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SUBJECT: Impacts of NSPS Gas Capture Requirements for New Gas Well Completions DATE: April 5, 2012 This document summarizes the approach for estimating the impacts of regulating volatile organic compound ( VOC ) emissions from new gas well completions following hydraulic fracturing where reduced emissions completions (REC) are required. A description of the data and how it was used is provided. This document is intended to serve as a companion to the docket memos and TSD, so this document provides a sum mary of the information and methodologies that are detailed separately in those files

. A similar procedure as the one shown here was used to estimate the impacts from recompletions following hydraulic fracturing and for the portion of affected facilities w here combustion is used for VOC control instead of the combination of combustion and gas capture

. 

## General Methodology Below is the list of steps taken to estimate each aspect of the impacts. 

### Estimate **Emissions from Representative Individual**  **Source** 1. Develop a methane emission factor for hydraulically fractured well completions (see separate docket memo : Emission Factor for Hydraulically Fractured Gas Well Completions: Data Assessment and Calculation Methodology) 2. Develop a conversion of mass of methane to mass of VOC (see separate docket memo : Composition of Natural Gas for U se in the Oil and Natural Gas Sector Rulemaking ) 

### Estimate **Reductions from Representative Individual**  **Source** 1. Determine the control efficiency of implementing a REC (see separate docket memo: Percent of Emissions Recovered by Reduced Emission Completions, May 19, 2011) 2. Multiply the control efficiency by the VOC emissions from a representative source 

### Estimate the Cost of Compliance **for Representative Individual Source** 1. Determine average cost per day of a REC (see Section 4.4.2.3 of Proposal Technical Support Document) 2. Determine average duration of REC in days (see Section 4.4.2.3 of Proposal Technical Support Document) 

### Estimate the Cost**- Effectiveness of VOC Control**  1. Divide the reductions from a re presentative source by the cost for a representative source 

### Estimate Total Emissions from All Hydraulically Fractured Gas Well **Completions** 1. Estimate the number of gas well completions in a representative year 2. Multiply the number of gas well completions by t he representative emissions from an individual source2



### Estimate Total Reductions from All Hydraulically Fractured Gas Well **Completions** 1. Estimate the number of gas well completions in a representative year 2. Multiply the number of gas well completions by the representative emissions reductions from an individual source 

### Estimate Total Cost of Compliance for All Hydraulically Fractured Gas Well **Completions** 1. Estimate the number of gas well completions in a representative year 2. Multiply the number of gas well completions by the cost of compliance for a representative individual source Figure 1, below, illustrates the general process by which each aspect of the impacts was determined.3

**Figure 1: Flow Diagram of Impacts Estimations** Figure 1


## Data **Descriptions** This section describes the data used for the impacts calculations . The data is also discussed in related docket memos and in the TSD. The list of the data is:

 Methane emission factor for hydraulically fractured gas well completions Methane Emission Factor Conversion of

Methane to VOC

**VOC Emissions per Ga**  **s Well Completion** REC Control Efficiency

**VOC Reductions per Gas Well Completion**  Average Cost of REC per Day Average Duration of RECs

**Cost of REC per Well Completion**  **Cost -**  **Effectiveness of VOC Control** 

**Total VOC Reductions**  **Total Cost of Compliance** 

**Total VOC Emissions**  Number of Hydraulically Fractured Gas Well Completions per year4

 Conversion of mass of methane to mass of VOC

 REC control efficiency
 Average cost of REC per day

 Revenues from natural gas product recovery
 Average duration of RECs

 Number of hydraulically fractured gas well completions per year 

### Methane Emission Factor The methane emi ssion factor was calculated based on 4 different data sets which contained over 1,000 wells. The emission factor was a simple average of the average emissions per completion from each data set (i.e. a simple average of 4 emission factors). The data include d tight gas formations, shale formations, and coal bed methane (CBM) formations. From the comments submitted to the proposed NSPS, additional data was received that the EPA considered . By performing a series of calculations based on this new data, it was s hown that the previously developed emission factor was representative of emissions from a typical hydraulically fractured gas well completion. For more information on the development of the original emission factor and the evaluation of data submitted through NSPS comments, please see the docket memo titled “Emission Factor for Hydraulically Fractured Gas Well Completions: Data Assessment and Calculation Methodology”. 

### Conversion of Mass of Methane to Mass of VOC A conversion of mass of methane to mass of VOC was determined using composition data from 9 different references. Based on this data, it was possible to generate an average composition profile for produced gas, and subsequently, a ratio of mass of methane to mass of VOC. For more information regarding the development of this ratio as well as the raw data on which it is based, please see the memo from EC/R to Bruce Moore titled “Composition of Natural Gas for use in the Oil and Natural Gas Sector Rulemaking”. 

### REC Control Efficiency Based on the results reported by 4 different Natural Gas STAR Partners who performed RECs, it was possible to estimate a representative control efficiency of using RECs. The companies provided both recovered and total produced gas, allowing for the calculation of the percentage of the total gas which was recovered. This estimate was based on data for more than 12,000 well completions. 

