Craig R. Hedin | Gesell’s Pump Sales & Service, Inc., IOGA Member at Large
In 2015, the United States Environmental Protection Agency (EPA) promulgated a revision of regulations with respect to methane emissions. The approach taken by the EPA was that “one size fits all” with respect to all oil and natural gas operators in the United States. This approach had a disproportional impact on conventional operations such as those in Illinois where the norm is low production wells and small business operators.
Prior to 2015, the EPA had promulgated regulations to address Volatile Organic Compounds (VOCs). The regulations addressed storage vessels with the Potential to Emit (PTE) the VOCs in an amount equal to or greater than six tons per years. VOCs are organic chemicals that have a high vapor pressure at ordinary room temperatures. If the regulations are applicable, an operator with respect to a tank battery in a conventional operation must reduce VOC emissions by 95% by a control device or establish an alternative mass based emissions limit. There are also requirements for compliance monitoring, record keeping, and reporting requirements for various control devices.
The regulatory revisions issued in 2015 set forth standards to reduce emissions of methane as to well operations. This would have been in addition to the procedures to reduce VOCs. The regulations included requirements for detecting and repairing methane leaks at oil well sites. Leaks known as “fugitive emissions” can occur at a number of points at an oil well site when connections are not properly fitted, hatches are not properly weighted and sealed, or when seals and gaskets start to deteriorate. The EPA was of the opinion that these leaks could be a significant source of methane emissions in the Industry. The rule did not exempt low production well sites (those with an average combined oil and natural gas production of less than 15 barrels of oil equivalent per well per day). Operators were required to conduct surveys to determine leaks and to undertake repairs. The extent of surveys and the equipment to be utilized was very burdensome and costly to a typical Illinois operator.
Since the advent of the Administration of President Trump, the Industry has advocated for policies to rewrite the methane emission regulations. The EPA has now proposed to change the regulated emission from methane to VOCs. The proposal to change the targeted emissions would give to the EPA the opportunity to fully understand the potential consequences of future options and design those that are necessary to be fair and cost effective to oil and gas operators.
The Industry in Illinois through the Illinois Oil and Gas Association, together with other associations, have submitted comments to the EPA with respect to the revision of regulations as to methane emissions. The substance of the comments is as follows:
- Various aspects of the methane emission regulations are supported only by politics and not justified under the Clean Air Act. The EPA in 2015 failed to consider the differences between large volumes of production when a well is initially drilled and low volumes when production declines because of the production curve. What is cost effective with initial production is not cost effective when production declines. The EPA was unwilling to recognize the unique economic realities and disproportionate impact of its regulations on low production wells. The failure to provide an exemption to low production wells was based on a single study presented during the comment period and not the consensus of other data supporting the exemption. Furthermore, the EPA failed to comply with the Administrative Procedure Act in promulgating the regulations in that it failed to justify its decision to add methane as a regulated pollutant and its decision to not include the exemption. EPA’s proposed revisions to the rules are simply an attempt to correct the prior errors.
- The addition of methane sources from the transmission and storage segments of the Industry by the EPA was without legal authority. A source category was first established in 1979 pursuant to a significant contribution finding. The EPA rationalized that the 1979 source category was broad enough to include sources from transmission and storage operations. This was legally insufficient and the sources should be removed. Revisions to the production and processing source category are warranted but only if the low production exemption is recognized and made a subcategory in order to prevent a disproportionate impact. The EPA’s proposal to remove the transmission and storage segments as sources for methane emissions is correct.
- The Clean Air Act requires the EPA to make a pollutant-specific significant contribution finding before regulating that pollutant as to a source category. It is insufficient that the source category may emit that pollutant. In 1979, the EPA found that hydrocarbons and SO2 from oil and gas production fields were emissions that contributed significantly to air pollution. While methane is a hydrocarbon, in 1979, the EPA was not analyzing methane as a pollutant and to now contend that it did is without basis. The pollutant-specific significant contribution finding required by the Clean Air Act must be conducted prior to promulgating any methane regulations. This finding has never been made.
The EPA will now consider the comments submitted as to the proposed rule. The thrust of the comments from the Illinois Industry and other states is that the existing methane emission rules are too burdensome and expensive and would have the effect of terminating many aspects of the Illinois Industry. While the rules as to VOCs should continue, those as to methane should be limited.