Concerns aired over EPA's new source performance standards proposal

Two leading oil and gas associations separately expressed concerns on Apr. 12 over the US Environmental Protection Agency new source performance standards (NSPS) covering production emissions that now are slated for release on Apr. 17. The Office of Independent and Regulatory Affairs, which is part of the White House Office of Management and Budget, is reviewing the proposal.

The American Petroleum Institute does not oppose the proposed rule if changes can be made to assure that it can be reasonably implemented to avoid negative impacts to US oil and gas production and job creation, API Pres. Jack N. Gerard said in a letter to EPA Administrator Lisa P. Jackson.

Gerard noted that in API’s formal comments on the proposal, it explained that when the volatile organic compound (VOC) content of gas is low, control measures such as reduced emissions completions (REC) achieve very little VOC reduction and are not cost-effective.

The proposed requirement for REC should be phased in over 2 years where it will apply because there are not enough REC sets available to handle the 25,000 wells that are competed each year, he continued.

“Assuming each REC set can be used to complete 25 wells/year, this means that about 1,000 new REC sets will be needed,” Gerard told Jackson. “In addition, many existing REC sets will need to be retrofitted to meet the new standards. This means that all 300 existing sets will not be immediately available upon the effective date of the rule.”

Proposal’s scope

Lee O. Fuller, vice-president of government relations for the Independent Petroleum Association of America, warned that the proposed rules would expand regulations for oil and gas production, processing, transmission, and storage while imposing the first-ever federal air standards for all gas wells which are hydraulically fractured.

“Due to the expansive nature of these rules, hundreds of thousands of American natural gas development operations could be affected and, as such, risks the jobs of hundreds of thousands of Americans whose livelihoods are dependent on the ability to explore for, and produce, oil and natural gas in the United States,” he said in an Apr. 12 letter to Valerie B. Jarrett, senior advisor to US President Barack Obama.

Fuller noted that while a significant part of the proposed rule apparently is directed toward larger gas wells with horizontal legs, it would apply to all gas wells that are fractured, including smaller vertical well operations that do not have the same emissions profile as their larger counterparts with horizontal components.

IPAA recommends delaying implementation of the NSPS rule until new data could be collected and a more-thorough cost benefit analysis for the emissions control requirements could be undertaken, he said.

As an alternative, IPAA would encourage EPA to exempt gas wells without horizontal legs (i.e., vertical wells) from the requirement, and supports proposals to limit the rule’s application to wells meeting a minimum VOC threshold (although this would not fully address the vertical well issue), Fuller said. Similar issues arise with regard to the proposed NSPS rule and storage vessels, he added.

Sought extension

EPA sought an extension for issuing its final oil and gas air emission rules, which include fracing regulations, according to Howard Feldman, API’s regulatory and scientific affairs director. “The fact is that the industry is already leading efforts to reduce emissions,” he told reporters during an Apr. 12 teleconference.

“Our companies, after all, are in the business of selling methane, which is natural gas, so they don’t want it to escape into the atmosphere,” he observed. “The technology and equipment being used to reduce emissions were created by the industry itself—not by EPA or by our critics in the environmental movement—and companies are already implementing it in many locations.”

Feldman said EPA recognized that there will be a significant increase in REC but failed to analyze whether there is enough of the specific emissions reduction equipment available. Such equipment is not produced on an assembly line, where production can be ramped up instantly, but must be carefully built one by one in machine shops, which takes time, he said.

“Also, implementation of the rule could be made easier if the system of notifications, monitoring, recordkeeping, performance testing and reporting requirements for compliance assurance were simplified,” Feldman said. “Unless changed, they would be overly burdensome for the small and/or temporary facilities. They would waste time and resources of the industry, states, and EPA.”

He reiterated that RECs were created by the industry itself, “not by EPA or by our critics in the environmental movement—and companies are already implementing it where it is cost-effective and technically feasible. The bottom line is that EPA can fix these rules so they reduce emissions in a way still compatible with oil and gas development that creates jobs, revenue to the government, and energy security.”

Contact Nick Snow at nicks@pennwell.com.

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