MEMORANDUM

TO: Record

FROM: EPA

DATE: March 15, 2013

SUBJECT: Supporting Information for Existing Source Analysis (DCN CBM00664)

To estimate economic achievability of possible discharge limitations for the Coalbed Methane 

(CBM) industry, EPA analyzed the costs of implementing wastewater pollution controls at 

existing wells. The Technical Development Document for the Coalbed Methane (CBM) 

Extraction Industry (TDD) (DCN CBM00669) provides a summary of this existing source

analysis. This memorandum provides additional details on the following tasks that were part of 

the analysis:

• Detailed Questionnaire produced water destination and volume review;

• Produced water transfer volumes analysis; and

• Project-level1 costs calculations.

Project-level data for the existing source analysis is provided in the following documents: 

• CBI Existing Source Analysis database (DCN CBM00657) presents existing source 

data and calculation results;

• CBI attachment to this memorandum (DCN CBM00664.A1) presents specific 

project-level CBI data that is not included in the CBI Existing Source Analysis 

database (e.g., projects transferring water; project-level cost data).

EPA also developed a non-CBI Existing Source Database Dictionary (DCN CBM00658) 

that describes each data field included in the Existing Source Analysis database.

1.0 DETAILED QUESTIONNAIRE PRODUCED WATER DESTINATIONS AND VOLUME REVIEW

EPA used the CBM Detailed Questionnaire as the primary source of information for the existing 

source analysis. The Detailed Questionnaire collected information on CBM operations in 2008. 

EPA identified the projects that discharge produced water to surface water and therefore would 

be affected by new discharge limitations. Because costs are a function of the volume of 

wastewater managed, EPA also identified the volume of produced water discharged by each 

project. During EPA’s review of the Detailed Questionnaire responses2

 1 “Project” is defined as a well, group of wells, lease, group of leases, or recognized unit which is operated as an 

economic unit when making production decisions

, EPA also reviewed 

Discharge Monitoring Reports (DMRs) provided by Wyoming. EPA found that CBM projects in 

Wyoming held discharge permits that may or may not discharge to surface water. Section 1.1 

2 See EPA’s 2013 Quality Assurance Activities During the Review of the Engineering Portion of the Detailed 

Questionnaire for the Coalbed Methane (CBM) Extraction Sector and the Development of the Detailed 

Questionnaire Databases memorandum (DCN CBM00663) for more information.
Memorandum

January 18, 2013

Page 2

discusses EPA’s review of the surface water destinations and volumes for CBM projects in 

Wyoming using DMRs.

EPA also reviewed data from operators that transfer produced water between projects to 

determine if the produced water was discharged to surface water. EPA analyzed these data to 

determine which projects should be attributed costs for implementing wastewater pollution 

controls (Section 1.2).

1.1

Generally, CBM projects that hold a discharge permit are allowed to discharge to surface 

water and would 1) indicate in the Detailed Questionnaire that they discharge to surface water

(C3-1) and 2) list the discharge permits held by the project (C3-4a). EPA used this information to 

identify projects that discharged CBM produced water to surface water. 

EPA Review of 2008 CBM Discharging Projects in Wyoming

Wyoming CBM discharges are permitted differently than most other states. In Wyoming, 

several types of discharge permits may be issued to CBM projects depending on the final 

destination of the produced water. CBM projects may discharge to permitted outfalls that allow

direct discharge to surface water or they may discharge to ponds that are designed to hold the 

capacity of the produced water without discharging to surface water3

EPA received 2008 DMR data

. EPA considered the 

permitted discharge to self-contained ponds as discharge to infiltration/evaporation ponds, a zero 

discharge water management method, because there is no discharge to surface water. Because 

operators using these evaporation/infiltration ponds hold a Wyoming Pollution Discharge 

Elimination System (WYPDES) permit, the operator’s Detailed Questionnaire response may 

have categorized the project as a discharging project. EPA conducted an additional review of the 

CBM projects in Wyoming using the state DMR data to determine if the project discharged to 

surface water in 2008.

4

• Whether the CBM project practices discharge to surface water and/or discharge to 

infiltration/evaporation ponds; and

from Wyoming, which included information on the type 

of permitted outfalls (e.g., direct discharge, discharge to pond) and the discharge volumes from 

each outfall. EPA used this information to confirm the following: 

• Whether the discharge volume reported in the Detailed Questionnaire accurately 

reflects what is discharged to surface water.

