regulated under the 2012 NSPS, including hydraulically fractured oil well completions, fugitive emissions from well sites and compressor stations, and pneumatic pumps."
"These rules create significant new obligations to reduce emissions of methane and VOCs from various equipment, perform green completions and monitor and correct leaks, and they serve as a prelude to further scrutiny of existing sources," the law firm added.
The NSPS was one of three methane-reduction rules EPA released May 12. The second rules clarified the term "adjacent" in defining a single "stationary source" for permitting purposes under Nonattainment New Source Review (NNSR), Prevention of Significant Deterioration (PSD) and Title V operating permit programs. The third rule finalized a federal implementation plan (FIP) for minor sources and modifications in the oil and natural gas production industry in Indian Country.
The trio of new rules showed the Obama administration's "commitment to finding commonsense ways to cut methane--a potent greenhouse gas fueling climate change--and other harmful pollution from the oil and gas sector," EPA Administrator Gina McCarthy said in a statement. "Together these new actions will protect public health and reduce pollution linked to cancer and other serious health effects while allowing industry to continue to grow and provide a vital source of energy for Americans across the country."
The EPA released a draft NSPS last summer, which subsequently drew over 900,000 comments. The final rule is tougher than the draft rule in a few respects: more frequent equipment leak-monitoring surveys will be required, and wells producing less than 15 barrels of oil equivalent per day (boe/d) that were exempted in the draft rule were included in the final rule. Those low-production wells reportedly account for about 30% of all natural gas wells and 43% of all oil wells. For more on the draft rule, see October 1, 2015, article--EPA Targets Methane Emissions from Oil & Gas Industry in New Rule.
Predictably, industry groups blasted the rule while environmental groups praised it. The rule will become effective 60 days after it is published in the Federal Register.
Blasting the new NSPS as "unreasonable and overly burdensome," Kyle Isakower, vice president of regulatory and economic policy for the American Petroleum Institute (API) (Washington, D.C.), added: "The industry is already leading the way on methane reductions because it is good for the environment and good for business. Even as oil and natural gas production has risen dramatically, methane emissions have fallen, thanks to industry leadership and investment in new technologies."
He added the estimated cost to comply with the new NSPS rule would be far higher than EPA estimated, possibly as much as $800 million.
In a blog post from the Natural Resources Defense Council (NRDC) (New York, New York), Meleah Geertsma wrote, "EPA's efforts to control methane pollution from new sources deserve thanks, not only because the standards are a significant step in themselves, but because setting new source standards legally obligates EPA to now take on the older equipment that is causing and will continue to cause the bulk of the methane problem."
The prospect of EPA regulation of methane emissions from existing sites has alarmed some in the industry. There are hundreds of thousands of existing Oil & Gas facilities that could come under EPA scrutiny if the agency is able to issue a new rule covering those facilities.
In its May 12 announcement, EPA also said it was issuing an Information Collection Request (ICR) to Oil & Gas operators as a first step toward characterizing the extent of methane emissions and the potential cost to reduce them. Over the summer, according to the law firm of Latham & Watkins LLP (Los Angeles, California), the agency plans to survey to about 22,500 operators of Oil & Gas production facilities to collect information on various sources of methane emissions, including natural gas venting from process and maintenance activities, equipment malfunctions and flashing emissions from storage tanks. EPA estimated about 700,000 facilities will be covered in the initial survey. Operators will be required to complete the survey within 30 days of receiving it.
Then, a more detailed "facility survey" will be sent to a representative sample of oil and gas facilities across different industry segments, excluding offshore production facilities and local natural gas distribution facilities. EPA expects this survey will be sent to about 3,400 operators, according to Latham & Watkins LLP. The EPA projected it will complete its ICR in early 2017.
The ICR is "really launching our work to address methane emissions from existing sources," McCarthy told reporters May 12.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
The EPA estimated the rule would reduce methane emissions from the Oil & Gas Industry by 510,000 short tons by 2025. The rule also is expected to remove 210,000 short tons of ozone-forming VOCs in 2025, along with 3,900 tons of air toxics such as benzene, toluene and ethylbenzene, the agency added. It projected the final rule would produce $690 million of benefits by 2025 against costs of about $530 million.
The new rules are part of the Obama administration's goal of reducing methane emissions from the Oil & Gas Industry by 40% to 45% from 2012 levels by 2025. EPA recently revised upward its estimate of methane emissions from all sources. It said about 33% of those emissions come from the Oil & Gas Industry. Methane has a higher short-term impact on global climate change than carbon dioxide (CO2), though it dissipates faster than CO2.
