# E C 

# / R Incorporated Providing Environmental Technical Support Since 1989

501 Eastowne Drive, Suite 25 0  Chapel Hill, North Carolina 2751 4 Telephone: (919) 484

- 0222  Fax: (919) 484

- 0122 M EMORANDUM

DATE: August 19 , 2011

SUBJECT: Impacts for Control Options for the Oil and Natural Gas Production and the

Natural Gas Transmission and Storage Source Categories as a Result of the Residual Risk and Technology Review

FROM: Heather Brown , EC/R Incorporated

Lesley Stobert, EC/R Incorporated

TO: Bruce Moore , EPA/OAQPS/SPPD/ FI G

The purpose of this memorandum is to present the estimated impacts of control options identified to reduce hazardous air pollutant (HAP) emissions and risks from facilities that are subject to the Oil and Natural Gas National Emission Standards for HAP (NE SHAP)

– 40 CFR 63, subpart HH and the Natural Gas Transmission and Storage NESHAP

– 40 CFR 63, subpart HHH

. These control options are being evaluated under EPA’s Risk and Technology Review program, which is addressing statutory requirements under section 1 12(d)(6) and 112(f)
of the Clean Air Act. Section 1 provides background information, followed by a summary of the risk results for these source categories in Section 2. Section 3 includes a n identification of the control op tions. Section 4 summarize s the e stimated impacts of the 112( f ) options and Section 5
summarize s the estimated impacts of the 112(d)(6) option s

.

1.0 BACKGROUND

Section 112 of the Clean Air Act (CAA) establishes a comprehensive regulatory process
to address emissions of hazardous air pollutants (HAP) from stationary sources. In accordance with CAA section 112(c), EPA identifies categories and subcategories of major sources that emit one or more of the HAP listed in CAA section 112(b). CAA section 112(d) (2) th en calls for EPA to promulgate national technology

- based emission standards for each listed cate gory or subcategory of sources. For “major sources” that emit or have the potential to emit any single HAP at a rate of 10 tons or more per year or any combinat ion of HAP at a rate of 25 tons or more per year, these technology

- based standards must reflect the maximum reductions of HAP achievable (after considering cost, energy requirements, and non

- air health and environmental impacts) and are commonly referred t o as maximum achievable contro l technology (MACT)
standards. S ection 112(d)(6) then requires EPA to review the CAA section 112(d) technology

based standards and to revise them “as necessary, taking into account developments in practices, processes, and con trol technologies,” no less frequently t han every 8 years. The residual risk review is described in section 112(f) of the CAA. CAA section 112(f)(2) requires EPA to promulgate standards for each category or subcategory of CAA section 112(d) sources “if

pro mulgation of such standards is required in order to provide an ample margin of safety to protect public health . . . or to prevent, taking into consideration costs, energy, safety, and other relevant factors, an adverse environmental effect

.2

The Oil and N atural Gas Production NESHAP (40 CFR 63, subpart HH) addresses emissions from the following types of emission points: (1) glycol dehydration unit process vents, (2) storage vessels with the potential for flash emissions, and (3) equipment leaks at natural gas processing plants. The Natural Gas Transmission and Storage N E SHAP (40 CFR 63, subpart HHH) addresses emissions from glycol dehydration unit process vents.

2.0 SUMMARY OF RISKS

EPA performed an assessment of the residual risks from these source categories using
2005 base year data in order to determine if additional regulation was necessary under CAA section 112(f). 1 Table 1 contains a summary of the results of this assessment, a nd Table 2 summarizes the contribution of individual emission point types to the cancer risks.

