Monday, April 23, 2012

EPA Issues Final Oil & Gas Production Air Standards

Apr 18: U.S. EPA announced that, in response to a court deadline, it has finalized standards to reduce harmful air pollution associated with oil and natural gas production. EPA said the updated standards, required by the Clean Air Act, were informed by the important feedback from a range of stakeholders including the public, public health groups, states and industry. As a result, the final standards reduce implementation costs while also ensuring they are achievable and can be met by relying on proven, cost-effective technologies as well as processes already in use at approximately half of the fractured natural gas wells in the United States.
    EPA said the technologies will not only reduce 95 percent of the harmful emissions from the wells that contribute to smog and lead to health impacts, they will also enable companies to collect additional natural gas that can be sold. Natural gas is a key component of the nation's clean energy future and the standards make sure that production can continue to expand while reducing impacts to public health, and most importantly builds on steps already being taken by industry leaders.

    EPA Administrator Lisa Jackson said, "The president has been clear that he wants to continue to expand production of important domestic resources like natural gas, and today's standard supports that goal while making sure these fuels are produced without threatening the health of the American people. By ensuring the capture of gases that were previously released to pollute our air and threaten our climate, these updated standards will not only protect our health, but also lead to more product for fuel suppliers to bring to market. They're an important step toward tapping future energy supplies without exposing American families and children to dangerous health threats in the air they breathe."

    In a release EPA indicates that when natural gas is produced, some of the gas escapes the well and may not be captured by the producing company. These gases can pollute the air and as a result threaten public health. Consistent with states that have already put in place similar requirements, the updated EPA standards include the first Federal air rules for natural gas wells that are hydraulically fractured, specifically requiring operators of new fractured natural gas wells to use cost-effective technologies and practices to capture natural gas that might otherwise escape the well, which can subsequently be sold. EPA's analysis of the final rules shows that they are highly cost-effective, relying on widely available technologies and practices already deployed at approximately half of all fractured wells, and consistent with steps industry is already taking in many cases to capture additional natural gas for sale, offsetting the cost of compliance. Together, EPA said the rules will result in $11 to $19 million in savings for industry each year. In addition to cutting pollution at the wellhead, the final standards also address emissions from storage tanks and other equipment.

    EPA also indicated that, in line with the executive order released by the President last week on natural gas development [See WIMS 4/13/12], the final rule received important interagency feedback and provides industry flexibilities. Based on new data provided during the public comment period, the rule establishes a phase-in period that will ensure emissions reduction technology is broadly available. During the first phase, until January 2015, owners and operators must either flare their emissions or use emissions reduction technology called "green completions," technologies that are already widely deployed at wells. In 2015, all new fractured wells will be required to use green completions. The final rule does not require new Federal permits. Instead, it sets clear standards and uses enhanced reporting to strengthen transparency and accountability, and ensure compliance, while establishing a consistent set of national standards to safeguard public health and the environment.

    EPA said that an estimated 13,000 new and existing natural gas wells are fractured or re-fractured each year. As those wells are being prepared for production, they emit volatile organic compounds (VOCs), which contribute to smog formation, and air toxics, including benzene and hexane, which can cause cancer and other serious health effects. In addition, the rule is expected to yield a significant environmental co-benefit by reducing methane, the primary constituent of natural gas. Methane, when released directly to the atmosphere, is a potent greenhouse gas -- more than 20 times more potent than carbon dioxide.

