EPA Expands Requirements for Reducing Methane Emissions from Oil & Gas Production Sector

Pillsbury Winthrop Shaw Pittman LLP

TAKEAWAYS

  • EPA proposes new emissions control requirements for new sources and existing sources and aims to reduce methane emissions by 74 percent by 2030.
  • Regulations would require newly constructed oil and gas production facilities to comply with additional requirements, including enhanced leak detection and repair requirements and a new obligation to minimize emissions from liquids unloading.
  • States will be directed to impose new standards on existing sources of methane emissions that would mirror the substantial requirements imposed on newly constructed oil and gas production facilities.

The Biden Administration is looking to make good on its promises to significantly curtail methane emissions in an EPA proposed rule that would significantly expand obligations for the oil and natural gas sector. The new regulations would amend and strengthen existing oil and gas regulations, commonly referred to as “Quad O” and “Quad Oa” because they are located in the federal regulations at 40 CFR Part 60, Subparts OOOO and OOOOa.

EPA’s last effort at reducing methane emissions from the oil and gas sector took place in 2016. However, the regulations covered only new sources—leaving roughly one million oil and gas wells uncovered. The Biden Administration’s regulations would, for the first time, direct states to impose new standards for existing sources, meaning that every oil and gas production facility that meets certain threshold criteria set forth in the regulations will be required to comply.

In recent enforcement actions, EPA and the Department of Justice have taken the position that the 2016 regulations require owners of oil and gas production facilities to prevent essentially all emissions leaks. This has been a challenging standard that has been questioned as unrealistic, particularly given that production facilities must safely control high-pressure gases. However, the proposed regulations only double down on the aim of requirement facilities to be emissions-free.

Strengthening New Source Regulations

The proposed rule would create a new set of regulations, Quad Ob (Subpart OOOOb), that would be focuses on both strengthening and expanding current requirements for new sources as well as standards for emissions sources previously not regulated under Quad Oa. Some key new requirements include a first-time, nationwide requirement to minimize emissions from liquids unloading and new leak detection and repair requirements.

Directing States to Regulate Existing Sources

Perhaps the most important change proposed by EPA is its regulatory expansion to cover existing oil and gas sources. New Quad Oc (Subpart OOOOc) would require states to implement plans for limiting methane emissions for existing sources under Section 111(d) of the Clean Air Act. The rule would establish “Emissions Guidelines” on methane reduction, providing “presumptive standards” for states to incorporate into their individual plans. Most of these presumptive standards for existing sources mirror the standards EPA is proposing for new sources. States would not be required to adopt the presumptive standard, but otherwise will need to develop their own plan that will be approved by EPA only if it is generally as strict as the presumptive standard.

Establishing a New Monitoring Program

The proposed rule also includes a new comprehensive monitoring plan that would require companies to find fugitive emissions and fix leaks at new and existing well sites and at compressor stations. Well sites with emissions of at least three tons per year will need to monitor for leaks and promptly repair them. EPA expects this requirement to apply to roughly 300,000 well sites nationwide. Sites with emissions below three tons per year will have to conduct and submit an initial survey demonstrating that they are free of leaks and malfunctions. This is a change from the current monitoring program, which includes a low-production well site exclusion that many oil and gas production facilities have invoked over the years.

Other Proposed Changes

The rule also proposes changes to how emissions from pneumatic controllers and storage tanks are regulated, as well as changes to how associated gas can be vented from oil wells.

  • Pneumatic Controllers: The rule proposes a “zero-emissions” standard for both new and existing pneumatic controllers. For the first time, even intermittent vent pneumatic controllers will be regulated.
  • Storage Tanks: Rules for storage tanks will be strengthened. Tank batteries would be added to the definition of facilities that must reduce volatile organic chemical (VOC) and methane emissions, requiring that new, modified, or reconstructed tank batteries with potential VOC emissions of six tons or more per year reduce their emissions by 95 percent, which is the amount currently required for individual tanks. The proposed presumptive state standard would similarly require existing storage tanks or tank batteries with a potential to emit 20 tons of methane or greater per year to control their emissions by 95 percent. Further, the rule would include tank hatches and openings into the list of types of equipment that would have to be monitored for leaks as part of the fugitive emissions program.
  • Venting: The rule proposes to eliminate venting of associated gas from oil wells. Operators would be required to capture and send the associated gas to a pipeline when possible, and if there is no pipeline available, operators would be required to either use the gas for power on site or for another useful purpose, or route it to a flare and control device that would reduce the methane and VOCs by 95 percent.
  • Liquids Unloading: The rule proposes requiring liquids unloading operations to be performed with zero methane or VOC emissions, with an option to implement best practices to minimize emissions where zero emissions is not a possibility.

Looking Forward

Impacted companies are strongly encouraged to participate in the rulemaking process by submitting comments, including input on whether the proposed requirements are practicable and whether there are additional sources that should be covered. The public comment period is scheduled to end January 14, 2022.

These comments are likely to be critical in EPA’s consideration, given that EPA’s proposed rule did not include specific regulatory text as is typical and that EPA is expected to issue a supplemental proposal with proposed regulatory text in 2022.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Pillsbury Winthrop Shaw Pittman LLP | Attorney Advertising

Written by:

Pillsbury Winthrop Shaw Pittman LLP
Contact
more
less

Pillsbury Winthrop Shaw Pittman LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.