CHAPTER 1 PETROLEUM EXTRACTION INDUSTRY AND ENVIRONMENTAL CONTROLS INTERFACE
| Jurisdiction | United States |
(Feb 1993)
PETROLEUM EXTRACTION INDUSTRY AND ENVIRONMENTAL CONTROLS INTERFACE
Holliday Environmental Services, Inc.
Tomball, Texas
TABLE OF CONTENTS
Page
Overview
Statutes
Petroleum Extraction Industry Operations
Exploration
Drilling Operations
Producing Operations
Clean Air Act.
Clean Water Act
Oil Pollution Act of 1990
Safe Drinking Water Act
Drinking Water Quality
Underground Injection Control
Federal Insecticide, Fungicide & Rodenticide Act
Toxic Substances Control Act
Resource Conservation & Recovery Act
Comprehensive Environmental Response Compensation and Liability Act
Superfund Sites
Hazardous Substances
Superfund Amendments & Reauthorization Act
Extremely Hazardous Substances Notification
Facility Emergency Response Coordinator
Release Reporting
Hazardous Chemical Notification
Hazardous Chemical Annual Inventory
Transportation Exemption
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Gas and Sulfur Pllant Operations
Abandonment Operations
Attachment 1-List of Extremely Hazardous & Hazardous Substances
Attachment 2—Acronyms
Attachment 3—Glossary of Terms
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OVERVIEW
Virtually all environmental statutes apply to the Petroleum Extraction Industry. What is worse, the Environmental Protection Agency takes advantage of the industry, because no single association represents the Petroleum Extraction Industry. Accordingly, there is need for environmental attorneys to understand the application of the statutes and implementing regulations to the Petroleum Extraction Industry so adequate counsel can be given.
STATUTES
The following Federal statutes impact the Exploration and Production segment of the petroleum industry:
1. Clean Air Act — 42 USC Section 7401 et seq.
2. Clean Water Act — 33 USC Section 1251 /et seq.
3. Oil Pollution Act of 1990 — 46 USC Section 1007 et seq.
4. Safe Drinking Water Act — 42 USC Section 300f et seq.
5. Federal Insecticide, Fungicide and Rodenticide Act — 77 USC Section 136 et seq.
6. Toxic Substances Control Act 7 USC Section 136 et seq.
7. Resource Conservation and Recovery Act — 42 USC Section 6901 et seq.
8. Comprehensive Environmental Response, Compensation and Recovery Act — 42 USC Section 9601 et seq.
9. Superfund Amendments and Reauthorization Act — 42 USC Section 11002 et seq.
A portion of these statutes and implementing regulations will be discussed by other speakers. Unfortunately, not all of the issues can be covered because of the limited timed available. Additionally, state regulations have built upon the Federal regulations, typically increasing the severity of the controls.
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PETROLEUM EXTRACTION INDUSTRY OPERATIONS
The industry is divided into 5 primary operations:
1. Exploration — looking for likely areas of oil or gas containing reservoirs
2. Drilling — the act of penetrating the earth to a depth where the oil or gas is expected or known to exist.
3. Producing — the process of bringing the oil or gas from the reservoir to the sales point.
4. Gas and/or sulfur plant operation — the physical separation of gas liquids [butane, propane] from natural gas.
5. Abandonment of facilities or operation — removal of facility when no long economically viable.
Exploration
Exploring for oil and gas reserves typically requires field geology and seismic work. Field geology is considered benign since it is facilitated by a lone field geologist typically on foot. However, if the geologist must enter Federal lands, permits are required from Mineral Management Service or Forest Service operation can require cutting of roads.
Seismic operation requires mobile equipment, either thumper or shot hole drilling operations. The Clean Air Act provisions apply to some trucks. The Clean Water Act regulations control the discharge of drilling fluids into Waters of the U.S. Further, some states require prescribed plugging and abandonment of the shot-hole.
Beyond these controls, little or no environmental statutes or implementing regulations apply to exploration activities.
