NSWA Vice President of Governmental Affairs Tim Charters
The Obama Administration has made fighting climate change the centerpiece of the President’s second term in office, and nowhere is that burden more of a growing threat than to the operations of the small oil and gas producers in America. In March 2014, the President’s Climate Action Plan directed federal agencies to look at developing mandatory and voluntary policies to reduce methane and volatile organic compound (VOCs) releases. In April of 2014, the EPA released a series of white papers on what they see as significant sources of emissions in the oil and gas sector.
The five papers focus on compressors, emissions from completions and ongoing production of hydraulically-fractured oil wells, leaks, liquids unloading, and pneumatic devices. See white paper summary here
As a result, in January 2015, the Environmental Protection Agency (EPA) announced its plan to develop new regulations on oil and gas producers to limit methane and VOCs emissions during oil and gas production operations. This action ignores the fact that by EPA’s own calculations, U.S. gas production has quadrupled since the mid-2000s, while at the same time methane emissions from oil and gas operations have declined by more than 13%.
Although at this point the exact nature of what EPA is planning to do with this rulemaking isn’t clear, the white papers make it clear that they believe that there is significant opportunity to reduce emissions in a variety of areas, and industry should expect the rulemaking to reflect that. One area that is most likely is the process of venting and flaring of methane. Already the Bureau of Land Management (BLM), which manages oil and gas operations on federal and Indian lands, is proceeding with new rules for venting and flaring on federal lands. While this is being done under both the premise of resource conservation and royalty generation, BLM also is calling this a centerpiece of their climate agenda. Producers should expect that EPA’s rulemaking may have significant requirements on reducing or eliminating flaring and venting of methane.
EPA is proposing to release the draft rule some time during summer 2015 with a goal of having a final rule in place by spring or summer 2016. When the rule is released, watch this update for additional information on what you may expect from EPA. In the meantime, NSWA is working with industry allies and congressional supporters in Washington to continue to influence the EPA rulemaking to protect or exempt small producers from the costs and burdens of this rulemaking.