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EPA proposes new standards to reduce methane and VOCs emissions from oil and gas industry

The US Environmental Protection Agency (EPA) released its latest set of proposed standards to reduce emissions of methane and volatile organic compounds (VOCs) from the oil and natural gas industry.

Methane, the key constituent of natural gas, is a potent GHG with a global warming potential more than 25 times greater than that of carbon dioxide. Methane is the second-most prevalent greenhouse gas emitted in the United States from human activities; nearly 30% of those emissions come from oil production and the production, transmission and distribution of natural gas.

The new proposed rules include updates to the agency’s New Source Performance Standards (NSPS) that would set methane and VOC requirements for additional new and modified sources in the oil and gas industry; draft guidelines for reducing VOC emissions from existing oil and gas sources in certain ozone non-attainment areas as well as in the mid-Atlantic and northeastern states in the Ozone Transport Region; proposed updates to clarify the agency’s air permitting rules as they apply to the oil and natural gas industry; and a proposed Federal Implementation Plan to implement minor New Source Review permitting in Indian country.

Sources already subject to the 2012 NSPS requirements for VOC reductions that also would be covered by the proposed 2015 methane requirements would not have to install additional controls, because the controls to reduce VOCs reduce both pollutants.

The proposed updates also add emissions reduction requirements for sources of methane and VOC pollution that were not covered in the 2012 rules. These include requirements that owners/operators:

  • Find and repair leaks, which can be a significant source of both methane and VOCs. The proposal also includes incentives to spur the oil and gas industry to minimize leaks.

  • Capture natural gas from the completion of hydraulically fractured oil wells. Many hydraulically fractured wells that are drilled primarily for oil also contain natural gas. This gas contains methane, VOCs and a number of air toxics. Owners/operators of hydraulically fractured and refractured oil wells would be required to capture the gas using a proven process known as a “reduced emissions completion” or “green completion.”

    In a green completion, special equipment separates gas and liquid hydrocarbons from the flowback that comes from the well as it is being prepared for production. The gas and hydrocarbons can then be treated and used or sold, avoiding the waste of natural resources that cannot be renewed. EPA required green completions for hydraulically fractured natural gas wells in its 2012 rules.

  • Limit emissions from new and modified pneumatic pumps, which are used throughout the industry from well sites to transmission compressor stations.

  • Limit emissions from several types of equipment used at natural gas transmission compressor stations and at gas storage facilities, including compressors and pneumatic controllers. These agency did not cover these in the 2012 rules.

EPA also is issuing draft Control Techniques Guidelines (CTGs) for reducing VOC emissions from existing equipment and processes in the oil and natural gas industry. CTGs are not regulations and do not impose legal requirements on sources; rather, they provide recommendations for state and local air agencies to consider in determining reasonably available control technology (RACT) for reducing emissions from covered processes and equipment. States may use different technology and approaches, subject to EPA approval and provided they achieve the required pollution reductions. The draft CTGs include information on cost-effective control technologies to help states in making their RACT determinations.

Costs and benefits. EPA conducted a regulatory impact analysis (RIA) that looks at illustrative benefits and costs of the proposed NSPS for the years 2020 and 2025. The 2020 estimates reflects a single year of benefits and costs for sources that become affected in that year. The 2025 estimates are larger, because they include sources that become affected in 2025 as well as sources that become affected in the 2020-24 time period and are assumed to be in continued operation in 2025, thus incurring compliance costs and emissions reductions in 2025.

The estimated climate benefits reflect a net reduction in climate change damages, which include human health impacts, property damages from flood risk, and the value of ecosystem services, among other effects.

Reductions in other pollutants, including volatile organic compounds and air toxics, also are expected to yield benefits; however, EPA was not able to quantify those. Those benefits include reductions in health effects related to fine particle pollution, ozone and air toxics, along with improvements in visibility.

  • EPA estimates the proposal will result in 2020 climate benefits of $200 million to $210 million (2012$), which outweigh the costs of $150 to $170 million. Net benefits are estimated at $35 million to $42 million.

  • EPA estimates the proposal will have climate benefits of $460 million to $550 million in 2025, which outweigh the costs of $320 to $420 million. Net benefits are estimated at $120 million to $150 million.

EPA did not conduct an RIA for the Control Techniques Guidelines, because CTGs are not regulations; they are RACT recommendations for states. The agency estimates that the CTGs would reduce about 82,000 tons of VOCs a year, if affected states were to implement the recommendations as outlined in the guidelines. Those VOC reductions would yield about 220,000 tons of methane reductions as a co-benefit. States have flexibility in determining what measures to implement to meet RACT requirements.


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