WPXENERGY.

May 31, 2012

Mr. Eric Wortman

U.S. EPA, Region 8

1595 Wynkoop Avenue, 8P-AR

Denver, CO 80202-1129

Submittal provided via e-mail to:

wortman.eric@epa.gov

Re: WPX Energy Williston, LLC

Request fOl' Information Pertaining to Emissions Conh'ol Eqnipment at

Oil and Gas PI'oduetion Facilities on Fort Bel'thold Indian Reservation

Dear Mr. Wortman:

WPX Energy Williston, LLC (WPX Energy) formerly Dakota-3 E&P Company, LLC (Dakota3) understands that the Environmental Protection Agency (EPA) is expediting the development

of a Reservation-specific Federal Implementation Plan (FIP) to establish federally enforceable

requirements to control volatile organic compound (VOC) emissions from oil and gas production

activities (i.e. storage tank and heater-treater emissions) within the exterior boundaries of the

Fort Berthold Indian Reservation (FBlR) in North Dakota. EPA's action would require owners

and operators of oil and gas well production facilities to reduce VOCs released during the

extraction and storage of hydrocarbon reservoir fluids prior to being transferred off site for sale

or treatment.

As part of this effort, EPA has requested information from WPX Energy that would facilitate

determination of the associated cost impacts of the proposed emission control requirements.

WPX Energy is providing the following information as requested. The cost information

provided incorporates manufacturer quotes, contractor invoices, and best professional judgment

based on WPX Energy's operational experience on FBlR. WPX Energy became an operator

within FBIR in May 2011. In some instances, WPX Energy currently has not used some of the

teclmologies indentified in the May 16, 2012 letter request and does not have cost data or the

operating experience to provide average cost information.

WPX Energy has provided the requested information and the basis of this information following

each of the listed requests. If the requested information is not available, WPX Energy has

provided an explanation of why this information is not included.

I. Please provide the average cost incurred to develop a synthetic minor permit application

for an oil and gas exploration and production facility on the FBIR.

Reqllested [lIfol'lI/atioll: The average cost to prepare a synthetic minor permit

application for an oil and gas exploration and production facility on the FBlR is $6,000.

This estimate includes cost savings that were achieved from permitting multiple facilities.

If a single permit application were developed, the costs would be closer to $25,000 per

100117· Street I Suite 1200 I Denver. Colorado 80202 I 303.572.3900 I ,wlW.wpxenergy.com
May 31,2012

Page 2

application. The average cost presented includes contractor fees and costs associated

with contractor management, analytical data, evaluation of equipment specifications,

developing production projections, meetings with EPA and contractors, site identification

and planning, reviews, and equipment evaluations.

2. Please provide the average cost incurred on an annual basis for each of the following

types of control equipment:

a. A Pit Flare capable of achieving 90% VOC destruction efficiency;

Requested Information: The average cost annual cost is = $16,200

Based on:

• TCI = $27,500

• Annual O&M = $6,000

• Annual Labor Costs Monitoring/Recordkeeping/Reporting = $4,800

• Annual Non-Labor Costs = $2,200

The costs provided above are based WPX Energy operating experience and best

professional judgment.

b. A utility flare that is manufacturer celiified for 98% VOC destruction efficiency

or compliant with the requirements for such flares at 40 CFR 60.18(b);

Requested Information: The average cost annual cost is = $41,600

Based on:

• TCI=$llO,OOO

• Annual O&M = $11,900

• Annual Labor Costs Monitoring/Recordkeeping/Reporting = $12,000

• Annual Non-Labor Costs = $4,800

The costs provided above are based on manufacturer quotes, WPX Energy operating

experience, and best professional judgment. The manufacturer quotes for three

different high efficiency flares have been included with this letter.

c. An enclosed combustor that is manufacturer certified for 98% VOC destruction

efficiency;

Requested Information: WPX Energy has determined that enclosed combustors are

not the best control device for our operations based on reliability, effectiveness, and

cost. The estimated capital cost of these units is approximately $65,000. WPX has

not implemented or does not currently plan to use any of these units on their FBIR

facilities so we do not have cost data that would be applicable.

