Industry sources are pushing regulators to perform better cost- benefit analyses of the requirements they promulgate. While it is important to achieve greater balance between the costs and benefits of potential environmental compliance requirements, transparent, comprehensive analysis and comparison of costs and benefits has traditionally been difficult to implement and credibly defend. One alternative approach sometimes used by regulators is to compare the cost-effectiveness of various alternatives ($ per ton of pollutant removed). These calculations are often performed at a very aggregate level, and fail to take into account the site-specific diversity that characterizes the exploration and production (E&P) industry.

A reservoir-based approach can provide a more effective and accurate means of evaluating cost-effectiveness of alternative regulatory approaches, and ultimately, better cost- benefit analysis. Each reservoir can be uniquely characterized by its site-specific environmental and operating conditions to evaluate the application of a requirement in that location. An Environmental Module (EM) being developed for the U.S. Department of Energy (DOE) takes a first step toward building this reservoir level analytical capability for the impact and cost-effectiveness of environmental regulations on natural gas E&P.

This paper describes a reservoir-level approach to cost- effectiveness and cost-benefit analysis that accounts for the site-specific impacts of explicit control technologies. An example of cost-effectiveness calculations for potential regulatory requirements for control of hazardous air pollutants from E&P is provided. The possible benefits of using this approach are discussed.

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