Air Quality and Greenhouse Gas Issues for the Oil and Gas ... · PDF fileAir Quality and...

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Air Quality and Greenhouse Gas Issues for the Oil and Gas SectorERM 2015 Webinar Series

September 10, 2015

2The world’s leading sustainability consultancy

Agenda

The High Level View

Voluntary Methane Challenge

NSPS/CTG

Tribal NSR

Source Determination

Path from Here

Q&A Session

The Growing Weight of Compliance

GAS PLANT CTG/RACT FOR EQUIPMENT LEAKS; MACT STANDARDS (HH, HHH);

SOURCE DETERMINATION/AGGREGATION FOR PERMITTING

The Growing Weight of ComplianceGAS PLANT CTG/RACT FOR EQUIPMENT LEAKS

MACT STANDARDS (HH, HHH)SOURCE DETERMINATION/AGGREGATION FOR PERMITTING

NATURAL GAS STARGREENHOUSE GAS REPORTING SUBPART W

NSPS SUBPART OOOO FOR VOCNSPS SUBPART OOOOa FOR VOC AND METHANE

OIL AND GAS PRODUCTION CTG/RACTNATURAL GAS STAR METHANE CHALLENGE

TRIBAL NSR/FIP

August 18, 2015EPA Administrator Signed: Proposed modifications to NSPS Subpart OOOO

Proposal for new NSPS Subpart OOOOa

Proposed rule to clarify EPA’s source determination air permitting rules as they apply to the oil and natural gas industry

Proposed a Federal Implementation Plan for EPA’s Indian Country Minor New Source Review (NSR) program for oil and gas production sources

Draft Control Techniques Guidelines for reducing VOC emissions from existing oil and gas sources in certain ozone nonattainment areas and states in the Ozone Transport Region

Gas and Oil WellsCompressorsFugitive Components

NSPS – CTGs – Tribal NSR – Source Determination – Methane Challenge

Equipment: wells, pneumatics, flares, control equipment Re-design/approach: monitoring equipment (IR cameras, sampling)Existing (retrofits) vs New

Check Gaps (vulnerability)Influence rule languageField trial of proposed methods (leaks: is it do-able?)Evaluate alternatives (voluntary programs)Look-ahead: future impacts?

Actions

Operational Expenses

Capital Expenses

Operational Change

People: training, skillsets, MOC challengesEquipment Upgrades: records, reports, data systemsExternal Stakeholders: Agencies, NGOs, neighbors/publicLicense to Operate: Violation, Risk

Pneumatic EquipmentStorage VesselsControl Devices

Natural Gas STAR Methane ChallengeLisa Campbell

Methane Challenge: Summary of action

Methane Challenge – companies make commitments to voluntarily reduce methane emissions: Implement Best Management Practices (BMPs) ‘company-wide’

One Future Program emissions intensity commitment

Methane Challenge: What can you do about it?

AssessImpacts

• Assess baseline and impacts of options• What is current status of CI or sources?• What are the reduction options vs cost / operational impacts?

Advocate

• Provide comments to EPA by Oct 13, 2015• What is company interest in participating?• What incentives, etc. are recommended?

SetPriorities

• Prepare MOU• What are costs vs benefits of participation?• What are priorities and tradeoffs?

AdaptProcedures

• Prepare Implementation Plan• How can existing systems be adapted to meet needs?• How can voluntary and compliance activities be integrated for efficiency?

NSPS/CTGAndy Woerner

NSPS/CTG: Summary of action

• Amended in response to petitions for reconsideration• Applicability: Sources constructed/ modified/ reconstructed prior to

proposal date of Subpart OOOOa (September x, 2015)

Proposed NSPS Subpart OOOO Updates

• Regulates Methane in addition to regulating VOC• New source categories (not covered under OOOO)• More sources in Transmission and Storage Segment covered

Proposed NSPS Subpart OOOOa

• CTGs: EPA’s Guidelines to state, local and tribal air agencies to assist in determining RACT for reducing VOC emissions

