BUSINESS:

EPA comments renew oil industry debate on methane flaring

"It looks like a birthday cake out there at night," a New Mexico regulator told his colleague after returning from a trip to the state's oil-rich Permian Basin. Flares dot the region, burning off the greenhouse gas methane and also poisonous hydrogen sulfide given off by freshly drilled oil wells.

Methane emissions from oil wells, as well as other parts of the oil and gas sector, are being considered by U.S. EPA for potential regulations under the Clean Air Act. The agency released a set of five white papers in April exploring equipment and processes where the industry could tighten nuts and bolts to tamp down on emissions (EnergyWire, April 16).

Companies including TransCanada Corp., Pioneer Natural Resources Co. and XTO Energy Inc. came out swinging against EPA's white papers in comments released last week.

The papers were a key first step for the agency, which has been tasked by President Obama to explore regulating the sector to address climate change. The oil and gas sector is the largest industrial emitter of methane, which is 86 times as potent as carbon dioxide over a 20-year time frame. To tackle global warming, both gases matter.

The industry has strongly opposed EPA regulations and the agency, which initially seemed dedicated to the process, has lately appeared to draw back (EnergyWire, May 13).

One of the processes the EPA examined was extraction from oil wells. Many energy companies have switched to oil production in recent years as the fuel fetches a better price on the market than natural gas.

An unwanted hydrocarbon

Oil wells tend to co-produce natural gas, which is composed primarily of methane. Operators either vent the methane to the atmosphere or flare. In rare cases, they capture and sell the gas.

In its white paper, EPA found that oil well operators release between 44,306 and 247,000 tons of methane per year to the atmosphere.

Southwestern Energy challenged this emissions rate, pointing out that some states such as Colorado and Texas already regulate emissions from oil wells by requiring green completions or flaring.

XTO Energy's Joe Cardena also said that many companies control their emissions by flaring. A flare ignites the emerging stream of methane and burns up the hydrocarbon gas. Cardena suggested the EPA use an annual inventory of methane leaks called the Greenhouse Gas Reporting Program to calculate the actual emissions rate from oil wells.

While flaring is better than venting to the atmosphere, it does not achieve the efficiency of "green" completions, a process where companies capture up to 98 percent of the methane. EPA has mandated the use of green completions for gas wells beginning in 2015, but the regulations do not apply to oil wells.

Geology would dictate whether oil wells can undergo green completions, Cardena wrote. For instance, the Bakken Shale and the Eagle Ford Shale of West Texas are high-pressure reservoirs and their gas can be easily captured or flared.

A pipeline solution?

In contrast, low pressure reservoirs such as the Permian Basin in New Mexico and East Texas generates little gas, and it could be technically challenging to capture these emissions, Cardena wrote.

But the New Mexico state regulator disagreed. The biggest challenge for the industry in his state is the dearth of pipelines to take the gas captured from the wellhead into processing facilities, wrote Ned Jerabek of the New Mexico Environmental Department. In addition, there are few processing facilities available to handle the captured gas, he wrote.

Jerabek oversees the Permian Basin, where flaring is already the preferred method used by oil producers. If the pipeline infrastructure is expanded, technical challenges like the low pressures of the reservoir would be resolved, he wrote.

"As the pipeline infrastructure is extended, thus allowing Industry to use REC [green completions] technology as a revenue source, many of the obstacles like well pressure will be overcome," he wrote. "Industry deals with all these problems in the downstream gathering system and it is reasonable to require industry to bring that expertise and knowledge to bear at the well head."

The Environmental Defense Fund, which has been advocating for regulations, praised the white papers and called for decisive action from the agency.

"Methane is a powerful, short-lived climate pollutant accelerating the rate of global warming we are experiencing now," said Mark Brownstein, associate vice president of EDF, in a statement. "EPA's rigorous analysis through the white paper process illustrates that methane leaks from oil and gas equipment and facilities are a problem, but one that sensible and cost-effective policy measures can help us overcome."

Twitter: @gayathriv | Email: gvaidyanathan@eenews.net

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