Report shows EPA can strengthen oil & gas rules while delivering health benefits & industry profits

We all know that improving our homes’ insulation and fixing leaky windows and doors can help us save money and the environment, with many investments in home energy efficiency paying for themselves in a short amount of time. But few are aware that there are similar measures available to the oil and gas industry – one of our greatest sources of methane, a highly potent heat-trapping gas – for reducing its global warming pollution. And similar to home energy efficiency improvements, these measures can make industry money, in some instances in as little as 6 months.

A new NRDC report co-authored by Harvey Consulting LLC, an independent oil and gas industry, environmental and regulatory compliance consulting firm, walks through the top 10 proven, commercially available methane control measures that the oil and gas industry can use now to significantly reduce its contribution to global warming and make money in the process. The report describes the methane emissions from various parts of the sector, controls for those emissions and their potential for emission reductions, and the payback to industry. Notably, the biggest opportunity for methane reductions and related profits comes from control of air pollution from hydraulic fracturing, a practice that has received a lot of public attention for its potential water impacts but whose air implications have gone relatively un-discussed in the media. 

During hydraulic fracturing, fluids and proppant* are injected underground at high pressure to fracture the rock. After the rock fractures, some of the fluid and proppant flows back to the surface along with natural gas. During this “flow back” period, large amounts of air pollutants, including methane, are released to the atmosphere if the fluid and gas are not captured in a closed container.  EPA estimates that such operations, known as completions or recompletions, currently generate 3.2 million tons of methane each year. A control known as a “green completion” or “reduced emissions completion” (REC) can be used to capture these emissions instead of letting them escape into the atmosphere. Such captured gas can then be sold back to the pipeline, making companies significant amounts of money even at relatively low market prices for natural gas. The report covers a number of other currently available measures for controlling sources of methane pollution in the oil and gas sector; all told, the measures collectively have the potential to capture 80 percent of the methane that industry currently loses, and generate more than $2 billion of additional revenue each year.

Fortunately, EPA is moving forward with important new air regulations that will require the oil and gas industry to use a number of these measures, including green completions/RECs, on new and modified sources of air pollution. On April 3, 2012, EPA is scheduled to finalize new rules (known as New Source Performance Standards) for the oil and gas production sector. While the rules do not regulate methane directly, the required measures also capture methane because it is emitted with volatile organic compounds (VOCs), the pollutant that the new rules do regulate. These rules incorporate long-awaited revisions to dated and incomplete rules that have been in place since 1985, rules that left significant portions of the industry unregulated. While the new rules do not go far enough to protect Americans’ health and environment from this industry (see here and here), they are a significant step in the right direction. EPA should build on this step by addressing methane emissions directly and including existing sources to achieve a more significant reduction in pollution.

But why do we even need these national rules if industry can make money off the measures? Wouldn’t industry already put these practices into use automatically? The truth is that industry has a number of projects in which it can invest its money, and it will invest in the areas where it can make the greatest profits, leaving other opportunities (like these) on the cutting room floor.  While the measures covered in NRDC’s report make industry money in the short-term, they compete against a number of projects that have more robust profit profiles.  Thus, if we are serious about controlling harmful amounts of air pollution from the industry, stringent national safeguards are needed.  A federal program also is crucial at this time, because a number of states facing rapid oil and gas development are struggling to come up with their own control programs.  Absent uniform federal rules, each of these states will be left to grapple with how and when to set standards, resulting in a patchwork of requirements across the country.  States like Colorado and Wyoming that experienced a huge explosion in oil and gas production in the past decade have paved the way with their requirements for green completions and other controls.  They have shown that industry can grow significantly even with strict protections for public health and welfare.  When EPA steps up to provide similar protections across the nation early next month, we hope that the agency will see that taking it one step further to address methane pollution head-on will bring even more health benefits for the public and economic return for industry.

See my colleagues’ related blogs on our report about: why methane pollution controls for the oil and gas industry are essential; the 10 methane control technologies; and key takeaways of the report and more on policy options.

*Proppant is typically sand but can also be synthetic material and is used to “prop” open the fractures that are created.