Table 1. Summary of Risk Results

Source Category Number of

Facilities
Modeled Maximum

Cancer Risk (In 1 Million) Population

Exposed To
Cancer Risk
Greater Than 1
In 1 Million Cancer

Incidence Maximum

Chronic
Hazard
Index Maximum

Acute Hazard Quotient

Oil and Natural
Gas Production 99 0 40 160,000 0.02 0.1 9 (benzene HQ REL ) 0.07 (benzene HQ AEGL

- 1 )

Natural Gas
Transmission and Storage 321 90 2,500 0.001 0. 4 5 (benzene HQ REL ) 0.04 ( benzene HQ AEGL

- 1 )

This document presents the estimated impacts of control options identified to reduce hazardous air pollutant (HAP) emissions and risks from facilities in the Oil and Natural Gas and the Natural Gas Transmission and Storage source categories. However, beca use the chronic non

cancer risks are already low , as shown in Table 1, we do not estimate the potential further reduction of these impacts with any of the risk reduction options identified. In addition, because it is not clear what impact, if any, the ide ntified risk reduction options would have on acute emissions episodes, this analysis does not estimate impacts on acute risks.

1 U.S. EPA, Office of Air Quality Planning and Standards. Draft Residual Risk Assessment for the Oil and Gas
Production and Natural Gas Transmission and Storage Source Categories . July 2011.3 Table 2. Maximum Emission Point Type Contribution to Risks *

Source Category Maximum Cancer Risk (In 1 Million) Source Type HAP

Oil and Natural Gas
Production 27 Wells: Other POM 75002

22 Oil and Gas Miscellaneous Benzene

22 Equipment leaks:

Production Benzene

21 Fugitives: Other Benzene

15 Equipment leaks:

Production Benzene

14 Dehydrators: Controlled Benzene

10 Dehydrators: Uncontrolled Benzene

8 Fugitives: Other Naphthalene

8 Dehydrators: Uncontrolled Benzene

7 Equipment Leaks: other Benzene

Natural Gas
Transmission and Storage 83 Dehydrators: Uncontrolled Benzene

65 Dehydrators: Uncontrolled Benzene

14 Fugitives: Other Benzene

7 Oil and Gas Miscellaneous Benzene

3 Dehydrators: Uncontrolled Benzene

3 Dehydrators: Uncontrolled Benzene

3 Dehydrators: Uncontrolled Benzene

2 Dehydrators: Uncontrolled Benzene

2 Fugitives: Other Benzene

2 Fugitives: Other Benzene

* Top 10 emission point contributions to source category maximum individual cancer risks shown for each source
category

.4

3.0 IDENTIFICATION OF CONTROL OPTIONS

There are two reasons that control options could be identified and evaluated. First are options identified to potentially reduce risks in accordance with section 112( f )

, s econd, are developments in practices, processes, and control techniques identified in the techn ology review in accordance with section 112(d ) (6)

. Following are the control options identified and evaluated.

112(f) Risk Reduction Options Identified:

 Oil and Natural Gas Production

o Eliminate the glycol dehydrator alternative compliance option of 0.9 M g/yr
benzene

o Require a second control device on glycol dehydrators

o Require a second control device on storage tanks

o Require more stringent LDAR programs for leak detection

 Require compliance with 40 CFR part 60 subpart VVa rather than subpart VV plant

- wid e

 Require compliance with 40 CFR part 60 VVa rather than subpart VV for certain components

 Require the use of an optical gas imaging camera monthly with an annual
EPA Method 21 check

 Natural Gas Transmission and Storage

o Eliminate the glycol dehydrator alte rnative compliance option of 0.9 Mg/yr
benzene

112(d)(6) Technology Review Options Identified:

 Oil and Natural Gas Production

o Require more stringent LDAR programs for leak detection

 Require compliance with 40 CFR part 60 subpart VVa rather than subpart

VV plant

- wide

 Require compliance with 40 CFR part 60 VVa rather than subpart VV for certain components

 Require the use of an optical gas imaging camera monthly with an annual
EPA Method 21 check

 Natural Gas Transmission and Storage

o No c ontrol options identified5

4 .0 IMPACTS OF RISK REDUCTION OPTIONS

The methodologies and impacts estimates for each of the risk reduction options identified
above in section 3 are discussed below.

