**The Honorable Gina McCarthy, Administrator**

**U.S. Environmental Protection Agency EPA West (Air Docket), Room 3334**  **1301 Constitution Ave., NW Washington, DC 20004** 
**Submitted via email to: oilandgas.whitepapers@epa.gov**

**Re: Penneco Oil Company Technica** **l Comments Regarding the “White Papers on Methane and VOC Emissions” Posted by U.S. EPA at**  **http://www.epa.gov/airquality/oilandgas/whitepapers.html on April 15, 2014** 
Dear Administrator McCarthy,
Penneco Oil Company (PENNECO) is an independent oil and gas exploration company

. The company was incorporated in 1979 and is currently located in Delmont, Pennsylvania. Its business objective is to locate and profitably produce oil and gas reserves for ours and our partners’ benefits in an environmentally responsible and safe manner. Through multiple generations, PENNECO has remained a stable family

-owned business. We currently operate
more than 900 oil and gas wells throughout the Appalachian Basin and we are constantly seeking new ventures to expand our portfolio. As an operator who will likely be impacted by any eventual regulatory activity resulting from the recently published, “White Papers on Methane and VOC Emissions” posted by the U.S. EPA, PENNECO is compelled to review the documents and provide comments in response. As you know, the five White Papers cover the following types of sources or activities within the oil and natural gas sectors: (1) compressors; (2) emissions from completions and ongoing production of hydraulically fractured oil wells; (3) leaks from natural gas production, processing, transmission, and storage; (4) liquids unloading; and (5) pneumatic devices.
A common theme throughout PENNECO’s comments relates to the differences between conventional and unconventional operators and the anticipated costs to such conventional operators that would result from potential future regulatory actions concerning methane emissions

. PENNECO is a small, conventional operator with resulting air emissions that are a fraction of the emissions associatedwith large, unconventional operations. As such, we believe that PENNECO, as well as other small conventional operators, would bear a disproportionate financial burden from any future regulatory activity that results from the U.S. EPA White Papers. We, therefore, submit our comments from the perspective of a small, independentproducer and with a healthy, respectful and informed skepticism. In addition to technical

comments regarding the U.S. EPA White Papers, PENNECO has also included a policy commentary discussion for U.S. EPA’s consideration regarding the perceived need to regulate emissions of greenhouse gases (GHG) following the White Paper technical comments. **Comments on the “White Papers on Methane and VOC Emissions”** The U.S. EPA, through the administration’s “Strategy to Reduce Methane Emissions” is apparently considering additional regulation of production emissions at the wellhead (e.g., liquids unloading, separator dumping, thread leaks, etc.). Based upon the data presented in the various white papers, it is PENNECO’s overarching position that the GHG emissions estimates presented do not support additional regulatory action.Specific comments regardingtheWhite Papers are presented below. **Oil and Natural Gas Sector Liquids Unloading Processes** Comment No. 1): According to Table 2

-2, the vast majority of wells in the study group generated an annual unloading measure of less than 3 1⁄2 metric tons. The Greenhouse Gas Reporting Rule1 defines an onshore petroleum and natural gas production “facility” as “all petroleum or natural gas equipment on a single well

-pad or associated with a single well

-pad and CO2 EOR operations that are under common ownership or common control including leased, rented, or contracted activities by an onshore petroleum and natural gas production owner or operator and that are located in a single hydrocarbon basin...”. The “facility” is an affected facility if actual GHG emissions exceed 25,000 metric tons per year of carbon dioxide equivalent (CO2e). Based on the emissions specifics of the study, an operator would need to own over 7,000 emitting wells in the same basin before it registered on the reporting radar. By this standard, very few independent operators would reach this level of scrutiny. PENNECO suggests that a general applicability threshold be established to ensure that future regulatory actions associated with the various white papers do not disproportionately impact small operators. Comment No. 2): The authors of this paper distinguish “conventional” wells from those that
are hydraulically fractured (2.2 last paragraph).The intimation isthat, accordingtothe “study” definition, a conventional well is one that is producing naturally without the assistance of hydraulic stimulation.This is not consistentwith the definitive distinction made in Pennsylvania law. In Pennsylvania, the term conventional is specific to the target formation’s composition and depth, not the technology used in the process of exploiting it. Under Pennsylvania law shallower wells are not heavily regulated due in partto their emissions profile even ifthey are hydraulically fractured. PENNECO suggests that a universal definition of “conventionalwell” be established and applied throughout the country to ensure regulatory consistency between state and Federal requirements in any subsequent regulations and to avoid unnecessary regulation.

