Source: Julia Schmalz/Bloomberg
After being caught off guard by the early winds of the shale gale, Pennsylvania officials have been in a near-constant state of regulatory and legislative activity for the last few years, working to put rules in place to reduce the risks posed by the increase in natural gas development. We’ve given PA high marks on some of those efforts, and we’ve disagreed strenuously with others. But we believe in giving credit where credit is due – and the Keystone State certainly deserves credit for the long hours that officials and stakeholders have devoted to improving regulations.
In some critical areas, such as reducing air pollution from leaky equipment located at natural gas processing plants and compressor stations, the Bureau of Air Quality at the Pennsylvania Department of Environmental Protection (DEP) has demonstrated real leadership.
Now, DEP has revised its technical guidance document known as Exemption 38, narrowing the eligibility criteria for the air quality permit exemption. Astonishingly, under the previous version almost all oil and gas production facilities were exempted from the state’s air quality requirements. Past guidance for Exemption 38 considered well sites and all the equipment associated with them to be “minor sources” – even though they can individually contribute to poor air quality conditions, particularly in densely populated areas. In Pennsylvania 90 percent of wells are concentrated in ten counties, with just three counties accounting for 50 percent of all wells. Without proper pollution controls and monitoring, this intensive development can easily lead to unhealthy local air quality.
In response to some of these concerns, the Pennsylvania DEP revised Exemption 38 to do a couple of things.
First, it tightens the scope of the current exemption – limiting the availability of the exemption to only those facilities whose emissions fall below a certain threshold – and it provides a process by which industry must document within the initial 180 days of production that any well site claiming the exemption in fact qualifies for it. While we think it would be wise to require such documentation earlier in the process, we also recognize that this is a marked improvement over the status quo – whereby the permit exemption was wide open to just about any well site operator, with no emissions limits and no documentation required.
Second, the DEP now requires operators to implement pollution control strategies that go ‘above and beyond’ legal minimums in return for getting a permit exemption. We commend DEP for thinking outside the box and requiring exemption seekers to implement controls that are better than what federal and state law otherwise requires.
One example of this is DEP’s proposal to require operators check for and repair leaks (known as “leak detection and repair” or LDAR programs) at well sites annually. We believe leak detection should be performed far more frequently than once a year. Wyoming and California, for example, require certain operators to check for and repair leaks at well sites on a quarterly basis. And the PA DEP requires quarterly LDAR for compressor stations and processing facilities. We think the standard for well sites should be at least as strong. That said, we also recognize that the new LDAR requirement represents an important new step in the right direction – one that most oil and gas producing states have yet to take.
Another of the ‘above and beyond’ measures requires operators to use enclosed flares on tanks and other equipment. Requiring enclosed rather than open flares, which are more prone to going out, is a no-brainer. And there are additional commonsense measures we’d like to see DEP implement in the near future. For example, flares should be required to have continuous ignition devices to ensure they stay lit, and they should be required to operate at the highest efficiency levels. Doing so guarantees a cleaner burn that will reduce emissions of the most harmful pollutants.
While these and other aspects of the proposed Exemption 38 will improve operations at well sites, the fact remains that permit exemptions are inherently problematic. When operators get permit exemptions, regulatory agencies lose some of their ability to perform oversight responsibilities in a meaningful way.
The permitting process is one of the first and most important opportunities state air quality engineers have to make sure operators are aware of and able to meet federal and state requirements. You’d be surprised to hear how often companies don’t know what they’re supposed to do to comply with the law. When you exempt operators from permitting, you lose a critical opportunity to correct these misunderstandings early on.
Permitting also allows the state to consider what impacts new well sites might have on the region when combined with other local pollution sources. An accurate picture of the cumulative effect of multiple sources, especially in areas of concentrated gas development, allows the state to adjust controls to respond to actual air quality conditions.
Finally, Exemption 38 offers very little in the way of enforceability. To its credit, the final version of the permit exemption is much improved by the inclusion of detailed guidance to operators outlining the type of information they need to provide in order to document their eligibility for an exemption. However, we believe it is critical that any exemption program be coupled with detailed monitoring and reporting requirements; otherwise, regulators and the public have no assurance that oil and gas operations are staying in compliance on an ongoing basis. As of now, such monitoring and reporting requirements are absent from Exemption 38.
Ultimately, permit exemptions should be granted only sparingly, and they should be granted only in return for using the most cutting-edge pollution control strategies. We commend the DEP for making important progress on these fronts. But any exemptions should also come with robust monitoring and reporting requirements that will guarantee that agencies such as the DEP –the cops on the beat – will know what’s really happening in the field. This is an area where more work needs to be done. The silver lining here is the DEP has shown in recent years that it’s willing to keep plugging away at regulatory improvements, so we’re hopeful we’ll have an opportunity to work with the state to make these changes. Certainly, we must – the health of local communities is what’s at stake.