1 New York Attorney General Eric T. Schneiderman

Delaware Attorney General Joseph R. Biden, III Maryland Attorney General Douglas F. Gansler Massachusetts Attorney General Martha Coakley

Oregon Attorney General Ellen F. Rosenblum Rhode Island Attorney General Peter F. Kilmartin Vermont Attorney General William H. Sorrell

June 16, 2014

Via Electronic Mail (w/cc to: oilandgas.whitepapers@epa.gov ) Gina McCarthy

Administrator Environmental Protection Agency Ariel Rios Building 1200 Pennsylvania Avenue, N. W. Washington, DC 20460

RE: Comments on EPA Methane White Papers

Dear Administrator McCarthy:

The Attorneys General of New York, De laware, Maryland, Massachusetts, Oregon, Rhode Island, and Vermont (tog ether, “States”) respectfull y submit these comments on the Environmental Protection Agency ’s five white papers addressing major sources of methane emissions from the oil and gas sector. These pa pers stem from the Admi nistration’s strategy to reduce methane emissions, which EPA acknowledges to be a key element in the President’s Climate Action Plan. The States view EPA’s public ation of the white papers as a positive step in the direction of cutting methane emissions from the oil and gas industry. Th e States urge EPA to take the next logical st ep of promptly setting emission stan dards and guidelines for methane for these sources under sections 111(b) and (d) of the Clean Air Act for the sour ces identified in the white papers.

1. Background

The Need for Prompt Action to Reduce Greenhouse Gases, Including Methane

Greenhouse gas pollution is warming our plan et, with significant and wide-ranging

adverse effects to human health and welfare. The recently released U.S. Global Change Research Program’s Third National Climate Asse ssment concludes that the evidence of humaninduced global warming continues to strength en and that impacts ar e increasing across the country. Finding that “climate change, once consid ered an issue for a distant future, has moved firmly into the present,” the Assessment’s aut hors present compelling bases for the need to2 reduce greenhouse gas emissions from major s ources, such as the oil and gas sector. 1 Given the strong body of science that demonstrates the imp acts on human health and the environment, EPA must act expeditiously to ensure that major sources of greenhouse gases – such as the oil and gas industry – promptly and aggressively limit their em issions. Prompt and effective action in the power generating, industrial, and tran sportation sectors are required if the U.S. and the rest of the

world are to have a reasonable chance of avoiding the most se vere impacts of global warming.

EPA determined in its 2009 endangerment finding that methane is one of the six greenhouse gases that endangers public health and welfare. See 74 Fed. Reg. 46,696 (Dec. 15, 2009). Methane is a very potent greenhouse ga s. Pound for pound, it warms the climate about 34 times more than carbon dioxide over a 100-ye ar period, according to the Intergovernmental Panel on Climate Change, and even more over shor ter periods. As noted in the White House’s Strategy to Reduce Methane Emissions (March 2014), methane accounts for about 9 percent of greenhouse gas emissions in the country, and that percentage will rise by 2030 unless measures are put in place to cut those emissions. Id. at 1. Not surprisingly, therefore, the President’s

Climate Action Plan issued in June 2013 states that curbing emissi ons of methane is “critical” to our effort to address global climate change. Climate Action Plan at 10.

In evaluating methane emissions from the oil and gas industry, there are four major segments from development to delivery that mu st be considered duri ng which methane either leaks or is intentionally vented to the atmosphere. Each of these segments represents a significant percentage of methane emissions:

 Production. The production segment includes ex traction of oil and gas from a well and use of gathering pipes or lines to move the fuel to a processing facility.

 Processing. The processing segment involves th e use of compressors to move natural gas from the well to facilities that remove liquids to create “pipeline quality” gas, which is then shipped via pipelines in the transmission phase.

 Transmission. The transmission segment includes the use of pipelines and compressors to ship natural gas from proces sing facilities to distributors.

