Released October 01, 2015 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The U.S. Environmental Protection Agency (EPA) (Washington, D.C.) this summer released a draft rule aimed at reducing emissions of methane and volatile organic compounds (VOCs) from new and modified sources in the Oil & Gas Industry. The rule, sharply criticized as unnecessary by the industry, is expected to reduce methane emissions by 340,000 to 400,000 short tons by 2025, a reduction of about 22%. That reduction accounts for about half of the Obama administration's goal to cut methane emissions from the Oil & Gas Industry by 40% to 45% by 2025, compared to 2012.
Lowering methane emissions from the Oil & Gas Industry is part of the Obama administration's broader effort to reduce emissions of gases thought to contribute to global climate change. The EPA is seeking to reduce methane emissions from the Oil & Gas Industry because methane is a particularly potent greenhouse gas, having about 25 times the impact of carbon dioxide (CO2). The draft rule was published September 18 in the Federal Register. The agency is taking public comments on the proposed rule until November 17, 2015.
In releasing the draft rule August 18, EPA Administrator Gina McCarthy said, "Cleaner-burning energy sources like natural gas are key compliance options for our Clean Power Plan, and we are committed to ensuring safe and responsible production that supports a robust clean energy economy."
EPA officials estimated the rule would cost industry between $320 million and $420 million in 2025. The rule would produce reduced health care costs and other benefits totaling between $460 million and $550 million, meaning the rule would create "net climate benefits" of $120 million to $150 million in 2025, EPA officials projected. In addition to reducing methane emissions, the agency said the rule also is expected to reduce 170,000 to 180,000 tons of ozone-forming VOCs in 2025, along with 1,900 to 2,500 tons of air toxics, such as benzene, toluene, ethylbenzene and xylene.
The EPA said the proposed rule would complement voluntary efforts, including the EPA's Methane Challenge Program. The new standards "are based on practices and technology currently used by industry," it added in a statement. The proposal requires operators to:
Oil and gas producers have long contended new federal regulation of methane emissions is not needed. By the EPA's own calculations, methane emissions account for about 9% of all greenhouse gases. While the Oil & Gas Industry accounts for 29% of all methane emissions, 29% of 9% only amounts to about 2.6% of overall greenhouse gas emissions. Producers reportedly account for about half of that 2.6%, with the balance being attributable to pipelines, terminals and distributors. Crafting a new regulation for an industry that contributes about 1.3% of all greenhouse gases would be going far beyond the point of diminishing returns, industry officials have told Industrial Info. For more on the evolution of this draft rule, see December 22, 2014 article: EPA Delays Decision on Methane Reduction Among Oil & Gas Companies and July 30, 2014, article: EPA Considering Steps to Cut Methane Emissions from Oil & Gas Facilities.
Click on the image at right to see a top-level breakdown of greenhouse gas emissions and a breakout by industry of major emitters of methane, a potent greenhouse gas.
The administration said the rule would apply only to emissions from new or modified natural gas wells, meaning it won't apply to existing wells.
Katie Brown, a spokeswoman for Energy in Depth, an oil industry research group, said methane emissions from fracking are already declining because of improved drilling techniques. "Cheap natural gas has delivered substantial climate benefits that come largely from voluntary reductions by industry and technological innovation," she told the Associated Press. "Federal regulations, especially if crafted poorly, could inflict more pain on the men and women who work in the oil and gas industry."
In a statement, Barry Russell, chief executive at the Independent Petroleum Producers of America (IPAA) (Washington, D.C.), said: "The administration is proposing a costly and complicated regulatory program for few environmental benefits. The unnecessary costs and added uncertainty resulting from the administration's proposals could inflict more pain on the men and women who work in the oil and gas industry--at a time when market forces are already creating economic challenges."
He continued: "There are over 1 million existing oil and natural gas wells in the United States. None of these wells individually is a major greenhouse gas emitter. Oil and natural gas exploration and production methane emissions, in the context of all U.S. greenhouse gas emissions, are small and declining. The oil and natural gas exploration and production sector accounts for 1.07% of total U.S. Greenhouse Gas emissions. In fact, EPA's own data show that methane emissions from hydraulic fracturing are already declining, despite rising production levels."
"We need common-sense policies that encourage job-creating shale development," Dave Spigelmyer, president of the Marcellus Shale Coalition, told the Pittsburgh Post-Gazette, "not duplicative, costly and unnecessary regulations that undercut energy security and economic opportunity."
Environmental activists praised the draft rule, but added the Obama administration's ambitious climate change goals could not be realized without imposing additional regulations on existing oil and gas operations. David Doniger, climate policy director for the Natural Resources Defense Council (NRDC) (New York, New York), called the draft rule "a good start," but added "EPA needs to follow up by setting methane leakage standards for existing oil and gas operations nationwide."
