By Zahava Bennett and Eli Humphries
Many energy prospectors, including the T. Boone Pickens, have viewed natural gas as a bridge fuel leading to a more sustainable future. Although natural gas burns cleaner than other fossil fuels, there is concern that a valuable resource is being wasted and additional pollution is being created by not having a standard method for identifying leaks and minimizing the loss of product in the process of taking gas from the ground to its end source. Any loss of gas or vapors from pressurized equipment due to leaks and other unintended releases of gas is referred to as fugitive emissions.
According to the Ohio Department of Natural Resources, oil and gas production continues trending upward in Ohio with 1,000 wells drilled in 2011 and 2012 combined. To address concerns associated with the increased oil and gas development, Ohio has become one of only three states that are currently regulating regulate fugitive emission of methane gas. The Ohio Environmental Protection Agency (“OEPA”) is working to identify sources and reduce fugitive emission of methane gas through revisions to its permitting process.
The OEPA has proposed new rules which were in development for more than a year and were to be effective immediately. Under the revised regulatory scheme, an operator can either apply for a general or traditional emissions permit. A general permit (“GP”) takes less time to receive than a traditional permit but allows less term flexibility. The Model General Permit (“MGP”) is a general permit with all the terms and conditions already developed. Once the MGP application process is complete, the operator is granted a GP with the same language as the MGP. Operators can quickly determine if they are eligible for a GP and avoid the extensive review and term-writing process of the traditional permit. The Ohio EPA recently updated its GPs for oil and gas production as well as unpaved roadways and parking areas. Horizontal drilling has become more prevalent across Ohio, which raises concerns over the increased methane emissions as compared to vertical drilling.
The U.S. EPA’s issuance of New Source Performance Standards and changes in the Best Available Technology (“BAT”) have prompted changes in the oil and gas GP 12. The GP has now been split into 12.1 and 12.2, two almost identical sections differentiated by the flare and natural gas engine emissions. MGP 12.1 allows for smaller combustion flare and larger natural gas engines, while 12.2 allows for a larger flare and smaller engines. The differences in the GPs result in the same net air emission allowances. Leak detection requirements were also modified to require more frequent monitoring through use of infrared cameras and portable sampling instruments.
Given the rural environment that often accompanies oil and gas production, the Ohio EPA’s changes to GP 5.1 regarding unpaved roadways and parking areas should also be noted. GP 5.1 targets dust pollution control from traffic on dirt and gravel roads. The revisions to GP 5.1 clarify existing language, makes a work practice plan the approach to BAT and require road dust emission testing only on days of employee activity.
These GP modifications were effective as of the date they were posted on the Ohio EPA’s website. Operators with existing GPs may request the new GPs but may need to make accommodations for the current BAT.
What do these regulations mean for the industry? First, it should be noted MPGs create an expedited permitting process. The separation of GP 12 into two separate GPs means that operators now have an alternative to waiting for six months for a traditional permit. The changes to GP 12 do not appear unreasonable. Initially, operators must conduct quarterly, rather than annual, leak monitoring. If minimal leaks are found, leak monitoring can be reduced to semi-annual or annual inspections. However, if leaks are in excess of two percent, operators must continue quarterly monitoring. When leaks are identified, corrective action must be taken within five days. It is evident by the language of the GP that compliance is king. It appears that the Ohio EPA wants to encourage responsible production practices which are then rewarded with relaxed obligations.
On the other hand, GP 5.1 benefits both the operator and the environment by helping to maintain road quality. With fairly minimal cost associated with controlling dust, the producer can control dust that could cause regional haze and health impacts which, if left unchecked, could lead to community pushback. Although GP 5.1 presents yet another impediment to production, operators are able to come up with their own unique solutions to the problem through the Work Practice BAT approach.
The oil and gas industry should expect agencies to continue to promulgate regulations targeting fugitive emissions. The industry may wish to foster a cooperative relationship with regulatory agencies to help craft cost effective regulations to reduce emissions. This kind of relationship would most likely be the best way for the industry to foster responsible growth and avoid outright bans on oil and gas development.
Zahava Bennett focuses her practice in the areas of oil and gas law. » See more articles by Zahava Bennett» Read the full biography of Zahava Bennett at Steptoe & Johnson
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