RECENT AMENDMENTS TO FINAL 2012 NSPS, Climate Action Plan, EPA and Methane, 40 CFR Part 98 Subpart W – Petroleum and Natural Gas Systems, MODIFICATIONS TO GP-5

1. 2015 Winter Meeting
February 24 & 25, 2015
Seven Springs Mountain Resort
Champion, PA 15622

2. RECENT AMENDMENTS TO
FINAL 2012 NSPS
(SUBPART OOOO)

3. Introduction
• Amendments issued in response to petitions for administrative
reconsideration filed in connection with final 2012 NSPS and 2013
amendments to NSPS dealing with storage vessel implementation
requirements.
• Change requirements applicable to well completions, storage vessels, rod
packing emissions from reciprocating compressors, the definition of
“responsible official” and the availability of the administrative affirmative
defense to civil penalties.
• Took effect on December 31, 2014.
• Subpart OOOO is applicable to crude oil and natural gas extraction,
distribution of natural gas and pipeline transportation of natural gas.

4. “Low Pressure Gas Well” Definition
• Definition contained in final 2012 NSPS.
o A mathematical formula based on a relationship between well depth, reservoir pressure and
flowline pressure.
o Wells that qualify are exempt from Reduced Emission Completion (“REC”) requirements.
• IPAA and PIOGA filed a joint petition for administrative reconsideration of the 2012
definition with EPA.
• IPAA and PIOGA submitted comments.
• EPA re-reissued the 2012 definition without change as part of the 2014
amendments.
• Reasons this may not be as bad as it might have been.
o EPA acknowledges receipt of the comments and that they were timely. EPA admits it did not
consider the comments in reissuing the definition.
o Changes that EPA has made to well completion requirements in the 2014 amendments.

5. Well Completions
• Amendments divide flowback into two
phases, an initial phase and a separation
phase
o Initial Phase
o Separation Flowback Phase

6. Initial Phase
• Begins with the onset of flowback.
• “During the initial flowback stage, there is no
requirement for controlling emissions from the vessel,
and any gas in the flowback during this stage may be
vented.” See Preamble to Final 2014 Amendments, 79
F.R. 79021 (December 31, 2014)
• “However, the operator must route the flowback to a
separator unless it is technically infeasible for a separator
to function”. Id.

7. • EPA has not identified criteria for determining when it is
technically infeasible for a separator to function. If it is
something other than the amount of gas present in the
flowback, it must be a site specific technical issue (i.e.,
separator is overwhelmed by the flowback such that vapor
space cannot be maintained; liquid drain unable to handle
volume of liquid flowing through).
• Operator must direct flowback liquids to a “storage vessel”
or a “well completion vessel.”
• “Well completion vessel” may include a lined pit or other
vessel. Flowback may not be directed to an unlined pit or
onto the ground.

8. Separation
Flowback Stage
• Begins as soon as a separator is able to function.
• Recovered liquids must be directed to a “storage vessel”, a
“well completion vessel”, a “collection system” or reinjected
into the well or another well.
o “Collection system” means any infrastructure that conveys
gas or liquids from the wellsite to another location for
treatment, etc.

9. • During the separation phase, direct venting of gas to
the atmosphere is prohibited.
• The operator must direct all salable quality gas to a
flow line or collection system, inject it into the well or
another well, use it as an on-site fuel source, or use it
for any other useful purpose for which a purchased fuel
or raw material may be used.
• If it is not feasible to direct the gas as stated the
operator must combust it unless combustion would
pose a fire or explosion hazard or negatively impact
tundra, permafrost or waterways.

10. End of Flowback/
Start of Production
• The end of the separation flowback stage marks the end of
flowback.
• It is defined as the time period when the well is shut in and
flowback equipment is permanently removed or start-up.
• The start of production begins the thirty (30) day period for
determining Volatile Organic Compound (“VOC”) Potential to Emit
(“PTE”) of storage vessels for purposes of making the affected
storage vessel facility determination. If the criteria are met and the
vessel is determined to be an affected facility, compliance with
applicable requirements (i.e., control, cover and closed vent
system) must occur within sixty (60) days after start of production.

11. • During this period any recovered liquids must be
directed to a storage vessel, a well completion
vessel or a collection system.
• Use of a “well completion vessel” for more than
sixty (60) days after start-up of production
renders the vessel a “storage vessel” by operation
of law and depending on the amount of
emissions subject to control (i.e. control, cover
and closed vent system requirements).

