American Oil and Gas Reporter - August 2019 - 29

Well-Informed Regulations
Especially Critical For
Small Oil, Gas Companies
"Small business owners embody the American pioneering
spirit and remind us that determination can turn aspiration into
achievement." President Trump, in April 2018, highlighted the
critical role that small businesses play in our economy. That
critical role for small business owners holds true for the oil and
natural gas industry as well. However, several pending regulations
fall short in adequately considering the impact on less prolific
oil and natural gas facilities, which often belong to smaller,
family-run operations.
The contribution of marginal wells to America's oil and
natural gas production deserves frequent mention: roughly 10
percent. Even more significant is the number of U.S. low-production wells-394,000 oil wells and 377,000 natural gas wells.
In formulating its Emission Standards for New, Reconstructed
and Modified Sources, the Environmental Protection Agency is
yet to acknowledge the magnitude of these wells, their realistic
greenhouse gas emissions or the economic implications of
saddling them with unnecessary regulations.
Initially, EPA's proposed Subpart OOOOa rule in 2015 exempted low-production wells. However, in the final rule it published in 2016, EPA removed that exemption. Since then, EPA's
attempt to address the arguments against that move has missed
the mark.
A large coalition of national and state associations representing
independent producers consistently has urged EPA to retain
provisions for low-production wells, noting that a fugitive emissions program designed for high-production wells is inappropriate
for low-production wells. These independent producers have
explained the evolving character of wells' natural gas production,
from their strong initial production, to the inevitable pressure
declines and shrinking output. However, a lack of understanding
remains.
To distinguish between high- and low-production wells, EPA
now proposes revising Subpart OOOOa to designate wells 30
days after they begin operation. To qualify as low-producing, a
well must not yield more than 15 barrels of oil a day or 90 mcf
of gas a day. Under this scenario, a facility that does not start its
productive life at these low levels can never qualify as a lowproduction well, which subjects the operator to the Optical Gas
Imaging Leak Detection and Repair (OGI LDAR) fugitive
emissions program. OGI LDAR prompts numerous concerns
when applied to any well. However, it hits the smaller operators
with low-production wells especially hard.
Any well-thought-out regulation should be based on data,
which in the case of Subpart OOOOa, is noticeably lacking.
EPA should defer any fugitive emissions regulations for lowproduction wells until it obtains sufficient information. The Department of Energy is conducting a study to provide specific
low-production well emissions data that can inform these
decisions and actions. EPA should open a new docket to receive
this new data to determine what action is appropriate for lowproduction wells, including the creation of a low-production
well subcategory.

"To distinguish between high- and
low-production wells, EPA now
proposes revising Subpart OOOOa to
designate wells 30 days after they
begin operation.

Meanwhile, natural gas gathering lines are another critical
component of our industry, and some of the smaller-diameter,
lower-pressure gas gathering lines in rural areas often are
operated by smaller businesses. These lines have lower risk
profiles and generally are regulated at the state level. The Department of Transportation's Pipeline and Hazardous Materials
Safety Administration has not exercised jurisdiction over these
gathering lines, and Congress long ago admonished PHMSA to
not exert jurisdiction absent supporting data.
In its pending final rule on Safety of Natural Gas Gathering
Lines, PHMSA initially proposed regulating lines as small as 8
inches. Following public comment, PHMSA's recommendation
set the threshold at larger-diameter lines 12.75 inches and
greater. Equally important, PHMSA sought missing data by
proposing to obtain annual and incident reports from all gathering
line operators.
Although it lacks the data Congress has required, PHMSA's
Gas Pipeline Advisory Committee has pushed back to recommend
PHMSA regulate at the 8-inch level, with consideration given
to pressure. While we know such a change will capture thousands
of miles of rural gathering lines, we do not know the risk these
lines pose, nor the costs various regulations would impose.
Planned data collection could inform PHMSA on the need for
federal regulation, with the potential to ascertain the level of
existing compliance, either voluntary or as required by the
states.
Despite the lack of data, both EPA and PHMSA appear to be
heading toward regulating smaller operations. Meanwhile, the
lack of data is being addressed. When that information becomes
available, if regulation is deemed necessary, agencies can use
the data to tailor a solution to fit the entity so that small
businesses can continue safely producing and transporting
energy to meet our country's demands for oil and natural gas,
and fuel our economy.
❒

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
more than three decades.
AUGUST 2019 29

American Oil and Gas Reporter - August 2019

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