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OCTOBER 2016 O&G REGULATORY UPDATE OIL AND GAS INDUSTRY AIR REG UPDATE Kelli Calhoon

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Page 1: OIL AND GAS INDUSTRY AIR REG UPDATE - envirofdok.orgenvirofdok.org/.../10/...OG-Reg-Update-Presentation-EFO-2016.pptx.pdf · OIL AND GAS INDUSTRY AIR REG UPDATE Kelli Calhoon

OCTOBER 2016

O&G REGULATORY UPDATE

OIL AND GAS INDUSTRYAIR REG UPDATE

Kelli Calhoon

Page 2: OIL AND GAS INDUSTRY AIR REG UPDATE - envirofdok.orgenvirofdok.org/.../10/...OG-Reg-Update-Presentation-EFO-2016.pptx.pdf · 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

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JUNE 2016

O&G REGULATORY UPDATE

OCTOBER 2016

NSPS SUBPART OOOO/OOOOaVOC AND METHANE

Page 4: OIL AND GAS INDUSTRY AIR REG UPDATE - envirofdok.orgenvirofdok.org/.../10/...OG-Reg-Update-Presentation-EFO-2016.pptx.pdf · OIL AND GAS INDUSTRY AIR REG UPDATE Kelli Calhoon

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

Page 5: OIL AND GAS INDUSTRY AIR REG UPDATE - envirofdok.orgenvirofdok.org/.../10/...OG-Reg-Update-Presentation-EFO-2016.pptx.pdf · OIL AND GAS INDUSTRY AIR REG UPDATE Kelli Calhoon

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

Page 6: OIL AND GAS INDUSTRY AIR REG UPDATE - envirofdok.orgenvirofdok.org/.../10/...OG-Reg-Update-Presentation-EFO-2016.pptx.pdf · OIL AND GAS INDUSTRY AIR REG UPDATE Kelli Calhoon

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

Page 7: OIL AND GAS INDUSTRY AIR REG UPDATE - envirofdok.orgenvirofdok.org/.../10/...OG-Reg-Update-Presentation-EFO-2016.pptx.pdf · OIL AND GAS INDUSTRY AIR REG UPDATE Kelli Calhoon

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 ReduceEmissions Under USEPA Rules

Rules that Apply

2012 NSPS for VOCs*

2016 NSPS for methane

2016 NSPS for VOCs

Natural Gas Well Sites

Completions of hydraulicallyfractured wells

✔ • •

Compressors

Equipment leaks ✔ • •

Pneumatic controllers ✔ • •

Pneumatic pumps ✔ • •

Storage tanks ✔ •

Oil Well Sites

Completions of hydraulicallyfractured 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

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JUNE 2016

O&G REGULATORY UPDATE

OCTOBER 2016

Location and Equipment/Process Covered

Required to ReduceEmissions 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

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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)

or

• Replace rod packing every 36 months

or

• Route emissions from rod packing to process through closed vent system

under negative pressure to be reused or recycled

SUBPART OOOOaCOMPRESSORS

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) • •

Page 10: OIL AND GAS INDUSTRY AIR REG UPDATE - envirofdok.orgenvirofdok.org/.../10/...OG-Reg-Update-Presentation-EFO-2016.pptx.pdf · OIL AND GAS INDUSTRY AIR REG UPDATE Kelli Calhoon

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 OOOOaPNEUMATIC 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) • •

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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 OOOOaPNEUMATIC 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)

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JUNE 2016

O&G REGULATORY UPDATE

OCTOBER 2016

• Now includes oil well sites

• Subcategory 1 wells (non-wildcat, non-

delineation)

SUBPART OOOOaHYDRAULICALLY 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 • •

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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 OOOOaFUGITIVE 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 operation

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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

NotableExemptions

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

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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 OOOOaRECORDKEEPING AND REPORTING

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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

office

• 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

of Subpart VVa do not apply to

open-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

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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

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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

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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

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JUNE 2016

O&G REGULATORY UPDATE

OCTOBER 2016

SOURCE DETERMININATION

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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

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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

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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

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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?

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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

one 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

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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

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JUNE 2016

O&G REGULATORY UPDATE

OCTOBER 2016

USEPA SIMPLIFIED EXAMPLES

Not AdjacentEquipment not shared with new site

Not AdjacentNot within ¼ mile

New site(center)

¼ mile

New site(center)

¼ mile

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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 of 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

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JUNE 2016

O&G REGULATORY UPDATE

OCTOBER 2016

ICR FOR EXISTING SOURCES

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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

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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

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JUNE 2016

O&G REGULATORY UPDATE

OCTOBER 2016

METHANE ICR - PART 1

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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

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JUNE 2016

O&G REGULATORY UPDATE

OCTOBER 2016

METHANE ICR – PART 2

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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

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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

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JUNE 2016

O&G REGULATORY UPDATE

OCTOBER 2016

THANK YOU

Kelli Calhoon

[email protected]

+1 913 553 5930