EPA Propo e.; Ail Pollution tt.indards.;or Oil and ezis Production

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1 Walter Wria: Frm: U.S. EPA ] Sent: Thursday, July 28, :09 PM T: Walter Wright Subject: Air News Release (HQ): EPA Prpses Air Pllutin Standards fr Oiland Gas Prductin CONTACT: Enesta Jnes jnes.enestaepa.qv FOR IMMEDIATE RELEASE July EPA Prp e.; Ail Pllutin tt.indards.;r Oil and ezis Prductin Cst-effective, flexible standards rely n peratrs' ability t capture and sell natural gas that currently escapes, threatens air quality WASHINGTON The U.S. Envirnmental Prtectin Agency (EPA) tday prpsed standards t reduce harmful air pllutin frm il and gas drilling peratins. These prpsed updated standards - which are being issued in respnse t a curt rder - wuld rely n cst-effective existing technlgies t reduce emissins that cntribute t smg pllutin and can cause cancer while supprting the administratin's pririty f cntinuing t expand safe and respnsible dmestic il and gas prductin. The standards wuld leverage peratrs' ability t capture and sell natural gas that currently escapes int the air, resulting in mre efficient peratins while reducing harmful emissins that can impact air quality in surrunding areas and nearby states. "This administratin has been clear that natural gas is a key cmpnent f ur clean energy future, and the steps annunced tday will help ensure respnsible prductin f this dmestic energy surce," said Gina McCarthy, assistant administratr fr EPA's Office f Air and Radiatin. "Reducing these emissins will help cut txic pllutin that can increase cancer risks and smg that can cause asthma attacks and premature death - all while giving these peratrs additinal prduct t bring t market." Tday's prpsal wuld cut smg-frming vlatile rganic cmpund (VOC) emissins frm several types f prcesses and equipment used in the il and gas industry, including a 95 percent reductin in VOCs emitted during the cmpletin f new and mdified hydraulically fractured wells. This dramatic reductin wuld largely be accmplished by capturing natural gas that currently escapes t the air and making that gas available fr sale thrugh technlgies and prcesses already in use by several cmpanies and required in sme states. Natural gas prductin in the U.S. is grwing, with mre than 25,000 new and existing wells fractured r re-fractured each year. The VOC reductins in the prpsal are expected t help reduce zne nnattainment prblems in many areas where il and gas prductin ccurs. In additin, the VOC reductins wuld yield a significant envirnmental benefit by reducing methane emissins frm new and mdified wells. Methane, the primary cnstituent f natural gas, is a ptent greenhuse gas - mre than 20 times mre ptent than carbn dixide. Tday's prpsed changes als wuld reduce cancer risks frm emissins f several air txics, including benzene. EPA's analysis f the prpsed changes, which als include requirements fr strage tanks and ther equipment, shw they are highly cst-effective, with a net savings t the industry f tens f millins f dllars annually frm the value f natural gas that wuld n lnger escape t the air. Tday's prpsal includes reviews f fur air regulatins fr the il and natural gas industry as required by the Clean Air Act: a new surce perfrmance standard fr VOCs frm equipment leaks at gas prcessing plants; a new surce perfrmance standard fr sulfur dixide emissins frm gas prcessing plants; an air txics standard fr il and natural gas prductin; and an air txics standard fr natural gas transmissin and strage. 1

2 EPA is under a cnsent decree requiring the agency t sign a prpsal by July 28, 2011 and take final actin by Feb. 28, As part f the public cmment perid, EPA will hld three public hearings, in the Dallas, Denver and Pittsburgh areas. Details n the hearings will be annunced sn. Mre infrmatin: httb://epa.qv/airquality/ilandqas/ R249 Nte: If a link abve desn't wrk, please cpy and paste the URL int a brwser. View all news releases related t air issues Yu can view r update yur subscriptins r address at any time n yur Subscriber Preferences Paqe. All yu will need is yur address. If yu have any questins r prblems supprtvdelivery.cm fr assistance. This service is prvided t yu at n charge by U.S. Envirnmental Prtectin Agency. Sent by the U.S. Envirnmental Prtectin Agency 1200 Pennsylvania Avenue NW Washingtn DC

