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# MEMORANDUM

TO: Public Record for the 2010 Effluent Guidelines Program Plan

EPA Docket Number EPA-HQ-OW-2008-0517 (www.regulations.gov)

FROM: Carey A. Johnston, P.E.

USEPA/OW/OST

ph: (202) 566-1014

johnston.carey@epa.gov

DATE: 31 December 2009

SUBJECT: Notes from the 16 December 2009 M eeting with Coalbed Methane Operators

(Casper, Wyoming).



# The Environmental Protection Agency (E PA) met with coalbed methane (CBM)

extraction operators at the Wyoming Oil a nd Gas Conservation Commission building in

Casper, Wyoming, on 16 December 2009. The m eeting was requested by the Petroleum

Association of Wyomin g (PAW). The purpose of the meeting was to address questions

from recipients of the EPA industry survey of CBM operators: “Detailed Questionnaire

for the Coalbed Methane Extrac tion Sector” (OMB No. 2040-0279).

Mr. Carey Johnston and Mr. James Covington gave a presentation on the most common

questions about the EPA Detailed Survey. See Attachment A.

EPA also solicited questions from meeting pa rticipants. These comments and questions

included the following.

• Mr. Joe Icenogle suggested that EPA re view the landowner comments made to

the Montana's Board of Environmental Revi ew (BER) as part of their rulemaking

to amend certain administrative rules specifying water quality standards.

• Mr. Neal Neumiller suggested that EP A provide guidance on how to address

multiple owners on individual CBM projects in responding the EPA Detailed

Survey. Mr. Neumiller is an owner/operat or of a CBM project but his ownership

portion of the CBM project is as a minority owner.

• Mr. Jim Enochs made a request for an el ectronic format of the survey, which he

can use for multiple projects.

• Mr. Icenogle suggested that survey respondents share their NPDES permit

numbers with EPA to test whether EPA could download DMR data directly from

State or EPA databases (e.g., MT00 30457, MT0030724). This would reduce the

response burden on operators. Mr. Johnst on requested that operators send EPA

some NPDES permit numbers to test the feasibility of this option.

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# • Mr. Jim Shaffer requested clarification on the words ‘independent’ (Question B2-

1) and ‘immediate’ (Question B2-16). Speci fically, do these two terms refer to the

same operator? He requested clarificati on in the form of an e-mail from EPA.

• Mr. Shaffer also wanted to know if he should skip from Question B2-10 to B2-14

for his response.

• Mr. Icenogle suggested that EPA coor dinate with PAW to compile all the

environmental studies for the Powder Rive r Basin. Mr. Icenogle suggested that

this would be a more efficient method of gathering such data and also reduce the

burden on operators.

