MEMORANDUM

TO: Docket # EPA-HQ-OAR-2011-0512

FROM: Alexis McKittrick and Mark Defigueiredo, EPA/CCD

DATE : February 20, 2014

SUBJECT : Assessment of Impacts of the 2014 Proposed Revisions to Subpart W

Introduction

The EPA is proposing technical revisions and other clarifications to subpart W of the Greenhouse Gas Reporting Rule (40 CFR part 98, subpart W) (herea fter referred to as “subpart W”). In this memorandum, we discuss the poten tial burden to reporte rs affected by these proposed amendments.

The EPA estimated the cost of the proposed am endments to subpart W as the incremental costs above the previously estimated co sts of the requirements under subpart W. 1 The EPA
calculated this incremental cost based on the number of reporters in each segment that are likely to be affected by the proposed amendments. The de tails for estimating this incremental cost (the potential burden to reporters) ar e included in the sections below.

Costs to reporters associated with this proposal are expressed as labor costs (i.e., the cost of labor by facility staff to meet the rule’s proposed amendments). The EPA determined labor costs using an approach consistent with pr evious impacts analyses associated with the Greenhouse Gas Reporting Program (GHGRP). For all industry segm ents the labor rates are $78.29 for engineers and $66.57 for technicians. 2 , 3

Summary of Amendments

In this memorandum, we summarize the poten tial burden to reporte rs affected by the substantive revisions proposed in the rule. In addition to these substantive revisions, the EPA is also proposing minor technical revisions to subpart W to im prove readability, to create

1 The previously estimated costs of the requirements under subpar t W are included in the Inform ation Collection Request for the Greenhouse Gas Reporting Program, OMB Control No. 2060-0629, EPA ICR No. 2300.10, May 2013.
2 None of the proposed amendments require an adjust ment to middle and senior management labor hours.
3 The engineering and technician labor rates are from the May 2011 National Industry-Specific Occupational Employment and Wage Estimates (http://www.bls. gov/oes/current/oessrci.htm) and Employer Cost s for Employee Compensation for June of 2011 (http://www.bls.gov/news.rel ease/archives/ecec_09082011.pdf).2

consistency in terminology, and/ or to correct typographical or other errors. These minor technical revisions would not impa rt additional burden on reporters and are not discussed in this
memorandum. 4

Well Completions and Workovers The EPA is proposing to revise reporting re quirements for completions and workovers to differentiate between completions and workovers w ith different well type combinations in each sub-basin category. The EPA is pr oposing to clarify the number of measurements or calculations that must be taken to estimate the average ratio of flowback rate (FRM). Reporters may have to conduct more tests/measurements, because a sepa rate FRM value is required for each well type. This proposed revision represents a potential increase to burde n and cost. Using 2012 subpart W data reported to EPA as of September 1, 2013, 5 the EPA determined that 40% of onshore production facilities reported completion and wo rkover emissions and 23% of these facilities reported emissions from completions under more than one well type. It was estimated that these facilities with completions would have to take two additional measurements to determine additional FRM values and that an engineer wo uld take approximately 8 hours to conduct each additional measurement. Therefore, engineer ing labor hours (at a cost of $78.29/hour) were adjusted upwards by 1.472 hours per reporter.

The EPA is proposing to modify Equation W-10A (which is a calculati on that determines annual volumetric total gas emissions from gas well venting during completions or workovers following hydraulic fracturing) in order to enable quantification, as opposed to measurement, of natural gas emitted during the initial flowback stag e of a well when insufficient gas is present to enable separation and metering. In addition, the EPA is proposing to modify Equation W-10A to ensure reporters account for sales gas volume onl y once in this calculation. The proposed method is similar in complexity as th e previous method and uses meas urements that are of similar complexity; therefore, these proposed cha nges to Equation W-10A would not impose any additional (or reduced) burden and costs.

