EPA Proposes New Methane Regulations for Midstream Operations

December 2015 Vol. 242, No. 12

George O. Wilkinson, Jr. and Corinne Snow, Vinson & Elkins LLP

The federal Environmental Protection Agency recently proposed new regulations for methane and volatile organic compound (VOC) emissions from the oil and gas sector that place time-consuming and expensive new requirements on midstream businesses.

These regulations would not apply to pipelines, but would require ongoing emissions monitoring and equipment replacements at compressor stations and natural gas processing plants built, “modified,” or “reconstructed” after Sept. 18, 2015.

While the proposal references a 95% reduction in emissions, it does not require that these plants and compressor stations reduce overall emissions by that amount. Instead, they must put certain control measures in place to reduce methane and VOC emissions from particular pieces of equipment.

In addition, operators must routinely find and fix methane and VOC leaks from their equipment. Similar requirements may also apply to existing compressor stations and processing plants in parts of the country listed as ozone nonattainment areas.

Summary of Proposed Guidelines

The proposal contains two main requirements: controls to reduce emissions from specific pieces of equipment, and fugitive emission leak-detection monitoring and repair requirements. For the control requirements, the regulations define each piece of regulated equipment as a different “affected facility.”

This means, for example, that the same compressor station could have one new pneumatic pump, which would be subject to new control requirements, while it also has other older pneumatic pumps that are not subject to the new 95% emission reduction requirements. In contrast, the fugitive emission requirements apply to an entire compressor station, rather than just specific pieces of equipment.

EPA has already established standards for VOC emissions for certain oil and gas sector operations through the Subpart OOOO regulations. Subpart OOOO primarily affected upstream operations and natural gas-processing plants. EPA is now proposing to expand the existing VOC standards to cover additional equipment, including at compressor stations.

Under the proposal, the current VOC emission control standards found in Subpart OOOO will apply for both methane and VOC emissions for the expanded list of facilities and equipment covered by the proposed Subpart OOOOa. According to EPA, equipment at natural gas-processing plants that was already subject to Subpart OOOO rules should be able to comply with these new rules.

Standards for Pneumatics

The proposed rules would apply to pneumatic controllers and pneumatic pumps at production, gathering and boosting stations, natural gas-processing plants, and natural gas compressor stations in the transmission and storage sector. EPA is requiring use of low-bleed controllers – bleed rate of 6 standard cubic feet per hour (scfh) or less – between the wellhead and the point where gas enters the transmission pipeline. Natural gas plants must use pneumatic controllers driven by compressed air rather than natural gas in order to achieve a zero bleed rates for gas. The proposal exempts certain critical applications from these requirements based on operational or safety considerations.

Natural gas-driven chemical/methanol pumps and diaphragm pumps at natural gas-processing plants cannot have emissions. At all other sites these pumps must reach 95% control efficiency if a control device is already available on site. EPA suggests operators can meet these standards by routing emissions from the pump to an existing control device, such as a flare, that is used to control emissions from other onsite sources.

Standards for Compressors

The proposed rules cover compressors at production gathering and boosting stations, natural gas-processing plants, and natural gas compressor stations in the transmission and storage segments. Operators can opt to use dry seal centrifugal compressors without installing any additional emission control equipment. Alternatively, operators may use wet seals in combination with a system to capture and route emissions to a combustion control device in a way that reduces the methane and VOC emissions released from the seals by 95%.

For reciprocating compressors, operators must replace rod-packing systems after every 26,000 hours of operation or every 36 months. Alternatively, the operator can route emissions from the rod packing through a closed vent system under negative pressure.

Compressor Stations Fugitive Emissions

The proposed rule requires operators to conduct initial and semi-annual monitoring leak surveys of all “fugitive gas components” at compressor station using optical gas imaging (OGI) technology. OGI uses a camera-type device that is pointed at components or groups of components while the display is monitored to determine whether there is a leak is present, The rules define “fugitive emissions” as any visible emission from a fugitive emissions component that can be observed using OGI technology.