# Attachment A

Questions and Answers for EPA’s Clean Water Act Industry Survey for the

Coalbed Methane (CBM) Extraction SectorQuestionsandAnswersforEPA’sCleanWaterActId tfthC lb dthnusrySurveyoreoaeMeane(CBM)ExtractionSectorCasper,Wyoming16December2009MeetingAgendaOpening/Introductions - 9AMOverview and Update on EPA’s Study and Survey/Schedule - 9:10AMDiscussion of Common Questions on Part B (Economics) - 9:20AM+ EPA will review Q's and A's from questions submitted via the hotline+ EPA will solicit questions from the meeting participants on Part BDiscussion of Common Questions on Part C (Engineering)-10:20AMDiscussionofCommonQuestionsonPartC(Engineering)10:20AM+ EPA will review Q's and A's from questions submitted via the hotline+ EPA will solicit questions from the meeting participants on Part COth Q ti f M ti P ti i t11AMOtherQuestionsfromMeetingParticipants -Break - 12noon to 1PMOne-to-One Individual Sessions With Operators (1PM - 5PM)AdditionalAssistance• EPA can schedule separate teleconferences with individualoperators or groups of operators as requested.• Survey respondents wishing to schedule an individual session withEPA may do so by sending an e-mailto the Detailed Survey hotline(800-864-9230 orcbmdetailed@pgenv.com).• We are reviewing and approving extensions to the survey responsedeadline.• Please contact Carey Johnston (202-566-1014 orjohnston.carey@epa.gov) if you will not be able to meet the 60 daydeadline and have not yet requested an extension.• We appreciate your effort and time to complete the Detailed Survey.Our goal is to minimize the burden of responding to the survey in away that also matches our obligations under the Clean Water ActwaythatalsomatchesourobligationsundertheCleanWaterAct.PurposeoftheEPA’sStudyonCBM• Rationale for Detailed Study:ProducedWaterManagementy– Growing industry sector and potential impacts onthe environment.– Impacts to surface waters from discharge ofCBM produced water can depend on thequantity and quality of the CBM produced water.• Objectives and Scope of the Detailed Study:– Evaluate availability and affordability of technologyoptions for CBM produced water discharges in thecurrent and future CBM basins.– Evaluate potential environmental issues associatedwith the discharge of CBM produced water.CBM Produced WaterGatheringPipes(WY)p ( )CWA 304(m) Detailed Study: Coalbed Methane Extraction• Major Tasks for Data Collection and Analysis:– Industry survey to collect technical,economic, and environmental data from a widerange of CBM operations across the Nation.p– Site Visits & misc. secondary data sources (e.g., DOE/EIA data)– Stakeholder meetings in the major CBM basins.– EPA has contacted over 700 people in eight states in over 70 outreach and datacollection activities since 2007.• Stakeholders:– So far: API, regional trade associations, individual companies, treatment technologyvendors, DOE, BuRec, BLM, States, Landowners, Indian Nations• Schedule:– Approval from OMB to distribute the mandatory survey on 18 February 2009.– First Phase (Screener Questionnaire) distributed to approximately 290 operators(that have three or more CBM wells) on February 27th.–Second Phase (Detailed Questionnaire)distributed to approximately 250 CBMprojects on October 30th. Operators have 60 days to respond to survey.– EPA will analyze the survey results and identify whether to initiate a rulemaking inthe final 2010 Effluent Guidelines Program Plan (October 2010).EPA CBM Detailed Study: Screener Data Summary• EPA compiled data from screener questionnaires and State data to identify 216operators managing three or more wells and 58 operators managing one to twowells (= 274 operators total).