1 See 40 CFR Part 98 Subpart W

- §98.238 Definitions (http://www.ecfr.gov/cgi

-bin/text

idx?SID=29a252bc4f8413ed2af8b20bc7972831&node=40:22.0.1.1.3.23.1.9&rgn=div8)Comment No. 3): The authors of this paper admit that the sampling size was “insufficient,” that

liquids unloading can vary dramatically from well to well and basin to basin, and that a much larger sampling of unloading events is required before the data can carry any practical relevance (2.4 last paragraphs).PENNECO agreeswiththis assertion and strongly suggests that additional studies be undertaken to ensure: 1) that the emissions estimates associated with liquids unloading merit regulation and 2) the cost burden of any resulting regulatory activity associated with liquids unloading are fair and equitablefrom the smalloperator’s perspective

. Comment No. 4): As wells age and reservoir pressures decline, system line pressures may prevent the option of lifting a plunger load without purging to the atmosphere. If producers are required to limit unloading by tripping the plunger through the separator, this will effectively render many existing wells unproductive. Such a requirement could be devastating to a small operator that depends on marginal production associated with aging wells. Consistent with the previous comments, PENNECO suggests that any future regulatory action that is based on the information contained in the white papers do not disproportionately impact small operators.

**Oil and Natural Gas Sector Leaks** Comment No. 1):There is a specific referenceto “oil and gas production from unconventional formations” in the introduction. The intimation of this detail suggests that shale development is the primary sector of oil and gas development that is targeted in this study, thereby placing conventional operations in a class of lesser impact. PENNECO suggests that any future regulatory actions that occur as a result of this white paper properly account for the differences in the emission profiles between conventional and unconventional oil and gas wells.
Comment No. 2): According to Table 2.2, an average Pennsylvania gas well with a separator, meter, and piping exhibits approximately 6 mcf of methane leak emissions per year. Agood well requiring a heater, in addition to the components accounted for in an average well, exhibits approximately 11 mcf of methane leak emissions per year. Acompressor with a dehydrator unit is estimated to exhibit approximately 12 mcf of methane leak emissions per year. PENNECO suggests that U.S EPA focus scarce fiscal resources on far more significant
sources of atmospheric insult and that any resulting future regulatory action that is based on the information contained in the white papers does not disproportionately impact small operators. Comment No. 3): One of the methods proposed for calculating emissions would require that operators report a well equipment inventory at each site in order to plug in leak emissions factors that may or may not be relevant to that site or to the equipment at that site. Just because a study establishes an average leak emission factor for a particular piece of equipment, doesn’t mean that the calculation is applicable to each appurtenance at each site. Rather than focus scarce fiscal resources on estimating minor sources of GHG, why not direct resources to the development and imposition of periodic leak detection and repair (LDAR) programs and encourage such activities by rewarding operators with exemptions from permitting requirements, etc., in response. The Pennsylvania Department of Environmental Protection (PADEP) has taken this approach and has achieved success and acceptancefrom both large and small operators.Comment No. 4): According to Table 2

-6, a Pennsylvania well with a heater, separator, and

meter will exhibit an annual methane leak emission of 0.24 metric tons. Based on the insignificant emissions associated with Pennsylvania wells as indicated in Table 2

-6, PENNECO suggests that the U.S. EPA consider exempting the Northeast production sector from future regulatory activity associated with oil and gas sector leaks. Comment No. 5): The authors of this paper recommend an economic analysis (cost of repair
vs. value of leaked gas) as the overarching litmus test in determining whether a leak is given attention. Since the first commercial gas well was plumbed and pipelined for service in Murrysville, Pennsylvania, operators have been guided by economics and safety concerns without necessity of government intervention. If it makes economic sense to capture the gas, operators have and will continue to do so. If excess gas poses a safety concern, it will be flared. In other words, operators are well equipped to make such decisions based on market knowledge, site specific cost structure, and experience and the paper is re
-statingthe obvious. PENNECO suggests that the white paper for oil and natural gas sector leaks acknowledge the experience and expertise of operators to make decisions related to the cost

