Oil and Gas System Greenhouse Gas Reporting—Where Do You Stand?

U.S. EPA’s Mandatory Reporting of Greenhouse Gases Rule, codified at 40 CFR Part 98 (the GHG Reporting Rule), requires certain facilities to report annual emissions of greenhouse gases (GHG) including, as applicable, carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), sulfur hexafluoride (SF6), hydrofluorocarbons (HFC), perfluorochemicals (PFC), and other fluorinated gases. Facilities that are subject to the GHG Reporting Rule must comply with many complicated provisions which include, but are not limited to, requirements for data monitoring, quality assurance, recordkeeping, required specific emissions calculation methodologies, and reporting content.

Subpart W of the GHG Reporting Rule covering Petroleum and Natural Gas Systems was published at 75 Fed. Reg. 74458 on November 30, 2010, and became effective on December 30, 2010.  This new rule has an expansive reach requiring companies in the oil and gas industry that exceed certain GHG emission thresholds to monitor and annually report GHG emissions to U.S. EPA.  Oil and gas facilities that are subject to Subpart W must report their 2011 GHG emissions to U.S. EPA by March 31, 2012, and then annually thereafter. Even though the reporting date in 2012 may seem to be a long way off, there are actions that the oil and gas industry needs to be taking now to comply with their obligations under the GHG Reporting Rule.

Who must report under Subpart W?

Subpart W requires facility level reporting of GHG emissions from the following source categories within the petroleum and natural gas industry if their total GHG emissions in a calendar year exceed 25,000 metric tons of CO2 equivalent (mtCO2e):

• Offshore petroleum and natural gas production.
• Onshore petroleum and natural gas production.
• Onshore natural gas processing plants.
• Onshore natural gas transmission compression.
• Underground natural gas storage.
• Liquid natural gas (LNG) storage and import/export.
• Natural gas distribution.

The key factor that makes Subpart W applicability so expansive is how it defines a “facility.”  Instead of using a traditional approach to define a facility as the physical boundaries of contiguous or adjacent property, under the definition in Subpart W an onshore facility includes collectively all emission sources on well pads, or associated with well pads, that are under common ownership or control and are located in a single hydrocarbon basin as defined by the American Association of Petroleum Geologists (AAPG).  With this definition, a single facility for Subpart W reporting could consist of the collection of over a thousand individual wells!  For natural gas distribution, a facility