Air Quality Compliance Affecting Oil and Gas Development
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The document discusses increasing air quality regulations from the EPA that are affecting oil and gas development. The EPA's New Source Performance Standards (NSPS OOOO) target volatile organic compound (VOC) emissions from oil and gas sources and require controls like green completions, compressor controls, and limits on storage vessels and pneumatic controllers. Other regulations address emissions reporting and may require carbon capture and storage if a project exceeds major source thresholds. While challenges exist in keeping up with changing rules, opportunities also arise in natural gas production and enhancing oil recovery through carbon sequestration.
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Air Quality Compliance Affecting Oil and Gas Development
- 3. Air Regulatory Issues The current regulatory environment is getting more stringent Federal EPA regulations (NSPS OOOO, aka Quad O) aimed at oil & gas operations impact some enhanced CO2 operations Major air emission source permitting must address CO2e emissions CO2e emission inventories include enhanced oil recovery and sequestration projects Let’s talk about these …
- 4. EPA’s New Source Performance Standards, Subpart OOOO (aka NSPS Quad O) Applicable to Crude Oil and Natural Gas Production, Transmission and Distribution Final rule published August 16, 2012 Affects many activities after August 23, 2011 Targets VOC emissions, not methane Natural gas focused, but not exclusively
- 5. Well site • Completions • Storage Vessels • Pneumatics Gathering Booster Facilities • Storage Vessels • Pneumatics • Compressors Natural Gas Plants • Storage Vessels • Pneumatics • Compressors • LDAR • SO2 Natural Gas Transmission Compression • Storage Vessels Underground Natural Gas Storage • Storage Vessels To Distribution What is Covered Under NSPS OOOO?
- 6. NSPS Applicability Date August 23, 2011 April 17, 2012 August 16, 2012 October 15, 2012 October 15, 2013 January 1, 2015 July 2015 October 15, 2015 EPA Administrator signs Final Rule Final Rule Published > Oil and Gas Production Facilities > Gas wells – combustion > Hydraulic Fracturing – record keeping and recording > Natural Gas Processing Plants > Centrifugal and reciprocating compressors > NG pneumatic controllers > Equipment leaks > Sweetening Units > Storage Vessels > NG pneumatic controllers between wellhead and gas processing plant Gas wells – Phase II (RECs) Equipment leaks at existing gas plants (NESHAP) Glycol dehydration units at existing sources (NESHAP)
- 7. Primary Impacts from Quad O Natural Gas Production Hydraulic Fracturing ‐ Green Completions Oil and/or Natural Gas Compressors (centrifugal ‐ wet seal controls; reciprocating ‐ rod packing replacement) Pneumatic controllers (zero bleed at gas plants, low bleed everywhere else) Storage vessels (controls if emit > 6 tons VOCs/year) Also, significant recordkeeping and reporting requirements. Gas Plants (tighter LDAR requirements)
- 8. Quad O – Storage Tank Reconsideration EPA recently proposed to “reconsider” storage tank control requirements EPA accepted industry comments that EPA significantly underestimated the number of effected storage tanks Proposed April 2013, expect to finalize July 2013 (before current August 2013 compliance deadline) Group 1 (between August 23, 2011 and April 12, 2013) – register, but no controls (unless production changes affecting the tank) Group 2 (after April 12, 2013) – controls by April 15, 2014 (or 60 days after startup if later)
- 9. Other Air Regulations EPA Power Plant NSPS Rule – although it most directly impacts coal‐fired power plants, the indirect affect is to promote carbon capture / sequestration. Colorado’s proposed Regulation 7 changes – will impose Quad O‐type requirements on all oil & gas sources statewide (well pad LDAR/camera; compressor LDAR, presumptive BACT control requirements). Likely to be finalized by end of 2013. Will other states follow? California Senate Bill 34 (pending) – would require California Air Resources Board to regulate CO2 EOR projects used for carbon sequestration
- 10. Air Permitting and CO2 CO2 is an “air pollutant” (U.S. Supreme Court; Massachusetts vs. EPA, 2007) EPA “Endangerment Finding” – 2009 (“greenhouse gases in the atmosphere may reasonably be anticipated both to endanger public health and to endanger public welfare”) Automobile tailpipe emission standards (once CO2 was regulated as a pollutant under the Clean Air Act, permitting requirements could be established). So how does this affect us?
- 11. Major Source Air Permitting EPA’s “Tailoring Rule” Since Clean Air Act major source permitting thresholds (100 tons/year of pollutants) would result in “absurd results” if applied to CO2 (EPA’s words), EPA established a 25,000 tons/year threshold for CO2. Projects that are major for CO2 must consider Best Available Control Technology (BACT), specifically including carbon capture and sequestration (CCS). EPA acknowledges that CCS is not “mature” and most CO2 BACT to date has focused on energy efficiency.
- 12. CO2 Emissions Reporting EPA’s Mandatory Reporting Rule Subpart W for oil and gas sources Subpart UU for enhanced oil recovery Subpart RR for geologic sequestration Electronic reporting due every March for prior calendar year Testing, source counting, data capture, emission factors; much recordkeeping
- 14. Are There Opportunities? Will the President’s recently announced Climate Action Plan present opportunities to the industry? The continued focus on coal may provide: More opportunities for natural gas Opportunities to support coal plants to CCS or EOR Energy Secretary Moniz expects EOR rates to grow from 300,000 BPD to 3,000,000 BPD, much of it from capturing coal power plant CO2 emissions.
- 15. White House Policy on Climate Change Three weeks ago, President Obama presented his view of changes that should be made regarding climate change. The official policy is largely silent regarding the petroleum industry. “Sometimes there are disputes about natural gas, but let me say this: We should strengthen our position as the top natural gas producer because, in the medium term, at least, it not only can provide safe cheap power, but it can also help reduce our carbon emissions.” Continue effort to eliminate “tax breaks” Keystone XL – approve only if the Pipeline does not exacerbate GHG emissions.