Energy, Regulatory Developments

O&G Companies to EPA: Don’t Eliminate Methane Regs

On its way to becoming a final rule, an odd thing happened to an EPA proposal that would withdraw requirements promulgated by the Obama administration—major players in the affected sector itself have come out against the proposal and requested that the Agency preserve the provisions it wants to eliminate.
Oil Refinery
The proposal would revise the New Source Performance Standards (NSPS) for sources in the oil and natural gas (O&G) sector the EPA promulgated in 2016. While a number of revisions were proposed, the most controversial would eliminate the methane-specific emissions requirements of the 2016 rule applicable to sources in the production and processing segments. At least five leading O&G companies commenting on the proposal opposed the elimination.

Largest Methane Emitter

After carbon dioxide (CO2), methane is the most consequential greenhouse gas (GHG) with a 100-year global warming potential (GWP) that is between 28–36 times greater than that of CO2. The O&G source category is the largest emitter of methane in the United States, contributing about 29 percent of total nationwide methane emissions, which account for 3 percent of all U.S. GHG emissions. The 2016 regulations established methane emissions limits for O&G equipment and well completions and also established requirements to control methane fugitive emissions and equipment leaks. Establishment of Clean Air Act NSPS pollutants released by an industry sector is typically followed by setting standards for existing sources in that sector.

Generally, the Agency argued in the proposal that methane is a volatile organic compound (VOC) and, therefore, is already regulated under the 2012 O&G NSPS, which the 2016 action amended; this means that the 2016 methane-specific requirements are “entirely redundant,” says the Agency.

Companies’ Comments

But in their comments on the proposal, the O&G companies disagreed that methane-specific regulations are unnecessary. The companies argued that methane is too dominant a GHG to be simply colocated within existing provisions affecting a broad set of O&G VOCs. Concerns were also raised about the absence of baseline federal regulations to smooth out the differences among requirements affecting O&G methane emissions issued by the states. Some O&G companies are also already meeting the 2016 NSPS amendments and have taken voluntary actions to exceed those requirements. In situations such as this, companies typically look to the federal government to provide that all sources in a sector are equally regulated to ensure a level economic playing field.

Here are some comments well-established O&G companies provided on the EPA’s proposal:

“While we agree that EPA’s rulemakings must follow proper legal procedures, doing so does not have to foreclose regulating methane emissions directly. EPA’s approach should consider alternatives such as: (1) following the proper procedures to retain transportation and storage within the source category; (2) regulating methane directly from the expanded source category by making the requisite findings pursuant to the Clean Air Act; (3) finding value in directly regulating methane as opposed to a VOC-only approach; and (4) maintaining some controls focused on methane mitigation, such as leak detection and repair programs, that were not part of the 2012 VOC rulemaking.”—ExxonMobil

“The Agency should not rescind any of the methane-specific requirements applicable under Subpart OOOOa. Methane is a potent greenhouse gas (GHG) for which its direct regulation is appropriate and necessary to address the many challenges of global climate change while further supporting the benefits of the increased use of natural gas for reducing GHG emissions throughout the U.S. economy. Based on these considerations, Shell supports the direct regulation of methane as long as those regulatory control requirements are implemented in an efficient and effective manner that encourages innovation. We believe that such an approach is critically important for ensuring natural gas plays a vital role in transitioning to a low-carbon energy future and economy.” —Shell

“Though the voluntary efforts of Equinor US and other companies operating in the United States are generating significant results, it is important to have a federal regulatory ‘floor’ that provides a consistent, flexible, predictable, and comprehensive policy framework. For this reason, Equinor US urges the EPA to promulgate and enforce federal methane-specific performance standards for both new and existing facilities in the oil and gas sector. Such standards are a necessary element of a comprehensive, economy-wide U.S. policy program to address global climate change.”—Equinor

“Despite TOTAL’s extensive operations in the U.S. and its demonstrated commitment to environmental stewardship, it is a remarkably rare event in which we feel compelled to comment, on an individual basis, on an EPA rulemaking proceeding. But in this instance, EPA’s proposed action has the potential to undermine the significant actions that TOTAL and others are taking to address the risks associated with global climate change.

“We believe EPA should seize the opportunity to align U.S. regulations with proven, reasonable strategies to reduce methane emissions. This would foster innovation and incentivize companies to take action. It would also maintain the U.S. in a leading position in terms of standards and practices in the Oil and Gas sector, encouraging other countries, often commercial partners, to follow suit.” —TOTAL