EPA Finalizes NSPS and NESHAPS for Oil and Gas Industries

Shale Energy Update

Date: May 01, 2012

Overview

The U.S. EPA released final regulations on April 17, 2012 that subject certain oil and gas operations, including hydraulic fracturing, to air quality regulation through the New Source Performance Standards (NSPS) and the amendment of existing National Emissions Standards for Hazardous Air Pollutants (NESHAPS).

NSPS

The NSPS regulate emissions of volatile organic compounds (VOCs) and sulfur dioxide (SO2) from various oil and gas exploration, production, processing and transportation facilities, including natural gas wells, certain compressors and pneumatic controllers, storage vessels and sweetening units at onshore natural gas processing plants.

To reduce VOC and SO2 emissions, EPA requires that all newly fractured or refractured wells incorporate reduced emissions controls (RECs) or "green completions." Green completions include separating gas and liquid hydrocarbons during flowback to capture the natural gas that may otherwise escape into the air. The requirement to employ REC technology will only apply to well completion operations using fracturing that commence on or after January 1, 2015. For natural gas wells where completion of operations begins before January 1, 2015, the operator need only capture and direct flowback emissions to a "completion combustion device" as an alternative to using REC procedures. Additionally, the rule provides that if using REC technology is "infeasible," the operator may use a completion combustion device to control flowback emissions. EPA also has exempted low-pressure wells from the REC requirement.

The rule modifies the definition of "well completions," limiting the REC requirement to that period when fracturing operations end and flowback begins. The REC requirement is in effect until the well either is continuously flowing to the flow line or storage vessel for collection or is shut in.

Although some relaxation of requirements for hydraulically fractured natural gas wells are contained in the new rule, the rule specifies a "general duty to safely maximize resource recovery and minimize releases to the atmosphere during flowback and subsequent recovery."

To incentivize operators to use REC technology before it is required on January 1, 2015, the rule will exempt from the definition of "modification" existing wells that are refractured using REC, allowing operators in many states to refracture wells without triggering additional state permitting requirements.

The remainder of the new rules take effect 60 days after the final rule is published in the Federal Register.

NESHAPS

The new NESHAPS cover the oil and natural gas production sector and the transmission and storage of natural gas. The final rule incorporates Maximum Achievable Control Technology (MACT) standards for previously unregulated "small" glycol dehydrators that are located at major sources, which are defined as those sources that have the potential to emit more than 10 tons per year (tpy) of any single hazardous air pollutant (HAP) or 25 tpy or more of any combination of HAPs. Additionally, EPA finalized modifications to the leak detection standards for valves.