EPA Proposes Increased Regulations

The American Petroleum Institute (API) defended the oil and gas industry last week as the Environmental Protection Agency proposed regulations intended to lessen pollution from drilling. The API contends that these regulations will suppress domestic energy production and inflate costs.>Howard Feldman, API's director of regulatory and scientific affairs, called the EPA's initial proposal "overly burdensome" and said it represented a "one-size-fits all approach . . . to regulating an industry that varies greatly in the type, size and complexity of operations."

The new mandates specifically target fracing and the EPA is suggesting that companies capture the natural gas that escapes into the air while drilling, which could then be resold as fossil fuel. The EPA has suggested such efforts could net a savings of nearly $30 million (annually).

"We believe EPA vastly overestimated the savings side," Feldman said. "They said we're going to get so much benefit from reducing fugitive emissions of natural gas that this rule will save you money, and based on real-world experience, we think that's way out of whack."

Energy producers already have an economic incentive to capture as much natural gas as possible to put on the market and employ techniques to harness the fugitive emissions "where feasible," Feldman said.

"There are situations where you can capture that gas and put it into a pipeline and make it marketable," Feldman said. "Obviously, our members are already incentivized . . . so they are well aware of natural gas emissions and they try to minimize those, because, frankly, that's money going up in the air."

Another obstacle—years of training and equipment upgrades for operators who aren't currently using gas-trapping processes.

Although the EPA is under a court order to finalize its rule by April 3, 2012, API says it should ask judges for more time to get it right. According to the trade group, the current timeline will not give the agency a chance to thoroughly analyze all of the public comments and suggestions and make changes in response.