My Preliminary Review of EPA Rulemaking About Drilling Air Emissions

I am still digesting the EPA proposed rulemaking to reduce air emissions from both oil and gas drilling.  But here are some facts that I can pass along:

The EPA states that its deadline for finalizing the proposed rule is February 2012. And that may be optimistic for reaching a final rule.  The American Petroleum Institute has already called for a six month extension of the comment period.

 The EPA will hold three public hearings on the rule around the country and one will be in Pittsburgh, the home of the Marcellus, difficult air issues, and a battleground state in the 2012 Presidential election.  You choose which factor was the most important in holding a hearing in Pittsburgh.  But I am glad that the EPA will come to Pennsylvania for one of its 3 national air rule hearing.

The EPA claims that the rulemaking will produce a net savings of $30 million, because the revenue from the captured methane will be more than the costs of technology required to meet the rule. EPA claims that payback periods for the cost of the technology deployed to comply with the rule is about 1 year.  I am sure that these claims will be dissected and probed.

Where does the $30 million net savings number come from?  The EPA proclaims the rule would cost the oil and gas industry $754 million in 2015 but create revenue of $783 for the industry from sales of the extra natural gas and condensate that will be captured.

The EPA states that methane from the oil and gas industry constitutes 40% of all methane emissions in the USA and cut the industry's methane emissions by 26%.  That would work out to a 10% cut of USA total methane emissions.  EPA puts a dollar value of $1.6 billion on the climate change benefits of the rule.

According to the EPA, the rule would cut Volatile Organic Compound emissions from the industry by 25% and toxics by 30%.

The proposed rule (which is really 4 separate provisions) will regulate oil and gas drilling, production, transmission, storage.  It will regulate approximately 1.1 million existing oil and gas wells, another 500,000 existing gas wells, the roughly 11,400 new wells drilled, 600 natural gas processing plants, 3,000 compressor stations, and 1.5 million miles of pipeline.

Obviously an important rule that many will be analyzing closely and about which many will comment.