U.S. EPA’s Proposed Revisions to Oil and Natural Gas Sector NSPS and NESHAPs
Posted: January 9th, 2012Author: All4 Staff
Using a “sector-based approach,” U.S. EPA proposed revisions to both the Standards of Performance for New Stationary Sources (NSPS) and National Emission Standards for Hazardous Air Pollutants (NESHAP) for the oil and gas industry on August 23, 2011. Comments regarding the proposed revisions were originally due on October 24, 2011, but the comment deadline was extended by one (1) week to October 31, 2011. The proposed revisions are required as part of a consent decree which required U.S. EPA to propose standards on or before July 28, 2011 and to issue final standards on or before February 28, 2012.
The consent decree resulted from a suit alleging that U.S. EPA failed to meet certain obligations under the Clean Air Act (CAA) regarding the review and revision of the standards. U.S. EPA chose the sector-based approach for the Oil and Gas industry rule revisions in order to identify “…optimum strategies, considering feasibility, cost impacts, and benefits across the different pollutant types while streamlining administrative and compliance complexities and reducing redundant requirements, resulting in added certainty, and easier implementation of control strategies for the sector under consideration.”
While there may very well be benefits associated with a sector-based approach to this rulemaking, the end result is just a simultaneously proposed revision to four (4) separate regulations:
- 40 CFR Part 60, Subpart KKK – Standards of Performance for Equipment Leaks of VOC from Onshore Natural Gas Processing Plants
- 40 CFR Part 60, Subpart LLL – Standards of Performance for Onshore Natural Gas Processing: SO2 Emissions
- 40 CFR Part 63, Subpart HH – National Emission Standards for Hazardous Air Pollutants from Oil and Natural Gas Production Facilities
- 40 CFR Part 63, Subpart HHH – National Emission Standards for Hazardous Air Pollutants from Natural Gas Transmission and Storage Facilities
These regulations fall under two (2) Parts of Title 40 of the Code of Federal Regulations (Parts 60 and 63), with differing CAA statutory origins (i.e., Section 111 and Section 112), and differing pollutants (i.e., hazardous air pollutants vs. criteria pollutants). Any efficiencies gained on the proposal of the rules are not translated during the review and comment period as the public (and affected entities) must essentially dissect and review two (2) complex sets of regulatory revisions in the time-frame that is typically allocated for a single rulemaking.
The NSPS revisions are being proposed under authority of CAA Section 111(b)(1)(B) which requires U.S. EPA to review and to revise performance standards every eight (8) years. The NESHAP revisions are being proposed under authority of CAA Section 112(d)(6), which also requires U.S. EPA to review technology-based Maximum Achievable Control Technology (MACT) standards every eight (8) years and to revise them as necessary to reflect current technology. In addition, CAA Section 112(f) requires U.S. EPA to determine if the technology-based MACT standards provide an ample margin of safety to protect public health. The proposed revisions to the NESHAP standards include the required “residual risk” evaluation. In addition to proposing several significant changes to the rules and requesting comment in general, U.S. EPA is seeking comments on several specific topics as detailed in the proposal.
Proposed NSPS Revisions
U.S. EPA is proposing to revise Subpart KKK to reflect the volatile organic compound (VOC) leak detection and repair (LDAR) requirements of 40 CFR Part 60, Subpart VVa in lieu of the currently required 40 CFR Part 60, Subpart VV requirements. U.S. EPA is also proposing to strengthen the existing Subpart LLL requirements for the control of sulfur dioxide (SO2) at natural gas processing plants. However, the big news is U.S. EPA’s expansion of the Oil and Natural Gas source category to cover all industry operations including production, processing, transmission, storage, and distribution and their proposal of standards for many of the newly affected oil and natural gas facilities.
