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- 05.24 .201 2 BHPB 1 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION 4

Final Determination and Response to Comments Outer Continenta l Shelf Air Permit OCS

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BHP Billiton Petroleum, Inc.

On April 4 , 201 2 , the Region 4 office of the United States Environmental Protection Agency (EPA) requested public comment on a draft Outer Continental Shelf (OCS) air permit for BHP Billiton Petroleum, Inc., ( the Applicant or BHPB ). The permit will regulate air pollutant emissions from BHPB’s project, known as the Sake Prospect Dr illing Project (Sake Project). The Sake Project is an oil and natural gas exploration drilling campaign for a period of up to two years using a mobile offshore drilling unit (MODU) and associated support vessels. BHPB will use either the T ransocean ultra

- deep water drillship C.R. Luigs MODU or the Transocean semisubmersible Development Driller 1 MODU

. BHPB will conduct drilling activities located in the OCS waters of the Gulf of Mexico, DeSoto Canyon area, within lease blocks 499, 543

- 545, 586

- 592, 631

- 640, 676

- 685, 721

- 729, 768

- 773, and 815

- 817. These contiguous lease blocks are found approximately within latitude 28.15° to 28.50° N and longitude 86.68° to 87.27° W, east of longitude 87.5° W. The center of the lease block area is located at latitude 28.31° N and longitude 86.96° W, approximately 120 miles from nearest Louisiana shoreline, 139 miles from the nearest Mississippi shoreline, and 125 miles from the nearest Alabama and Florida shorelines. This permit does not authorize the establi shment of any permanent production facilities.

EPA also prepared a preliminary determination and statement of basis document that explains the derivation of the permit conditions. Th e preliminary determination and the draft permit are available on EPA Region 4’s website at: http://www.epa.gov/region4/air/permits/ocspermits/ocspermits.html and regulations.gov (docket EPA

R04

- OAR

- 2012

- 0239 )

. The permit incorporates applicable requirements from the federal Prevention of Significant Deterioration preconstruction and title V operating permit programs, New Source Performance Standards (NSPS), and National Emission Standards for Hazardous Air Pollutants (NESHAP), as required by the OCS Air Quality Regulations at 40 Code of Federal Regulations ( CFR ) part 55.

During the public comment period, which commenced on April 4, 2012

, and ended on May 7, 2012 , EPA received comments from BHPB

. EPA carefully reviewed each of the comments

. This Response to Comments document summarizes the comments received

, provides EPA’s response , and summarizes the c hanges made to the permit. Complete copies of all comments are included in the administrative record for the BHPB permit and

are available at the website listed above

. No request for a public hearing was received , and due to insufficient interest, no hearing was h eld

.

A fter consideration of the expressed view of all interested persons, the pertinent federal statutes and regulations, the application and supplemental information submitted by the applicant, and additional material relevant to the application and contained in the administrative record, EPA has made a final determination in accordance with title 40 CFR p art 55 to issue an air permit to construct and operate to BHPB for the proposed Sake Project exploratory drilling operation in the waters of the Gulf of Mexico, DeSoto Canyon area. The final permit does not differ significantly from the draft permit offered for public comment.

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- 05.24 .201 2 BHPB 2 Comments received from BHP Billiton Petroleum, Inc., on Draft Outer Continental Shelf Air Permit OCS

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followed by EPA responses:

Comment 1 : Project Description (Draft Permit page 2)

- BHPB requests including a statement noting that the C.R. Luigs MODU and the DD1 MODU are both area sources of HAPs. Their classifications as area sources are important distinctions that impact regulatory applicability, including that of 40 CFR 63 Subpart ZZZZ. This statement will help to clarify the regulatory applicability analysis, and it will provide a complete descripti on of the proposed project.

Response: The requested change is consistent with the application and the assumptions used in EPA’s review. EPA has added language to the Project Description of the final permit to clarify that the project is an area source for HAPs.

Comments 2 and 3 : Table 1., C.R. Luigs Emissions Units (Operating Scenario 1) (Draft Permit page 3) and Table 2., DD1 Emissions Units (Operating Sce nario 2) (Draft Permit page 4)

- BHPB Notes that Units EU

060 to EU

- 061 and EU

- 048 to EU

- 049 were listed as 10,632 and 4,800 horsepower, respectively in the tables. For clarity, please add a footnote, “Ratings represent the total horsepower of all engines that could be operated on an individual support vessel” to the tables. This will remove any uncertainty as to whether the rating specified applies to each engine, or to the sum of all engine ratings on the specified support vessels.

