Impact of New NSPS and NESHAP  Regulations on Oil & Gas Industry
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Impact of New NSPS and NESHAP Regulations on Oil & Gas Industry

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Discussion of EPA proposed changes to NSPS and NESHAP regulations for Oil & Gas industry

Discussion of EPA proposed changes to NSPS and NESHAP regulations for Oil & Gas industry

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    Impact of New NSPS and NESHAP  Regulations on Oil & Gas Industry Impact of New NSPS and NESHAP Regulations on Oil & Gas Industry Presentation Transcript

    • Implications of the New NESHAP/NSPS (MACT) for the Oil & Gas Sector Presented by Cindy Bishop (B.S.Ch.E.)American Institute of Chemical Engineers Dallas Chapter March 27, 2012 1
    • Implications of the New NESHAP/NSPS (MACT) for the Oil & Gas SectorI. What Has Changed?II. Who Is Affected?III. What Needs to Be Done?IV.When Does it Happen?V. What If You Don’t Do it? 2
    • ORIGIN Clean Air Act Section 111  EPA Must List Categories of Stationary Sources That Cause or Contribute Significantly to Air Pollution  EPA Must Issue Performance Standards for Each Category  ―Best System of Emission Reduction‖  Cost  Non-air Impacts  Energy Requirements 3
    • ORIGIN NSPS (40 CFR Part 60) – New Source Performance Standards • New and Modified Sources • Industry Specific • Focus on Criteria Pollutants (VOCs, SO2) • EPA Review Required Every 8 Years 4
    • ORIGINNSPS (continued)1979 – Oil & Gas Production Placed on EPA’sPriority ListJune 24, 1985 - NSPS for leakingcomponents at gas processing plants (KKK)October 1, 1985 – SO2 regulations fromnatural gas processing (LLL) 5
    • ORIGIN Clean Air Act Section 112  NESHAP (40 CFR Part 63) – National Emission Standards for Hazardous Air Pollutants • New and Existing Sources • Industry Specific • Major Sources  MACT – Maximum Achievable Control Technology  Top 12%  No Cost Consideration  EPA Review Required Every 8 Years 6
    • ORIGINNESHAP (continued)July 16, 1992 – EPA Published List of Majorand Area Source Categories, including Oil &Gas ProductionFebruary 12, 1998 – Natural GasTransmission and Storage Added to ListJune 17, 1999 – MACT Issued (HH & HHH)January 3, 2007 – Area Sources 7
    • WHY NOW? January 14, 2009 suit filed February 4, 2010 – Settlement: • Proposed Standards by July 28, 2011 • Final Action by February 28, 2012 8
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    • Who Is Affected? Operations from Well to Refinery or to Customer•Onshore & Offshore•Production (well completion and workover)•Portable Equipment•Storage•Transmission 10
    • When Does it Happen?• Aug. 23, 2011 Rule Proposed Published• Oct. 24, 2011 Comment Deadline• April 3, 2012 Final Rule• ??? 11
    • What Has Changed?NSPS Revised: • Equipment Leaks (KKK) • SO2 (LLL) New (OOOO): • Hydraulic Fracturing • Gas-driven Pneumatic Devices, Centrifugal and Reciprocating Compressors • Storage Vessels Applies to new facilities that were constructed or modified after August 23, 2011 12
    • What Has Changed?NESHAP Revised • Oil & Gas Production Facilities (HH) • Gas Transmission and Storage (HHH) New • Small Glycol Dehydrators • Storage Vessels at Major Sources Must Notify EPA within 1 year after rule becomes final 13
    • NSPS Oil & Gas Production, Transmission, and Distribution (OOOO)Applies to all construction, modification orreconstruction after August 23, 2011Includes fracking or refracking existing wellheadCompliance date: date of final rule publication. 14
    • NSPS Oil & Gas Production, Transmission, and Distribution (OOOO)Reduced Emission Completion (―REC‖) •Route gas during flowback into collection system •Use sandtraps, surge vessels, separators, and tanks during flowback and cleanout operations •Capture and direct flowback emissions that cannot be routed to a gathering line to a combustion device (flare) 15
