EPA Issues Final Rules to Reduce Methane Emissions from Oil and Gas Industry

On May 12, 2016, the United States Environmental Protection Agency (“EPA”) issued three related final rules directed at reducing methane emissions from the oil and natural gas sector.  EPA’s Fact Sheet indicates that these rules will build on EPA’s 2012 requirements for facilities involved in the production, processing, transmission, and storage of oil and natural gas.

The 2012 rule imposed a Reduced Emissions Completion (“REC”) requirement for natural gas wells using hydraulic fracturing.  These new rules establish methane emission limits and require leak detection and repair at most of the facilities subject to the 2012 rule.  While the REC requirement in the 2012 rule applied to gas wells, the new rules generally apply to both gas and oil wells that employ hydraulic fracturing.

In the new rules, EPA also seeks to clarify when multiple pieces of equipment and activities are a single source for air permitting purposes.   Oil and gas equipment and facilities under common control and on the same site, or on sites that share equipment and are within ¼ mile, will be considered “adjacent” for permitting purposes.

Christopher J. Colville of Edge Engineering and Science advises clients affected by these rules.  Chris leads the Air Quality Services practice for Edge.  He has engineering degrees from Texas A&M and Duke and assists clients in permitting and compliance strategies.

Chris noted two significant challenges due to the new rules for sites already subject to the REC requirement: (1) They will need to implement a leak detection and repair program; and (2) they will need to meet the new requirements for controlling emissions from pneumatic pumps.   Chris acknowledged that setting up programs to meet these requirements will add to an ever growing regulatory compliance burden for operators.

Chris sounded one optimistic note, based on his familiarity with leak detection and repair, including optical gas imaging and other emerging emission measuring technologies.  He has encouraged appropriate clients to embrace these programs “because of the corollary safety and product recovery benefits.”  He has seen effective leak programs generate net income in a very short time; Chris noted that the captured emissions in this sector are almost always the product that the companies hope to sell.  Chris can be contacted at cjcolville@edge-es.com.

Good Records Can Demonstrate the Overall Effect of a Leak Program

While these rules increase compliance requirements at oil and gas facilities, product capture may minimize the costs to some extent.   Companies should keep good records of the costs of the leak programs, and make good estimates of the additional revenue resulting from repairs, to determine the overall effect of the programs.  Many companies have been pleasantly surprised to learn that an environmental compliance effort is also a revenue generator.

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