Innovation addresses US environmental regulations; more needed

July 6, 2015
Technology spawned the recent boom in US oil and gas production which in turn led to new regulations that keep the environment and people safe.

Bennett Resnik
Vermont Law School
South Royalton

Benjamin Nussdorf
US Department of Energy
Washington

Technology spawned the recent boom in US oil and gas production which in turn led to new regulations that keep the environment and people safe. That same dedication to innovation will enable oil and gas companies to partner with regulators and meet the new requirements.

The environmental concerns over oil and gas production, specifically unconventional production such as hydraulic fracturing, are well known. Water and air pollution and water conservation concerns are close to the front of the minds of operators, regulators, and environmental groups. Each seeks continual and comprehensive improvement.

Rigorous standards and best practices through efficient monitoring and strict regulation can mitigate potential environmental risks. Alongside proper state and federal regulation, however, operators have advanced strong technological and operational initiatives to reduce emissions, curb water use, and improve water treatment and disposal.

This article looks at current and pending regulations from the US Environmental Protection Agency (EPA) and US Department of Interior's Bureau of Land Management (BLM) that will require further partnership with, and innovation from, the oil and gas industry to advance the country's environmental efforts. It also looks at steps the industry has taken to address and even stay ahead of regulations.

Air emissions, drinking water

Under the Clean Air Act, EPA regulates natural gas industry air emissions by establishing new source performance standards for various categories of new and newly modified stationary sources of air pollutants.1 It also regulates emissions of hazardous air pollutants (HAPs).2

The EPA issued a final rule, "Oil and Natural Gas Sector: New Source Performance Standards and National Emission Standards for Hazardous Air Pollutants Reviews," imposing new emissions requirements on hydraulically fractured natural gas wells effective Jan. 1.3

EPA estimates that these new regulations will reduce emissions by 190,000-290,000 tonnes/year (tpy) of volatile organic compounds (VOCs), 12,000-20,000 tpy of HAP, and 900,000-1.5 million tpy of methane.4

In addition to air emission regulations, EPA is expected to release a final draft report this year on hydraulic fracturing and its potential impact on drinking water.

Neither industry nor government has waited for the release of this report to advance more environmentally friendly treatment of water. Issues of water availability for drilling and hydraulic fracturing, water quality, treatment of produced and flowback water, and methods of disposal of wastewater are, to a degree, addressed in current regulations under the Clean Water Act and Safe Drinking Water Act.5

Federal regulations, such as BLM's pending "Oil and Gas; Well Stimulation, Including Hydraulic Fracturing, on Federal and Indian Lands," as well as technological innovations, have addressed water management.

Industry responds

Innovative and advanced water treatment equipment is gradually supplanting traditional extraction and treatment technologies. Companies are developing more efficient means to clean and recycle drilling water on site, as well as engineering more environmentally friendly drilling solutions.

Hydraulic fracturing is particularly water intensive. As several regions in the US have experienced drought conditions, the need for efficient and effective water management and treatment technologies has come to the fore.

Some oil and gas companies have taken a strong step to "green" the hydraulic fracturing process through electrocoagulation (EC), as well and by using downhole drilling solutions with active ingredients from the food industry.

EC treatment applies an electric current across metal plates to remove contaminants from water. The water might contain hydrocarbons, high levels of dissolved solids, and chemicals from drilling and production. EC removes specific contaminants, such as suspended solids, allowing future fracturing operations and applications to use the treated water.

Companies also are applying advanced desalination to treat contaminated water. The technology removes salts and other contaminants to allow companies to reuse the water. At the end of the process, the recycled water returns to the original source in a decontaminated state.

Treating water on site is not only environmentally beneficial but cost effective. Treating produced and flowback water at the well pad means less water to haul off site, reducing traffic congestion and fuel and water costs.

Reuse and recycling are beneficial methods of wastewater treatment. Reclaiming produced water in hydraulic fracturing not only alleviates water dependence but also decreases overall costs.

Produced water is generally disposed of down saltwater injection wells, which state agencies regulate under EPA's Underground Injection Control program, part of the Safe Drinking Water Act.6

Green completions

Methane emissions from the oil and gas industry continue to be a concern. Natural gas is the cleanest burning fossil fuel and is less carbon-intensive than alternative fuels. Despite this, gas well completions release VOCs, HAPs, and methane.

The oil and gas industry has adopted special completion methods, known as "green completions," to reduce these emissions. Green completions capture gas flowback that would otherwise be vented or flared. Instead, the gas is cleaned and routed to the flowline or a collection system to be reinjected into the well or another oil or gas well.

Several states require the use of green-completion technology, and others address this issue by including best-management practices in their permitting processes. Companies can also use captured gas as an on site fuel source or for other purposes.

