Continuing what has been a steady march towards tighter air regulations on upstream and midstream facilities, on August 17, the EPA released two proposed rules that address fugitive emissions from oil and gas production and transmission sites as well as a new federal plan for wells in Indian Country. While the new requirements come as no surprise given the Administration’s 2014 “Climate Action Plan: Strategy to Reduce Methane Emissions” and the subsequent technical papers issued in January of this year, Bloomberg Business reports marginal drillers and those who have failed to prepare for the new regulations will likely fold if the proposed rules go into effect and oil and gas prices remain at their current levels.
Key aspects of the proposed rules include:
- Expansion of the EPA’s 2012 methane and VOC New Source Performance Standards (e.g. “green completions”) for unconventional gas wells to now include new and modified unconventional oil wells;
- A leak detection and repair program for new and modified well sites, processing plants, transmission compressor stations, and storage vessels requiring semi-annual optical gas imaging of nearly all key components;
- A refined definition of “source” for oil and gas production sites to include all emitting equipment and activities under common control that are either (i) on adjoining property or (ii) located within a short distance from one another (the EPA proposed both a 1/4 mile and a 1/2 mile standard);
- Draft guidelines for states with moderate to extreme ozone nonattainment areas and those in the Ozone Transport Region for reducing VOC emissions from existing oil and gas sources (specifically production and transmission sources); and
- A proposed federal implementation plan (FIP) which incorporates the existing and proposed federal emission limitations into preconstruction permits for oil and natural gas production facilities operating in Indian Country and whose construction begins on or after October 3, 2016.
It is important to note that re-completions at existing wells are considered “modifications” and subject the sites to the above New Source Performance Standards. The EPA anticipates its final rules to be issued in early 2016.