What Regulatory Activities are Expected this Year for the Oil and Gas Industry?

Published
American Association of Petroleum Geologists (AAPG)

As 2015 begins, the oil and gas industry is preparing itself for a plethora of regulatory activities. The following are highlights of some of the anticipated regulatory activities.

Hydraulic Fracturing
The U.S. Department of Interior’s (DOI), Bureau of Land Management (BLM) is expected to finalize its rulemaking that would impact fracking on federal lands. The rule is expected to focus on the disclosure of chemicals used for fracking, wellbore integrity, and water use and disposal for flowback water. The final rule is expected to be released any day now. 

The U.S. Environmental Protection Agency (EPA) is expected to release a draft assessment report for its ongoing study of hydraulic fracturing impacts on drinking water. The final report is expected in 2016.    

EPA is expected to publish a final report outlining the best practices for addressing seismic events associated with oil and gas development and wastewater activities.  The report is a product of the findings of the Underground Injection Control workgroup, which convened in 2012. The report is expected to be issued in mid, 2015.   

Methane   

On January 14, as part of its climate strategy, the Obama administration announced its intent to regulate methane emissions for new and modified sources in the oil and gas sector. The goal of this initiative would be a reduction of 40-45 percent of 2012 levels by 2025. This would include sources in the production, processing, transmission segments and cover completions, pneumatic pumps, leaks at well sites, gathering and boosting stations, and compressor stations. A proposed rule is expected in the middle of 2015 with a final rule sometime in 2016. Although existing sources would not be included at this point, the Administration is looking to EPA, Department of Energy (DOE), and the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) to work with industry on voluntary programs to address existing sources in the oil and gas sector.   

As part of this initiative, BLM is charged with developing a rulemaking limiting the amount of methane that can be vented and flared on federal lands.

Other measures that are called for include: volatile organic compounds control technology guidelines to achieve methane reduction co-benefits (expected to be proposed by EPA in the middle of 2015), increased detection and reporting under EPA’s greenhouse gas reporting program, and revised natural gas pipeline standards. In addition the President’s methane strategy calls for measures to encourage more energy efficient equipment, research and development for better detection of leaks, and general modernization of natural gas infrastructure.

Ozone

EPA recently released a proposed rule calling for more stringent standards (most likely down to the .65 - .70 parts per billion (ppb) range) for ozone which are expected to impact the oil and gas industry. The current standard is .75 ppb. A final rule is expected by the end of 2015. 

Stricter ozone standards may put areas with oil and gas development into non-attainment.  As part of a state implementation program oil and gas operations are likely to be targeted because they are large source of ozone.

Waters of the U.S.   

EPA is expected to finalize a ruling that would broaden the scope of the “waters of the U.S.” under the Clean Water Act.  This regulation is of concern to the oil and gas industry because it would give EPA expanded authority over land and water use, which could create for more federal permitting, which would likely slow oil and gas operations and create new costs. A final rulemaking could come as early as spring 2015.

Other Rulemakings to Watch

DOI’s Bureau of Safety and Environmental Enforcement (BSEE) is expected to issue a proposed rule to make blowout preventers more reliable.  It may also address factors such as well design, well control, safe drilling margins, casing and cementing, and subsea containment.

BSEE and the Bureau of Ocean Management are expected to propose rules addressing Arctic drilling in early 2015. The proposed rules are expected to require companies to develop plans to address well blowouts. It is also likely to address health, safety, and environmental concerns.   While announcing BOEM’s plans for the next outercontinental shelf five year plan this week, Secretary Jewell said that the Arctic rules should be forthcoming.

DOI is expected to make a determination on whether the greater sage grouse will be listed as an endangered species by September, 2015. 

PHMSA is expected to issue a final rule on addressing the safety of transport of oil on railroad cars. The rule could come out at any time.

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