From production to transmission, the oil and gas industry is bracing for a surge in regulatory requirements. On December 2, 2023, the U.S. Environment Protection Agency (EPA) released the final rule on a set of revised New Source Performance Standards (NSPS) intended to reduce methane emissions and other air pollutants from affected sources. Â
These new standards impose strict, potentially costly compliance obligations on oil and natural gas production. A better understanding of these regulatory rules will be key to developing a successful compliance program for today and into the future.
Change Is Here
This final rulemaking, published under Section 111 of the Clean Air Act (CAA), builds upon EPA’s 2012 publication of 40 CFR, Part 60, Subpart OOOO—commonly known as Quad O—which first implemented substantial new methane emissions monitoring and reduction requirements for oil and natural gas sources.
The rule includes additional standards for sources constructed, modified or reconstructed after December 6, 2022 (OOOOb or Quad Ob). It also sets aggressive first-time standards for methane emissions from existing sources (OOOOc or Quad Oc).
Evolution of Quad O
In 2016, EPA expanded the number of facilities subject to the regulation by introducing Subpart OOOOa (Quad Oa). The Quad Oa rule set standards for methane emissions from new and modified stationary sources (i.e., sources constructed, reconstructed or modified after September 18, 2015) and expanded volatile organic compound (VOC) emission reduction requirements for a broader range of oil and gas equipment.
In November 2021, new rules were once again proposed, dividing sources into four classes:
- Subpart OOOO:Â new, modified or reconstructed sources after August 23, 2011 but on or before September 18, 2015
- Subpart OOOOa (Quad Oa): new, modified or reconstructed sources after September 18, 2015 but on or before November 15, 2021
- Subpart OOOOb (Quad Ob): new, modified or reconstructed after December 6, 2022
- Subpart OOOOc (Quad Oc): existing sources, including sources that commenced construction, reconstruction or modification before December 6, 2022
Additionally, under Quad Oc, EPA proposed to regulate existing crude oil and natural gas facilities through Emissions Guidelines (EG). This would create first-time reduction requirements—implemented through state and local air districts rules—for methane emissions from approximately one million existing oil and gas wells, 2,000 existing interstate natural gas compressor stations, and more than 500 natural gas processing plants.
Key Impacts of Quad Ob
The final Quad Ob rule follows EPA’s earlier NSPS regulations in Quad O and Quad Oa but has more stringent requirements. In the production sector, for example, well unloadings are expected to achieve zero emissions or implement best management practices to minimize emissions.
Fugitive monitoring—either with optical gas imaging (OGI) cameras or EPA Method 21 (a specialized VOC analyzer)—now has an increased inspection frequency from semiannual to quarterly.
Compressors located at well sites remain unaffected, however compressors located at the newly defined “centralized production facility” are affected. In addition, new dry seal centrifugal compressors—a previously unaddressed source—are expected to meet the new Quad Ob requirements.
Reciprocating compressors are required to maintain emissions at or below two standard cubic feet per minute (scfm) per cylinder. Dry seal centrifugal compressors are required to maintain flow rates equal to or less than 10 scfm per seal and wet seal centrifugal compressors must maintain flow rates equal to or less than three scfm per seal. Alternatively, emissions may be controlled to achieve a 95% reduction.
Gas plants must also conduct OGI inspections once every other month in lieu of EPA Method 21 or an EPA Method 21 alternative, as previously required.
Key Impacts of Quad Oc
Under the proposed Quad Oc provisions, air pollution control agencies are required to develop implementation plans for methane emissions that are as strict (or equivalent) as the final Quad Ob rule and submit them for EPA approval. These EGs will impact all existing Quad O, Quad Oa and previously non-applicable sources.
The guidelines deviate from the proposed Quad Ob rule for storage vessels. Under Quad Oc, storage vessel applicability is not allowed to determine emission threshold applicability based on VOC, but instead by a methane threshold of 20 TPY.
While the Quad Ob rule is applicable 60 to 90 days after publication, the Quad Oc requirements will be implemented on a state-by-state basis with State Implementation Plans due 24 months after publication. Each state will determine its own rulemaking process, with an EPA review expected to validate proposed standards to ensure they meet the EGs of Subpart OOOOc.
Scarce Equipment and Resources
With the increased frequency of fugitive emission monitoring, required inspections of all well-heads could potentially create a shortage of OGI cameras and overwhelm current OGI service providers. The piping and components that route emissions from compressors to control devices or measure flow rates may also become unavailable.
The number of storage tanks reclassified as applicable could potentially increase the demand for closed-vent evaluations of piping from storage tanks to control devices, as well as the need for Quad Ob- or Quad Oc-approved control devices. Whether performed internally or externally, the closed-vent evaluations potentially require a significant amount of labor to appropriately evaluate and document the results. The need for new control devices for various sources could also be impacted by market availability.
Prepare for the As-Written Rule
It is prudent to evaluate the ability of both new and current oil and gas sites to comply with the listed requirements. A good first step is to perform a gap analysis and identify the necessary resources required to meet the new rule.
The final rule will have a significant impact directly on the oil and gas industry and will likely impact support industries as well. While EPA received many comments from industry and air management districts in opposition to some portions of the rule, it is advisable to prepare for compliance despite the anticipated legal challenges.
Article originally published in the Winter 2023 issue of Currents. Subscribe today to stay current on environmental insights and regulatory updates that impact your projects.