NACAA Conference Call to Develop Comments On

NACAA Conference Call to Develop Comments on

EPA’s Proposal for the Oil and Natural Gas Industry

Thursday, October 22, 2015

12:00 – 1:30 PM Eastern

Call-In Number: 866-365-4406, Access Code: 2682624#

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EPA announced the four pieces of its proposed oil and natural gas package on August 18, 2015 and published them in the Federal Register on September 18, 2015:

Proposed Rule for Oil and Natural Gas Sector Emission Standards for New and Modified Sources –
Proposed Rule for Source Determination for Certain Emission Units in the Oil and Natural Gas Sector –
Notice of Availability of Draft Control Techniques Guidelines for the Oil and Natural Gas Industry –
Proposed Rule for the Review of New Sources and Modifications in Indian Country: Federal Implementation Plan for Managing Air Emissions from True Minor Sources Engaged in Oil and Natural Gas Production in Indian Country –

Additional information on this package of measures is available on EPA’s website at

The deadline for public comments is November 17, 2015.

Potential Issues for Comment

Proposed NSPS

In 1979, EPA listed crude oil and natural gas production on its priority list of source categories for promulgation of NSPS. On June 24, 1985, EPA promulgated an NSPS for the source category that addressed VOC emissions from leaking components at onshore natural gas processing plants. On October 1, 1985, EPA adopted a second NSPS for the source category that regulates SO2 emissions from natural gas processing plants. In 2012, based on its Clean Air Act section 111(b)(1)B) authority to review and, if appropriate, revise NSPS, EPA promulgated final standards of performance for Crude Oil and Natural Gas Production Transmission and Distribution, updating the VOC standards for equipment leaks at onshore natural gas processing plants and establishing VOC standards for several oil and natural gas-related operations not covered by subpart KKK, including gas well completions, centrifugal and reciprocating compressors, natural gas-operated pneumatic controllers and storage vessels. In 2013 and 2014, EPA amended the 2012 NSPS to make some improvements to the standards, focusing on storage vessel implementation issues and clarification of well completion provisions. With the current proposal, EPA seeks to address methane from this industry as well.

EPA’s proposed NSPS would establish VOC and methane limits for equipment clustered at five locations across the oil and gas sector, including production, transmission and storage activities. The locations covered by the proposal are 1) natural gas well sites; 2) oil well sites; 3) production gathering and boosting stations; 4) natural gas processing plants; and 5) natural gas compressor stations. For some equipment already covered by the 2012 NSPS, EPA is extending its prior VOC limits to include methane emissions but without imposing any new control requirements. The proposal, however, does include new VOC and methane emissions limits for some equipment excluded from the 2012 NSPS as well as new leak inspection requirements at four of the five locations identified above.

1)Issue: EPA’s 2014 technical white papers address methane and VOC emissions from sources throughout the oil and gas sector. However, some of the equipment and activities discussed are omitted from the proposed NSPS. Should the NSPS be expanded to include them?

Recommended NACAA Comment: The scope of the final rule should be expanded to include liquids unloading activities and intermittent pneumatic controllers.

2)Issue: For equipment already regulated by the 2012 NSPS for VOC emissions, EPA is not requiring any new control technologies to reduce methane emissions. Is EPA’s equivalency determination for VOC and methane controls appropriate?

Recommended NACAA Comment: EPA should revisit its BSER determination to provide more direct regulation of methane and not simply rely on the co-benefits of existing VOC controls. Under the proposed approach, “dry gas” areas are unlikely to achieve the methane emission reductions sought by the rule.

3)Issue: EPA’s proposed NSPS requires periodic site-wide surveys to detect methane and VOC leaks from equipment at natural gas well sites, oil well sites, natural gas production and boosting stations and natural gas transmission compressor stations. The agency has proposed that the surveys take place on an annual or semi-annual basis. Should the surveys be conducted more frequently (e.g., quarterly)?

Recommended NACAA Comment: More frequent reporting requirements are necessary to ensure identification of the highest volume emitters. The final rule should impose quarterly reporting requirements.