Response: The requested change is consistent with the application and the assumptions used in EPA’s review. EPA has added a footnote for the horsepower ratings for the specified emissions units in Tables 1 and 2 of the final permit.

Comment 4: Immediately preceding Section 5.16.8 (Draft Permit page 11)

- Please update the heading General Reporting Requirements to number 5.17 in the list of General Conditions. This will correct numerous references to the subsequent sections in Section 5 of the permit. Numbering should be adjusted throughout the remainder of Section 5 of the permit to reflect this update.

Respo nse: EPA has corrected this inadvertent administrative error and updated the numbering as requested.

Comment 5: Section 5.16.11 (Draft Permit page 12)

- The purpose of the 10 working day follow

- up notice is to provide additional information that may not have been available at the time of a deviation or emergency. Deviations only required to be submitted in the semi

- annual monitoring report should not be included in this detailed notice. Please add the following language, “excluding deviations only r equired to be reported in the semi

- annual monitoring report required in Condition 5.17.1,” to General Condition 5.16.11. BHPB requests that the revised portion reads as follows: Within 10 working days of the occurrence of a deviation that requires 24

- hour or 48

- hour notification as provided in Condition 5.17.3.2 above, the permittee shall also submit a written notice, which shall include a narrative description of the deviation and updated information as listed below to EPA, certified consistent with Condi tion 5.13 of this permit.

Response : EPA concurs that the 10

- day follow

- up notice is intended to apply to the 24

- hr and 48

- hr deviation notifications. However, the information that is required to be submitted following a deviation is the same,

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regardle ss of whether the deviation is first required to be reported within 10

- days or with the semi

- annual monitoring report. EPA has revised Conditio n 5.17.4 to clarify that the 10

- day follow

- up written report is required following the 24

- hr or 48

- hr notificati on, and to clarify that the deviation information required to be submitted to EPA applies to both the 10

- day notification and deviations first reported in the semi

- annual report.

Comment 6: Section 5.25.4 (Draft Permit page 16)

- BHPB understands that the following General Condition: Only regular operating staff may adjust the processes or emission control devices during or within two (2) hours prior to the start of a source test. Any operating adjustments made during a source test, that are a result of consultation during the tests with source testing personnel, equipment vendors, or consultants, may render the source test invalid. is not intended to prohibit a permittee from consultation with source testing personnel, equipment vendors, or consultants. The intent of this requirement is to ensure that operating adjustments made during a source test that do not result in representative testing conditions render the source test invalid. However, the requirement is currently worded ambiguously. It could be interpreted that “ any operating adjustments made during a source test, that are a result of consultation during the tests with source testing personnel, equipment vendors, or consultants [regardless of whether they result in representative testing condi tions] may render the source test invalid. ” BHPB requests that the language of this requirement state the following: Only regular operating staff may adjust the processes or emission control devices during or within two (2) hours prior to the start of a s ource test. Any operating adjustments made during a source test that do not result in representative testing conditions may render the source test invalid.

Response: EPA has incorporated the change as requested. The clarification does not change the int ended meaning of the provision.

Comment 7: Section 5.26.5.4 (Draft Permit page 18)

- The annual fees for this permit are based on the actual emissions of all “regulated pollutants (for fee calculation).” As defined in 40 CFR Part 71.2:

Regulated pollutant (for fee calculation) , which is used only for purposes of §71.9(c), means any regulated air pollutant except the following:

(1) Carbon monoxide; (2) Any pollutant that is a regulated air pollutant solely because it is a Class I or II substance subject to a standard promulgated under or established by title VI of the Act; or (3) Any pollutant that is a regulated air pollutant solely because it is subject to a standard or regulation under section 112(r) of the Act.

Based on the above definition, greenhouse gases (GHGs) are not specifically exempted from “regulated pollutants (for fee calculation).” However, in accordance with the preamble to 75 Fed. Reg. 31514, 31526 (June 3, 2010), GHG emissions are excluded from the calculation of fees. To str eamline and clarify the permit requirements, BHPB requests that language reflecting the preamble to 75 Fed. Reg. 31514, 31526 (June 3, 2010) is included which specifically exempts GHGs from inclusion in the fee calculation.