In August 2012, EPA unveiled rules revising NSPS and HAPs standards for oil and gas production. EPA, under the Clean Air Act, must review the NSPS every 8 years.

These new standards, implemented in January, require companies to capture natural gas and VOCs that escape when they prepare hydraulically fractured gas wells for production.

Reduced-emission completions capture or burn emissions, including methane, during the initial phase of water flowback from hydraulic fracturing operations.

The EPA estimates these rules will result in the capture of about 95% of the VOCs emitted from 11,400 newly fraced and 1,400 refracture wells.4

Equipment to capture the emissions will require increased capital investment from the oil and gas industry. EPA, however, estimates a net average savings of $11-19 million/company/year if companies sell captured gas (including propane and LNG) and condensate in the market.4

Plunger lift systems, desiccant dehydrators, vapor recovery units, and various monitoring and repair technologies are also being deployed to address the new regulatory requirements.

New rules also demand reductions in emissions from equipment such as processing plants, storage tanks, and certain pipeline compressors. The rules provide several reporting and notification requirements but only apply to well completion operations that began on or after Jan. 1.

BLM Onshore Order 9

Greenhouse gases, such as CO2 continue to be a problem in the energy sector (Figs. 1, 2, and 3). US Pres. Barack Obama's Climate Action Plan, published in June 2013, addresses the reduction of greenhouse gas emissions, including curbing methane and CO2 emissions.7

The Obama administration tasked federal, state, and tribal agencies with improving permitting for infrastructure projects via the Bakken Federal Executive Group, an interagency group that works with the oil and gas industry to reduce venting and flaring in the Bakken. The World Bank has estimated that around 14 bcfd of gas is flared globally, with 10.3 bcf of gas flared in the Bakken during April 2014 alone.7

About 30% of associated gas produced in the Bakken is flared. Capturing this resource and reducing gas flaring are priorities for operators and regulators.

Companies have been testing mobile systems that convert associated gas into compressed natural gas at the wellsite to capture and sell the gas. Bakken fields are losing more than $100 million/month in potential capture and sales due to flaring.8

BLM has announced a proposed rulemaking that may further the administration's Climate Action Plan entitled "Onshore Oil and Gas Order No. 9: Waste Prevention and Use of Produced Oil and Gas for Beneficial Purposes." This proposed rule would establish standards to minimize the amount of venting and flaring of natural gas that occurs at oil and gas production sites on federal and Indian land.

The notice also directs BLM to set criteria for determining "avoidable" and "unavoidable" losses. Authority for this rule falls under the Mineral Leasing Act of 1920 that allowed leasing, exploration, and production of selected commodities, including oil and gas, on public lands. Section 16 of the act reads:

"That all leases of lands containing oil or gas, made or issued under the provisions of this Act, shall be subject to the condition that the lessee will, in conducting his exploration and mining operations, use all reasonable precautions to prevent waste of oil or gas developed in the land, or the entrance of water though wells drilled by him to the oil sands or oil-bearing strata, to the destruction or injury of the oil deposits. Violations of the provisions of this section constitute grounds for the forfeiture of the lease."9

The continued progression of Order No. 9 and the details of how BLM seeks to reduce venting and flaring may set a baseline for other regulatory agencies to curb methane emissions and for operators to address them via new technologies.

References

1. 42 US Code § 7411 - Standards of performance for new stationary sources, 1970.

2. 42 US Code § 7412 - Hazardous air pollutants, 1970.

3. "Oil and Natural Gas Sector: New Source Performance Standards and National Emission Standards for Hazardous Air Pollutants Reviews," Federal Register, Vol. 77, Issue 159, Aug. 16, 2012.

4. "Overview of Final Amendments to Air Regulations for the Oil and Natural Gas Industry," US Environmental Protection Agency, Apr. 17, 2012.

5. Safe Drinking Water Act, Public Law 109-58, § 322, 2005.

6. 42 US Code Part C - Protection of underground sources of drinking water, 1974.

7. "President's Climate Action Plan," Executive Office of the US President, June 2013.

8. Scheyder, E., "Bakken Flaring Burns More than $100 Million a Month," Reuters, July 29, 2013.

9. 30 US Code § 181- Mineral Leasing Act, 1920.

DRILLING &

PRODUCTION

The authors
Bennett Resnik ([email protected]) has worked in both public and private sectors, focusing on federal and state energy and environmental regulation, government affairs, and domestic public policy matters. He holds a JD from Vermont Law School, a certificate in energy innovation and emerging technologies from Stanford University, California, and a BA from James Madison University, Harrisonburg, Virginia.
Benjamin Nussdorf ([email protected]) is a senior regulatory advisor with the US Department of Energy, Office of Fossil Energy, and a lecturer at the Washington College of Law, George Washington University Law School, Washington, DC. He holds a JD from American University Washington College of Law, Washington and a BA from the University of Pennsylvania.