No current federal regulatory restrictions apply to methane emissions from O&G operations. O&G has significant data collection and disclosure obligations pursuant to the EPA GHG Reporting Program, however. Congress enacted that program under section 114 of the Clean Air Act (CAA), and it is therefore strictly limited to information disclosure. New and modified O&G sources also have significant emissions and operational control obligations pursuant to the O&G New Source Performance Standards, Subpart OOOO, enacted under CAA section 111(b) (known as “Subpart OOOO”). These obligations, however, attach only to the volatile organic compound (VOC) emissions from O&G operations that are typically co-emitted with methane at much lower concentrations, not directly to methane emissions themselves. This scenario is expected to end in the summer of 2015 when EPA proposes an expansion of Subpart OOOO. The expansion is expected not only to extend applicability to more midstream O&G operations, but also to extend the scope of regulated pollutants from VOC emissions to both VOC and methane emissions.
Potential expansion to include methane
The extension of applicability of Subpart OOOO to GHG emissions has the potential to do for O&G operations what it did for power plants: open the door to regulation of existing sources under CAA section 111(d) Emission Guidelines in the form of an Existing Source Performance Standard (ESPS). This ESPS would be implemented at the state level with the potential to reach many, many more facilities than a New Source Performance Standard, including older facilities not scheduled for additional investment. While EPA has stated in the media that it does not support and is not actively planning an ESPS for O&G, the fact remains that CAA section 111(d) would require such regulation at some point in time because methane emissions are not covered by a National Ambient Air Quality Standard, assuming this concept is not overturned by litigation. And, EPA has already included a limited existing source program, applicable to O&G operations in ozone nonattainment areas only, as part of the summer 2015 Subpart OOOO expansion. Under this program, EPA will issue “Control Techniques Guidelines” for use by states to develop O&G methane reduction regulations for use in ozone nonattainment areas. Of course, by the time EPA finalizes the Subpart OOOO rules, which EPA anticipates will occur by the end of 2016, ozone nonattainment areas will be poised to expand dramatically as the new, lower ozone National Ambient Air Quality Standard is implemented and a new administration is entering the White House.
Expanded reporting requirements
While expansion of Subpart OOOO is the lynchpin for increasing EPA jurisdiction over O&G operations, the march to broader O&G emissions regulation will not begin with the planned summer expansion of Subpart OOOO. It already began last fall with the expansion of EPA’s GHG Reporting Program jurisdiction, with relatively little industry engagement, to include O&G gathering and boosting stations, hydraulically fractured oil wells, and gas transmission pipeline blowdowns. Interestingly, these are the very sources slated for addition to Subpart OOOO applicability in the summer of 2015. In essence, EPA is developing a pattern of collecting data under its section 114-based GHG reporting program in preparation for implementation of GHG emissions restrictions the following year. These restrictions for new and modified sources are implemented under section 111(b), followed by expansion to existing sources under section 111(d).
In light of these developments, the best defense for upstream and midstream O&G operations against what appears to be a multi-year program of rapidly expanding air emissions regulatory requirements is a good offense. In other words, it behooves the prudent O&G facility operator to develop and implement a robust compliance management system with plenty of room for expansion to cover new requirements.