United States: California Approves New Regulation to Reduce Methane Emissions from Oil and Gas Facilities

The California Air Resources Board has approved a new stringent regulation to curb methane emissions from oil and gas operations in California. The unprecedented regulation focuses on monitoring, detecting, and repairing methane leaks. The new regulation will be phased in between 2018 and 2020. Industries impacted by this new regulation should begin planning now for infrastructure upgrades and modifications over the coming years

In this Client Alert, we explain the background and application of the new regulation and briefly describe its key features.

On March 23, 2017, the California Air Resources Board ("CARB") unanimously approved a new methane regulation that will be phased in between 2018 and 2020. CARB coins the new regulation as "the most comprehensive of its kind in the country." The new regulation aims to reduce methane leaks / emissions from oil and gas operations in California by an amount equivalent to 1.4 million metric tons of carbon dioxide annually. According to CARB, the oil and gas industry is responsible for about 15 percent of the state's methane's emissions. CARB indicates that the new regulation will take California one step closer to meeting its goal of reducing greenhouse gas emissions 40 percent below 1990 levels by 2030.

Application of the New Regulation

The new regulation applies to the following industry sectors:

  • Onshore and offshore crude oil or natural gas production
  • Crude oil, condensate, and produced water separation and storage
  • Natural gas underground storage
  • Natural gas gathering and boosting stations
  • Natural gas processing plants
  • Natural gas transmission compressor stations

Included in the new regulation are requirements for quarterly monitoring of methane emissions from oil and gas wells, natural gas processing facilities, compressors stations, and other equipment used in the processing and delivery of oil and natural gas. In addition, some equipment will be required to add vapor collection systems. The new regulation also implements certain record-keeping and reporting requirements. A few of the key provisions of the new regulation are highlighted below.

Leak Detection and Repair

A prominent component of the new regulation relates to leak detection and repair. Some requirements apply directly to certain types of facilities. For instance, natural gas underground storage facilities are required to conduct daily or continuous leak screening at each injection/ withdrawal wellhead assembly and attached pipeline in accordance to approved methods. Any identified leaks are to be tested within 24 hours of the initial leak detection. In addition, the identified leaks must be successfully repaired within certain specified repair timeframes.

More generally, all covered facilities will need to comply with leak inspections within specified time frames.

  • Beginning January 1, 2018, all specified components (including components found on tanks, separators, wells, and pressure vessels) will need to be inspected and repaired within timeframes specified in the new regulation.
  • Audio-visual inspection (by hearing and by sight) requirements for hatches, pressure-relief valves, well casings, stuffing boxes, and pump seals for leaks or indications of leaks are to be completed at least once every 24 hours for facilities that are visited daily, or least once per calendar week for facilities that are not visited at least once every 24 hours.
  • Audio-visual inspections of all pipes for leaks or indications of leaks are to be conducted at least annually.Repairs of any components with a leak concentration measured above specified standards are to be repaired within specified time periods.
  • At least once each calendar quarter, all components are to be tested for leaks of total hydrocarbons in units of parts per million volume (ppmv), calibrated as methane in accordance with U.S. EPA Reference Method 21, excluding the use of photo-ionization detector ("PID") instruments.

Record-Keeping and Reporting Requirements

Beginning January 1, 2018, covered facilities are to maintain, and to make available at CARB's request, a copy of records necessary to verify compliance with the new regulation. This covers records, including, but not limited to, Flash Analysis Testing, Separator and Tank Systems, Circulation for Well Stimulation Treatments, Reciprocating Natural Gas Compressors, Well Casing Vents, Underground Natural Gas Storage, and Leak Detection and Repair. Although the length of time covered entities will need to retain such records varies, the new regulation generally mandates a five-year period of retention. The new regulation also implements certain reporting requirements to CARB by July 1 of each calendar year.

Limited Exemptions

Industries impacted by this new rule should begin planning now for infrastructure upgrades and modifications over the coming years, as there are limited exemptions within the rule. For example, by January 1, 2018, or within 180 days from installation, critical components used in conjunction with a critical process unit at regulated facilities must be pre-approved by the ARB Executive Officer, if owners or operators wish to claim any critical component exemptions available.

CARB's new Oil & Gas Production, Processing, and Storage regulation can be found here.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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