Bakken producers appear to have dodged what could have stopped hydraulic fracturing dead in its tracks, stalling the North Dakota-Montana oil boom.
Rather, the U.S. Environmental Protection Agency, or EPA, announced April 18 it decided to give producers until 2015 to comply with so-called “green completions” designed to rid the air of toxic substances emitted during the well fracking process.
Industry had feared that EPA would impose an immediate drilling moratorium, effectively halting well completions until companies could employ the necessary technology. In fact, an earlier version of the rule would have required companies to install pollution-reducing equipment immediately after the rule was finalized.
Drillers now will be given more than two years to come up with the technology to reduce emissions of smog- and soot-forming pollutants during the fracking stage. EPA will require drillers to burn off gas in the meantime, an alternative that can release smog-forming nitrogen oxides, but will still slash overall emissions.
Much of the air pollution from wells is vented when the well transitions from drilling to production, a three-to 10-day process referred to as “completion.”
Last update 13 years ago
The limited federal standards that existed prior to the new clean air measures covered only natural gas processing plants, and were most recently updated, in part, 13 years ago, EPA said, noting that other aspects of the air standards for the oil and gas industry are more than 25 years old.
Still, industry groups had pushed hard for the delay, claiming the equipment to reduce pollution at the wellhead during completion was not readily available.
Capturing gas to sell
In addition to allowing producers to capture harmful emissions, such as benzene, green completions will allow them to capture and profit from the sale of gas that would otherwise be lost through flaring. For example, the gas could be diverted to a pipeline and sold in the marketplace. The Bakken, though primarily an oil play, does produce a significant amount of gas.
EPA estimates that deploying green completion technologies, along with other measures in the rule that would plug leaks throughout the system, will save billions of cubic feet of domestic natural gas each year. EPA estimates that application of these “proven, cost-effective technologies” will yield a cost savings of $11 to $19 million in 2015, because the value of natural gas and condensate that will be recovered and sold will offset costs.
The industry had lobbied to prevent the rule from applying to the hydraulic fracturing process, saying that shale wells generally emit far fewer volatile organic compounds than conventional wells.
Instead, the industry proposed burning the toxic gases and methane from shale wells through flaring that is relatively effective in eliminating the pollutants but is not as clean as capturing them.
EPA’s ruling is something of a compromise, subjecting fracking to the new regulations but giving the industry more time to obtain the equipment and requiring flaring during the interim.
Rule gets broad support
Both industry and environmentalists seemed pleased with the ruling.
“These updated standards will reduce harmful air pollution through highly cost-effective controls and avoid the needless waste of a valuable domestic energy source: natural gas,” said Ramon Alvarez, senior scientist for the Environmental Defense Fund. “They will also standardize many common sense practices and technologies that natural gas companies already use successfully and benefit from financially.”
Howard Feldman, American Petroleum Institute’s director of regulatory and scientific affairs, recognized improvements in EPA’s final air rules, including those covering hydraulic fracturing operations.
“The industry has led efforts to reduce emissions by developing new technologies that were adopted in the rule,” he said, noting EPA’s willingness to allow companies to continue reducing emissions while producing oil and natural gas to meet America’s energy needs. However, he cautioned: “This is a large and complicated rulemaking … and we need to thoroughly review the final rule to fully understand its impacts.”
Already required in some states
Some states, notably Colorado and Wyoming, already require the capture of gases during the fracking process. EPA’s ruling makes it a federal standard. So, the equipment is becoming more available as companies adopt the method.
For example, the Colorado Oil and Gas Conservation Commission awarded BP an “Outstanding Operations Award” in 2004 for using closed loop completion technology in the San Juan basin. And EPA invited Williams Production Co. to discuss its green completion program in the Piceance basin as part of EPA’s Gas Star program in 2006.
Moreover, green completions have been Devon Energy’s standard practice in the Texas Barnett Shale since 2004. The company uses the same process to complete wells in New Mexico, Wyoming and Oklahoma. In the Barnett Shale alone, Devon has reduced methane emissions by more than 25 billion cubic feet.
At first, green completions were so uncommon that Devon had to look as far as Wyoming to rent the necessary filtering equipment. Now, more than 2,000 green completions later, the rental equipment is available readily and locally, the company said. The rental cost is roughly $1,000 per day. However, the process helps Devon generate far more daily revenue than that in additional natural gas sales.