The “fugitive emissions component” is defined broadly in the proposal to include anything with potential to emit fugitive emissions of methane or VOC, such as valves, connectors, pump seals or diaphragms, compressors, instruments, and meters. It does not include devices that vent as part of normal operations, such as natural gas-driven pneumatic controllers or natural gas-driven pumps. The proposal also contains exemptions for certain equipment that would be unsafe or difficult to inspect.

Operators must complete an initial survey of all of the compressor station’s components within 30 days of site startup or a modification using OGI technology. If a survey detects leaks, then repairs or equipment replacements must be completed within 15 days. If it is technically unfeasible or unsafe to make the repairs during unit operations, the operator can wait until the next scheduled shutdown or within six months, whichever is earlier, to complete the repair.

EPA considers equipment unsafe to repair or replace during operations if personnel would be exposed to an immediate danger. After the repair, the operator must perform a resurvey of the repaired component within 15 days to ensure that the leak has been fixed.

EPA expects that not all compressor stations will have OGI technology available onsite. As a result, operators may use EPA’s Method 21 or OGI to conduct the resurvey when the repair cannot be made during the monitoring survey in which the leak was found. Method 21 uses a probe from a handheld instrument in close proximity to the portion of a component to detect leaks.

In addition to this initial survey, operators must perform similar surveys of all compressor station components semiannually. EPA’s proposed rule would relax the frequency of subsequent surveys from semiannually to annually if the data show fugitive emissions from less than 1% of their components during two consecutive surveys. Conversely, the frequency would increase from semiannually to quarterly for sites with fugitive emissions from 3% or more of their components during two consecutive surveys.

The proposal also includes lengthy recordkeeping and reporting requirements. The operator must keep one or more digital photographs of each affected well site or compressor station for each monitoring survey (a photograph of every component that is surveyed is not required), as well as a fugitive-emissions monitoring log for each affected facility. The photographs and logs must be available at the affected facility or the field office.

EPA is soliciting comment on whether these records should also be sent electronically to the permitting agency. The proposal also requires affected facilities to file an annual report. Companies would also need to develop and implement a site-monitoring plan that specifies measures for locating fugitive emission sources and the detection technology to be used.

Triggering the Requirements

There are two types of requirements in the proposals which are triggered by different definitions of the term “modification.” For the 95% emission-reduction requirements, a modification is specific to the piece of equipment regulated under the proposal and is modified when there is any physical or operational change to that piece of equipment that increases the emission rate of methane or VOCs, as defined in the Clean Air Act regulations at 40 C.F.R. 60.14.

These requirements could also be triggered if a piece of equipment is “reconstructed” after Sept. 18, 2015 as defined in EPA’s Subpart VVa regulations. In contrast, for fugitive-emissions monitoring requirements, compressor stations are considered modified for purposes of the fugitive-emissions monitoring requirements when one or more compressors is added to a compressor station, or when a physical change is made to an existing compressor that increases compression capacity of the compressor station.

Conclusion

EPA’s proposed regulations for methane and VOC emissions would place new and expensive requirements on midstream operations. These requirements include installing additional emissions-control equipment, as well as ongoing leak detection and equipment repair requirements at compressor stations. The recordkeeping and reporting obligations are particularly burdensome and could open midstream businesses up to the risk of additional regulatory penalties or enforcement investigations.

This article is intended for educational and informational purposes only and does not constitute legal advice or services. These materials represent the views of and summaries by the author. They do not necessarily reflect the opinions or views of Vinson & Elkins LLP or of any of its other attorneys or clients.

Authors: George O. Wilkinson, Jr. is a partner in Vinson & Elkins’ Houston office with over 20 years of experience advising and representing clients on business-critical environmental matters. His broad environmental law practice includes environmental litigation, environmental enforcement defense, emergency response, and environmental compliance counseling.

Corinne Snow is an associate in Vinson & Elkins’ New York office where her principal area of practice is environmental law, with an emphasis on regulatory compliance, environmental litigation, and enforcement defense. Her other practice areas include general litigation, permitting and transactional environmental issues, and emergency response to onshore and offshore accidents.

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