insights into the air regulatory issues facing shale gas

Insights into the Air Regulatory

Issues Facing Shale Gas

Operations

Columbus, OH

March 22nd, 2013

Agenda

Section 1: Industry Overview & Key Air Quality Challenges

Section 2: Regulatory Landscape

Section 3: Ohio Permitting Strategies

Industry Overview and Key Air

Quality Challenges

Natural Gas Industry Flow

Source: EPA Natural Gas STAR

Storage tanks and tank flashing losses

Temporary/portable generators, compressors, dehydration units

Gas venting and flaring

Well completions and workovers

Exploratory drilling and well testing venting and flaring

Equipment blowdowns

Component fugitive leaks

Noteworthy Emissions Sources Well Sites

Compressor engine/turbine

Generator engine

Storage tanks

Gas dehydration

Flares & vapor recovery units (VRUs)

NG-driven pneumatics & pumps

Equipment blowdowns


Noteworthy Emissions Sources Compressor Stations

Storage tanks and tank flashing losses

Truck and railcar loading


Compressor engines/turbines

Process heaters

Gas dehydration

Flares & VRUs

Equipment blowdowns

Noteworthy Emissions Sources Processing Plants


NG-driven pneumatic devices & pumps

Vapor recovery compressors (LNG storage)

Process heaters

Metering & regulating (M&R) stations

Equipment blowdowns

Small compressor engines

Customer meters

Noteworthy Emissions Sources Storage & Distribution

Potential emissions determine major/minor source status with respect to PSD/NSR Greenhouse gases (GHGs)

Criteria pollutants

Aggregation of sites Well heads + compressor stations

Largely overturned by 6th Circuit Court of Appeals – MI, OH, TN, KY

Permitting timeframes PSD major source ~9-12 months

PSD minor source ~4-6 months

Ohio EPA’s General Permit for Shale Gas Production Sites

Permitting Your Facility New Source Review

“Subject to regulation” as of January 2, 2011

Industry sector processes large volumes of CO2 and CH4

General thresholds New source = 100,000 tpy CO2e Modification at existing source w/ PTE ≥

100,000 tpy CO2e = 75,000 tpy CO2e Modification at existing source w/ PTE <

100,000 tpy CO2e = 100,000 tpy CO2e

Triggers evaluation of GHG BACT Sequestration Energy efficiency

Reduces criteria pollutant thresholds to significant emission rates (SERs) (e.g., 40 tpy NOX)

Permitting Your Facility Greenhouse Gases

Stringent, 1-hr NAAQS for NO2 of 100 ppb (~188 µg/m3)

Process heaters

Engines/compressors

Flares

Modeling may influence engineering Stack heights

Source locations

Include impacts from background and regional sources Lowest ambient monitor in

Ohio = 51 µg/m3!

Permitting Your Facility Air Dispersion Modeling

Regulatory Landscape

Oil and Gas Sector Regulatory

Basics New Source Performance Standards (NSPS)

Criteria pollutants New, reconstructed, modified sources Best System of Emission Reduction (BSER) -

control evaluation considers economic viability

National Emission Standard for Hazardous Air Pollutants (NESHAP) Hazardous Air Pollutants (HAPs) All sources, existing and new at major or area

sources of HAP Maximum Achievable Control Technology (MACT)

Oil and Gas Sector Regulatory

History Crude oil and natural gas production listed as priority

source categories for New Source Performance Standards (NSPS) 40 CFR 60, Subpart KKK – Regulates VOC Emissions in NG Processing

Plants from compressors, dehys, sweetening units, and others. 40 CFR 60, Subpart LLL – Regulates SO2 Emissions in NG Processing

Plants from sweetening units and sulfur recovery units.

Crude oil and natural gas production listed as source categories for National Emission Standards for Hazardous Air Pollutants (NESHAPs) 40 CFR 63, Subpart HH (Major and Area sources) – Regulates HAP

emissions in O&NG production for dehys, storage vessels, and equipment leaks.

40 CFR 63, Subpart HHH (Major Sources) – Regulates HAP emissions in NG transmission and storage from dehys.

NSPS Subpart OOOO Regulatory

History

Proposed rules were published in Federal Register on August 23, 2011

Comment period on proposed rule was extended

EPA received more than 156,000 written comments

Issuance of final rule was delayed twice until April 17, 2012

Final rule published in Federal Register on August 16, 2012 (effective date of October 15, 2012)

http://www.epa.gov/airquality/oilandgas/actions.html




NSPS Subpart OOOO Affected

Facilities Each natural gas well Each centrifugal compressor using wet seals Each reciprocating compressor Each continuous bleed natural-gas driven pneumatic

controller Each storage vessel Group of equipment (pump, pressure relief device,

open-ended valve or line, valve, and flange or other connector in VOC or wet gas service), within a process unit located at onshore natural gas processing plants

