Permian Basin Facing New Environmental Regulations that Might Curtail Drilling

Published on: 25 June 2022
by KnowESG

The Biden administration is considering imposing stricter anti-smog regulations, which might limit drilling in areas of the Permian Basin, the world's largest oil field that spans Texas and New Mexico.

The Environmental Protection Agency is considering classifying areas of the Permian Basin as exceeding federal ozone air quality requirements, which would require state regulators to devise strategies to reduce smog-forming pollutants. The action, as detailed in a regulatory notification, may result in new permitting procedures and increased inspection of drilling operations.

Jeremy Nichols, climate and energy programme director for WildEarth Guardians, said: 

"Ozone levels in the basin have surpassed a federal standard for the last several years—really since the fracking boom took off in the Permian. The conservation group formally petitioned EPA for the so-called non-attainment designation in March 2021 and, roughly six months later, warned the agency it intended to sue to force action. The designation “basically says you’ve got to clean up this mess or the consequences are going to get even more severe as far as restricting your ability to permit more pollution and more development."

While Texas does not have ozone sensors on its side of the Permian, monitors in New Mexico's Eddy and Lea counties have consistently recorded average ground-level ozone levels surpassing the 2015 guideline of 70 parts per billion. Even at low concentrations, ozone can aggravate asthma, emphysema, and other respiratory disorders.

If the region is found to be in violation, state authorities will have three years to establish plans to reduce ozone levels, including prohibiting new industrial facilities from affecting air quality and ensuring current sites use pollution-control technology.

The resulting uncertainty could constrain energy development in the region, said Todd Staples, president of the Texas Oil and Gas Association. “Creating uncertainty on permitting and inserting unnecessary regulatory barriers will only negatively impact the production necessary to meet the needs of consumers."

Source: Bloomberg

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