October 23, 2011

EPA’s Proposed New Air Standards Affecting the Oil and Natural Gas Industry

Posted on October 23, 2011 by Donald Shandy

On August 23, 2011, the United States Environmental Protection Agency (EPA) proposed new air standards for the oil and natural gas industry (the Proposed Rule).  The Proposed Rule includes EPA’s first federal air standards for wells that are hydraulically fractured, along with requirements for several other sources of pollution in the oil and natural gas industry that currently are not regulated at the federal level. There are four major air components of the Proposed Rule: (1) a New Source Performance Standard (NSPS) for volatile organic compounds (VOC); (2) an NSPS for sulfur dioxide (SO2); (3) an air toxics (NESHAP) standard for oil and natural gas production; and (4) an air toxics (NESHAP) standard for natural gas transmission and storage.

Section 111 of the Clean Air Act (CAA) requires EPA to set NSPS for industrial categories that cause, or significantly contribute to, air pollution that may endanger public health or welfare. These performance standards must reflect the degree of emission limitation achievable through the application of the “best system of emission reduction” (BSER), which EPA determines has been adequately demonstrated within the industry. 

EPA’s existing NSPS for VOCs were issued in 1985. The existing standards address only VOC leak detection and repair (LDAR) at new and modified natural gas processing plants.  Other potential sources of VOC emissions in the oil and natural gas industry currently are not subject to nationwide regulation.  EPA is proposing new standards for several processes or pieces of equipment used in oil and gas production that have not previously been subject to federal regulation, including: well completions at new hydraulically fractured natural gas wells and at existing wells that are fractured or “re-fractured,” which would require the use of “green completions”; centrifugal and reciprocating compressors; pneumatic controllers; and condensate and crude oil storage tanks.

The NSPS for SO2 were also issued in 1985 and apply only to natural gas processing plants. EPA is proposing to strengthen the performance standards for plants processing gas with the highest hydrogen sulfide content in order to further reduce sulfur dioxide emissions from these facilities.

Section 112 of the CAA requires EPA to address emissions of hazardous air pollutants (HAP) from stationary sources.  Section 112(d) requires EPA to promulgate NESHAPs applicable to major sources of HAPs.  For major sources, technology-based maximum achievable control technology (MACT) standards must reflect the maximum degree of emission reductions achievable, considering cost, energy requirements, and non-air quality benefits and environmental impacts.  Unlike Section 111 NSPS standards that apply only to new or modified sources, Section 112 standards are applicable to both new and existing stationary sources.  EPA is proposing changes to the NESHAP standards for major sources in both the natural gas production and storage and transportation subcategories.

The public comment period on the Proposed Rule currently runs through October 24, 2011.  It will be interesting to track the response from the oil and natural gas industry to EPA’s proposal. 

Tags: Air


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