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INGAA: Methane Rule Would Force Blowdowns, Burden Operators

The Interstate Natural Gas Association of America (INGAA) said the potential costs of the Environmental Protection Agency’s (EPA) plan to limit methane emitted by the oil and gas industry would outweigh the benefits.

In a detailed filing submitted to EPA Friday, just before the end of the proposed methane rule’s public comment period, INGAA outlined what it characterized as unnecessary costs to transportation and storage (T&S) stakeholders under EPA’s methodology. INGAA raised concerns over how the rule defines what compressor stations would be regulated, how the rule proposes to survey for leaks in equipment and the timelines it sets for repairing those leaks. INGAA further argued that its own methodology for evaluating and repairing leaks would be both less costly to industry and more effective at reducing methane emissions.

“The proposed rule would offer little, if any, environmental benefit compared with the more reasonable alternatives offered by INGAA,” the trade association said.

The Obama administration revealed detailed plans earlier this year to cut methane emissions from new and modified sources in the oil and gas industry by 40-45% below 2012 levels by 2025 (see Shale Daily, Aug. 18; Jan. 14). The methane rule is part of the administration’s broader climate change agenda.

When EPA issued its notice of proposed rulemaking for the methane rule [EPA–HQ–OAR–2010–0505] in August, EPA Administrator Gina McCarthy said the “cost-effective proposed standards” underscore “our commitment to reducing the pollution fueling climate change and protecting public health while supporting responsible energy development, transparency and accountability.”

EPA said it expects the rule to cut 340,000 to 400,000 short tons of methane in 2025, while yielding “net climate benefits” of $120-$150 million over the same timeframe.

But INGAA, in its filing, said the EPA both overestimated the benefits of the rule and underestimated its costs to industry. INGAA maintained that a less costly industry-led approach could achieve greater emissions reductions.

One of the central concerns laid out in INGAA’s filing is a 15-day deadline for repairing leaks and a lack of “reasonable delay-of-repair provisions” for circumstances where that 15-day window would be technically infeasible. Fifteen days may not give an operator adequate time to order replacement parts or may prove costly if a compressor station must shut down, potentially requiring a T&S operator to refund shippers subscribed to the interrupted capacity, INGAA said.

And forced blowdowns to repair leaks within 15 days could counterintuitively lead to more methane emissions than waiting to repair the leaks during the next planned shutdown, INGAA said.

“EPA did not recognize that requiring leak repair within 15 days would necessitate blowdowns that otherwise would not occur, and that this could result in far greater emissions of methane than if more reasonable rules governed delay of repair,” INGAA said. “In many instances, it is likely that the methane emitted from a blowdown will greatly exceed the volumes of methane emissions avoided by fixing a leak within 15 days.”

INGAA questioned the EPA’s proposed schedule for surveying equipment and the expansive definition of potential components surveyed, saying the EPA’s approach is both burdensome and fails to prioritize equipment based on the volume of methane emitted.

“The proposed rule is flawed because it does not focus on the larger methane leaks,” and this “intense focus on addressing fugitive emissions from smaller sources will lead to a misallocation of resources that will discourage T&S operators from addressing larger methane emissions at existing sources that are outside the scope” of the rule, INGAA said.

Also of concern, INGAA said, is the language for defining new and modified sources that would be regulated under the rule. The EPA unfairly assumes that all modifications lead to an increase in fugitive emissions, the trade association said.

“For these purposes, the proposed rule defines ‘modification’ as any addition of a compressor or compression capacity at a compressor station. As such, EPA appears to presume (incorrectly) that any such change would increase fugitive emissions at a station. (This is not always the case.) Furthermore, EPA appears to assume (incorrectly) that such a change would increase fugitive methane emissions at the entire compressor station because the proposed rule makes the entire station the ‘affected facility’ to which the standard of performance for fugitive emissions applies,” INGAA said.

With the public comment period now closed, the EPA plans to issue the final version of its proposed methane rule in June (see Daily GPI, Nov. 24).

Others have weighed in on the proposed rule in recent months.

The Environmental Defense Fund came out in support of the planned methane reductions shortly before the proposed rule was announced (see Shale Daily, Aug. 17).

Around the same time, a pair of Barclays analysts estimated that the proposed rule would cost the industry $420 million in 2025, assuming recovery of 16-19 Bcf from the new standards, but that this cost would be “manageable” and would not likely impact U.S. production levels (see Daily GPI, Aug. 20).

More recently, Sen. Jim Inhofe (R-OK), chairman of the Senate Environment and Public Works Committee wrote to McCarthy questioning the use of a social cost of methane (SCM) methodology in the proposed rule.

In a letter sent Friday, Inhofe, an outspoken critic of the Obama administration’s efforts to address climate change, called the SCM “deeply flawed,” suggesting a political motive leading up to the ongoing international climate talks in Paris.

“The timing of the SCM’s application is seemingly driven by the international climate negotiations so the Obama administration can cite regulatory actions for methane and tout outlandish benefit estimates for reducing methane conjured by the SCM,” Inhofe said.

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