3 PROPOSED AMENDMENTS TO AIR REGULATIONS FOR THE OIL AND NATURAL GAS INDUSTRY FACT SHEET OVERVIEW OF ACTION On July 28, 2011, the U.S. Envirnmental Prtectin Agency (EPA) prpsed a suite f highly csteffective regulatins that wuld reduce harmful air pllutin frm the il and natural gas industry while allwing cntinued, respnsible grwth in U.S. il and natural gas prductin. The prpsal is based n prven technlgy and best practices that the il and gas industry is using in sme states tday. It includes the first federal air standards fr wells that are hydraulically fractured, alng with requirements fr several ther surces f pllutin in the il and gas industry that currently are nt regulated at the federal level. Tday's prpsal includes fur air regulatins fr the il and natural gas industry: a new surce perfrmance standard fr VOCs; a new surce perfrmance standard fr sulfur dixide; an air txics standard fr il and natural gas prductin; and an air txics standard fr natural gas transmissin and strage. The prpsal wuld cut smg-frming vlatile rganic cmpund (VOC) emissins by nearly nefurth acrss the il and gas industry, including a nearly 95 percent reductin in VOCs emitted frm new and mdified hydraulically fractured gas wells. This significant reductin wuld be accmplished primarily thrugh use f a prven technlgy t capture natural gas that currently escapes t the air. That gas wuld then be made available fr sale. The estimated revenues frm selling the gas that currently ges t waste are significant s much s that tday's prpsed rule is anticipated t quickly result in a net savings f nearly $30 millin annually, while significantly reducing pllutin frm this expanding industry. The VOC emissin reductins frm wells, cmbined with reductins frm strage tanks and ther equipment, are expected t help reduce zne levels in areas where il and gas prductin ccurs. In additin, the reductins wuld yield a significant envirnmental c-benefit by reducing methane emissins frm new and mdified wells. Methane, the primary cnstituent f natural gas, is a ptent greenhuse gas mre than 20 times as ptent as carbn dixide. Oil and natural gas prductin and prcessing accunts fr nearly 40 percent f all U.S. methane emissins, making the industry the natin's single largest methane surce. The prpsed changes als wuld reduce cancer risks frm emissins f several air txics such as benzene. EPA estimates the fllwing cmbined annual emissin reductins when the prpsed amendments are fully implemented: VOCs: 540,000 tns, an industry-wide reductin f 25 percent

4 Methane 3.4 millin tns, which is equal t 65 millin metric tns f carbn dixide equivalent (CO2e), a reductin f abut 26 percent. Air Txics 38,000 tns, a reductin f nearly 30 percent. The prpsed rules wuld apply t the mre than 25,000 wells that are fractured and refractured each year, as well as t strage tanks and ther pieces f equipment. As part f tday's prpsal, EPA is seeking cmment n several steps t reduce the cmpliance burdens f the rule t industry and t state, lcal and tribal air agencies. Tday's prpsal cntinues EPA's effrts t supprt respnsible il and natural gas explratin and prductin that prtects public health and the envirnment. In June, the Agency signed a memrandum f understanding with the departments f Interir and Agriculture establishing a cmmn prcess fr the agencies t fllw in analyzing the ptential air quality impacts f prpsed il and gas activities n federally managed public lands. The cllabrative apprach in the agreement will prvide increased certainty, clarity and transparency abut requirements n public lands. EPA will accept public cmment n the prpsed amendments fr 60 days after publicatin in the Federal Register. Infrmatin n submitting written cmments is included at the end f this fact sheet. The Agency als will hld three public hearings n the prpsals in the Dallas, Denver, and Pittsburgh areas. Additinal infrmatin n the hearings will be annunced in a separate ntice. The Clean Air Act requires EPA t peridically review these rules. EPA must take final actin by Feb. 28, AIR EMISSIONS FROM OIL AND GAS PRODUCTION IN THE U.S. In 2009, abut 1.1 millin wells were prducing il and natural gas in the United States. The wells are lcated in many areas f the cuntry, including bth urban and rural areas. The majrity f new wells drilled tday prduce gas, and the majrity f thse new wells use a prcess knwn as hydraulic fracturing r "fracking." In this prcess, a mixture f water, chemicals and a prppant (usually sand) is pumped int a well at extremely high pressures t fracture rck and allw natural gas t escape. An estimated 11,400 new wells are fractured each year; anther 14,000 are re-fractured t stimulate prductin r t prduce natural gas frm a different prductin zne. The gas these wells prduce ges t gathering and bsting statins that take it t prcessing plants. These plants remve cntaminants t make the gas ready fr the pipelines that deliver it t cmmercial, industrial and residential custmers. Transmissin cmpressin statins help mve the gas thrugh 1.5 millin miles f natural gas pipelines acrss the United States. Sme f the largest air emissins in the il and gas industry ccur as natural gas wells that have been fractured are being prepared fr prductin. During a stage f well cmpletin knwn as "flwback," fracturing fluids, water, and reservir gas cme t the surface at a high velcity and vlume. This mixture includes a high vlume f VOCs and methane, alng with air txics such as benzene, ethylbenzene and n-hexane. The typical flwback prcess lasts frm three t 10 days. 2

