OIL AND GAS INDUSTRY AIR REG UPDATE Kelli Calhoon O&G - - PowerPoint PPT Presentation

OCTOBER 2016 O&G REGULATORY UPDATE

OIL AND GAS INDUSTRY AIR REG UPDATE

Kelli Calhoon

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

• NSPS Subpart OOOO/OOOOa—VOC and methane
• Source determination
• Methane ICR for existing sources

SUMMARY

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

NSPS SUBPART OOOO/OOOOa VOC AND METHANE

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

• Final Rule published in Federal Register June 3, 2016
• Why methane?
• O&G operations are second largest emitter of GHGs in US
• Climate action plan—strategy to reduce methane emissions, goal to reduce

emissions from O&G sector

• NSPS – Applies to new, reconstructed, and modified processes and

equipment

BASICS

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

• Subpart OOOO
• Amendments to existing regulations to improve implementation
• Subpart OOOOa:
• Establish CH4 standards for emission sources currently regulated for VOC
• Extend current VOC standards and establish CH4 standards for remaining

unregulated equipment

• Establish CH4 and VOC standards for emission sources not currently covered by

NSPS Subpart OOOO

• Best system of emissions reduction (BSER)
• BSER for CH4 = BSER for VOC

BASICS

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

APPLICABILITY/COMPLIANCE DATES

• Applicability – facilities constructed, modified or reconstructed
• Between August 23, 2011 and September 18, 2015  Subpart OOOO
• After September 18, 2015  Subpart OOOOa
• Subpart OOOOa compliance date:
• August 2, 2016 or start-up, whichever is later

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

Sources covered by the 2012 New Source Performance Standards (NSPS) for VOCs and the 2016 NSPS for Methane and VOCs, by site

Location and Equipment/ Process Covered Required to Reduce Emissions Under USEPA Rules Rules that Apply

2012 NSPS for VOCs* 2016 NSPS for methane 2016 NSPS for VOCs Natural Gas Well Sites Completions of hydraulically fractured wells

✔

• Compressors

Equipment leaks

✔

• Pneumatic controllers

✔

• Pneumatic pumps

✔

• Storage tanks

✔

• Oil Well Sites

Completions of hydraulically fractured wells

✔

• Compressors

Equipment leaks

✔

• Pneumatic controllers

✔

• Pneumatic pumps

✔

• Storage tanks

✔

• Note: Types of sources already subject to the 2012 NSPS requirements for VOC reductions that also are covered by the 2016 methane requirements will

not have to install additional controls, because the controls to reduce VOCs reduce both pollutants. https://www3.epa.gov/airquality/oilandgas/may2016/nsps-table.pdf

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

Location and Equipment/ Process Covered Required to Reduce Emissions Under USEPA Rules Rules that Apply

2012 NSPS for VOCs* 2016 NSPS for methane 2016 NSPS for VOCs Production Gathering and Boosting Solutions Compressors

✔

• Equipment leaks

✔

• Pneumatic controllers

✔

• Pneumatic pumps

Storage tanks

✔

• Natural Gas Processing Plants*

Compressors

✔

• Equipment leaks

✔

• Pneumatic controllers

✔

• Pneumatic pumps

✔

• Storage tanks

✔

• Natural Gas Compressor Stations (Transmission and Storage)

Compressors

✔

• Equipment leaks

✔

• Pneumatic controllers

✔

• Pneumatic pumps

Storage tanks

✔

• Note: Types of sources already subject to the 2012 NSPS requirements for VOC reductions that also are covered by the 2016 methane requirements will

not have to install additional controls, because the controls to reduce VOCs reduce both pollutants. https://www3.epa.gov/airquality/oilandgas/may2016/nsps-table.pdf

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

• Wet seal centrifugal compressors:

95 percent reduction of CH4 and VOC

• Accomplished by flaring or routing

back to a process

• Dry seal systems not covered
• Reciprocating compressors:
• Replace rod packing every 26,000

hours of operation (monitor/document operating hours)

• r
• Replace rod packing every 36 months
• r
• Route emissions from rod packing to

process through closed vent system under negative pressure to be reused

• r recycled

SUBPART OOOOa COMPRESSORS

Compressor Location Rules that Apply

2012 NSPS for VOCs 2016 NSPS for methane 2016 NSPS for VOCs

NG Well Sites Oil Well Sites Gathering & Boosting Stns

• NG Processing
• NG Compressor

Stations (T&S)

