The document discusses upcoming changes to federal rules and air quality standards that will impact the oil and gas industry. It outlines proposed revisions to new source performance standards and national ambient air quality standards for ozone, particulate matter, sulfur dioxide and other pollutants. The oil and gas industry is encouraged to engage with state and federal associations to comment on rules and permitting impacts as standards continue to tighten. Air quality across the U.S. has improved but additional monitoring is needed as new standards are developed.

1. Oil and Gas Air Issues
NAAQS in Transition
AIPRO - Arkansas Independent Producers and Royalty Owners
September 29, 2011
Little Rock, AR

2. Discussion Topics
Federal Oil and Gas rule & NAAQS changes underway
 MACT and NSPS Rulemaking
 National Ambient Air Quality Standards (NAAQS)
 Permits (Aggregation, PSD for SO2 and NO2
NAAQS, NEPA)
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3. Old NSPS
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4. NSPS Proposed August 23, 2011
Comments due October 31, 2011
After proposal, new or modified facilities comply by 2/28/20124

5. Oil and Gas NSPS Overview
Source Applicability Proposed Control Comment
Devices
Storage tanks >=1 bbl/d throughput of Close tank and route Applies to both new and replaced storage tanks
condensate (≥ vents to a VRU,
40 API wt.) combustor, or
>=20 bbls/d throughput flare that
of crude oil (<40 achieves at least
API wt.) 95% emissions
Construction control.
commenced
after 8/23/2011
Centrifugal Installation commenced Must be equipped with a Final rule may allow for wet seal if controlled, but
Compressor after 8/23/2011 dry seal currently not in proposed rule. Includes
compressors moved from one site to another
Reciprocating Installation commenced Replace rod packing Includes compressors moved from one site to another
Compressor after 8/23/2011 every 26,000 hrs
Pneumatic controllers All new or replaced Gas plants: instrument Natural gas is proposed as a surrogate for VOC
controllers using gas is prohibited
instrument gas. (air is ok)
Construction All other sites: Gas driven
commenced controller bleed
after 8/23/2011 rate must be < 6
scfh
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Comments due October 31, 2011; extension request needed

6. NAAQS in Transition
 1997 Ozone and PM2.5 NAAQS – Largely attained nationwide
 2006-Oct. PM10 and PM2.5 NAAQS - Largely attained in the eastern U.S.
 2008-Mar. 75 ppb 8-Hour Ozone (Primary & Secondary ) – Now confirmed
 2008-Oct Lead NAAQS Final (Primary and Secondary)
 2010-Jan. NO2 NAAQS Final (Primary only) – Significant permitting issue
 2010-June SO2 NAAQS Final (Primary only) – Attainment by modeling an issue.
 2011- Aug. CO NAAQS Final – No proposed changes
 2011- Sept. 2 Ozone reconsideration – Terminated by President Obama
 2012-March NOx / SOx Secondary – Proposed no combined new form
 2012- ? PM10 and PM 2.5 NAAQS (Primary and Secondary)- How much lower?
Source: EPA Information 6

7. U.S. 2008-2010 Ozone Design Values Status
Arkansas Counties(ppb)-(Crittenden-74, Polk-70, Pulaski-70, Newton-
66, Washington-64)
Based on 2008-2010 data retrieved from AQS Data Mart on January 27, 2011
Includes counties with incomplete and uncertified data
Design values for monitors in
Alaska, Hawaii, and Puerto Rico
Legend
monitoring sites (not shown) were
Numbers of counties are in parentheses
below 61 ppb
0 - 60 ppb (60)
61 - 75 ppb (538)
76 - 84 ppb (96)
> 84 ppb (16)
In 2010, 102 Counties have Air Quality exceeding the 2008 Ozone NAAQS; NONE in Arkansas 7

