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Market Monitor – EPA Oil and Natural Gas Methane Regulations

On May 12, 2016, the EPA took another set of steps to cut methane emissions from the oil and natural gas industry and stay on track to achieve its goal of cutting methane emissions from the oil and gas sector by 40-45% from 2012 levels by 2025. In addition to curbing emissions of methane, the new rule will reduce levels of smog-forming volatile organic compounds (VOCs) and toxic air pollutants from new, reconstructed and modified oil and gas sources.

Building on its 2012 requirements to reduce VOC emissions, the EPA has updated the New Source Performance Standards (NSPS). The final NSPS will yield significant reductions in methane emissions from new, reconstructed and modified processes and equipment, along with reducing VOC emissions from sources not covered in the agency’s 2012 rules. These sources include hydraulically fractured oil wells and equipment used across the industry that was not regulated in the agency’s 2012 rules. The final rule also requires owners/operators to find and repair leaks, also known as “fugitive emissions,” which can be a significant source of both methane and VOC pollution.

Most sources subject to the 2012 VOC reduction requirements also are covered by the new requirements to reduce methane. Moreover, they will not have to install additional controls, because the controls to reduce VOCs also reduce methane.

EPA issued two rules to clarify permitting requirements: the Source Determination Rule, and a final federal implementation plan to implement the Minor New Source Review Program in Indian country. The final Source Determination Rule clarifies when oil and gas equipment and activities must be deemed a single source when determining whether major source permitting programs apply.

The new rules, which both amend 40 CF part 60 subpart OOOO and add a new subpart OOOOa are comprised of roughly 600 pages of new regulations and are extremely comprehensive. Full details and summary information is available from the EPA’s web site at https://www3.epa.gov/airquality/oilandgas/actions.html

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