The proposed new requirements will be placed in a new Subpart OOOO that will include new and revised requirements that would affect new and modified facilities under Subparts KKK and LLL, while retaining Subparts KKK and LLL for affected facilities currently subject to those standards. The proposed NSPS revisions are focused on the reduction of VOC emissions. While greenhouse gas (GHG) emissions are not directly regulated by the proposed standards, the preamble to the rule references the significant reductions in methane emissions that would result from the proposed revisions. A summary of each of the proposed revisions is provided below:
Operational Standards for Completions of Hydraulically Fractured Gas Wells
Standards are being proposed for two (2) well subcategories: non-exploratory/non-delineation wells and exploratory/delineation wells. The proposed standards include reduced emission completion (REC) for the non-exploratory/non-delineation subcategory and would include re-fractured existing wells (i.e., pre-August 23, 2011) as modifications subject to the standards as well as new wells. The proposed operational standard for new exploratory/delineation wells requires pit flaring as such wells are typically not close to a gathering line. The proposed standards are envisioned to reduce VOC (and methane) emissions.
Standards for Gas Driven Pneumatic Controllers
U.S. EPA is proposing to identify each pneumatic device as an affected facility under Subpart OOOO, making any new or replaced device subject to the new standard. For gas processing plants, the VOC emission standard will be zero emissions, which reflect the use of non-natural gas driven pneumatic controllers (i.e., use of compressed air driven controllers). At all other locations (e.g., well pads, etc.), pneumatic devices would be subject to a proposed bleed limit of six standard cubic feet of natural gas per hour.
Standards for Centrifugal and Reciprocating Compressors
New and modified centrifugal compressors will be subject to an equipment standard that specifies the use of dry seal systems. Comments are being sought for abating VOC emissions from wet seal systems where such systems are required. New and modified reciprocating compressors will be subject to an operational standard that specifies required piston rod packing replacement prior to 26,000 hours of operation.
Standards for Condensate and Crude Oil Storage Tanks
Certain tanks will be required to achieve a 95% reduction in VOC emissions. In the proposal, new and modified tanks with throughputs of one barrel per day of condensate or 20 barrels per day of crude oil would be subject to the standard.
Revised LDAR Standards for Natural Gas Processing Plants
New and modified natural gas processing plants will now be subject to the LDAR requirements under 40 CFR Part 60, Subpart VVa for the control of VOC, whereas the existing standard requires Subpart VV.
Revised Natural Gas Processing Plant SO2 Standards
New and modified natural gas processing plants with sulfur feed rates of five tons per day or greater or with an acid gas stream hydrogen sulfide (H2S) concentration of 50% or greater will be required to reduce SO2 emissions by 99.9%.
Startup, Shutdown, and Malfunction (SSM) Provisions
The revised standards will include “affirmative defense” provisions for exceedances that are caused by malfunctions. For a more detailed review of affirmative defense, please refer to our December 2010 4 The Record article.
In addition to the proposed technical revisions and additions to the NSPS, there will be corresponding revisions to monitoring, recordkeeping, compliance verification, and reporting requirements. U.S. EPA is considering several “innovative compliance approaches and is requesting comments on several specific items:
- Well registration and advance notice of planned completions – U.S. EPA is looking for ways to streamline the anticipated flood of notifications regarding completions of hydraulically fractured wells and their specific locations.
- Third party verification – U.S. EPA is considering the use of third party compliance verification resources to relieve the anticipated burden on state, local, and U.S. EPA permitting staff with the industry bearing the responsibility for the costs.
- Electronic reporting using existing mechanisms – U.S. EPA is considering the use of existing emission reporting tools (e.g., Electronic Greenhouse Gas Reporting Tool or e-GGRT) for submittal of emissions data.
- Provisions for encouraging innovative technology – U.S. EPA is concerned that the proposed NSPS revisions will prove to be a disincentive for industry innovation due to fear of violation.
Finally, U.S. EPA elected to retain the Title V permit exemption for non-major NSPS sources, finding that exempting non-major NSPS sources from Title V requirements would not have any adverse impacts on public health or the environment.
