EPA expands the GHG reporting rules to oil and gas

Posted on November 19, 2010 by


Last week, the U.S. EPA finalized rules that expand the EPA’s Mandatory GHG Reporting Rule applicable to the petroleum and natural gas industry. The rule for GHG was originally created in October 2009 and was applicable to about 10,000 facilities across 31 categories – mainly energy intensive sectors such as iron and steel, glass, cement, engines, and pulp and paper. This rule created the basis and starting point for a number GHG emissions control regulations (both upcoming and proposed) targeting industrial emissions of carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O). As per the agency, the GHG emissions from the oil and gas sector are greater than 40 million automobiles and thus the sector has become a target for reductions.

 

Petroleum and Natural Gas

 

The new reporting rule is based on a proposal published 2010 and requires Petroleum and Natural Gas facilities with emissions over 25,000 metric tons of carbon dioxide equivalent per year to report

  1. annual CH4 and CO2 emissions from equipment leaks and venting;
  2. emissions of CO2, CH4, and N2O from gas flaring;
  3. combustion emissions of CO2, CH4, and N2O from stationary and portable equipment at onshore petroleum and natural gas production facilities; and
  4. combustion emissions of CO2, CH4, and N2O from stationary natural gas distribution equipment.

 

The new rule expands the realm of businesses in the oil and gas sector subject to reporting beyond those businesses covered by the earlier reporting rule of EPA. It is estimated that the new reporting obligations will apply to approximately 2,800 new facilities across the following categories

  • onshore petroleum and natural gas production
  • offshore petroleum and natural gas production
  • onshore natural gas processing
  • natural gas transmission and natural gas distribution facilities (i.e., pipelines and distribution)
  • underground natural gas storage
  • LNG storage and LNG import and export facilities

 

For industry participants that have significant emissions from vented, fugitive and combustion emissions of CO2, methane and nitrous oxide, the reporting requirement for each year begins from January 1, 2011. More detailed facility-level reports are required to be submitted annually by March 31 of 2012. The proposed rule focuses on modelled and/or estimated reporting as against direct measurement of emissions. It is estimated that cost of reporting per facility will be $16,000 in the first year of reporting and $7,000 thereafter.

With more GHG reporting getting mandated by the EPA, the energy sector will explore opportunities to reduce greenhouse gas emissions voluntarily.

 

References

  1. EPA’s website
  2. Agneya’s Analysis
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