On August 23, 2011, the Environmental Protection Agency (EPA) published in the Federal Register a proposed rule that significantly expands the applicable air emissions standards for the Oil and Natural Gas Sector. See 76 Fed. Reg. 52738 (Aug. 23, 2011), available at http://epa.gov/airquality/oilandgas/actions.html. Specifically, EPA is proposing changes to the New Source Performance Standards (NSPS) in 40 CFR part 60 and technology-based National Emissions Standards for Hazardous Air Pollutants (NESHAP) in 40 CFR part 63 that apply to oil and gas production, processing, transmission and storage facilities. According to EPA, the rules would result in a net savings for industry of $29 million because of the increased natural gas and condensate available for sale. The public comments period for the proposal ends on October 24, 2011.
New Source Performance Standards
Currently, two New Source Performance Standards apply to the oil and gas industrial category. Subpart KKK covers Volatile Organic Compound (VOC) emissions from leaking components in onshore natural gas processing plants, while Subpart LLL covers SO2 emissions from onshore natural gas processing plants. EPA conducted reviews of both standards as required by the Clean Air Act, and is now proposing changes to each. Specifically, EPA is proposing to update the Leak Detection and Repair (LDAR) requirements in Subpart KKK, and modify Subpart LLL to require greater SO2 control in facilities that process natural gas with high sulfur content.
In addition, the proposal would create a new NSPS Subpart OOOO to regulate VOC emissions from all oil and gas operations not already covered under Subpart KKK that commence construction, reconstruction, or modification after August 23, 2011. The new Subpart OOOO would include operational standards for completions of hydraulically-fractured gas wells. Non-exploratory and non-delineation wells would need to use reduced emission completion, commonly referred to as “green completion,” while exploratory and delineation wells would be allowed to use pit flaring. For purposes of the rule, a completion associated with refracturing performed at a well existing prior to August 23, 2011 is considered a modification, subjecting the well to the new standards. The rule also requires a 30-day advance notification for each completion or recompletion of a hydraulically fractured gas well. EPA is also proposing VOC emissions limits for gas-driven pneumatic devices, equipment standards for centrifugal compressors, operational standards for reciprocating compressors, and a 95% VOC emission reduction requirement for some condensate and crude oil storage tanks. Finally, the proposal exempts some “non-major” sources that would be subject to Subpart OOOO from having to obtain Title V permits.
NESHAP Technology-Based Standards
Under 40 CFR part 63, there are two technology-based NESHAP standards that apply to sources in the Oil and Gas sector. Subpart HH covers oil and natural gas production facilities that are major or area sources of Hazardous Air Pollutants (HAP). The rule includes standards for the following emission points: glycol dehydrator vents, storage vessels, and natural gas processing plant equipment leaks. On the other hand, Subpart HHH covers natural gas transmission and storage facilities that are major sources of HAP, and only includes standards for emissions from glycol dehydrator process vents. These NESHAP standards require major sources to use Maximum Achievable Control Technology (MACT). As required by the Clean Air Act, EPA conducted technology reviews and residual risk assessment reviews for both standards. Based on the findings from the reviews, EPA is proposing changes to both MACT standards for major sources.
The proposal establishes new emissions limits for small glycol dehydrators at major sources, which were previously exempted under Subpart HH and HHH. EPA is also proposing to eliminate the alternative compliance option under Subpart HH and HHH, which allows sources to reduce benzene emissions from large glycol dehydrators to less than 0.9 Mg/yr in lieu of achieving 95% emissions control. In addition, the rule proposes to eliminate the existing Startup, Shutdown and Malfunction (SSM) exemption that made emission standards inapplicable during periods of SSM. However, EPA proposes to add an affirmative defense to civil penalties and exceedances of emission limits caused by malfunctions. Finally, the proposal would modify Subpart HH to require all crude oil and condensate tanks at major sources to control their HAP emissions by at least 95%, and requires inclusion of all tank emissions when performing major source determinations.