August 1, 2011

EPA: New Air Pollution Standards For Oil & Gas Production

The US Environmental Protection Agency (EPA) on Thursday proposed new standards to reduce harmful air pollution caused from oil and gas drilling operations, including the first standard for wells that are hydraulically fractured.

The proposed standards, which are being issued in response to a court order, would rely on cost-effective existing technologies to reduce emissions that contribute to smog and can cause cancer. The standards are also meant to support the EPA's priority of continuing to expand safe and responsible domestic oil and gas production.

The standards would allow for more control in capturing and selling natural gas that currently escapes into the atmosphere, resulting in more efficient operations while reducing harmful emissions that impact air quality.

Northern Texans have complained about the air pollution that results from oil drilling, and some cities have restricted drilling in response to such complaints. However, state regulators said they have found air pollution levels that do not threaten public health.

"This administration has been clear that natural gas is a key component of our clean energy future, and the steps announced today will help ensure responsible production of this domestic energy source," said Gina McCarthy, assistant administrator for EPA's Office of Air and Radiation. "Reducing these emissions will help cut toxic pollution that can increase cancer risks and smog that can cause asthma attacks and premature death - all while giving these operators additional product to bring to market."

The EPA's proposal would cut smog-forming volatile organic compound (VOC) emissions from several types of processes and equipment used in the oil and gas industry. The proposal calls for a 95 percent reduction in VOCs emitted during the completion of new and modified hydraulically fractured wells.

The regulation would also apply to emissions from compressor stations, storage tanks and other equipment. And two other regulations would call for tighter limits on emissions of toxic chemicals, such as benzene. A fourth rule applies to gas processing plants that handle and treat "sour gas," natural gas that contains high levels of sulfur and is poisonous to breathe.

Environmental groups said some large operators are already using equipment that would make it easier for them to comply with new regulations. The EPA said industry would save about $30 million a year by adopting the new technology that captures the escaping gas.

Environmental groups said the regulations are needed because the added revenue isn't sufficient to get operators to install the technology everywhere.

"Industry often makes more money by drilling more wells, not by fixing leaks in their pipelines," Jeremy Nichols, climate and energy program director for Denver-based Wild Earth Guardians, told The Dallas Morning News. "It sometimes amounts to picking up pennies off the sidewalk. That is making money, but it's not exactly picking up hundred-dollar bills."

Devon Energy Corp., the largest producer in the Barnett Shale, has said it saved $125 million using emission-reducing methods such as "green completion," a process that captures gas that emerges with water and other fluids that would otherwise be flared.

Chip Minty, a Devon spokesman, The Dallas Morning News that green completion is cost-effective in the Barnett Shale because the pipeline infrastructure is already developed. But in a newer field without widespread pipelines, operators might find it "less viable," he said.

"There has been some conversation in the state of Texas about requiring green completions. That really presents a problem for the industry to require green completions with every well," he said.

Natural gas production in the U.S. is growing, with more than 25,000 new and existing wells fractured or re-fractured each year. The proposals are expected to reduce VOCs in many areas where oil and gas production occurs. VOC reductions would yield a significant environmental benefit by reducing methane emissions from new and modified wells.

Methane, a potent greenhouse gas, is more than 20 times more potent than carbon dioxide.

The EPA said the regulations would cut the industry's smog-forming emissions of volatile organic compounds by 25 percent.

EPA is under a consent decree requiring the agency to sign a proposal by July 28, 2011 and take final action by Feb. 28, 2012. As part of the public comment period, the EPA will hold three public hearings, in the Dallas, Denver and Pittsburgh areas. Details on the hearings will be announced soon.


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