With the final pollution standards for the oil and natural gas industry due to be issued within days, the industry is hoping for the best but preparing for the worst. An official with the American Petroleum Institute (API) said the group hopes the rule will be “reasonable” and “achievable,” while at the same time stressing that industry does not oppose the Environmental Protection Agency’s (EPA) efforts to reduce emissions from oil and gas operations.
“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,” said Howard Feldman, API director of regulatory and scientific affairs, during a joint teleconference with America’s Natural Gas Alliance (ANGA) Thursday.
“We hope the EPA is taking the opportunity to get these rules right,” he 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 Daily GPI, April 4). The proposed standards, which were issued in response to a court order following lawsuits from environmental groups, would cut volatile organic compounds (VOC) from oil and gas operations, with an emphasis on operations using hydraulic fracturing (fracking) well stimulation (see Daily GPI, July 29, 2011).
Feldman said API has two concerns with the EPA proposed standards:
He said the API sent a letter to the White House Tuesday expressing its concerns with the upcoming rules.
The API 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 proposed by the EPA. He said the API picked 10% because it’s a “common threshold that’s used in establishing [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.
Both the API and ANGA have found fault with the EPA’s estimate of emissions that escape from oil and gas drilling operations and 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 (see Daily GPI, April 12).
“We don’t know” how many companies are using green completions, said Feldman. “We think the EPA’s estimate of 15% is low,” while the estimate of 93% mainly applies to large companies and does not include green completions of smaller or medium-sized firms, he said. 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 the number of companies using 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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