Ep 3: A Trade Association View of the Methane Rule

In her role as the Senior Vice President of Regulatory and Environmental Affairs for the Petroleum Alliance, Angie Burckhalter offers an in-depth analysis of the EPA's recent Methane Rule and its implications for oil and gas producers. She explores the challenges faced by operators, shedding light on critical aspects such as the EPA's Super Emitter event, the Super Emitter program, and the intricacies of the new flaring requirements.

To understand how the EPA's Methane Rule and new flaring requirements impact oil and gas producers, and how vapor recovery and vapor recovery units (VRUs) plays a vital role in compliance, visit our knowledge center.

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Transcript
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Kristin
Welcome to our podcast, Fueling Conversation. I'm Kristen Henke, Vice President of Sustainability and Public Policy for Flogistix. Today, I'm joined by Angie Burkhalter, Senior Vice President of Regulatory and Environmental Affairs for the Petroleum Alliance of Oklahoma. Welcome, Angie.

Angie
Thanks, Kristen. I appreciate the opportunity to be here today.

Kristin
Okay, Angie, would you like to start off by telling us a little bit about the Petroleum Alliance?

Angie
Sure. The Alliance represents approximately 1, 400 individuals and member companies, and there are tens of thousands of employees in the upstream, the midstream, and the downstream sector. Our membership ranges in size from small, independent companies, family owned businesses, to large publicly traded companies.

Our members represent all segments of the industry. They produce, they transport, they process, and they refine the bulk of Oklahoma's crude oil and natural gas.

Kristin
That's great. We're very happy to be members.  When we launched our podcast, we had a pretty high level discussion about EPA's new methane rules.

So I'd like to spend some time today talking with you about the implications of the new regulation on oil and gas producers in Oklahoma.  To begin with, what do you see as the biggest challenge for operators in the Sooner State in regard to the methane rule as a whole?

Angie
Well, two of the biggest concerns I think our members have is the Super Emitter Program as well as the OOOOc rules which apply to existing wells.

Kristin
Okay, well let's, let's start off with your first concern with the Super Emitter Program. Can you explain what EPA means by Super Emitter Event and what the Super Emitter Program entails?

Angie
The Super Emitter Program allows EPA approved third parties to track large emission events of 100 kilograms of methane per hour or larger, so that's approximately 5, 200 standard cubic feet per hour.

And then those entities report those events to EPA. EPA takes a look at that information and they determine if the submitted information is complete. If it's timely and if it's accurate to a reasonable degree of certainty, EPA in turn will contact the owner or the operator to investigate the event.

Operators are required to investigate those notices within five calendar days of receiving the notice. And then they have to respond to EPA and submit a report within 15 days. If the event is verified by the operator, or if the operator does not respond and EPA reasonably believes the event is accurate, EPA will post the information on its Super Emitter Program Portal and make it available to the public.

So it's It's really unclear how EPA will address these verified events, but it's likely that EPA will use these events to gather more detailed information from a company on their operations and use the event for enforcement actions. So, I would like to point out, though, that the Super Emitter Program applies to emission events exceeding the 100 kilograms per hour threshold, regardless of whether or not they are regulated under OOOOb or C.

So, it could be any unregulated well site. So, on May 7th, Basically operators should have a plan in place to be able to respond to EPA's notices that they might receive.

Kristin
Okay, so that's probably going to affect some producers who normally haven't been filing.

Angie
Exactly, exactly. Even those folks with the existing well sites, they might think this doesn't apply to me yet.

But that's not the case. They could get a notice at any time.

Kristin
I see  so oh my okay. Well, let's talk about your second concern. First of all, what is considered an existing well?

Angie
A sources that are constructed modified or reconstructed before December 6th of 2022 will be considered an Existing source and will be regulated under OOOOc rules. Now, facilities constructed, modified, or reconstructed after December 6 are considered new sources, and they will be regulated under OOOOb. But I do want to point out here that operators of existing wells need to review the definition of modified and reconstructed. An operator of an existing well site may conduct some kind of activity that could trigger them to be in automatically OOOOb requirements.

So, for example, you know, adding a storage tank to an existing tank battery is a modification, triggering all the tanks to comply with OOOOb.

Kristin
So then it would become a new source instead of an existing source.  Oh my.

Angie
And there's, there's other sources that that applies to as well, not just tanks.

Kristin
Right. Okay. So as we know, the OOOOc section of the rule focuses on existing wells and will be regulated by the states. How will this be implemented?

Angie
OOOOc is basically a model rule for the states to follow in developing and implementing a state program for existing wells. So states have the option to adopt EPA's model rule.

