(07/28/2011)

Gabriel Nelson, E&E reporter
A package of air quality standards proposed today by U.S. EPA would require the oil and gas industry to cut its emissions to protect people from smog, cancer-causing chemicals and climate change — and would also save drillers millions of dollars per year, the agency said.

The four rules, which would need to be finalized by the end of February 2012 under a settlement with environmentalists, include new limits on both volatile organic compounds (VOCs) and toxic emissions. EPA says the standards would cut smog-forming VOCs across the industry by 25 percent and toxics by about 30 percent, and as a side benefit, would cut methane — a potent greenhouse gas — by about 26 percent.

At a time when the Obama administration is taking fire from business groups that claim its environmental rules are too costly, the new standards were touted as saving money for the oil industry by forcing companies to do more to keep natural gas from escaping into the air.

The rules would cost businesses an estimated $754 million in 2015, but the natural gas and condensate that would be captured by new pollution controls could be sold for $783 million, the agency’s analysis shows.

Money spent on upgrades would be recovered within at most a year, EPA says, and because methane is more than 20 times more potent than carbon dioxide at warming the planet, the new equipment would also provide climate change benefits worth an estimated $1.6 billion per year.

“This administration has been clear that natural gas is a key component of our clean energy future, and the steps announced today will help ensure responsible production of this domestic energy source,” EPA air chief Gina McCarthy said in a statement today. “Reducing these emissions will help cut toxic pollution that can increase cancer risks and smog that can cause asthma attacks and premature death — all while giving these operators additional product to bring to market.”

The rules would apply to about 1.1 million wells that are already producing oil and gas, as well as 500,000 existing gas wells and the 11,400 new gas wells being drilled each year. They also apply to 600 natural gas processing plants, 3,000 compressor stations and 1.5 million miles of pipelines.

A representative of the American Petroleum Institute, the largest trade group for the oil and gas industry, said today that EPA should extend the comment period on the rules by at least six months to give companies time to digest them.

“API will review these proposed rules to ensure that they don’t inadvertently create unsafe operating conditions, are cost effective and truly provide additional public health benefits, and don’t stifle the development of our abundant natural resources,” Howard Feldman, the group’s director of scientific and regulatory policy, said in a statement.

Today’s proposal would include the first air quality rules for natural gas wells that use hydraulic fracturing, a practice that has recently unlocked vast reserves of gas in underground shale formations but has become highly controversial based on fears it could be causing water contamination. In places where shale gas wells are popping up by the thousands, neighbors have also raised concerns that they are being exposed to toxic emissions such as benzene.

And in some remote parts of the country, such as northeastern Utah and southwestern Wyoming, locals blame the boom in gas development for spikes in levels of ground-level ozone, the main ingredient in smog, that rival big cities in the summertime.

EPA has already set emissions standards for large gasoline- and diesel-powered engines that are used by oil and gas companies. But some of the smaller engines that are used to drill wells and power other operations are not included in either set of rules.

Today’s rule won’t reach their emissions of nitrogen oxides, which react with VOCs to form ozone. “That’s where there’s been relatively little progress made at the national level for several decades now,” said Ramon Alvarez, a Texas-based scientist for the Environmental Defense Fund. But environmental and public health groups were largely pleased today, especially by the plan to cut down on methane.

They say the techniques that EPA is proposing are already being used in the field. States such as Wyoming and Colorado have set stricter air pollution rules for natural gas wells, and some companies, hoping to plug natural gas leaks and save money, have started using the new techniques under a voluntary EPA program called Natural Gas STAR.

Special thanks to Richard Charter, as always.