For the oil and gas industry, abiding by environmental statutes, regulations, and permits has become no simple-or easily understood-task.
Over the last few decades in particular, the environmental concerns have become points of focus for the public as well as many regulators.
For industry, it has become a question not so much of wanting to comply with environmental regulations but rather of understanding which regulations it is subject to and which it is not.
Navigating the maze
For Greg Haunschild, untangling the regulatory threads for the oil and gas industry comes more as a crusade than as a business. He is president of Argent Consulting Services Inc., Houston, one of many companies that have developed compliance software to ease the burden of following environmental regulations.
“I see industry as being overwhelmed and shell-shocked yet still surviving with the regulatory requirements,” Haunschild said of the ever-increasing list of regulations. Most companies don’t always have a clear view of what is required, he noted, so they do what they think is right, which often leads to lost time and money.
Companies need regulatory compliance experts who understand what does and doesn’t apply to their operations, Haunschild told OGJ.
He compares the situation to staying compliant with tax laws, which are systematized and therefore amenable to automation. For example, when a company processes its payroll, automated accounting systems can assure a company of compliance with tax requirements.
Haunschild points to a client that struggled with environmental compliance. The client, a chemical company that had completed an upgrading project, was visited by an inspector who asked questions about changes to the company’s system. The chemical maker wasn’t sure why it had followed some regulations and not others. The company spent more money than it needed to because the regulations were unclear.
The system needs more simplification than it has received, Haunschild said. In the meantime, he added, the proliferation of regulations needs to stop.
“In the big scope of things, the overall impact of regulatory compliance is one more factor that’s driving companies out of the United States, in my opinion,” Haunschild said.
Other examples
Another of his clients was only moderately knowledgeable about regulatory requirements but still decided to complete its own permit application for a system improvement to save money. After beginning the process, the company decided to follow a permit condition that seemed to require the construction of two gas flares at a cost of $250,000/site. As it turned out, the company wasn’t required to build the flares. But it completed one of the flares before realizing its mistake and was stuck with liability for the unneeded unit.
Fight for clarity
One way to improve environmental regulation, Haunschild said, is for regulators to provide companies guidance based on common-sense approaches to regulations-essentially clarifying what regulations “actually mean.”
In one fight for clarity, Haunschild found himself addressing Texas regulators about water opacity limits. Prior to a certain regulation, he explained, the common-sense approach was that if there was no opacity, there was no need to monitor or certify “nothing.” But the guidance interpretation was that every site must have a “certified opacity reader,” which added considerable cost.
“My argument that finally swayed them after 6 months of fighting was comparing the regulation for collecting storm-water samples to having a person hold a bucket under a dry outfall for 30 min to prove it is dry when we have extended periods of no rain.”
The fact that Texas was in a drought at the time helped drive the point home, he added. ✦