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EPA Proposes to Include Upstream Oil and Gas Operations in Greenhouse Gas Reporting Program

November 19, 2014 | Oil, Gas, Resources & Mining

 

On November 13, 2014, U.S. Environmental Protection Agency (“EPA”) Administrator Gina McCarthy signed proposed revisions to the Greenhouse Gas (“GHG”) Reporting Program, which will extend GHG reporting requirements to portions of the upstream oil and gas sector. The EPA will accept comments for 60 days after the proposal is published in the Federal Register.

The GHG Reporting Program currently requires annual reporting of greenhouse gas data for 29 source categories, but it does not include petroleum and gas systems (see 40 CFR Part 98). Beginning January 1, 2016, the current proposal would add requirements for the oil and gas industry to report GHG emissions in connection with the following sources: (i) oil well completions and workovers with hydraulic fracturing, which will be added to the existing Onshore Petroleum and Natural Gas Production segment; (ii) petroleum and natural gas gathering and boosting systems, which will be added as a new industry segment (Onshore Petroleum and Natural Gas Gathering and Boosting segment); and (iii) transmission pipeline blowdowns between compressor stations, which will also be added as a new industry segment (Onshore Natural Gas Transmission Pipeline). The regulations also provide details as to calculation methods for the new reporting requirements.

The revised regulation also includes the reporting of well-identification numbers associated with individual oil and gas wells, as well as emissions for certain pieces of equipment that are associated with them (e.g., gas-removal units, dehydrators, tanks, and flares). Confidentiality determinations for data collected under the GHG Reporting Program follow the existing procedure under the Clean Air Act. As part of the proposed revisions, the EPA is proposing confidentiality determinations for 171 new data elements that would be reported by the Onshore Petroleum and Natural Gas Production segment, the Onshore Petroleum and Natural Gas Gathering and Boosting segment, and the Onshore Natural Gas Transmission Pipeline segment.

In related developments, the EPA has now released five white papers on the regulation of potentially significant sources of methane emissions in the oil and gas sector, including white papers on compressors, which are identified as increasing GHG emissions during production, processing, transmission and storage, and leaks from wells, related equipment and pipelines. The white papers suggest that the EPA will proceed to undertake a methane emissions rulemaking, although it seems doubtful that a final rule could be issued during the current Administration. The release of the white papers follows the EPA’s adoption of final regulations under the Clean Air Act, which will take effect on January 1, 2015, creating national standards to reduce air pollution created by hydraulic fracturing and other oil and gas operations. Also, on July 25, 2014, the Office of the Inspector General released a report titled, “Improvements Needed in EPA Efforts to Address Methane Emissions from Natural Gas Distribution Pipelines,” recommending that the EPA implement certain strategies to address methane emissions from natural-gas distribution pipelines. (See OMM September 2, 2014, Client Alert: Current Developments Affecting Hydraulic Fracturing Operations.)


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