Subpart W is a part of EPA’s Greenhouse Gas Reporting Program (GHGRP) and requires oil and gas operators to annually report greenhouse gas emissions from their facilities. Under congressional mandate through the Inflation Reduction Act (IRA), EPA has been tasked with reforming the program to include empirical data in order to gather a more accurate accounting of industry methane emissions.
Recently EPA proposed updates to the program which, among other things, includes a new reporting category for large unplanned emissions and expanded calculation and quantification methods. These changes will require operators to incorporate measurement-based data into their reports as well as require reporting of emissions with an instantaneous rate above 100 kg/hr or a cumulative release volume of 500 MCF under the new Other Large Release Event reporting category.
How Do We Find Big Leaks?
Other Large Release Events can be identified and quantified using advanced technology, such as aerial surveys. Smaller Equipment Leaks will be identified and quantified using ground measurement (OGI or EPA Method 21), direct measurement, or population count methods, also known as emission factors.
Why Does This Change Matter?
An important factor at play is that the data reported through Subpart W will feed directly into calculations for IRA methane fees, which begin in 2024. The changes EPA finalizes to this program will have potentially serious financial ramifications for the industry, which is why we’re encouraging the inclusion of measurement-based data wherever possible to ensure an accurate accounting of emissions.
The comment period on Subpart W’s proposed changes ended October 2nd, 2023. Kairos submitted comments to EPA highlighting areas where opportunities and incentives for the use of measurement-based data can be improved. You can find the complete comments here, but we’ll cover the highlights below.
- Measurement is crucial to close the gap between top-down and bottom-up emissions estimates and is therefore necessary to improve the overall accuracy of EPA’s greenhouse gas inventory.
- The Other Large Release Event reporting category, as currently structured, may inadvertently disadvantage companies that have invested in widespread methane detection programs and should be amended to ensure greater consistency in emissions reporting across the industry
- EPA should amend the Equipment Leaks reporting category to better incorporate measurement data from advanced technologies that are cost-effective and can be deployed at scale
How could EPA’s changes disadvantage operators?
Numerous scientific studies have shown large emission events often make up the bulk of cumulative emissions, so the newly-created Other Large Release Event reporting category will undoubtedly improve the overall quality of EPA’s emissions inventory. However, companies that are working aggressively to proactively identify and fix these sources of emissions through voluntary methane programs may be penalized for doing so. By needing to report every large emission they find under the Other Large Release Event category, companies that have heavily invested in methane programs far beyond regulatory requirements will need to report the emissions they see, whereas an operator who utilizes no leak detection technology will need to report far fewer emissions, even if such events are present, because they do not see them. As mentioned before, these reported values inform IRA methane fees, so the companies working the hardest to eliminate methane will wind up reporting and paying fees on more emissions than their counterparts who do not make similar strides to reduce emissions.
How can EPA avoid this disincentive?
We provided EPA three approaches that address this possible risk to operators, including:
- New Mexico’s ALARM program, where operators can elect to use a division-approved alternative monitoring technology to survey for leaks. By using the technology at a cadence more frequent than that required under NM’s Waste Prevention rules, operators can obtain credit against the volume of gas lost reported for the year. An additional credit can be earned if the leak is repaired within 15 days of discovery. EPA could implement a similar structure to avoid penalizing operators with robust voluntary methane detection programs while promoting the use of advanced technologies and finding and rapidly repairing leaks.
- State of Colorado’s Greenhouse Gas Intensity Verification Rule, which allows companies to measure and calculate their own emissions intensity for annual inventory reporting or otherwise use a “default” measurement enhancement factor developed using widespread methane measurement.
- The Oil and Gas Methane Partnership 2.0 (OGMP) Level 5 Framework, which requires emissions reporting at the facility level as well as facility-specific, site-level measurement.
Where does this leave us?
EPA has some work to do, but with careful consideration can create a program that incentivizes advanced technology to create an accurate, measurement-based emissions inventory. Changes to this program are expected to be finalized before August 2024.