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.
Lowering methane emissions from the Oil & Gas Industry is part of the Obama administration's broader effort to reduce emissions of gases thought to contribute to global climate change. The EPA is seeking to reduce methane emissions from the Oil & Gas Industry because methane is a particularly potent greenhouse gas, having about 25 times the impact of carbon dioxide (CO2). The draft rule was published September 18 in the Federal Register. The agency is taking public comments on the proposed rule until November 17, 2015.
In releasing the draft rule August 18, EPA Administrator Gina McCarthy said, "Cleaner-burning energy sources like natural gas are key compliance options for our Clean Power Plan, and we are committed to ensuring safe and responsible production that supports a robust clean energy economy."
EPA officials estimated the rule would cost industry between $320 million and $420 million in 2025. The rule would produce reduced health care costs and other benefits totaling between $460 million and $550 million, meaning the rule would create "net climate benefits" of $120 million to $150 million in 2025, EPA officials projected. In addition to reducing methane emissions, the agency said the rule also is expected to reduce 170,000 to 180,000 tons of ozone-forming VOCs in 2025, along with 1,900 to 2,500 tons of air toxics, such as benzene, toluene, ethylbenzene and xylene.
The EPA said the proposed rule would complement voluntary efforts, including the EPA's Methane Challenge Program. The new standards "are based on practices and technology currently used by industry," it added in a statement. The proposal requires operators to:
- Find and repair leaks
- Capture natural gas from the completion of hydraulically fractured oil wells
- Limit emissions from new and modified pneumatic pumps
- Limit emissions from several types of equipment used at natural gas transmission compressor stations, including compressors and pneumatic controllers
Oil and gas producers have long contended new federal regulation of methane emissions is not needed. By the EPA's own calculations, methane emissions account for about 9% of all greenhouse gases. While the Oil & Gas Industry accounts for 29% of all methane emissions, 29% of 9% only amounts to about 2.6% of overall greenhouse gas emissions. Producers reportedly account for about half of that 2.6%, with the balance being attributable to pipelines, terminals and distributors. Crafting a new regulation for an industry that contributes about 1.3% of all greenhouse gases would be going far beyond the point of diminishing returns, industry officials have told Industrial Info. For more on the evolution of this draft rule, see December 22, 2014 article: EPA Delays Decision on Methane Reduction Among Oil & Gas Companies and July 30, 2014, article: EPA Considering Steps to Cut Methane Emissions from Oil & Gas Facilities.
Click on the image at right to see a top-level breakdown of greenhouse gas emissions and a breakout by industry of major emitters of methane, a potent greenhouse gas.The administration said the rule would apply only to emissions from new or modified natural gas wells, meaning it won't apply to existing wells.
Katie Brown, a spokeswoman for Energy in Depth, an oil industry research group, said methane emissions from fracking are already declining because of improved drilling techniques. "Cheap natural gas has delivered substantial climate benefits that come largely from voluntary reductions by industry and technological innovation," she told the Associated Press. "Federal regulations, especially if crafted poorly, could inflict more pain on the men and women who work in the oil and gas industry."
In a statement, Barry Russell, chief executive at the Independent Petroleum Producers of America (IPAA) (Washington, D.C.), said: "The administration is proposing a costly and complicated regulatory program for few environmental benefits. The unnecessary costs and added uncertainty resulting from the administration's proposals could inflict more pain on the men and women who work in the oil and gas industry--at a time when market forces are already creating economic challenges."
He continued: "There are over 1 million existing oil and natural gas wells in the United States. None of these wells individually is a major greenhouse gas emitter. Oil and natural gas exploration and production methane emissions, in the context of all U.S. greenhouse gas emissions, are small and declining. The oil and natural gas exploration and production sector accounts for 1.07% of total U.S. Greenhouse Gas emissions. In fact, EPA's own data show that methane emissions from hydraulic fracturing are already declining, despite rising production levels."
"We need common-sense policies that encourage job-creating shale development," Dave Spigelmyer, president of the Marcellus Shale Coalition, told the Pittsburgh Post-Gazette, "not duplicative, costly and unnecessary regulations that undercut energy security and economic opportunity."
Environmental activists praised the draft rule, but added the Obama administration's ambitious climate change goals could not be realized without imposing additional regulations on existing oil and gas operations. David Doniger, climate policy director for the Natural Resources Defense Council (NRDC) (New York, New York), called the draft rule "a good start," but added "EPA needs to follow up by setting methane leakage standards for existing oil and gas operations nationwide."
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.
