American Oil and Gas Reporter - October 2018 - 26

Executive Actions

EPA, BLM Revise Methane Regulations
WASHINGTON-In a move that it estimates will save the oil and gas industry
as much as $75 million a year, the U.S.
Environmental Protection Agency on Sept.
11 announced proposed amendments to
its New Source Performance Standards
for existing and modified sources of
methane emissions.
One week later, the Bureau of Land
Management followed suit, releasing a
final rule modifying the Obama-era Waste
Prevention, Production Subject to Royalties, and Resource Conservation (venting
and flaring) regulation.
Immediate reactions lauded EPA's intent. "The Texas Independent Producers
& Royalty Owners Association commends
EPA for its effort to alleviate red tape
and remove unnecessary and overly burdensome federal methane regulations for
domestic oil and natural gas producers,"
stated President Ed Longanecker.
Howard Feldman, senior director of
regulatory and scientific affairs for the
American Petroleum Institute added, "We
welcome EPA's efforts to get this right.
The proposed changes could ensure that
the rule is based on best engineering
practices and is cost-effective."
But as the saying goes, the devil is in
the details. Texas Alliance of Energy Producers Chairman Jim Beck, president of
Tiger Eye Resources in Magnolia, Tx.,
observes, "Federal methane regulations
are an example of some of the most problematic national regulations imposed on
Texas oil fields. The effort to return science, solid facts and due process to
methane regulations is good to see, but
the work to reduce federal over-regulation
on this topic must continue."
No Marginal Well Exemption
Perhaps the most glaring issue for
many independent producers, suggests
Lee Fuller, executive vice president of
the Independent Petroleum Association
of America, is the rule's treatment of
marginal, or low-volume wells, which
the proposed rule defines as wells that
produce less than 15 barrels of oil equivalent averaged over the first 30 days of
production.
Fuller recalls that when the 2016 NSPS
was being promulgated, IPAA had argued
for-and expected to see-an exemption
for low-volume wells. It didn't happen.
The 2016 NSPS required operators at
new and modified well sites to conduct
initial emissions monitoring within 60
days of startup and semiannually thereafter,
26 THE AMERICAN OIL & GAS REPORTER

regardless of volume. In its 2018 amendments, EPA says it is changing that to
annual emissions monitoring for nonlow-volume wells, and biennial monitoring
for low-volume wells.
The 2016 NSPS required operators to
repair leaking components within 30 days
and to re-survey within the next 30 days.
The 2018 amendments would change that
to "make a first attempt at repair" during
the first 30 days after fugitive emissions
are detected, and to complete repairs
within 60 days, the agency says.
Equally important, Fuller says, IPAA
also lobbied for a figurative offramp so
that once a well reached the low-volume
trigger, it then would become exempt or
at least move into a significantly different
fugitive emissions regime. Neither the
2016 rule nor the 2018 proposed amendments contain such an offramp, he rues.
"We have had numerous conversations
with (EPA) to explain that people don't
intentionally drill low-production wells,"
he reflects.
Fuller says EPA appears to believe it
responded to the need for a means to reclassify wells once their production declined by proposing to allow monitoring
to be stopped "once all major production
and processing equipment is removed so
that the site contains only wellheads."
That provision also stipulates, "Separate
tank batteries receiving oil or gas produced
from wellhead-only sites are considered
modified and would be subject to fugitive
emissions monitoring requirements."
While the concept of wellhead-only
sites may work for marginal natural gas
wells, "It doesn't work particularly well
for oil wells," Fuller allows. "We really
have to dig into the definition of 'removing
major production and processing equipment' because it probably is going to be
really hard to ever meet that test. We
have our work cut out for us."
Regulate Existing Sources?
Another significant problem with the
proposed amendments, Fuller continues,
is that they are structured as a methane
regulation, which, he worries, may trigger
a pathway to regulating existing sources
through Section 111(d) of the Clean Air
Act.
He explains that when the CAA was
written in the 1970s, and even through
its 1990 revisions, lawmakers anticipated
that if EPA created an NSPS for a criteria
pollutant, existing sources would be regulated under the CAA's nonattainment

provisions. For an NSPS on a hazardous
air pollutant, the existing-source HAP
rules would govern that category.
Section 111(d) was created for everything else, Fuller says, and had been invoked only a half dozen times until the
U.S. Supreme Court's 2007 ruling that
greenhouse gases could be regulated under
the CAA, if EPA deemed it necessary.
"The first real exposure to Section
111(d) in the climate context was the
Obama administration's Clean Power Plan,"
Fuller points out, which the Trump administration proposes to replace with its
Affordable Clean Energy Rule, released
Aug. 21. "(ACE) restructures how they
are going to handle that program," he says.
"Once they establish that process, it likely
will be used (for the oil and gas NSPS), if
this stays as a methane regulation."
One additional issue Fuller mentions
is how "maximum average daily throughput" of production routed to storage
vessels is calculated to determine whether
emission control requirements apply. "Initial reactions to those provisions are that
there are problems with EPA's approach,"
he advises. "So there are a lot of moving
parts we are going to be addressing as
we put together our comments."
Modified Requirements
Despite those reservations, Fuller
agrees that EPA's overall intentions appear
good. "In the larger context," he allows,
"they changed from a six-month testing
cycle to annually. They tried to put in a
better system for state equivalency and
tried to do something on alternative monitoring methods."
Following a review of state and local
programs for addressing fugitive emissions,
EPA says it is proposing to allow operators
to base fugitive emissions monitoring
and repair plans for both well sites and
compressor stations on state requirements
in California, Colorado, Ohio and Pennsylvania. Operators may choose to follow
state requirements for well sites only in
Texas and Utah.
The 2016 NSPS required initial monitoring of compressor stations within 60
days after startup and quarterly thereafter.
EPA says its 2018 amendments propose
to change that to either semiannual or
annual monitoring.
For pneumatic pumps, EPA continues,
the 2016 rule required routing methane
and volatile organic compounds emissions
to an on-site control device or process.
This provision applied to both new and

American Oil and Gas Reporter - October 2018

Table of Contents for the Digital Edition of American Oil and Gas Reporter - October 2018