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

• All except natural gas

processing: natural gas bleed rate limit of six scfh (same as 2012 NSPS, new for compressor stations)

• Low-bleed controllers (gas bleed

rate<six scfh) at compressor stations are not subject

• Natural gas processing plants:

zero natural gas bleed rate (current NSPS)

SUBPART OOOOa PNEUMATIC CONTROLLERS

Pneumatic Controller Location Rules that Apply

2012 NSPS for VOCs 2016 NSPS for methane 2016 NSPS for VOCs

NG Well Sites

• Oil Well Sites
• Gathering &

Boosting Stns

• NG Processing
• NG Compressor

Stations (T&S)

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

• Have 180 days from publication in FR to meet requirement
• Natural gas processing plants: zero emissions of CH4/VOC
• For natural gas-driven diaphragm pumps
• Because electricity is widely available at NG processing plants
• Does not include non-natural gas driven pumps (solar, electric, air-driven)
• USEPA is not finalizing requirements for natural gas-driven piston pumps

because they are low-emitting

• Final rule removed pumps at gathering and boosting stations and

compressor stations—USEPA did not have enough information about prevalence of use at these sites

• Well sites (oil and NG): 95 percent

control of CH4/VOC if control device already onsite

• Final rule exempts: limited use

(operate<90 days/yr), lean glycol circulation pumps, all non-natural gas driven pumps (solar, electric, air-driven)

SUBPART OOOOa PNEUMATIC PUMPS

Pneumatic Pump Location Rules that Apply

2012 NSPS for VOCs 2016 NSPS for methane 2016 NSPS for VOCs

NG Well Sites

• Oil Well Sites
• Gathering &

Boosting Stns NG Processing

• NG Compressor

Stations (T&S)

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

• Now includes oil well sites
• Subcategory 1 wells (non-wildcat, non-

delineation)

SUBPART OOOOa HYDRAULICALLY FRACTURED WELL COMPLETIONS

• Reduced emissions completions (RECs), must have separator onsite during flowback period (some

exceptions)

• Not required for wells with gas-to-oil ratio<300 scf/bbl (maintain records)
• Not required if not technically feasible—use combustion controls
• Phase in: can use combustion controls until November 30, 2016
• After November 30, 2016 utilize RECs, as applicable
• Subcategory 2 wells (exploratory, delineation, low-pressure)
• Use combustion device or completion vessel and separator (unless technically infeasible for

separator to function)

• Modification defined as new well site or fracking/refracking at existing site
• Refracture-recompletion not considered “modification” if use green completions and

meet notification and reporting requirements for new wells

Well Location Rules that Apply

2012 NSPS for VOCs 2016 NSPS for methane 2016 NSPS for VOCs

NG Well Sites

• Oil Well Sites

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

• NG Processing – same as 2012 NSPS
• Final rule removed incentive for

reductions in leak survey frequency

• Monitoring Plan required
• Outlines measures for locating

sources and detection technology to be used, number and ID of components, site map, observation path, equipment verification procedures

SUBPART OOOOa FUGITIVE EMISSIONS

Fugitive Emissions Equip Location Rules that Apply

2012 NSPS for VOCs 2016 NSPS for methane 2016 NSPS for VOCs

NG Well Sites

• Oil Well Sites
• Gathering &

Boosting Stns

• NG Processing
• NG Compressor

Stations (T&S)

• Final rule allows use of optical gas imaging (OGI), Method 21, or other

emerging technology with approval

• Fugitive emissions
• OGI – Any visible emission
• Method 21 – 500 ppm
• Does not include equipment that vents natural gas as part of normal
• peration

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

SUBPART OOOOa

Fugitive Emissions Monitoring Schedule

Type of Facility Initial Leak Monitoring Survey Repeat Leak Survey Frequency Repair Leaks Within Notable Exemptions

Well sites (oil and natural gas) Within 60 days of start- up of production or by June 3, 2017; whichever is later Semi-annual, at least four months apart 30 days, unless shutdown required then at next shutdown within two years Sites with only wellheads Compressor Stations - Gathering & Boosting, Transmission Within 60 days of start- up or by June 3, 2017; whichever is later Quarterly, at least 60 days apart 30 days, unless shutdown required then at next shutdown within two years Can waive quarterly inspection if 2/3 of quarter has 0oF or below average temperature

