EPA proposes new greenhouse gas emission rules for onshore petroleum industry

January 31, 2022

In November, the Environmental Protection Agency (EPA) proposed a new set of regulations under the Clean Air Act to reduce greenhouse gas emissions by onshore US oil and gas facilities. The rule particularly targeted emissions of methane, due to its strong warming effect in the atmosphere. More than 300,000 responses were submitted during the public comment period that closed on January 31, 2022.

 

The new rule applies to oil and gas production; gas gathering, boosting and processing; and gas transmission and storage. It does not cover crude oil transmission to refineries or gas distribution to end users. The extensive proposal:

  • Tightens restrictions on methane and Volatile Organic Compounds (VOC) emissions from new facilities, and adds requirements for several previously unregulated emissions sources (new subpart OOOOb).
  • Provides guidelines for states to create methane emissions reduction plans from existing facilities (new subpart OOOOc).
  • Resolves discrepancies that arose between the 2020 Technical Rule and previous New Source Performance Standards (NSPS), when Congress disapproved the 2020 Policy Rule in June 2021.

Current requirements will continue under existing NSPS subparts OOOO and OOOOa, established in 2012 and 2016 respectively.

 

When will the regulation take effect?

Although the new rule was proposed in November 2021, the review process will take about a year. A second version will be published later this year, incorporating input from the first comment period. We expect to see more technical detail in the upcoming supplemental proposal, with specific standards for new subparts OOOOb and OOOOc. The rule should be finalized in late 2022.

 

After that, individual states begin formulating requirements for existing sources, in line with final EPA guidelines. No deadline for state implementation has been set. Assuming a similar two-year timeframe for that process, full regulation of existing sources may not be effective until 2025.

 

Why are further regulations proposed?

Among US industries, the oil and gas sector emits the highest methane volumes, contributing 30% of industrial methane emissions according to EPA reports. In aggregate, onshore operations produce more than 40 times greater methane emissions than offshore facilities.

 

Due to its strong global warming effect, cutting methane emissions has an outsized impact for reducing climate risks. Thus, new detection technologies and proposed restrictions on flaring, venting and pneumatic devices target methane releases. The EPA indicated its goal is to detect and decrease the largest leaks and emissions from the most problematic equipment and sites.

 

It’s worth noting that reported methane emissions from oil and gas production have gradually fallen over the last ten years, suggesting success of the 2012 and subsequent regulations. Still, in 2020, methane accounted for half (49.8%) of the sector’s reported CO2-equivalent greenhouse gas emissions. Carbon dioxide and nitrous oxide emissions both trended up. The gathering, boosting and transmissions sectors haven’t achieved clear overall reductions since they began reporting to EPA in 2016.

 

US onshore oil and gas sector emissions trends. Source: ESG Dynamics EPA Onshore module

 

What’s changing for new, modified or reconstructed facilities?

The proposal adds a new subpart OOOOb to tighten some requirements and create performance standards for previously unregulated emissions sources. Newly covered sources include:

  • Storage vessels – adds restrictions on methane, previously only VOC emissions were regulated. Tank batteries will now be covered along with individual tanks.
  • Liquids unloading – this modification must be done with zero emissions
  • Gas processing facilities – requires leak detection and repair

While the exact details and procedures continue to be written, the proposal reveals a few key themes.

 

Leak detection and repair: EPA proposes changes to leak detection methods and frequency. Allowing advanced technologies – like drones, flyovers and continuous monitoring – would identify major leaks and more efficiently target ground-based surveys. Public comments will help clarify how alternative monitoring programs are implemented in the final rule.

 

Pneumatic devices: The new regulations require zero emissions of methane and VOCs from pneumatic controllers across all segments, with few exceptions in Alaska only. These intermittently release gas to control equipment pressure. Although each is a small part of the system, more than half a million devices together emitted 1 million mt of methane in 2020. Pneumatic pump requirements will expand to include more types.

 

Venting and flaring: The proposal seeks to eliminate associated gas venting from oil wells, which releases methane directly in to the air. Associated gas flaring – which emits carbon dioxide by burning methane – must reduce methane and VOC emissions at least 95% and ensure that flares do not malfunction. The EPA encourages producers capture the gas for a beneficial use instead of venting and flaring.

 

What’s changing for existing facilities?

Federal and state agencies share responsibility under the Clean Air Act. The EPA sets emissions standards for new or modified sources, while states regulate existing sources following EPA guidelines. This allows states to address local issues, variations, and nuances relevant to existing sources in each region. For example, states could consider old facility designs that may not easily integrate emissions reduction equipment.

 

EPA will define “Emissions Guidelines” for states to develop and implement plans to reduce methane emissions. State regulations must be as strict as the final EPA guidelines, while taking into account the concerns of local industry, underserved and affected community stakeholders. Tribal nations have the option to develop their own emission reduction plans, and will not be included under state regulations.

 

 

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