The EPA is proposing to revise Equation W-13 (which is a calculation that determines annual volumetric total gas emissions from gas well venting during completions or workovers without hydraulic fracturing) to separate the calculat ion of emissions from workovers and the
calculation of emissions from co mpletions into two equations. Re porters would have to perform two calculations as opposed to one; however, it is the same calculati on that reporters are currently doing broken into tw o steps. Therefore, these pr oposed changes to Equation W-13 would not impose any additional (or reduced) burden and costs.

4 For explanation of the minor technical revisions refer to the memorandum, “Proposed Minor Technical Corre ctions to Subpart W, Petroleum and Natural Gas Systems, in the Greenhous e Gas Reporting Program” in Docket ID No. EPA-HQ-OAR-2011- 0512.
5 http://ghgdata.epa.gov/ghgp/main.do3

Flare Stack Emissions The EPA is proposing to revise the calcul ation and reporting requirements for onshore natural gas transmission compression, underground natural gas storage, liquefied natural gas (LNG) storage, and LNG import and export to include emissions from flare stacks. This proposed revision represents a pote ntial increase to burden and cost for reporters in these four industry segments. Facilities in these industry segm ents that have flares do not have to report flare stack emissions currently, but would need to collect flare data, calculate, and report these emissions under the proposed revisions. However, because underground natural gas storage and LNG storage facilities do not report flared emi ssions for compressors, as is required under the
current rule if these facilities have flares asso ciated with their compressors, the EPA has assumed that 0% of these facilities operate flares. Theref ore, this proposed revision would not impose any additional (or reduced) burden and co sts on these two industry segments.

In order to calculate the potential increas e to reporters in the onshore natural gas transmission compression and LNG import and expor t industry segments, the EPA estimated that the percent of facilities that would report flar e stack emissions was equal to the percent of facilities that reported flared emissions for comp ressors for each of these two industry segments. Using subpart W data reported for 2012, 1% of the onshore natural gas transmission compression facilities and 50% of LNG import and export fa cilities reported fl ared emissions from compressors. The incremental increase in hours pe r reporter was then determined by multiplying the percent of facilities that ha ve other flare stacks in each in dustry segment (i.e., 1% or 50%, respectively) by 20 minutes (i.e., the amount of tim e the EPA estimated an engineer would need to collect data and estimate emissions). The result was an estimated increase in the engineering labor hours 0.003 hours per reporter (at a rate of $78.29/hour) in the onshore natural gas transmission compression industry segment; and an increase of 0.17 hours per reporter (at a rate of $78.29/hour) in the LNG import a nd export industry segment.

Centrifugal and Reciprocating Compressor Venting The EPA is proposing to revise the monito ring requirements so that, in cases where multiple compressor sources are manifolded together downstream, reporters can measure
downstream of the manifold and would not have to measure the compressor sources individually. For manifolded compressors, reporters would also have to report activity data for the manifold (i.e., number of compressor sources manifolded together, mode of each compressor). Reporters would no longer be required to annually meas ure compressor sources that are manifolded individually. Instead, reporters would measure the manifolded gr oup of compressor sources three times per year. Therefore, this proposed change is a burden reduction fo r reporters that have more than three compressor sources manifolded t ogether. This proposed revision is expected to affect only compressors at onshore natural ga s processing facilities, onshore natural gas transmission compression facilitie s, underground natural gas stor age facilities, and LNG import4

and export equipment facilities. 6 The EPA assumed that faciliti es with manifolded compressor sources would use the proposed option. Therefore, the EPA calculated the decrease in burden associated with this proposed measurement opti on by adjusting engineeri ng and technician labor hours downwards per reporter for each industry se gment that could use the proposed option. This adjustment downward in labor hours was determin ed by first estimating the average number of compressors that are located at a faci lity in each affected industry segment 7 , and then multiplying the average number of compressors lo cated at a facility by 10% (because it was
assumed that 10% of the facilities would have manifolded compressor sources). The EPA then took the number of manifolded compressor sources and multiplied it by 10 minutes—the
estimated time for a technician to take the measurement, and by 30 minutes—the estimated time for an engineer to pe rform the calculation.

