On March 10, the Obama Administration announced that it will begin drafting proposed methane standards for existing oil and gas sources. These forthcoming regulations would presumably apply to production, gas processing, as well as the transportation and storage segments.
Even though EPA has yet to issue final standards for new and modified sources, this announcement is not surprising. By regulating new and modified sources of methane directly under Section 111(b) of the Clean Air Act, EPA is legally obligated to regulate existing sources of methane under 111(d) of the Clean Air Act in the future. However, the announcement does raise the question of how and whether the methane regulations for existing sources will differ from those soon to be adopted for new and modified sources.
As EPA begins the drafting process to develop proposed standards for existing sources, it is worthwhile to consider whether the cost-benefit calculus is different for existing sources. This consideration is important not only because there are significantly more existing sources, but because production at an existing well will likely have tapered off. As a result, emissions from an existing well will be lower than when it was new. Given these considerations, it may not be as cost-effective to install the same type of emission control equipment or to adopt the same work practices to reduce emissions from existing sources.
Please contact us if you would like to discuss our initial thoughts regarding the potential impacts to existing oil and gas sources if they are regulated like new sources.