EPA EXPANDS THE GHG

REPORTING RULES TO OIL AND

GAS
Last week, the U.S. EPA finalized rules that expand the EPA’s Mandatory GHG
Reporting Rule applicable to the petroleum and natural gas industry. The rule for
GHG was originally created in October 2009 and was applicable to about 10,000
facilities across 31 categories - mainly energy intensive sectors such as iron and
steel, glass, cement, engines, and pulp and paper. This rule created the basis and
starting point for a number GHG emissions control regulations (both upcoming and
proposed) targeting industrial emissions of carbon dioxide (CO2), methane (CH4),
and nitrous oxide (N2O). As per the agency, the GHG emissions from the oil and gas
sector are greater than 40 million automobiles and thus the sector has become a
target for reductions.

P ETROLEUM AND N ATURAL G AS

The new reporting rule is based on a proposal published 2010 and requires
Petroleum and Natural Gas facilities with emissions over 25,000 metric tons of
carbon dioxide equivalent per year to report

1. annual CH4 and CO2 emissions from equipment leaks and venting;
2. emissions of CO2, CH4, and N2O from gas flaring;
3. combustion emissions of CO2, CH4, and N2O from stationary and portable
equipment at onshore petroleum and natural gas production facilities; and
4. combustion emissions of CO2, CH4, and N2O from stationary natural gas
distribution equipment.

The new rule expands the realm of businesses in the oil and gas sector subject to
reporting beyond those businesses covered by the earlier reporting rule of EPA. It is
estimated that the new reporting obligations will apply to approximately 2,800 new
facilities across the following categories

 onshore petroleum and natural gas production

 offshore petroleum and natural gas production
 onshore natural gas processing

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 natural gas transmission and natural gas distribution facilities (i.e., pipelines and
distribution)
 underground natural gas storage
 LNG storage and LNG import and export facilities

For industry participants that have significant emissions from vented, fugitive and
combustion emissions of CO2, methane and nitrous oxide, the reporting
requirement for each year begins from January 1, 2011. More detailed facility-level
reports are required to be submitted annually by March 31 of 2012. The proposed
rule focuses on modelled and/or estimated reporting as against direct measurement
of emissions. It is estimated that cost of reporting per facility will be $16,000 in the
first year of reporting and $7,000 thereafter.

With more GHG reporting getting mandated by the EPA, the energy sector will
explore opportunities to reduce greenhouse gas emissions voluntarily.

R EFERENCES
1. EPA’s website
2. Agneya’s Analysis

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