Response: The preamble to EPA’ s final Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule See 75 Fed. Reg. 31514, 31526 (June 3, 2010) indicates that EPA did not amend the title V regulation for fees and that workload related to GHG permitting will be moni tored. EPA is currently not collecting fees related to GHGs, but could do so at some future time. Region 4 will not collect fees for GHG pollutants unless national EPA guidance changes to reflect a new position on the collection of fees for GHGs.

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GHGs are not included in the required fee calculation forms that BHPB will be using. EPA does not believe that additional clarification of the permit is needed and no changes were made to this condition in the final permit.

Comment 8: Sec tion 6.3 (Draft Permit p age 20)

- Please specify the meaning of “performance data” in Condition 6.3. Emissions from the support vessels can be calculated from “engine specifications,” in combination with the number of hours operated of each engine. Therefore, “engine specificat ions” and the number of hours operated of each engine are sufficient to demonstrate compliance with support vessel emission limitations. Please clarify the language of Condition 6.3 by updating the first sentence as follows: The permittee shall maintain r ecords in accordance with Condition 5.16 of the engine specifications, number of hours operated within 25 miles of a MODU and emission estimates for any support vessel used in place of the Allie (work boat) or the Fast Skipper (crew boat).

Response: EPA included the term “performance data” to allow for verification that the emission factor estimates for the alternative engines (such as g/kw

- hr) are below the “worst case” emission factors assumed in the application. EPA concurs that the emission factor est imates can be obtained from the engine specifications. However, EPA would like the applicant to provide the emission factors as part of the reported engine specifications. This requirement is in place only for crew and support boats used in place of those assumed in the application. EPA has revised the permit to remove the term “performance data” and to clarify that BHPB should submit emissions factors associated with engines on the alternate boats used in the project

.

Comment 9: Section 6.4.2.2 (Draft Permit page 20)

- BHPB interprets that the intent of this requirement is to ensure that all diesel fuel combusted by support vessels and the chosen MODU is either shown through testing to be or certified to be ultra low sulfur diesel (ULSD) (less than or equal to 15 parts per million by weight sulfur). BHPB believes that a certification of sulfur content from a fuel supplier for a type of fuel that will be supplied to BHPB for the duration of the project should satisfy this permit requireme nt. BHPB respectfully requests that EPA update the Conditions contained in Section 6.4 of the permit to reflect that a single representative certification obtained from each fuel supplier is sufficient to demonstrate compliance with this requirement.

Re sponse: This permit condition incorporates a standard approach to ensuring that the sulfur content of the fuel meets the permit limits. EPA has experience with the wrong fuels being delivered and with fuel suppliers blending waste fuels into fuel shipment s. EPA believes the current permit conditions will result in greater accountability on behalf of the fuel supplier and for a better correlation of specific fuel shipments from different vendors with emissions data . Hence, the permit was not changed as a result of this request.

Comment 10: Section 6.5.2.3 (Draft Permit page 23)

- Based on the orientation of the MODU, some crane engines will be required to operate more than others. In order to provide operational flexibility, while still ensuring compl iance with all emissions limitations, BHPB requests that the operating hour limits for units EU

009 through

- 012 (crane engines) be combined. As long as BHPB does not exceed a combined operating time of 17,520 hours per year, the emissions limits included in the permit for EU

- 009 through

- 012 will not be exceeded. BHPB requests that the updated requirement state, “ These units shall be operated no more than 17,520 hours per
year combined on a 12

- month rolling total basis.” Response: The requested change d oes not impact the total project emissions nor assumptions used in the modeling analysis. To allow for necessary operational flexibility, EPA has revised the permit condition to allow for a combined limit of crane engine operating hours.

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Comment 11: Section 6.5.2.6 (Draft Permit page 23)

- To ensure that this Condition agrees with the requirements specified in 40 CFR Part 60 Subpart IIII, please clarify the condition to state, “Any new, modified or reconstructed engines that trigger 40 CFR Part 60 Su bpart IIII applicability will comply with 40 CFR Part 60 Subpart IIII or obtain a technical exemption under 40 CFR 55.7.” Please also move this requirement to Section 6.16 for consistency with other New Source Performance Standards (NSPS) IIII requirement s. Response: The suggested revisions are consistent with the intent of the permit condition. EPA has revised th e permit condition and move d the condition section 6.16 as requested

.