• EPA identified that there were 56,049 CBM wells in 2008 that operators managedin 692 different CBM projects.• This CBMproduction, 2.0 trillion cubic feet, represents approximately7.7percentp pp y pof the total U.S. natural gas production in 2008.• The 692 CBM projects are located in 16different CBM basins across the Nationbut are mainly concentrated in Wyoming, New Mexico, Alabama, and Appalachia.• CBM projects ranged from over 2,000CBM wells to 1 CBM well. Nationwidemedium and large businesses have 28% ofthe projects (by number) but provide79% of the gas production.• EPA used these data to draw a representative sample of CBM projects. Thedetailed questionnaire will collect financial and technical data on approximately250 CBM methane projects across the country.Distribution of CBM Projects (Operator Size, Discharge Status)Small OperatorNot Small OperatorSmallOperator(Discharge)15%Not-SmallOperator(No Discharge)15%Not-Small Operator(Discharge)13%Small Operator(No Discharge)57%Distribution of CBM Gas Production (Operator Size, Discharge Status)S ll O tSmallOperator(Discharge)7%Not Small OperatorNot-Small Operator(Discharge)33%Not-SmallOperator(No Discharge)46%Small Operator(No Discharge)14%EPA CBM Detailed Study: Screener Data SummaryProduced Water Management Method for Selected Basins(Percentage of Reported CBM Production)CWA 304(m) Detailed Study: Industry Survey• Stratification variables for selecting detailed questionnairerespondents include:–Basin: Geological and regional differencesBasin:Geologicalandregionaldifferences+ Collapsed small basins within state+ Split Powder River Basin into Montana, Wyoming– Business size: Small business impacts–Discharge practices within two basins:+ Powder River Basin in Wyoming+ Appalachian+ Most other basin tend to have one main method for produced+Mostotherbasintendtohaveonemainmethodforproducedwater management (discharge or zero discharge).• In the final design of the survey draw EPA focused on basins withdischargers.• EPA also excluded basins from the draw that could not be used tomodel potential future CBM basins and were entirely composedmodelpotentialfutureCBMbasinsandwereentirelycomposedof zero dischargers.CWA 304(m) Detailed Study: Industry Survey• EPA used pie charts in evaluating the potential burden of the detailedquestionnaire on operators(in terms of number ofprojects andgasp ( pj gproduction).• For example, the following charts show the distribution of smallbusinesses that discharge produced water in the Powder River BasinbusinessesthatdischargeproducedwaterinthePowderRiverBasin,Wyoming:- One operator had 48 of the 85 projects.- Two operators contributed 50% of the gas.% projects/operator:%gas/operator:PurposeCollectionoftheDataCollection•ThefinancialdatacollectedPartfinancialcollectedinBwillbeusedtodetermine:3⁄4CurrentfinancialconditionsintheCBMindustry3⁄4PotentialimpactsontheviabilityoffirmsproducingCBM3⁄4PotentialimpactsontheviabilityofCBMprojects,nowdanintothefuture3⁄4Potentialimpactsonoverallgasproductioninbasinswhereproducedwaterdischargeiscurrentlyoccurringproduceddischargecurrentlyoccurring3⁄4PotentialimpactsonU.S.gasproductionPurposeCollectionoftheDataCollection•ThetechnicaldatacollectedinPartCwillbeusedtechnicalcollectedtodetermine:3⁄4CharacteristicsofCBMproducedwater3⁄4Potentialenvironmentalimpacts3⁄4Existingmanagement,beneficialuse,anddisposalifCBMd dl dpractcesorproucewater,andreatecostsPARTBFirmFinancialData•Ifyouareasmallbusiness,rememberthatEPAwillenteryouraccountinginformationforyou,butweneedyouraccountingreportsortaxreturnsfor2006,2007,and2008Iflt kfldi liClIIi j