4 .1 Elimination of the glycol dehydrator alternative compliance option

The current MACT standards for subparts HH and HHH contain a compliance option for glycol dehydrators that allows for either a 95% reduction of total HAP emissions from glycol dehydrators or a reduction in benzene emissions to less than 0.9 Mg /ye ar

. While many facilities
control benzene emission s to a level less than 0.9 Mg/yr , i n theory, they are allowed to increase their emissions to just below 0.9 Mg/yr

. To determine the emissions and resulting risks that
would occur if facilities wit h controlled glycol dehydrators with less than 0.9 Mg/yr emissions used the alternative compliance option and increased benzene emissions to 0.9 Mg/yr (the
MACT

- allowable level), we identified each glycol dehydrator in the NEI database that had
controlled benzene emissions at a level of less than 0.9 Mg/yr , and we scaled the emissions up to 0.9 Mg/yr for each of these dehydrators. Based on the difference at each dehydrator between the reported benzene emissions and 0.9 Mg/yr and t he con tribution each of these dehydrators made
to the risk values, we determined the risks associated with emissions at the alternative compliance level. The risks based on reported HAP emissions and the risks estimated if all controlled dehydrators complied wi th the alternative compliance option are shown in Table 1.

While the NEI contains information on whether an emission point is controlled or not, we do not have information on the type of control measure in place. Therefore, we cannot determine how many controlled dehydrators are complying with the 95% reduction alternative or how

many are using less effective controls to meet the 0.9 Mg/yr benzene alternative limit. However,
based on in formation gathered to determine the cost effectiveness of controlling small glycol dehydrators , we can infer the cost effectiveness of controlling the large dehydrators that would be affected by the removal of the 0.9 Mg/yr benzene emissions alter native. 2 The estimated cost effectiveness of the controls to reduce HAP emissions by 95% for small glycol dehydrators in the Oil and Natural Gas Production source category is $ 7

, 00 0/Mg HAP reduced and is $1,650/Mg HAP reduced for the Natural Gas Transmission and Storage source category. 3 While control methodologies are similar for large and small dehydrators, the gas flow being processed and the amount of HAP reductions achieved for large glycol dehydrators are expected to be equal to or greater than those for small glycol dehydrators. However, we would expect the cost effectiveness for large units not to exceed twice the cost effectiveness of small units. Therefore, we would assume the cost effectiveness for large units not to exceed $1 4

, 00 0 / Mg HAP reduced for the Oil and Natural Gas Production source category and $3,300 /Mg HAP reduced for the Natural Gas Transmission and Storage source category. The estimated source category risks and removal of the glycol dehydra tor alternative control option cost effectiveness values are presented in Table 3

.

2 To address an unregulated emission point under CAA section 112(d)(2) and (3), EPA has estimated the costs of requiring controls on currently unregulated “small” glycol dehydrators , which are those with an actual annual average natural gas flowrate less than 85,000 standard cubic meters per day (scmd) and actual average benzene
emissions less than 0. 9 Mg/yr. The risk reduction options pertain to the previously regulated “large” glycol dehydrators, which are those above the thresholds specified for “small” glycol dehydrators.

3 Memorandum from Heather Brown, EC/R Inc. to Bruce Moore and Greg Nizich, EPA. Oil and Natural Gas Production MACT and Natural Gas Transmission and Storage MACT

– Glycol Dehydrators: Impacts of MACT Review Options

. July 28, 2011.6

Table 3

. Estimated Impacts of Removing the Glycol Dehydrator Alternative Compliance Option

Source Category Source Category Max Cancer Risk

if Controlled Glycol Dehydrators
Us e 0.9 Mg/yr Alternative Source Category Max
Cancer Risk Without the 0.9 Mg/yr Alternative Control Cost
Effectiveness ($ /Mg HAP) a

Oil and Natural
Gas Production 400 40 $1 4

, 000

Natural Gas
Transmission and Storage 90 90 b $3,300

a Assumes the control cost is twice that of the control cost for small glycol dehydrators

b The maximum cancer risk is from a facility without controlled glycol dehydrators, so removing the alternative compliance alternative alone would not reduce the maximum cancer risk from this category. Although not investigated specifically as a risk reduction option, the requirement for small glycol dehydrators proposed under CAA section 112(d)(2) for the Natural Gas Transmission and Storage source category is expected to reduce risks to
20

- i n

- 1 million.