5 Pllutin als is emitted frm ther prcesses and equipment in the industry that prepare gas fr sale and that assist in mving it thrugh pipelines. SUMMARY OF PROPOSED REQUIREMENTS New Surce Perfrmance Standards The Clean Air Act requires EPA t set new surce perfrmance standards (NSPS) fr industrial categries that cause, r significantly cntribute t, air pllutin that may endanger public health r welfare. Oil and gas prductin, prcessing, transmissin and strage are significant surces f VOCs, which cntribute t the frmatin f grund-level zne (smg). The law requires EPA t review new surce perfrmance standards every eight years. New Surce Perfrmance Standards fr Vlatile Organic Cmpunds (VOCs) The il and gas industry is a significant surce f VOCs, which cntribute t the frmatin f grundlevel zne (smg). EPA's existing NSPS fr VOCs were issued in The existing standards address nly VOC leak detectin and repair at new and mdified natural gas prcess prcessing plants, meaning significant surces f VOC emissins in the il and gas industry currently are nt subject t natinwide regulatin. EPA is prpsing new standards fr several prcesses r pieces f equipment used in il and gas prductin that have nt previusly been subject t federal regulatin. These include well cmpletins at new hydraulically fractured natural gas wells and at existing wells that are fractured r "re-fractured." These prcesses are the surce f an estimated 500,000 tns f VOC emissins each year. The prpsal wuld require VOC reductins frm: 1) Cmpletins f new hydraulically fractured natural gas wells and re-cmpletins f existing natural gas wells that are fractured r refractured. VOC emissins wuld be minimized thrugh the use f "green cmpletins," als called "reduced emissins cmpletins." In a green cmpletin, special equipment separates gas and liquid hydrcarbns frm the flwback that cmes frm the well as it is being prepared fr prductin. The gas and hydrcarbns can then be treated and sld. Sme states, such as Wyming and Clrad, require green cmpletins, and a number f cmpanies are vluntarily using this prcess thrugh EPA's Natural Gas STAR prgram. In additin, green cmpletins have been identified as an ptin fr thusands f new gas wells in the Uintah Basin in Utah t address cncerns abut air quality impacts assciated with natural gas develpment in the regin. EPA estimates that use f this equipment fr the three- t 10-day flwback perid reduces VOC emissins frm cmpletins and recmpletins f hydraulically fractured wells by 95 percent. 3

6 When gas cannt be cllected, VOCs wuld be reduced thrugh pit flaring, unless it is a safety hazard. Methane, a ptent greenhuse gas, als wuld be significantly reduced as a c-benefit f reducing VOCs. The green cmpletin requirements wuld nt apply t explratry wells r delineatin wells (used t define the brders f a natural gas reservir), because they are nt near a sales line. Thse wells must use pit flaring t burn ff their emissins, unless it is a safety hazard. 2) Cmpressrs Cmpressin is necessary t mve natural gas alng a pipeline. The prpsed rule wuld reduce VOC emissins frm tw types f cmpressrs: Centrifugal cmpressrs wuld have t be equipped with dry seal systems. Owners/peratrs f reciprcating cmpressrs wuld have t replace rd packing systems every 26,000 hurs f peratin. 3) Pneumatic cntrllers Pneumatic cntrllers are autmated instruments used fr maintaining a cnditin such as liquid level, pressure, and temperature at wells, gas prcessing plants, cmpressr statins, amng ther lcatins. These cntrllers ften are pwered by high-pressure natural gas. These gas-driven pneumatic cntrllers may release natural gas (including VOCs and methane) with every valve mvement, r cntinuusly in sme cases. EPA is prpsing VOC emissin limits fr pneumatic cntrllers. Fr new r replaced pneumatic cntrllers at gas prcessing plants, the prpsed limits wuld eliminate VOC emissins. These limits culd be met thrugh using cntrllers that are nt gas-driven. Fr cntrllers used at ther sites, such as cmpressr statins, the emissin limits culd be met by using cntrllers that emit n mre than six cubic feet f gas per hur. The prpsed amendments include exceptins fr cntrllers in applicatins requiring highbleed cntrllers fr certain purpses, including peratinal requirements and safety. 4) Cndensate and crude il strage tanks Tanks with a thrughput f at least 1 barrel per day f cndensate r 20 barrels per day f crude il (equivalent t abut 6 tns f VOC emissins per year) must reduce VOC emissins by 95 percent. 5) Natural gas prcessing plants EPA is prpsing t amend the existing NSPS fr natural gas prcessing plants t strengthen the leak detectin and repair requirements that apply t these plants t reduce VOC emissins. 4

