Environmental regulators showed the first signs of their evolving position on the natural gas industry last week, proposing new standards intended to prevent escaping natural gas in production, storage or transport from contributing to pollution.
The new air pollution standards from the Environmental Protection Agency, targeted at the contribution of escaping natural gas to smog-forming volatile organic compounds, are comparatively limited in scope and apply to “several types” of production, storage or transport processes and equipment. The changes are largely adjustments to storage tanks and other equipment.
The agency took a conciliatory tone in announcing the new rules, which are set to be finalized by the end of February 2012.
“This administration has been clear that natural gas is a key component of our clean energy future, and the steps … will help ensure responsible production of this domestic energy source,” assistant administrator Gina McCarthy said in announcing the new proposed air standards.
Natural gas companies should even benefit from the new standards, the agency hastened to add, as fuel that would otherwise have escaped from drilling, storage and transport chains is retained for sale.
“EPA’s analysis of the proposed changes … show that they are highly cost-effective, with a new savings to the industry of tens of millions of dollars annually,” the agency said.
The Big Game
The tens of millions of dollars cited by EPA pale in comparison to the money at stake as EPA tiptoes ahead on broader rules for the entire oil and gas business, as well as a potential and widely anticipated overhaul of federal regulation of hydraulic fracturing, better known as “fracking.” The agency, as part of its proposal announced July 28, also plans to review four other much broader potential rules, including air toxicity standards for oil and natural gas production.
Hydraulic fracturing has been largely regulated by the states, but the Obama Administration warned natural gas firms earlier this year that it could target new safety regulations on fracking practices. For more on that story, see Support For Natural Gas Is A Clear Mystery In Washington.
Fracking is at the center of the natural gas industry’s transformation in the past decade from a peaking fuel with volatile price outlooks to one of the primary driving forces of the US energy economy and a major choice for baseload power generation.
The natural gas industry adopted a measured tone in reacting to the first set of new rules on their industry to emerge from EPA.
“We strongly believe that environmental protection and development of natural gas are not mutually exclusive,” America’s Natural Gas Alliance VP of strategic communications Dan Whitten said in response to the proposed rule. “We will be studying EPA’s proposed rules in the days and weeks ahead, and we will consider submitting comments as part of the notice and comments process.”