ti•youonyrucorcommerciasposanaassneconwellorotherwiseinjectallyourproducedwaterfromallCBMoperationsinallbasinsyouoperatein,youdonotneedtocompletequestionsB2‐17throughB2‐25•Estimatesarefine.EPAonlyneedsanapproximateideaofyourCBMrevenuesrelativetotalrevenuesrevenuesrelativetoyourrevenues,forexampleOverviewProject‐SpecificOverviewofProjectSpecificData•MakesureallcoststhatareexcludedfromPartCareincludedinPartBandthatcostsrequestedinPartCareNOTincludedinPartB—PartCcostswillbereviewedlaterintheseslidesEPAktib tdithi h•assmanyquesonsaouunusualexpenures,wcarecoststhatareonlyrarely,ifever,incurred:3⁄4EPAneedstoknowwhatcostsshouldbeprojectedeveryyearintothefuture;unusualexpendituresshouldnotbeprojectedthisway3⁄4EPAneedstoknowiftheyshouldbetreatedlikeacapitalexpenditureorexpensedtomodelyourproject’staxburdenOverviewProject‐SpecificOverviewofProjectSpecificData•Ifyouthinkacostwasincurredthatisunlikeltooccurintheyfutureormightoccuronlyveryrarely,pleaseincludeitasanunusualexpenditureIffithttttth•youcannotgureouwereopuacositem,puecostitemanditscostinacomment,provideanexplanation,ifnecessary,andEPAwilldeterminewhereitshouldgo•Commentsexplaininganymiscellaneouscosts,unusualexpendituresoranysituationsthatmightaffectyouroperationsgoingforwardarewelcomeforwardwelcomeProject‐SpecificData(TableB‐1)ProjectSpecific•IfyoucommingleCBMwithconventionalgasataproject,h hdllbfwetercomminglewithinweoresoraspartoyoureconomicdefinitionofproject,youarestillrequiredtofilloutthedetailedquestionnaireforyourprojectQ tiiii lii lddth lEPA•uesonspertanngtocommngngarencuedoepsortouttheCBMportionofyourproject•Ifyouhaveanyquestionaboutwhetheryourcommingledprojectistr laCBMprojectpleasehelplineprojectuyproject,callthehelpline.•Ifyourprojectwasbegunpriorto2004(anypartofit,evenonewell,otherthanleaseacquisition)oryouacquiredanyparttheproject(otherthantheundevelopedleases)ofprojectundevelopedleases)rememberthatyoucanskipALLofTableB‐2(pagesB‐15toB‐19).Project‐SpecificData(TableB‐2)ProjectSpecific•EPAiscollectingdatainthistabletodeterminethecostsandrevenuesfromprojectstart‐upsothatfinancialmodelsofnewprojectscanbedeveloped•Anymiscellaneousprojectcostscapitalizedmiscellaneousprojectthatarecapitalizedoramortized(i.e.,onlypartiallydeductedintheyearincurred)ANDthatarenotspecificallyidentifiedinaquestion(e.g.,drillingcosts,unusualexpenditures)placedinQuestiondrillingunusualexpenditures)canbeQuestionB3‐23•AnymiscellaneousprojectcoststhatareexpensedintheyearincurredrecurregularlyANDthatnotspecificallyincurredandregularlyarespecificallyidentifiedinaquestion(e.g.,unusualexpenditures)canbeplacedinQuestionB3‐34Project‐SpecificData(TableB‐3)ProjectSpecific•TableB‐3addressesonly2008costs•Anymiscellaneouscosts(asinthepreviousslide)thatarecapitalized/amortizedcanbeplacedinQuestionB‐49•AnymiscellaneouscoststhatareexpensedcanbeplacedinQuestionB‐50•Thesemiscellaneouscostsincludeanyorfeesthatmiscellaneouscanincludecostswouldaffecthowyouwouldcalculatenetrevenuesfortheproject(otherthanthosespecificallyidentified,e.g.,)ihifi dseveranceorareproductoncostsnotelsewerespeceFinancialProjections•EPArealizesthatproectingfuturelansandproductionisj gpverydifficultandinexact•Keypiecesofinformationareyourdrillingplansandanysensefhlthttoowongyourprojecmigoperaegivencurrentconditions•Anydataoucanprovidewillhelprefineestimatesoffutureyproduction—themoreyoucanprovide,thebetterEPA’sestimateswillbePARTCProducedWaterManagementSystem(PWMS)•PWMSisdefinedasasystemthatismanagedbytheoperatorasingleunitforproducedwatermanagementoperatorasproducedmanagement•APWMSmay:3⁄4Includedifferenttreatment,transfertodisposallocations,and/orreusepractices.3⁄4Treatwaterfromalease,field,project,orplanofdevelopment(POD).Waterdischargepermits,landapplicationpermits,andapplicationsforpermitstodrill(APD)typicallyuseoneofthesetermstodefinethewellgrouping.3⁄4ServethesameordifferentwellsfromtheCBMprojectdefinedinPartA.ProducedWaterManagementSystem(PWMS)•APWMScanhavemultipledisposaloptionsbutitismanagedasasingleunit.3⁄4Forexample,anoperatormayuseacombinationofstocktanks,irrigation,andstoragepondsonasinglePWMS.Adldhd