On May 12, 2016, the United States Environmental Protection Agency issued a pre-publication version of a final rule that sets the first-ever federal limits on methane emissions for new, reconstructed, and modified oil and gas sources. The Methane Rule aims to reduce greenhouse gas (GHG) emissions in the oil and gas industry in two ways: by updating New Source Performance Standards (NSPS) for the emission of methane and volatile organic compounds (VOCs) and by imposing new monitoring and maintenance requirements. It is the latest in a series of EPA rulemakings to implement the Obama administration’s Climate Action Plan. The Methane Rule will become effective 60 days after it is published in the Federal Register, which has not yet occurred.

Background

For several years, the Obama Administration has focused on emissions from the oil and gas sector. In the past year alone, EPA proposed new rules for producers on federal lands, and finalized a rule that considerably tightens emissions standards for refineries. EPA’s new Methane Rule builds on the 2012 NSPS. That rule limited VOC emissions, though not methane, from new, reconstructed, and modified sources in the oil and gas industry. First proposed in August 2015, the Methane Rule generated over 900,000 public comments before EPA finalized it last week.  

The Methane Rule

The Methane Rule sets numerical limits on methane and VOC emissions and imposes new monitoring and repair requirements on new, modified, and reconstructed oil and natural gas sources.

a. New Emissions Limits Impacting Energy Transmission & Distribution Industry

The Methane Rule regulates emission limits for equipment and activities throughout the oil and gas production chain, including operations at production, processing, transmission, and storage facilities. This post focuses on the limits impacting pipelines and compression stations. As shown in the table below,[1] the rule sets new methane emissions limits for centrifugal compressors, reciprocating compressors, and pneumatic controllers.

Source Final NSPS
Wet seal centrifugal compressors[2] 95% reduction in emissions, which can be accomplished by routing captured gas back to a control device
Reciprocating compressors (a) Replace rod packing on or before every 26,000 hours of monitored and documented operations; or

(b) Replace rod packing every 36 months (no monitoring and documentation of operating hours required); or

(c) Route emissions from rod packing through a closed vent system under negative pressure

Continuous bleed, gas-driven controllers Natural gas bleed rate limited to 6 standard cubic feet per hour[3]
Pneumatic pumps at compressor stations No final requirements for transmission sources

 

b. New Requirements for Monitoring and Repairing Leaks

The Methane Rule also requires owners and operators of compressor stations to monitor and repair leaks, known as “fugitive emissions,” as follows:

  • Owners/operators must establish and implement a fugitive emissions monitoring plan using optical gas imaging (OGI) to conduct a survey of leaks. OGI produces real-time images of gas leaks or emissions through the use of infrared detectors. In lieu of OGI, owners/operators may use “Method 21,” which typically involves a portable VOC monitoring instrument.
  • Owners/operators must conduct an initial survey within 60 days of the startup of a new or modified compressor station or within one year after the publication of the Methane Rule, whichever is later. Owners/operators must then complete monitoring on a quarterly basis.
  • Owners/operators must repair any leaks discovered during monitoring within 30 days. If the repair would require a shutdown of the compression station, however, owners/operators need fix the leak only during the next scheduled shutdown or within two years. Note also that emissions from equipment designed to vent natural gas do not constitute leaks and need not be fixed under the Methane Rule.
  • The Methane Rule allows the use of alternative monitoring technology, but owners/operators must submit support to EPA that the alternative technology is capable of detecting leaks as well as OGI or Method 21.

Regulations on the Horizon

The Methane Rule marks a new era of regulations for the oil and gas industry. And more change is on the horizon. On March 10, 2016, EPA announced its plans to issue an Information Collection Request (ICR) designed to collect information relating to existing oil and gas sources. Industry members will be required to respond to this broad request for information after EPA issues the final ICR. In addition, EPA is planning to issue final Control Techniques Guidelines later this spring to decrease VOC emissions from certain existing oil and gas sources. Finally, a new rule is expected in the coming months that will govern how oil and gas sources are aggregated for the purpose of emissions limits.

Please consult Schiff Hardin’s Environmental Group with questions about the new standards or requirements.

 

[1] This table is adapted from the Methane Rule, Table 1.  See Methane Rule at 10.

[2] Dry seal centrifugal compressors are not covered by the Methane Rule because according to EPA those systems already have low methane and VOC emissions.

[3] The Methane Rule does not regulate low-bleed controllers with a gas bleed rate of 6 standard cubic feet per hour or fewer.  In addition, the Methane Rule does not require low-bleed controllers for certain operations that actually require high-bleed controllers for certain purposes, like safety or operational requirements.