Texas regulators have adopted tougher restrictions on natural gas development-related air emissions in the Barnett Shale of North Texas. Eventually the new rules -- which the industry laments as costly -- will apply statewide.
The Texas Commission on Environmental Quality (TCEQ) has revised its standard permit and permit by rule (PBR) for oil and gas facilities or groups of facilities at a site. The new rules take affect in the 23 counties that comprise the Barnett Shale area on April 1. The Barnett implementation is seen as a trial period of the new requirements, which was sought by the oil and gas industry before statewide rollout of the changes.
The rules that were approved are weaker than what was proposed at the agency last summer. Still, TCEQ allowed "that there could be significant costs for facilities required to use the new authorizations.
"Sampling of emission streams can range from $800 to $5,000," the agency said in a memo earlier this month. "Installation of emission controls can range [from] $10,000 to $100,000 based on the specific facilities located at a site and control options selected by the site owner or operator for the PBR or as required [best available control technology (BACT)] for the standard permit."
TCEQ said it received more than 200 comments during the rule revision process. Commenting on behalf of the oil and gas industry were the Texas Oil and Gas Association, the Texas Pipeline Association, the Permian Basin Petroleum Association and the Gas Processor's Association, as well as a number of producers. The Lone Star Chapter of the Sierra Club and the Environmental Defense Fund were the main commenters among environmental organizations.
"Companies and individuals commented that the rule was overly burdensome and expensive and would result in major portions of the industry leaving the state with severe damage to supporting businesses and tax revenue," according to TCEQ. However, "...when the control costs are analyzed as a fraction of the recorded profits of the industry and potential revenue per individual site, the percentages are approximately 1% and 3% of the revenue figures."
TCEQ calculated its cost estimate based on a "worst case" for control implementation, maximum control costs and average revenues, it said. "Additionally, the analysis did not consider savings resulting from recovered product and the reduction in costs due to regulation changes from proposal to adoption of the rule," it said.
Justin Furnace, president of the Texas Independent Producers and Royalty Owners Association (TIPRO), said the organization was still evaluating the adopted rule changes.
"We've got to get down in this final version that passed and understand what the net effect to us is," he told NGI's Shale Daily. "But as originally proposed, there were some that estimated that this would cost over $4,000 per well to comply with, and that's not bringing in the capital expenses associated with bringing a well back in compliance...That number is simply just the cost of seeking a permit."
The standard permit is to remain as an authorization for new oil and gas sites in Texas counties outside of the Barnett Shale region until Jan. 5, 2012 and for renewals until Jan. 1, 2016. Facilities authorized under a PBR and that are not modified are generally not affected by the changes. Unmodified facilities authorized under a standard permit would be required to comply with the new standard permit at their next renewal cycle as of Jan. 1, 2016.