 Distribution. The distribution segment incl udes the use of city gates to receive the natural gas from pipelines and then distribute the gas through smaller lines to commercial

and residential customers.

According to 2012 emissions data from the oil and gas sector, the production segment accounts for approximately 32 percent of methane emi ssions, the processing segment 14 percent, the transmission segment 33 percent, and the di stribution segment 20 percent. U.S. EPA, Greenhouse Gas Inventory Report (April 2014), Ta ble 3-43. Because each of these segments represents a significant percentage of emissions , a successful strategy to reduce methane must address all four segments. EPA has previously acknowledged that its au thority under the Clean

Air Act covers emissions from all of these segments. 76 Fed. Reg. at 52,745.

1 U.S. Global Change Research Program, Climate Change Impacts in the United States: The Third National Climate Assessment (doi:10.7930/J0Z 31WJ2) (Jerry M. Melillo, Terese (T.C.) Richmond, and Gary W. Yohe, eds. 2014).3 The critical need to limit methane emissi ons was further underscored by EPA’s recentlyproposed Clean Power Plan targeting greenhouse ga s emissions from existing power plants. One of the underpinnings of that rule is to encourage states to sw itch from energy generation using coal to generation using natural gas and lower carbon-intensive fuels. Because of the readilyavailable supply of natural gas in this country, and the fact that na tural gas is mostly methane, we must act to ensure that the global warming benefits of switching from coal to natural gas are not

diminished because of the release of methane th roughout the natural gas system. According to a recent World Resource Institute report, cutting methane leakage rates from natural gas systems to less than one percent of total production would ensure that the climate impacts of natural gas are

lower than coal or diesel fuel. World Resour ces Institute, Clearing the Air: Reducing Upstream

Greenhouse Gas Emissions from U.S. Natural Gas Systems (March 2013).

State Action on Reducing Methane Emi ssions from the Oil and Gas Sector

It is the States’ position th at not only is targeting me thane emissions a necessary component of a successful strategy to address gl obal warming, it is required under the Clean Air Act. In that vein, in December 2012, seven of the States sent a notice of intent to sue EPA based on the agency’s failure to set emission standards for methane in its 2012 New Source Performance Standard (NSPS) rule for the oil and gas sector, 77 Fed. Reg. 49,490 (Aug. 16, 2012). Oregon sent a similar notice of intent in June 2013. As explained in the notice letters,

EPA has determined that emissions of this potent greenhouse gas enda nger public health and welfare, and that processes and equipment in the oil and gas sector emit vast quantities of methane. We further explained that EPA ha s compelling data, including from 18 years of experience administering the Natu ral Gas Star Program, demonstr ating that many measures to avoid (or reduce) methane emissions from new a nd existing oil and gas op erations are available and cost-effective. In light of these findings, EPA’s failure to determine in its 2012 rulemaking whether it is appropriate at this time to set standards limiting methane emissions from oil and gas operations under section 111 of th e Clean Air Act is a violation of a nondiscretionary duty of the

Administrator or constitutes an unrea sonable delay in taking agency action.

Although the 60-day and 180-day notice period s to bring a nondisc retionary duty and unreasonable delay claim, respectively, have now e xpired, the States have chosen not to file a lawsuit as of this date in light of the Presid ent’s subsequent commitment that EPA and other federal agencies would examine how to reduce methane emissions from the oil and gas sector.

See Climate Action Plan at 10. This commitme nt was fleshed out in the Administration’s Strategy to Reduce Methane Emissions, which was issued on March 28, 2014. As set forth in the methane strategy document, EPA’s issuance of tec hnical white papers is the first step in a process in which the agency is considering direct regulation of methane in the oil and gas sector through rulemaking. Methane Strategy at 2. Unde r this schedule, the ag ency would issue any proposed rule this fall, to be followed with the pr omulgation of a final rule and deadline for state implementation plan submittals by the end of 2016. Id.

