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Pennsylvania Governor Announces Plan for Regulating Methane Emissions from the Oil and Gas Industry

V&E Environmental Law Update E-communication, January 26, 2016

On January 19, 2016, Pennsylvania Governor Tom Wolf announced a plan to reduce methane emissions from oil and gas operations within the state, based on their contribution to climate change.

Unlike EPA’s recent proposed methane New Source Performance Standards (NSPS), the Pennsylvania plan would impose requirements on both new and existing sources in the oil and gas sector. The Pennsylvania plan also proposes to regulate oil and gas operations, such as liquids unloading, which were not included in EPA’s proposal. The Governor’s four point plan aims to reduce:

  1. leaks at new unconventional natural gas well pads, through new permit requirements that include Best Available Technology (BAT) for equipment and processes, better record-keeping, and quarterly monitoring inspections;
  2. leaks at new compressor stations and processing facilities, by applying more stringent leak detection and repair (LDAR) requirements;
  3. leaks at existing oil and natural gas facilities through new regulations; and
  4. emissions along production, gathering, transmission and distribution lines by establishing non-binding best management practices, including LDAR programs.

A video of the Governor’s announcement and town hall meeting is available here. According to Governor Wolf, Pennsylvania is the second-largest producer of natural gas in the nation behind Texas. Like the Obama Administration, Governor Wolf appears committed to an aggressive climate change agenda centering on addressing methane emissions.

The Pennsylvania Department of Environmental Protection (DEP) has also released a whitepaper, which provides additional information about the program. Specifically, the DEP indicated that it will incorporate requirements from EPA’s proposed NSPS for methane emissions to regulate new sources within the oil and gas sector. For existing sources, DEP has signaled that it plans to adopt the requirements outlined in EPA’s draft Control Techniques Guidelines for ozone non-attainment areas, which largely mirror the requirements in the proposed NSPS for methane. In addition, DEP will develop a regulation for existing sources, including well pads, processing facilities, and compressor stations, for consideration by the state’s Environmental Quality Board.

DEP does not currently, and is not proposing to, require monitoring, leak detection, or control measures for fugitive methane emissions from transmission or distribution pipelines. It will, however, establish best practices for preventing fugitive emissions from these pipelines.

Permitting Changes

DEP has also announced that it plans to make changes to its air permitting program for the oil and gas sector. DEP plans to use a general permit approach for the industry, where identical permit requirements will apply to each facility requiring a permit. According to a webinar that DEP held on January 20, 2016, these general permits reduce the burden on both the agency and industry and allow permits to be issued more quickly.

Since 2013, Pennsylvania has regulated methane emissions from unconventional natural gas wells through a conditional permit exemption (Exemption 38). DEP has indicated that these facilities will not be exempt from the new general permit, which DEP plans to issue in August 2016. DEP will also revise GP-5, the state’s general air permit that applies to compressor stations and processing facilities. DEP states that it will strengthen the existing LDAR requirements in this general permit, and require the use of Tier 4 diesel engines that reduce emissions of particulate matter and nitrous oxide by about 90%. DEP will also expand the applicability of GP-5 to cover sources located at natural gas transmission stations.

Under the new general permit, “DEP intends to establish BAT requirements at unconventional gas well pads for sources including dehydrators, engines, turbines for compressor engines at well pads, pigging operations, liquid unloading, venting, gas processing units, storage tanks, and truck load-outs.”

Additional Insights

The DEP webinar focused heavily on the need to address climate change through reducing greenhouse gas emissions, and indicated that Pennsylvania hopes to achieve a minimum of 40% reduction of methane emissions as a result of these changes. The DEP representatives acknowledged that it is very difficult to measure current methane emissions — because they could come from so many small leak sources — and that there is currently a lack of monitoring over these emissions.

During the webinar, DEP asserted that the costs of these new requirements will be a fraction of a percent of the industry’s revenues in Pennsylvania, and that many of the requirements will “pay for themselves” based on recovering natural gas that would otherwise be lost as fugitive emissions. EPA has made similar arguments about the benefits to industry of capturing natural gas, which are discussed more here.

While the full timeline for these changes is not yet available, the DEP indicated that a request including this proposal will go to an agency advisory board in early February 2016. 

For more information, please contact Vinson & Elkins lawyers Casey HopkinsLarry NettlesGeorge Wilkinson, or Margaret PelosoVisit our website to learn more about V&E’s Environmental & Natural Resources or Climate Change practices, or e-mail one of the practice contacts.

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This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.