By Timothy Gardner and Ayesha Rascoe
WASHINGTON (Reuters) - U.S. environment regulators will postpone implementation of standards requiring natural gas and oil drillers to cut emissions when they finalize the long-delayed regulations on Wednesday, an industry group and an environmental group said.
Drillers that use hydraulic fracturing, or fracking, and other methods to extract natural gas and oil will not be required to add equipment to capture smog-forming emissions at wells until January 2015, the groups said.
That would be a delay of more than two years from an initial proposal the agency made in July.
The Environmental Protection Agency, which did not immediately respond to the comments, is under court order to finalize the rules that have been delayed four times since September. It said Wednesday it will hold a press conference call at 1 p.m. EDT (1700 GMT) to discuss an announcement on clean air.
The Obama administration is attempting to balance its support for an industry that could help the United States become a major exporter of natural gas with how to address concerns about its safety.
Environmentalists and health groups have complained that fracking operations near schools and homes can harm air and water supplies.
"Today's announcement (will be) clearly a bad news, good news story," said a source at an environmental group, who did not want to be identified ahead of the release of the rules. The source welcomed administration's decision to move forward with rules even if the phase-in of requirements is extended.
Howard Feldman, the director of scientific and regulatory policy at the American Petroleum Institute, applauded the delay.
"Overall the changes are constructive," said Feldman who had been briefed on the final rules. He said adding the change gives companies time to put in place equipment to capture emissions shortly after wells are fracked in a process known as green completion.
In fracking, drillers blast large amounts of sand and water laced with chemicals deep underground to free natural gas and oil.
The draft rule the EPA issued last July sought to cut emissions of so-called volatile organic compounds that contribute to smog by nearly 25 percent across the oil and gas industry and by 95 percent from wells that use fracking.
The draft standards caused a dispute among environmentalists, who say green completions only add minor costs to drilling, and energy companies who say the costs are much higher and the equipment is not yet fully available.
The API has said the equipment to capture emissions in the first few days after fracking is completed could cost about $180,000 per well.
Environmentalists say the cost is far lower. Some companies already do green completions voluntarily. Some methane is also captured during green completions that drillers can sell to help lower the costs, even when natural gas is at very low prices, they say.
Companies including Chesapeake Energy and Exxon Mobil could be forced by the rules to invest in pollution control technologies.
The EPA said in July the standards would rely on existing technologies to cut emissions that can also cause cancer, while supporting the expansion of oil and gas production.
(Reporting By Timothy Gardner; Editing by Maureen Bavdek and Sofina Mirza-Reid)