The calculation resulted in a decrease in 0.25 engineering labor hours (at a rate of $78.29/hour) and 0.08 technician labor hours (at a rate of $66.75/hour) per reporter for the onshore natural gas processing and underground natural gas storage industry segments, a decrease in 0.15 engineering labor hours and 0.05 technician la bor hours per reporter for the onshore natural gas transmission compression industry segment, and a decrease in 0.10 engineering labor hours and 0.03 te chnician labor hours per repor ter for the LNG import and export equipment industry segment.

In addition, the EPA is proposing to remove vented compressor emissions routed to a flare from the compressor emissions total (clarify ing that these emissions should be reported in the flared emissions total) and retain the requirement to report uncontrolled vented emissions from compressors. Reporters woul d no longer be required to perf orm individual compressor leak measurements or continuous measurements, but rather perform a single calculation under the flare stack emissions methodology. The latter would be less burdensome, because it only requires reporters to either continuously monitor total flow and composition to the flare or use engineering estimates. This proposed amendment is expected to affect only compressors routed
to a flare at onshore natural gas processing facilities, onshor e natural gas transmission

6 The proposed manifold measurement option would not impact onshore petroleum and natural gas production facilities because compressor emission cal culation methods are different for this industry segment. It would not impact natural gas distribution fac ilities or offshore petroleum and natu ral gas production facilities because compressor emission calculation methods are not required for these industry segments. It would not impact LNG storage facilities because there were only a combined to tal of three compressors located at two facilities that reported compressor emissions for this industry segment acco rding to 2012 subpart W data reported to EPA as of September 1, 2013.

7 The EPA determined the average number of compressors per facility using 2012 subpart W data reported to EPA as of September 1, 2013: 8 compressors at onshore na tural gas processing facilities; 6 compressors at onshore natural gas transmission compression facilities; 6 compresso rs at underground natural gas storage facilities; and 5 compressors at LNG import and export equipment facilities.5

compression facilities, and LNG import and export equipment facilities. 8 The EPA calculated the decrease in burden associated with this pr oposed amendment by adju sting engineering and
technician labor hours downward s per reporter for each affected industry segment. This adjustment downward in labor hours was determ ined by estimating the average number of compressors that are located at a facility in each affected industry segment, 9 and then multiplying the average number of compressors locat ed at a facility by the percent of facilities with flares in each affected industry segment 10 and by the percent of the compressors at these facilities that are venting to flares. 11 The EPA then multiplied the number of flares (from the previous step) by 10 minutes—the estimated time for a technician to take the measurement, and by 30 minutes—the estimated time for an engineer to perfor m the calculation.

This calculation resulted in a decrease in 0.39 engineering labor hours (at a rate of $78.29/hour) and 0.19 technician labor hours (at a rate of $66.57/hour) per reporter for the onshore natural gas processing industry segment, a decrease in 0.02 engineering labor hours and 0.01 technician labor hours per reporter for the onshore natura l gas transmission compression industry segment, and a decrease in 0.83 engineering labor hours and 0.42 technician labor hours per reporter for the LNG import and export equipment industry segment.

The EPA is also proposing that compresso rs not measured in the “not-operatingdepressurized-mode” for over three years, mu st be measured in the “not-operatingdepressurized-mode” at the next scheduled depr essurized shutdown (for centrifugal compressors)
or at the next scheduled shutdown when th e compressor rod packing is replaced (for reciprocating compressors). Regardless of when the “not-operating-depressurized-mode” would be measured, the reporter would still be require d to conduct an annual measurement in whatever mode the compressor is found. Therefore, the frequency of measuremen ts would be unchanged, and this proposed change would not impose a ny additional (or reduced) burden and costs.