12. Storage
Vessels
• Removal from service and PTE determinations.
o EPA has amended storage vessel requirements to require that the dates
upon which storage vessel affected facilities are removed from service and
returned to service be included when those events are required to be
reported.
 EPA has adopted a new definition of “removal from service”.
 A storage vessel affected facility is considered to have been removed
from service when it is isolated and physically disconnected from the
process for a purpose other than maintenance, completely emptied
and degassed and no longer used to store crude oil, condensate,
intermediate hydrocarbon liquids or produced water.

13. o PTE determinations upon return to service.
o Storage Vessels in Parallel
When two or more storage vessels are receiving liquids in
parallel, the total through put is shared between or among
them. The PTE of an individual vessel is a fraction of the
total PTE of the combined vessels. In that case, EPA
considers the parallel storage vessels to be a single vessel
with the PTE equal to the sum of the PTEs of the individual
vessels.

14. Other Storage Vessel Amendments
• PTE for storage vessels using vapor recovery under a legally and
practically enforceable emission limit.
o Exclusion only applicable when vessel not subject to legally and
practically enforceable emission limit and meets other
requirements.
• Thief hatch.
o Thief hatch must be equipped, maintained and operated with a
weighted mechanism or equivalent to insure that the lid
remains properly seated - purpose is to encourage innovation
and flexibility.

15. Routing Emissions from Reciprocating
Compressor Rod Packing to a Process
• The amendments recognize a new technology to address
rod packing emissions from reciprocating compressors.
• The technology involves the collection of rod packing
emissions under negative pressure and the routing of such
emissions through a closed vent system that meets the
requirements of existing NSPS to a process that burns gas
for augmentation of regular fuel supply.
• The operator may choose between the three alternatives
(two work practice, one technology) the most appropriate
in the circumstances.

16. Equipment Leaks at
Gas Processing Plants
• Small gas processing plants.
o Amends leak detection requirements of Subpart OOOO to
add “connectors” to the list of equipment that is exempt
from routine leak detection requirements at small gas
processing plants.
o Small gas processing plants are defined as those plants
which do not have the design capacity to process at least
10,000,000 standard cubic feet of field gas per day.

17. The Definition of
“Responsible Official”
• Replaced the term “Responsible Official” with the term “Certifying
Official” and the term “Permitting Authority” with the term
“Administrator”. EPA believed that the use of the terms Responsible
Official and Permitting Authority too closely mirrored the language of Title
V and could cause confusion. 79 F.R. 79027-79028 (December 13, 2014).
• EPA dropped the requirement of preapproval for a delegation by an entity
employing less than 250 persons or having gross sales of less than
$25,000,000.
• Delegation is now effective upon advance notification to the Administrator
for those facilities (<250 person or <$25M).

18. Affirmative Defense
• EPA removed the regulatory affirmative defense
to civil penalties contained in the 2012 final NSPS.
• EPA stated it believed that its enforcement
discretion on a case-by-case basis was sufficient
to provide the flexibility needed when a violation
results from a malfunction beyond the owner or
operator’s control.

19. EPA and Methane
Roy Rakiewicz
Senior Consultant
All4 Inc.

20. How Did We Get Here?
• President’s June 2013 “Climate Action Plan”
– Prepare the United States for the impacts of
climate change
– Lead international efforts to address global
climate change
– Cut carbon pollution in America

21. June 2013 Climate Action Plan
• Cut Carbon Pollution in America
– Deploying clean energy
– Building a 21st century transportation sector
– Cutting energy waste in homes, businesses, and
factories
– Leading at the Federal level
– Reducing “other” GHG emissions

22. June 2013 Climate Action Plan
• Reducing Other Greenhouse Gas Emissions
– Curbing emissions of hydrofluorocarbons
– Preserving the role of forests in mitigating climate
change
– Reducing methane emissions

23. June 2013 Climate Action Plan
• Reducing Methane Emissions
– Interagency methane strategy
– Collaborative approach to reduce emissions
– Targets identified for methane reduction:
• Coal mines
• Landfills
• Farms
• Oil and gas development

24. Federal Agency Methane Strategy
• March 28, 2014 – “Strategy to Reduce Methane Emissions”
Released
• Targets: Landfills, Coal Mines, Agriculture, and Oil and Gas
• Oil and Gas Specifics:
– Introduction of “White Papers” to be completed and released
for public review and comment
– Ozone “linkage” to non-methane VOC
– Likely regulatory pathways and 2016 deadline
• Section 111
• Control technique guidance (CTG) documents

25. Additional Methane Strategy Actions
• Reduced venting and flaring on public lands for new
and existing wells
• Natural gas pipeline safety standards
• Develop/demonstrate leak detection technology for
transmission and distribution systems
• Modernize transport and distribution infrastructure
• Miscellaneous voluntary efforts

26. The White Papers
• April 5, 2014: EPA “White Papers” on Oil and Gas
Sector Methane and Non-methane VOC Emissions
• Five Documents Covering:
– Compressors
– Completions and ongoing production of hydraulically
fractured oil wells
– Leaks
– Liquids unloading
– Pneumatic devices

27. The Fact Sheet
• January 14, 2015: Administration Takes Steps Forward on
Climate Action Plan by Announcing Actions to Cut Methane
Emissions
• Methane emission reduction goal of 40-45% from 2012
levels by 2025
• Methane comprises 10% of U.S. GHG emissions
• 30% of methane emissions attributed to the oil and gas
industry
• How will reductions be achieved?

