On May 12, 2016, the EPA issued a final rule aimed at curbing methane emissions from new and modified sources of oil and gas. In addition to methane, the final rule regulates volatile organic compounds (“VOCs”) and several air pollutants that, according to the EPA, come “packaged” with methane when emitted from oil and gas infrastructure. EPA believes that the final rule will reduce methane emissions by 520,000 short tons by 2025, and thus help attain the Obama administration’s goal in the Climate Action Plan to reduce methane emissions from the oil and gas industry by 40 to 45% by 2025 from 2012 levels.
On August 18, 2015, the EPA issued a draft rule aimed at reducing methane emissions. Since that time, the EPA stated that it has received more than 900,000 public comments and held three public hearings to discuss its proposed regulations. According to the EPA, the information it received during the public comment period led to several changes in the final rule, including: (i) setting a fixed schedule for monitoring leaks, rather than a schedule that varies with the production or operational performance of a specific oil or gas site; (ii) allowing an alternative approach for finding leaks, in addition to optical gas imaging; (iii) permitting owners/operators to apply for approval to use new technologies to meet their leaks monitoring requirements; and (iv) phasing-in requirements for using a process known as a “green completion” to capture emissions from hydraulically fractured oil wells.
The EPA has stated that the final rule will reduce emissions from new and modified oil and gas sources by: (i) setting direct emissions limits for methane; (ii) covering sources that were not previously covered under prior rules, including hydraulically fractured oil wells, and equipment used in the oil and gas production chain; and (iii) requiring owners and operators to find and repair emissions leaks. The EPA also believes that the final rule will result in climate benefits of $690 million in 2025 that will offset EPA’s estimated costs of $530 million.
The EPA also stated that the final rule permits states that currently regulate air pollution from the oil and gas industry to continue to do so, and provides a “pathway for companies to harmonize the [new methane emission requirements] with any comparable state requirements that they may have.” According to the EPA, natural gas that is recovered as a result of complying with the final rule can be used as a fuel onsite or sold.
In conjunction with issuing the final rule, the EPA also issued a draft Information Collection Request (“ICR”) for developing regulations aimed at reducing methane emissions from existing oil and gas sources. In doing so, EPA stated that it was “seeking a broad range of information on the oil and gas industry, including: how equipment and emissions controls are, or can be, configured; what installing those controls entails; and the associated costs.”
A copy of the final rule, and the draft ICR, can be found here.