Wednesday, June 7, 2017

Shale Law in the Spotlight: Overview of Federal Regulatory Actions Related to Methane Emissions and Other Air Quality Impacts from the Oil and Gas Sector

Written by Chloe Marie – Research Fellow

According to the EPA Inventory of U.S. Greenhouse Gas Emissions and Sinks, dated April 2017, the concentration of methane in the atmosphere has increased by 162 percent during the past 250 years. The Inventory also stated that “natural gas systems were the second largest anthropogenic source category of [methane] emissions in the United States in 2015.” This article will discuss regulatory actions undertaken at the federal level to address the topic of methane emissions and other air pollutants within the past few years.

·       Climate Action Plan

In June 2013, Former President Barack Obama released a Climate Action Plan, the objective of which was to progressively reduce greenhouse gas emissions (GHG), including methane emissions, by 2020. The plan stated that methane has a higher global warming potential compared to carbon dioxide. Thus, it strongly encourages industries that produce GHG emissions to closely collaborate with the Environmental Protection Agency and the Departments of Agriculture, Energy, Interior, Labor, and Transportation. Moreover, the plan urges the oil and gas sector to upgrade and invest in new infrastructure projects.

To implement the Climate Action Plan, EPA issued three final rules in May 2016 providing strict regulations to address methane emissions from oil and gas operations, namely the Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources Final Rule, the Source Determination for Certain Emission Units in the Oil and Natural Gas Sector Final Rule, and the Federal Implementation Plan for EPA’s Indian Country Minor New Source Review (NSR) Program for Oil and Gas Production Sources. In a previous article, we mentioned that a joint resolution was introduced in the U.S. House of Representatives to disapprove the 2016 Oil and Gas New Source Performance Standards for New, Reconstructed, and Modified Sources under the Congressional Review Act – which action was unsuccessful. On April 4, 2017, however, EPA announced the review of said Performance Standards.

In addition, with regard to methane emissions, the Climate Action Plan encouraged further dialogue and partnership with the international community through the Unconventional Gas Technical Engagement Program. This Program – initially named the Global Shale Gas Initiative – was created in 2010 by the United States in order to provide global support in response to GHG emissions from flaring methane during hydraulic fracturing operations.

·       Clean Power Plan

The Clean Power Plan is another federal policy developed under the Obama administration with the purpose of setting up specific actions to reduce GHG emissions and slow the impacts of climate change. The Clean Power Plan – also known as Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units – was published in the Federal Register on October 23, 2015, and became effective on December 22, 2015, under Section 111 of the Clean Air Act (42 U.S.C. 7411). The Plan states that upstream methane emissions from natural gas systems would very likely decrease pursuant to its application.

On April 4, 2017, EPA announced the review of the Clean Power Plan following the issuance of President Trump’s Executive Order on Promoting Energy Independence and Economic Growth dated March 28, 2017.

·       BLM Methane Waste Prevention Rule

The BLM Methane Waste Prevention Rule – officially called the Waste Prevention, Production Subject to Royalties, and Resource Conservation – provides for new regulations designed to help curb methane emissions from venting, flaring, and leaks during oil and gas activities on Federal and Indian lands. Among other things, the rule requires operators to capture 85% of their adjusted total gas volume by 2020, which percentage will keep increasing over time until it reaches 98% in 2026. In addition, the rule provides for new requirements relating to gas losses from pneumatic controllers and pumps, storage vessels, liquids unloading, and well drilling and completions.

On January 30, 2017, a joint resolution was introduced in the U.S. House of Representatives to disapprove the BLM Methane Waste Prevention Rule, which passed the House on February 3, 2017. On May 10, 2017, however, the U.S Senate rejected a motion to consider such resolution by a 49 to 51 vote.

·       The Greenhouse Gas Reporting Program

On November 10, 2016, EPA issued a final Information Collection Request (ICR) as part of President Obama’s commitment to reduce GHG emissions and other air quality impacts from oil and gas facilities. Pursuant to Section 114 of the Clean Air Act, owners and/or operators of oil and gas facilities are required to assist EPA in developing applicable regulations to reduce methane and other air pollutants from oil and gas sources.

More precisely, facility owners and/or operators must “sample such emissions … keep records on control equipment parameters, production variable or other indirect data when direct monitoring of emissions is impractical … provide such other information as the Administration may reasonably require.” Those information and data are collected through EPA’s Greenhouse Gas Reporting Program (40 CFR Part 98).

EPA’s Greenhouse Gas Reporting Program (GHGRP) requires annual greenhouse reporting from facilities and suppliers that directly emit GHG to better work and develop opportunities to reduce GHG emissions. The most recent GHGRP data report for petroleum and natural gas systems showed a significant decrease in methane emissions from gas well completions and hydraulic fracturing operations from 2011 to August 2016.

On March 2, 2017, however, EPA announced the immediate withdrawal of the Information Collection Request (ICR). As a result, facility owners and/or operators are no longer required to provide data on air emissions from their oil and gas activities.

·       The Natural Gas STAR Methane Challenge Program

On March 30, 2016, EPA implemented the Natural Gas STAR Methane Challenge Program with the purpose of creating a platform for the exchange of ideas on how best to address the issue of methane emissions. The partners agreed to undertake commitments to reduce methane emissions through the implementation of environmentally sound technologies and best practices. According to EPA, “doing so reduces operational risk, increases efficiency and demonstrates company concern for the environment, with benefits from climate change to air quality improvements to conservation of a non-renewable energy resource.

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