28. Regulatory Revisions
• Standards for Methane and Non-methane VOC
emissions
– New/modified “White Paper” sources - likely Subpart
OOOO revisions
– Oil and gas production, processing, and transmission
– Proposal summer 2015
– Final by end of 2016

29. New Control Technique Guidelines
(CTGs)
• CTGs for oil and gas non-methane VOC emissions
• Developed by contractors for U.S. EPA
• Represent “Ready to Adopt” control measures for
states
• States can adopt and apply to existing sources in
ozone non-attainment areas

30. New Reporting Requirements
• Enhanced Leak Detection and GHG Emission
Reporting
– Expanded GHG reporting for oil and gas industry
• Subpart expansion is already proposed
– Remote sensing technologies and other
“enhancements” including optical sensing

31. What Is PIOGA Doing?
• U.S. EPA forming a Small Business Advocacy Review
(SBAR)
• PIOGA - Small Entity Representative (SER)
• SERs provides advice/recommendations regarding
potential rule impacts on small entities
• Panel will also include federal representatives from:
– Small Business Administration (SBA)
– Office of Management and Budget (OMB)

32. 40 CFR Part 98 Subpart W –
Petroleum and Natural Gas Systems
Meghan Barber
Project Engineer
All4 Inc.

33. History of 40 CFR Part 98 Subpart W
• November 30, 2010
– Finalization of 40 CFR Part 98 Subpart W requirements
– Applicable to eight (8) different industry segments
• Since 2010 – Subpart W has been revised EIGHT (8)
separate time
• Most recent revisions:
– November 25, 2014 (finalized)
– December 9, 2014 (proposed)

34. November 2014 Finalized Revisions
• Amendments became effective January 1, 2015
– Affects reports due March 31, 2016
• Amendments expected to reduce reporters’ burden:
– Various revisions to calculation methods within each of the
industry segments
– Use of optical gas imaging for screening tool to detect
emissions from reciprocating and centrifugal compressors
– Guidance around missing data procedures

35. November 2014 Finalized Revisions
• Amendments expected to reduce burden:
– Removal of existing Best Available Monitoring Method
(BAMM) and transitional BAMM provisions
• If a request for extension was not filed by January 30, 2015,
reporters must conduct measurements according to the new rules
by April 1, 2015
• Amendments expected to increase burden:
– Revisions to calculation and reporting methods for
completions and workovers, and flare stacks

36. November 2014 Finalized Revisions
• Amendments expected to increase reporters’ burden:
– Addition of 247 new data elements, revision of 13 data
elements, and deletion of 34 data elements required to be
reported
• Revisions do not specifically change monitoring
requirements; however, these may have been
inadvertently changed in different areas of the subpart.

37. December 2014 Proposed Revisions
• Intent is to finalize amendments by end of 2015
– Affects reports due March 31, 2017
• Onshore Petroleum and Natural Gas Production
Segment
– Required to monitor and report emissions from oil well,
not just gas well, completions and workovers completed
with hydraulic fracturing
• 50 new reporters (nationally) expected to trigger Subpart W
• Affect 246 existing reporters

38. December 2014 Proposed Revisions
• Onshore Petroleum and Natural Gas Production
Segment
– Required to report Well Identification Number
• Two (2) new industry segments:
– Onshore Petroleum and Natural Gas Gathering and
Boosting
• 200 new reporters (nationally) expected to trigger Subpart W

39. December 2014 Proposed Revisions
• Proposed Two (2) new industry segments:
– Onshore Natural Gas Transmission Pipeline
• 150 new reporters (nationally) expected to trigger Subpart W
• None of the newly proposed elements are entitled to
confidential protection
• Comments accepted through today, February 24, 2015

40. SOURCE AGGREGATION

41. Source Terms
• Authority to aggregate arises from source terms in EPA’s Title V, PSD
and nonattainment NSR programs (adopted in pertinent part by
Pennsylvania).
• Title V – May not operate a “major source” of air emissions without
a permit.
• “Major source” – any stationary facility or source which directly
emits or has the potential to emit 100 tons per year of any air
pollutant.
• “Stationary Source” - any building, structure, facility or installation
which emits or may emit a regulated air pollutant.

