EPA Issues New Source Performance Standards (NSPS) and National Emission Standards for Hazardous Air Pollutants (NESHAPS) for Oil and Gas Industry

On April 17, 2012, the U.S. Environmental Protection Agency (EPA) issued its long-expected revised air emission rules for the oil and gas sector. The rules reflect a consent decree entered into between the agency and environmental groups in February 2010 and establish the first federal air standards for natural gas wells that are hydraulically fractured and other air emission sources in the upstream and midstream oil and gas industries. The subject of extensive public comment, the final rules include a number of changes from the proposal, including a delayed compliance deadline of January 1, 2015 for the use of reduced emission completion (REC) techniques, also known as “green completion” for hydraulically fractured gas wells. REC techniques capture natural gas that would otherwise be emitted into the air as a well is prepared for production. Generally, the rules do not directly impact oil wells, but focus extensively on natural gas operations and, in particular, hydraulic fracturing activities.

Key Activities and Sources Affected

• Hydraulically Fractured Natural Gas Well Sites

EPA has adopted a phased approach for reducing volatile organic compounds during well completions. Specifically, air emissions that occur during “flowback”, defined by EPA as “the process of allowing fluids to flow from a natural gas well following treatment…”. Before January 1, 2015, flowback emissions may be captured by the use of a completion combustion device such as a flare. On or after January 1, 2015, operators will be required to use green completions during flowback periods. However, green completions will not be required for hydraulically fractured low pressure gas wells or delineation wells and wildcat wells. Other equipment at natural gas well sites, such as pneumatic controllers, storage vessels and glycol dehydrators, will also be subject to new regulation. In addition, the rules impose notification and reporting requirements for well completions.

• Other Key Activities Affected

  • Natural Gas Processing Plants

  • Natural Gas Gathering and Boosting Stations

  • Natural Gas Compressor Stations

  • Certain Equipment Downstream of Oil Wells

Emission sources covered by the new rules include centrifugal and reciprocating compressors, pneumatic controllers, storage tanks, glycol dehydrators and sweetening units.

Implications

Requirements for specific operations, and applicable exceptions, are detailed in the nearly 600-page rule. Operators should evaluate any necessary compliance measures and costs and expect EPA to continue its focus on the oil and gas industry.

Additional Information

The rules will be effective 60 days after they are published in the Federal Register. A pre-publication version of the rule is available by clicking here.