In the meantime, a number of states – in cluding Colorado, Ohio, and Wyoming – have enacted regulations to prevent methane leaks from the oil and gas sector. Colorado’s rules, passed in February, govern both new and existing wells and require leak inspections either monthly, quarterly, or annually, depending on the am ount of emissions. Colorado has stated that4 it expects these regulations, which target methane emissions directly rather than as a co-benefit of reducing other pollution, to reduce methane emissions by approximately 65,000 tons per year.

2. Comments on Methane White Papers

EPA’s five white papers describe sources of methane emissions in the oil and gas sector

and methods that are available to limit those em issions. The States’ comments on each of these white papers (Oil and Gas Sector Leaks, Hydr aulically Fractured Oil Well Completions and Associated Gas during Ongoi ng Production, Pneumatic Devices, Compressors, and Liquids Unloading Processes) are set forth below.

Leak Detection and Repair

EPA’s “Oil and Natural Gas Sector Leaks” wh ite paper acknowledges that as the oil and natural gas exploration and produc tion industry in the U.S. grow s rapidly, so does the potential for greater methane emissions from leaks. As EPA notes, “leak emissions occur through many types of connection points (e.g., fl anges, seals, threaded fittin gs) or through moving parts of valves, pumps, compressors, and other types of pr ocess equipment.” Oil and Natural Gas Sector Leaks White Paper at 3. The white paper iden tifies a number of different leak detection technologies, including portable analyzers and infrared cameras, which are readily available and inexpensive. As discussed in the recently i ssued report by Carbon Limits, “Quantifying Costeffectiveness of Systematic Leak Detection and Repair Programs Using Infared Cameras,” (March 2014), infrared cameras can be used relativel y inexpensively to scan an entire facility for leaks. Furthermore, EPA has determined that “once a leak is found it is almost always economical to repair the leak” and that inspection and maintena nce programs “can effectively decrease leak emissions.” Id. at 55. In light of these findings that l eak detection and repair programs can effectively reduce methane emissions from leaks at a reasonable cost, EPA should

follow the lead of states such as Colorado that have made these programs mandatory.

Unfortunately, the white paper leaves out a significant source of methane leaks by excluding methane emissions from the distribution sector, i.e. , only considering leaks that are “upstream of the city gate.” Oil and Natural Ga s Sector Leaks White Pape r at 3. As EPA noted above, however, EPA has found that methane leaks in distribution from city gates and associated above-ground facilities and fr om underground pipes comprise about one-fifth of methane emissions from the oil and gas sector. As a result, leaving this se gment unaddressed would undermine the President’s goal of significantly cutti ng methane from the oil and gas sector as an important strategy to addre ss global warming.

Distribution sector methane leaks present significant environmental, economic, and safety concerns for states. In Massachusetts al one, leaking pipelines are estimated to release between eight and twelve billion cubic feet of me thane a year, at a cost of about $38 million per year to customers. Shanna Cleveland, Into Thin Air: How Leaking Natural Gas Infrastructure is Harming Our Environment and Wasting a Valuable Resource (CLF, Boston), Nov. 2012, at 7, 12, available at http://www.clf.org/static /natural-gas-leaks/WhitePaper_Final_lowres.pdf . A

number of recent studies have documented ex tensive leaks from thousands of miles of underground piping in cities such as Boston, New York, and Washi ngton, D.C. See, e.g., Nathan5 G. Phillips, et al., Mapping Urban Pipeline Leaks: Methane Leaks Across Boston, Environmental Pollution, Vol. 173 (Feb. 2013) at 1-4 (copy attached). For example, a team using infrared imaging discovered 3,356 leaks with fifteen times the global background level for methane in Boston alone. Gas distribution comp anies in 2011 reported re leasing 69 billion cubic feet of natural gas to the atmosphere, almost e nough to meet the state of Maine’s gas needs for a year and equal to the annual carbon dioxide em issions of about six million automobiles. See America Pays for Gas Leaks: Natural Gas Pipeline Leaks Cost Consumers Billions (Staff Report Prepared for Senator Edward J. Markey, Washington, D.C.) Aug. 2013, at 2 & 7, Table 3,

available at: http://www.markey.senate.gov/documents/markey_lost_gas_report.pdf . As a result, nationally consumers paid at least $20 billion from 2000-2011 for gas that was unaccounted for

and never used. Id. at 1.