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

• Consistent with current NSPS
• Initial notifications for NG processing (not for wells, pneumatic controllers,

pneumatic pumps and compressors)

• Notification for well affected facilities at least two days prior to

commencement of well completion operation

• Include contact info, US well number, lat/long, planned date for beginning of

flowback

• Annual reports
• Due no later than 90 days after end of initial compliance period (initial compliance

period begins Aug 2, 2016 or upon initial startup, whichever is later)

• Include information on affected facilities constructed, modified or reconstructed

during prior year

• Information on fugitive emissions surveys

SUBPART OOOOa RECORDKEEPING AND REPORTING

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

• Storage vessels
• Revise enclosed combustor TOC limit

at outlet of control device from 20 ppmv to 275 ppmv

• Monitor visible emissions consistent

for all enclosed combustion units— monthly 15 minute Method 22

• Initial compliance requirement for

bypass devices—audible alarm or remote alarm to nearest field

• ffice
• Recordkeeping of repair logs for

control devices failing visible emissions test

• Initial report due date January 15,

2014 erroneous, should be January 13

• Flare design and operation comply

with 40 CFR 60.18

• Clarify that monitoring provisions
• f Subpart VVa do not apply to
• pen-ended valves and lines

(no change required)

• Clarify initial compliance

certification for LDAR requirements at NG processing plants is within 180 days of initial start-up (no change required)

SUBPART OOOO AMENDMENTS

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

• Reconstruction notification

required only for some affected facilities, updated Table 3

• Re-proposing provisions for

management of waste from spent carbon canisters—no comment so finalized as proposed

• Clarify definition of “capital

expenditure” for equipment leak provisions to mirror definition in Subpart VV, reflect basis year of 2011 and B value of 4.5

• Amend to ensure tanks associated

with water recycling operations not subject to rules (see §63.5365(e)(5))

• Continuous control device

monitoring requirements for storage vessels and centrifugal compressor affected facilities were NOT included in final rules (only proposed)

• Effective 60 days after publication

in FR

SUBPART OOOO AMENDMENTS

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

• Did not include liquids unloading in final rules—information received was

not sufficient to finalize standard representing BSER for liquids unloading

• Continuing to search for better means to address emissions
• Including in information gathering efforts

OTHER NOTES

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

• Permitting – Applicability & compliant equipment/controls
• Compliance – OOOO/OOOOa
• Well completion notifications
• Fugitive emissions monitoring plan
• Site specific -OR-
• Basic plan plus site specific attachments
• Schedule monitoring surveys
• Staff/contractors
• Understand modifications, as defined in the rules
• Reporting – annual schedule

PLAN AHEAD

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

SOURCE DETERMININATION

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

• Published June 3, 2016
• Applies only to the oil and natural gas sector (SIC Group 13)
• USEPA clarifies the term “adjacent” in the definition for “building,

structure, facility or installation” used to determine

• Stationary source in PSD/NNSR program (construction permitting)
• Major source in Title V program (operating permitting)

SOURCE DETERMINATION

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

• PSD/NNSR
• Stationary source: any building, structure, facility or installation that emits or

may emit a regulated NSR pollutant.

• Building, structure, facility or installation: all of the pollutant-emitting

activities which belong to the same industrial grouping are located on one or more contiguous or adjacent properties, and are under the control of the same person (or persons under common control).

• Title V
• Major source: any stationary source or group of stationary sources that are

located on one or more contiguous or adjacent properties, and are under common control of the same person (or persons under common control) belonging to a single major industrial grouping.

