Proposed Revisons to Regulation Numbers 3, 6 Part A, and 7

Proposed Revisons to Regulation Numbers 3, 6 Part A, and 7

Regulating Oil and Gas Emissions in the Denver Julesburg Basin Garry Kaufman Deputy Director Colorado Air Pollution Control Division June 6, 2014 Overview Air quality need for oil and gas emission reductions Past efforts 8-Hour Ozone Early Action Compact 8-Hour Ozone Action Plan 2014

Oil and Gas Rulemaking Conclusions Air Quality Need for Oil and Gas Emission Reductions in the DJ Basin Historically oil and gas emission reduction strategies implemented to address violations of the ozone National Ambient Air Quality Standard in the Denver Metro/North Front Range Area Primarily volatile organic compound (VOC) reduction strategies 2014 rulemaking also considered methane

reductions as part of Colorados efforts to address global climate change (Draft data for 2013) Three Year Average 4th Maximum Ozone Values *** 2013 data through 30 September *** For NAAQS of 0.075 ppm 2011 2012 2013 AQS #

8-hr. O3 4th Max. Value (ppm) 8-hr. O3 4th Max. Value (ppm) 8-hr. O3 4th Max. Value (ppm) 3-yr. Avg. 4th Max. Value (ppm) Highest Allowable

4th Max. (ppm) 08-001-3001 08-005-0002 08-005-0006 08-013-0011 08-031-0002 08-013-0026 08-035-0004 08-041-0013 08-041-0016 08-059-0005 08-059-0006 08-059-0011 08-059-0013 08-069-0011 08-069-0012 08-069-1004 08-123-0009 0.075

0.078 0.077 0.076 ----0.082 0.074 0.075 0.077 0.081 0.083 0.072 0.080 0.073 0.068 0.077 0.077 0.080 0.074 0.076 0.068 --0.086 0.075

0.075 0.079 0.084 0.081 0.077 0.080 0.071 0.074 0.080 0.077 0.079 0.073 0.079 0.067 0.071 0.083 0.074 0.072 0.080 0.085 0.084

0.077 0.082 0.066 0.074 0.073 0.076 0.079 0.074 0.077 ----0.083 0.074 0.074 0.078 0.083 0.082 0.075 0.080 0.070 0.072 0.076

0.073 0.068 0.080 0.072 0.092 --0.058 0.078 0.080 0.068 0.058 0.062 0.073 0.065 --- * 0.079 0.074 NPS - Rocky Mtn. NP 08-069-0007 NOAA - BAO Tower n/a n/a

NOAA - Niwot Ridge * Rist Canyon site closed 6/28. 0.077 0.076 0.067 0.079 0.077 0.076 0.074 0.064 0.070 0.076 0.072 0.071 0.074 0.086 0.081

East Slope Sites Site Name Welby Highland Aurora East S. Boulder Creek CAMP La Casa Chatfield State Park USAF Academy Manitou Welch Rocky Flats North NREL Aspen Park Fort Collins - West Rist Canyon * Fort Collins - CSU Weld County Tower (NOAA thru 6/23)

2014 Past Efforts Prior to the early 2000s oil and gas sector was considered to be an insignificant contributor to VOC emissions in the Denver Metro/North Front Range Area Until 2003, condensate storage tanks at oil and gas production facilities were exempt from reporting and permitting requirements Little or no understanding of the potential for VOC leakage and venting at oil and gas production facilities

Past Efforts In early 2000s APCD discovered that flashing at condensate storage tanks was a significant source of VOC emissions in DMA/NFR flashing occurs when petroleum liquid that is under high pressure underground is put into an atmospheric tank Previously APCD assumed that emissions from tank were limited to evaporative losses (working and breathing losses) For 2002 estimated flashing emissions in DMA/NFR of 134 tons per day 2004 Early Action Compact emission inventory Past Efforts: 2004 EAC

