January 2018, Vol. 245, No. 1

Government

Government

EPA Examining Further Changes to Methane Leak Rule

The Environmental Protection Agency (EPA) is taking a second look at its requirements for natural gas pipelines to repair compressor leaks as part of the methane emissions final rule the agency published in 2016.

That rule – a new source performance standard (NSPS) regulating methane and volatile organic compound emissions from new and modified sources in the oil and gas industry (known as NSPS OOOOa) – affected numerous emission sites at pipelines and wells and prescribed control requirements and timelines.

The agency last June had already extended from six months to two years the period of time a transmission company or oil company could take to repair a leak if it were infeasible or unsafe to repair during operation of the unit at the time the leak was discovered.

The EPA made that extension in part after getting numerous “petitions for reconsideration” at the start of 2017 covering several aspects of the final rule, all submitted by President Trump. After taking office, he issued an order requiring all federal agencies to examine final rules issued by the Obama administration and make any necessary changes. Hence the changes the EPA proposed in June.

In that proposed rule the EPA, besides extending the leak-repair deadline, made an exception to the two-year deadline in the event a compressor suffered “an unscheduled or emergency vent blowdown, compressor station shutdown, well shutdown, or well shut-in occurs during the delay of repair period.” If that were the case, the leak must be fixed at that time.

In an Aug. 9 response to that proposed rule, Sandra Snyder, Regulatory Attorney for Environment & Personnel Safety at the Interstate Natural Gas Association of America (INGAA), objected to both the two-year timetable and the “immediate fix” because of emergency situations exception. She argued the delay of repair provision “is problematic for compressor stations for several reasons.”

She noted that 1) blowdowns are not always scheduled activities during which planned maintenance occurs. Therefore, the occurrence of a blowdown should not be tied to when repairs must be made; 2) the delay of repair provision does not take into consideration that unscheduled and emergency shutdowns occur from time to time, and service can often be returned shortly after the interruption; 3) when a leak is discovered shortly before a planned shutdown there is not enough time to fabricate, deliver, test, and install the new part or to make other logistical arrangements for the repair during the upcoming planned downtime.

“The delay of repair provision needs to be modified to address each of these scenarios and to avoid unintended consequences through competing requirements,” Snyder wrote.

With its second proposed rule issued in November, the EPA committed to assess the complaints of INGAA and other industry groups such as the American Petroleum Institute which added that other federal and state leak-detection and repair regulations do not require that repairs be made immediately during emergency or unscheduled shutdowns.

The EPA is reconsidering any number of issues that INGAA, API and others have raised about the final rule of 2016 and the changes offered by the agency in June. The agency noted in November:

“Since publication of the 2016 Rule, the EPA has received feedback that requiring repair or replacement of fugitive emissions components during unscheduled or emergency vent blowdowns could result in natural gas supply disruptions, safety concerns, and increased emissions. In particular, stakeholder feedback suggests that compliance with this provision could result in prolonged shutdowns impacting natural gas supply if necessary parts and skilled labor is unavailable, and avoidable blowdowns resulting in greater emissions than the leaking component.”

PHMSA Reassessing RPs on Underground Gas

Four natural gas industry groups asked the Pipeline and Hazardous Materials Safety Administration to make changes to its underground storage interim final rule published in December. At issue is what appears to be PHMSA’s decision to consider non-mandatory aspects of two API recommended practices (RP) as enforceable under federal law.

The American Gas Association, the American Petroleum Institute, the American Public Gas Association, and INGAA are trying to convince PHMSA to reverse that decision and give companies more time to implement the risk-based inspection and mitigation practices described by the two Recommended Practices.

The December 2016 rule stemmed from the leak from Southern California Gas Company’s (SoCalGas) Aliso Canyon Well SS25 in October 2015. As a result of that leak, and concerns from PHMSA that other similar, older wells could spring leaks, PHMSA finalized an interim final rule which essentially put into federal regulations RPs:

API RP 1170: Design and Operation of Solution-mined Salt Caverns used for Natural Gas Storage2 and API RP 1171: Functional Integrity of Natural Gas Storage in Depleted Hydrocarbon Reservoirs and Aquifer Reservoirs3 (collectively, the Recommended Practices).

The two RPs outline a process for maintaining functional integrity of underground natural gas storage facilities through design, construction, operation, monitoring, maintenance and documentation practices.

The PHMSA rule meant elements of either RP would be considered going forward by PHMSA as mandatory actions, though the API standard is voluntary. In June PHMSA retroactively delayed the effective date of the interim final rule from Jan. 18, 2017 until Jan. 18, 2018.

At the same time, the agency committed to exploring issues raised by a January 2017 petition for reconsideration submitted by the four associations. PHMSA started the reconsideration process Oct. 19.

The four gas associations submitted comments Nov. 20 reiterating their previous positions, the most important being that the non-mandatory elements of the two API RPs such as “should,” “may,” or “can” should not become required under federal law, and thus enforceable and open to penalties for noncompliance.

House Passage of Energy Bill Imminent

The House appears to be on the cusp of passing an onshore/offshore energy regulatory relief bill after the House Natural Resources Committee passed the SECURE American Energy Act (H.R. 4239) on Nov. 8 on a party-line vote with no Democratic support.

The lack of Democratic support won’t hurt the bill’s chances for passage on the House floor. However, its chances of passage in the Senate are remote given that there a bill needs 60 votes to pass and the Republicans have only 52 seats.

The House bill was co-sponsored by a couple of Texas Democrats and that could translate into some Democratic support in the Senate, if in fact the bill comes up at all. Senate energy bill (S. 1460) has bipartisan support but has not received a vote in the Senate Energy and Natural Resources Committee. It does not appear to have many parallels to the bill passed by the House committee.

With regard to long-standing pipeline industry complaints about the length of time it takes to get federal approval for construction on public lands, the bill enables states with established regulatory programs to manage certain federal permitting and regulatory responsibilities for oil and gas development on federal lands within their borders.