dh i•PWMSoesnotincueteproucewatergaterngsystem(e.g.,pipingortrucking)thatisusedtotransporttheproducedwaterbetweentheCBMwellheadandacentralizedlocation(e.g.,treatmentunit,landapplicationsite).BasicPWMSDiagramExamplegfhxfgjhMultiplePWMSDiagramExampleDiagramExampleMultipleProjectswithOnePWMSProjectsPWMSBlockDiagramExampleFhPWMSlidkth thtioreac,peaseproveablocdiagramasows,oranarravedescriptionthatexplains,howtheproducedwaterwasmanagedfromtheCBMwellfieldtothePWMSin2008.ResidualsThesolid,liquid,ormixedsolid/liquidmaterialsgeneratedduringwatertreatment.•Examplesinclude:sludges andwastewatersgeneratedfrompre‐sedimentation,coagulation,flocculation,sedimentation,clarification,precipitativesoftening,backwashoperations;membraneprecipitativesoftening,andfilterbackwashoperations;membranerejectwastewaters;ionexchangeresinsandbrinewastewaters;activatedcarbonwastes;andothermiscellaneousresiduals.•Residualsincludeaccumulatedsolids,liquids,orsolid‐liquidmixturesaccumulatedforbatchdischarge.•Non‐contactstormwater isnotconsideredaresidual.UndevelopedArea•Undevelopedareaisanyareaoccupied,owned,oroperatedwithintheprojectsitethathasnotbeendeveloped.•EPAisinterestedinundevelopedareaswithintheprojectsitethatwouldbesuitableforconstructingneworadditionalwastewatertreatmentsystems.Undevelopedareasconsideredunsuitablefordevelopmentmayinclude,forll tdil if titexampe,areasocaeonmountansoranyothergeoogcormaonthawouldpreventconstruction.Capitalvs.OperatingandMaintenancevs.h idiGaternganTransportatonCostsCapitalcost– Thecostsassociatedwiththepurchase,developmentorconstructionoffixedassetssuchasland,stations,buildings,andwatertreatmentequipment.OperatingandMaintenancecost– Theongoing,repetitivecostsofoperatingawatersystem;forexample,employeewagesandcostsfortreatmentchemicalsandperiodicequipmentmaintenance.Capitalvs.OperatingandMaintenancevs.h idiGaternganTransportatonCostsGatheringsystem– SystemormethodusedtotransportproducedwaterbetweentheCBMwellheadandacentralizedlocationfortreatmentordisposal.PleaseRememberTo...PleasecarefulattentionpatterninstructionslocatedatthebottompaycarefulattentiontotheskippatterninstructionslocatedofpageC‐15ForquestionC4‐1,ifyoudonothaveanywaterqualitydata,pleasemakeanoteinthecommentsectionforPartClocatedonpageC‐29.PleaseRememberTo...SigntheCertificationStatementCertificationStatementinPartAUsecommentsections(locatedthecommentsections(locatedinPartA,PartB,andPartC)PleaseRememberTo...Ifusingtheelectronicversionofthequestionnaire,insertyourOperatorIDnumberinthetoprighthandcornerKeepacopyofyoursubmission,incasefollow‐upisrequiredtoclarifyyourresponsesFrequentlyAskedQuestionsGeneralQuestionsorPartBQuestionsEconomicsGeneralHelplineQuestionsIhavesoldmyproectsincethescreenersurveywasjcompleted.DoIneedtocompletethedetailedquestionnaire?Youareresponsibleforansweringthequestionnaireunless:•AllfinancialdataconcerningtheprojecthasbeenprovidedtothenewownerAND•ThenewownerhasagreedtocompletethequestionnaireforthatprojectOR•Specialcircumstancesapply,whichhavebeendiscussedwithEPAdirectlyEconomicsHelplineQuestionsIpurchasedleasesfortheuroseofdeveloinap pp gconventionaloilandgasproject,butlaterdevelopedashallowercoalbedmethaneproject.Shouldleasecostsbeincludedinthesurveyornot?Ifthesecostsplayedanyroleinadecisiontogof