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EPA Proposes Crackdown on Shale Patch Air Emissions

In a landmark maneuver Thursday the U.S. Environmental Protection Agency (EPA) released a list of proposed standards to reduce air pollution from oil and natural gas drilling operations, with particular attention paid to shale development operations, which include hydraulic fracturing (hydrofracking).

Issued in response to a court order following lawsuits from environmental groups, the updated standards would rely on "cost-effective existing technologies" to reduce emissions that contribute to smog pollution and can cause cancer while supporting the Obama administration's priority of expanding safe and responsible domestic oil and gas production.

The proposed standards come on the heels of the agency separately proposing new ozone standards, which came under fire from the American Petroleum Institute (API) as it claims the EPA "exaggerated the benefits" of the proposed ozone rules.

The EPA said the proposed standards Thursday would leverage operators' ability to capture and sell natural gas that currently escapes into the air, resulting in more efficient operations while reducing harmful emissions that can impact air quality in surrounding areas and nearby states.

"This administration has been clear that natural gas is a key component of our clean energy future, and the steps announced today will help ensure responsible production of this domestic energy source," said Gina McCarthy, assistant administrator for EPA's Office of Air and Radiation. "Reducing these emissions will help cut toxic pollution that can increase cancer risks and smog that can cause asthma attacks and premature death -- all while giving these operators additional product to bring to market."

Thursday's proposal would cut smog-forming volatile organic compound (VOC) emissions from several types ofprocesses andequipment used in the oil and gas industry, including a 95% reduction in VOCs emitted during the completion of new and modified hydrofracked wells. The agency said this dramatic reduction would largely be accomplished by capturing gas that escapes to the air and making that gas available for salethrough technologies and processes already in use by several companies and required in some states.

In commenting on the proposed EPA rules Thursday, an API spokesman told NGI's Shale Daily that the institute needs to "take a look at the components of the plan" to be able to gauge what kind of impact they might have on the industry.

The EPA said the standards are especially important now due to the fact that gas production in the United States is growing, with more than 25,000 new and existing wells fracked or refracked each year.

"The VOC reductions in the proposal are expected to help reduce ozone nonattainment problems in many areas where oil and gas production occurs," the EPA said. "In addition, the VOC reductions would yield a significant environmental benefit by reducing methane emissions from new and modified wells." The agency added that the proposed standards also would reduce cancer risks from emissions of several air toxics, including benzene.

Following analysis of the proposed changes, which also include requirements for storage tanks and other equipment, EPA deemed the standards as "highly cost-effective," with a net savings to the industry of tens of millions of dollars annually from the value of natural gas that would no longer escape to the air.

The proposal includes reviews of four air regulations for the oil and gas industry as required by the Clean Air Act:

Because it is under a consent decree, EPA said it was required to sign a proposal by Thursday (July 28) and has to take final action by Feb. 28, 2012. Under a public comment period, EPA will hold three public hearings, in the Dallas, Denver and Pittsburgh areas.

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