EPA's final ruling & Canada's proposed amendments

Published

Dec 13, 2023

By Validere

4 min read

Over the last two weeks, significant news and buzz have been circulating in the regulatory world. The Environmental Protection Agency (EPA) finalized updated methane regulations, and the Canadian Federal Government published amendments to existing methane regulations that introduced the framework for a new emissions cap -- increasing stringency for oil and gas companies. This article provides an overview of the recent changes and proposed regulations in the US and Canada.

US | Final regulations and guidelines for new and existing sources

The US Environmental Protection Agency (EPA) issued its final rules on November 30, 2023, targeting methane, VOC, and SO2 emissions from the oil and gas industry. Four distinct actions were finalized in this rule-making, including:

1. Amendments to NSPS OOOO and NSPS OOOOa stemming from the joint resolution of Congress disallowing the 2020 Policy Rule,
2. New regulations for new sources under the new NSPS OOOOb,
3. New emission guidelines for states to follow in developing State Plans in Subpart OOOOc, and
4. Formal protocol for the use of OGI in leak detection surveys in process units, applied to gas processing plants through this action.

This final action incorporated feedback from over 1 million public comments that were submitted between both the November 2021 and December 2022 proposals. Additionally, the EPA has finalized actions that clearly demonstrate “outside the box” approaches to achieving real success through the implementation of significant advancements in methane mitigation options. Some of these areas include:

• Fugitive Emissions Monitoring: The final rule includes fugitive emissions monitoring at all sites, but with monitoring requirements tailored to the number and type of equipment at the site. Additionally, the final rule ensures monitoring continues at well sites until they have been properly closed (including plugging all wells) to help prevent future populations of orphaned wells which have been found to be an emissions problem.
• Advanced Technologies: The rule integrates specific pathways to the use of advanced screening technologies and continuous monitoring systems in place of OGI and sensory monitoring. While technologies have been advancing quickly in this space, the EPA’s matrix and action levels provide vendors with clear goals for detection sensitivity to help advance these technologies further and ultimately allow for mitigation of larger leaks much faster than traditional ground-based methods.
• Super Emitter Program: EPA has established the Super Emitter Program, which will allow certified third parties to provide notification to EPA of the detection of super-emitter events (emissions ≥100 kg/hr methane). Following notification from EPA, owners and operators will investigate the cause and presence of the emissions and take action to mitigate them.
• Eliminating Emissions: For process controllers and pumps, the final rule establishes a zero-emissions standard, effectively eliminating emissions from these sources. Additionally, the rule does not allow for routine venting or flaring of associated gas from new wells and requires the use of best management practices to eliminate venting of emissions to the atmosphere during gas well liquids unloading operations. For process controllers and associated gas, EPA has established a phase-in period for new sources to reach compliance with these standards.
• State Plans: The Emission Guidelines established the first nationwide requirement for states to regulate methane emissions from existing sources. States will have up to 2 years to submit their state plan to EPA for approval.

Canada | Proposed Federal regulatory changes

On December 7, 2023, the Government of Canada published a Regulatory Framework for an Oil and Gas Sector Greenhouse Gas Emissions Cap. It outlines the key design details of the proposed approach to setting a cap on emissions and seeks public comment. The framework proposes a cap-and-trade system (under the Canadian Environmental Protection Act) that sets a regulated limit on emissions from the sector.

Prior to this announcement, on December 4, 2023, Environment and Climate Change Canada (ECCC) released draft amendments to the existing Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector). These draft amendments apply to onshore upstream oil and gas facilities, categorized as:

• Type 1 facilities, which are those with natural gas compressors, storage tanks for produced liquids, flares, or gas-liquid separators.
• Type 2 facilities stand for any upstream oil and gas facility, not classified as a Type 1 facility.

The draft regulations emphasize these key themes:

• The elimination of flaring and venting from all upstream onshore oil and gas sites by 2030.
• The increased frequency and coverage for fugitive surveys and screenings (including expanded coverage to inactive sites) beginning January 1, 2030.
• Facilities with continuous monitoring systems manage emissions based on event detection and limits instead of the vent and flare management sections of the regulation. These systems also effectively replace the need for ongoing ground-based fugitive emissions surveys and screenings.