The Environmental Protection Agency is proposing to drop its plan to develop effluent guidelines for coalbed methane extraction, according to a notice scheduled for publication Aug. 7.
EPA's notice, summarizing a biennial report on preliminary effluent guideline plans, said it was proposing the change of course on coalbed methane “based on new information regarding the declining prevalence and economic viability of this industry, due in large part to the increased extraction of natural gas from other sources, such as shale formations.”
Betsy Southerland, director of the Office of Science and Technology within EPA's Office of Water, said the problem is that “effluent guidelines have to be economically achievable, technology-based limits.” But the limited number of people engaged in coalbed methane extraction might have trouble affording the control measures that EPA might promulgate, Southerland said Aug. 6 at the Association of Clean Water Administrators' conference in Santa Fe, N.M.
“It means coalbed methane as a mining activity has a much smaller market share right now,” she said. “That in turn means we might not be able to find an alternative for them that is economically achievable.”
She cautioned that the possible change on coalbed methane effluent guidelines is only a proposal, subject to public comment. The agency is not operating under a strict deadline.
EPA had said it would not issue a notice of proposed rulemaking on coalbed methane effluent standards until sometime in 2013. On one EPA website, a projected time for the notice of proposed rulemaking for the coalbed methane effluent standards is given as April 2014.
The discussion of coalbed methane was contained in the larger preliminary effluent guidelines program plan. In the plan, EPA said it was not identifying any additional industry sectors for regulation (see related story).
Economic Realities of Gas Markets
Natural gas production from shale has been surging in recent years, and that has sent the price down, from about $7 per thousand cubic feet at the start of 2010 to about $3.35 in early August at the leading U.S. gas market delivery site, Henry Hub in Louisiana. The price decline has weakened the economics of much gas production.
“Coalbed methane has really fallen off with the low natural gas prices,” said Kathleen Sgamma, director of government and public affairs for the Western Energy Alliance, a trade association.
She said her group was pleased that EPA had recognized the economic strains on the industry. She added that where there is dwindling coalbed methane production, there is less produced water, reducing the problem that EPA was worried about.
The new EPA plan also should please coalbed methane producers struggling with low gas prices, such as Anadarko Petroleum Corp., Apache Corp., and WPX Energy Inc.
The price of gas now is well below the levels seen several years ago when EPA began thinking about effluent guidelines for coalbed methane, said Howard Feldman, director of regulatory and scientific affairs at the American Petroleum Institute, a trade group. The numbers of new coalbed methane wells being drilled now are much lower than had been projected, he said.
EPA's second thoughts about imposing additional regulatory burdens on coalbed methane producers reflect economic reality setting in, Feldman said. The economics of coalbed methane would be challenging if additional technological requirements were imposed to filter effluents from water, he said.
Alternatives Available at Added Costs
Coalbed methane operators typically send produced water into impoundments, where dissolved solids can settle out of the water.
Alternative technologies that have been considered include reverse osmosis, shallow reinjection underground, partial reverse osmosis with trucking of residual, and ion exchange filters. They typically are more expensive than impoundment, though the costs would vary with the strictness of the standards they must meet, such as in terms of total dissolved solids.
EPA has said produced water pumped out of coalbed methane wells may include chloride, sodium, sulfate, bicarbonate, fluoride, iron, barium, magnesium, ammonia, and arsenic.
An EPA official said supporting documents will be posted on the agency's website Aug. 7.
The public will have until Oct. 6 to submit comments. Comments can be submitted through the http://www.regulations.gov website by using the Docket ID No. EPA-HQ-OW-2010-0824.
More information is available from William F. Swietlik of the Engineering and Analysis Division in EPA's Office of Water at (202) 566-1129.