Sweetening units located at onshore natural gas processing plants

§60.5365

Affected Facility Exemptions

Pneumatic controllers with a natural gas bleed rate ≤ 6 scfh not at gas processing plant are not affected

Intermittent pneumatic controllers are not affected

Centrifugal and reciprocating compressors located at a well site are not affected

Centrifugal compressors using dry seals are not affected

Compressors and controllers after custody transfer to the transmission and storage segment are not affected

Compliance Requirements

Applies to affected facilities that commence construction, reconstruction or modification after 8/23/2011 (date of proposed rule), but the compliance date depends on the type of emission source

Standards apply at all times (i.e., no exemption during periods of startup, shutdown, or malfunction)

Affirmative defense codified in final rule

§60.5365 & 60.5370

Subpart OOOO Applicability

NSPS OOOO Affected Facility

Production (Well Site) Gathering Gas Processing Transmission

Gas Well X

Centrifugal Compressors

X X

Reciprocating Compressors

X X

Pneumatic Controller

X X X

Storage Vessels X X X X

Equipment Leaks X

Sweetening Units X

Subpart OOOO Requirements for

Gas Wells 1. Perform reduced emissions completions (REC)/green

completions: Route the recovered liquids into one or more storage vessels or re-inject

the recovered liquids into a well; Route the recovered gas into a gas flow line or collection system, reinject

the recovered gas into a well, use the recovered gas as an on-site fuel source, or use the recovered gas in place of a purchased fuel or raw material, with no direct release to the atmosphere.

2. (Route to Sales) Route salable gas to the gas flow line as soon as practicable.

3. (Completions Flaring) Capture and direct flowback emissions that cannot be directed to the flow line to a completion combustion device (unless risk of fire or explosion).

4. (General Duty) Maximize resource recovery and minimize releases to the atmosphere during flowback and subsequent recovery.

§60.5375

Centrifugal Compressor

Requirements

Centrifugal compressors equipped with wet seals: Reduce VOC emissions from each wet seal fluid

degassing system by ≥ 95.0 percent

If using a control device, equip with specified cover and connect through a closed vent system to a control device

Conduct initial inspection

Install and operate continuous parameter monitoring system (CPMS)

Initial performance test required

§60.5380

Reciprocating Compressor

Requirements

Primary requirement is to replace the rod packing. You can choose to replace rod packing before either of the following occur:

The compressor has operated for 26,000 hours

36 months from the last replacement

§60.5385

Reciprocating Compressor

Requirements If you choose to continuously monitor the hours of

operation, then you must track the hours of operation beginning on the later of one of the following: Initial startup of the reciprocating compressor; October 15, 2012; or The most recent reciprocating compressor rod packing

replacement

If you choose not to monitor hours of operation, then the rod packing must be replaced prior to 36 months from the most recent rod packing replacement (or 36 months from initial startup of new unit).

Pneumatic Controller Standards

Each affected continuous bleed pneumatic controller at natural gas processing plants must have a bleed rate of zero

Each affected continuous bleed pneumatic controller between the wellhead and a natural gas processing plant must have a bleed rate of ≤6 scfh One year phase in period (10/15/2013)

Existing units already in stock and ordered before 8/23/2011 can be used

§60.5390

Storage Vessel Requirements

Tanks with VOC emissions equal to or greater than 6 tpy Reduce VOC emissions by ≥ 95.0 percent through use

of a control device (including flare) or floating roof ♦ If using a control device, equip with specified cover and connect

through a closed vent system to a control device

♦ Initial performance test required

One year phase in period for control requirements

§60.5395

Storage Vessel Emissions

Determination and Timing ˃ Well site with no other

wells in production: Within 30 days after

startup ♦ Determine the VOC emission

rate for each storage vessel using any generally accepted model or calculation methodology;

♦ Minimize emissions to the extent practicable using good engineering practices

Within 60 days after startup ♦ For each storage vessel

emitting more than 6 tpy VOC, reduce VOC emissions by ≥ 95%.

˃ Well site with one or more wells in production Before or at least by

startup ♦ Determine the VOC

emission rate for each storage vessel using any generally accepted model or calculation methodology;

♦ For each storage vessel emitting more than 6 tpy VOC, reduce VOC emissions by ≥ 95%.

