U.S. & Canada to Impose Tough Methane Emissions Standards on Oil & Gas Producers
03/16/2016
In a decision that could have profound effects on EHS professionals in the oil & gas industry, President Obama and Canadian Prime Minister Justin Trudeau announced, last Thursday, a bi-lateral agreement calling for a 40-45% reduction in methane emissions associated with oil & gas production over the next nine years.
The agreement builds upon international commitments established during the U.N. Conference on Climate Change (COP21) in Paris this past December, and is in-step with the Obama Administration’s previous goal of reducing methane emissions 40% below 2012 levels by 2025. It marks the first time that such dramatic emissions standards would be applied to existing wells and facilities, in addition to newly-developed oil & gas resources. The EPA is expected to announce the proposed standards as early as next month, and Environment Canada is expected to implement the new standards sometime early next year. According to EPA Administrator Gina McCarthy, the proposed rule would not only require petroleum producers to reduce their total emissions, but would impose new monitoring, control, and reporting requirements on equipment & facilities throughout extraction, transportation, refining, and storage processes.
The new rule will not only apply to wellhead emissions, but will seek to minimize emissions from leaks in pipelines, truck & rail transport channels, and refining & storage facilities. If consistent with recent rules proposed by EPA and BLM, the new rule could also seek to regulate emissions from compressors, pneumatic devices, storage tanks, and other downstream natural gas infrastructure. While the EPA has yet to release any specific standards or timeline for drawing down emissions, EHS managers throughout the petroleum industry should stay current and involved with the rulemaking process to ensure compliance with the new standards, determine what monitoring and control technologies are available, and avoid unnecessary regulatory risk.
In January, Pennsylvania Governor Tom Wolf and the state’s Department of Environmental Protection (DEP) moved to impose tighter standards and reporting requirements on producers operating in the Marcellus shale formation. The Marcellus shale formation is, by far, the largest natural gas deposit in North America, holding an estimated 4,359 trillion cubic feet of natural gas, approximately 30% of which is deemed “recoverable”. By itself, the Marcellus shale formation could supply the natural gas demand of the United States for an estimated 20 years. In the absence of any previous formal emissions reporting requirements, regulators remain uncertain about the volume of methane released since the formation was first commercially developed more than a decade ago. However, industry associations like the Marcellus Shale Coalition and American Petroleum Institute point out that advancements in extraction technologies and process improvements have already helped achieve a 13% reduction in methane emissions between 2013 and 2015, according to an April 2015 DEP report.
The rapid resurgence of North American oil & gas development has created substantial debate about the long-term climate effects of such expansion. The recent California Methane Leak demonstrated the dramatic environment, health, and safety risks posed by methane emissions. The leak has forced the evacuation of more than 2,300 homes in the City of Porter Ranch due to air quality and public health concerns, as well as risk of explosion, and released more than 107,000 tons of methane into the atmosphere, an amount equivalent to the total emissions of Pennsylvania’s oil & gas industry during 2013.
Obtaining accurate emissions data is the first step for regulators in determining the impact of methane on the environment, health, and safety. Though new emission standards and reporting requirements are likely to place additional strain and cost on oil & gas producers, a centralized, enterprise-wide monitoring and reporting system can help to ensure compliance with new standards and make emissions reporting simple, fast, and more accurate.