4)Issue: The proposed leakage survey requirements include incentives that, if met, reduce the frequency of the required surveys. For example, if leaks are found at less than 1 percent of covered components during two consecutive surveys, the survey frequency decreases. Is EPA offering an appropriate incentive structure or does the proposed framework create risks that large leaks may go undetected?

5)Issue: Should EPA allow site operators to use Method 21 as an alternative to optical gas imaging when conducting the site survey? Should EPA allow states to use otherleak detection approaches?

Recommended NACAA Comment: Leak detection technology is changing rapidly. The final NSPS should not commit states to a single method that excludes the use of improved techniques and instrumentation in the future.

6)Issue:The proposed rule would impose new “green completion” requirements to capture methane emissions at oil well sites beginning 60 days after the final rule is published in the Federal Register. Is sufficient green completion equipment available to meet EPA’s proposed compliance timeline or should the timeline be adjusted?

7)Issue: EPA has not, and does not propose to, address NOx emissions from the oil and gas sector.

Recommended NACAA Comment: Although the agency asserts that other standards and regulatory programs will capture NOx from this sector, comprehensively addressing all emissions from the sector, including NOx from a variety of sources within the sector, in one regulation would be a prudent and effective multi-pollutant approach. Since EPA does not include an NSPS for NOx in this proposal, the addition of such a standard would likely require reproposal. Therefore, EPA should move forward to finalize the current proposal and follow it with a proposal for an NSPS for NOx.

Proposed Source Determination Rule

Under the current statutory and regulatory definitions, three factors are assessed on a case-by-case basis to determine which pollutant-emitting activities should be included as part of a single source when determining applicability of the Clean Air Act’s major-source permitting programs (NSR and Title V permitting requirements:

(1) same industrial grouping,

(2) location on contiguous or adjacent properties, and

(3) under common control.

In this rulemaking, EPA is proposing to clarify how properties in the oil and natural gas sector are determined to be “adjacent” for purposes of applying this three-part test. Previously, EPA has addressed this definition through policy interpretation and guidance. The agency’s longstanding approach—for all industries, including oil and gas—has been to consider both the distance between two or more sources and whether they share an operational dependence or “functional interrelatedness” to determine whether they are adjacent.

EPA is co-proposing two alternative options for assessing adjacency in the onshore oil and natural gas sector and requests comment on both. Option 1, which EPA prefers, would define adjacency in terms of proximity; under this option, equipment and activities would be considered adjacent if they are located on the same site or on sites that are within ¼ mile of each other. Under the second option, equipment and activities would be considered adjacent due either to their proximity or if they are located more than a quarter mile apart and there is an “exclusive functional interrelatedness” between them. Option 2 would be consistent with EPA’s current and historical practice. Option 1 would be codify a narrower interpretation that applies only to the oil and gas sector. EPA believes that the unique characteristics of the oil and gas sector (widespread operations, interconnectedness via pipeline, etc.) warrant an industry-specific definition that will streamline the assessment process and ease administrative burdens for permitting authorities. EPA anticipates that Option 1 would result in fewer major sources than Option 2, thus reducing the permitting burden, but more minor sources.

Option 1 (EPA’s Preferred Option) – Proposed Regulatory Text:

Notwithstanding the provisions of paragraph (a)(1)(ii)(A) of this section, building, structure, facility, or installation means, for onshore activities under SIC Major Group 13: Oil and Gas Extraction, all of the pollutant-emitting activities included in Major Group 13 that are located on one or more contiguous or adjacent properties, and are under the control of the same person (or persons under common control). Pollutant emitting activities shall be considered adjacent if they are located on the same surface site, or on surface sites that are located within ¼ mile of one another, where a surface site has the same meaning as in 40 CFR 63.73.

Option 2 – Proposed Regulatory Text:

Replace last sentence in Option 1 with the following:

Pollutant-emitting activities shall be considered adjacent if one of the following circumstances apply.

(1) The pollutant-emitting activities are separated by a distance of ¼ mile or more and there is an exclusive functional interrelatedness; or

(2) The pollutant-emitting activities are separated by a distance of less than ¼ mile.

1)Issue: Which option is preferable – Option 1 or Option 2?

2)Issue: Is it appropriate to codify via rulemaking a definition of adjacency that applies only to the natural gas sector?

