July 2017, Vol. 244, No. 7

Government

Government

EPA Agrees to Reconsider Elements of Methane Emissions Controls

The Environmental Protection Agency (EPA) has delayed implementation of its 2016 methane leak rule for 90 days beyond the original June 3, 2017 start date as a first step in reconsideration of parts of that rule.

Both the American Petroleum Institute (API) and the Interstate Natural Gas Association of America (INGAA) have criticized various provisions in the final rule, issued in May 2016, with the API submitting an August 2016 request for reconsideration of numerous provisions – a request the Obama administration ignored.

On April 18, 2017, EPA Administrator Scott Pruitt sent a letter to API pushing the compliance deadline back 90 days and conceding that at least one of the provisions in the final rule, related to fugitive emissions monitoring, did not get the full consideration by the agency it should have prior to being published. Pruitt specifically mentioned the provisions on requesting and receiving an alternative means of emissions limitations and inclusion of low production wells. Because those provisions were not included in the proposed rule, industry did not have an opportunity to comment on them. Pruitt said his letter does not address other requests for reconsideration addressed in petitions from API or others.

Cathy Landry, spokeswoman for INGAA, said, “It is INGAA’s understanding that EPA’s announcement of its intent to reconsider the new source methane rule includes all of the fugitive emissions monitoring requirements. As a result, this would encompass INGAA’s concerns.” INGAA was unhappy with the rule’s provisions dictating quarterly monitoring requirements at compressor stations and timeframes for repairs. INGAA CEO Don Santa also complained about the leak detection and repair approach (LDRA), which he said is more costly and less effective than Directed Inspection and Maintenance, which INGAA has proposed.

The API petition also objected to many of the LDRA provisions. In a May 3 reply to Pruitt, API Senior Director of Regulatory and Scientific Affairs Howard Feldman expressed thanks for the 90-day delay and wrote: “API’s members look forward to EPA moving expeditiously with this temporary relief. API’s members would benefit from additional guidance, either in the notice of the stay or in supplemental documents, concerning the scope of the stay and how it affects interrelated leak monitoring and repair requirements.”

The API petition requested changes in the final rule well beyond what Pruitt has committed to re-examine. Some have to do with the definition of “control device,” which API wants clarified to omit boilers and process heaters, as well as the alignment of compliance assurance requirements for closed-vent system routing emissions to storage vessels, and not to centrifugal and reciprocating compressors as indicated in the May 2016 final rule.

That May 2016 final rule was issued under the Clean Air Act and represented the Obama administration’s next step in limiting greenhouse gas emissions, of which methane is the most environmentally hazardous. Natural gas pipeline companies will have to both reduce methane emissions and plug equipment leaks when they become apparent.

As currently written, for example, the 2016 rule requires compressors with wet seals to achieve a 95% reduction of methane and VOC emissions through flaring, or by routing captured gas back to a process. Dry seals, however, are not covered by the final rule. Rod-packing systems in reciprocating compressors will have to be replaced at or before every 26,000 hours of operation, or every 36 months. As an alternative to changing rod packing, the rule states, operators may opt to route emissions from the rod packing via a closed vent system under negative pressure to be reused or recycled by a process or piece of equipment.

Plan to Sell Half of Oil stockpile Sparks Debate

President Trump’s proposal to sell nearly half the U.S. emergency oil stockpile is renewing debate about whether the Strategic Petroleum Reserve is still needed amid an ongoing oil production boom that has seen U.S. imports drop sharply in the past decade.

Trump’s budget, unveiled May 23, calls for selling an additional 270 million barrels of oil over the next decade, raising an estimated $16.6 billion. The proposal, on top of planned auctions expected over the next few years, could push the reserve below 300 million barrels by 2025. It now is at 688 million barrels.

The petroleum reserve, created in the wake of the 1970s Arab oil embargo, stores oil at four underground sites in Texas and Louisiana. The reserve guards against disruptions in the flow of oil from the Middle East and other countries, and lawmakers from both parties have long warned against using it to raise money.

But some Republicans say North Dakota’s oil-rich Bakken region offers a de facto reserve that can be tapped if needed. “The world’s changed a lot,” said Rep. John Shimkus, (R-IL), a senior member of the House Energy Committee. “We’re one of the largest oil producers in the world.”

Asked if he was worried that Trump’s proposal could deplete the reserve, Shimkus laughed. “Not when you have North Dakota and the Dakota (Access) Pipeline,” he said.

Not all Republicans agree. The petroleum reserve “is not an ATM for new spending,” Alaska Sen. Lisa Murkowski said in 2015 as the Obama administration proposed selling off a smaller of portion of the reserve to help fund a budget agreement. Murkowski, who chairs the Energy Committee, was reviewing Trump’s proposal but “is generally opposed to selling off emergency oil reserves, particularly as ‘pay-fors’ for unrelated measures,” a spokeswoman said.

Richard Newell, a former head of the U.S. Energy Information Administration, said the plan could cause the United States to break its obligation as a member of the International Energy Agency to hold 90 days’ worth of oil imports on reserve. The SPR now holds about 145 days’ worth of oil imports.

Budget Director Mick Mulvaney said the proposed sale would not cause a security risk, citing increased oil production from fracking and other drilling techniques that have opened up areas once out of reach. The sales should not affect global oil prices because they would be carefully staged over a decade, he said.

“I don’t need to take this much of your money and bury it in the ground out in western Texas someplace for domestic security and national security reasons when we have domestic surpluses like we do,” Mulvaney said at a budget briefing.

Jason Bordoff, director of Columbia University’s Center on Global Energy Policy, warned that selling off large parts of the reserve could cause a price spike if there’s a supply disruption in Venezuela or elsewhere.

“It would be foolish to sell off this 40-year-old strategic stockpile given continued risks to global oil supply, uncertainty about the longevity of the shale revolution, and historically low levels of spare capacity held by OPEC countries to cushion supply shocks,” said Bordoff, who served as an energy adviser to former President Obama.

Energy analyst Kevin Book said sale of the whole 270 million barrels is unlikely, given congressional opposition, but said additional sales beyond those now scheduled are probable.

Rep. Greg Walden, (R-OR), chairman of the House Energy Committee, said the reserve “made sense when we were hostage, potentially, to others. But now with a changed landscape, it calls for a review.”

– Associated Press