dtldorwarwiththeCBMprojecORyouincuethesecostswhencalculatingreturnsonthisproject,includethecostsinthesurvey;otherwise,youmay$enter0forleasecosts;pleaseprovideanoteinthecommentssectiononPageB‐37explainingwhycostsare$0.EconomicsHelplineQuestionsWherecanIputgatheringandcompressioncosts?g•First,makesurethesecostsareconsideredapartofyourdevelopmentcostsandoperatingexpensesandarenotapartofafeepaidtothepipelineor3rdarenotapartofafeepaidtothepipelineor3partyfirm(i.e.,youcannotmarketthegaswithoutthislevelofprocessing)Iftthl•so,youcantreathesecosts(bocapitaandoperating)asmiscellaneouscostsandputthesecostsinQuestionsB3‐23,B3‐34,B3‐49and/orB3‐50,asrelevant•PleaseletEPAknowthatyouhavedonethisonPage3‐37(Comments)h?OterPartBQuestions?PartCQuestionsProducedWaterManagementProcessFlowDiagramIhdsteattachediagramandnarrativewhatyouallhadinmind?Generallyyes.However,werequestthatadditionalinformationdescribingthesizeofeachpitandtheoperationalrelationshipamongtheevaporationpitsbeincludedinthesurveyresponseneeded.CommingledCBMProducedWaterProducedIi lCBMd dcommngeproucewaterfrommultipleprojects.DoIneedtorepeatPartCforeachproject?YouonlyneedtorepeatPartC,Sections2and3foreachproducedwatermanagementsystemthatyouoperatedin2008tomanagewaterfromthewellslistedinPartAoftheti iquesonnare.SeasonalDischargeVariationsMycollectionandmanagementpracticeschangeduringtheyear,whatshouldmyblockdiagramreflect?Yourblockdiagramshouldreflectthesedifferences.YouwillneedtocompletePartC,Sections2and3foreachdistinctmanagementpractice.ContractorHaulstoanUnknowni lTreatmentorDsposaSystemAhi dh ltrpartycontractstoaumyproducedwaterfortreatment.Idon’tknowtheirtreatment/disposalmethodsdischargetomethods.ShouldIenterdischargeaPOTWofthirdpartyorenterhauledoff‐site?Youshouldenterhauledoff‐site.?ContractorHaulstoa3rdPartyorPOTWwithU kT t t/Di lth dnnownTreatment/DisposalMeosAthirdpartyorPOTWtreatsmyproducedwaterfortreatment.Idon’tknowspecificsoftheirtreatmentmethod/disposalmethods.DoIneedtof lld ldfioutetaiedinormationontreatment/dischargeinPartC,Section3?UnlessyouprovideanytreatmentprovidetreatmentpriortosendingtheproducedwatertoathirdpartyorPOTW,youdonotneedtorespondtoQuestionsC3‐9throughC3‐13.?pgIfyoudotreattheproducedwaterpriortosendingtheproducedwatertoathirdpartyorPOTW,thenyoumustcomplete?QuestionsC3‐9throughC3‐13asitrelatestothetreatmentyoudoprovide.StorageMethodsasTreatmentTreatmentIdischargetoimpoundments/ponds/lagoons/tanksbeforedischarge,hdistestorageconsideretreatment?Storageponds/lagoons/tanksthatholdproducedwaterpriortodischargeareconsideredtobetreatmentunits(becausetheyprovideequalizationoftheproducedremovedproducedwaterandcanremovedsomesuspendedsolids).Partial2008InformationWebeganoperationsin2008.Howshouldwecompletethequestionnaire?Thequestionnairecompletedquestionnaireshouldbecompletedusingthe2008data.PleasenotethatintheCommentssection(QuestionC4‐3)thatthemanagementoperationswereinitiatedandthatthedataareprovidedforonlyaportionof2008.PipedGatheringSystemandTruckedtoPWMSWhatifItruckedwatertomyproducedwatermanagementsystemforpartof2008,butalsoimplementedapipedgatheringsystemin2008?Forthepartoftheyearthatproducedwatertotheproducedproducedwaspipedproducedwatermanagementsystem,QuestionsC2‐8athroughC2‐8cshouldbecompleted.ForthepartoftheyearthatproducedwaterwastruckedtotheproducedwatermanagementsystemQuestionC2‐8dshouldbe,completed.ResidualsTransportationSh ldiifoumy2008operatngandmantenancecostsormysedimentationpondincluderesidualstransportationanddisposal?Yes,anycostsassociatedwithresidualstreamsfromthetreatmentoperationshouldbeincludedintheoperatingandmaintenancecosts.gO hi?terPartCQuestons?