To avoid 8-hour Ozone NAAQS non-attainment designation for the DMA/NFR, Colorado entered into Early Action Compact with EPA in 2004 (EAC), which included 1st Colorado regulations for reducing VOC emissions from oil and gas operations Operators in DMA/NFR required to reduce condensate tank emissions by 47.5% on a system-wide basis during ozone season (May 1- September 30) Lesser control level during rest of year Control dehydrators emitting 15 tpy or greater VOC Engine controls Leak detection at existing gas plants Past Efforts: 2006 EAC 2004 condensate tank emission reduction requirements assumed modest growth in emissions 2002 uncontrolled emissions=134 tpd 2007 projected uncontrolled emissions 146 tpd

By 2006 it was clear that growth in tank emissions was significantly underestimated 2006 uncontrolled emissions =211 tpd To address growth Air Quality Control Commission increased tank control percentage 75% control during ozone season starting in 2007 78% control during ozone season starting in 2012 Past Efforts: 2006 EAC All tanks required to be controlled during 1st 90 days of production Production/emissions highest during this period and declines thereafter Prior to 2006, tanks were not being controlled during this initial period to allow operators to determine expected

production/emissions Additional monitoring, recordkeeping and reporting requirements to enhance compliance New state-wide rules to proactively address oil and gas emissions outside the DMA/NFR Past Efforts: 2008 Ozone Action Plan DMA/NFR 8-Hour Ozone non-attainment designation in 2007 Extensive inventory analysis and photochemical

modeling to identify controls and demonstrate projected compliance with standard by 2010 Additional oil and gas emission reduction strategies Increase tank control percentage (81% in 2009, 90% in 2011) Low-bleed pneumatic requirement (projected 23 tpd emission reduction) 2008 OAP VOC Inventory 2008 OAP Oil and Gas Inventory 2014 Emission Reduction Strategies New rules target VOC and methane emissions from the oil and gas production sector 1st in the nation rules to specifically require methane emission

reductions from O&G New rules expected to reduce VOC emissions by approximately 94,000 tpy, methane emissions by approximately 64,000113,000 tpy, at an overall annual cost of approximately $ 42 million New rules establish emission reduction requirements for the largest O&G source categories Tanks Fugitives/Venting Pneumatic devices Oil and Gas VOC Emissions Storage Tank Reduction Strategies Expand control requirements for storage tanks

Lower statewide control threshold from 20 tons per year to 6 tons per year Include crude oil and produced water storage tanks Require controls during the first 90 days of production statewide Improve capture of emissions at controlled tanks Controlled tanks must be operated without venting to the atmosphere Establish requirements for Storage Tank Emission Management systems (STEM) Capture performance evaluation Certified design to minimize emissions Extensive instrument based monitoring Continual improvement

Storage Tank Capture Requirements Emission reduction benefits from storage tank controls premised on capturing emissions and routing them to the control device Input pressure for many controlled tanks is too high (above atmospheric) During high pressure dumps to the tank, the pressure relief valve (PRV) and thief hatch may release to prevent tank failure Results in uncontrolled flashing losses from thief hatch and PRV Leak Detection and Repair Establish LDAR requirements for compressor

stations and well production facilities Frequent monitoring using Method 21 or infra-red (IR) cameras Tiered monitoring schedule to focus on the highest emitting facilities and reduce the burdens on smaller facilities Establishes the most comprehensive leak detection program for oil and gas facilities in the nation Repair schedule for identified leaks Recordkeeping and reporting requirements Additional Emission Reduction Strategies Expand low-bleed pneumatic controller requirements statewide Require capture or control of the gas stream at well production facilities

Establish requirements to minimize emissions during well maintenance Require auto-igniters on all combustion devices Expand control requirements for glycol dehydrators Lower control threshold from 15 tons per year to 6 tons per year More stringent threshold for facilities near populated areas Technical Support for 2014 Rulemaking Significantly enhanced inventories

More refined photochemical modeling EPA sponsored cost and benefit analyses Bottom-up surveys of oil and gas emissions Top-down inventory assessments Ground based measurements Airplane measurements Infra-red leak detection

Sophisticated measurements of incomplete tank emission capture Conclusions Advances in drilling technologies and the resultant increases in production in the DJ Basin have created potential significant additional impacts on air quality resources Increased knowledge of oil and gas emissions, better monitoring techniques, and advances in control technologies has allowed us to address these potential impacts Ongoing assessment of emissions and further refinement

of control technologies should allow us to further minimize air impacts from oil and gas development

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