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Navigating Evolving Emissions Management Requirements
by
Karen Marsh
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Methane emissions accounting and mitigation continue to be top of mind for the oil and gas industry, especially as pressures mount to continuously adapt and become more transparent in their emissions management strategies. Regulatory changes, investor demands, disclosures, and voluntary initiatives are all factors that must be addressed in the process - requiring all hands on deck to meet compliance obligations and effectively manage emissions.
Regulations in the US and Canada continue evolving - with increasing stringency - and data management is critical to both demonstrating compliance and achievements in reductions. Keeping on top of these regulations is no easy task, especially when you operate assets that are subject to multiple regulatory programs. Let’s walk through an example of what operators in New Mexico may need to consider.
Possible applicable regulations for oil and gas operations in New Mexico include:
Not only do operators in New Mexico need to stay abreast of their regulatory compliance obligations, they also need to fully understand how physical or operational changes may affect which standards apply. While EPA’s recently promulgated NSPS and Emission Guidelines established the date defining new vs. existing sources - an existing source can easily move under the NSPS if modification or reconstruction takes place. For example, if a new well is drilled at an existing well site, that well site would be subject to the fugitive emissions monitoring under the NSPS - which may mean beginning a program earlier than when existing sources need to be in compliance. You can see how this would create a logistical nightmare to try to stay on top of it all!
If these operational regulatory requirements weren't enough, we are now seeing more formalized and regulated financial disclosure requirements that include emission reporting. As an example, we expect to see the Securities Exchange Commission (SEC) and Canadian Securities Administrators (CSA) implement rules related to environmental, social, and governance (ESG) factors, including emissions reporting, with the goal of enhancing transparency and providing investors with information about a company's environmental impact.
Emissions reporting requirements may share some similarities with financial reporting in terms of the need for standardized, accurate, and comparable information. Companies may be required to disclose their greenhouse gas emissions, energy usage, and other environmental metrics. These disclosures aim to help investors assess the sustainability and long-term viability of a business.
Translating and coordinating these stacked regulatory requirements into operational actions will become a top priority, and operationalizing compliance obligations is no small feat. This will require training field and corporate staff, timely engineering and installation of compliant infrastructure, data management for record maintenance and reporting obligations, and responding to regulatory compliance assessments. Whether it is establishing workflows to ensure compliance with the performance standards for compressors (e.g., annual volumetric vent rate measurements) or maintaining data on the duration of emissions events for greenhouse gas reporting purposes, companies will need to adopt strategies and data management tools that provide for clear evidence of compliance should enforcement come knocking.
More than ever, meeting the various compliance obligations and effectively managing emissions requires engagement across the entire organization. For example:
In the meantime, check out this blog post for a more comprehensive overview of recent regulatory changes mentioned above.
Regulations in the US and Canada continue evolving - with increasing stringency - and data management is critical to both demonstrating compliance and achievements in reductions. Keeping on top of these regulations is no easy task, especially when you operate assets that are subject to multiple regulatory programs. Let’s walk through an example of what operators in New Mexico may need to consider.
Possible applicable regulations for oil and gas operations in New Mexico include:
- New Source Performance Standards (NSPS) enforced by EPA,
- Ozone Precursor Rule enforced by New Mexico,
- Venting and Flaring limits enforced by New Mexico,
- Reporting of greenhouse gas emissions to EPA through the Greenhouse Gas Reporting Program,
- Emissions inventory reporting to New Mexico, and
- Calculation and potential payment of fees for excess emissions through the Methane Waste Emissions Charge.
Not only do operators in New Mexico need to stay abreast of their regulatory compliance obligations, they also need to fully understand how physical or operational changes may affect which standards apply. While EPA’s recently promulgated NSPS and Emission Guidelines established the date defining new vs. existing sources - an existing source can easily move under the NSPS if modification or reconstruction takes place. For example, if a new well is drilled at an existing well site, that well site would be subject to the fugitive emissions monitoring under the NSPS - which may mean beginning a program earlier than when existing sources need to be in compliance. You can see how this would create a logistical nightmare to try to stay on top of it all!
If these operational regulatory requirements weren't enough, we are now seeing more formalized and regulated financial disclosure requirements that include emission reporting. As an example, we expect to see the Securities Exchange Commission (SEC) and Canadian Securities Administrators (CSA) implement rules related to environmental, social, and governance (ESG) factors, including emissions reporting, with the goal of enhancing transparency and providing investors with information about a company's environmental impact.
Emissions reporting requirements may share some similarities with financial reporting in terms of the need for standardized, accurate, and comparable information. Companies may be required to disclose their greenhouse gas emissions, energy usage, and other environmental metrics. These disclosures aim to help investors assess the sustainability and long-term viability of a business.
Translating and coordinating these stacked regulatory requirements into operational actions will become a top priority, and operationalizing compliance obligations is no small feat. This will require training field and corporate staff, timely engineering and installation of compliant infrastructure, data management for record maintenance and reporting obligations, and responding to regulatory compliance assessments. Whether it is establishing workflows to ensure compliance with the performance standards for compressors (e.g., annual volumetric vent rate measurements) or maintaining data on the duration of emissions events for greenhouse gas reporting purposes, companies will need to adopt strategies and data management tools that provide for clear evidence of compliance should enforcement come knocking.
More than ever, meeting the various compliance obligations and effectively managing emissions requires engagement across the entire organization. For example:
- Operators will be responsible for executing new measurement, inspection, and repair workflows
- Operations managers will be responsible for implementing these new programs, and may be held accountable for emissions events and associated liabilities
- Emissions accounting teams will have new reporting requirements and be responsible for managing and processing new data
- Engineering and project teams will have new emissions-related financial considerations when prioritizing capital projects
- Executives will have new liabilities to manage, and need to mobilize teams across the organization accordingly
- Finance teams will need to understand and model financial impacts
- Investor relations (and other stakeholder-relations staff) will need to be well-versed in their organization’s posture on ESG and be equipped to provide traceability back to source data and methodologies
In the meantime, check out this blog post for a more comprehensive overview of recent regulatory changes mentioned above.
About the Author
Karen Marsh
Prior to Validere, Karen Marsh served as a senior environmental engineer and lead regulation developer for the U.S. EPA, authoring key regulations such as New Source Performance Standards for the oil and gas industry. Karen brings 15+ years of experience in developing regulations to reduce methane emissions, various LDAR regulations, fugitive emissions detection, air permitting, and GHG reporting.