-benefit of performing leak repairs and avoid unnecessary regulation

. **Oil and Natural Gas Sector Hydraulically Fractured Oil Well Completions and Associated Gas**  **during Ongoing Production** Comment No.1): There is a specific reference to “oil and gas production from unconventional formations” in the introduction.The intimation of this detail suggests that shale development is the primary sector of oil and gas development that is targeted in this study, thereby placing conventional operations in a class of lesser impact. PENNECO suggests that any future regulatory actions that occur as a result of this white paper properly account for the differences in the emission profiles between conventional and unconventional oil and gas wells. Comment No. 2): Based on the regional uniqueness of the Bakken oil, the reach of any regulation resulting from the FBRI data used in the Fort Berthold FIP should be confined to oil shale plays only.PENNECO suggeststhat any regulatory activity resulting from data developed from oil shale plays included in this white paper be limited to operators in shale plays. Comment No. 3): Because the HPDI study data used by ERG and EC/R represented emissions from “hydraulically fractured, unconventional wells,” the reach of any associated regulation should be confined to shale oil plays only. PENNECO suggests that any regulatory activity resulting from data developed from oil shale plays included in this white paper be limited to operators in shale plays. Comment No. 4): Because the HPDI study data used by EDF and EDF/Stratus represented emissions from completions of “unconventional oil play formations,” the reach of any associated regulation should be confined to oil shale plays only. Again PENNECO suggeststhat any regulatory activity resultingfrom data developedfrom oil shale plays included inthiswhite paper be limited to operators in shale plays. Comment No. 5): Because the HPDI study data used by Novim represented emissions from “hydraulically fractured oil” completions in formations that are primarily characterized as shale,the reach of any associated regulation should be confined to oil shale plays only. PENNECO

suggests that any regulatory activity resulting from data developed from oil shale plays included in this white paper be limited to operators in shale plays. Comment No. 6): The mitigation techniques mentioned by the authors of this white paper (flares, reduced emission completions or RECs, combustion devices, natural gas liquid (NGL) recovery, reinjection, and electricity generation) are based on completion and production characteristics specific to unconventional oil wells, therefore the reach of any associated regulation should be confined to oil shale plays only. PENNECO suggests that any regulatory activity resulting from data developed from oil shale plays included in this white paper be limited to operators in shale plays. **Oil and Natural Gas Sector Compressors** Comment No. 1): There is a specific reference to “oil and gas production from unconventional formations” in the introduction.The intimation of this detail suggests that shale development is the primary sector of oil and gas development that is targeted in this study, thereby placing conventional operations in a class of lesser impact. PENNECO suggests that any future regulatory actions that occur as a result of this white paper properly account for the differences in the emission profiles between conventional and unconventional oil and gas wells. Comment No. 2): Because compressors vary significantly in component size, pressure rating, pump capacity, stroke count, revolutions, etc., it is difficult to make broad emissions assignments. PENNECO suggests that any future regulatory actions that occur as a result of this white paper properly account for the differences in the emission profiles between conventional and unconventional oil and gas wells. **Oil and Natural Gas Sector Pneumatic Devices**  Comment No. 1): Because emissions from pneumatic devices vary based on construct, pressure, stroke count, etc., it is difficult to make blanket emissions assignments. The production needs of conventional operations are far more modest than the growing unconventional sector and should be exempt from any emissions regulation of surface appurtenances. PENNECO suggests that any future regulatory actions that occur as a result of this white paper properly account for the differences in the emission profiles between conventional and unconventional oil and gas wells.
**General Comment** PENNECO recognizes the time, effort, and cost associated with the development of the five white papers discussed herein and appreciates the findings expressed within each document. However, it is the opinion ofthis reviewer that primary regulatory oversight ofthe national oil and natural gas sector should be left to the discretion of the States, taking into consideration the findings of the U.S. EPA as articulated in the white papers and in other taxpayer funded research endeavors. State specific regulatory agencies are in regular communication with operators in their specific states or region and are much more cognizant of the unique challenges faced by the operators within their geographic and jurisdictional regions. As such,regulatory vetting is far more credible and prone to constructive dialogue at the state/local

level than with Washington.

