Resolute

Patrick E. Flynn

Vice President, Governmental & Corporate Affairs

303.534.4600 x 1145

pflynn@rnrc.net

VIA CERTIFIED MAIL AND EMAIL

~PR 2 ~

April19, 2011 nce Peifl~ ~ ~g~ofl 9

Mr. Andrew Chew,

Air Division AIR-3

U.S. Environmental Protection Agency

75 Hawthorne Street

San Francisco, CA 94105

Re: Subpt. HR Applicability - Replacement of Dehydration Unit at MCU Facility

Dear Mr. Chew:

As you are aware, Resolute Natural Resources Company (“Resolute”) is planning to

replace the current dehydrator at the McElmo Creek Unit oil production facility (“MCU”),

located on Navajo Nation land in San Juan County, Utah, with a new, higher capacity, and more

efficient triethylene glycol (TEG) dehydrator. Based on past comments made by you and Mr.

Mintz, Resolute understands EPA’s position to be that the replacement dehydrator can be added

to the facility prior to issuance by your office of pending PSD and Operating permits, and

without prior approval of EPA, provided that (1) the new dehydrator’s potential to emit (“PTE”)

will be limited by 40 C.F.R. Part 63, subpart RH; (2) the new dehydrator will replace the existing

dehydrator at the MCU and will have a lower PTE; (3) emissions from the new dehydrator will

not be routed to the Main Flare and will not cause an exceedance of the Consent Decree’s Main

Flare emission limits; (4) greenhouse gas (GHG) emissions from the new dehydrator will not

exceed the GHG Tailoring Rule’s significance thresholds; and (5) the 1991 PSD permit limits

and PSD significance thresholds will also not be exceeded by replacement of the dehydrator.

In a March 17, 2011 letter to EPA Region 9, Resolute confirmed that replacement of the

dehydrator will satisfy the five conditions identified above. EPA Region 9 subsequently

requested that Resolute notify EPA Region 9 of the specific requirements of subpart RH that will

be applicable to the TEG dehydrator. This letter complies with that request.

The uncontrolled emissions from the planned TEG dehydrator, as set forth in the noted

attachment to Resolute’s March 17, 2011 letter, exceed HAP major source thresholds for

purposes of subpart HR. Therefore, the following requirements apply to the TEG dehydrator:

Resolute Natural Resources Company, LLC

1675 Broadway, Suite 1950, Denver, CO 80202

Voice: 303.534.4600 Fax: 303.623.3628
Mr. Andrew Chew

April 19,2011

Page 2

Applicable Subpt. HH Sections Description

§ 63.760(a)(l)-(2) Applicability — —~________________

§63.760(b)(l)(i), (iii) Affected sources

§ 63.760(0(2) Compliance requirements

§ 63.760(h) Operating permit requirements

§ 63.762 Startup, shutdown, and malfunction requirements

§ 63 .764(c)(1), (3) General standards for glycol dehydrators and ancillary

equipment

§ 63 .765(b)( 1 )(i) Control requirements for dehydration unit process vent (i.e.,

connection to control device through a closed vent system)

§ 63.769 Equipment leak standards for ancillary equipment

§ 63. /11(c) Closed ~ent system requirements

§ 63.77 1(d)(1)(i)(A) Control device requirements (i.e., requires an enclosed

combustion device designed and operated to reduce the

mass content of total HAPs in the gases vented to the device

by 95% by weight or greater)

§ 63.772(e) Control device performance test procedures —

§ 63.772(0 Compliance demonstration for control device performance

requirements

§ 63.773 Inspection and monitoring requirements

§63.774 Recordkeepin~ requirements

§ 63.775 Reporting requirements

Table 2 to Subpart HFI Applicability of 40 CFR Part 63 general provisions

As noted in Resolute’s March 17, 2011 letter, the emissions from the planned TEG

dehydrator will be controlled by a thermal oxidizer that will be designed and operated in

accordance with the subpart HH requirements listed above, including the 95 percent destruction

efficiency requirement of § 63.77 1(d), which will limit the TEG dehydrator’s PTE accordingly.

Resolute appreciates your consideration of this letter. We respectfully request that you

confirm that no further approval from EPA Region 9 is necessary before Resolute installs the

planned replacement lEG dehydrator. A timely response would he greatly appreciated, as

Resolute intends to begin construction activity for the new TEG dehydrator in the very near

future. Please call me with any questions or comments.

Sincerely,

RES LUTE NATURAL RESOURCES COMPANY

Patrick E. Flynn

Vice President, Governmental Affairs
Mr. Andrew Chew

April 19, 2011

Page 3

cc: Thomas P. Mintz, Esq. — EPA Region 9

John R. Jacus, Esq. — David Graham & Stubbs LLP