Based on these findings, EPA updated the responses to the Detailed Questionnaire in the 

Detailed Questionnaire Engineering database (DCN CBM00654). EPA’s 2013 Quality 

Assurance Activities During the Review of the Engineering Portion of the Detailed 

Questionnaire for the Coalbed Methane (CBM) Extraction Sector and the Development of the 

Detailed Questionnaire Databases memorandum (DCN CBM00663) provides details on EPA’s 

update to the discharge practices and discharge volumes reported in the Detailed Questionnaire.

 3 ERG, 2012. Coalbed Methane State Phone Calls. Various Dates and Contacts. EPA-HQ-OW-2010-0824. DCN 

CBM00678. 4 EPA included the 2008 DMR data from Wyoming in the Pollutant Database located in the EPA docket. EPA-HQOW-2010-0824, DCN CBM00689.
Memorandum

January 18, 2013

Page 3

1.2

During EPA’s review of question C3-1 responses to the Detailed Questionnaire, EPA determined 

that some CBM operators reported the final destination of their produced water as discharge to a 

POTW or third party when they were transferring their produced water to another CBM operator

or project that, in turn, discharged the produced water to surface water. EPA also determined that 

some operators reported transferring produced water between their own projects. For all

operators that transferred produced water to another CBM operator or project, EPA added a 

notation in the Existing Source Analysis database (DCN CBM00657) that the operator 

transferred produced water to another operator or project and changed the final produced water 

destination from POTW to surface water discharge.

Operators Transferring Produced Water

EPA assumed that the costs of managing the produced water should be attributed to the project 

from which the produced water is discharged, not to the project that generated and transferred the 

produced water. To calculate produced water management costs, EPA subtracted the volume of 

produced water transferred from the operator producing the water and added this volume to the 

operator receiving the water. 

The accompanying CBI Excel spreadsheet (DCN CBM00664.A1) shows the individual project 

volumes for the five projects transferring produced water and for the five projects accepting 

produced water. EPA’s Technical Development Document for the Coalbed Methane (CBM) 

Extraction Industry (DCN CBM00669) provides additional discussion about where produced 

water volumes are used in the existing source analysis.

2.0 EXISTING SOURCE ANALYSIS CALCULATIONS

EPA computed project-level costs for existing discharging projects to implement two produced 

water management alternatives: ion exchange and underground injection. The following 

subsections discuss detailed information about these project-level calculations.

2.1

EPA used the parameters from the Detailed Questionnaire that are listed in 

Project-Level Economic Data

Table 1 in the 

existing source analysis. EPA transferred these parameters from the Detailed Questionnaire to 

the Existing Source Analysis database (DCN CBM00657) for use in the existing source 

analysis5

While developing the existing source database, EPA identified missing operator responses for 

some of the data fields. EPA estimated values for missing data using the methods listed in 

.

Table 

1 and included these estimated values in the Existing Source Analysis database (DCN

CBM00657).

 5 U.S. EPA. 2013a. Economic Analysis for Existing and New Projects in the Coalbed Methane (CBM) Industry. 

EPA-HQ-OW-2010-0824, DCN CBM00680.
Memorandum

January 18, 2013

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Table 1. Detailed Questionnaire Part B Information Using in Existing Source Analysis

Missing Information from the Detailed 

Questionnaire Response 

EPA’s Method of Estimating Data Missing from the 

Detailed Questionnaire

Gas produced (B3-59) Use the reported data from the Screener Questionnaire

(DCN00564)

Gas sold (B3-60) Calculate the value as gas produced (B3-59) minus gas used

(B3-61)

Gas used (B3-61) Assume no gas was used and gas sold (B3-60) equaled 

production

Average wellhead price (B3-62) Assume the average of the reported wellhead prices for other 

projects in the same basin

Royalties (B3-65), severance (B3-66), and/or 

ad valorem (B3-67)

Assume the average of the reported rates for other projects in 

the same basin

2.2

EPA estimated costs for ion exchange and underground injection using operator responses to the 

Detailed Questionnaire and existing data. The methodology EPA used to estimate the projectlevel cost to implement ion exchange and underground injection is presented in this section. The 

accompanying CBI Excel spreadsheet (DCN CBM00664.A1) presents the underlying data used 

to calculate project-level costs for ion exchange and underground injection.

Project-Level Costs to Implement Water Management Alternatives

Ion Exchange Costs. EPA used existing data along with the costs and volumes reported in 

operator responses to questions C3-106 and C2-3 of the Detailed Questionnaire. EPA only 

included Detailed Questionnaire responses that included both produced water volume and ion 

exchange cost. EPA calculated an average ion exchange cost of $0.50 per barrel that they applied 

to all basins. The project-level data are included in the attached CBI Excel spreadsheet (DCN 

CBM00664.A1). 

