Energy Law

EPA Releases Final Rule Requiring Oil and Gas Sources to Report Emissions of Greenhouse Gases

By Kelly Becker

By Carlos J. Moreno

On November 8, 2010, the U.S. Environmental Protection Agency (EPA) released its final Subpart W rule to cover petroleum and natural gas facilities under the agency's Greenhouse Gas (GHG) Reporting Program. The original Subpart W rule for petroleum and natural gas facilities was proposed in March 2010. The industry segments covered by the rule are: offshore petroleum and natural gas production; onshore petroleum and natural gas production; onshore natural gas processing; onshore natural gas transmission compression; underground natural gas storage; liquefied natural gas (LNG) storage, import, and export; and natural gas distribution. The rule requires facilities emitting 25,000 metric tons or more of CO2 equivalents per year to report GHG emissions to EPA annually. Under the final rule, facilities are required to begin collecting emissions data on January 1, 2011, and the first annual report is due by March 31, 2012. Data submitted to EPA must be self-certified by facility reporters and is subject to EPA verification.

The final rule excludes gathering lines and boosting stations from the onshore petroleum and natural gas production source category. The rule also gives onshore petroleum and natural gas production facilities the option to use Best Available Monitoring Methods (BAMM) for specific sources during part of the 2011 calendar year. EPA may consider individual petitions to extend the use of BAMM if there are extreme or unusual circumstances.

One of the more controversial requirements in the proposed rule, the 'basin-level' definition of an onshore production facility, remains largely unchanged in the final rule. For onshore production sources, the rule defines 'facility' as 'all petroleum or natural gas equipment on a well pad or associated with a well pad and CO2 E[nhanced] O[il] R[ecovery] operations that are under common ownership or common control including leased, rented, or contracted activities by an onshore petroleum and natural gas production owner or operator and that are located in a single hydrocarbon basin.' By defining the term 'facility' this way, individual production wells that are under the reporting threshold may be pulled in if the owner or operator has additional wells in the same basin. In that case, the emissions from the individual wells would be aggregated and treated as one 'facility' for reporting purposes. Although this definition departs from how 'facility' is defined in other regulatory programs, EPA asserts that the basin-level definition is necessary to ensure appropriate emissions coverage and meet the intent of the GHG Reporting Program. EPA did include language that explicitly limits the basin-level definition to the GHG Reporting Rule.

Offshore petroleum and natural gas production facilities must include emissions from equipment leaks, venting, and flaring. Emissions from portable equipment and drilling operations (unless drilling is conducted from a production platform) are excluded for this industry segment. Reporting for offshore facilities is still based on the BOEM Gulfwide Emissions Inventory process.

For more information on the final rule, see: www.epa.gov/climatechange/emissions/subpart/w.html

Full post as published by The Energy Law Blog on November 18, 2010 (boomark / email).