EPA Finalizes New Rules for Natural Gas Industry



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EPA Finalizes Natural Gas Industry GHG Reporting Requirements

On November 8, 2010, the United States Environmental Protection Agency (EPA) finalized reporting requirements for the petroleum and natural gas industry under the Greenhouse Gas (GHG) Reporting Program, 40 C.F.R Part 98. Beginning in 2011, petroleum and natural gas facilities that emit more than 25,000 metric tons of carbon dioxide equivalent (CO2e) per year are required to monitor and report all greenhouse gas emissions to EPA. Data collection will begin January 1, 2011, with the first annual reports due to EPA in 2012.
The new rule requires annual reporting of methane (CH4) and carbon dioxide (CO2) emissions from equipment leaks and venting; CO2, CH4, and nitrous oxide (N2O) emissions from flaring, onshore production stationary and portable combustion emissions; and combustion emissions from stationary equipment involved in natural gas distribution.

EPA estimates that approximately 2,800 facilities will meet the reporting threshold and that their GHG emissions will cover 85 percent of the total GHG emissions from the petroleum and natural gas industry. In calculating whether a system exceeds the 25,000 metric ton CO2e threshold for reporting, engineering estimates, emissions modeling software and emission factors may be used in addition to actual direct measurement of emissions. The total compliance cost to the industry is estimated to be approximately $62 million for the first year and $19 million in subsequent years, including the costs for non-reporters to make a reporting determination.

The rule, which applies to offshore petroleum and natural gas production, onshore petroleum and natural gas production, onshore natural gas processing, onshore natural gas transmission compression, underground natural gas storage, liquefied natural gas (LNG) storage, import and export, and natural gas distribution, requires reporting on a ?facility? level. Due to unique characteristics of onshore petroleum and natural gas production and natural gas distribution, the definition of ?facility? for these industry segments differs from the definition of ?facility? used throughout the GHG Reporting Program.

If you have any questions about this rule and how it might affect your operations, please contact us.