On April 17, 2012, the U.S. Environmental Protection Agency (EPA) issued revised rules regulating the oil and natural gas industry’s emission of volatile organic compounds (VOCs), sulfur dioxide and other air pollutants pursuant to the Clean Air Act (CAA). These rules, promulgated under the EPA’s New Source Performance Standards (NSPS) and the National Emission Standards for Hazardous Air Pollutants (NESHAP) programs, modify existing air pollution standards and notably, include the first federal air emissions standards for natural gas wells that are hydraulically fractured.
EPA drafted the revised rules in accordance with the CAA which requires the EPA to set performance standards for industrial sources that contribute to air pollution and endanger public health or welfare. The EPA is required to review these standards every eight years.
The revised NESHAP rule does not address hydraulic fracturing but instead focuses on certain gas production operations. In this regard, the NESHAP rule now regulates small glycol dehydrators that were previously unregulated (new performance standard for emission limits), excludes storage vessels from certain emission performance criteria and requires additional leak detection measures and recordkeeping practices with regard to previously exempted gas processing equipment.
The revised NSPS regulates VOC emissions from gas wells, centrifugal compressors, reciprocating compressors, pneumatic controllers, storage vessels, leaking components at onshore natural gas processing plants, and onshore natural gas processing plants. This revision directly implicates wells that are hydraulically fractured.
Specifically, the NSPS adopts a two-tiered phase-in period for fractured wells. During the first phase–60 days following publication in the Federal Register until January 1, 2015–owners and operators of fractured and refractured gas wells must either flare their emissions or use emissions reduction “green completions.” In a green completion, special equipment separates gas and liquid hydrocarbons from the flowback that comes from the well as it is being prepared for production. The gas and hydrocarbons can then be treated and used or sold. After January 1 2015, all new fractured wells are required to use green completions with combustion.
The EPA asserts that the final rules will reduce 95% of the harmful emissions from fractured natural gas wells and will enable companies to collect additional natural gas, which can then be sold. The EPA expects green completion will affect more than 11,000 new hydraulically fractured gas wells annually and 1,400 refractured wells, reducing VOCs by 190,000 to 290,000 tons per year (tpy), and air toxics by 12,000 to 20,000 tpy. The EPA’s analysis shows a cost savings of $11 to $19 million when the rules are fully implemented in 2015.