EPA proposes methane rules for oil and gas

The U.S. Environmental Protection Agency has proposed a suite of new and modified rules affecting the oil and natural gas industry.  Collectively, the proposed rules released on August 18 are designed to reduce methane emissions from oil and natural-gas drilling activities.

As the world tackles climate change and greenhouse gas emissions, methane plays a dual role.  As the key constituent of natural gas, methane offers society an abundant and efficient fuel that can displace reliance on costlier and more carbon-polluting fuels like coal and oil.  At the same time, methane in the atmosphere can act as a greenhouse gas itself, with a global warming potential more than 25 times greater than that of carbon dioxide.  According to EPA, methane is the second most prevalent greenhouse gas emitted in the United States from human activities, and nearly 30 percent of those emissions come from oil production and the production, transmission and distribution of natural gas.  At the same time, U.S. production of oil and natural gas has increased, giving the sector important economic and domestic security impacts.

To address this dynamic, yesterday EPA proposed a series of rules affecting the oil and natural gas sector.  EPA has described the new rules as a "key component" of the Obama administration's Climate Action Plan.  They follow a January announcement of a new goal to cut methane emissions from the oil and gas sector by 40 to 45 percent of 2012 levels by 2025.  Under the administration's view, a key tool supporting that goal is the implementation of standards for methane and volatile organic compound (VOC) emissions from new and modified oil and gas production sources, and natural gas processing and transmission sources.

The rules EPA proposed yesterday include such standards, along with supporting materials.  EPA has described its collective proposal as "a suite of commonsense requirements that together will help combat climate change, reduce air pollution that harms public health, and provide greater certainty about Clean Air Act permitting requirements for the oil and natural gas industry."

EPA's proposed package of rules includes:

• Updates to New Source Performance Standards (NSPS) (PDF, 591 pages) setting methane and VOC requirements for additional new and modified sources in the oil and gas industry. 
• Draft Control Techniques Guidelines (PDF, 310 pages) for reducing VOC emissions from existing oil and gas sources in certain ozone nonattainment areas and states in the Ozone Transport Region.
• A Source Determination Rule (PDF, 54 pages) to clarify EPA’s air permitting rules as they apply to the oil and natural gas industry.

According to EPA, the proposed rule will reduce methane emissions by between 340,000 and 400,000 short tons in 2025,  on top of reductions of 170,000 to 180,000 tons of other VOCs and 1,900 to 2,500 tons of hazardous air pollutants.  But industry trade group American Petroleum Institute has called additional regulation "unnecessary for reducing emissions."  Debate over EPA's proposal is likely to be vigorous, before EPA as it considers its proposed rulemaking, as well as before Congress and possibly even federal courts, before the dust settles.

EPA will take public comment on the proposals for 60 days after they are published in the Federal Register.  According to the January announcement, the administration expects the final rule will follow in 2016.  This action on oil and natural gas production follows closely on the heels of EPA's adoption of the Clean Power Plan rules, regulating carbon emissions associated with the electric power industry.