7 New Surce Perfrmance Standards fr Sulfur Dixide The new surce perfrmance standards fr sulfur dixide (SO 2) were issued in 1985 and apply t natural gas prcessing plants. The Agency is prpsing t strengthen the perfrmance standards fr plants prcessing gas with the highest hydrgen sulfide cntent (at least 50 percent), in rder t further reduce sulfur dixide emissins frm these facilities. Air Txics Standards Air txics are pllutants knwn t, r suspected f, causing cancer and ther serius health effects. The Clean Air Act requires EPA t cnduct tw types f reviews f air txics standards fr majr surces: A residual risk assessment: This assessment must be cnducted ne time, eight years after a standard is issued, t determine what risks remain, and whether mre prtective standards are necessary t prtect public health. A technlgy review: This review must be cnducted every eight years after an air txics standard is issued t determine if better emissin cntrl practices, prcesses r technlgies have becme cst-effective r available that wuld warrant revising the standard. EPA reviewed bth the air txics standards fr il and natural gas prductin, and the standards fr natural gas transmissin and strage. Bth f the existing standards were issued in Air Txics Standards fr Oil & Natural Gas Prductin EPA's residual risk review fund that the current maximum individual cancer risk frm il and natural gas prductin is 40 in 1 millin, which falls within a range EPA cnsiders acceptable. Hwever, the review als fund that the level f emissins allwed under the existing air txics standard culd drive that risk significantly higher as high as 400 in 1 millin, which EPA des nt cnsider acceptable. T prevent this frm ccurring, EPA is prpsing changes t the standards fr majr surces t ensure that cancer risk des nt increase beynd current levels. T address this ptential risk, EPA is prpsing t remve the 1 tn per year benzene cmpliance ptin fr large glycl dehydratrs (used t remve excess water vapr frm natural gas). Under the revised requirements, all large dehydratrs wuld have t reduce air txics their emissins by 95 percent. In additin, EPA is prpsing t: Establish emissin limits fr small glycl dehydratrs at majr surces. A dehydratr wuld be cnsidered small if it has an annual average natural gas thrughput f less than 3 millin cubic feet per day, r actual annual average benzene emissins f less than 1 tn per year. Require all crude il and cndensate tanks at majr surces t cntrl their air txics by 5

8 at least 95 percent. In additin, emissins frm these tanks will be cunted tward determining whether a facility is a majr surce. Tighten the definitin f a leak fr valves at natural gas prcessing plants. This change is a result f the technlgy review. The prpsed changes t this rule d nt apply t surces that are cnsidered "area surces," meaning they have fewer than 10 tns a year f emissins f a single air txic and less than 25 tns a year f a cmbinatin f txics. Standards fr these surces were issued in Air Txics Standards fr Natural Gas Transmissin and Strage EPA's technlgy review f these standards did nt identify cntrls that warranted changes t the current standards. Hwever, the Agency's residual risk review f these standards estimates the current maximum individual cancer risk frm air txics emissins frm natural gas transmissin and strage is 90 in 1 millin, a risk level that EPA cnsiders acceptable. T prtect public health with an ample margin f safety, EPA is prpsing changes t this standard that wuld reduce the maximum risk level t 20 in 1 millin. The prpsed changes wuld remve the 1 tn per year benzene cmpliance alternative fr large glycl dehydratrs and establish emissin limits fr small glycl dehydratrs at majr surces. Fr this rule, a glycl dehydratr wuld be cnsidered small if it has an annual average natural gas thrughput f less than 10 millin cubic feet per day r annual average benzene emissins f less than 1 tn. REDUCING COMPLIANCE BURDENS T reduce the cmpliance burden t industry, state and lcal gvernments and tribes, EPA als is prpsing t exempt certain surces frm Title V permitting requirements that wuld be triggered by the prpsed rule. The prpsed exemptin wuld apply nly t surces cvered by the NSPS that are nt majr surces and that d nt have t btain Title V permits fr anther reasn. EPA believes the recrdkeeping and reprting requirements included in the prpsed standards are sufficient t assure cmpliance. VOC surces generally are cnsidered "nn-majr" if they emit less than 100 tns per year. That emissins threshld is lwer in certain nnattainment areas, hwever. EPA als is seeking cmment n additinal appraches t prvide the industry and regulatry agencies with mre efficient and effective tls fr maximizing transparency cmpliance with the prpsed regulatins. These include submitting perfrmance test results t an EPA electrnic database, and third-party cmpliance verificatin. COSTS AND BENEFITS Tday's prpsed rules wuld be extremely cst-effective, yielding significant reductins in air pllutin at a net savings t the industry. EPA estimates the cmbined annual csts f meeting the 6

