Market News

 May 01, 2012
EPA Issues Air Pollution Standards for Oil and Natural Gas Wells

 In response to a court deadline, the U.S. Environmental Protection Agency (EPA) has finalized standards to reduce harmful air pollution associated with oil and natural gas production.
The updated standards, required by the Clean Air Act, were informed by the important feedback from a range of stakeholders including the general public, public health groups, states and industry.

Assistant EPA Administrator Gina McCarthy (pictured right)says the agency received 150,000 comments on its original proposal and decided to make some changes.

From the time the new rule goes into effect in late June to January 2015 natural gas well operators will be allowed to either flare the gas that escapes during the drilling process or capture it through "green completions" technology.

"Either one would be appropriate and you're going to have to report and pre-notify to the agency," said McCarthy in a conference call today. "On January 1st, 2015, you're not going to have the option to solely flare but you're going to have to do reduced emission completion."

McCarthy, who spoke at GLOBE 2012 on What's Next for Climate Policy" says the EPA decided to give those who drill for natural gas more time to make the adjustment to the more expensive "green completions" process which will capture what's lost during drilling and enable it to be resold.

"We really wanted to make sure that we understood the value of green completions but we wanted to make sure that we didn't require them before the technology was broadly enough available, which would have meant it wasn't cost-effective in certain circumstances," McCarthy said.

As a result, the final standards reduce implementation costs while also ensuring they are achievable and can be met by relying on proven, cost-effective technologies as well as processes already in use at approximately half of the fractured natural gas wells in the United States.

These technologies will not only reduce 95 percent of the harmful emissions from these wells that contribute to smog and lead to health impacts, they will also enable companies to collect additional natural gas that can be sold.

Natural gas is seen as a key component of the U.S. clean energy future and the standards released today make sure that we can continue to expand production of this important domestic resource while reducing impacts to public health, and most importantly builds on steps already being taken by industry leaders, commented EPA Administrator Lisa P. Jackson

"The president has been clear that he wants to continue to expand production of important domestic resources like natural gas, and today's standard supports that goal while making sure these fuels are produced without threatening the health of the American people."

During the first phase of implementation of the new standards, until January 2015, owners and operators must either flare their emissions or use emissions reduction technology called "green completions," technologies that are already widely deployed at wells.

In 2015, all new fractured wells will be required to use green completions. The final rule does not require new federal permits. Instead, it sets clear standards and uses enhanced reporting to strengthen transparency and accountability, and ensure compliance, while establishing a consistent set of national standards to safeguard public health and the environment.

An estimated 13,000 new and existing natural gas wells are fractured or re-fractured each year. As those wells are being prepared for production, they emit volatile organic compounds (VOCs), which contribute to smog formation, and air toxics, including benzene and hexane, which can cause cancer and other serious health effects.

In addition, the rule is expected to yield a significant environmental co-benefit by reducing methane, the primary constituent of natural gas. Methane, when released directly to the atmosphere, is a potent greenhouse gas-more than 20 times more potent than carbon dioxide.