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Oil and Gas Emissions Standards
Key Development: EPA finalizes its first air pollution standards for hydraulic fracturing.
Potential Impact: The rule would reduce emissions of VOCs, an ozone precursor, from fracked wells by 95 percent.
What's Next: Some pollution reductions are required in about 60 days, but a key provision will not take effect until 2015.
The Environmental Protection Agency's first air pollution standards for natural gas fracking operations will not require industry to use key pollution control equipment until 2015, the agency announced April 18.
EPA wants to ensure that reduced emissions completion (REC) equipment is broadly available before requiring its use to capture excess gas at wells, thereby reducing emissions of volatile organic compounds, methane, and air toxics.
In the meantime, industry will have the option of reducing emissions by flaring off excess gas, a technique that is as effective at capturing VOCs as REC but which also releases nitrogen oxides, Gina McCarthy, EPA assistant administrator for air and radiation, told reporters April 18.
Hydraulic fracturing involves injecting water, sand, and chemicals into rock layers to allow gas to flow from a well. Companies can use portable REC equipment, also called “green completions,” to capture excess natural gas that otherwise would be released into the air or flared off, along with the water and sand that is released during fracking flowback, a process that lasts three to 10 days.
The American Petroleum Institute has told EPA that REC equipment would not be available for the whole industry if the new source performance standards went into effect in 2012, as had been expected. The trade association has said 300 sets of REC equipment are available to industry, but 1,000 new sets would be needed to comply with the rule as proposed.
Howard Feldman, API director of regulatory and scientific affairs, told BNA April 18 the agency “made some constructive improvements to the rule that will allow operations to continue and protect the environment.”
“Generally, we are pleased,” he said. The Jan. 1, 2015, compliance date for REC “seems to be much more reasonable and feasible.”
David Doniger, policy director of the Natural Resources Defense Council's climate and clean air program, told BNA the group is “very supportive of the green completion requirement” but is “disappointed in the length of the phase-in period.”
Doniger said a two-and-a-half-year transition period is excessive because manufacturing rigs to capture the natural gas “is not rocket science.”
EPA emphasized that REC allows natural gas that otherwise would escape into the air to be sold. The agency said it expects the performance standards will save the industry up to $22 million each year, when accounting for the value of natural gas that could be recovered and sold. Without accounting for the value of the recovered gas, the rule would cost up to $330 million annually.
Half of all fractured wells rely on REC, the agency said. The states of Wyoming and Colorado and some cities have regulations requiring its use. And some companies voluntarily use REC, which McCarthy said indicates the technology is “achievable.”
EPA said it included incentives in the final rule to encourage industry to use REC at existing wells that are re-fractured.
Re-fracked wells that adopt REC would not be considered to be “modified” sources, which means they would not trigger state permitting requirements, EPA said.
“We are somewhat encouraged that EPA is simultaneously offering regulatory incentives for those in the industry who chose to become early adopters of this readily available cost-effective technology,” Ann Brewster Weeks, senior counsel for the Clean Air Task Force, said in a statement April 18. “We sincerely hope the industry will take advantage of these incentives, because communities in and near the intense gas drilling, which is now common in many states, will be exposed for two and a half more years to many thousands of tons of air pollution if the gas is flared instead of being sent to market.”
The final rule also exempts some new wells--including low-pressure wells, exploratory wells, and delineation wells--from the rule's requirements. EPA said it is technologically infeasible to use REC at low-pressure wells, which account for 10 percent of fracked wells.
In addition to fracking, the expanded performance standards cover other new and modified oil and gas operations, including centrifugal compressors, reciprocating compressors, pneumatic controllers, and storage vessels.
The rule also includes national emissions standards for hazardous air pollutants for oil and gas production facilities and gas transmission and storage facilities.
The rule, which EPA signed April 17, affects 11,400 fractured and 1,400 re-fractured wells as well as storage tanks and other equipment, according to the agency.
“The president has been clear that he wants to continue to expand production of important domestic resources like natural gas, and today's standard supports that goal while making sure these fuels are produced without threatening the health of the American people,” EPA Administrator Lisa Jackson said in a statement April 18.
Across the oil and gas industry, EPA said it expects the rule to reduce VOCs by up to 290,000 tons, including a 95 percent reduction from fracked gas wells.
VOCs contribute to the formation of ozone, and the agency has said it expects the VOC reductions from wells, storage tanks, and other equipment to benefit ozone nonattainment areas.
The agency said the rule will reduce methane emissions by up to 1.7 million short tons as a co-benefit to VOC reductions. But the rule does not directly regulate methane, a greenhouse gas, as environmental groups wanted. The oil and gas industry is the country's largest source of methane emissions.
In addition, EPA expects the rule to reduce air toxics emissions by up to 20,000 tons.
The pollution reduction estimates for VOCs, methane, and air toxics are about half of what EPA expected under a July 2011 proposed rule. Similarly, the compliance costs are about half of what EPA estimated under the proposed rule (76 Fed. Reg. 52,738; 146 DER A-16, 7/29/11).
McCarthy said the proposed rule overestimated the number of wells that are re-fractured, which partly accounted for the changed emissions reduction estimates and cost estimates. The final rule covers about 13,000 wells, while the proposed rule estimated it would cover 25,000 wells.
“It continues to be a very strong rule that's just as stringent as we proposed, but it's been adjusted in response to data we received,” McCarthy said during a telephone news conference.
EPA was required to sign the rule by April 17 under a consent agreement with WildEarth Guardians (WildEarth Guardians v. Jackson, D.D.C., No. 09-89, stipulation filed 4/2/12).
In the lawsuit, WildEarth Guardians and the San Juan Citizens Alliance alleged EPA failed to perform periodic reviews of air pollution standards for oil and natural gas facilities as required by Section 111 and Section 112 of the Clean Air Act.
“These rules are a major American public health milestone,” Jeremy Nichols, director of climate and energy program for WildEarth Guardians, said in a statement April 18. “With our clean air literally being fracked away across the nation, these rules promise to safeguard our communities and keep the dirty process of drilling in check.”
The final oil and gas standards, which EPA signed April 17 and released April 18, are available at http://www.epa.gov/airquality/oilandgas/pdfs/20120417finalrule.pdf.
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