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EPA Frack Emission Deadline Extended to 2015

In its final rule to eliminate harmful air pollution from oil and natural gas production, the U.S. Environmental Protection Agency (EPA) granted the energy industry a "reasonable" time to meet its requirements, extending the deadline for full compliance from two months to two-and-a-half years. The extension was in keeping with the Obama administration's recent embrace of unconventional resources, particularly shale gas.

"The president has been clear that he wants to continue to expand production of important domestic resources like natural gas, and [last week's] standard supports that goal while making sure these fuels are produced without threatening the health of the American people," said EPA Administrator Lisa P. Jackson. The rule, which will apply to unconventional wells that are stimulated using hydraulic fracturing (fracking), is required by the Clean Air Act with a deadline for its issuance set by a court order.

EPA's Gina McCarthy, assistant administrator for the Office of Air and Radiation, said volatile organic compounds (VOCs) would be slashed at new wells -- those drilled after Aug. 23, 2011 -- through a two-phase process requiring flaring followed by "green completions," equipment that would be used to capture and sell natural gas emissions that are currently being lost. The EPA set a deadline of Jan. 1, 2015 for full compliance.

Colorado and Wyoming began requiring green completions in 2009 and 2010, respectively. Several companies, including Southwestern Energy Co. and Devon Energy Corp., have also voluntarily embraced the practice. McCarthy said by EPA estimates, the industry will save $11-19 million by selling the gas captured through green completions by 2015.

The American Petroleum Institute (API) said the EPA made "constructive changes" to its plans since the rules were first proposed last July (see NGI, Aug. 1, 2011).

"The industry has led efforts to reduce emissions by developing new technologies that were adopted in the rule," said API's Howard Feldman, director of regulatory and scientific affairs. "EPA has made some improvements in the rules that allow our companies to continue reducing emissions while producing the oil and natural gas our country needs. This is a large and complicated rulemaking for an industry so critical to the economy, and we need to thoroughly review the final rule to fully understand its impacts."

The American Chemistry Council concurred, stating that it "appreciates EPA's efforts to regulate the oil and natural gas sector with a common sense approach that balances environmental protection with responsible growth in our energy supply."

Dan Whitten, vice president of Strategic Communications for America's Natural Gas Alliance, said the group was still reviewing the rule. "At first glance, it appears as if EPA accepted some of our comments in response to the proposal. However, there remains questions, such as how EPA will address natural gas with low VOC content."

Independent Petroleum Association of America (IPAA) CEO Barry Russell said, "The good news is that many of the objectives that EPA would like to see accomplished under these new rules are already being met and exceeded by industry, with control technologies being deployed across the country and significant reductions in emissions being realized across the board as a result of the enormous investments being made by large and small companies alike."

The IPAA still believes that the baseline data used by the EPA "are significantly overstated; indeed, by as much as 1,400% in some cases," Russell added.

McCarthy acknowledged the criticism. "Our baseline actually doesn't take into consideration the kind of voluntary action that industry was taking, because in the regulatory world, when you're looking at taking credit for these types of federal measures, we do not take that into consideration," she said. "Some folks, particularly companies that are doing green completions, felt we overestimated the reductions because we didn't account for these voluntary measures. [But] you will see in the final rule that we clearly account for those because we understood that people were confused." EPA also stood by its methodology for calculating methane emissions.

Environmental groups applauded the EPA's position. "These updated standards will reduce harmful air pollution through highly cost-effective controls and avoid the needless waste of a valuable domestic energy source: natural gas," said Environmental Defense Fund's Ramon Alvarez. "They will also standardize many common sense practices and technologies that natural gas companies already use successfully and benefit from financially."

Under the EPA's final rule, annual VOC emissions would decline 95%, or about 190,000-290,000 tons. Air toxics (12,000-20,000 tons) and methane (1.0-1.7 million short tons) are also expected to be reduced, the latter by 19-33 million tons of carbon dioxide equivalent.

President Obama recently announced that he would establish a high-level, administration task force to support and oversee the development of unconventional natural gas resources and associated infrastructure (see NGI, April 16). The task force is to coordinate the efforts of eight cabinet-level departments and various federal agencies to promote the clean and responsible development of the natural gas resource.

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