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Producer Groups Lobby White House on Emissions Rule Changes

Major oil and natural gas groups continued to lobby the White House last week to change pollution standards for oil and gas operations, which the Environmental Protection Agency (EPA) is scheduled to issue Tuesday (April17). They called for the administration to postpone the final rule on the standards until more accurate emissions data is gathered.

In a letter to the White House last Thursday, Lee Fuller, vice president of government relations for the Independent Petroleum Association of America (IPAA), urged the administration to delay the rulemaking until the EPA collects accurate data on emissions from gas-producing wells; exempts vertical wells mostly drilled by smaller producers from the rule; and limits application of the emissions rule to wells meeting a minimum threshold for volatile organic compounds (VOCs).

"The use of flawed data has led to grossly overestimated emissions and has ultimately resulted in a distortion of the agency's required cost-benefit analysis. Reports have shown that, in some cases, the EPA overstated emissions estimates by [more than] 1,400%...As such IPAA would encourage the postponement of the...rulemaking until accurate data is collected," he said.

In a joint teleconference with America's Natural Gas Alliance (ANGA) Thursday, Howard Feldman, director of regulatory and scientific affairs for the American Petroleum Institute (API), said API had two concerns with the EPA's proposed final rule on the New Source Performance Standards and National Emission Standards for Hazardous Air Pollutants for the Oil and Gas Sector (NSPS rule):

Despite its concerns, Feldman said the API does not oppose the EPA's efforts. "I want to be clear; we do not oppose these rules. Nonetheless, significant improvements are crucial to make sure they are workable and achieve emissions reductions cost-effectively and safely while allowing oil and gas development to continue," he noted.

"We hope the EPA is taking the opportunity to get these rules right," Feldman said. The emissions standards were initially due out April 3, but the deadline was extended by two weeks so the agency could consider comments filed by industry (see NGI, April 9). The proposed standards, which were issued in response to a court order following lawsuits from environmental groups, would cut VOCs from oil and gas operations, with an emphasis on operations using hydraulic fracturing (fracking) well stimulation (see NGI, Aug. 1, 2011).

The API sent a letter to the White House Thursday expressing its concerns with the upcoming rules, and it has proposed that the EPA's emissions-reduction standards apply only to operations where VOC emissions are 10% or more. Environmentalists claim that API's proposal would exempt most fracking operations from the EPA rules. "Clearly, some wells in Marcellus would be below that threshold and some would be above that," Feldman said.

But he believes a VOC threshold is necessary, either API's or one that is proposed by the EPA. He said the API picked 10% because it's a "common threshold that's used in establishing [new source] performance standards."

Feldman would not rule out the possibility that API could challenge the EPA emissions rule in court. Once the final rule is issued, the producer group will assess it to "decide whether we need to take any additional steps." The rule is expected to cost the oil and gas industry $783 million over four years.

In addition to IPAA, both the API and ANGA have found fault with the EPA's estimate of emissions that escape from oil and gas drilling operations. As a result the two groups have partnered on a more comprehensive emissions survey. "The data [already] has been collected [and] is in the process of being analyzed and written up in a report to be made available to the public," said Sara Banaszak, ANGA chief economist and vice president. She said the study results will be out "imminently."

The EPA's estimate of gas that escapes into the atmosphere is based on "data that is outdated and incomplete," she said. Due to the technology being used by industry, "our emissions [are] substantially lower than existing data suggest." The industry also disputes claims about emissions rates made by environmental groups.

"We don't know" how many companies are using green completions, said Feldman. "We think the EPA's estimate of 15% is low." Green completions are designed to control or reduce VOC emissions from oil and gas operations. They can eliminate most of the VOC emissions and recover natural gas during flowback and well testing.

Banaszak said ANGA submitted a "small sampling" of industry green completions along with its comments on the EPA's proposed rule, and it showed there could be a "high degree of variance" with the EPA's estimate of green completions.

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