• Addresses O&G industry emission sources in Non-Attainment Areas• Provides model rule language – in most cases mirrors NSPS OOOOa

Draft Control Techniques Guidelines (CTG)

CTG vs. NSPS OOOOa - Distinctions

CTGs NSPSApplicability Existing O&G sources in

Moderate or higher non-attainment areas of ozone, and ozone transport region

Applies nationally to new, modified, and reconstructed

emissions sources

Regulated Pollutant

Addresses VOC only Proposes regulation of both methane and VOC

Level of Control Addresses RACT NSPS requires BSER

Regulatory Authority

Final rule-making authority is with state/local agency

NSPS is prescriptive and federally enforceable

Transmission & Storage Covered?

Tanks Only… Yes

Onshore Natural Gas Transmission Compression

Underground Natural Gas Storage

City Gate

Onshore Natural Gas Processing

Gathering Booster Stations

Onshore Oil & Natural Gas Production

IN ! Out!

Well Completions - VOC

NSPS OOOO Applicability

City Gate

IN ! Out!

Well Completions – VOC and Methane

NSPS OOOOa Applicability

Expansion to cover Oil Wells Technical Feasibility Considerations…

City Gate

Out!Out!

Compressors - VOC

City Gate

Compressors – VOC and Methane

Requirements SameScope of Sources Covered Expanded

City Gate

Pneumatic Controllers - VOC

City Gate

Pneumatic Controllers – VOC and Methane

Requirements Same No high bleed, zero bleed at ProcessingScope of Sources Covered Expanded

City Gate

Storage Tanks - VOC

Significant Updates to CVS and Control Device Compliance Demonstration Requirements…

City Gate

Storage Tanks - VOC

Significant Updates to CVS and Control Device Compliance Demonstration Requirements…

City Gate

Out!Out!

Leak Detection and Repair – VOC

“Traditional” LDAR @ Processing facilities…

City Gate

Leak Detection and Repair – VOC and Methane

Different requirements inside vs. outside of Processing facilities…

City Gate

Pneumatic Pumps – Not Applicable

City Gate

Pneumatic Pumps – VOC and MethaneNSPS OOOOa Applicability

Control if control device already present…Processing facilities – use zero bleed

NSPS/CTG: Important Considerations (1)

Regulation of Methane under NSPS opens up the door for future methane regulations for existing sources under 111(d) Consider legal argument Assessment of EPA”s use of Social Cost of Methane

Proposed NSPS addresses Methane, not other GHGs (CO2 etc.) Does regulation of methane under NSPS have any ramifications

from a GHG (minor or major source) permitting standpoint?

Treatment of Transmission and Storage Segments

Significant increase in source categories covered Will the industry face a serious resource crunch? Would training and retaining skilled operators be a challenge?

Retrofit costs and technical feasibility Pneumatic pumps requiring routing to existing on-site control devices

Equipment leaks What triggers a Modification?

Additional recordkeeping and reporting requirements How does this compare relative to current activity? Changes to SOPs for voluntary, state-level programs?

NSPS/CTG: Important Considerations (2)

Understand the potential impacts on Business Capital Costs Resource Burden

Leak Detection Critical Assessment of Existing LDAR program Outline elements of a system fit for purpose for your operations

Closed Vent Systems and Control Devices Tying in Pneumatic Pumps – Technical Issues? Tank Controls - Assess existing design relative to proposed changes Cost, Availability of technology to bring up to speed? Accuracy required for instrumentation (flow meters)

NSPS/CTG: Assessing Impacts

Tribal NSRRyan Alam

Tribal NSR: Overview of Proposed Rulemaking 8/18/15 USEPA proposed rulemaking to streamline minor NSR

permitting for O&G sources in “Indian Country”

Rulemaking consists of 2 parts: New FIP registration process for new true minor sources and minor

modifications at existing true minor sources Harmonizing amendments with existing minor NSR rule in §49.151 et seq.

