Texas seeks halt to ozone rules in Permian basin

  • Market: Crude oil, Emissions, Natural gas, Oil products
  • 06/27/22

Texas governor Greg Abbott (R) is pressuring President Joe Biden to pump the brakes on a pending regulatory action that could trigger stricter emission limits on oil and gas facilities in the Permian basin.

Federal regulators are evaluating if the Permian basin, which straddles Texas and New Mexico, is still in compliance with air quality standards for ground-level ozone that were set in 2015. The US Environmental Protection Agency (EPA) as soon as this month could issue a "discretionary redesignation" to find portions of the area are violating those standards, according to a regulatory agenda the agency released earlier this month.

But Abbott says such a finding could lead to "skyrocketing prices at the pump" by crimping oil and gas activity in the Permian basin, which is now producing more than 5mn b/d of crude and 20 Bcf/d of natural gas. Abbott argues Biden should intervene to halt the redesignation process, as a way to stick to his promises to lower gasoline prices for consumers.

"If you let the EPA move forward with untimely and unnecessary measures that accompany redesignation, that action will put at risk 25pc of American oil supply," Abbott said in a letter to Biden today. "That, in turn, could substantially increase the cost of gasoline."

If EPA's proposed redesignation is not suspended by 29 July, Abbot said his state would "take the action needed to protect the production of oil — and the gasoline that comes from it." Abbott's letter does not elaborate on what type of action he is considering.

EPA did not respond to a request for comment.

Abbott's letter does not not raise any disputes focused on air quality in the Permian basin, which air quality monitors have found are routinely in violation of the federal limit of 70 parts per billion in some areas. Environmentalists say air quality has declined precipitously since 2014-16, the years that EPA used to find the area was attaining the 2015 ozone standards, primarily because of a surge since then of oil and gas activity. The group WildEarth Guardians last year petitioned EPA to use more recent ozone data to find parts of New Mexico are violating air quality standards.

If EPA finds that parts of the Permian basin are no longer complying with ambient air quality standards, it would trigger a requirement for affected states to come up with an enforceable plan for reducing ozone-forming emissions. But it would take years for any binding emission limits to go into effect. States first have to develop those plans, go through public comment, and then get them approved by EPA.

EPA earlier this year finalized a rule that reclassified the region around El Paso, Texas, as failing to meet federal ozone standards, in response to a court ruling last year. Texas has filed a lawsuit challenging EPA's decision.


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