8 This proposed amendment would not impact onshore petroleum and natural gas production facilities because compressor flare emission calculation method s are different for this industry se gment. It would not impact natural gas distribution facilities or offshore petroleum and natural gas produ ction facilities because compressor flare emission calculation methods are not required for these industry segments. It would not impact underground natural gas storage and LNG storage facilities because underground natural gas storage and LNG storage facilities do not have compressors controlled by flares according to 2012 subpart W data reported to EPA as of September 1, 2013.

9 The EPA determined the average number of compressors pe r facility using 2012 subpart W data reported to EPA as of September 1, 2013: 8 compressors at onshore na tural gas processing facilities; 6 compressors at onshore natural gas transmission compression facilities; and 5 co mpressors at LNG import and export equipment facilities.

10 The EPA determined the percent of facilities with flares using 2012 subpart W data reported to EPA as of September 1, 2013: 21% of facilities in onshore natural gas processing; 1% of facilities in onshore natural gas transmission compression; and 50% of facilities in LNG import and export equipment).

11 The EPA determined the percent of the compressors at facilitie s with flares that are actually venting to flares using 2012 subpart W data reported to EPA as of September 1, 2013: 68% of the compressors at these facilities are venting to flares in onshore natural gas processing; 92% of the compressors at these facilities are venting to flares in onshore natural gas transmission compression; and 100% of th e compressors at these facilities are venting to flares in LNG import and export equipment.6

Pneumatic Devices The EPA is proposing to allow either the use of site-specific composition data for natural gas transmission compression and underground natu ral gas storage facilities or the use of a default gas composition. The calcula tion still would be conducted in much the same way that is currently required; however, reporte rs would now be allowed to use site-specific data if data are available. Therefore, this proposed change w ould not impose any additional (or reduced) burden
and costs.

Liquids Unloading The EPA is proposing to modify the liquids un loading calculation to allow flexibility for metered data that do not exactly correspond to a given reporting year. While this modification would increase facility flexibili ty, the calculation stil l would be conducted in much the same way that is currently required. Therefore, this pr oposed change would not impose any additional (or reduced) burden and costs.

Blowdown Vent Stacks The EPA is proposing to revise the calculati on for “unique physical volume” so reporters can report emissions from blowdown vent st acks by equipment type instead of by “unique physical volume.” Although reporters would no longer be required to report blowdown vent stack emissions by each “unique physica l volume,” reporters still have to calculate blowdown vent stack emissions from each “unique physical volume.” Therefore, this proposed change would not impose any additional (or reduced) burden and costs.

The EPA is proposing to add a compressibi lity term to the blowdown vent stack calculations. It is anticipated th at reporters handle gas within th e proposed compressibility factor default ranges; therefore, it is unlikely that adding this compressibility factor term into the
blowdown vent stack calculations would increas e burden to reporters. Therefore, the EPA did not estimate the potential burden imp act to reporters for this change.

The EPA is proposing to allow an option to di rectly measure blowdown emissions in lieu of performing “unique physical volume” calculati ons. Although this optio n may decrease burden for those reporters that currently measure blowdo wn emissions, because they could simply report these measured emissions (without the burden of performing calculations), it is unlikely that facilities directly measure all of their “unique physical volumes.” Therefore, the EPA did not estimate the potential burden impact to reporters for this change.

Associated Gas Venting and Flaring The EPA is proposing to modify the calcula tion method for associated gas venting and flaring to account for situations wh ere part of the gas is going to the sales line and part of the gas emissions are reported under other emission sources included in this subpar t (i.e., tank venting).7

The reporter would still have to perform a similar calculation to wh at is currently being required. Although the proposed calculation method modifies the current equation to include two new terms, these new terms are already being calc ulated elsewhere and/ or can be estimated. Therefore, this proposed change would not impos e any additional (or redu ced) burden and costs.

Above Grade Metering-Regulating Stations The EPA is proposing technical revisions to the natural gas dist ribution segment to clarify the calculation methodologies and re porting requirements for above grade meteringregulating stations. The EPA woul d clarify that reporte rs calculate only two emission factors (one for CO 2 and one for CH 4 ) for meter/regulator runs instead of separate emission factors for all component types. These proposed changes would not impose any a dditional (or reduced)
burden and costs.