§60.5395

Standards for VOC Leaks

Applies to equipment, except compressors, in VOC or wet gas service within a process unit located at an onshore natural gas processing plant site Process unit means components assembled for the

extraction of natural gas liquids from field gas, the fractionation of the liquids into natural gas products, or other operations associated with the processing of natural gas products

Comply with NSPS Subpart VVa (lower leak definitions and additional monitoring required)

Sampling connection systems are exempt Exemptions for non-fractionating plants with

design capacity less than 10 million scf per day

§60.5400, 60.5401, 60.5402

Standards for Sweetening Units

Applies to each onshore sweetening unit at a natural gas processing plant:

Emission limits remain the same as proposed rule (comply with percent reduction requirements based on sulfur feed rate and hydrogen sulfide [H2S] content of acid gas)

Initial performance test required

Monitoring of sulfur product accumulation, H2S content, and acid gas flow rate

Facilities with design capacities less than 2 long tons per day of H2S in the acid gas are subject to recordkeeping and reporting only

§60.5405, 60.5406, 60.5407

Closed Vent System

Requirements

Designed to route all gases, vapors, and fumes emitted from the material in the storage vessel to a control device

Design and operate with no detectable emissions

Monitor bypasses in the closed vent system

§60.5411

Cover Requirements

Cover and all openings (e.g., access hatches, sampling ports, gauge wells) shall form a continuous barrier over the entire surface area of the liquid in the storage vessel

Each cover opening shall be secured in closed, sealed position (e.g., covered by gasketed lid or cap) whenever material is in the unit except when necessary to open

§60.5411

Subparts GG/KKKK – Turbines

Subpart LLL – Sweetening Units

Subpart NNN – Distillation Operations

Subpart RRR – Reactor Operations

Subparts IIII/JJJJ – Internal Combustion Engines

Regulatory Landscape Other Noteworthy NSPS Subparts

Current NESHAPs for O&G Sector

Subpart HH – Oil and Natural Gas Production Facilities (Major and Area Sources) Glycol dehy units (major and area sources) Storage vessels with potential for flash emissions

(major sources) Compressors and ancillary equipment in VOC HAP

service (major sources)

Subpart HHH – NESHAP for Natural Gas Transmission and Storage (Major Sources) Glycol dehy units

Revisions to Subparts HH and

HHH

Finalized on April 17, 2012 Published on August 16, 2012 (effective

10/15/2012) Clarifications to potential to emit

calculations Includes previously unregulated sources Affirmative defense replaces startup,

shutdown, and malfunction exemption Revisions affect major sources only

No revisions to area source standards


HHH Revisions to potential to emit calculations:

For production fields, include all storage vessels (not just those with potential for flash)

Assume worst-case glycol circulation rate

3-yr compliance timeline for area sources that become major as a result of new calculation methodology (October 15, 2015)

Initial notifications required by October 15, 2013 for previously unregulated sources For area sources that became major due to new PTE calculations,

but want to remain area sources, a non-binding schedule of actions to achieve area source status is required


HHH

Area sources under HH with actual emissions greater than 50% of the major source threshold must review major source determination annually using gas composition data measured within the last 12 months

Make sure extended if necessary (i.e., C6+ present)

Best practice?

Subpart YYYY – Combustion Turbines

Subpart ZZZZ – Reciprocating Internal Combustion Engines

Regulatory Landscape Other Noteworthy MACT Subparts

Ohio Permitting Strategies

Ohio EPA Permitting Tiers

Permit Type Eligibility Processing Timeframe

US EPA Review

?

NG Completion PBR*

Comply w/ NSPS OOOO N/A No

General Permit (GP) 12

Well sites meeting qualifying criteria ~45 Days No

Non-major PTIO

PTE < 100 tpy criteria pollutants & < 10/25 tpy HAP

60 – 180 Days

No

Non-major PTI New or existing minor sources: 100 < PTE < 250 tpy

Existing major sources: PTE < Significant Emission Rates 60 – 180

Days No

PSD Major PTI New or existing minor sources: PTE ≥ 250 tpy

Existing major sources: PTE ≥ Significant Emission Rates 6 – 12

Months Yes

Title V Operating Permit

Required for sites that do not qualify for PTIO ?? Yes

*Proposed

General Permit 12 Qualifying

Criteria

Emission Thresholds

Area source of HAPs

Toxic contaminants < 1 tpy

Additional permitted limits for each source

Capacity \ Unit Thresholds

Each condensate tank < 950 bbls; total < 6,000 bbls

Total NG-fired engine horsepower < 1,800 hp

Total diesel engine horsepower < 250 hp

Each heater < 10 MMBtu/hr or PBR

General Permit 12 Covered Units

Glycol Dehydrator

NG- and Diesel-fired Engines

Flare / Combustor

Equipment Leaks

Storage Tanks / Vessels

Proposed Revisions to GP-12

General Permit 12.1


Flare/Combustor ≤ 10 MMBtu/hr

General Permit 12.2


Flare/Combustor ≤ 32 MMBtu/hr

Currently under public review

Comments due today!

Additional Concerns for PTIs &

PTIOs

Submission via Air Services

Electronic facility profile

Registration requirements including notary verification

Best Available Technology (BAT)

Case-by-case evaluation of control techniques

Comparison against Ohio EPA BAT database

Air Dispersion Modeling

Questions?

insights into the air regulatory issues facing shale gas

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