Two Washington, DC-based groups representing oil and gas producers have protested the U.S. Environmental Protection Agency’s (EPA) final new source performance standards, which are aimed at restricting volatile organic compounds (VOCs) and sulfur dioxide emissions from onshore natural gas operations, including hydraulically fractured (fracked) wells. One of the groups is seeking a stay of the EPA’s action.
The new standards will regulate emissions from gas processing plants, wells, centrifugal compressors, reciprocating compressors, pneumatic controllers and storage facilities. Moreover, the EPA action also finalizes residual risk and technology reviews for oil and gas producers, gas pipelines and storage facilities, as well as establishes emission limits reflecting maximum achievable control technology for certain currently uncontrolled emission sources in these sources categories. They are scheduled to take effect on Oct. 15.
The standards “are based on emissions estimates that are overstated by as much as 1,400%,” said Lee Fuller, vice president of of government relations for the Independent Petroleum Association of America (IPAA).
The U.S. Chamber of Commerce also has accused the EPA of overestimating the emissions associated with shale gas production (see Shale Daily, Dec. 30, 2011). In addition, it noted that energy research firm IHS CERA concluded that the “overall amount of methane that EPA assumes is emitted during well completion activities does not pass a basic test of reasonableness” (see Shale Daily, Aug. 25, 2011). And San Francisco-based URS Corp., which conducted a survey of gas well completions and emissions, reported that the survey results showed that actual gas emissions from the completion of unconventional shale gas wells were more than 1,200% lower than EPA’s gas emission estimate.
Fuller noted that the EPA standards, as written, would apply to any well that is fracked, making no distinction between a large horizontal well or a small vertical well. As a result, small wells would be required to buy emission-control equipment that won’t be cost-effective, he said.
The American Petroleum Institute (API) has filed a petition with the EPA seeking reconsideration and an administrative stay of the standards. “While the final rule is an improvement from the proposal, it still has critical issues that will warrant immediate action from EPA. Specifically we believe that EPA has inadvertently written some of the requirements in a manner that will cause widespread non-compliance with the rules,” said Matt Todd, API senior policy advisor.
“We think that [a stay] is a great idea. I think we’ll look at that [possibility also],” the IPAA’s Fuller said. He noted that API has had a lot more discussions with the EPA on this issue.
EPA estimates that the annual costs of the rule will be about $738 million. The agency projects that the rule will result in a reduction of 540,000 tons per year (tpy) of VOCs, or about 25% overall; cut methane emissions by 3.4 million tpy (26% reduction); and reduce air toxics by 38,000 tpy (30%).
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