Comment 12: Sections 6.5.4.3 and 6.6.3.3 (Draft Permit pages 23 and 29 , respectively)

- The requirement to determine the water

- based mud/oil

- based mud ratio based on a 12

- month rolling average included in permit Conditions 6.5.4.3 and 6.6.3.3 is sufficient to ensure compliance with the emission limitations specified in perm it Conditions 6.5.4.1 and 6.5.4.2 and Conditions 6.6.3.1 and 6.6.3.2. However, a rolling 12

- month average does not allow for compliance to be ensured at a frequency greater than a monthly average (i.e., “at any time”). Please revise this permit Condition by removing “at any time.” The updated requirement would state, “ The permittee shall determine the water

- based mud/oil

- based mud ratio to ensure it does not exceed 2:5 based on a 12

- month rolling average.” Response: EPA concurs that the language “at any time” is inconsistent with the monthly averaging time and has removed this phrase from the permit condition as requested. The revision is consistent with the intent of this provision.

Comment 13: Section 6.5.7.3 (Draft Permit page 25)

- In order to pr ovide operational flexibility, while still ensuring compliance with all emissions limitations, BHPB requests that the operating hour limits for units EU

- 016 and

- 017 (cementing units) be combined. As long as BHPB does not exceed a combined operating time of 1,200 hours per year, the emissions limits included in the permit for EU

- 016 and

- 017 will not be exceeded. BHPB requests that the updated requirement state, “ These units shall be operated no more than 1,200 hours per year combined on a 12

- month rollin g total basis.”

Response: The requested change does not impact the total project emissions nor the assumptions used in the modeling analysis. To allow for necessary operational flexibility, EPA has revised the permit condition to allow for a combined limit of the cement unit operating hours.

Comment 14: Section 6.5.8.3 (Draft Permit page 26)

- In order to provide operational flexibility, while still ensuring compliance with all emissions limitations, BHPB requests that the operating hour limits for units EU

- 019 and

- 020 be combined. As long as BHPB does not exceed a combined operating time of 1,500 hours per year, the emissions limits included in the permit for EU

- 019 and

- 020 will not be exceeded. BHPB requests that the updated requirem ent state, “ These units shall be operated no more than 1,500 hours per year combined on a 12

- month rolling total basis. ” Response: The requested change does not impact the total project emissions nor the assumptions used in the modeling analysis. To allow for necessary operational flexibility, EPA h as revised the permit condition to allow for a combined limit of wireline engine operating hours.

Comment 15: Section 6.6.1.3 (Draft Perm it page 29)

- For consistency with C.R. Luigs’ permit conditions, please remove NO X from this requirement. This citation should reference Section 6.9, which indicates the required pollutants to be monitored. The updated Condition should read:

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Compliance Demonstration Method for units EU

- 01 through

- 08: Pursuant to Condition 6.9, the permittee shall monitor emissions by the use of an EPA

- approved continuous emissions monitoring system...

Response: The requested change is consistent with the intent of the permit condit ion; the inclusion of “NOx” has the unintended consequence of limiting the scope of the monitoring requirement. EPA has revised the permit condition as requested.

Comment 16: Section 6.6.5.3 (Draft Permit page 31)

- In order to provide operational fle xibility, while still ensuring compliance with all emissions limitations, BHPB requests that the operating hour limits for units EU

- 012 and

- 013 be combined. As long as BHPB does not exceed a combined operating time of 1,200 hours per year, the emissions limits included in the permit for EU

- 012 and

- 013 will not be exceeded. BHPB requests that the updated requirement state, “ These units shall be operated no more than 1,200 hours per year combined on a 12

- month rolling total basis. ” Response: The requeste d change does not impact the total project emissions nor the assumptions used in the modeling analysis. To allow for necessary operational flexibility, EPA h as revised the permit condition to allow for a combined limit of cement unit operating hours.

Comment 17: Section 6.6.5.5 (Draft Permit page 31)

- The operating limit for unit EU

- 015 appears to have been erroneously set equal to the limit for unit EU

- 014. Unit EU

- 014 is correctly listed as operating a maximum of 100 hours per year. However, as presented in the Dec. 21, 2011 addendum, the stated emissions from unit EU

015 are based on an operating time of 600 hours per year. Please revise the operating limit on unit EU

- 015 to 600 hours per year. Response: EPA has corrected this inadvertent error as requested. This change is consistent with the December 21, 2011 addendum and the assumptions used in EPA’s review of the application.