Or they can develop their own program, but it has to be equal to or more stringent than EPA's OOOOc standards.  So, looking at that, I anticipate that most states will probably adhere to or adopt EPA's standard, their OOOOc standards, so. At that point, states basically will go through the rulemaking process, they'll propose the rule, they'll conduct public outreach, they'll take comments, and then they'll finalize the rule.

At that point, the states have up to two years to submit their plan to EPA for approval. And then they have three years after that to implement the plan. EPA can approve or deny the plan. And if they deny it, then EPA can promulgate a rule for the state. And it will most likely look like OOOOc.

Kristin
Okay.  So then those states like New Mexico and Colorado that already have their state plans in place.

Angie
So OOOOb and OOOOc include requirements to address methane emissions from new and existing oil and gas operations.

And really the requirements are very similar for both OOOOb and C sites. But there are a couple of differences, and that has to do with the timeframe for compliance as well as the flaring requirements.

Kristin
Okay, well let's, let's dig in a little bit more to that. What are the key elements of the new flaring requirements?

Angie
The, uh, rules phase out routine flaring from new oil and gas well sites under the OOOOb. So that phase in or that phase out is based on when construction, modification, or reconstruction occurred. And at the same time, operators must submit a technical infeasibility finding to EPA to flare during those time frames.

A new well that is constructed, modified, or reconstructed after May 7th of 2026 will not be able to routinely flare. So they will have to route their gas to either a sales line used on site as a fuel source or re injected into the well upon startup. EPA does allow some situations like emergency flaring and they outline some various circumstances when that would occur.

Kristin
I see.

Angie
Now, under OOOOc, existing wells that have methane emissions of 40 tons per year or less, they allow flaring as long as the gas is routed to a flare or a control device that achieves 95 percent reduction in methane.  Now, for those well sites that have emissions of 40 tons per year or more of methane, Flaring will be allowed, however, EPA requires an annual technical and feasibility finding.

Kristin
Okay, so, obviously there's going to be an LDAR requirement to that, so can you summarize the new leak detection and repair requirements?

Angie
Sure. Basically, EPA is going to be outlined four categories of the types of wells that would need LDAR. So, for example, the first category is a single wellhead only well site, and that includes small well sites.

The second category is a multi wellhead only well site. The third category is well sites with major production and processing equipment and centralized production facilities. And then finally you have the  compressor stations. And these LDAR requirements for each category vary ranging from AVOs to OGI inspections and the time frame ranges from monthly to quarterly to annual surveys.

Kristin
Okay. And what are the applicability differences between OOOOb and C rules and subpart W requirements?

Angie
Well, OOOOb and C applies to specific equipment and processes at oil and gas production and processing, as well as natural gas transmission and storage sites to control VOCs and methane. On the other hand, under subpart W, that encompasses a much larger group of greenhouse gases, and it applies to operators of facilities that contain petroleum and natural gas systems that emit 25, 000 metric tons of  CO2e per year. The rule requires owners and operators to collect the greenhouse gas information. They require calculation methodologies and they, uh, require, uh, operators to follow specified procedures for quality assurance, missing data points, record keeping, and then also reporting requirements.

Kristin
Okay. All right.  So I know that the Petroleum Alliance recently submitted comments on EPA's waste emission charge. Can you tell us about the provisions of this proposed rule and who will be affected by this fee and when EPA will begin collecting it?

Angie
First, the proposed waste emission charge rule is a result of provisions in the Inflation Reduction Act of 2022.And the waste emission charge for methane applies to petroleum and natural gas facilities that emit more than 25, 000 metric tons of CO2e per year as reported under subpart W of the greenhouse gas reporting program. And then operators have to see if they exceed a waste emission threshold established by the Inflation Reduction Act.

They have to determine if there's any exemptions they can apply for under. The IRA,  the waste emission charge starts at 900 per metric ton for calendar year 24, that fee goes up to 1, 200 per metric ton for 2025, and 1, 500  per metric ton for emissions in years 2026 and thereafter. So EPA's proposed WEC rule includes various compliance deadlines, calculation procedures, and explaining to operators how they can obtain the exemptions to the fee.

The Alliance took a look at the proposed rule. And we found that EPA significantly limited or prevented entities from taking full advantage of the exemptions as well as the netting opportunities that were provided in the legislation.  In addition, the WECC filing and obligation date fails to account for revisions to subpart W reports that may go on well after March 31st.

As proposed, if this stays the way it is, it will require entities basically filing and paying fees under their WIC to unnecessarily amend their WIC filing, subjecting them to various penalties and violations after that because of late filing.

Kristin
Okay. Okay. That's great, Angie. Thanks so much for unpacking all of this for us.

How can listeners find out information about the Petroleum Alliance of Oklahoma?

Angie
If you'd like to know more information, you can find us at thepetroleumalliance, all one word, dot com.

Kristin
Great. Thanks, Angie.

Angie
Thank you so much.