During a series of meetings with White House economists over the past two months, some of the nation's largest oil and gas producers have asked to delay or pare down regulations that would require them to submit annual greenhouse gas emissions reports to U.S. EPA.
Many industry sectors have already started gathering data under EPA's program, which is intended to inventory emissions of carbon dioxide and other gases that contribute to global warming. The first annual reports for most industries are due in March 2011, but the oil and gas exploration and production sector was given a one-year reprieve so agency officials could process a flood of comments from stakeholders.
EPA has said it intends to finalize a rule this month, but it must wait for a green light from the White House Office of Management and Budget, which is tasked with reviewing all major regulations.
According to meeting records, some of the nation's largest energy companies are asking OMB's Office of Information and Regulatory Affairs (OIRA) for another year or two to meet the reporting requirements. Even if EPA finalizes rules for the oil and gas industry by the end of this month, they say, the industry could not begin measuring its emissions on time.
EPA's proposed start date of Jan. 1, 2011, "is extremely aggressive for the large amount of new monitoring, recordkeeping and reporting requirements," representatives of Noble Energy Inc. told the White House in a presentation last month. "Practical compliance in two months will be impossible. EPA should adopt a safe harbor policy for the first two annual submissions ... whereby the EPA will presume that the submissions and calculations are being reported honestly and accurately, and that any errors are inadvertent."
If the agency's reporting rule goes into effect at the beginning of 2011 as proposed, the industry argues, the best available emissions data should suffice for the first year.
Those requests do not sit well with environmentalists, who say the industry has had plenty of time to develop reporting methods. They have spoken with OIRA, which has had five meetings with industry and environmental groups since receiving EPA's rule two months ago.
"The industry's already had an extension here," said Ramon Alvarez, a scientist at the Environmental Defense Fund. "We think that any further delay is unwarranted and the requirements should kick in at the beginning of the 2011 reporting year."
During a meeting with OMB economists, Alvarez and several other environmental advocates urged the White House to support the use of emissions monitors. Until recently, accepted methods drastically underestimated the amount of greenhouse gases released when an oil or gas well is completed, he said -- a mistake that would have been avoided with monitoring.
Environmentalists and industry groups agree that compared to large pollution sources such as refineries, exploration and production facilities are a particular challenge to assess. There are more than 823,000 oil and gas wells in the country, and many of them are located in hard-to-reach areas.
"The sources are small and numerous, but in the aggregate, they add up to a lot of emissions," Alvarez said. "That makes it a lot more challenging than a large coal-fired power plant."
Compliance costs at issue
Khary Cauthen, director of federal relations at the American Petroleum Institute, said many of the smaller sources that would be required to report their emissions are not used to these types of requirements, he said.
"Exploration and production facilities have not had the same regulatory history," Cauthen said. "In many ways, the levels of emissions don't usually fall under many programs, as opposed to a major coal-fired power plant."
API also feels that EPA has underestimated the cost of complying with the reporting requirements. The agency estimates that the rules would cost the private sector $60 million in the first year of reporting and $25 million in following years, but industry groups have argued that the projections are "too low by an order of magnitude" (E&ENews PM, April 19).
EPA's rules would require oil and gas producers to report on some emissions sources that are insignificant to the U.S. onshore production greenhouse gas inventory, Cauthen said. Measuring emissions from hydrocarbon liquids and produced water would cost an estimated $18,000 per metric ton of carbon dioxide released, he said.
EPA's rule, which covers facilities that release at least 25,000 metric tons of carbon dioxide equivalent, is expected to include about 3,000 facilities. They would include various production sites, processing centers and storage facilities.
By themselves, the reporting rules would not require oil and gas companies to reduce their emissions. But they are intended to guide policy decisions on climate change, making it important that the methodology and industry guidelines are consistent, Cauthen said.
"We want the data that are provided to EPA to be good data that will inform future climate change policy," he said. "Part of making it good data is ensuring that it will be similar to others who are reporting."
Click here to read API's presentation.
Click here to read Noble Energy's presentation.