Administration Makes Two Regulatory Moves On Oil And Gas Operations

May 2012, Vol. 239 No. 5

The Obama administration took its first two regulatory steps, one final, one tentative, toward guarding against air and ground water pollution from fracking. The final rule on air emissions from the Environmental Protection Agency (EPA) and proposed rule from the Department of Interior (DOI) covered different regulatory terrain. The EPA limits emissions of volatile organic chemicals, chiefly methane, from fracked oil and gas wells while the DOI wants gas companies and their well-digging contractors to disclose more information about the fracking chemicals they use and about their well-digging and construction practices.

Lost in the headlines over the controversial fracking implications was the EPA's decision, in its final rule, to step back from what interstate pipelines worried would be onerous new, emission reduction requirements on transmission and storage operations. The EPA proposed rule issued previously would have expanded New Source Performance Standards (NSPS) for the oil and gas industry. Those standards regulate emissions of volatile organic chemicals, the chief one being, with regard to pipelines, methane. The EPA had proposed to broaden the reach of the NSPS to cover, for the first time, transmission and storage operations and fracking.

In the final rule published in April, the EPA stayed with the first-time fracking requirements, but softened them considerably. The transmission and storage enhancements were, for the most part, ditched. Compressor and pneumatic controller reductions were omitted...for the moment. The final rule exempted from regulation low-bleed controllers (with bleed rates below six standard cubic feet per hour) located between the wellhead and the point where the gas enters the transmission line, to encourage a quicker transition from high-bleed controllers.

The requirements for high-bleed controllers were also phased in over one year to give manufacturers of these devices the time needed to test and document the gas bleed rate. A different metric was also identified to simplify the determination of which storage tanks are covered by the standards. Instead of the proposed throughput measurement, the final rule identified a regulatory cutoff of six tons of VOC emissions.

With regard to fracked wells going forward, operators will have to either flare their emissions or use emissions-reduction technology called “green completions,” technologies that are already widely deployed at wells. In 2015, all new fractured wells will be required to use green completions. The final rule does not require new federal permits.

"We are very pleased that EPA was convinced by our arguments that there are very few VOC emissions from the transmission sector and thus they chose not to regulate that segment in this rule," says Lisa S. Beal, vice president, Environment & Construction Policy, Interstate Natural Gas Association of America (INGAA). "However, we are still perplexed by some of the language in the rule that suggests this might just be temporary. We do not believe that further analysis will result in a different conclusion. Simply put, EPA would be chasing something that just isn't there.”

The EPA also softened proposed changes to the Maximum Achievable Control Technology (MACT) standards which apply to emissions of air toxics. Richard N. Wheatley, Manager, Media Relations/Emergency Response Communications, El Paso Corporation, says the NSPS and MACT changes in the final rule "are a significant improvement."