American Oil and Gas Reporter - September 2015 - 29

WASHINGTONWATCH
Methane Rules
Seemingly All Pain
For No Gain
U.S. shale gas production has grown 400 percent since 2008,
while methane emissions have declined 13.3 percent. According
to 2013 Environmental Protection Agency greenhouse gas reporting
data, methane emissions from oil and natural gas exploration and
production are 1.07 percent of total U.S. GHG emissions. Further
reductions will occur because of "green" or "reduced emission completions" that will be phased in under existing EPA regulations.
Kudos to the natural gas industry? Not from the Obama administration. On Aug. 18, EPA issued a set of proposed rules that
would require oil and natural gas production sources to further
reduce their methane emissions (see story page 36). The four separate proposals are:
* New Source Performance Standards setting methane and
volatile organic compound emission standards for new, modified
and reconstructed equipment, processes and activities in the production, gathering, transmission and storage segments;
* Draft control techniques guidelines (CTGs) for reducing
VOC emissions from existing oil and gas sources in ozone nonattainment areas, and for states in the Ozone Transport Region;
* Options for determining when multiple pieces of equipment
and activities are "adjacent" and therefore deemed a single source
under the Clean Air Act; and
* Limitations on emissions in Indian Country, while proposing
to streamline the permitting process.
Imposition of additional regulations on the oil and natural gas
industry is not a surprise. Nor is it a surprise that the end of the
Obama administration is driving EPA to promulgate rules to reduce greenhouse gas emissions. The administration announced
in January its intent to develop new regulations and programs to
reduce methane emissions from oil and natural gas production.
The administration rationalizes these regulations as part of its Climate Action Plan to reduce methane emissions from the oil and
gas industry by 40-45 percent from 2012 to 2025.
However, the regulations EPA put in place in 2012 would largely accomplish the administration's goals for the exploration and
production sector without piling on new regulations, particularly rules applied to existing sources without the attributes of costeffectiveness and the minimization of energy impacts that must
accompany NSPS.
EPA finalized a CAA Section 111(b) NSPS in 2012 that targeted VOC emissions from hydraulically fractured natural gas
wells. As a co-benefit, methane emissions also declined, since
methane and VOCs are emitted from production facilities at the
same time from the same equipment.
EPA noted in its latest GHG reporting program, "Reported
methane emissions (in 2013) from the petroleum and natural gas
systems sector have decreased by 12 percent since 2011, with the
largest reductions coming from hydraulically fractured natural gas
wells, which have decreased by 73 percent. EPA expects to see
further emission reductions as the agency's 2012 standards for
the oil and gas industry become fully implemented."
EPA has not allowed for that full implementation. Producers
have been completing new wells ("new sources"), while many
older wells have depleted and been capped. This ongoing cycle

"Regulations put in place in 2012 would

largely accomplish the administration's goals

for the exploration and production sector.

leads to an ever-expanding inventory of wells that fall under the
2012 NSPS. While a number of older wells-many of them marginal-will continue to produce, these older wells will account for
an increasingly smaller component of gas supply-and of methane
emissions. As small, existing sources, these older wells do not
present a viable target for methane reduction; certainly not when
considering cost effectiveness and the impact on energy.
The new proposals leave a lot to digest. The CTGs are not regulations. They are used to guide state regulators in developing reasonably available control measures. Therefore, they are not legal requirements, but EPA is inviting public comment. The other three proposals have 60-day comment deadlines after their publication in the
Federal Register. IPAA will be bolstering the arguments used in
prior discussions with EPA to discourage these new rules, and will
be asking numerous questions about how EPA would impose them.
For example, the CTGs would affect production in ozone nonattainment areas. However, the scope of these nonattainment areas will be altered on Oct. 1 by a new ozone National Ambient
Air Quality Standard. We do know what production areas will
be included, but depending on the NAAQS concentration, new
areas will be affected.
How does EPA define "major modification" to facilities that
would trigger the updated NSPS for existing facilities? How does
EPA take into account cost effectiveness and the potential impact on energy of NSPS?
EPA's statistics would seem to indicate the oil and gas industry
deserves a pat on the back. But the agency's proposed rules indicate a different view by the administration. Industry must continue to gather facts, submit strong comments, and argue the facts
to fight off excessive regulations that do not provide benefits that
withstand administrative requirements that controls must consider
costs and energy impacts.
❒

SUSAN GINSBERG is vice
president of crude oil and natural gas regulatory affairs for
the Independent Petroleum
Association of America. She
covers legislation and regulation, focusing on the CFTC
and FERC. Her experience in
natural gas regulatory affairs
spans 25 years.

SEPTEMBER 2015 29

American Oil and Gas Reporter - September 2015

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