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Natural gas spot prices are dipping below $2, U.S. energy-related CO2 emissions are 12 percent below 2005 levels, but more regulations are coming.

More Regulations from EPA

Published
American Association of Petroleum Geologists (AAPG)

Natural gas spot prices are dipping below $2 per million BTUs, U.S. energy-related CO2 emissions are 12 percent below 2005 levels, but more regulations are coming.

After recently releasing a rule aimed at reducing methane emissions from new and modified oil and natural gas wells and facilities, the EPA has now started the regulatory process to apply the same rules to existing wells and facilities.

 

On May 12 the Environmental Protection Agency (EPA) issued its final rule that aims to reduce emissions from new and modified oil and natural gas facilities: New Source Performance Standards for methane and volatile organic compounds (VOC). This rule expands on a 2012 rule that limited VOC, but not methane, from new and modified sources in the oil and natural gas industry.

The planned rules for existing facilities are expected to mirror those for new and renovated facilities, which include:

  • Well sites must monitor leaks two times a year and compressor stations must conduct quarterly leak monitoring. Leaks generally must be repaired within 30 days.
  • The rule also applies to gathering, processing, transmission and storage equipment and facilities.
  • Green (reduced emission) completions are required for oil wells. Green completions were already required for natural gas wells.
  • Monitoring requirements apply to all wells regardless of production volumes. EPA initially considered exempting small-volume wells, but included them in the final rule. These stripper wells, defined as producing no more than 15 barrels of oil or 90 thousand cubic feet (mcf) of gas per day, produce 11 percent of U.S. output. The National Stripper Well Association expects the rules will force most low-volume wells to stop production.
  • The estimated cost of the regulation is $530 million; it is expected to yield $690 million in climate benefits in 2025.

To apply the rule to existing wells and facilities EPA has determined that it needs additional information about the size and scope of the oil and natural gas industry as well as emissions data. A formal Information Collection Request (ICR) is in development. tI would require the operator of every onshore production facility to report on wells, access to electricity and gathering lines, compressors, storage tanks and flares. In addition, selected facilities will be required to provide more detailed information including details about specific equipment size, throughput, and current methane leak monitoring.

The cost to industry of compiling and submitting the information is expected to be over $40 million. EPA says that the information request will soon be released for review, and the final ICR will go out to the industry in the fall.

Watch for an AAPG Action Alert and tweets about how to comment on the proposed information collection.

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