Underground Injection Costs. EPA used the operating and maintenance costs reported in 

questions C2-7a, C2-8c, and C2-8d.v

7 to estimate the cost of underground injection in each CBM 

basin. Underground injection costs depend primarily on the accessibility of injection wells and 

on transportation costs. The accessibility of injection wells depends on the regional geology and 

the presence of existing underground injection infrastructure, which should be fairly constant 

throughout a given basin. Transportation methods and costs should also be constant throughout a 

basin. Therefore, EPA assumed that a basin average underground injection cost should be an 

accurate estimate of the cost. EPA averaged all costs for projects that only disposed of produced 

water via underground injection (i.e., projects that did not use multiple disposal options)

according to the Detailed Questionnaire responses to calculate the basin-level average costs in 

dollars per barrel. Section 5 of the TDD discusses the assumptions made for basins that did not 

have any associated underground injection costs reported in the Detailed Questionnaire.

 6 Question C3-10 requests capital costs and the year in which the costs were incurred and 2008 operating and 

maintenance costs of the ion exchange unit.

7 Question C2-7a requests 2008 operating and maintenance costs of the produced water management system 

(PWMS); Question C2-8c requests 2008 operating and maintenance costs of the piped water gathering system; and 

Question C2-8d.v requests 2008 total costs incurred to truck produced water to the PWMS.
Memorandum

January 18, 2013

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EPA multiplied the basin-level average underground injection costs ($/bbl) by the discharge 

volumes for each project to determine the underground injection costs for each project. 

3.0 QUALITY CONTROL PROCEDURES

EPA’s contractor, ERG, adhered to the Quality Assurance Project Plan for the Review 

and Data Entry of the Engineering Portions of the Coalbed Methane Questionnaire

(CBM00691) and the Quality Assurance Project Plan For the Economic Portion of the Coalbed 

Methane Detailed Questionnaires and Coalbed Methane Economic Analysis Task (CBM00692) 

during the existing source cost analysis. ERG conducted the following QA checks during the 

cost analyses:

• ERG created a table in the Engineering database8 (DCN CBM00654) to use as a 

crosswalk between the various identifiers used in the Detailed Questionnaire 

Engineering database, the Economic database9 (DCN CBM00656), and the

Screener database (DCN CBM00681). This table includes all of the CBM 

operators in the industry with additional project-specific information from the 

Detailed and Screener Questionnaires. ERG reviewed this information with the 

economists to verify its correctness and provide crosschecks of project-specific 

information.

• ERG created the CBI Existing Source Analysis database (DCN CBM00657) by 

extracting data from the Detailed Questionnaire. ERG checked that the data were 

transferred correctly by visually checking the project-level data in the CBI 

Existing Source Analysis database against the project-level data in the 

Engineering database (DCN CBM00654). ERG also checked approximately 10 

percent of the projects in the existing source database against the hardcopy 

Detailed Questionnaires to ensure that the database information was assigned to 

the correct project and operator.

• One team member created queries in the CBI Existing Source Analysis database 

(DCN CBM00657) and another team member reviewed the design and logic of 

the queries. ERG documented these checks in the database.

• ERG checked that the total number of discharging projects analyzed throughout 

the existing source analysis was consistent. ERG also checked that the same 

discharging projects (i.e., same individual project IDs) were analyzed throughout 

the existing source cost analysis. This was one check to verify that the database 

queries in the CBI Existing Source Analysis database (DCN CBM00657) were 

performing correctly.

 8 The Detailed Questionnaire Engineering database contains operator responses to Parts A and C of the Detailed 

Questionnaire. See EPA’s 2013 Quality Assurance Activities During the Review of the Engineering Portion of the 

Detailed Questionnaire for the Coalbed Methane (CBM) Extraction Sector and the Development of the Detailed 

Questionnaire Databases memorandum (DCN CBM00663) for more information. 9 The Detailed Questionnaire Economic database contains operator responses to Part B of the Detailed 

Questionnaire. See EPA’s 2013 Quality Assurance Activities During the Review of the Economic Portion of the 

Detailed Questionnaire for the Coalbed Methane (CBM) Extraction Sector and the Development of the Economic 

Database memorandum (DCN CBM00701) for more information.
Memorandum

January 18, 2013

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• ERG had a senior staff member familiar with effluent guidelines development 

review the results from the CBI Existing Source Analysis database (DCN

CBM00657).