### Average Cost and Duration of RE **Cs** The average cost and duration of RECs was obtained from data also shown in the Natural Gas STAR Lessons Learned document titled “Reduced Emissions Completions for Hydraulically Fractured Natural Gas Wells” and is available at: http://epa.gov/gasstar/documents/reduced_emissions_completions.pdf

. The impacts calculations use the cost per day for gas capture and the duration of gas capture along with a setup/takedown/transport cost and a flare cost to represent the total cost. The cost is then annualized5

across the time horizon under study. The average cost and duration information is also covered in the TSD. 

### Revenue from R**ecovered Products** The costs were depicted in two different ways: without accounting for the value of the product recovered as a result of controlling VOC, and with the revenue from recovered products . To estimate the revenue from recovered products, the estimated value of t he recovered gas was added to the estimated value of the recovered condensate. 90% of the gas emitted (ie 90% of the emission factor per completion event) was depicted as being captured and sold (see separate docket memo : Percent of Emissions Recovered by Reduced Emission Completions, May 19, 2011 ) . This saved gas was multiplied by a characteristic gas price of $4 per Mcf gas . A characteristic amount of gas condensate was determined to be 34 barrels per completion, and this number of barrels was multiplied by its characteristic market value of $70 per barrel

. 

### Number of Hydraulically Fractured Gas Well Completions per Year The number of hydraulically fractured gas well completions was estimated using the National Energy Modeling System analysis consistent wit h the Annual Energy Outlook 2011 Reference Case

. It is estimated that there would be 11,403 gas well completions in tight, shale, and CBM formations. From this total, three deductions were made: 1. The first deduction was for wildcat and delineation wells a. 446 well completions b. According to Annual Energy Outlook 2011 Reference Case 2. The second deduction was for RECs already required by state regulations a. 1,644 well completions b. 15 percent of gas well completions (after subtracting wildcat and delineation wells) c. Exp lained in Section 4.3.3 of Proposal Technical Support Document 3. The third deduction was for low pressure wells a. 931 well completions b. 10 percent of gas well completions (after subtracting wildcat and delineation gas wells and the gas well completions already controlled by state regulations) c. Based on the memo titled “Determination of Minimum Flowback Pressure, Docket EPA

HQ

- OAR

- 2010

-0505, Oil and Natural Gas Sector: New Source Performance Standards 40 CFR Parts 60” from ICF International to Bruce Moore on March 26, 2012.6

The table below summarizes the breakdown of the estimated number of gas well completions. **Table 1: Number of Hydraulically Fractured Gas Well Completions**

**Source Required to** 

**perform RECs Required to**  **Combust**

**Completion Emissions**  ***** **Completions**

**Already Regulated by States**  **Total Hydraulically**

**Fractured Gas Well Completions**  Hydraulically Fractured Gas Well Completion **8,382 1,377**  **1,644 11,403**  * Note that the gas well completions required to combust the completion emissions are not prohibited from performing RECs. However, for the impacts assessment, these well completions are assumed to control emissions through a combustion device only. 

## Final **Impacts** The tables below provide the final rule impacts for well completions when REC are performed estimated using the methodologies, data , and parameters described in this memo, in the docket memos, and in the TSD

. **Table 2**  **: Estimated**  **Impacts per Individu al**  **Hydraulically Fractured Gas Well**  **Completion When REC is**  **Performed**

**Source Uncontrolled** 

**VOC Emissions (tons)**  **VOC Emissions**

**Reductions (tons)**  **Cost of Compliance**

**(without savings) Cost of** 

**Compliance (with savings)**  Individual Hydraulically Fractured Gas Well Completion **22.691 21.500**  **$33,237**
**- $1,543** 

**Table 3**  **: Estimated**  **Impacts for All Hydraulically Fractured Gas Well Completion When REC is Required** 

**Source Uncontrolled** 

**VOC Emissions (tons)**  **VOC Emissions**

**Reductions (tons)**  **Cost of Compliance**

**(without savings)**  **Cost of**

**Compliance (with savings)**  All Hydraulically Fractured Gas Well Completion **1 90,200**  **1 80,214**  **$ 278,594,675**  **- $12,**  **931,285 Note: An additional 55,535 tons of 58,612 tons of VOC emissions are estimated to be reduced via**  **completion combustion for hydraulically fractured gas well completions that are not required to**  **implement a REC but are required to combust emissions.** 7

**Table 4**  **: VOC Control Cost Effectiveness when**  **a REC is Performed** 

**Source VOC Control Cost** 

**Effectiveness ($/ton)** 
**— without**  **savings VOC Control Cost** 

**Effectiveness ($/ton)** 
**— with**  **savings** All Hydraulically Fractured Gas Well Completion **$1,546 per ton VOC**  **- $72 per ton VOC**