Obama tightens oil and gas drilling regulations

@CNNMoney April 18, 2012: 2:45 PM ET
Obama's EPA requires the oil and gas industry to capture air pollution released during well construction, including during the fracking process. But rules give industry time to comply.

Obama's EPA requires the oil and gas industry to capture air pollution released during well construction, including during the fracking process. But rules give industry time to comply.

NEW YORK (CNNMoney) -- The Obama administration tightened regulations on the oil and gas industry Wednesday, requiring drillers to capture emissions of certain air pollutants from new wells.

But in a nod to industry concerns that the rules were being enacted too quickly, the Environmental Protection Agency said companies can burn the pollutants at the well head until the start of 2015, when enough equipment is expected to be available to capture the pollution.

The administration said the regulations are part of President Obama's promise to develop the nation's oil and gas resources in a manner that protects the environment and the public health.

"The standards are practice, flexible, affordable and achievable," Gina McCarthy, an assistant administrator for EPA's Office of Air and Radiation, said on a conference call with reporters.

The rule will require all oil and gas companies to capture the volatile organic compounds that are emitted during the final stages of well construction, including during the process of hydraulic fracturing.

That process, known as fracking for short, eases the flow of oil or gas from dense shale rock by injecting water, sand and some chemicals deep into the earth.

Fracking has unlocked an energy boom in the United States, but has also led to concerns about groundwater contamination and earthquakes.

Once the realm of smaller comapnies, big oil firms such as BP (BP), ExxonMobil (XOM, Fortune 500) and Royal Dutch Shell (RDSA) are all in on the shale boom.

The equipment used to capture the pollution largely consists of truck-mounted tanks and hoses that separate the gas from the liquids. Currently, that gas is often just released into the atmosphere.

Volatile organic compounds are responsible for smog formation. Some are known to cause cancer in humans and other animals.

The equipment will also capture methane released during the well construction process. Methane, the prime ingredient in natural gas, is a potent greenhouse gas itself -- 20 times stronger than carbon dioxide.

Some states, notably Colorado and Wyoming, already require the capture of these gases. EPA's ruling makes it a federal standard.

The industry had lobbied to prevent the rule from applying to the hydraulic fracturing process, saying that shale wells generally emit far fewer volatile organic compounds than conventional wells.

Instead, the industry proposed burning the toxic gases and methane from shale wells -- a process known as flaring that is relatively effective in eliminating the pollutants but is not as clean as capturing them.

The industry also wanted an extended timetable to implement the new rules.

EPA's ruling is something of a compromise -- subjecting fracking to the new regulations but giving the industry three years to obtain the equipment and requiring flaring during the interim.

Both industry and environmentalists seemed pleased with the ruling.

"EPA has made some improvements in the rules that allow our companies to continue reducing emissions while producing the oil and natural gas our country needs," Howard Feldman, director of regulatory and scientific affairs at the American Petroleum Institute, said in a statement shortly after the announcement.

"EPA's action today is a breath of fresh air for every man, woman, and child living in the shadow of the gas drilling boom," John Rumpler, senior attorney for Environment America, said in a statement.  To top of page

Overnight Avg Rate Latest Change Last Week
30 yr fixed3.80%3.88%
15 yr fixed3.20%3.23%
5/1 ARM3.84%3.88%
30 yr refi3.82%3.93%
15 yr refi3.20%3.23%
Rate data provided
by Bankrate.com
View rates in your area
Find personalized rates:
Economic Calendar
Latest ReportNext Update
Home pricesAug 28
Consumer confidenceAug 28
GDPAug 29
Manufacturing (ISM)Sept 4
JobsSept 7
Inflation (CPI)Sept 14
Retail sales Sept 14
  • -->

    Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.