Crude Oil and Natural Gas Industry Reduced Emission Completion NSPS Requirements

As 2015 quickly approaches, there is still momentum in the development of domestic unconventional oil and gas resources.  Therefore, exploration and production companies utilizing hydraulic fracturing are reminded that the final compliance provisions for reduced emission completions (RECs) pursuant to 40 CFR Part 60, Subpart OOOO (Standards of Performance for Crude Oil and Natural Gas Production, Transmission and Distribution) will become effective with the New Year.  In this article we discuss the REC compliance requirements that become effective January 1, 2015, as well as the proposed amendments and their implications to RECs.  Before that discussion though, a brief review of the regulatory driver is presented for reference.

The History Of Subpart OOOO

Subpart OOOO regulates emissions of volatile organic compounds (VOC) and sulfur dioxide (SO2) from seven (7) categories of “affected facilities” for which construction, modification, or reconstruction began after August 23, 2011.  Subpart OOOO was originally promulgated in July 2012, and was revised in September 2013.  In July 2014, additional amendments were proposed that: provide regulatory clarification regarding the handling of liquids and gases during well completion operations; update requirements for storage vessels and reciprocating compressors; provide an opportunity for public comment on the definition of low-pressure wells within the rule; and clarify requirements for leak detection at natural gas processing plants.  Key aspects associated with RECs are also clarified in the 2014 proposed amendments.  These amendments are expected to be finalized in December 2014.

Subpart OOOO Affected Sources

Before jumping directly into RECs and the implications of the latest proposed amendments, let’s take a step back and do a quick review of the overall requirements for all Subpart OOOO affected facilities.

• A gas well that is constructed, modified, or reconstructed after August 23, 2011 is an affected facility and is subject to Subpart OOOO.  Subpart OOOO defines a “gas well or natural gas well” as an onshore well drilled principally for production of natural gas.  Each single natural gas well is considered a “gas well affected facility.”
• A centrifugal compressor is considered an affected facility if it uses wet seals and is located between the wellhead and the point of custody transfer to the natural gas transmission and storage segment.  If a centrifugal compressor is located at a well site (or an adjacent wellsite) and services more than one (1) well site, it is not considered an affected facility under Subpart OOOO.
• A reciprocating compressor is considered an affected facility if it is located between the wellhead and the point of custody transfer to the natural gas transmission and storage segment.  If a reciprocating compressor is located at a well site (or an adjacent wellsite) and services more than one (1) well site, it is not considered an affected facility under Subpart OOOO.
• For both the natural gas and oil production segment, a pneumatic controller is considered an affected facility if it is located between the wellhead and the point of custody transfer, is natural gas driven, and operates at a natural gas bleed rate of greater than six (6) standard cubic feet per hour (scfh).
• For a natural gas processing plant, a pneumatic controller is considered an affected facility if it is driven by natural gas.
• A storage vessel is considered an affected facility if (1) it contains an accumulation of crude oil, condensate, intermediate hydrocarbon liquids, or produced water; (2) is constructed from nonearthern materials (i.e., wood, concrete, steel, fiberglass, or plastic) that provide structural support; and (3) has the potential to emit greater than or equal to six (6) tons per year of VOC.
  • Storage vessels for which construction, modification, or reconstruction began after August 23, 2011 or before April 12, 2013, are considered Group 1 storage vessels.

1. • Storage vessels for which construction, modification or reconstructions began after April 12, 2013, are considered Group 2 storage vessels.

The information detailed below will specifically focus on affected gas well facilities and REC requirements.

Why Are Gas Well Facilities Regulated By Subpart OOOO?

The venting or flaring of natural gas from gas well facilities is a source of VOC emissions.  Subpart OOOO establishes emission standards and compliance schedules for the control of VOC emissions from affected gas well facilities.  In addition, venting or flaring of natural gas from gas well facilities also is a source of methane emissions.  Methane is one (1) of the gases included in the definition of greenhouse gases (GHGs), and it has a global warming potential that is 25 times greater than carbon dioxide.  Thus, Subpart OOOO, while not directly regulating emissions of methane, establishes de-facto GHG emission standards and compliance schedules that control emissions of GHGs (i.e., methane emissions) from affected gas well facilities.

What Are The Subpart OOOO Standards For Gas Well Affected Facilities?

There are three (3) sets of standards provided at §60.5375 for each affected well completion operation with hydraulic fracturing.  These standards can be categorized as follows:

1. Well completion operation with hydraulic fracturing begun prior to January 1, 2015
2. Well completion operation with hydraulic fracturing beginning on or after January 1, 2015
3. Well completion operation with hydraulic fracturing of wells meeting the criteria for a wildcat, delineation, non-wildcat low pressure, or non-delineation low pressure gas well

Note that there is another Subpart OOOO provision at §60.5365(h)(1) for well completions that are hydraulically refractured.  This standard specifies that a gas well facility that conducts a well completion operation following hydraulic refracturing is not an affected Subpart OOOO facility, provided the requirements for RECs are met.  Any gas well hydraulically refractured on or after October 15, 2012 must meet these REC requirements.

