The oil and natural gas industry is the target of round two of the President’s Climate Action Plan, released in 2013 with the goal of reducing greenhouse gas (GHG) emissions.
Round one was the proposed rules limiting carbon dioxide (CO2) emissions from new and existing power plants. Regulation of methane emissions is now taking center stage.
In January, the administration announced a new goal to cut methane emissions from the oil and natural gas sector by 40 to 45 percent (2012 levels) by 2025.
To help accomplish this, the EPA will propose standards for “methane and volatile organic compounds (VOC) emissions from new and modified oil and natural gas production sources, and natural gas processing and transmission sources.”
The proposal is expected this summer.
Review of the EPA’s background analysis or white papers, discussed later in this article, suggests that the EPA does not have an accurate estimate of the volume of methane emitted from the oil and natural gas sector. It is hard to imagine how regulators will determine how to capture 40 to 45 percent of an unknown – or what the costs and benefits will be.
The EPA also plans to set guidelines for states to reduce emissions of ozone-forming pollutants from existing oil and natural gas systems in areas that do not meet the ozone health standards. Dallas-Fort Worth would be one major oil and gas producing area impacted under ozone rules.
The EPA may envision regulating oil wells in a process similar to the 2012 standards requiring reduced-emissions, or green, completions to reduce VOCs from natural gas wells – those standards do not set limits on methane emissions. The requirements took effect at the beginning of this year, although many operators have been using green completions for years.
Alternatively, the EPA could seek to regulate methane as a greenhouse gas in a process similar to that used for power plants, by first regulating new sources, then directing the states to constrain existing sources.
In addition, the administration expects the Bureau of Land Management (BLM) to issue new standards for hydraulic fracturing on federal lands in late February. These standards have been in development since 2012.
The administration says the BLM standards will reduce wasteful venting, flaring and leaks of natural gas from new and existing oil and gas wells.
This statement suggests that the new standards will go beyond the 2012 draft proposal that only considered hydraulic fracturing chemical disclosure, well bore integrity and management of flow-back waters.
EPA White Papers
In the spring of 2014, the EPA issued a set of five white papers listing methane and VOC emissions sources and possible leak mitigation technologies for:
- Compressors.
- Oil well completions and production.
- Pneumatic devices.
- Leaks.
- Liquid unloading.
These documents form the justification for the upcoming rules.
This column will look only at the oil well completions and production white paper: “Oil and Natural Gas Sector Hydraulically Fractured Oil Well Completions and Associated Gas During Ongoing Production.”
The white paper describes the existing, extremely limited emissions data and extrapolates to national emissions volumes or targets for mitigation.
The papers also describe emissions mitigation technologies and estimate their effectiveness.
The EPA has attempted to estimate how much methane and VOC would be emitted during oil well completions, based on assessments of commercial oil and gas production databases and one peer-reviewed study of 26 well completion events in the Gulf Coast, Mid-continent, Rocky Mountain and Appalachian regions (Allen et al, 2013, Measurement of Methane Emissions at Natural Gas Production Sites in the United States).
In addition, industry – as well as academic, regulatory and environmental organizations – faults the white papers for incorrectly assuming that all stranded gas produced at oil wells is vented rather than flared.
Inaccurate or inflated emissions estimates are a significant concern, because EPA will need to take into account the cost of controls. Larger methane emissions volumes mean a higher value for the captured and marketed methane, which can justify requiring more expensive mitigation technology or procedures.
The mitigation technologies that EPA considers are:
- Reduced-emissions (green) completions, which are currently required for gas wells; the technology for oil wells is essentially the same. Green completions may involve the sale, on-site use, flaring or reinjection of completion flow-back gas.
- Flaring (combustion devices), which is standard operating procedure for wells throughout the United States. Both flaring and separating gas and sending it to a sales line are very efficient, removing up to 98 percent of methane.
- Natural gas liquids recovery; this was applied to Bakken wells not connected to natural gas collection infrastructure, and then the results were evaluated by the Energy & Environmental Research Center (EERC) of the University of North Dakota. EERC found the technology of limited economic application.
- Natural gas reinjection to mitigate methane emissions has never been evaluated.
Some reviewers also suggest consideration be given for some regions’ lack of infrastructure to send gas to market.
The Bakken is the largest play that has inadequate natural gas gathering infrastructure. In 2014’s third quarter, just over 26 percent of natural gas production in the Bakken play was flared, compared to about 40 percent in the fourth quarter of 2011. In other regions wells may produce at pressures lower than the natural gas collection infrastructure, and the use of a compressor to raise the pressure of small volumes of gas enough to flow into collection lines may be uneconomic.
Reviewers also note that the EPA, in its white paper on completions, failed to consider how many states do not allow uncontrolled emissions. This suggests that the EPA is not considering how its regulations might duplicate state regulations.
It also suggests another way the EPA may have overestimated emissions.