U.S. aims to slash emissions from oil, gas industry

WASHINGTON Thu Jul 28, 2011 4:04pm EDT

WASHINGTON (Reuters) - The U.S. Environmental Protection Agency issued draft rules on Thursday that would cut emissions of health-harming gases emitted during the production of oil and natural gas.

The rules, which were expected, would lower emissions of volatile organic compounds that contribute to smog by nearly 25 percent across the oil and gas industry and by 95 percent from natural gas wells drilled using the controversial technique of hydraulic fracturing, or fracking.

The proposal marks the first federal air standards for wells that are hydraulically fractured, which occurs when companies inject chemicals, water and sand deep underground to break up rock and free trapped gas.

U.S. natural gas production is growing as more than 25,000 new and existing wells use fractured drilling each year, according to EPA.

EPA said the proposed rules would still allow U.S. oil and gas production to increase. By using technologies to capture and sell natural gas that now escapes into the air, the industry would actually save nearly $30 million a year even as it cut dangerous emissions, the agency said.

"Reducing these emissions will help cut toxic pollution that can increase cancer risks and smog that can cause asthma attacks and premature death - all while giving these operators additional product to bring to market," said Gina McCarthy, assistant administrator for EPA's Office of Air and Radiation.

The rules are part of a raft of measures the EPA is taking on toxic and greenhouse gas emissions on petroleum and other heavy industries this year. Industry groups and lawmakers from energy-intensive states are trying to stop the EPA regulations, saying they will hurt the economy.

Howard Feldman, the American Petroleum Institute's Director of Scientific and Regulatory Policy, said his group will review the proposed rules "to ensure that they don't inadvertently create unsafe operating conditions, are cost effective and truly provide additional public health benefits, and don't stifle the development of our abundant natural resources."

Environmentalists cautiously welcomed the proposals, with the Clean Air Task Force (CATF) saying they were a "first step." But the group said the proposals would not go far enough to reduce emissions of methane, a powerful greenhouse gas. "CATF will strongly urge EPA to correct this omission in its final rule," the group said in a release.

The EPA said the proposals will reduce 3.4 million tonnes of methane, or the equivalent of 65 million tonnes of carbon dioxide.

The draft rules cover the production, processing, transmission and storage of oil and natural gas. However, crude oil sent to refineries would not be covered by the proposal.

The measures resulted from a lawsuit by two environmental and consumer groups, which sued the EPA for failing to review the air toxic standards for the oil and gas industry.

A federal appeals court ordered the agency to release draft rules by July 28 and issue final standards by next February 28.

The EPA will take public comment on it proposal for 60 days.

Feldman said API wanted the February 2012 deadline for issuing the final rules to be extended by at least six months to give EPA adequate time to collect and analyze comments on the proposal.

(Reporting by Tom Doggett and Timothy Gardner; Editing by John Picinich and Lisa Shumaker)

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