On August 18, the Environmental Protection Agency (EPA) proposed a suite of requirements aimed at reducing methane emissions from the oil and gas industry. Methane is a greenhouse gas that is over 20 times more potent than carbon dioxide and is emitted throughout the oil and natural gas development and transportation process. Released on the heels of EPA’s Clean Power Plan, as well as recent discussions surrounding methane emissions from landfills, these proposed rules can be viewed as the next step in President Obama’s Climate Action Plan.
EPA’s proposal consists of four key items:
- Proposed updates to the agency’s New Source Performance Standards that would set methane and VOC requirements for additional new and modified sources in the oil and gas industry;
- Draft guidelines for reducing VOC emissions from existing oil and gas sources in certain ozone nonattainment areas as well as in the mid-Atlantic and northeastern states in the Ozone Transport Region;
- Proposed updates to clarify the agency’s air permitting rules as they apply to the oil and natural gas industry;
- A proposed Federal Implementation Plan to implement minor New Source Review permitting in Indian country.
All told, the EPA’s suite of efforts on methane is part of a larger goal to reduce methane emissions by 40 to 45 percent from 2012 levels by 2025. These rules would extend standards established in 2012, which largely focused on hydraulically fractured natural gas wells, to reduce emissions from hydraulically fractured oil wells as well as natural gas transportation infrastructure. The proposal applies to new and modified sources, and will not require sources covered by the 2012 standard to add any additional pollution controls. EPA’s proposed measures would also require producers and operators to locate leaks and take the appropriate measures to repair them. Importantly, operators of hydraulically fractured oil wells will be required to use green completion technology to capture associated natural gas produced with oil, as opposed to flaring practices. The rules also cover emissions from new and modified pneumatic pumps and compressor stations.
While some energy companies could take issue with the burden of additional regulations, amplified by the struggles of the ongoing low oil price environment, many companies have already taken steps to reduce their methane emissions. Environmental advocates, on the other hand, could contend that limiting the rules to cover only new and modified production sources does not go far enough.
Overall, the EPA’s new proposed rules will reduce methane emissions throughout the entire process, from the well site upstream to the city gate downstream.