EPA Finalizes New Standards for Oil and Gas Production

Yesterday, the EPA finalized new source performance standards and national emissions standards for hazardous air pollutants released during oil and gas production. The EPA rule requires operators of new fractured and re-fractured natural gas wells to utilize equipment and practices that will limit emissions. Approximately 13,000 wells are hydraulically fractured every year and these processes can emit harmful pollutants including volatile organic compounds (VOCs), sulfur dioxide, and air toxics such as benzene. The rule also applies to natural gas storage vessels, controllers (devices that control entry into transmission and storage systems), compressors (devices that compress natural gas to control entry into transmission and storage systems), and onshore natural gas processing plants. The emissions that the rule controls include volatile organic compound emissions and sulfur dioxide emissions, depending on the regulated facility type.

Compliance with the rule is phased in during the period following publication of the final rule in the Federal Register and January 1, 2015.  While the required emission control technologies and practices are available today, industry may need time to purchase and install new equipment and train necessary personnel.  For fractured and re-fractured natural gas wells, compliance with the rule can be achieved with flaring or with the application of reduced emission completion techniques (also referred to as RECs or “green completions”) during the phase in period. RECs are closed loop systems that use on-site processing equipment to capture and separate produced gases and liquids produced during well completion.  By 2015, all new fractured and re-fractured wells must implement reduced emission completion techniques.  

Without controls, fluids and gases produced during well completion are released into the open air pits or tanks.  Flaring can reduce 95% of VOCs but can produce additional pollutants; RECs produce no additional pollutants and capture the valuable gas commodity.  Roughly half of all hydraulic fracturing wells already use RECs to minimize methane losses that can otherwise be sold to the market and some states, such as Wyoming and Colorado, require green completions, as do some cities, including Fort Worth and Southlake, Texas.

The phase in period for regulated storage vessels, controllers, compressors, and natural gas processing plants that are new, modified, or reconstructed must also meet lower VOC and sulfur dioxide emission limits under the final rule in time frames that range from 1 to 3 years after publication of the final rule in the Federal Register. 

While the rule does not specifically target methane emissions, the required VOC and sulfur dioxide control technologies are expected to have a significant co-benefit of reducing methane, a greenhouse gas 20 times more potent than carbon dioxide.  Recent scientific studies have raised concerns about the relative environmental benefit of natural gas when methane leaks are not addressed.  It is estimated that 2 to 3 percent of all natural gas produced by the US oil and gas industry is leaked or vented during various stages of production, processing, transportation and storage.  The EPA believes these rules are cost effective because the required technologies not only reduce harmful emissions but also allow well operators to recover and sell valuable natural gas that would otherwise be wasted.  

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