January 2018 Vol. 73 No. 1

Washington Watch

EPA Examining Further Changes To Methane Leak Rule

The Environmental Protection Agency (EPA) is taking a second look at its requirement for natural gas pipelines to repair compressor leaks as part of the methane emissions final rule the agency published in 2016. That rule – a new source performance standard (NSPS) regulating methane and volatile organic compound emissions from new and modified sources in the oil and gas industry (known as NSPS OOOOa) – affected numerous emission sites at pipelines and wells, and prescribed control requirements and timelines.

The agency in June 2017 had already extended from six months to two years the period of time a transmission or oil company could take to repair a leak that was infeasible or unsafe to repair during operation of the unit at the time the leak was discovered.

The EPA made that extension in part because it had received numerous “petitions for reconsideration” at the st art of 2017 covering a number of aspects of the final rule, all submitted when the Trump administration took office. President Trump issued an order requiring all federal agencies to examine final rules issued by the Obama administration and make any necessary changes. Hence the changes the EPA proposed in June.
In that June 2017 proposed rule, besides extending the leak repair deadline, the EPA also carved out an exception to the two-year deadline in the event a compressor suffered “an unscheduled or emergency vent blowdown, compressor station shutdown, well shutdown, or well shut-in during the delay of repair period.” If that were the case, the leak would have to be fixed at that time.

In an Aug. 9, 2017 response to that proposed rule, Sandra Snyder, regulatory attorney for Environment & Personnel Safety at INGAA, objected to both the two-year timetable and the “immediate fix” because of emergency situations exception. She argued the delay of repair provision “is problematic for compressor stations for several reasons.” For example, she noted that blowdowns are not always scheduled activities during which planned maintenance occurs. Therefore, the occurrence of a blowdown should not be tied to when repairs must be made. unscheduled and emergency shutdowns occur from time to time, and service can often be returned shortly after the interruption. In addition, when a leak is discovered shortly before a planned shutdown, there is not enough time to fabricate, deliver, test and install the new part, or make other logistical arrangements for the repair during the upcoming planned downtime.
With its second proposed rule issued in November 2017, the EPA committed to assess the complaints of INGAA and other industry groups. The American Petroleum Institute, for example, added that other federal and state leak detection and repair regulations do not require that repairs be made immediately during emergency or unscheduled shutdowns.

The EPA is now reconsidering any number of issues INGAA, API and others have raised about both the final rule of 2016 and the changes offered by the agency in June 2017. In November the agency noted: “In particular, stakeholder feedback suggests that compliance with this provision could result in prolonged shutdowns impacting natural gas supply if necessary parts and skilled labor are unavailable, and avoidable blowdowns resulting in greater emissions than the leaking component.”

PHMSA Reassessing Enforceability Of RPS On Underground Gas

Four natural gas industry groups asked the Pipeline and Hazardous Materials Safety Administration (PHMSA) to make changes to its underground storage interim final rule published in December 2016. At issue is what appears to be the decision to consider non-mandatory aspects of two API recommended practices (RP) as enforceable under federal law. The American Gas Association, the American Petroleum Institute, the American Public Gas Association, and the Interstate Natural Gas Association of America are trying to convince PHMSA to reverse that decision, and give companies more time to implement the risk-based inspection and mitigation practices described by the two RPs.

The December 2016 rule stemmed from the leak from Southern California Gas Company’s (SoCal Gas) Aliso Canyon Well SS25 in October 2015. As a result of that leak, and concerns from PHMSA that other similar, older wells could spring leaks, in December 2016 PHMSA finalized an interim final rule that essentially put into federal regulations Recommended Practices. Those included API RP 1170. The two RPs outline a process for maintaining functional integrity of underground natural gas storage facilities through design, construction, operation, monitoring, maintenance and documentation practices.

The PHMSA rule meant that any of the elements of either RP would be considered going forward by PHMSA as mandatory actions, even though the API standard is voluntary. Four gas associations then submitted comments on Nov. 20, 2017, essentially reiterating their previous positions, the most important of which is that the non-mandatory elements of the two API RPs such as “should,” “may” or “can” should not become required under federal law, and thus enforceable and open to penalties for noncompliance.

House Passage Of Energy Bill Imminent

The House appears to be on the cusp of passing an onshore/offshore energy regulatory relief bill after the House Natural Resources Committee passed the SECURE American Energy Act (H.R. 4239) Nov. 8, on a party-line vote with no Democratic support. The lack of Democratic support won’t hurt the bill’s chances for passage on the House floor. However, its chances in the Senate are remote given that a bill needs 60 votes to pass and the Republicans have only 52 seats.

The House bill was co-sponsored by a couple of Texas Democrats and that could translate into some Democratic support in the Senate, if in fact the bill comes up at all.

With regard to long-standing pipeline industry complaints about the length of time it takes to get federal approval for construction on public lands, the bill enables states with established regulatory programs to manage certain federal permitting and regulatory responsibilities for oil and gas development on federal lands within their borders. States with approved regulatory programs would receive the full 50 percent of mineral revenues, eliminating the two percent administrative fee charged by the Department of the Interior.

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