In its final rule to eliminate harmful air pollution from oil and natural gas production announced Wednesday, the U.S. Environmental Protection Agency (EPA) granted the industry a "reasonable" time to meet its requirements, extending the deadline for full compliance from 60 days 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 today'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.
"The steps we are taking today are designed to support responsible production of domestic oil and natural gas," McCarthy said. "They reduce harmful air pollution, they improve air quality, they protect the public and they do it in a way that more than pays for itself."
The EPA estimates that by 2015, the industry will save $11-19 million by selling the gas captured through green completions. Industry was being given until 2015 to comply because the EPA "received a lot of data concerning how much of the equipment is now out there and available. This particular standard...requires the technology to be available and cost effective. We took a look at that data and it told us that there does need to be a period of time for equipment to be manufactured and distributed, and for training to be done. We believe that reasonable period of time will end on Jan. 1, 2015."
The American Petroleum Institute (API) said the EPA had made "constructive changes" to its plans since the rules were first proposed last July (see Shale Daily, July 29, 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."
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."
But Russell added that 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."
McCarthy acknowledged that 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."
McCarthy said the agency also stood by its methodology for calculating methane emissions.
Environmental groups also 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.
Last Friday President Obama 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 Shale Daily, 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.