EPA Finalizes First Rules on Fracking

Last Wednesday, The Environmental Protection Agency issued the first federal air standards for hydraulic fracturing (fracking) under the National Emissions Standards for Hazardous Air Pollutants Rule. The regulations will limit emissions of volatile organic compounds, which react with sunlight to create smog. The new safeguards will also curb carcinogens and methane, the main component of natural gas and a potent contributor to climate change.

According to the EPA, the rule is expected to cut VOC emissions by 95% from more than 11,000 new hydraulically fractured gas wells each year. This significant reduction would be accomplished primarily through the use of a proven process – known as a “reduced emissions completion” or “green completion” — to capture natural gas that currently escapes into the air. In a green completion, special equipment separates gas and liquid hydrocarbons from the flowback that comes from the well as it is being prepared for production. The gas and hydrocarbons can then be treated and used or sold, avoiding the waste of natural resources that cannot be renewed. The estimated revenues from selling the gas that currently goes to waste are expected to offset the costs of compliance.

Some environmental groups are disappointed by the EPA’s decisions to delay compliance of the new rules until 2015 as opposed to the original proposal of 60 days after the final ruling. The reaction from oil and natural gas industry groups are mixed. Some complain that the rules are still onerous, especially for smaller companies, while others have commented that they are already using green-completion systems and that the system doesn’t cost any more than just venting the gas into the atmosphere. In fact, most wellheads and pipelines already exceed the EPA benchmark as methane capturing systems were developed by the industry years ago for economic reasons.

In its current state, this rule doesn’t seem like it will have a negative impact on the natural gas and oil industry. The concern is that the promulgation of this rule is only the beginning. The industry is wary that this is just the first approved rule on a long list of potential legislation with respect to the regulation of fracking.