4

. 2 Require a second control device on controlled glycol dehydrators

Requiring an addit ional control device beyond that required to meet the MACT floor
level of control for glycol dehydrators was an option identified in making the ample margin of safety decision for the Oil and Natural Gas Production source category. For sources achieving the MACT level of control, it is assumed that for most glycol dehydrators required to reduce emissions, th e emissions are routed to a condenser or a combustion device, which achieve at least a 95% HAP reduction. To reduce the emissions remaining after the use of this control device, the option of requiring an additional add

- on control device, most likely a co mbustion device that would also achieve a 95% emission reduction, was investigated. The costs for the second device were assumed to be equal to the costs of the first device, however, the amount of emission reduction would be less, as they would have alre ady been reduced substantially by the first control device. Assuming the first device achieves a 95% HAP reduction in the uncontrolled emissions, the second device would achieve a 95% HAP reduction in the remaining emissions, or 4.75% of the uncontrolled emissions. Therefore, the second device would achieve
1/20 the emissions reduction of the first device for the same cost. Based on the cost effectiveness of the first device of $ 7

, 00 0/Mg HAP reduced 4 , the cost effectiveness of the second
device would be $7

, 00 0*20, or $1 40

, 0 00.

T he maximum cancer risks for the source category are not due to emissions from glycol dehydrators, assuming the 0.9 Mg/yr benzene emissions alternative is removed , as shown in
Table 2 . T herefore , further reduction of emissions a nd risk from glycol dehydrators with a second control device will not reduce the maximum cancer risks for the source category. The
estimated source category risks and glycol dehydrator additional control device cost
effectiveness values are presented in Ta ble 4

.

Table 4

. Estimated Impacts of Adding a Second Control Device to Glycol Dehydrators

Source Source Category Max Cancer Source Category Max Cancer Control Cost

4 Memorandum from Heather Brown, EC/R Inc. to Bruce Moore and Greg Nizich, EPA. Oil and Natural Gas Production MACT and Natural Gas Transmission and Storage MACT

– Glycol Dehydrators: Impacts of MACT Review Options

. July 28, 2011.7

Category Risk Without the 0.9 Mg/yr

Alternative (Baseline) Risk With Second Control Device on Glycol Dehydrators Effectiveness ($/Mg HAP) 1

Oil and Natural
Gas Production 40 40 a $140

, 0 0 0

a The maximum cancer risk is from an emission point other than a glycol dehydrator, so reducing emissions from this type of emission point alone would not reduce the maximum cancer risk from this category.

4

. 3 Require a second control device on controlled storage vessels

Requiring an additional control device beyond that required to meet the MACT floor
level of control f

or storage vessels was an option identified in making the ample margin of safety decision for the Oil and Natural Gas Production source category. For sources achieving the MACT level of control, it is assumed that storage vessels required to reduce emissi ons are equipped with a cover vented through a closed vent system to a control device , which achieve s at least a 95% HAP reduction. To reduce the emissions remaining after the use of this control device, the option of requiring an additional add

- on contro l device, most likely a combustion device that would also achieve a 95% emission reduction, was investigated. The costs for the second device were assumed to be equal to the costs of the first device, however, the amount of
emission reduction would be les s, as they would have already been reduced substantially by the first control device. Assuming the first device achieves a 95% HAP reduction in the uncontrolled emissions, the second device would achieve a 95% HAP reduction in the remaining emissions, or 4.75% of the uncontrolled emissions. Therefore, the second device would achieve
1/20 the emissions reduction of the first device for the same cost. Based on the cost effectiveness of the first device of $ 1 8,3 0 0/Mg HAP reduced 5

, the cost effectiveness of the second device would be $ 1 8,3 0 0*20, or $ 366

, 0 00.

