JurisdictionUnited States
Development Issues in the Major Shale Plays
(Dec 2010)


John R. Jacus
Davis Graham & Stubbs, LLP
Denver, Colorado

JOHN R. JACUS represents clients under all major federal and state environmental laws and regulatory programs, including the Clean Air Act, RCRA, CERCLA, and the Clean Water Act. His practice includes environmental litigation, administrative proceedings and representation in complex business transactions. He is experienced in rule-making and adjudicatory proceedings, permitting, litigation for cost recovery, citizen suits and environmental insurance coverage, and the judicial appeal of adverse agency actions. Mr. Jacus has authored numerous articles on subjects ranging from the transport of hazardous waste to adoption of corporate environmental policies, in various publications of the ABA, the Colorado Bar Association and the Rocky Mountain Mineral Law Foundation, among others. He also served as Editor-in-Chief of Hazardous Waste Strategies Update, a quarterly magazine published by Shepard's - McGraw Hill, from 1993 to 1997, and as Editorial Assistant for the American Law of Mining 2d. Mr. Jacus has been listed in the International Who's Who of Environment Lawyers since 2004 (1st Edition, Who's Who Legal), was recognized in 2006 by The Best Lawyers in America, and is also peer-rated "AV" through Martindale Hubbell. In 1997, Mr. Jacus was a recipient of the U.S. Environmental Protection Agency's Silver Hammer Award for his work with the North Boulder Project Team in an effort to avoid CERCLA NPL listing of the Crestview neighborhood. Mr. Jacus is former Chair of the Environmental Law Section, Colorado Bar Association (1996-1997), and a member of the ABA Section of Environment, Energy & Resources (SEER). Mr. Jacus served on SEER's Council from 1995 to 1998, and also served on the editorial board for "Trends," SEER's newsletter from 1998 to 2002. Mr. Jacus was co-chair of the Section's Annual Conference on Environmental Law (Keystone Conference) from 1993 to 1996, and served as the Environmental Program Chair of the 44th Annual Rocky Mountain Mineral Law Institute in 1998. Mr. Jacus is active in community and pro bono organizations. He has served in various capacities with governance committees and on boards of various public and private schools in Boulder, as well as on the District Accountability Advisory Committee for Boulder Valley Public Schools. Mr. Jacus is a past Chair of the University of Colorado at Boulder Alumni Association's Board of Directors (2003-2005), and is a former member of the University of Colorado Foundation's Board of Trustees (2003-2007.

I. Introduction

Compliance with current and evolving air quality standards and regulations is one of the most demanding regulatory constraints upon the rapid development of shale gas and oil resources in the United States. The Clean Air Act's (hereafter CAA or the Act) complex partnership between the federal government and the states makes the implementation of new standards and the development of plans and control strategies for attainment of new standards a lengthy and uncertain process for all new sources, not just oil and gas sources. Moreover, the CAA's requirement that standards be reviewed and possibly strengthened periodically makes the "target" of compliance with air quality laws and regulations a moving and shrinking one, even as air quality has improved significantly in the last 20 years since the 1990 amendments to the Act.

The challenge of achieving compliance with air quality laws and regulations is made even more difficult in recent years for oil and gas sources constructed and planned for construction in locations where deep shale and other newly accessible tight formations hold large reserves of gas and oil. The discovery of vast shale gas and oil reserves made recoverable through new drilling and completion technologies has resulted in large investments of capital and human resources to develop such reserves, but the challenge of compliance with ever-more-stringent air quality regulations is a substantial impediment to the successful implementation of these development plans and activities.

