• EPA’s Proposes GHG Reporting Rules for Natural Gas
  • April 26, 2010 | Author: Carl B. Everett
  • Law Firm: Saul Ewing LLP - Philadelphia Office
  • EPA published proposed amendments to the Mandatory Greenhouse Gas (GHG) Reporting Rule (40 CFR Part 98) in the April 12, 2010 Federal Register.  Of interest to Marcellus Shale activities, the proposal would expand the Reporting Rule to reach GHG emissions from onshore natural gas production, natural gas processing, natural gas transmission compressor stations and distribution systems.

    EPA first proposed Mandatory GHG Reporting requirements for petroleum and natural gas systems (under 40 CFR, part 98, subpart W) in April 2009.  Numerous comments were filed, leading EPA to defer rulemaking for those systems.  The new proposal addresses calculation and reporting of vented, fugitive and flare combustion emissions from facilities emitting at least 25,000 metric tons of CO2 equivalent per year.  The calculation is to include emissions from all source categories for which methods are provided. Fuel combustion emission estimates are to include both stationary and portable equipment (e.g., compressors, drilling rigs, and dehydrators that are skid-mounted) that are controlled by well operators through ownership, direct operation, leased and rented equipment, and contracted operation.  According to EPA, fugitive, vented and combustion emissions from portable equipment are proposed for inclusion because production facilities typically use skid mounted portable compressors, glycol dehydrators and other equipment partly for installation cost savings and because well flow rates decline over time such that well-head equipment becomes over sized and is moved around to match equipment capacity with wells of the same production capacity.

    One significant change from the original proposal is EPA’s decision to treat vented and fugitive emissions separately.  Vented emissions include intentional or designed releases of CH4 and/or
    CO2 containing natural gas or hydrocarbon gas (not including stationary combustion flue gas) from emissions sources including, but not limited to, process designed flow to the atmosphere through seals or vent pipes, equipment blowdown for maintenance, and direct venting of gas used to power equipment (such as pneumatic devices).  Fugitive emissions are defined to include those emissions which could not reasonably pass through a stack, chimney, vent, or other functionally-equivalent opening.  Flare combustion emissions include CH4, CO2 and N2O emissions resulting from combustion of gas in flares.  EPA estimates total fugitive, vented and combustion emissions covered in the proposal at 351 million metric tons carbon dioxide equivalent (”MMTCO2e”); 272 MMTCO2e from fugitive and vented emissions and 79 MMTCO2e from combustion emissions.

    EPA is not proposing to include reporting of fugitive emissions from natural gas pipeline segments between compressor stations because those emissions tend to be identified and addressed quickly.  Producers who own or operate gathering lines associated with their production fields and natural gas processors who own or operate gathering lines associated with their processing plants are to include those gathering lines in their field or processing plant reported emissions.

    A potentially significant issue for comments is the 25,000 metric tons threshold.  EPA estimates 1,232 onshore petroleum and gas production facilities to be covered by the rule.  If the number drops to 10,000 metric tons, the number of affected facilities will approximately double.

    The comment period on the proposed rule ends on June 11, 2010.