It should be noted that a well completion operation, following refracturing, that is not conducted pursuant to the REC requirements, is considered to be a modification to a gas well that would have been originally exempt from Subpart OOOO.  Furthermore, refracturing of a gas well facility does not affect the modification status of other equipment, process units, storage vessels, compressors, or pneumatic controllers located that the well site.  Lastly, §60.5365(h)(4) further clarifies that a gas well facility that is initially constructed after August 23, 2011, is considered a Subpart OOOO affected facility and would fall within one (1) of the three (3) categories above.

The primary difference between the various Subpart OOOO standards is the requirement for owner/operators to employ RECs as a method to capture and recover the natural gas (i.e., VOC and methane) that is produced during completion operations.  RECs apply to the following gas well facilities:

• Category No. 2 above (i.e., well completion operations with hydraulic fracturing that begin on or after January 1, 2015)
• Well completion operations that were hydraulically refractured on or after October 15, 2012

RECs do not apply to the following gas well facilities:

• Category No. 1 above – well completion operations with hydraulic fracturing that begin prior to January 1, 2015)
• Category No. 3 above – well completion operations with hydraulic fracturing meeting the criteria for a wildcat, delineation, non-wildcat low pressure, or non-delineation low pressure gas well
• Well completion operations that were initially constructed before August 23, 2011 and were hydraulically refractured before October 15, 2012

It should be noted that Subpart OOOO specifies separate requirements for gas well facilities that are not required to comply with the REC requirements or for when RECs are deemed infeasible.

What Are The Non-REC Requirements For Well Completions?

Although the main focus of this article is RECs, a brief review of the regulatory requirements for well completions not requiring RECs is provided below for your reference.

Owner/operators must capture and direct flowback emissions to a completion combustion device, except in conditions that may result in a fire hazard or explosion, or where high heat emissions from a completion combustion device may negatively impact tundra, permafrost or waterways.  The completion combustion device must be equipped with a reliable continuous ignition source over the duration of flowback.  Owner/operators have a general duty to safely maximize resource recovery and minimize releases to the atmosphere during flowback and subsequent recovery.

What Are RECs?

Subpart OOOO defines RECs as “a well completion following fracturing or refracturing where gas flowback that is otherwise vented is captured, cleaned, and routed to the flow line or collection system, re-injected into the well or another well, used as an on-site fuel source, or used for other useful purpose that a purchased fuel or raw material would serve, with no direct release to the atmosphere.”

In simpler terms, gas flowback that has been historically vented will need to be captured, cleaned, and routed to the sales line, used on-site, or reinjected.  Specifically, this process must occur with no direct releases to the atmosphere.

What Does Subpart OOOO Currently Require For RECs?

For those of you who enjoy reading the actual regulation, RECs are specified at §60.5375(a)(1) and (2).  For those of you who prefer a paraphrase, RECs are summarized in the bulleted list below:

• RECs are required for the duration of flowback
  • Subpart OOOO defines flowback as “the process of allowing fluids to flow from a natural gas well following a treatment, either in preparation for a subsequent phase of treatment or in preparation for cleanup and returning the well to production. The flowback period begins when material introduced into the well during the treatment returns to the surface immediately following hydraulic fracturing or refracturing. The flowback period ends with either well shut in or when the well is producing continuously to the flow line or to a storage vessel for collection, whichever occurs first.”
• Recovered liquids:
  • Route into one (1) or more storage vessels or re-inject into the well or another well
• Recovered gas:
  • Route into a gas flow line or collection system,
  • Re-inject the recovered gas into the well or another well,
  • Use the recovered gas as an on-site fuel source, or
  • Use the recovered gas for another useful purpose that a purchased fuel or raw material would serve.
  • No direct release to the atmosphere may occur.

What REC Revisions Are Proposed Under Subpart OOOO?

The basic requirements for RECs will remain the same if the proposed July 17, 2014 revisions are made final as proposed.  The intent of the proposed revisions is to make technical corrections and provide further clarification concerning what owners and operators must do during well completion operations.  Specifically, the 2012 NSPS focused mainly on the handling of flowback emissions and did not provide extensive detail concerning requirements for the handling of liquids during well completion operations.

Industry expressed concern that written compliance with the existing language could not be achieved.  Some examples presented by industry included the routing of recovered gas into a flow line or collection system and recovered liquids into storage vessels.  Specifically, the beginning of flowback consists mainly of water and fracturing materials with virtually no gas present.  Gas appears sporadically within the flowback in increasing amounts until a separator can eventually be operated.  Routing recovered liquids to a storage vessel, as defined by the rule, would not be feasible because the high volume of solids (e.g., sand and debris) in the fluids would be extremely difficult to remove from storage vessel, typically closed top tanks.

