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Reporting burden


Oil and natural gas companies reluctantly oblige new EPA requirements.

Dean Anderson April 20th, 2011

The Environmental Protection Agency is now keeping a closer eye on the oil and gas industry. And no one in the industry seems happy about it.

January 2010 was the starting date for the EPA’s greenhouse gas reporting program. Initially exempt from emissions reporting requirements, the oil and gas industry was included beginning Jan. 2 of this year.

Tom Price, Chesapeake Energy’s senior vice president of corporate development and government relations, said his company is already recognized as a national leader through the EPA’s natural gas STAR program for its voluntary efforts of controlling and reporting methane emissions.

He said Chesapeake will accept the additional reporting burden, but questions why it has to.

“Our industry is responsible for only 3.2 percent of all greenhouse gas emissions,” Price said. “This reporting rule will require the oil and natural gas industry to spend hundreds of millions of dollars to just minimally improve the EPA’s existing U.S. greenhouse gas inventory, when those same dollars could be used to create more American jobs and increase domestic supplies of natural gas and oil.”

Under the requirements, the first annual emissions reports from the industry are due March 2012.

Oklahoma’s Devon Energy also bristled at the notion of increased reporting, citing the requirements as an end-around maneuver by the current administration.

“The EPA is using a Clean Air Act regulatory maneuver to force it upon us,” said Darren Smith, corporate environmental manager for Devon. “Ultimately, this could lead to reduced domestic production, lower energy supplies, lost jobs and higher energy and goods and service cost for consumers.”

Former Oklahoma Secretary of the Environment Miles Tolbert said the requirements pose a unique issue for the oil and gas industry.

“The industry is set up differently from most other industries,” said Tolbert, now a director at Oklahoma law firm Crowe & Dunlevy. “The challenge for regulation in this context is you’re not dealing with centralized factories with big smokestacks. You’re dealing with often very dispersed operations, and so it’s trickier to identify the right level of regulation.”

Although they are required to track emissions, there are no requirements that oil and gas manufacturers achieve any emissions reductions through the program.

Tolbert said that day will come, sooner or later.

“I think the major reason for doing this sort of census is to get ready for regulation,” Tolbert said. “(As to timing for regulation) it seems to be that’s more likely to be a political question than an administrative one. But I think a couple years’ worth of data might give what is needed practically. But it’s a more complicated question about how long they might wait to seek reductions.”

Industry representatives say the requirements are unneeded for an industry that already has a vested interest in the emissions it produces: What escapes from the ground is lost profit.

“There’s good reason to keep the natural gas in the pipeline,” Tolbert says. “There’s good reason to keep the carbon dioxide underground for enhanced recovery. The challenge, of course, is you can’t be perfect.”

 
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