This paper examines the typical sources of air pollutants from various items of equipment and activities common to shale gas and oil production, the current and likely future air quality regulations affecting the operation of these sources and activities, and recent regulatory and administrative challenges to the permitting of sources necessary for planned shale gas and oil development, focusing primarily on developments in Pennsylvania specific to Marcellus Shale gas development. Of particular note is the increased uncertainty associated with the pursuit of necessary permits for oil and gas sources in Pennsylvania. While RFDs and General Permits were routinely obtained in 30-60 days by applicants in the oil and gas sector as recently as the beginning of 2010, there have been a significant changes and delays in the process for issuance of "written approvals" more recently. These uncertain and often poorly understood delays and complications are seen as hostile to further investment in the Marcellus Shale, which to date has seen literally billions of dollars spent in lease acquisition, drilling and infrastructure development. The organizations making such large investments cannot long tolerate the present confusion and uncertainty associated with obtaining air permits necessary to develop wells and gathering or processing facilities in what has become the largest North American gas field outside of Alaska. Restoring certainty to the air quality permitting process is perhaps the most important challenge for the industry, regulators and also the public.

II. General Air Quality Impacts of Shale Gas & Oil Development

A. Typical Sources of Air Emissions in Shale Gas and Oil Development

Oil and gas exploration and production activities, including gathering in the case of gas production, involve a number of types of activity that emit air pollutants and are therefore subject

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to CAA and comparable state statutory and regulatory permitting requirements. These activities begin with drilling to explore for and produce gas or oil from shale and tight sand formations using the latest well-drilling and development technology. Exploration and production sources include engine emissions from drill rigs, fracking equipment and on-site power generation; fugitive emissions from hydrocarbon-containing produced water and other flowback fluids; and emissions from venting and flaring of gas during flowback, until gas can be safely routed to a flowline for gathering and capture as a merchantable energy commodity.

Once a producing well is developed and brought into production, other equipment is employed that has associated air emissions and is subject to regulation. Whether producing primarily gas or oil, a well will typically have a separator, possibly with a burner to heat the multiphase production (oil, water and gaseous production) to enhance phase separation; and tanks to hold the separated hydrocarbon liquid and produced water, respectively, for collection and delivery off-site (usually by truck). Gas produced and separated from liquids is routed to a flowline for gathering, if produced in economic quantities and it is feasible to do so, and may also fuel on-site equipment or be flared.

Since the equipment at gas wells is often remotely located and lacking connection to electrical power, separators and other important control equipment is pneumatically driven, often by the pressure of gas being produced by a well. These pneumatic devices have emissions of field gas, primarily consisting of methane, associated with their operation. The use of an air compressor can allow for conversion to "instrument air" (compressed air instead of gas) to power on-site pneumatic controllers, but in the absence of grid electric power, this would be reliant on engine-driven power generators and/or air compressors, which also have emissions.

Additional equipment used in gathering production from shale gas wells includes glycol dehydrators to remove water vapor from the gas, amine treatment units to remove CO2 (to reduce pipeline corrosion), and compressors to enable and enhance the flow of gas from producing wells and maximize their production within certain practical limits. Gathering and flowlines also need to be kept free of liquids which can accumulate due to condensation in the lines, and so they are subject to line "pigging" to remove liquids and scale or other non-gaseous materials than inhibit the flow of natural gas or contribute to pipeline corrosion.

B. Federal Requirements Applicable to Oil & Gas Sources

The various items of equipment typically involved in oil and gas production are and have been subject to many federal and state regulations and permitting requirements since well before the advent of unconventional shale gas and oil development in the last several years. There are numerous overlapping federal and state requirements potentially applicable to oil and gas sources and equipment, some self-enforcing and others only effective when included in state or federal permits. Examples of common NSPS Subparts that apply to oil and gas industry include: 40 CFR Part 60 Subparts Dc, Kb, KKK, LLL, IIII, and JJJJ. NESHAP subparts that frequently apply to the oil and gas industry include: 40 CFR Part 63 Subparts HH, HHH, and ZZZZ. These control requirements serve to further reduce emissions from minor sources in the oil and gas sector (and especially for newer equipment). Some of the more commonly applicable requirements under the CAA (federal only) for oil and gas operations include:

40 CFR 60 Subpart JJJJ - Standards of Performance (NSPS) for Stationary Spark Ignition Internal Combustion Engines: Subpart JJJJ applies...

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