Energy issues

The U.S. Department of Energy’s National Energy Technology Laboratory (NETL) is actively pursuing new technologies that will increase oil and gas production opportunities while guarding against possible environmental side effects. A new initiative, in line with these commitments, has been announced recently.

In the initiative, NETL approved an unsolicited proposal, titled Quantification of Methane Emissions from Marginal (Small Producing) Oil and Gas Wells, from GSI Environmental Inc. (GSI). The data, collected from wellsites in basins across the United States, will help address critical knowledge gaps and support best management practices that are appropriate for marginal wells.

This effort complements related DOE research and analysis projects conducted by NETL to improve understanding of methane emissions and identify potential reduction strategies that can improve the operational efficiency of the nation’s natural gas production and delivery systems.

The problem. In June 2016, the U.S. Environmental Protection Agency (EPA) published a final rule in the Code of Federal Regulations to amend the New Source Performance Standards, and finalize new standards, to reduce methane emissions from new and modified oil and gas facilities. The updated standards included requirements for marginal well sources—oil wells that produce less than 15 bopd or gas wells that produce less than 90,000 cfd—which were not addressed previously.

EPA’s decision was based on limited data. The agency had presumed emissions from marginal and non-marginal wellsites were comparable, but that conclusion was derived from data amassed from studies employing a wide variety of technical approaches. None of these approaches were designed to assess emissions specifically from representative populations of marginal wellsites.

Fixing the problem. On Sept. 11, 2018, as part of an ongoing regulatory review and reconsideration process, EPA issued proposed targeted improvements to the 2016 standards that aim to streamline implementation, reduce duplicative EPA and state requirements, and decrease unnecessary burdens on domestic energy producers. The agency continues to review other aspects of the 2016 rule that could be the subject of future rulemaking.

While the costs of regulatory compliance impact all operators, small independent oil and gas producers, who operate many of the more than 700,000 marginal wells that dot the United States, could be impacted disproportionately, with associated economic impacts to energy production, states and communities.

Recognizing these challenges, GSI proposed to collect and evaluate representative, defensible and repeatable data from each type of well (marginal vs. non-marginal, oil vs. natural gas). These data, together with data from existing sources, will be compiled and evaluated for usability and representativeness, and analyzed to answer two key questions:

• What conclusions can be drawn reliably, regarding the relative methane emissions among significant marginal and non-marginal wellsite populations, based on existing available information?
• What are the key gaps in understanding the relative frequency and magnitude of emissions from marginal vs. non-marginal wellsites?

Once these questions are addressed, GSI will develop a focused and detailed scope of subsequent field investigations, as appropriate, to address critical data gaps. Study conclusions also will focus on identification and implementation of appropriate best management practices, so that the United States can continue to rely on traditional oil and natural gas resources for clean, secure and affordable energy while enhancing environmental protection.

EPA’s new methane proposal. The study to be undertaken by GSI coincides with the EPA’s new methane proposal, according to a recent draft, which would loosen the 2016 rule that required oil and gas drillers to perform leak inspections as frequently as every six months on their drilling equipment, and to repair leaks within 30 days. The proposed amendment, as detailed in The New York Times, “would lengthen that to once a year in most cases, and to as infrequently as once every two years for low-producing wells. It would also double the amount of time a company could wait before repairing a methane leak from 30 to 60 days.”

The Times further noted, “It would also double the amount of time required between inspections of the equipment that traps and compresses the natural gas, from once every three months to once every six months. On the Alaskan North Slope, where oil and gas companies contend that harsh weather makes it difficult to conduct inspections, such equipment would only have to be monitored annually.”

In addition, the EPA proposal reportedly would let energy companies operating in states that have their own methane standards follow those regulations instead of the federal counterparts. This, the Times complained, “would include states such as Texas, where the pollution standards have been more lax than federal standards.”

The benefits. If put into effect, the proposal would, by EPA calculations, “recoup nearly all the costs to the oil and gas industry that would have resulted from the Obama-era regulation,” said the Times. “The EPA estimated that rule would have cost companies about $530 million by 2025, and it now estimates that the proposed changes would save the oil and gas industry $484 million by the same year.”

Industry groups praised the expected changes, reports the Times. “It’s a neat pair” of proposals on methane, said Kathleen Sgamma, president of the Western Energy Alliance, an association of independent oil and gas companies that is based in Denver. 

About the Authors

William J. Pike

World Oil

William J. Pike has 47 years’ experience in the upstream oil and gas industry, and serves as Chairman of the World Oil Editorial Advisory Board.