"The final rule establishes methane standards for emissions sources already regulated under the (EPA's) 2012 New Source Performance Standard (NSPS) for VOCs and for additional sources, including hydraulically fractured gas well completions, equipment leaks at natural gas processing plants and equipment downstream from the wellhead, including pipelines," noted law firm Beveridge & Diamond PC (Washington, D.C.). "The final rule also extends current VOC standards to sources and equipment not regulated under the 2012 NSPS, including hydraulically fractured oil well completions, fugitive emissions from well sites and compressor stations, and pneumatic pumps."
"These rules create significant new obligations to reduce emissions of methane and VOCs from various equipment, perform green completions and monitor and correct leaks, and they serve as a prelude to further scrutiny of existing sources," the law firm added.
The NSPS was one of three methane-reduction rules EPA released May 12. The second rules clarified the term "adjacent" in defining a single "stationary source" for permitting purposes under Nonattainment New Source Review (NNSR), Prevention of Significant Deterioration (PSD) and Title V operating permit programs. The third rule finalized a federal implementation plan (FIP) for minor sources and modifications in the oil and natural gas production industry in Indian Country.
The trio of new rules showed the Obama administration's "commitment to finding commonsense ways to cut methane--a potent greenhouse gas fueling climate change--and other harmful pollution from the oil and gas sector," EPA Administrator Gina McCarthy said in a statement. "Together these new actions will protect public health and reduce pollution linked to cancer and other serious health effects while allowing industry to continue to grow and provide a vital source of energy for Americans across the country."
The EPA released a draft NSPS last summer, which subsequently drew over 900,000 comments. The final rule is tougher than the draft rule in a few respects: more frequent equipment leak-monitoring surveys will be required, and wells producing less than 15 barrels of oil equivalent per day (boe/d) that were exempted in the draft rule were included in the final rule. Those low-production wells reportedly account for about 30% of all natural gas wells and 43% of all oil wells. For more on the draft rule, see October 1, 2015, article--EPA Targets Methane Emissions from Oil & Gas Industry in New Rule.
Predictably, industry groups blasted the rule while environmental groups praised it. The rule will become effective 60 days after it is published in the Federal Register.
Blasting the new NSPS as "unreasonable and overly burdensome," Kyle Isakower, vice president of regulatory and economic policy for the American Petroleum Institute (API) (Washington, D.C.), added: "The industry is already leading the way on methane reductions because it is good for the environment and good for business. Even as oil and natural gas production has risen dramatically, methane emissions have fallen, thanks to industry leadership and investment in new technologies."
He added the estimated cost to comply with the new NSPS rule would be far higher than EPA estimated, possibly as much as $800 million.
In a blog post from the Natural Resources Defense Council (NRDC) (New York, New York), Meleah Geertsma wrote, "EPA's efforts to control methane pollution from new sources deserve thanks, not only because the standards are a significant step in themselves, but because setting new source standards legally obligates EPA to now take on the older equipment that is causing and will continue to cause the bulk of the methane problem."
The prospect of EPA regulation of methane emissions from existing sites has alarmed some in the industry. There are hundreds of thousands of existing Oil & Gas facilities that could come under EPA scrutiny if the agency is able to issue a new rule covering those facilities.
In its May 12 announcement, EPA also said it was issuing an Information Collection Request (ICR) to Oil & Gas operators as a first step toward characterizing the extent of methane emissions and the potential cost to reduce them. Over the summer, according to the law firm of Latham & Watkins LLP (Los Angeles, California), the agency plans to survey to about 22,500 operators of Oil & Gas production facilities to collect information on various sources of methane emissions, including natural gas venting from process and maintenance activities, equipment malfunctions and flashing emissions from storage tanks. EPA estimated about 700,000 facilities will be covered in the initial survey. Operators will be required to complete the survey within 30 days of receiving it.
Then, a more detailed "facility survey" will be sent to a representative sample of oil and gas facilities across different industry segments, excluding offshore production facilities and local natural gas distribution facilities. EPA expects this survey will be sent to about 3,400 operators, according to Latham & Watkins LLP. The EPA projected it will complete its ICR in early 2017.
The ICR is "really launching our work to address methane emissions from existing sources," McCarthy told reporters May 12.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