42. Aggregation Criteria
• Authority to aggregate emissions from multiple emissions activities arises
if and only if the following three criteria are met:
1. Share same two digit SIC code;
2. Located on one or more contiguous or adjacent properties; and
3. Owned by the same person or persons under common control.
• Common ownership and SIC code criteria are often not in dispute, but
whether emissions’ activities are “adjacent” often is.
• “Adjacent” and “contiguous” are not defined in the regulations.
• EPA has developed a test (not part of its regulations) to determine if
multiple sources are “adjacent”.
• The test is known the functional interrelationship test.

43. • Under the test sources are considered adjacent if
they work together to produce a unified product
irrespective of the distance between them.
• The result of “aggregation” can be increased
administrative burden if two or more minor
sources are combined and become a “major
source”.

44. Major Court Decisions and
Administrative Action
• Summit Petroleum v. EPA, 690 F.3d 733 - Summit Petroleum sought review of
EPA’s determination that its sour gas wells and sweetening plant were a single
stationery source. The closest well to the plant was 500 feet and the most distant
well was 8 miles.
o EPA determined that the wells and plant worked together as a unit to produce a single product
(i.e., natural gas), such that the wells and plant were one source for air permitting purposes.
o The Sixth Circuit disagreed - held that the term “adjacent” is unambiguous and that the EPA’s
use of the functional interrelationship test, to determine if sources are adjacent, irrespective
of distance, undermined the plain meaning of the word “which demands, by definition, that
would-be aggregated facilities have physical proximity.”
o The court remanded the case back to EPA for a redetermination of the Source consistent with
the court’s opinion.

45. • EPA’s Summit Directive:
o “Because of the court’s decision (Summit) … the EPA
may no longer consider interrelatedness in
determining adjacency … in areas under the
jurisdiction of the 6th Circuit …”
o Outside the 6th Circuit … EPA does not intend to
change its long-standing practice of considering
interrelatedness …”

46. • National Environmental Development Association’s Clean
Air Project v. EPA, 752 F.3d 999.
o National Environmental Development sought review of EPA’s
Summit Directive.
o Contended that it placed members outside the 6th Circuit at a
competitive disadvantage.
o Also contended that directive violated EPA’s regional consistency
regulations which require EPA to assure fairness and uniformity
by its regions in application of criteria policy and procedures to
implement and enforce the Act.
o The D.C. Circuit agreed and vacated EPA’s Summit Directive.

47. • On the Horizon – Proposed Regulations
o Office of Information and Regulatory Affairs in February
published Notice of EPA’s intention to propose source
terms within the PSD and nonattainment NSR programs as
they apply to the oil and gas extraction industry.
o “The lack of clarity regarding the term ‘source’ has
resulted in confusion for the regulated community and for
permitting authorities, including EPA’s regions.”
o A bit of good news - appears to be forward-looking only.

48. MODIFICATIONS TO GP-5

49. Proposed Modifications
• Proposed addition of General Condition A9.(d), “the owner or operator of
the facility shall annually submit to the Department a certification of
compliance with the terms and conditions in the GP-5…”
• Certification must state, “based on information and belief formed after
reasonable inquiry, the statements and information in the document are
true, accurate and complete.”
• PIOGA’s comments.
o PIOGA commented PaDEP was without authority under the Clean Air Act or
otherwise.
o Self-certification unnecessary given that the PaDEP can readily ascertain
compliance and the information the operator is already required to report the
records operator is required to maintain.

50. Final Action
• On January 17, 2015 PaDEP issued final
modifications to GP-5 without significant
change.

51. PaDEP Comment
Response Document
• PaDEP’s general response was:
o PaDEP has authority under the Air Pollution Control Act
(“APCA”) to issue a general permit.
o Operator is required to comply with the terms and conditions of
GP-5.
o If an operator objects to self-certification the operator can
submit a full blown application for plan approval or operating
permit.

52. • In response to PIOGA’s argument that PaDEP lacked authority PaDEP relied
on Section 6.1(d) of APCA.
o PaDEP’s reliance is misplaced.
o Section 6.1(d) of APCA imposes an obligation upon a permit applicant
to provide in the design of the source an, “adequate means of
verification of compliance, including source testing or alternative
means to verify compliance.” It authorizes PaDEP to compel nothing.
o Assuming arguendo it does authorize PaDEP to compel something
PaDEP would have to demonstrate that the means of compliance
verification already provided in the design of the source is not
adequate before requiring self-certification.

53. Ron Cusano
Schnader Harrison Segal & Lewis LLP
Fifth Avenue Place
Pittsburgh, Pa 15222
rcusano@schnader.com
(412)577-5203