3)Issue: EPA is proposing to make these changes applicable to both federal and state PSD and NNSR programs, and anticipates most states will have to revise their SIPs when the rule is finalized. Should states with SIP-approved programs be required to adopt the changes, or should the rule apply only to the federal (and delegated) program?

4)Issues specific to Option 1 (NOTE – These are questions on which EPA has specifically asked for comment. NACAA does not anticipate commenting on each of these, but they are issues to keep in mind when considering our more general comments).

Is it appropriate to establish a specific distance within which to consider multiple surface sites as a single source, and if so, what should that distance be? Is ¼ mile the right distance, or is another distance, such ½ mile, the appropriate distance?

If EPA adopts a proximity-based source definition, should it also make a distinction that facilities should not be “daisy-chained” together to establish a single contiguous source? A “daisy chain” is where each individual unit is located within the specified “contiguous or adjacent” distance from the next unit, but where the last unit is separated from the first unit by a much larger distance.

Is the center of a site’s emissions or some other feature, such as the boundary of the surface site, more appropriate to use as the starting point of the measurement radius when determining the boundary of a single source?

Are there instances where setting such a bright-line distance could increase or limit permitting authority oversight of these sources because they would be more likely to be subject to minor source permitting?

Could the potentially smaller scope of each source result in an unacceptable permitting burden (by creating a larger number of smaller sources) on the regulated community or on permitting authorities?

Would implementing EPA’s preferred approach result in any harmful (or beneficial) environmental effects, including effects on NAAQS compliance? (EPA does not expect there would be adverse air quality impacts, but requests comment on this issue.)

Should EPA preserve an option for an owner/operator to combine surface sites or other operations that are beyond the presumptive distance, e.g., ¼ mile, and seek a PSD or NNSR permit (in order to utilize offsets, or for some other reason). If so, should the option to seek a major source permit be limited to the owner or operator’s discretion, or should a permitting authority be able to make this determination, and under what circumstances?

5)Issues specific to Option 2:

What are the advantages and disadvantages to including consideration of functional interrelatedness in making single source determinations?

Are there characteristics related to the oil and natural gas sector that would make this approach more or less difficult to implement than the preferred alternative, such as need to examine various interrelatedness criteria or the interconnectedness of the operations through pipelines?

Should EPA further define exclusive functional interrelatedness for this sector to provide additional clarity to regulators and the regulated community? If so, how, specifically?

Is there any environmental benefit or harm that might result from this approach? For example, could it create a disincentive to building pipelines, and what would be the environmental effect of those decisions?

Is there a specific distance beyond which sources in the oil and gas industry should not be considered interrelated, even if interrelated by pipeline?

Draft CTG

EPA has prepared a draft CTG for the oil and natural gas industry. SIPs for nonattainment areas must include Reasonably Available Control Measures, including RACT, for existing sources of emissions. The Clean Air Act requires that Moderate and above ozone nonattainment areas, and the entire Ozone Transport Region, revise their SIPs to include RACT for each category of VOC sources covered by a CTG document issued between November 15, 1990 and the date of attainment.

1)Issue: EPA’sissuance of CTGS has slowed to a near standstill over the past number of years.

Recommended NACAA Comment: NACAA commends EPA for issuing this draft CTG.

2)Issue: Usefulness of CTG for states – Is EPA’s draft CTG helpful for areas with emissions associated with the oil and natural gas industry?

3)Issue: For the most part, EPA’s draft CTG incorporates the components of its proposed NSPS. Should NACAA recommend that EPA revise the draft CTG consistent with the comments we offer on the proposed NSPS?

EPA is soliciting comments on four specific issues related to the CTG:

4)Issue: Information on costs associated with retrofitting an existing storage vessel to allow routing of emissions to a control device.

5)Issue: Information on the implementation of a monitoring plan that includes the use of optical gas imaging for fugitive emissions at existing well sites.

6)Issue: Interaction of the CTG with new builds in areas affected by the CTG.

7)Issue: The appropriateness of a daily average of 15 barrel equivalents as a representative threshold to define low production wells for purposes of requiring a fugitive emissions program and information on fugitive air emissions with low production wells.

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