WEA: New EPA rules would divert development dollars to compliance

Proposed US Environmental Protection Agency emissions control requirements for oil and gas producers exemplify recent EPA actions focusing limited government resources on regulation at a time of high unemployment and slow economic growth, an official of a Rocky Mountain Independent Producers trade association warned.

The proposed New Source Performance Standard and National Emissions Standards for Hazardous Pollutants for the oil and gas sector will further divert investment from development of energy, particularly clean-burning natural gas, and into nonproductive regulatory compliance, Spencer Kimball, government affairs manager at the Western Energy Alliance, told a Sept. 29 EPA hearing on the proposed rules in Denver.

“The notification, record keeping, monitoring, and reporting requirements in the proposed NSPS and NESHAP rules are extremely burdensome for companies as well as state regulators who will be required to process all the new paperwork,” Kimball said. “The proposed rules require operators to install expensive monitoring systems and flow meters that will generate more data but no environmental benefit.”

Kimball said EPA’s cost estimates for complying with the proposed rules are extremely low, while its estimates of benefits from the new regulations are extremely high.

The agency estimates that the combined annual costs of meeting the proposed requirements would be $754 million in 2015, which is unreasonably low given the number of facilities across the country and the elements which are missing from the analysis, he indicated. “Tanks are an example, as EPA considered just the cost of adding flares, but not the cost of the pad, piping, installation, monitoring equipment, and other equipment necessary to make the entire system work,” Kimball said.

Inflated benefit estimates

“On the other hand, [the agency’s] benefit estimates are extremely high, and claim the capture of 3.4 million tons of recovered methane will net $30 million annually,” he continued. “EPA is assuming only a small percentage of facilities currently capture gas, and takes credit for the full economic benefit of something many companies are already doing where the operational conditions allow. Gathering the data to refute these cost estimates is extremely time consuming and complex.”

Kimball noted that instead of work practices which are usually imposed under the federal Clean Air Act, EPA is dictating a work practice, “green emissions,” for hydraulic fracturing, which is not always feasible in certain technical and economic situations. “Rather than petroleum and environmental engineers making the determination of how best to safely meet emissions reductions standards given the technical situation in the field, nonexpert government bureaucrats are dictating the method,” he said.

EPA also is giving the public only 60 days to respond to the proposed regulation, and also has not allowed enough time to implement the rule which would be retroactive to Aug. 23, Kimball said. WEA believes that the Feb. 28, 2012, deadline for the final rule is unrealistic since it does not allow time for deliberative public comment and implementation, and recommends that EPA seek an extension from the federal district court for the District of Columbia, he said.

“At a time when the Obama administration should be embracing policies to create jobs, stimulate the economy, and increase production of American clean energy, EPA is increasing the regulatory burden on the development and production of oil and gas, putting jobs and economic growth at risk,” said Kimball.

“Taken together with EPA’s other regulatory initiatives, these proposed rules will continue to slow American economic growth, make it more expensive and difficult to develop American energy, and result in lost jobs without providing commensurate environmental protection,” he declared.

Contact Nick Snow at nicks@pennwell.com.

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