Oil and Natural Gas Air Pollution Standards

What are Oil and Natural Gas Air Pollution Standards?

The Environmental Protection Agency (EPA) released oil and natural gas air pollution standards on April 17, 2012. These standards are a combination of court-mandated regulations for the oil and gas industry covering both New Source Performance Standards (NSPS) and National Emissions Standards for Hazardous Air Pollutants. The regulations target the emission of Volatile Organic Compounds (VOCs), sulfur dioxide, and air toxics, but they will have significant co-benefits reducing emissions of methane, a potent greenhouse gas. By requiring the use of a process known as "green completion" these are the first federal regulations to specifically require emission reductions from new or modified hydraulically-fractured natural gas wells.

The Clean Air Act requires the EPA to regulate pollution from new, modified and reconstructed facilities through the NSPS program, established in Sec. 111 of the Act. NSPS are rate-based standards which apply to specific categories of stationary sources. The Clean Air Act also requires EPA to regulate hazardous air pollutants, through the National Emissions Standards for Hazardous Air Pollutants program established in Sec. 112 of the Act. 

Together, these rules will require the use of "green completions" at drilling sites, a step already mandated by some jurisdictions and voluntarily undertaken by many companies. EPA estimates that this proven, cost-effective technology is currently used at roughly half of the fractured natural gas wells recently drilled throughout the country.  In a green completion, special equipment separates hydrocarbons from the "flowback" that comes from the well as it is being prepared for production. This step allows collection and sale of the natural gas that would otherwise be released as waste. 

Who are the covered entities?

The NSPS regulates VOC emissions from oil and gas production and processing facilities, including gas wells (including hydraulically fractured wells), compressors, pneumatic controllers, storage vessels, and leaking components at onshore natural gas processing plants. It also regulates (SO2) emissions from onshore natural gas processing plants. The MACT component adds regulation for glycol dehydration unit process vents used in well production and updates leak detection and repair requirements for all equipment. The final standards apply to facilities that commence construction, reconstruction or modification after August 23, 2011, estimated to be 11,000 wells per year. The green completion requirement will be phased in, with flaring allowed as an alternative compliance mechanism until January 1, 2015.

Exploratory, delineation and low-pressure wells are exempt from green completion requirements, but are required to flare waste gases instead, which eliminates VOC emissions and combusts methane.

What are the air pollution and climate implications of this regulation?

EPA estimates that this regulation will improve air quality by directly reducing emissions of certain air pollutants:

  • 190,000 to 290,000 tons of VOCs (a 95 percent reduction); and
  • 12,000 to 20,000 tons of air toxics.

The green completions required under these standards will have a co-benefit of reducing emissions of methane a potent greenhouse gas by 1 million to 1.7 million short tons annual, or about 19 to 33 million tonnes of CO2 equivalent. 

Methane is a short-lived climate pollutant, with 37 times the radiative forcing of CO2 and with an atmospheric lifespan of only 12 years. Short-lived climate pollutants such methane, black carbon and hydrofluorocarbons account for roughly 30 to 40 percent of global warming to date. Targeted efforts to reduce these emissions can slow the pace of global warming and moderate climate impacts already underway, including the melting of sea ice and glaciers. These co-benefits are significant as the oil and gas industry is the largest source of domestic methane emissions, accounting for 40 percent of U.S. emissions of this potent greenhouse gas.

EPA's analysis of the rules shows a cost savings of $11 million to $19 million when the rules are fully implemented in 2015. These net savings result from the capture and sale of natural gas that would otherwise be vented to the air. 

What is the status of regulation?

The first NSPS for oil and natural gas facilities for VOCs and SO2 were issued in 1985, while the MACT requirements were issued in 1999. In 2009, litigation was initiated by environmental groups against the EPA for failure to update these regulations. The U.S. District Court for the District of Columbia issued a consent decree requiring EPA review of these standards by April 17, 2012. A proposed rule was released on July 28, 2011.  The final rule was issued on the day of the final deadline, April 17, 2012, and a revised final rule was published on August 16, 2012.