Industry fights planned pollution rules for oil & gas drilling

Proposed regulations designed to curb pollution from oil and gas drilling will suppress domestic energy production and inflate costs, the industry’s largest trade group warned today.

In comments filed with the Environmental Protection Agency last night and in a conference call with reporters today, the American Petroleum Institute took aim at the proposed new limits on pollution emitted during drilling, production at wells and eventual transportation of the fossil fuels.

Howard Feldman, API’s director of regulatory and scientific affairs, called the EPA’s initial proposal “overly burdensome” and said it represented a “one-size-fits all approach . . . to regulating an industry that varies greatly in the type, size and complexity of operations.”

The mandates would apply to wells that are stimulated using hydraulic fracturing, a technique that involves blasting mixtures of water, sand and some chemicals deep underground to release natural gas and oil from dense shale formations. The process has been linked to increased smog in some western states.

The regulations, first proposed in July and set to be finalized next April, aim to cut smog-forming volatile organic compounds by a quarter, while also slashing by 95 percent the amount of VOCs released from new and updated gas wells that are hydraulically fractured.

Currently, during one stage of the hydraulic fracturing process, a mix of fracturing fluids, water and reservoir gas surge to the surface, with this flowback typically lasting from three to 10 days. The mixture generally includes methane, volatile organic compounds and other chemicals.

In proposing the new rules, EPA said companies could capture the natural gas that escapes into the air at the drilling sites and then sell the harnessed fossil fuel, generating a net savings of nearly $30 million annually.

But Feldman said that is overly optimistic.

“We believe EPA vastly overestimated the savings side,” Feldman said. “They said we’re going to get so much benefit from reducing fugitive emissions of natural gas that this rule will save you money, and based on real-world experience, we think that’s way out of whack.”

Energy producers already have an economic incentive to capture as much natural gas as possible to put on the market and employ techniques to harness the fugitive emissions “where feasible,” Feldman said.

“There are situations where you can capture that gas and put it into a pipeline and make it marketable,” Feldman said. “Obviously, our members are already incentivized . . . so they are well aware of natural gas emissions and they try to minimize those, because, frankly, that’s money going up in the air.”

Still for operations that aren’t employing gas-trapping equipment, it could take years to deploy the devices and adequately train workers to use it, Feldman said.

More than 4,000 public comments were filed on the EPA’s proposal, including API’s submission and those from environmental groups who applaud the agency’s move. The deadline for submitting comments closed yesterday.

Robin Cooley, an attorney with Earthjustice, said the flood of public comments showed that Americans are concerned about the pollution from oil and gas drilling, stoked by rising smog in Western states.

“When the air in Wyoming gets smoggier than the air in Los Angeles, something has gone wrong,” said Cooley, who described current regulations governing the industry as too “lax.”

Susanne Brooks, a senior economic policy analyst at the Environmental Defense Fund, said it is high time for an update to existing pollution rules governing oil and gas operations. Even as shale gas drilling is booming nationwide, “national clean air standards covering these activities have not been updated since 1985 in one case and 1999 in another,” Brooks said. “They are limited, inadequate and out of date, particularly given recent technological advances in this area.”

Some environmental groups urged the EPA to go further than its initial draft regulations to fully cover the release of methane from oil and gas operations.

Although the EPA is under a court order to finalize its rule by April 3, 2012, API says it should ask judges for more time to get it right. According to the trade group, the current timeline will not give the agency a chance to thoroughly analyze all of the public comments and suggestions and make changes in response.

API’s Comments on EPA’s proposed oil and gas pollution rule