d. An auto-ignition system that includes, an electronically controlled ignition device

continuous recording device, malfunction alarm, and remote notification system

to ensure the continued presence of a pilot flame during operation;
May 31, 2012

Fage 3

Requested Informatiou: The auto-ignition systems are built into the utility flares so

the costs have been included with the utility flare cost estimates as they are part ofthe

flare design provided by the manufacturer.

e. A continuous pilot flame system that includes a thermocouple, continuous

recording device malfunction alarm, and remote notification system to ensure the

continued presence of a pilot flame; and

Requested IUformation: The average cost annual cost is = $28,100

Based on:

• TCI = $13,200

• Annual O&M = $9,000

• Annual Labor Costs Monitoring/Recordkeeping/Reporting = $12,000

• Annual Non-Labor Costs = $4,200

The costs provided above are based WPX Energy operating experience with

measurement equipment, SCADA system, compliance tracking software, and best

professional judgment.

f. A vapor recovery system (VRU) for capture and recovery ofstorage tank gases.

Requested Informatiou: WPX Energy has not operated a vapor recovery system on

the FBIR and does not have cost or operational data to estimate the requested

information. Based on manufacturer estimates, the capital cost of an 11-70 MSCFD

unit ranges between $115,000 to $125,000. Use of a VRU will be evaluated as wells

are added and production increases. If WPX Energy implements a VRU; the system

will be operate as process equipment not emission control equipment.

3. Please describe the source ofthe data and the methodology used in calculating items 2(a)

through 2(f). The average annual cost incurred should include, but is not limited to the

following list of cost elements:

Requested Information: The information requested in Item 3 has been provided above in

the requested information for Items 2(a) through 2(f). Total capital investment costs have

been annualized based on a discount factor of 3 percent and the estimated life of the

equipment.

a. The total capital investment (TCI) cost, which includes but is not limited to, the

capital cost for the primary control device, auxiliary equipment and

instrumentation, piping, performance testing, associated utilities, engineering and

system design, freight, site preparation, foundation, construction and field

expenses, installation, etc.

b. The operation and maintenance (O&M) cost (equipment, pilot fuel, etc.);
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c. The annualized labor costs such as salary and benefits associated with

monitoring/recordkeeping/reporting requirements and O&M activities; and

d. The alUlUalized non-labor costs such as office supplies, vehicle costs, and

information teclUlology.

4. For each piece of equipment identified in 2(a) through 2(f), please provide the expected

life for each component. Any costs associated with maintenance over the life of the unit

should be alUlUalized and included as part ofthe alUllIal O&M costs reported.

Requested IUfol'lI/atiou: The estimated life ofthe equipment is provided below:

a. Pit Flare - 10 years

b. Utility Flare - 10 years (Replace tips every 5 years, Replace/rebuild flare turbine

meter annually)

c. Enclosed Combustor - (Not applicable. Not planning on using these)

d. Auto Ignition System - 5 year

e. Continuous Flame/Monitor - 5 years (Thermocouple replaced annually)

f. Vapor Recovery Unit - (No data. No operating experience)

5. Please provide the average cost associated with the sale of recoverable product from a

VRU.

Requested IUfol'lI/atiou: WPX Energy has not operated a vapor recovery system on the

FBIR. We do noLhave any operational experience to provide this dataas it is unclear how

well these systems will work in this area. When WPX Energy implements a VRU the system

will operate as process equipment not emission control equipment.

The signed Statement of Certification (Attachment A) is included with this submittal as

requested. WPX Energy has also included the available manufacturer equipment quotes

(Attachment B) for Utility Flares and Vapor Recovery Units. If you have specific questions

associated with this information please do not hesitate to contact JoDell Mizoue (303) 606-4056

or myself.

Sincerely,

WPX:::;;;X' LLC

Williams K. Stenzel

Vice President

cc: file

Attaclunents
May 31, 2012

Page 5

Attachment A

I certifY under penalty oflaw that I have personally examined and am familiar with the

information submitted in this document and all attachments and that, based on my inquiry

ofthose individuals immediately responsible for obtaining information, I believe that the

information is true, accurate, and complete. I am aware that there are significant penalties

for submitting false information, including the possibility offine or imprisonment.

Signature

Vice President

Title

Date