Some states have undertaken efforts to deal with th is problem. Since 2009, Massachusetts has promoted replacement of l eaking distribution pipe line through the use of Targeted Infrastructure Replacement Funds that pr ovide for expedited reimbursements to utilities that replace aging steel and cast iron infrastructure, as opposed to the use of tr aditional rate recovery. The Massachusetts Department of Pub lic Utilities has also op ened an investigation into the Service Quality Standards for local el ectric and gas distributi on companies that is investigating, among other items, appropriate metrics for leak de tection and response. And, the Massachusetts Legislature recently took up legislation (H3873 and S2073, currently in conference committee) to address gas leaks. Si milarly, in New York, the New York Attorney General’s Office successfully argued to the Publ ic Service Commission that Consolidated Edison should be required to increase it rate of replacem ent of old distribution system pipes in New York City in order to reduce methane emissions. As a result of that proceeding, Con Ed is also conducting a study to improve dete ction of distribution system leaks and quantification of associated leak rates. Although these state efforts represent impor tant steps, federal action is needed to drive a more concerted, immediate effort to eliminate leaks and reduce methane emissions from the distribution segment.

In light of the significant emissions from the distribution segment, at a minimum EPA should broaden its scope of potentia l regulatory action to encompa ss emissions from city gates, which the agency has previously identified as the largest source of methane emissions in distribution. See EPA, Techni cal Support Document: Petroleum and Natural Gas Systems for the 2010 Final Rule – Mandatory Reporting of Greenhouse Gases from Petroleum and Natural Gas Systems – Subpart W, at 76, available at: http://www.epa.gov/ghgreporting/docu ments/pdf/2010/Subpart-W_TSD.pdf . City gates are metering and pressure regulating f acilities located at the custody transfer points where natural gas is delivered from transmission pipelines into the lower pressure lines of local distribution companies. Distribution providers that are pa rticipants in EPA’s Natural Gas STAR program have reported significant savi ngs and methane emission reductions by implementing inspection and maintenance programs of city gates, which are easier to fix than underground piping. Based on data provided by these companies, implemen ting these programs at gate stations and associated above-ground facilities can result in gas savings worth up to $1,800 per year, at a cost between $20 and $1,200. EPA, Lessons Learned: Di rected Inspection and Maintenance at Gate Stations and Surface Facilities, Pub. No. EPA430-B-03-007 (2003).6 Hydraulically-Fractured Oil Wells

The white paper on hydraulica lly-fractured oil wells and associated natural gas production underscores the need for emission standard s and guidelines for these sources. In its 2012 NSPS, EPA did not include “oil wells” in the defi nition of affected fac ilities, so those wells are currently exempt from rule’s reduced emission completion, i.e. , “green completion,” requirements that apply to hydraulic ally-fractured gas wells. The NSPS rule requires flaring of gas wells until January 1, 2015, at which time producers will need to use green completion equipment to separate out the gas from the wa ter and send the gas into pipelines, where it subsequently can be sold.

The white paper supports the conclusion that hydraulically-fractured oil wells (either completion of a newly-fractured well or re-s timulation of a previously fractured well and ongoing production) are also sign ificant sources of both methan e and volatile organic compound (VOC) emissions. For example, the Environm ental Defense Fund/Stratus study cited in the white paper estimated methane emissions from hydraulically-fractured oil well completions (venting, flaring, etc.) at approxi mately 247,000 metric tons of methane per year. An ERG/ECR study cited in the white paper estimated VOC em issions at approximate ly 116,230 tons per year (assuming a 7-day flowback period). Furthermore, the emission figures for methane at least may underestimate the amount of those emissions give n that aerial, or “top down” surveys of oil fields in Colorado, Utah, and else where have detected much highe r levels of methane than found in the “bottom up” studies in the white paper.