The proposed revisions identify three (3) distinct stages of a well completion operation and the specific requirements for handling of gases and liquids for each stage.  The three (3) distinct stages of a well completion operation are as follows:

• Initial flowback stage – begins with the onset of flowback following hydraulic fracturing or refracturing and ends when there is sufficient gas present in the flowback for a separator to operate.
• Separation flowback stage – begins when there is sufficient gas present in the flowback for a separator to operate and ends when the production stage begins or the well is shut it, whichever is first.
• Production stage – when flowback has declined and stabilized sufficiently to allow continuous recovery of the gas and to allow separation and recovery of any crude oil, condensate and produced water.

U.S. EPA provided written clarification that its intent was to allow venting of flowback gasses during certain situations and that fracturing fluids were not required to be routed to storage vessels.  The proposed revisions provide key definitions and clarity within the actual rule, which will be located at §60.5430 if the amendments are accepted as proposed.  A few of the key proposed Subpart OOOO definitions are as follows:

• Flowback “means the process of allowing fluids and entrained solids to flow from a natural gas well following a treatment, either in preparation for a subsequent phase of treatment or in preparation for cleanup and returning the well to production.  The term flowback also means the fluids and entrained solids that emerge from a natural gas well during the flowback process.”
• Recovered gas “means gas recovered through the separation process”
• Recovered liquids “means any crude oil, condensate or produced water recovered through the separation process”
• Well completion vessel “means a vessel that contains flowback during a well completion operation following hydraulic fracturing or refracturing.  A well completion vessel may be a lined earthen pit, a storage vessel, or a vessel that is skid-mounted or portable.”

What Will The Proposed Subpart OOOO Require For RECs?

As previously stated, although the regulatory language has changed significantly, the basic requirements for RECs will remain the same if the amendments are made final as proposed.

The first stage in a well completion is the “initial flowback stage”.  During this stage, flowback must be routed to a “well completion vessel” (e.g., open top frac tank, a lined pit, or any other vessel), and there is no requirement to control emissions from the “vessel” and any gas can be vented.  Gas must be diverted to a separator as soon as a sufficient amount is present.  U.S. EPA is seeking to establish objective criteria for determining when there is sufficient gas in the flowback. The proposed requirement has been paraphrased below.

• During the initial flowback stage, route flowback into one (1) or more well completion vessels and operate a separator when sufficient gas is present for a separator to operate.  Any gas present in the flowback prior to the separation flowback stage is not subject to control under this section. Initial flowback is the period during a well completion operation when there is insufficient gas in the flowback to operate a separator.

The second stage in a well completion is the “separation flowback stage.”  During this stage, flowback gasses and liquids are routed to the separator.  With a few exceptions as defined by the rule, the operator is required to route the recovered gas into a gas flow line or collection system, re-inject the gas into the well or another well, use the recovered gas as a fuel, or use the recovered gas for another useful purpose.  Where it is technically infeasible to route the recovered gas to a flow line or collection system or reinject the gas or use the gas as a fuel or for other useful purpose, the recovered gas must be combusted using a completion combustion device. Examples of technical infeasibility include: no flow line or other infrastructure available at the site for collection of the gas.  Please note that with a few exceptions as defined by the rule, no direct venting of recovered gas is allowed. The proposed requirement has been paraphrased below.

• During the separation flowback stage, route all liquids (i.e., crude oil, condensate or produced water) to one (1) or more well completion vessels or storage vessels, or re-inject the liquids into the well or another well.  Route the recovered gas from the separator into a gas flow line or collection system, re-inject the gas into the well or another well, use the recovered gas as a fuel, or use the recovered gas for another useful purpose.  If the above items are infeasible, follow the requirements in (a)(3).  Comply with the initial flowback stage requirements if at any time the gas present in the flowback becomes insufficient to maintain separator operation.

The final stage in a well completion is the “production stage”.  During this stage, gas from the separator is prohibited from being vented or controlled by combustion and all recovered liquids must be routed to a storage vessel.  Furthermore, the 30-day period for determining VOC potential to emit for purposes of making a storage vessel affected facility would also begin at the beginning of the production stage.  The proposed requirement has been paraphrased below.

• During the production stage, separate and route recovered liquids to storage vessels.  Route recovered gas into a gas flow line or collection system, re-inject the gas into a well, use the recovered gas as a fuel, or use the recovered gas for another useful purpose.  Recovered gas during the production stage may not be vented or controlled by any combustion device.

Bottom Line

Regulatory definitions and citations aside, the requirement to conduct RECs on January 1, 2015 is not new and is not changing.  The proposed July 17, 2014 revisions merely make technical corrections and provide further clarification concerning what owners and operators must do during well completion operations.

There is an exception in the rule to implementing RECs during the separation flowback stage.  The exception allows gas that is captured to be directed to a completion combustion device, but only if RECs are deemed infeasible.  Whether you plan to utilize this exception or are unsure at this point, you will want to consider how you plan to document that RECs are infeasible.  Exception recordkeeping requirements are provided in the rule at §60.5420(c)(iv), which require owner/operators to record the location of the well; the API well number; the specific exception claimed; the starting date and ending date for the period the well operated under the exception; and an explanation of why the well meets the claimed exception.