Best Available Monitoring Methods (BAMM) The EPA is proposing to remove all provi sions in 40 CFR 98.234(f) for BAMM. BAMM was designed to be a temporary flexibility mech anism and not a permanent option in the rule. Therefore, removing BAMM would not change th e burden associated with the methods of subpart W.

Missing Data Except for missing data that are continuously m onitored or measured (for example, flow meters), or for missing temperature or pressure da ta, a complete record of all estimated and/or measured parameters used in the GHG emissions cal culations is required by the current rule. The EPA is proposing certain ways that reporters can substitute a va lue for certain specific missing estimated and/or measured parameters. In additi on, for reporters who would be newly subject to subpart W in a given reporting year, and for repo rters who acquire wells during a reporting year that were not subject to subpart W prior to th e acquisition, the EPA is pr oposing to allow the use of best engineering estimates for any parameter that cannot be reasonably measured or obtained according to the requirements in subpart W for up to six months from the first date of subpart W applicability.

Missing data procedures are currently not in cluded in the greenhouse gas reporting rule (Part 98) for many areas of subpa rt W; however, the proposed missing data procedures would provide clarity for reporters who may have uni ntentionally not monitored required data. The proposed language would improve clarity for report ers and would make it easier for reporters to determine how to address missing data situations . These proposed changes would not impose any additional (or reduced) burden and costs.8

Reporting Provisions The EPA is proposing that 245 new data elemen ts be reported. The EPA is also proposing to delete 63 data elements, and substantially revise 15 data elements that are currently required to be reported under the rule. The proposed new and revise data elements would impose additional burden and costs because, for each of the new and revised data elements that would be required to be reported, reporters would be required to calculate the data element using readily available data, and report the value to the EPA via the EPA’s Electronic Greenhouse Gas Reporting Tool (e-GGRT) as part of the annual report currentl y required under Part 98. The proposed deletion of data elements would reduce burden for reporters.

The EPA calculated the increase in burden asso ciated with new and revised data elements by adjusting engineering labor hours upwards pe r reporter for all industry segments. This potential increase in labor hours was determined by first adjusting th e number of new and revised data elements for each industry segment us ing the percentage of facilities that reported emissions for each emission source, according to 2012 subpart W data reported to the EPA as of September 1, 2013. 12 The EPA then multiplied the adjusted number of new and revised data elements by 3 minutes per data element—the amount time that the EPA estimated an engineerwould need to access the data element from readily available data and submit the value via eGGRT as part of the annual report currently required under Part 98. Tabl e 1 shows the potential labor increase by industry segment that would be associated with the proposed new and revised
data elements.

Table 1. Labor Increase Associated with Pr oposed New and Revised Data Elements (by Industry Segment; all are engineering labor hours at $78.29/hour)

Industry Segment Proposed New Proposed Revised Adjusted New Adjusted Revised Adjusted Total Total Increase in Labor Hours per Reporter Onshore Natural Gas Processing 121 6 56 3 59 2.95

Onshore Natural Gas Transmission Compression 99 4 55 2 57 2.85

Underground Natural Gas Storage 82 4 38 2 40 2.00
LNG Import and Export Equipment 86 4 39 2 41 2.05

Onshore Petroleum and Natural Gas Production 124 10 60 5 65 3.25

Natural Gas Distribution 31 3 18 1 19 0.95 LNG Storage 79 4 12 0 12 0.60 Offshore Petroleum and Natural Gas Production 3 0 3 0 3 0.15

12 This adjustment is necessary because not al l facilities report data for each emission source.9

The EPA calculated the decrease in burden associated with deletion of data elements by adjusting engineering labor hour s downwards per reporter for al l affected industry segments.
This decrease in labor hours wa s determined by first adjusting the number of data elements proposed to be deleted for each industry segment us ing the percentage of facilities that reported emissions for each emission source, according to 2012 subpart W data reported to the EPA as of September 1, 2013. 13 The EPA then multiplied the adjusted nu mber of data elements proposed to be deleted by 3 minutes—the amount of time th at the EPA estimated an engineer would save because they would no longer need to access the data element and submit the value via e-GGRT as part of the annual report cu rrently required under Part 98. Tabl e 2 shows the labor adjustment by industry segment that would be associated with the data elements proposed to be deleted.

