DRAFT

MEMORANDUM

Date: October 12, 2011

Subject: Summary of discussion from the September 22, 2011, m eeting between

the Gas Processors Association and the Environmental Protection Agency

From: Heather Brown , EC/R Incorporated

Bill Huang, EC/R Incorporated

To: Bruce Moore, EPA/OAQPS/SPPD/ FIG

I. PURPOSE

This memorandum summarizes the September 22, 2011 meeting between the Environmental Protection Agency (EPA) and industry representatives from the Gas Processors Association (GPA ). The purpose of this meeting was to listen to comments and concerns from

the GPA regarding the August 23, 2011, Oil and Natural Gas Sec tor proposal.

II. DATE

The meeting took place from 9:00 am until 12:00 pm on September 22 , 2011 at the Research Triangle Park, NC, campus of the U

. S

. EPA.

III. ATTENDEES

The following individu als attended the meeting:

Gas Processors Association

B ritish P etroleum : Jeffrey Adams
Chesapeake : Grover Campbell

DCP Midstream : Quentin C Mendenhall

OneOK: Lynn Reed
Tim Hale (by telephone)

Anadarko : Bill Grugar (by telephone)

Center Point: Laura Guthrie (by telephone)

Targa: Jessica Kaiser (by telephone)

Copano: Will Shutt (by telephone)

Mark West: Christie Trontel (by telephone)2

U.S. Environmental Protection Agency

Bruce Moore Greg Nizich

Alex MacPherson

EC/R Incorporated

Heather Brown Bill Huang

IV. SUMMARY OF DISCUSSION

Bruce Moore began the meeting by saying that since it is between proposal and promulgation, he can’t respond to comments, but can listen to the issues raised during the meetings and provide clarifying information. The following is a summary of the discussi on on each of the issues that were raised by GPA.

Issue 1

. Cross

- referencing of HH for storage tanks

. GPA began by stating that the new source performance standards (NSPS), subpart OOOO, was easy to understand. However, subpart

OOOO cross references the o il and natural gas production national emissions standards for hazardous air pollutants (NESHAP), subpart HH. GPA stated that cross referencing is confusing, especially for smaller producers. In addition, there is confusion between the references to

hazard ous air pollutants (HAP) under subpart HH, and subpart OOOO is a volatile organic compound (VOC) rule. They indicated that they would prefer that all of the storage tank requirements be contained in subpart OOOO. As an aside, GPA also mentioned that they d o not like the definitions in the back of the rule, because they never get to see them. GPA says these definitions are extremely important and are sometimes missed by those unfamiliar with the layout of the rule. EPA responded that having the definitions i n the back is the way the newer

rules are laid out.

Issue 2

. Comment Extension. GPA stated that a comment extension is necessary to provide comments. EPA responded that so far there have been at least 5 requests made so far, but more may be coming in. In addition, GPA asked for a year extension on the promulgation date. Then GPA asked whether EPA has the authority to delay the promulgation of subpart OOOO when it was not in the consent decree (especially for specific pieces of equipment). EPA clarified tha t subpart OOOO was an outcome of subparts KKK and LLL review.

Issue 3

. Use of natural gas as a surrogate. GPA was concerned about use of natural gas as a surrogate for VOC. Since the rule is a VOC rule, they would like the use of VOC instead. In addition, GPA requested an exemption across the board for gas streams for anything less than

5 percent by weight VOC. According to GPA, sales gas is usually less than 1 percent propane and some states use 1 percent as an exemption. According to GPA, 5 percent is an arbitrary number and would like EPA to do an economic analysis to get a better number. According to GPA, gas from the Barnett Shale in Texas has a VOC to methane ratio of approximately 0.028 and coal bed methane (CBM) is “pure” methane

. In addition, GPA b elieves that issues with equipment availability resulting from the rule would be helped by providing an exemption.3

Issue 4

. Use of “social cost of carbon”

. GPA mentioned that it was strange to see the “social cost” of carbon in an EPA document. According to GPA, the sales volumes being estimated related to green completions are way too high and are not supported. GPA stated that they’re higher than in Wyoming whe re it’s most economical to recover.

Issue 5

. Concern with the use of voluntary programs to set standards

. GPA was concerned about EPA’s use of voluntary programs to set standards. According to GPA, oil and gas companies have been “bitten” by voluntary pro grams, because of the regulations that come after them. As an example, GPA discussed how BP did voluntary reductions, and were required to do offsets (which they had none because of the voluntary reductions) by follow

- up regulations. In addition, GPA point ed out that Natural Gas STAR programs are examples of the best of the best and EPA should be careful to apply across the industry.