Applies to “oil and natural gas production facility” that begin construction/modification on or after 10/3/16

New FIP establishes pre-construction registration process (30 days prior)

Incorporate by reference 6 federal rules: NESHAP DDDDD, NESHAP HH, NSPS Kb, NSPS IIII, NSPS JJJJ, and NSPS OOOOa

Extends existing O&G source permitting deadline from 3/2/16 to 10/3/16

Maintains option to pursue site-specific permits per §49.151 et seq.

Tribal NSR: Potential Implications for New FIP Establishes pre-construction registration process as

opposed to post-construction process. PTE not known before completion and initial well test

Not applicable for sources in non-attainment areas (e.g. Uinta)

Does not provide any streamlined mechanism for obtaining synthetic minor permits for PSD/NNSR, T5, MACT, NSPS (OOOO/OOOOa tank 6 TPY) avoidance

USEPA retains ability to require site-specific permits to ensure protection of NAAQS

Does not cover natural gas processing plants

Source DeterminationKevin Madry

PurposeTo request comment on the best approach to define “adjacent” when identifying a major source in EPA permit programs for the onshore oil and natural gas sector.

• Case-by-case

1977-2007

• Proximity via guidance

• Withdrew guidance

2007-2009 • Florida River – not enough aggregation

• Summit Petroleum –too much aggregation

• EPA Regional guidance: case-by-case unless court says otherwise

2009-2015

History…

Definition of Stationary Source

Only taking comments on the definition of adjacent

Share same SIC code

Under common control

Contiguous and or adjacent

Affected Regulations

NSR (NNSR and PSD)Change: “Building, structure, facility or

installation” definition

Part 51- Requirements for Preparation, Adoption and Submittal of Implementation Plans

Part 52- Approval and Promulgation of Implementation Plans

Stationary source: “…any building…”“Building, structure…”: “…same industrial grouping…one or more contiguous and adjacent properties…”

Title VChange: “Major Source” definition

Part 70- State Operating Permit Programs

Part 71- Federal Operating Permit Programs

Major Source: “…any stationary source (or any group of stationary sources that are located on one or more contiguous or adjacentproperties…”

Affected Processes/Equipment

Affected Processes- SIC code 13 Only applies to onshore oil

and gas operations

From well to point of custody transfer (oil) or customer (gas)

Does not include offshore

Does not include downstream operations

Production

• Wells• Pumps• Compressors• Separators• Tanks• Vessels• Pneumatic

devices• Dehydrators• Gathering lines

Processing

• Natural gas processing plants

• Liquid extraction plants

1st Option: Proximity (Similar to NESHAP)

2nd Option: Proximity & Functional Interrelatedness

Everything within a

proximity distance.

Everything within a

proximity distance.

Everything greater than or

equal to a proximity distance.

And there is exclusive functional

interrelatedness

Considerations Appropriate distance?

Measurement of appropriate distance?

Final implementation method?

Does this preclude daisy-chaining?

Other viable options: only equipment/operations within proximity distance that is functionally interrelated?

Overlapping facilities

Ability to “opt-in” equipment/operations?

What should you do now?

Assess potential impact - evaluate scenarios

Consider future implications –expansion, mergers, acquisitions

Consider local/state impact –aligned?

Look at examples of aggregated source regulations

Wrap-up

The Road Ahead

Evaluate and Communicate Overall Impacts

Submit Comments

Capital Project Planning/Review

Pilot and Develop Compliance Programs LDAR

Testing and Monitoring

Prepare for Enforcement

Q&A Session

Contact Information

Toby HannaEwing, NJ609-403-7518toby.hanna@erm.com

Andy WoernerPhiladelphia/Pittsburgh, PA484-913-0455andrew.woerner@erm.com

Phil NorwoodRaleigh, NC919-233-4501phil.norwood@erm.com

Lisa CampbellRaleigh, NC 919-855-2279lisa.campbell@erm.com

Leslie WongHouston, TX832-730-4407leslie.wong@erm.com

Sid Rajmohan Houston, TX832-730-1056 sid.rajmohan@erm.com

Kevin MadryDenver, CO720-200-7168kevin.madry@erm.com

Ryan AlamDenver, CO 303-741-5050ryan.alam@erm.com

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