Federal Government Issues New Hydraulic Fracturing Rules

Two rules impacting hydraulic fracturing, or fracking, have been issued or proposed by the federal government. EPA has issued emission standards relating to fracking and the Bureau of Land Management (BLM) has proposed a rule for fracking on public and Indian lands.

On April 17, EPA issued a final rule governing emissions of volatile organic compounds (VOC) and air toxics resulting from hydraulic fracturing and refracturing. The rule is a revision to existing New Source Performance Standards and applies to several aspects of the oil and natural gas industry. As to fracking, though, the rule finalizes operational standards for completions of hydraulically fractured and refractured gas wells. A well completion is defined as the flowback period beginning after hydraulic fracturing and ending with either well shut-in or when the well continuously flows to the flow line or a storage vessel for collection, whichever occurs first.

For fractured and refractured gas well completions, the rule generally requires owners/operators to use reduced emissions completions, also known as RECs or green completions, to reduce VOC emissions from well completions. To achieve these VOC reductions, owners/operators may use RECs or completion combustion devices, such as flaring, until Jan. 1, 2015. Thereafter, owners/operators must use RECs and a completion combustion device.

In the rule, there is a general duty to safely maximize resource recovery and minimize releases to the atmosphere during flowback periods and subsequent recovery. An REC includes routing recovered liquids into storage vessels or reinjecting the recovered liquids into the well or another well and routing the recovered gas into a gas flow line or collection system, reinjecting the recovered gas into the well or another well using the recovered gas as an on-site fuel source, or using the recovered gas for another useful purpose that a purchased fuel/raw material would serve, with no direct release to the atmosphere. All salable quality gas must be routed to a gas flow line as soon as practicable (40 CFR 60.5375). Of course, notification and record-keeping requirements are imposed for each well completion.

However, industry believes EPA has overestimated methane emissions from well completions, which distorts the cost/benefits analysis and undercuts the stated need and rationale for the rule. For example, a report issued in 2011 (“Mismeasuring Methane,” IHS CERA) finds the number of data points used in EPA’s estimation of methane emissions is extremely low, EPA’s assumptions underlying its methodology do not reflect current industry practice and if emissions were as high as estimated, a hazardous condition would be created at the well site. An additional study (“Characterizing Pivotal Sources of Methane Emissions from Unconventional Natural Gas Production,” API) concludes methane emissions used by EPA are overstated. As a result, industry representatives argue the rule is simply not necessary. The overestimation of methane emissions by EPA negates the stated need for the rule, plus operational standards imposed by EPA in the rule will not reduce methane emissions as much as EPA claims because most owners/operators already capture as much natural gas or methane as economically possible.

Not to be outdone, the BLM issued a proposed rule addressing fracking on public and Indian lands (77 Fed. Reg. 27691). The owner/operator must submit a proposal for well stimulation, which includes fracking, for approval prior to commencement of the activities. A mechanical integrity test must be conducted prior to the activity and pressures must be monitored during the well stimulation. Within 30 days after operations are complete, a full report must be submitted. This report must include the additives and complete chemical makeup of all materials used in the actual stimulation fluid.

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