I ssue 6

. Monitoring, recordkeeping and reporting requirements

. GPA stated that monitoring, reporting and recordkeeping (MRR) requirements are very prescriptive for tanks and t hey would

like to see the prescriptiveness lessened. According to GPA, a lot of these sites are unmanned, and operators are only going there to make sure equipment is working properly. EPA stated that

the General Provisions can add a lot of reporting and recordkeeping, but they are trying to streamline this. EPA asked for suggestions on how to streamline the MRR requirements. According to GPA

, continuous parameter monitoring systems ( CPMS ) use was meant for major maximum achievable control technology ( MACT ) sources, and is burdensome for smaller

sources

.

GPA was concerned that their only two choices were the use of a flow meter or permission by the Administrator to use an alternative. Therefore, due to the length of time it would take to get permission from the Administrator, they would be required to use flow meters. GPA stated that flow meters are not really an option for the industry because they won’t always work. Intermittent flow, freeze ups, and two

- phase flow makes them inaccurate. As an alternative, GPA suggested the use of sales volume instead of throughput, since they already document this. This alternative is the number one management request.

Issue 7

. Storage Tank Regulations

. GPA asked whether EPA intended to exempt produced water tanks? If so, EPA needs to add a definition for atmospheric tanks for inspectors. GPA suggested that the definition of atmospheric tanks needs to say it is a pressure vessel, not a processed vessel or water tank. EPA asked for a suggested way to clarify this.

GPA also requested a way to identify locations where tank regulations would apply and establish

boundaries between the volatile organic liquid storage vessel NSPS (subpart Kb )

, the organic liquid distribution (OL D) MACT, subpart HH, and subpart OOOO

.

GPA stated that a vapor recovery unit (VRU) is thought of as a part of the process and not as a control device. GPA explained that when VRUs are being used they are 100 percent effective; however, when it is down (fo r maintenance usually for a few days), then it is 0 percent effective. GPA was concerned that the way the rule is written, this would require MRR.4

According to GPA, the way the rule is written a flat 95 percent efficiency is impossible to meet and they su ggested that the a veraging period needs to be over the c alendar year or as a rolling

average

. GPA prefers a rolling average.

GPA also mentioned that some VRU have a “flare” backup and that the manufacturers’ performance test for control device is huge plu s . The u se of a representative test also good.

Issue 8

. LDAR leak definition

. GPA was concerned about the leak definition going from 10,000 ppm to 500 ppm. They stated that gas plant managers are really worried that if they go to 500 ppm , they will not meet the MRR requirements. GPA mentioned that contractors are also trying to do testing for subpart W (the greenhouse gas reporting rule), and additional leak testing will drain their manpower. Further, according to GPA, their studies have showed that a leak definition below 10,000 ppm will not significantly reduce emissions. Therefore, as an alternative, GPA is proposing a leak definition of 5,000 ppm. GPA argued that the 500 leak in equipment leak NSPS (subpart VVa ) is from the synthetic o rganic chemical manufacturing industry (SOCMI) and they’re industry tends to be more centralized , whereas their industry is more

s pread out nature . Further, GPA argued that methane is a short chain hydrocarbon, which is hard to “keep in valve

. ”

GPA is also proposing not requiring Method 21 for connectors and to continue the weekly inspections they’re doing currently. In support of their argument, GPA pointed out that the connector LDAR requirements had been s tayed under subpart VVa . With respect to LDAR

ca meras, GPA stated that there was no interest because of the huge recordkeeping responsibility

and it was not a useful tool. GPA also commented that Method 21 is unreasonable in

combination with the camera. GPA stated that there was some concern with use of the cameras, because of the compliance aspect that will come with it (i.e., the storage of video).

Issue 9

. Issues with Subpart KKK requirements now incorporated into subpart OOOO.

GPA brought up several concerns with the existing NSPS for VOC emissions from gas processing plants (subpart KKK), which were carried over into subpart OOOO. The first concern

was with section 60.487(d)

– administrator approval for decreasing monitoring frequency

. The

issue was that the n otification requirement is sometimes mis sed by the industry

.

Another issue brought up by GPA was the removal of the SSM exemption . GPA was concerned

that upset conditions could pull in equipment subject to the rule. They suggested adding “ during normal operation.”

GPA was also concerned that e mergency flare s at gas plant s would h ave to comply with 60.18. These flares are generally quite o versized to handle big emergenc ies but under normal operation only have to control pressure relief devices . GPA requested some relief for notification and

per fect tests.