    • NSPSOil & Gas Production, Transmission, and Distribution(OOOO)Compressor standards •Rotating compressor: dry seal system •Reciprocating compressor: replace rod packing before 26,000 operating hoursPneumatic controller: zero emissions of natural gas ifat gas processing plant, otherwise no more than 6 scfh(switch to compressed air driven from gas controller) 16
    • NSPS Oil & Gas Production, Transmission, and Distribution (OOOO)Condensate and Crude Oil Storage Tanks If : •At least one barrel per day condensate or •At least 20 barrels per day crude oil; Then, 95% VOC emission reduction 17
    • NSPSSulfur Recovery Units at Onshore Gas ProcessingPlantsSO2 standards:• Feed rates of 5 tons per day or greater or• With an acid gas stream H2S concentration of50% or greater•SO2 emission reduction of 99.9% (was 99.8%) 18
    • NSPSLDAR (Subpart VVa instead of VV)Applies to onshore gas processing plants•Lower ―leak‖ threshold•Monitoring connectors 19
    • NSPSStartup, Shutdown, Malfunction•No ―Free Pass‖ During Startup and Shutdown•Affirmative Defense for Malfunctions •Sudden •Infrequent •Not reasonably preventable •Not caused by poor maintenance or careless operation 20
    • NSPSRegistration/recordkeeping•Construction, startup, and modification notifications•Well registration and 30-day notification prior to eachwell completion•Annual Compliance Certification•Third Party verification•Electronic reporting•Over 20,000 completions and recompletions annually 21
    • NESHAP 22
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    • NESHAP Subparts HH & HHHAddition of Small Glycol Dehydrators•Oil & Gas Production: gas flowrate < 85,000 scmd or 0.90 Mg/yr benzene emissions •Existing sources: 1.10 x 10-4 g BTEX/scm •New sources: 4.66 x 10-6 g BTEX/scm•Gas Transmission & Storage: gas flowrate < 283,000 scmd or 0.90 Mg/yr benzene emissions •Existing sources: 6.42 x 10-5 g BTEX/scm •New sources: 1.10x 10-5 g BTEX/scm•Types of control: process vent » control device or closed-vent system 25
    • NESHAP Subparts HH & HHHStorage Vessels95% reduction of HAPs for all storage vessels•Process modifications•Flare•Incinerator•Carbon Filter•CondenserPerformance Testing of Control DeviceElimination of Startup, Shutdown & MalfunctionExemption (See NSPS) 26
    • NESHAP Subparts HH & HHHCompliance dates:Existing sources: 3 years after the date of final rulepublicationNew sources (commenced construction on or after August23, 2011): immediately upon startup or the date of finalrule publication, whichever is later 27
    • What has industry said?Rules will slow drilling, cut natural gas productionand reduce royalties (API)Equipment for capturing emissions duringcompletions is unlikely to be as readily available asEPA assumed, and equipment would have to spendmore time at each site than estimated. 28
    • What If You Don’t Do it?• EPA can make you do it• Civil Penalties up to $25,000/day/violation• Criminal Penalties $250,000 per day per violation and up to five years in jail. Corporations are subject to up to $500,000 per day per violation.• $10,000 bounty 29
    • EPA Region 6 2011—2013 National Enforcement Initiatives1. Keeping raw sewage and contaminated stormwater out of our nation’s waters2. Preventing animal waste from contaminating surface and ground waters3. Cutting Toxic Air Pollution that Affects Communities’ Health4. Reducing Widespread Air Pollution from the Largest Sources, especially the Coal-Fired Utility, Cement, Glass, and Acid Sectors5. Reducing pollution from mineral processing operations6. ASSURING ENERGY EXTRACTION SECTOR COMPLIANCE WITH ENVIRONMENTAL LAWS―To address these emerging problems, EPA will develop an initiative to assure that energy extraction activities are complying with federal requirements‖ 30
    •  Stay on top of the rules –be organized! Look for exemptions Start reviewing operations now – do not wait until the rules are final. Look for innovative/emerging technology EPA favors those who voluntarily disclose problems. 31
    • Implications of the NewNESHAP/NSPS (MACT) for the Oil & Gas Sector Presented by Cindy Bishop 214-893-5646 cbishop@cbishoplaw.com www.cbishoplaw.com 32