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Producers Decry EPA Source Rules for Fractured Wells

Two producer groups 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.

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).

Methane emissions from natural gas wells, particularly those from unconventional wells using hydraulic fracturing (fracking), are 50% lower than what the Environmental Protection Agency (EPA) estimated in 2010, according to a joint report released by two industry groups Monday.

The U.S. Chamber of Commerce also accused the EPA of overestimating the emissions associated with shale gas production (see NGI, Jan. 2). In addition, the 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." 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.

Based on a survey of 91,000 gas wells operated by more than 20 companies, compared to an EPA survey of 8,880 wells in 2010, a report issued by America's Natural Gas Alliance (ANGA) and American Petroleum Institute (API) in June estimated methane emissions from gas wells were 4.42 million metric tons, significantly below the 8.79 million metric tons that the EPA had calculated (see NGI, June 11).

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 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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