9 prpsed requirements wuld be $754 millin in The estimated value f the natural gas and cndensate that wuld be made available fr sale is $783 millin a net savings f $29 millin when the rules are cmbined. Fr the new surce perfrmance standards, the annual csts are estimated at $738 millin, with the value the natural gas and cndensate yielding an annual net savings f $45 millin as a result f thse rules. Fr the air txics standards, EPA estimates the annual csts f cmpliance at $16 millin. The industry is expected t recver its csts quickly in abut 60 days fr green cmpletins, and within abut ne year fr ther equipment. The VOCs and air txics reductins in the prpsed rule are expected t imprve utdr air quality, reduce cancer risk frm air txics emissins and reduce health effects assciated with expsure t grund-level zne (smg) and fine particles (particle pllutin). Expsure t bth pllutants is linked t increased asthma attacks, hspital admissins and emergency rm visits, and premature death. These rules als are anticipated t yield significant climate c-benefits by significantly reducing emissins f methane, a ptent greenhuse gas. EPA was unable t mdel health benefit estimates fr the rule, due t uncertainties abut future lcatins f il and gas emissins. Air quality changes assciated with air txics and VOC reductins can be highly lcalized. Tday's prpsed rules als wuld yield significant reductins in methane, a ptent greenhuse gas. EPA's Regulatry Impact Analysis fr the rule estimates the value f the climate benefits that wuld result frm this reductin at $1.6 billin annually by This includes the value f climate-related benefits such as avided health impacts, crp damage and damage t castal prperties. BACKGROUND In January 2009, WildEarth Guardians and the San Juan Citizens Alliance sued EPA, alleging that the Agency had failed t review the new surce perfrmance standards and air txic standards fr the il and natural gas industry. In February 2010, the U.S. Curt f Appeals fr the D.C. Circuit entered a cnsent decree that requires EPA t sign prpsals related t the review f these standards. EPA must sign the prpsal by July 28, 2011 and issue final standards by Feb. 28, EPA's Natural Gas STAR prgram has been wrking with U.S. il and gas cmpanies since 1993 t adpt prven, cst-effective technlgies and practices that imprve peratinal efficiency and reduce methane emissins. Many Gas STAR partners already are using the green cmpletins that EPA has prpsed t require acrss the industry. Fr mre infrmatin n EPA's Natural Gas STAR prgram, visit HOW TO COMMENT Cmments, identified by Dcket ID Number EPA-HQ-OAR , may be submitted by ne f the fllwing methds: fllw the n-line instructins fr submitting cmments. Cmments may be sent by electrnic mail ( ) t a-and-r-dcket@epa.gv. Fax: Fax yur cmments t: (202)

10 Mail: Send yur cmments t: Air and Radiatin Dcket and Infrmatin Center, Envirnmental Prtectin Agency, Mail Cde: 2822T, 1200 Pennsylvania Ave., NW, Washingtn, DC Hand Delivery r Curier: Deliver yur cmments t: EPA Dcket Center, 1301 Cnstitutin Ave., NW, Rm 3334, Washingtn, D.C Such deliveries are nly accepted during the Dcket's nrmal hurs f peratin, and special arrangements shuld be made fr deliveries f bxed infrmatin. FOR MORE INFORMATION Tday's prpsed rule and ther backgrund infrmatin is available Infrmatin als is available at EPA's electrnic public dcket and cmment system ( using Dcket ID Number EPA-HQ-OAR The rule and materials als are available in hard cpy at the EPA Dcket Center's Public Reading Rm, rm 3334 in the EPA West Building, lcated at 1301 Cnstitutin Avenue, NW, Washingtn, DC. Hurs f peratin are 8:30 a.m. t 4:30 p.m. eastern time, Mnday thrugh Friday, excluding federal hlidays. Visitrs are required t shw phtgraphic identificatin, pass thrugh a metal detectr, and sign the EPA visitr lg. All visitr materials will be prcessed thrugh an X-ray machine as well. Visitrs will be prvided a badge that must be visible at all times. 8