Table 2. Labor Decrease Associated with Data Elements Proposed to be Deleted (by Industry Segment; all are engineering labor hours at $78.29/hour)

Industry Segment Proposed Deleted Adjusted Deleted Total Decrease in Labor Hours per Reporter Onshore Natural Gas Processing 23 12 -0.60 Onshore Natural Gas Transmission Compression 21 14 -0.70 Underground Natural Gas Storage 14 5 -0.25 LNG Import and Export Equipment 21 10 -0.50 Onshore Petroleum and Natural Gas Production 20 16 -0.80 Natural Gas Distribution 21 21 -1.05 LNG Storage 14 1 -0.05 Offshore Petroleum and Natural Gas Production 0 0 0

For additional information on the proposed ch anges to the reporting provisions, see the memo, “Revisions to the Subpa rt W Reporting Requirements as proposed in the ‘Greenhouse Gas Reporting Rule: Revisions and Confidential ity Determinations for Petroleum and Natural Gas Systems; Proposed Rule’” in Docket Id. No. EPA-HQ-OAR-2011-0512.

Results of Analysis

The estimated change in burden (labor hours) and cost for the proposed amendments to subpart W are summarized by industry segment in Table 3.

13 Ibid.10

Table 3. Annual Average Change in Reporter Burden and Cost for Proposed Subpart W of the GHGRP

Subpart W Industry Segment Change In Total Burden

(Technical Labor Hours) Change In Burden (Technical Labor Hours /

Reporter) Change In Total Cost ($) Change In Cost ($ / Reporter) Onshore Natural Gas Processing a 417 1.43 $33,612 $116 Onshore Natural Gas Transmission Compression b 2,221 1.93 $174,662 $152 Underground Natural Gas Storage c 197 1.42 $15,552 $112 LNG Import and Export Equipment d 1 0.33 $125 $31 Onshore Petroleum and Natural Gas Production e 4,062 3.93 $317,186 $307 Natural Gas Distribution f -8 -0.05 -$622 -$4 LNG Storage g 18 0.52 $1,507 $43 Offshore Petroleum and Natural Gas Production h 11 0.15 $846 $12 TOTAL 6,920 --- $542,868 ---

a For onshore natural gas processing, the technical labor hour burden increased from 25,495 hours to 25,912 hours, which increa sed the total cost from $2,346,000 to $2,380,000. b For onshore natural gas transmission compression, the techni cal labor hour burden increased from 75,506 hours to 77,727 hours , which

increased the total cost from $7,554,000 to $7,482,000.

c For underground natural gas storage, the technical labor hour burden increased from 12,450 hours to 12,646 hours, which incre ased the total

cost from $1,164,000 to $1,180,000. d For LNG import and export equipment, the technical labor hour burden increased from 367 hours to 368 hours, which increased t he total cost from $39,200 to $39,300.

e For onshore petroleum and natural gas production, the tec hnical labor hour burden increased from 97,754 hours to 101,816 hour s, which

increased the total cost from $8,334,000 to $8,651,000. f For natural gas distribution, the technical labor hour burden increased from 18,986 hours to 18,979 hours, which increased the total cost from

$1,659,000 to $1,658,000.
g For LNG storage, the technical labor hour burden increased fr om 2,954 hours to 2,973 hours, which increased the total cost fr om $286,000 to

$287,000. h For offshore petroleum and natural gas production, the t echnical labor hour burden increased from 3,220 hours to 3,231 hours, which increased

the total cost from $285,000 to $286,000.