EPA Issues Proposed Methane Limits for New and Modified Oil and Gas Wells

August 19, 2015

 

Further to our alert issued in July 2015, the U.S. Environmental Protection Agency (“EPA”) has now issued proposed regulations for the reduction of methane emissions from oil and gas operations, including specific requirements for hydraulic fracture (“fracking”) wells (the “Proposed Regulations”). The Proposed Regulations would require new or modified oil and gas wells to capture methane and volatile organic compounds (“VOCs”) by setting standards for certain equipment, processes, and activities, including specific limits on methane and VOC emissions from oil and gas operations. The Agency had considered but did not elect to include existing wells within the purview of the proposal.

Fracking wells have been subject to VOC emission standards since 2012, but the Proposed Regulations would impose additional methane standards on such wells. EPA estimates that the Proposed Regulations would reduce emissions of methane—a potent, but short-lived greenhouse gas—by between 340,000 short tons and 400,000 short tons by 2025, at a cost of $320 million to $420 million.

Additionally, in connection with the Proposed Regulations, EPA published draft guidance titled “Control Techniques Guidelines for the Oil and Natural Gas Industry” (“Guidelines”), which do not impose legal obligations on sources, but are “intended to provide state, local and tribal air agencies…with information to assist them in determining [reasonably available control technology] for reducing VOC emissions.” The Guidelines provide information on both the type of technology and costs of such technology that can be used to control sources of VOCs, such as storage vessels, compressors, pneumatic pumps, processing plants, and fugitive emission sources.

Comparable regulations have already been implemented in several states. Commentators note that the Colorado regulations (which extend to both existing and new operations) are more stringent than the Proposed Regulations and are not expected to result in unmanageable costs for oil and gas operators.1 The comment period for the Proposed Regulations will start upon publication of the Proposed Regulations in the Federal Register (expected by the end of August 2015) and expire 60 days after such publication (unless otherwise extended). Environmental organizations will likely advocate for extension of the Proposed Regulations to existing sources.

For additional information on federal and state regulations on methane emissions, please see our previous client alert, which may be found here.

[1] Christine Buurma, Methane Caps on Drillers Worked in Colorado, BLOOMBERG BNA: DAILY ENVIRONMENTAL REPORT (Aug. 18, 2015). 

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