Comment 18 : Section 6.6.6.3 (Draft Permit page 32)

- In order to provide operational flexibility, while stil l ensuring compliance with all emissions limitations, BHPB requests that the operating hour limits for units EU

- 016 and

- 017 be combined. As long as BHPB does not exceed a combined operating time of 1,500 hours per year, the emissions limits included in t he permit for EU

- 016 and

- 017 will not be exceeded. BHPB requests that the updated requirement state, “ These units shall be operated no more than 1,500 hours per year combined on a 12

- month rolling total basis. ” Response: The requested change does not im pact the total project emissions nor the assumptions used in the modeling analysis. To allow for necessary operational flexibility, EPA has revised the permit conditions to allow for a combined limit of wireline unit engine operating hours.

Comment 19: Secti on 6.9.1 (Draft Permit page 34)

- Permit Conditions 6.5.1.10 and 6.6.1.10 do not exist. These citations should refer to the compliance demonstration methods for the main engines of C.R. Luigs and DD1. Please revise these references to 6.5.1.3 and 6 .6.1.3, respectively. Response: EPA has revised the permit conditions to reflect the proper references as requested.

Comment 20: Section 6 .9.1.1.2 (Draft Permit page 35)

- Permit Condition 6.9.1 requires the permittee to monitor NO X , CO, VOC, CO 2 and P M/PM 10 /PM 2.5 . To facilitate compliance and clarify the permit requirements,

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please add PM/PM 10 /PM 2.5 to the list of pollutant emission concentrations required to be monitored and recorded in Condition 6.9.1.1.2. Response: EPA has clarified the permit term as requested to add particulate matter to the list of concentrations required to be monitored.

Comment 21: Section 6 .9.1.2.3 (Draft Permit page 35)

- In order to clarify the permit requirement and ensure compliance, BHPB requests that “energy usage” in permit Condition 6.9.1.2.3 be updated to “engine electric power output.” Response: To clarify the permit requirement, EPA has changed the term “energy us age” to “engine electric power output.” This revision does not change the intent of the permit term.

Comment 23: BHPB wishes to note the following typographical errors: Section 4, Third Paragraph (Draft Permit page 3) Please update the first sentence to, “The C.R. Luigs emission units consist of...” by removing the “s” from consists.

Table 1. C.R. Luigs Emissions Units (Operating Scenario 1) (Draft Permit page 3) The Table 1 title is missing a period after the “R” in C.R. Luigs. Please update the mode l for emissions unit “EU

- 013” (Mud and Cement Mixing Dust Collectors) to CF400R

129, as described in the submitted applications and addendums. Section 6.6.5.1.3 (Draft Permit page 31) The VOC BACT limit for this unit (0.52 tpy in the draft permit) does not match the limit determined in the statement of basis (0.57 tpy). Please correct the VOC BACT limit to 0.57 tpy.

Section 6.7.1 (Draft Permit page 34)

Please revise “with 25 nautical...” to “within 25 nautical....”

Section 6.13.2 (Draft Permit page 38)

Pleas e correct “manufacture” to “manufacturer.”

Response: EPA has corrected the typographical errors as requested in the comments above. These changes do not change the intent of the permit terms.

Comment 24: Monitoring, recordkeeping, and reporting requirements in section 6 cite specific monitoring and recordkeeping requirement permit conditions for types of units. Many of these citations reference the wrong monitoring and recordkeeping permit condition. A su mmary of these issues is shown in Table 1 in BHPB’s comment letter.

Response: EPA has corrected the n umbered references as requested. These revisions are necessary and do not change the intent of the permit terms.

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Other Permit Changes

Monitoring and Recordkeeping Requirements for Mud and Cement Mixing Operations: Permit Condition 6.13.2, reg arding dust collectors on the DD1, was revised to include the manufacturer specifications for maintaining minimum air supply pressure, to be consis tent with Condition 6.13.1, pertaining to like units on the C.R. Luigs. The manufacturer specifications for EU

- 009D were also added to the Administrative Record in support of the revision to this condition.

Othe r minor permit changes were made to the perm it to correct typographical , formatting, or grammatical errors or to improve the clarity of certain provisions. For example, the emission unit (EU) identification numbers were further clarified by adding “L” or “D” to distinguish between units on the C.R. Luigs and the Development Driller 1 MODU s. These changes have no impact on the emissions or the required monitoring. All changes made to the draft permit are identified by underline and strike

- through in the Administrative Record.