Proposed NESHAP Revisions
U.S. EPA is proposing to revise Subparts HH and HHH to include MACT standards for small glycol dehydrators which were previously not subject to standards. Under Subpart HH, small glycol dehydrators have actual annual average natural gas flowrates of 85,000 standard cubic meters per day (scmd) or actual average benzene emissions of less than 0.9 megagrams per year (Mg/yr). Under Subpart HHH, small glycol dehydrators have actual annual average natural gas flowrates of less than 283,000 scmd or actual average benzene emissions of less than 0.9 Mg/yr. U.S. EPA is also proposing MACT standards for storage vessels that are currently unregulated under Subpart HH at major sources of hazardous air pollutants (HAP). U.S. EPA is also proposing revisions to both Subparts HH and HHH as a result of the risk review in addition to revisions to testing requirements, parametric monitoring calibration procedures, and the elimination of the SSM exemption. The proposed revisions are summarized further below:
Subpart HH Small Glycol Dehydrators
The proposed standard for existing small glycol dehydrators at Subpart HH facilities is a unit-specific benzene, toluene, ethylbenzene, and xylene (BTEX) limit of 1.1E-4 grams BTEX/standard cubic meter (scm)-parts per million by volume (ppmv). For new small glycol dehydrators, the proposed standard is 4.66E-4 grams BTEX/scm-ppmv.
Subpart HHH Small Glycol Dehydrators
The proposed standard for existing small glycol dehydrators at Subpart HHH facilities is a unit-specific BTEX limit of 6.42E-5 grams BTEX/scm-ppmv. For new small glycol dehydrators, the proposed standard is 1.10E-5 grams BTEX/scm-ppmv.
Subpart HH Storage Vessels
U.S. EPA is proposing to apply the current 95% reduction standard for vessels with potential flash emissions (PFE) to every storage vessel at major sources. This, combined with a change in the definition of “associated equipment,” impacts the major source definition as well since emissions from all storage vessels will need to be considered in a major source determination.
Subpart HH and HHH Risk Review Revisions
U.S. EPA is proposing to eliminate the current glycol dehydrator alternative compliance option under each subpart that allows facilities to reduce benzene emissions to less than 0.9 Mg/yr versus the 95% control option. The alternative standard was shown to exhibit an unacceptable level of risk.
Alternative Performance Test for Non-flare Combustion Control Devices
U.S. EPA is proposing an alternative test for non-flare control devices that will allow control device vendors to demonstrate control device efficiency prior to sale. A definition of “flare” will be included to clarify applicability to the alternative test.
Additional Proposed Revisions
U.S. EPA is proposing several additional revisions that reflect changes regarding control devices and compliance since the original rule promulgation and include revised parametric monitoring calibration provisions, periodic compliance testing, removal of allowance for a design analysis for non-condenser control devices, removal of residence time requirement for enclosed combustion control devices, and addition of recordkeeping and reporting requirements for carbon replacements.
Startup, Shutdown, and Malfunction (SSM) Provisions
The revised standards will eliminate SSM provisions and will include “affirmative defense” provisions for exceedances that are caused by malfunctions. For a more detailed review of affirmative defense, please refer to our December 2010 4 The Record article.
As with the proposed NSPS revisions, in addition to the proposed technical revisions and additions to the NESHAPs, there will be corresponding revisions to monitoring, recordkeeping, compliance verification, and reporting requirements.
Considered collectively, the proposed revisions appear to be substantial. U.S. EPA’s recent “sector-based” approach to regulatory revisions doesn’t help matters because, in essence, significant revisions are being proposed to multiple and complex rules under a single proposed rulemaking. While such an approach may provide economies of scale to the regulators developing the rules, it requires commenters to review, understand, and evaluate multiple rule impacts to a variety of regulated entities in a relatively compressed 60-day review period. The proposed revisions to the NSPS rules appear to be the more substantial concern due to their now expansive coverage. Affected facilities should fully understand the technical details of the proposed revisions as well as the underlying monitoring, recordkeeping, reporting, and compliance demonstration obligations. U.S. EPA acknowledges the expansive coverage of the NSPS revisions by requesting comment on the use of third party compliance verification, with industry bearing the associated cost burden. Affected entities should also pay special heed to the non-technical, administrative revisions to proposed NESHAP revisions to fully understand the demons in the details.
This article was prepared by the ALL4 Marcellus Shale Initiative team.