**Policy Commentary Discussion** With all of the attention being given to climate change, its detriment to the planet, and regulatory solutions to mitigate its impact, one gets the impression that the industrious product of human inventiveness has pushed earth’s atmosphere to the precipitous brink of its life

sustaining balance. However, when you take look at the facts concerning the actual atmospheric composition, there is reason to suspect that there is more in play here than just stewardship and environmental preservation. According to the Fundamentals eBook of PhysicalGeography.net2
, the atmosphere is made up of primarily 11 gases. Ofthese eleven,three are compounds that are regulated as Greenhouse Gases (GHG). They are carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O). Combined these three gases comprise nearly 0.04% of Earth’s total atmospheric composition (CO2 - 0.036%, CH4– 0.00017%, and N2O

– 0.00003%).Ofthethree atmospheric gasesthat comprise GHG, CO2 makes up over 95%. The U.S. EPA regulates emissions of these three natural atmospheric constituents, as well as emissions of manmade hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride, as GHGs based on their perceived contribution to climate change. Despite the cries of a ‘feedback loop’ or accelerated cycle by climate change alarmists,the hardfact remainsthat CO2 and CH4 make up less than 1% of greenhouse gases in our atmosphere. The question begs, of all atmospheric CO2 gas (0.036% of total atmospheric gas composition), how much of it is naturally occurring in the carbon cycle and how much of it is introduced by life improvement ingenuity of human beings? Most resources on the subject agree that naturally occurring carbon emissions makes up 96% of the 0.036% total atmospheric CO2 leaving only 3.7% of the 0.036% total (or 0.0013%) to be considered anthropogenic or man
made. Of the total CO2 emissions assigned to human introduction (3.7%), only 8.4% of that is attributed to “fossil fuel retrieval, processing, and distribution.” This means that the U.S. EPA and other environmental agencies are intending to regulate an industry sector that may be responsible for oneten

-thousandth of a percent (0.0001%) of a contribution to the atmosphere as it relates to CO2. The case for CH4 is similar. Of all atmospheric CH4 (0.00017% total atmospheric composition), 64% of it can be assigned to nature (wetlands, bio

-ruminants, termites, oceans). Of the 36% that is credited to anthropogenic introduction (36% of 0.00017% or 0.00006% of total atmospheric content), only half of that is assigned to the energy sector. This means that the U.S. EPA and other environmental agencies are intending to regulate an industry sector that may be responsible for a 0.00003% contribution to the atmosphere as it relates to methane.

2 See: http://www.physicalgeography.net/fundamentals/contents.htmlCombined, the GHG contribution of concern constitutes a composition of earth’s atmosphere at

a measure of 0.00013%.The U.S. EPAwould like usto believethatthe atmosphere isteetering
on a delicate balance and that industry is the ample straw that will turn the poor camel into a motionless heap. The truth is the constitutional fluctuations over which the environmental regulators are clamoring are so insanely miniscule that any notion of legislation should be scoffed and any propagator shamefaced. The hype over GHG emissions and the need to regulate seems to be more political at its core than it is rooted in science. Politicians are capitalizing on the environmental sensibilities of good people by presenting weather related catastrophes as the inevitable result of selfish lifestyle choices like driving an SUV or comfort conditioning a home. We are rebukedwiththe mantrathat ‘we all needto do our part’forthe sake of the planet and its most vulnerable inhabitants. Every good story needs a villain. In the tale of global warming and climate change, the dark figure is industrialAmerica.The hero isgovernmentwho constrainsthe civiltyrant and ensures clean air and stable coastlinesfor allgood citizens oftheworld.The problem is,whilethe story is a fable, the imposition of this political storyline is very real. The white papers mention that the U.S. submits our GHG Inventory to the United Nations Framework Convention on Climate Change. Why? Why are we compelled to report our emissions to the U.N. as a transgressor to a lord? What stakedoes the U.N. have in our national economy or innovation? Perhaps the stake is greater than any of us ever wish to imagine. When the largest percentage of the atmospheric gases of concern are introduced naturally, how can any anthropogenicfraction ofthe U.S. be considered a detriment, labeled a pollutant, and tagged for regulation when on the world stage, China emits twice our industrial totals? Whilewefind ourselves under the increasing burden of compliance rule, developing nations are supplanting our self

-imposed, high

-priced emissions indulgences manytimes over. We aretold that our conscience holds us to a higher standard, but for what environmental benefit and at what national cost?

We appreciate the opportunity to provide comments on the White Papers and thank you in advance for your anticipated consideration.
Respectfully submitted,

Penneco Oil Company D. Marc Jacobs, Jr. Senior Vice President