    EPA indicated that during the nearly 100-day public comment period, the Agency received more than 150,000 comments on the proposed rules from the public, industry, environmental groups and states. The Agency also held three public hearings. EPA said, "The updated standards were informed by the important feedback received through the public comment period, reducing implementation cost and ensuring the achievable standard can be met by relying on proven, cost-effective technologies and processes already in use."
    Senator James Inhofe (R-OK), Ranking Member of the Senate Committee on Environment and Public Works (EPW), said that contrary to President Obama's reelection rhetoric, the new regulations are "the latest in his administration's war on natural gas production." Senator Inhofe said, "The Obama EPA has been working aggressively to assert control over natural gas production so that they can regulate it out of existence -- and this rule is just the latest in that grand scheme. It's no secret that EPA has been trying hard to manufacture a correlation between groundwater contamination and hydraulic fracturing, but in each case, they were unable to find sound scientific evidence to make this link. So now, they're attempting to usurp control through air regulations. EPA has given us few details about the rule, and while I look forward to seeing it in full, I have serious concerns about its potential impacts, particularly on smaller producers. . ."
    Representative Ed Markey (D-MA) praised the rule saying, "These new EPA safety and environmental standards will ensure that less pollution escapes into our air and our atmosphere, and that the natural gas industry won't be able to escape proper oversight of their practices. American natural gas will be a vital part of our economic and environmental progress, but only if the industry accepts the fact that the public wants assurances that drilling practices are done safely and don't result in needless releases of pollution into the environment. These new standards will encourage safer, cleaner natural gas that can then be used to fuel a manufacturing renaissance in America, and cut our use of dirtier fuels like old-style coal power plants. The natural gas industry should embrace these standards as a responsible way to continue the expansion of domestic natural gas, and should reject the proposed trend towards sending our natural gas abroad, which will raise costs to consumers and industry."
    Energy and Commerce Committee Chairman Fred Upton (R-MI) and other Republican Committee member expressed concern about the rule. Chairman Upton said, "This rule is another example of EPA expanding its role in national energy policy. The president says he wants to promote American energy production, yet he continues to allow EPA to issue regulations that increase environmental regulatory requirements and impose more red tape for domestic producers of affordable energy. American energy production on state and private lands remains a bright spot in our economy but EPA's layers of red tape threaten to stifle job creation and industry growth, especially for small businesses. We should be focusing on solutions to remove government barriers to affordable energy. Instead, the administration continues to layer regulation after regulation that will drive electricity and fuel prices even higher."
    The American Petroleum Institute (API) said it "recognized improvements" in the rule and Director of Regulatory and Scientific Affairs Howard Feldman commented saying, "The industry has led efforts to reduce emissions by developing new technologies that were adopted in the rule. EPA has made some improvements in the rules that allow our companies to continue reducing emissions while producing the oil and natural gas our country needs. This is a large and complicated rulemaking for an industry so critical to the economy, and we need to thoroughly review the final rule to fully understand its impacts."
    In a joint release, environmental groups praised EPA rule saying it is the "first federal safeguard aimed at curbing air pollution from hydraulic fracturing or 'fracking.'" They said the New Source Performance Standards (NSPS) and National Emission Standards for Hazardous Air Pollutants (NESHAPS) "will benefit the health of Americans and our environment in many ways. The updated standards will result in major reductions in emissions of volatile organic compounds (VOCs), toxic benzene and methane, a highly potent contributor to climate disruption. These pollutants are known to cause asthma attacks, hospital admissions, emergency room visits, cancer and even premature death." Groups commenting on the rule included: Sierra Club, Environment America, Earthjustice, Earthworks, Clean Air Task Force and Clean Water Action.
    Michael Brune, Executive Director of the Sierra Club said, "EPA Administrator Lisa Jackson is taking an important first step in closing loopholes for the natural gas industry and addressing dangerous air quality levels in and near frack-fields across the country. The natural gas industry dumps massive amounts of air pollutants into our air every day, sickening families and children.  An industry that touts its ability to efficiently drill thousands of wells thousands of feet into the earth is crying wolf when it claims it can't build enough tanks to capture wellhead pollution.  It's time we clean up the natural gas industry's dirty and reckless practices."
    Earthjustice President Trip Van Noppen said, "Left to its own devices, the oil and gas industry has turned the clear skies over Wyoming as smoggy as the car-choked highways of Los Angeles. For decades, industry had a free pollution pass. Thanks to a court victory, that changes today. There is more work to be done to protect Americans living near oil and gas fields from cancer and other unacceptable health threats, but this rule from EPA is an important first step."
    Access a release from EPA (click here). Access the complete 588-page final rule and extensive background, summary information, regulatory impact analysis and more (click here). Access the complete statement from Senator Inhofe (click here). Access a release from Rep. Markey (click here). Access a release from the House E&C Committee Republicans (click here).
Access a release from API (click here). Access a release from the environmental groups (click here). Access a separate release from EPA with favorable comments on the rule (click here). [#Air, #Energy/Frack, #Energy/OilGas]
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