EPA's mandatory GHG reporting rule By Mary Ellen Ternes

Oil and natural gas producers are busily preparing to comply with EPA’s final rules requiring reporting of GHG emissions from oil and natural gas systems, promulgated as 40 CFR Part 98, Subpart W (Section 98.230), 75 Fed. Reg. 75548 (Nov. 30. 2010). The final petroleum and natural gas reporting rule applies to, specifically, offshore petroleum and natural gas production, onshore petroleum and natural gas production, onshore natural gas processing, onshore natural gas transmission compression, underground natural gas storage, liquefied natural gas (LNG) storage and LNG import and export, and natural gas distribution. Only those facilities, as defined by Subpart W, that emit 25,000 metric tons or more of CO2 equivalent per year in aggregated emissions from all sources are required to report annual GHG emissions to EPA.

This rule was originally proposed on April 10, 2009. After significant comment by industry, this proposed rule was taken back to the drawing board and reproposed a year later in a much more manageable form. With the new proposal, EPA had cut back most of the original provisions requiring actual measuring and monitoring to allow estimating based upon component count, and included a new definition for “facility” based upon basin-specific production. The 2009 proposal required 100 percent measurement by six segments of the reporting industries, while the 2010 proposal and final rule require hybrid methodologies for GHG quantification by eight industry segments with only limited direct measurement. This hybrid method of GHG quantification includes engineering estimates, emissions modeling software and emission factors, and, only when other methods are not feasible, direct measurement of emissions.

Article authored by McAfee & Taft attorney: Mary Ellen Ternes.