In an effort to advance White House climate change targets, EPA recently finalized methane rules for new, heavily modified or reconstructed oil and natural gas facilities.  The Clean Air Act New Source Performance Standards (NSPS) new rules, among other things, will require monitoring to detect and repair methane and volatile organic compound (VOC) leaks at new oil and gas wells, production, gathering and boosting stations, gas processing plants, and gas pipeline compressor stations.  In addition, the Agency moved toward regulation of existing onshore facilities by issuing a draft information collection request for information on how equipment and emissions controls are, and can be, configured and the associated costs, natural gas venting in conjunction with maintenance activities, equipment malfunctions and flashing emissions from storage tanks.

All methane sources covered by the rule will have to impose emissions monitoring under a strict schedule (as opposed to the proposed schedule that would have varied with performance) to detect and repair leaks, in most cases within 30 days from discovery.  Owners and operators have 1 year from the effective date of the rule (or within 60 days of startup of production) to conduct an initial leak monitoring survey using optical gas imaging technology or alternatively, “Method 21” which relies on a portable organic vapor analyzer.  Compressor stations require quarterly leak inspections (doubling what was proposed) and well sites will require bi-annual leak inspections.  In addition, new hydraulically fractured oils wells have 6 months to begin using “green completion technology” to capture emissions and until then must curb methane and VOC emissions through flaring.  The rule also eliminates a previously proposed monitoring exemption for low production wells.

Industry groups responded to the final rule arguing that EPA’s estimates of methane emissions are flawed and that the agency has underestimated the costs of the regulation (i.e, $530 million as compared to $690 million in “climate benefits”).  Last month, EPA issued a new greenhouse gas inventory that found that the oil and gas industry was the largest source of methane emissions in 2014, accounting for about a third of total greenhouse gas emissions.  A recent National Oceanic and Atmospheric Administration (NOAA) study specific to emissions from the Bakken region in 2014, however, calls this into question, finding that while “[t]he Bakken oil and gas field is leaking a lot of methane, [it is] less than some satellites report, and less than the latest Environmental Protection Agency inventory for petroleum systems, according to the researchers’ calculations.”

Industry continues to argue that the best approach to curbing methane emissions is to continue with voluntary efforts focused on flexible strategies, which has resulted in a 13%  reduction in emissions from 2011 to 2014.  In addition, industry argues that the rule unnecessarily locks in expensive monitoring technologies and stifles the development of more cost-effective and efficient technologies.  Further, many in the industry responded that the rules will produce virtually no climate impact, despite the Administration’s goal of reducing methane emissions by 40-45% by 2025 (compared to 2012 levels).

Both the final NSPS rules and the draft information collection request are pending publication in the Federal Register.  Once the information collection request has been published, industry will have 60 days to submit comments.  EPA will then consider the comments and release a general information request to all owners and operators of existing sources.  In the coming weeks, EPA also expects to issue a final rule for wellheads in areas that are out of compliance with the national ozone standard (i.e., nonattainment areas).  In addition, EPA plans to issue a voluntary request for information in the near future on strategies to accurately and cost-effectively locate, measure and mitigate methane emissions.  It is unclear whether industry groups or individual owners or operators will challenge the rule in court.