The U.S. Environmental Protection Agency (USEPA) is proposing to include additional emissions sources in its first-ever national mandatory greenhouse gas (GHG) reporting system. On March 22, 2010, USEPA signed a proposed rule for the mandatory reporting of vented and fugitive methane (CH4) and carbon dioxide (CO2) emissions from petroleum and natural gas industry facilities emitting 25,000 metric tons or more of carbon dioxide equivalent per year. USEPA estimates the total cost of reporting to the private sector would be about $60 million for the first year and $25 million in subsequent years. This translates to an estimated average cost of $18,000 per facility for the first year and $8,000 in subsequent years.

Last year, USEPA finalized the first-ever GHG mandatory reporting requirement (MRR) in October of 2009. That rule required 31 industry sectors, covering 85 percent of total U.S. GHG emissions, to track and report their emissions.

In addition to those 31 industries, USEPA is now proposing to collect emissions data from the oil and natural gas sector, industries that emit fluorinated gases, and from facilities that inject and store CO2 underground for the purposes of geologic sequestration or enhanced oil and gas recovery. In a move broader than expected, covered facilities include onshore petroleum and natural gas producers, offshore petroleum and natural gas producers, onshore natural gas processing, natural gas transmission, underground natural storage, liquefied natural gas (LNG) storage, LNG import and export facilities, and natural gas distribution facilities. Methane is the primary GHG emitted from oil and natural gas systems and is more than 20 times as potent as CO2 at warming the atmosphere. USEPA’s proposed rule sets the reporting threshold for methane at 1250 tons per year.

USEPA expects to publish the final rule later in 2010 so that data collection for this source category can begin on January 1, 2011 with the first annual reports submitted to EPA on March 31, 2012. USEPA estimates that the proposal would cover 85 percent of the total GHG emissions from the U.S. petroleum and natural gas industry with approximately 3,000 facilities reporting. Due to the unique characteristics of these industry segments, the proposed definition of “facility” for onshore and offshore petroleum and natural gas production, and natural gas distribution differ from the definition of facility applied in the remainder of the MRR.

The proposals will be open for public comment for 60 days after publication in the Federal Register. The agency will also hold public hearings on these proposals on April 19, 2010 in Arlington, Va. and April 20, 2010 in Washington, D.C.