Another oil and gas company gets hit with $241.5 million from the EPA and DOJ

Presented by TrueComply AI

On July 11, 2024, the U.S. Environmental Protection Agency (EPA) and Department of Justice (DOJ) announced a substantial settlement agreement with Marathon Oil Company, which carries important implications for the sector.

Here's an overview of the settlement

Marathon Oil has agreed to a $241.5 million settlement to resolve Clean Air Act violations at their North Dakota facilities. This agreement comprises a $64.5 million civil penalty - the largest to date for Clean Air Act stationary source violations - and an estimated $177 million investment in compliance measures.

This is what the scope of violations consists of

The violations occurred at nearly 90 oil and natural gas production facilities on the Fort Berthold Indian Reservation. Marathon failed to comply with multiple volatile organic compound (VOC) emission control requirements under New Source Performance Standards and the reservation's Federal Implementation Plan. Additionally, the company did not obtain necessary preconstruction permits or timely apply for operating permits as required by the Clean Air Act.

Potential impact on the environment

These compliance failures resulted in the release of approximately 110,000 tons of excess VOCs and methane, equivalent to more than 2 million tons of carbon dioxide.

Actions required moving forward

Under the consent decree, Marathon is obligated to implement extensive compliance measures, including:

1. Obtaining permits limiting VOC emissions to less than 100 tons per year per facility.
2. Installing flow meters and temperature monitors at flares for continuous operation monitoring.
3. Implementing automated shut-in systems to halt production when emission limits are exceeded.
4. Conducting more frequent infrared camera inspections and audio, visual, and olfactory (AVO) inspections.
5. Performing enhanced preventative maintenance and installing tank pressure monitors across all 169 affected facilities.

Efforts to take for mitigation

In addition to addressing direct non-compliance issues, Marathon has agreed to several mitigation projects:

1. Providing infrared cameras to the Mandan, Hidatsa and Arikara Nation for VOC inspections.
2. Constructing new well pads in North Dakota using low-emission automated designs.
3. Replacing or retrofitting 870 venting pneumatic devices with zero-emission alternatives.
4. Upgrading approximately 49 shop-built flares to engineered flares for improved efficiency.

Other environmental related stuff

The EPA estimates that full implementation of these measures will reduce VOC and hazardous air pollutant emissions by approximately 21,812 tons per year and CO2 emissions by approximately 451,449 tons per year. This is equivalent to emissions from 487,000 cars during a five-year period.

This case is part of the EPA's National Enforcement and Compliance Initiative and represents a broader effort (and more forceful attack on hydrocarbons) to hold oil and gas companies accountable for environmental violations. It underscores the increasing regulatory scrutiny on the industry and the substantial financial and operational consequences of non-compliance.

Regardless of your belief or lack thereof regarding "climate change", as industry professionals, it is crucial to remain informed about such developments and their potential impact on operational practices and regulatory strategies. I encourage you to consider how these issues might relate to your own organizations and welcome any thoughts or questions you may have on this matter.

Disclaimer: This is not legal advice and shall not be construed as such.

?? Nathan Hammer, 2024-present. All rights reserved.