Drilling Operations
Drilling includes the excavating of a drilled hole to a given depth. This requires use of large diesel engine driven equipment. The engines are controlled under the Clean Air Act since they emit criteria pollutants. However, onshore drilling operations are exempted from Clean Air Act permitting requirements because the drilling activity is a temporary activity. Offshore
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drilling activities are permitted only in the Gulf of Mexico and are subject to the onshore state criteria pollutant limitations for any operation within 25 miles of shore.
Drilling is subject to all of the provisions of the Clean Water Act. In the states of Louisiana, New Mexico, Oklahoma and Texas, this means zero discharge to Waters of the U,.S. No other industry operates under such severe limitations.
The Clean Water Act not only limits or prohibits discharges under the National Discharge Elimination System [NPDES] permit, but requires storm water permits and Spill Prevention Control and Countermeasure [SPCC] [plans.
Further, offshore drilling operations are subject to the Response Plan provisions of the Oil Pollution Act of 1990 if 250 bbls of oil are transferred over water. The Oil Pollution Act applies to onshore drilling if fuel storage exceeds an unspecified quantity and no secondary containment is provided. Starch muds require biocides controlled by the Federal Insecticide, Fungicide and Rodenticide.
Additionally, the Toxic Substances Control Act Registry provisions apply as well as the Superfund Amendments and Reauthorization Act hazardous chemical notification and inventorying provisions. Also, the Suspect Hazard Reporting System [TSCA 8(e)] applies. [Refer to Producing Operations for more detail regarding these provisions.]
Drilling fluids are exempted under 42 USC 6921(b)(2) from being classed as hazardous wastes. However, diesel fuel, drilling clay, barite, and caustic materials are subject to notification and inventorying provisions of the Superfund Amendments and Reauthorization Act.
Spent mud and cuttings are not subject to the Underground Injection provisions of the Safe Drinking Water Act if they are injected into the annulus between casings.
Producing Operations
Producing operations can be subject to all of the environmental statutes and implementing regulations.
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Clean Air Act [CAA]
Compressor and water flood pump engines if grouped so as to constitute 250 tons of a criteria pollutant can be subject to the Prevention of Significant Deterioration and/or Non-attainment Construction permit requirements. Further, the Clean Air Act
Amendments of 1990 subject facilities emitting 100 tons per year of a criteria pollutant or 10 tons per year of a Hazardous Air Pollutant [HAP] to operating permit requirements.
Non-attainment areas are divided into classes of non-compliance with the National Ambient Air Quality Standards ranging from marginal to severe. Each class requires increasing more severe controls and lower threshold values triggering controls.
Clean Water Act [CWA]
The Clean Water Act imposes controls or prohibitions on the discharge of contaminated liquids into Waters of the U.S. Currently, stripper wells can and do discharge produced water to Waters of the U.S. These controls are imposed in the form of National Discharge elimination System [NPDES] permits
Contaminated storm water leaving a facility via a conveyance and entering Waters of the U.S. require a Storm Water Permit. Exploration and Production facilities are exempt unless the facility experienced such a discharge within the last 3 years.
Any oil storage facility capable of containing 660 gallons in one tank or 1320 gallons in multiple tanks and reasonably expected to enter Waters of the U.S. if spilled must prepare and implement a Spill Prevention, Control and Countermeasure [SPCC] plan.
Oil Pollution Act of 1990 [OPA-90]
The Oil Pollution Act of 1990 [OPA-90] is an extension of the Clean Water Act. OPA-90 requires onshore and offshore producing operations prepare Response Plans. We understand Coast Guard has set the threshold planning quantity for over water transfers of oil at 250 bbls. It is rumored, EPA has set the threshold at 1000 bbls. Mineral Management Service may propose a different threshold quantity.
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Additionally, OPA sets limits on oil spill clean-up financial liabilities. Offshore liability is $75 million plus clean-up costs. Onshore liability is $350 million. Finally, OPA-90 requirements imposes $150 million financial responsibility on offshore operators. No financial responsibility is imposed on onshore facilities.
Safe Drinking Water Act [SDWA]
The Safe Drinking Water Act controls:
1. Drinking water quality
2. Underground injection wells
Drinking Water Quality
...Drinking water wells at field locations are subject to the sampling and analytical requirements of the Act. Not many operators own drinking water wells. Those who do post signs "non-potable water" and provide
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