NATURAL GAS:

Devon quits EPA gas group amid methane data dispute

A major natural gas producer is leaving a voluntary emissions-reduction program run by U.S. EPA amid an ongoing dispute over how the agency used data collected through the program to justify regulations for the sector, according to a letter obtained by Greenwire.

The split comes amid ongoing concern from industry that EPA is exceeding its legal authority in an effort to limit greenhouse gas emissions and could lead to tough questions in the coming weeks as EPA's air chief faces Senate confirmation hearings over her nomination to lead the agency.

Devon Energy Corp. told EPA last week it was withdrawing from the Natural Gas STAR Program after failing to persuade the agency to revise its application of data collected from participants in the program measuring emissions of methane, a potent greenhouse gas; volatile organic compounds, which cause ozone pollution; and hazardous air pollutants. The emissions data were used to justify a Clean Air Act rule finalized last year that mandates the use of "green" completions for hydraulically fractured wells, but industry groups say EPA vastly overestimated how much of the potent greenhouse gas and other pollutants actually escape to the atmosphere when green completions are not mandated.

"Devon expected that the Natural Gas STAR team would help to ensure correct and responsible use of its program data by other EPA groups and outside sources, but, unfortunately, such efforts have either not been made or have not been successful," Devon's executive vice president for public affairs, William Whitsitt, wrote last week to EPA's Roger Fernandez, who helps lead the Natural Gas STAR team.

In the letter, Whitsitt says emissions data submitted through the program "has been irresponsibly and inaccurately used to justify costly regulations" and that it has been misused by outside researchers and state officials threatening to sue EPA in pursuit of stricter methane regulations.

Launched in 1993, the Natural Gas STAR Program includes dozens of industry partners that worked with EPA to develop new technologies and take voluntary steps to reduce their own emissions. As Whitsitt notes in his letter, many of the practices encouraged as part of the program are now required by new source performance standards (NSPS).

The dispute between EPA and the gas industry first emerged more than a year ago in public comments to EPA's revised NSPS for the oil and gas sector, the rulemaking that established the green completion requirement. Companies and trade associations submitted their own studies arguing that EPA overestimated its methane emissions estimates by as much as 1,400 percent, but EPA has stuck by its estimates.

Gina McCarthy, who has been nominated to become EPA administrator, ran the air office when the NSPS rule was being developed, and she could face tough questions on the methane estimates in her upcoming confirmation hearings.

Sens. James Inhofe (R-Okla.), then the ranking member of the Environment and Public Works Committee, and Lisa Murkowski (R-Alaska), ranking member of the Energy and Natural Resources Committee, wrote to EPA last year raising concerns that the overestimated emissions led EPA to vastly overstate the potential benefits of the rule while downplaying its cost to the industry.

The rule doesn't directly regulate methane but instead mandates green completions to control volatile organic compounds; however, industry sees it as a proxy climate regulation that fits into a broader Obama administration pattern to stretch its use of existing authority (Greenwire, April 20, 2012).

Devon's Whitsitt said in his letter that EPA's fundamental mistake was measuring the amount of gas captured when green completions are used to estimate how much would be vented to the atmosphere when such completions are not mandated.

"Despite our withdrawal, we hope you and your staff will work to see that others within EPA understand how program data should -- and should not -- be used," Whitsitt wrote. "Continued misuse can only undermine the reputation of a program that has benefited our sector and the country over a long period during which Devon was a proud Natural Gas STAR Program partner."

The company has previously told EPA and regulatory overseers at the Office of Management and Budget that the venting assumption is inaccurate because the value of natural gas as a commodity provides an incentive to limit venting. For example, the company said applying EPA's emissions factor to its own operation would mean that "Devon would be losing more than $305 million per year to the atmosphere," according to its 2011 comments on the rule.

An EPA spokeswoman did not respond to a request for comment today, but the agency addressed Devon's and others' concerns in documents accompanying its final rule last year. The agency said it was sticking with its emission factor of about 9,000 thousand cubic feet per completion.

"The EPA used the best publically available data to develop this factor, which estimated emissions captured through reduced emission completions from over a thousand wells," the agency said in its response to comments on the rule. "The EPA determined this data was appropriate for developing this emission factor, in order to estimate potential emissions from an uncontrolled hydraulically fractured gas well completion and recompletion."

While uncertainty is inherent in almost any large-scale data collection effort, the dispute over the estimates highlights a common split between EPA and industry over how to proceed in the face of uncertainty, said Meleah Geertsma, an attorney with the Natural Resources Defense Council. Industry often contends that data gaps should force EPA to halt or relax its regulatory efforts, but the Clean Air Act and court decisions have established fairly wide latitude for the agency to use the best information it has.

"The statute gives EPA some pretty broad leeway here, and we think EPA was operating within the legal bounds of that statute," Geertsma said.

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