17 May 2016

Sidley Shale and Hydraulic Fracturing Report

Vol. 5, No. 20

Topics discussed in this week’s Report include:

  • EPA releases final rule governing methane emissions from new and modified oil and gas sources.
  • EPA issues final Source Determination Rule clarifying when equipment and activities are sufficiently “adjacent” to be considered a single source.
  • EPA issues draft information collection request for data on methane emissions from existing oil and gas sources.
  • Environmental nongovernmental organization asks federal agencies to stop issuing oil and gas leases on federal lands in Oklahoma and Kansas due to induced seismicity fears.
  • Senate passes bill addressing safety of transporting hazardous materials by rail.
  • Oil and gas trade associations sue government based on approval of land plans to protect greater sage grouse.
  • USGS researchers publish paper alleging link between underground injection of wastewater and water quality.

Federal

EPA releases final rule governing methane emissions from new and modified oil and gas sources. On May 13, the U.S. Environmental Protection Agency (EPA) issued its final rule regulating methane emissions from new and modified oil and gas sources under the Clean Air Act. The final New Source Performance Standards set emissions standards for methane at certain new and modified upstream and midstream oil and gas sources and require owners and operators of certain sources to implement a leak detection program to identify and repair fugitive emission leaks. EPA has given sources the option to conduct leak surveys using EPA’s conventional Method 21 test and is not mandating use of the more costly optical gas imaging. EPA has also provided some flexibility on when leaks detected must be repaired, allowing sources 30 days to complete a repair (the proposal had allowed 15 days) unless the repair would require shutting down production, in which case a more extended time period would be allowed. In other respects, EPA’s final rule is more stringent than its proposal, such as by requiring low-production wells to implement leak detection programs (those sources were exempt in the proposal) and requiring quarterly leak detection monitoring at compressor stations (as opposed to twice per year, as in the proposal).

EPA issues final Source Determination Rule clarifying when equipment and activities are sufficiently “adjacent” to be considered a single source. Also on May 13, EPA issued a final Source Determination Rule that clarifies when onshore oil and natural gas equipment and activities must be deemed a single source for determining whether the source is a major source under the Clean Air Act’s New Source Review and Title V permit programs. By defining the term “adjacent,” the new rule provides that equipment and activities in the oil and gas sector that are under common control will be considered part of the same source if they are located on the same site or on sites that share equipment — and are within a quarter mile of each other. EPA’s previous policy of when oil and gas sources were deemed sufficiently adjacent to be aggregated as a single source was often applied inconsistently and without regard to common sense.

EPA issues draft information collection request for data on methane emissions from existing oil and gas sources. On the same day EPA promulgated its rule governing methane emissions from new and modified oil and gas sources and its final Source Determination Rule, the agency issued a draft information collection request (ICR) describing its plans to collect information on methane emissions from existing oil and gas sources in preparation for possible regulation of those sources under the Clean Air Act. In the draft ICR, EPA detailed a proposal to conduct an operator survey to collect data on equipment at all onshore oil and gas production facilities and a more in-depth facility survey sent to a group of production facilities EPA deems representative. The facility survey would ask for data on emissions sources and control devices at facilities in all segments of the oil and gas production process, from gathering and boosting to the pipeline process. EPA will accept public comments on the draft ICR for 60 days after it is published in the Federal Register.

Environmental nongovernmental organization asks federal agencies to stop issuing oil and gas leases on federal lands in Oklahoma and Kansas due to induced seismicity fears. The Center for Biological Diversity (CBD) sent a letter to the U.S. Bureau of Land Management (BLM), U.S. Department of the Interior and U.S. Army Corps of Engineers requesting that BLM withdraw 11 leases the government auctioned off on April 20 authorizing oil and gas production on federal land. The CBD asserted that the auctions violated the National Environmental Policy Act, as BLM did not consider induced seismicity in its environmental assessment for the lease auction. The CBD also claimed that at least four leases are for land located in areas where the U.S. Geological Survey has allegedly concluded there is a higher risk of induced seismicity. Finally, the letter argued that drilling activities and associated wastewater injection covered in two of the leases will occur too close to Army Corps dams, threatening their stability.

Senate passes bill addressing safety of transporting hazardous materials by rail. The Senate unanimously passed the Railroad Emergency Services Preparedness, Operational Needs and Safety Evaluation (RESPONSE) Act. The bill would order the Federal Emergency Management Agency to establish a subcommittee of its National Advisory Council that would review past accidents involving hazardous materials shipped by rail, such as crude oil, the effectiveness of training local first responders receive to deal with hazardous waste spills, proper funding levels for hazardous waste spill responses and how to most efficiently share relevant data among first responders. The subcommittee would be required to report its findings to Congress 12 months after its creation.

Oil and gas trade associations sue government based on approval of land plans to protect greater sage grouse. The Western Energy Alliance and the North Dakota Petroleum Council sued the U.S. Department of the Interior, BLM, U.S. Department of Agriculture and U.S. Forest Service, alleging the agencies violated federal environmental laws in establishing land plans last fall to conserve greater sage grouse habitat. As an alternative to listing the greater sage grouse as threatened or endangered under the Endangered Species Act, the agencies created a variety of land use plans in seven states that include restrictions on oil and gas production. The complaint argues that aspects of these plans, including the lack of a safety valve for amending the North Dakota plan if the greater sage grouse’s recovery goes more smoothly than expected, violate the Administrative Procedure Act (by amending BLM regulations without undergoing rulemaking procedures) as well as the National Environmental Policy Act, Federal Land Policy and Management Act, Mineral Leasing Act and National Forest Management Act. Other lawsuits over the greater sage grouse plans are pending in the District Court for the District of Columbia and the District of Nevada.

Studies

USGS researchers publish paper alleging link between underground injection of wastewater and water quality. U.S. Geological Survey (USGS) researchers published a paper in the journal Environmental Science & Technology that claims that underground injection of oil and gas production waste at an injection well in Fayetteville, West Virginia, polluted downstream surface waters and sediment in the Wolf Creek watershed. The researchers used isotopic analysis to allegedly trace the source of the contamination to coalbed methane and shale gas wells. Industry representatives questioned the results, noting the study was limited to a single injection facility in a watershed that has been affected by historic coal mining.

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