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ExxonMobil Reportedly Breaks With Industry, Supports EPA Methane Rules

ExxonMobil Corp. has reportedly broken ranks with some operators in the oil and gas industry over the Trump administration's plans to amend Obama-era rules on methane emissions, arguing that the regulations are "reasonable" in their current form.

ExxonMobil Vice President Gantt Walton, in a letter to the Environmental Protection Agency (EPA), said the supermajor supports "maintaining the key elements of the underlying regulation, such as leak detection and repair programs [LDAR],” according to a Reuters report. Walton also said the company supports the use of natural gas and called EPA's 2016 New Source Performance Standards "reasonable regulations” to reduce emissions.

In the more than 317,000 public comments EPA received before midnight Wednesday, the industry as a whole appears to disagree. A common thread, according to comments accessible through the website regulations.gov, is a request that EPA scale back monitoring requirements at low production well sites.

Chevron USA Inc.'s Maria Pica Karp, vice president for government affairs, told EPA that the company recommends that LDAR inspections be conducted annually.

"This frequency is an appropriate tradeoff between transportation emissions, time, and effort for travel to sites, and emissions reductions from fixing leaks found in surveys," Pica Karp said. "We agree with EPA's assessment that the 2016 analysis overestimated emissions reductions from leaks, as the frequency of occurrence of leaks detected by surveys is significantly lower than the estimates used in the 2016 rulemaking."

The Chevron Corp. subsidiary agrees with the American Petroleum Institute's (API) position that several recordkeeping provisions of the NSPS "have little to no nexus with compliance assurance and also are costly to comply with. We recommend incorporating API's suggestions to improve the effectiveness of this rulemaking by reducing the recordkeeping requirements for each of the source areas."

Texas Independent Producers & Royalty Owners Association (TIPRO) President Ed Longanecker called the 2016 NSPS "among the most overreaching regulations targeting the U.S. oil and natural gas industry promulgated under the previous administration.

"Since the EPA updated its NSPS and permitting rules in 2016 for new, reconstructed and modified oil and gas sources, TIPRO has lobbied aggressively against the onerous regulations, including a consistent call for the exclusion of low production well sites. Given the significant difference in production and reservoir pressure compared to higher volume wells, stripper wells should have never been subjected to the same requirements under the NSPS."

Permian Basin Petroleum Association (PBPA) President Ben Shepperd concurred, stating in comments to the EPA that while the organization "generally supports" reconsidering the standards, it is recommending the agency reconsider the biennial LDAR monitoring requirement, and instead either exempt or require only a one-time LDAR monitoring event for low production sites.

PBPA requested that EPA allow operators to stop LDAR at well sites after sustained production falls below 15 boe/d per well on a consecutive 12-month average. It also suggested expanding the technical infeasibility provision for pneumatic pumps to include all well sites, not only greenfield well sites.

According to Shepperd, PBPA members also consider it "not feasible" to require repairing a leaking component within 60 days of detection.

"The semiannual monitoring requirement and the repair requirements are currently forcing PBPA members and others in our industry to delay repairs beyond 30 days and in many instances beyond 60 days to meet the definition of 'technically infeasible' because the replacement components are unavailable or on back order," Shepperd said, adding that the association supports a two-year timeline for delay of repair (DOR) situations.

"The industry has experienced delays related directly to the fact that manufacturers...cannot meet the growing demand that regulations have created to comply with the current repair deadlines...The PBPA believes the unavailability of replacement equipment should be included as a valid reason for being put on DOR lists."

Tallgrass Energy LP, which owns and operates more than 8,300 miles of natural gas pipeline and 800-plus miles of crude oil pipeline, recommended that EPA require annual instead of semiannual monitoring at compressor stations. The company also said it opposes an EPA requirement that compressors must be monitored while in operation.

"The requirement will have the unintended consequence of generating emissions solely to monitor a compressor in a specific mode," said Tallgrass air compliance manager Paula Menten. "Additionally, it creates unnecessary recordkeeping and scheduling complexity."

Kansas Independent Oil & Gas Association President Edward Cross took exception with EPA's assumption that owners and operators would capture and sell methane to offset compliance costs.

"Most of the gas that is not being sold today cost too much for owners and operators to collect, process, transport and sell into the natural gas market," Cross said. "Management teams at energy companies have fiduciary responsibility to use owners' and investors' capital in the most efficient way possible. If projects to collect, process and sell gas were economically attractive, companies would have already made the investment…

"This is another example where a federal agency issues a national level regulation without considering the impact across the country. EPA's 'one size fits all' regulation format failed to consider local conditions. Projects in Kansas and other areas around the United States will not realize an economic benefit for developing compliance programs."

EPA first unveiled the NSPS in May 2016, while President Obama was in office. President Trump once elected issued an executive order calling for EPA to reconsider the rule, among other things.

The agency issued a 90-day administrative stay in May 2017, but a three-judge panel of the U.S. Court of Appeals for the District of Columbia removed the stay two months later. EPA then took the unusual step of asking the court to recall its mandate, thereby giving the agency more time to weigh its options. The full court rejected a request by the oil and gas industry to reconsider lifting the stay in August 2017.

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