The white paper further shows that the t ypes of measures required for gas wells (complete combustion, green completions) as well as other alternative tec hnologies are available

to limit methane and VOC emissions from oil we lls. Although the cost effectiveness of these measures appears to vary depending upon different factors, such as the existence of nearby gas pipelines, those considerations can be addressed in the context of implementing the requirements to hydraulically-fract ured oil wells.

Compressors and Pneumatic Devices

Regarding the white papers addressing compressors and pneumatic devices, in the 2012 NSPS rulemaking, EPA identified compressors (r eciprocating and centrifugal) and pneumatic devices (controllers and pumps) in the natural gas transmission segment as equipment that emits large quantities of methane. But at the time, EP A declined to establish standards to limit these emissions based on its approach of focusing on reducing VOCs, which are largely removed by the time the natural gas stream reaches compre ssors and pneumatic devices in the transmission segment. See 77 Fed. Reg. at 49,522-23 (declining to regulate transmission compressors and pneumatics because of “the relatively low leve l of VOC emitted from these sources”).

In light of the President’s subsequent comm itment to reduce methane emissions and the issuance of the methane strategies document, a VOC-focused rationale is no longer supportable. The white papers for compressors and pneumatic devices confirm that th is equipment is the source of significant amounts of methane emissi ons. According to EPA, compressors emitted more than 2 million tons of methane in 2012, with more than 50 percent of that amount coming7 from the transmission segment. Oil and Natura l Gas Sector Compressors White Paper at 43. Similarly, EPA estimates that pneumatic contro llers are responsible for about 13 percent of methane emissions from the oil and gas sect or, while pneumatic pu mps account for about 16 percent of methane emissions from the producti on and processing segments. Oil and Natural

Gas Sector Pneumatic Devices White Paper at 56-57.

Moreover, both of the white papers demonstrate that methane can be significantly and cost-effectively reduced by establishing emission standards for methane from compressors and pneumatic devices. Centrifugal compressor emi ssions may be cost-effectively controlled by using dry seals in place of wet seals, while reciprocating compressor emissions may be controlled by the periodic replacement of rod packing systems. Compressors White Paper at 43.

Pneumatic controller emissions can be significantly reduced by replacing high-bleed controllers with either low- or zero-bleed controllers, while methane from pneumatic pumps can be cut in many instances by replacing them with instrument air pumps and electric pumps. Pneumatic Devices White Paper at 56-57. These findings in th e white papers are consistent with previous EPA determinations concerning th is equipment and in other studi es. See, e.g., EPA, “Reducing Methane Emissions from Compressor Rod Pack ing Systems” (Oct. 2006) at 1 (indicating payback periods from 1 to 3 months for compre ssor maintenance activities that reduce methane emissions); WRI Clearing the Air report at 6 (r eplacing existing high-bl eed pneumatic devices with low-bleed equivalents thr oughout natural gas system identifie d as one of three strategies that could cost-effectively cut methane emissi ons by 30 percent); Natural Resources Defense Council, “Leaking Profits: The Oil and Gas I ndustry Can Reduce Pollution, Conserve Resources, and Make Money by Preventing Methane Wa ste,” (2012) (improved maintenance of reciprocating compressors and replacement of hi gh-bleed pneumatic cont rollers with low-bleed

or zero-bleed controllers identified as two of ten cost-effective strate gies that could reduce methane emissions from oil and ga s sector by 80 percent).

