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Steptoe & Johnson PLLC: Final NSPS for Oil and Gas Industry Published in Federal Register

By Armando F. Benincasa  

The final New Source Performance Standard (NSPS) for the oil and natural gas sector was published in the Federal Register and will become effective on October 15, 2012.

The key component of the final rules is a requirement to use "reduced emissions completion" or "green completion" to capture natural gas that escapes into the air from wells which are hydraulically fractured. Using green completion, gas and liquid hydrocarbons are separated from the flowback that comes from the well as it is being prepared for production. This approach is expected to yield a nearly 95 percent reduction in volatile organic compound (VOC) emissions from the more than 11,000 new hydraulically fractured gas wells each year. In addition, the rules will reduce emissions of air toxics, including benzene, and greenhouse gases such as methane.

Based on public comment, the final rule contains some changes as compared to the initial proposal - the most important being a "phase in" of the green completion requirements. Recognizing that there was a shortage of equipment necessary to perform green completions, EPA has pushed back the requirement to begin using green completions to January 1, 2015. In the interim, companies who do not use green completions will be required to flare the emissions, which also effectively reduces VOC emissions by 95 percent.

Green completions will not be required for new exploratory "wildcat" wells or delineation wells (used to define the borders of a natural gas reservoir) or for low pressure wells, which are defined using a simple formula based on well depth and well pressure. 

Armando F. Benincasa concentrates his practice in the areas of energy law, environmental law, environmental litigation, and administrative law.

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