8. EPA Ozone NAAQS 2011-’12 Actions
 2008 Ozone NAAQS –
 Applies for PSD and NEPA permitting
 No non-attainment designations yet ( and none expected for AR)
 Litigation will resume before year end;
 Sept. 2, 2011 – Ozone NAAQS reconsideration ended
 Uncertain date - Ozone NAAQS Implementation rules needed
 Next steps-
 Dec. 2012 - 120 day EPA notice of intent to designate
 Summer 2012 – EPA non-attainment designation using YE2010 Ozone Air
Quality Data
Recommendation: AIPRO review and comment on designation process 8
to assure attainment outcome

9. Counties With Monitors Currently Violating
the Revised Primary 1-Hour Sulfur Dioxide (SO2) Standard of 75ppb
Not shown on map:
Hawaii Co., HI
St. Croix, Virgin Islands
22 States (59 counties)
with 1-9
59 of 249 monitored counties (data in AQS) violate the standard counties per state
-- Based on 2007-2009 data monitoring
-- Designations will probably be based on 2009-2011 data non-attainment
 Arkansas monitors attainment in Union (26 ppb) and Pulaski (15ppb) 9

10. SO2 NAAQS Status
 June 2011- State designations (AR attainment/unclassifiable statewide)
 Sept. 2011-EPA implementation guidance (FR with comment for states
and stakeholders)
 Rulemaking will follow detailing new implementation approach.
 EPA’s new approach will require 100+ TPY (and perhaps
smaller) sources to model attainment
 Arkansas has ~24 SO2 sources above 100 TPY SO2
 Feb. 2012 – EPA intent to designate issues with public comment
 June 2012 - EPA designation (petition for review possible)
 June 2013 – Attainment / unclassifiable SIP due (attainment modeling)
 February 2014 – Non-attainment SIPs due (attainment modeling)
 June 2017 – Attainment deadline
Recommendation: AIPRO review and comment on Implementation rulemaking10

11. Counties Violating Existing PM2.5 15 ug/m3 Annual Standard
And Hypothetical Lower Standards of 13, 12, and 11 ug/m3
Data Source: http://www.epa.gov/airtrends/values.html
EPA Policy Assessment
Ranges
6 counties violate 15 ug/m3
53 additional counties violate 13 ug/m3 (total of 59)
• 11-13 µg / m3
79 additional counties violate 12 ug/m3 (total of 138)
-- Including Fairbanks North Star, Alaska (not shown)
109 additional counties violate 11 ug/m3 (total of 247)
No Arkansas non-attainment areas; monitor upcoming PM2.5 NAAQS revision11

12. Counties Violating Existing PM2.5 35 ug/m3 24-Hour Standard
And Hypothetical Lower Standard of 30 ug/m3
Data Source: http://www.epa.gov/airtrends/values.html
EPA Policy Assessment
35 counties violate 35 ug/m3 Ranges
-- Including Fairbanks North Star, Alaska (not shown)
79 additional counties violate 30 ug/m3 (total of 114) • 30-35 µg / m3
-- Including Juneau, Alaska (not shown)
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No Arkansas non-attainment areas; monitor upcoming PM2.5 NAAQS revision

13. 2011 Cross State Air Pollution Rule
(CSAPR)
 Issued in August; limits EGU emissions to help
downwind states attain the 1997 Ozone and 2006 PM
2.5 NAAQS
 Ozone season NOx limits begin May 2012
 Ozone annual NOx limits begin January 2012
 SO2 annual limits begin January 2012
 Many areas of the eastern U.S. are attaining the
NAAQS that the CSAPR targets
 Indirect potential impacts: electricity curtailment and
price increases beginning in 2012 in some states
Monitor AR utility responses closely 13

14. Conclusion
Significant NAAQS & Oil and Gas sector rule changes underway
 New EPA rules and permitting interests best addressed by
expanding oil and gas sector associations (state and federal)
 Changes underway bear review and comment where appropriate
 Air Quality has improved significantly recently
 Air Quality improvement trends will continue into the near future
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