Liquids Unloading

The white paper on liquids unloading discu sses methane and VOCs that are emitted when companies periodically open mature wells to the atmosphere to unload well bore liquids, such as water and condensate, which accumulate in the bo ttom of the well. This process, typically referred to as a “well blowdown,” can result in large quantities of methane and VOCs being released. Although emission figures vary, EPA es timates that methane and VOC emissions from liquids unloading comprised abou t 14 percent of emissions from the natural gas production segment in 2012.

Rather than using well blowdown methods to unload liquids and allow the flow of gas from the well to resume, there are available tech nologies that perform th is same function while significantly reducing emissions. As the white paper notes, plunger lifts are the most common of the technologies. Of these, the use of optimi zed plunger lift systems (e.g., those that use smart well automation) offer the dual benefits of decreasi ng the amount of emissions by more than 90 percent while reducing the need for venting due to overloading. Oil and Natural Gas Sector Liquids Unloading Processes White Paper at 16; see also NRDC Leaking Profits report at 24-25 (summarizing emission reductions attr ibutable to use of plunger lift systems). Previous studies have also demonstrated that pl unger lift systems are cost-effectiv e. Id.; WRI Clearing the Air8 report at 6 (identifying use of plunger lift systems at new an d existing wells during liquids unloading as one of three technolog ies that could cut methane emissi ons in the oil and gas sector by 30 percent). Other available technologies – such as artificia l lifts, velocity tubing, and foaming agents – can achieve even greater emi ssion reductions, eliminating emissions entirely from liquids uploading. Liquids Un loading White Paper at 17-18.

3. Conclusion

In summary, EPA’s publication of the white pa pers for the oil and gas sector represents a positive step in implementing the President’s dire ctive to significantly cut methane emissions from this industry. The States urge EPA to ta ke the next logical st ep of proposing emission standards and guidelines for methane for the source s discussed in the white papers under sections 111(b) and (d) of the Clean Air Act, as it has done recently with carbon dioxide emissions from power plants. In light of the potency of meth ane as a short-term accelerator of global warming, the States urge EPA to act in expedited fash ion by proposing standards and emission guidelines by this fall.

Sincerely,

FOR THE STATE OF NEW YORK

ERIC T. SCHNEIDERMAN Attorney General

/s/ Michael J. Myers By: ____________________________

MICHAEL J. MYERS

MORGAN A. COSTELLO Assistant Attorneys General

Environmental Protection Bureau The Capitol Albany, NY 12224 (518) 473-5843

FOR THE STATE OF DELAWARE FOR THE STATE OF MARYLAND

JOSEPH R. BIDEN, III DOUGLAS F. GANSLER Attorney General Attorney General

VALERIE M. EDGE MARY E. RAIVEL Deputy Attorney General Assistant Attorney General Delaware Department of Justice Office of the Attorney General 102 West Water Street, 3rd Floor Maryland Department of the Environment Dover, Delaware 19904 1800 Washington Blvd., Suite 6048 (302) 739-4636 Baltimore, Maryland 21230 (410) 537-30359 FOR THE COMMONWEALTH OF FOR THE STATE OF OREGON

MASSACHUSETTS

ELLEN F. ROSENBLUM MARTHA COAKLEY Attorney General Attorney General PAUL A. GARRAHAN MELISSA HOFFER Acting Attorney-in-Charge

Division Chief Natural Resources Section

Environmental Protection Division Oregon Department of Justice
One Ashburton Place, 18th Floor 1515 SW Fifth Avenue Suite 410
Boston, MA 02108 Portland, OR 97239 (617) 963-2428 (971) 673-1943

FOR THE STATE OF RHODE ISLAND FOR THE STATE OF VERMONT

PETER F. KILMARTIN WILLIAM H. SORRELL Attorney General Attorney General

GREGORY S. SCHULTZ THEA J. SCHWARTZ Special Assistant Attorney Genera l Assistant Attorneys General Rhode Island Department of Attorney Office of the Attorney General

General 109 State Street 150 South Main Street Montpelier, VT 05609 Providence, RI 02903 (802) 828-2359 (401) 275-4400 x 2400