PRIOR DEFINITIONS

Note: Industrial grouping refers to two-digit SIC code

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

• USEPA uses a three part test:

1. Same industrial grouping 2. Location on contiguous or adjacent property 3. Under common control

• Adjacent not defined in regulations
• Interpretation of “contiguous or adjacent”: land associated

with the source is connected or nearby another source

• USEPA has considered both distance and whether they share operational

dependence or functional interrelatedness

USEPA INTERPRETATION

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

• Summit Petroleum Corp. appealed single source determination in 2012
• Oil and gas sweetening plant and approximately 100 oil and gas wells

located within eight mile radius, same two-digit SIC code, under common control

• Sixth Circuit overturned USEPA’s single source determination
• Use of interrelatedness is unreasonable and contrary to the plain meaning of

“adjacent”, related only to physical proximity

• USEPA directed regions to apply outcome within Sixth Circuit,

rest of country continue to follow prior interpretations

• Challenged in DC Circuit for violating USEPA’s Regional Consistency regulations
• DC Circuit agreed, memo conflicted with USEPA regulations that

promote uniform national regulatory policies

• Decision noted that USEPA could avoid conflict by revising source determination

regulations to explicitly require consideration of functional interrelatedness

USEPA INTERPRETATION: WHAT LEAD TO CHANGE?

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

For onshore activities under SIC Major Group 13: Oil and Gas Extraction, all of the pollutant-emitting activities included in Major Group 13 that are located on

• ne or more contiguous or adjacent properties, and are under the control of the same

person (or persons under common control). Pollutant emitting activities shall be considered adjacent if they are located on the same surface site; or if they are located on surface sites that are located within 1⁄4 mile of one another (measured from the center of the equipment on the surface site) and they share equipment. Shared equipment includes, but is not limited to, produced fluids storage tanks, phase separators, natural gas dehydrators or emissions control devices. Surface site, as used in this paragraph (a)(1)(ii)(B), has the same meaning as in 40 CFR 63.761. Applicable starting August 2, 2016 – not retroactive, previous determinations stand

USEPA FINAL RULE

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

USEPA SIMPLIFIED EXAMPLES

Legend

Gas well Oil well Tank battery Shared equipment

Adjacent

New site (center) ¼ mile

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

USEPA SIMPLIFIED EXAMPLES

Not Adjacent

Equipment not shared with new site

Not Adjacent

Not within ¼ mile

New site (center) ¼ mile New site (center) ¼ mile

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

• Additional EPA examples:
• Equipment used to process or store oil/gas is located within a ¼ mile
• f a commonly-owned well site is part of the same stationary source

as the well site

• Two well sites that feed a common pipeline are not part of the same

stationary source if they do not share processing or storage equipment

• Does not cover transmission/distribution under SIC 49
• States may, but are not required, to update regulations
• Ownership changes – reduced burden due to “shared equipment”

clause

CONSIDERATIONS

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

ICR FOR EXISTING SOURCES

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

• Information collection request (ICR) for existing oil and gas sources

released Sept. 29, 2016 (draft #2)

• Provide information that will assist in development of regulations to

reduce methane emissions for existing sources

• Gather information on existing sources:
• Methane emissions—agency seeking to identify sources with high emissions and

factors that contribute to those emissions

• Technologies to reduce emissions
• Costs of technologies
• Includes oil and gas production, gathering, processing, transmission and storage
• Comments must be submitted on or before October 31, 2016
• EPA anticipated release date of October 30, 2016

https://www.epa.gov/controlling-air-pollution-oil-and-natural-gas-industry/oil-and-gas-industry-information-requests

METHANE ICR FOR EXISTING SOURCES

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

Part 1 - Operator survey (30 days to respond)

• 15,000 operators
• Collects number and types of equipment at all onshore oil and gas

production facilities in the US

https://www.epa.gov/sites/production/files/2016-09/part-1-operator-survey-v61-locked_0.xlsx

METHANE ICR FOR EXISTING SOURCES

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

METHANE ICR - PART 1

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

Part 2 - Facility survey (120 days to respond)

• Fewer respondents, representative sample
• Collect detailed information on emissions sources and control devices or

practices

• Some information readily available, other may need to be collected

(counts of pneumatic devices)

https://www.epa.gov/sites/production/files/2016-09/part-2-survey-v81-locked_0.xlsx

METHANE ICR FOR EXISTING SOURCES

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

METHANE ICR – PART 2

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

METHANE ICR – PART 2 RESPONDENTS

https://www.epa.gov/sites/production/files/2016-09/documents/20160926-oilandgas-icrss.pdf

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

METHANE ICR – PART 2 RESPONDENTS

https://www.epa.gov/sites/production/files/2016-09/documents/20160926-oilandgas-icrss.pdf

JUNE 2016 O&G REGULATORY UPDATE OCTOBER 2016

THANK YOU

Kelli Calhoon kcalhoon@ramboll.com +1 913 553 5930