T he maximum cancer risks for the source category are not due to emissions from storage vessels , as shown in Table 2 . Therefore, further reduction of emissions and risk from storage vessels with a seco nd control device will not reduce the maximum cancer risks for the source
category. The estimated source category risks and storage vessel additional control device cost
effectiveness values are presented in Table 5

.

Table 5

. Estimated Impacts of Adding a Second Control Device to Storage Vessels

Source Category Source Category Max Cancer

Risk Without the 0.9 Mg/yr Alternative (Baseline) Source Category Max
Cancer Risk With Second Control Device on Storage

Vessels Control Cost
Effectiveness ($/Mg HAP) 1

Oil and Natural
Gas Production 40 40 a $366,000

a The maximum cancer risk is from an emission point other than a storage vessel, so reducing emissions from this type of emission point alone would not reduce the maximum cancer risk from this category.

4

. 4 Require a leak detection and repair (LDAR) program for additional facility components

5 Memorandum from Heather Brown, EC/R Inc. to Bruce Moore and Greg Nizich, EPA. Oil and Natural Gas
Production MACT a nd Natural Gas Transmission and Storage MACT

– Storage Vessels : Impacts of MACT Review Options

. July 28, 2011.8

Requiring an LDAR program for additional facility components was an option identified in making th e ample margin of safety decision for the Oil and Natural Gas Production source
category. For natural gas processing plants, which already have LDAR requirements, more stringent options were not investigated. For production facilities and gathering and b oosting facilities, which do not currently have LDAR requirements, several LDAR options were investigated

. The investigated LDAR programs include :

 Compliance with 40 CFR part 60 subpart VVa ( which is based on conducting Method 21 monthly, defining a leak at the 500 ppm threshold for valves , and includes connectors on the list of components to be monitored)

 Compliance with 40 CFR part 60 subpart VVa for certain components (including valves, pressure relief devices, connectors, and open

- ended lines)

 U se of an optical gas imaging camera monthly with an annual EPA Method 21 check

The costs of these options were examined under the review of the NSPS for the oil and gas sector based on reductions of VOC. Since the HAP present is approximately 1/20 the VOC

pre sent in material handled by regulated equipment, the cost effectiveness of these LDAR programs is approximately 20 times greater for HAP reduction than for VOC reduction. For example, based on the VOC cost effectiveness of requiring VVa for production fac ilities of $1 7

, 7 00/Mg VOC reduced, the cost effectiveness of this program for HAP reduction would be $1 7

, 700*20, or $354 ,000 /Mg HAP reduced . To estimate the cost effectiveness for HAP reduction, we performed this calculation for each option for each plant component investigated. While cost estimates were developed under the NSPS review for the use of the optical camera without an annual Method 21 check, due to the lack of data on the emission reduction associated with this method, cost effectiveness value s were not developed. Similarly due to this lack of data, cost effectiveness values were not developed for HAP reduction and are not included here as options considered.

T he maximum cancer risks for the source category are not due to emissions from equip ment leaks , as shown in Table 2 . Therefore, further reduction of emissions and risk from equipment leaks with an LDAR program will not reduce the maximum cancer risk s for the source category. The estimated source category risks and LDAR program control c ost effectiveness values are presented in Table 6

.

