On September 23, the Environmental Protection Agency (EPA) updated its 2012 New Source Performance Standards (NSPS) and National Emission Standards for Hazardous Air Pollutants (NESHAP) rule, which indirectly regulates fugitive methane emissions at the production phase of oil and natural gas development. EPA will use outcome data from the NSPS NESHAP rule to determine whether – and to what extent – it will directly regulate methane from oil and gas sources in the future.
The NSPS NESHAP rule requires well operators to install Reduced Emission Completions (RECs), also known as “green completions,” to capture leaked methane natural gas at the time of well completion or refracturing.
According to the EPA, the 2012 NSPS/NESHAP rule requiring RECs at the well head will cost oil and gas producers approximately $350 million to comply. According to EPA’s Natural Gas STAR program, REC units cost approximately $500,000 per unit. The technology cost will impact small producers, but the REC component of the 2012 NSPS rule is not expected to have a significant impact on the price of natural gas or natural gas production.
EPA Predicted GHG Emissions from Shale Wells in 2015 (World Resources Institute)
Voluntary efforts to reduce emissions and capture fugitive gases at the wellhead have established a competitive REC manufacturing market to absorb demand. Industry costs to comply with the REC rule are nominal compared to the net annual savings in recoverable, salable natural gas, and the final rule exempts exploratory and low-pressure wells from the green completion requirement.
The regulatory guidelines aim to encourage early adoption, and early adopters have reported favorable results and heightened revenues through natural gas and condensate recovery technology. Program participants have reported recovering 500-2,000 Mcf/day/well. EPA will use data from NSPS to assess the extent of methane emissions that remain after imposition of the rule. If the data shows that the majority of methane emissions are not released at well completion, EPA will likely issue a draft rulemaking that targets emissions throughout the production cycle – a direct rule that would present more significant costs to industry.
November 5, 2013 via Energy Solutions Forum
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