Table 6

. Estimated Impacts of Requiring a n LDAR Program for Additional Facility Components

Source Category Plant

Component LDAR Option Source Category Max Source

Category Control Cost

Effectiveness Control Cost

Effectiveness9 Cancer Risk
Without the 0.9 Mg/yr
Alternative (Baseline) Max

Cancer
Risk With
LDAR Option ($/Mg VOC ) a ($/Mg HAP)

Oil and
Natural
Gas
Production Production

facilities (currently unregulated) VVa facility

wide 40 40 c $1 7

, 7 00 $3 54 ,000

VVa for certain
components 40 40 c $1 6

, 6 00

- $2 33 ,000 $332 ,000

-

$4, 66 0,000 Optical camera monthly with
annual Method
21 check 40 40 c $1 7

, 7 00 $3 54 ,000

Gathering
and boosting
facilities (currently unregulated) VVa site

- wide 40 40 c $ 10

, 3 00 $206 ,000

VVa for certain
components 40 40 c $5, 7 00

- $ 85 ,000 $1 14 ,000

-

$1, 70 0,000 Optical camera monthly with
annual Method
21 check 40 40 c $ 11

, 1 00 $222

, 000

a Values taken from the following source: U .S. EPA, Office of Air Quality Planning and Standards. New Source Performance Standards for the Oil and Natural Gas Industry

- Background Technical Support Document for Proposed Standards . July 2011.

c The maximum cancer risk is from an emission point othe r than equipment leaks, so reducing emissions from this type of emission point alone would not reduce the maximum cancer risk from this category.

5 .0 IMPACTS OF TECHNOLOGY REVIEW OPTIONS

The methodologies and impacts estimates for each of the technology review options
identified above in section 3 are discussed below.

5. 1 Require an enhanced leak detection and repair (LDAR) program

Requiring an LDAR program more stringent than the current LDAR program for natural gas processing plants was an opt ion identified in the technology review for the Oil and Natural Gas Production source category. For these natural gas processing plants , several LDAR options were investigated. The investigated LDAR programs include:

 Compliance with 40 CFR part 60 subpart VVa (which is based on conducting Method 21 monthly, defining a leak at the 500 ppm threshold for valves, and includes connectors on the list of components to be monitored)

 Compliance with 40 CFR part 60 subpart VVa for certain components (includin g valves, pressure relief devices, connectors, and open

- ended lines)

 Use of an optical gas imaging camera monthly with an annual EPA Method 21 check

The costs of these options were examined under the review of the NSPS for the oil and gas sector based on reductions of VOC. Since the HAP present is approximately 1/20 the VOC present in material handled by regulated equipment, the cost effectiveness of these LDAR programs is approximately 20 times greater for HAP reduction than for VOC reduction. For

exam ple, based on the VOC cost effectiveness of requiring VVa for natural gas processing plants, the cost effectiveness of this program for HAP reduction would be $3, 7 00*20, or $ 73

, 5 00 /Mg HAP reduced. To estimate the cost effectiveness for HAP reduction, we performed10

this calculation for each option. While cost estimates were developed under the NSPS review for the use of the optical camera without an annual Method 21 check, due to th e lack of data on the emission reduction associated with this method, cost effectiveness values were not developed. Similarly due to this lack of data, cost effectiveness values were not developed for HAP reduction and are not included here as options con sidered. The estimated enhanced LDAR program control cost effectiveness values are presented in Table 7

.

Table 7

. Estimated Impacts of Requiring a More Stringent LDAR Program

Source Category Plant

Component LDAR Option Control Cost
Effectiveness ($/Mg VOC) a Control Cost

Effectiveness ($/Mg HAP)

Oil and
Natural Gas
Production Natural gas

processing plants VVa facility

- wide $ 3,700 $ 7 3

, 5 00

VVa for certain
components $ 1 60

– $ 4

, 8 00 $3, 2 00

- $ 96 ,000

Optical camera monthly with annual
Method 21 check $ 5,100 $ 1 0 2 ,000

a Values taken from the following source: U.S. EPA, Office of Air Quality Planning and Standards. New Source Performance Standards for the Oil and Natural Gas Industry

- Background Techni cal Support Document for Proposed Standards . July 2011.