GPA also was concerned that positive displacement pumps can barely meet the current 10,000 ppm leak definition

. GPA felt as though section 63.648(f) was written for the Refinery MACT. GPA noted that reciprocating pumps in light liquid service are exempt, and requested the same exemption for gas plants as refineries. GPA elaborated that it’s only the old pumps that weren’t meant to meet the 10,000 ppm threshold; the new ones don’t have this problem.5

Issue 10

. Problems with notifications, and MRR for small sources

. GPA mentioned that the control levels seemed reasonable, but suggested moving notification s in subpart OOOO to annual reports for all affected sources . EPA stated that their intent was not to have ev ery pneumatic controller on every annual report (i.e., not cumulative). GPA stated that they would like this clarified in the rule text. They also suggested that EPA not refer to the General

Provisions when possible

.

GPA stated that currently there is not hing in the rule text allowing for the periodic reports to be due at some time after the end of the reporting period. GPA recommended that the periodic reports be due 60 days after the end of the reporting period. Additionally, GPA requested that EPA provi de some f

lexibility to define what reporting period should be but that it should not be

the installation date

.

GPA also asked EPA needs for reciprocating compressors in the annual report versus just in the records. EPA responded that it is an enforcement issue that gives EPA an opportunity to go and check. GPA then noted that industry only logs run hours of engine. EPA responded that industry should suggest an alternative fixed schedule that would not exceed the 26,000 hour

- limit that is currently in the r ule

.

Issue 11

. Pneumatic controller s

. GPA referred to the commence construction date for a pneumatic controller affected facility which is 180 days from August 23. GPA stated that currently there is no way to tell if a controller is low bleed or high blee d. According to GPA, they need time to go back to the manufacturer to tell if a controller is low or high bleed, and the manufacturer can’t always do it. GPA stated that they are attempting to get the manufacturers to stamp controllers to designate type an d date to allow vendors to identify whether it is a low or high bleed. GPA also stated that vendors will need time to adjust the operation to accommodate this. GPA recommended looking at subpart JJJJ for an example of how compliance dates were

dealt with.

GPA asked whether “Miser” retrofit kits for pneumatic controllers would be acceptable for the

rule

. EPA clarified that the standard is in terms of standard cubic feet per hour (scf/hr)

. GPA was okay with natural gas being used as a surrogate to VOC, as long as an “in VOC service” type threshold is included.

GPA pointed out that the preamble refers to both pneumatic controllers and devices. Subpart OOOO is consistent with using the term “controllers,” but starts by using the term
“devices.” GPA wanted cl arification that EPA intended to only regulate continuous bleed pneumatics, and not intermittent pneumatics. EPA clarified that intermittent pneumatic controllers were the same as “snap

- acting” controllers. GPA stated that they were not aware of many inter mittent pneumatics. GPA also suggested making the definitions of high bleed and low bleed p arallel. GPA also stated that the guaranteed emission rate was an issue.

In addition, GPA had a concern with replacing one pneumatic controller affected facility at a natural gas processing plant (NGPP) with the requirement that the new pneumatic controller has

to be on air

. According to GPA, there are some NGPP are not yet on instrument air and there are6

issues with having to install an air system for one pneumatic, which is not an overnight

installation

. Therefore, GPA requested additional compliance time

. As an alternative, GPA suggested that they be allowed to run on low bleed until air system is installed

. According to GPA, the same low bleed device could be use d with air

. GPA also pointed out that dew point skids (which are considered NGPPs) sometimes don’t have electricity

. GPA suggested a minimum number of replaced controllers to trigger applicability, or a throughput limit (like subpart KKK).

GPA also requested that EPA make clear at what specific facilities the p neumatic controllers are subject to the NSPS.

Issue 12

. Storage vessels compliance dates

. GPA expressed concern that there are not enough combustors available to comply with the storage vessel regulations

. GPA recommended that EPA allow a year or six months after startup

. GPA especially was concerned about times when an affected source would be a newly affected source under the rule because the throughput

threshold was exceeded

. GPA asked whether there are other rules with similar examples (maybe woodstoves) and pointed out that subpart JJJJ is keyed on manufacturer date of engine. EPA pointed out that for woodstoves, the manufacturer is subject to the rule not the purchaser.

Issue 13

. Co mpressors

. GPA was concerned about a problem for compressors triggering NSPS as existing equipment because it is being relocated

. GPA argued that compressors aren’t being rebuilt, and that it is not the intention of NSPS to apply to existing sources. GPA s tated that the precedent for commence construction and relocation doesn’t change status

. However, when installation is thrown in as commence construction, it seems to override that

. They stated that they would like the compliance requirements to be more li ke subpart JJJJ and the turbine NSPS.

With respect to centrifugal compressors, GPA stated that they would like an option for wet seals with controls. Centrifugal compressors aren’t moved frequently, and there aren’t as many in the industry.

Issue 14

. Nat ural Gas Processing Plants. GPA was concerned about a NGPP that is in compliance with subpart KKK , but then goes through a modification, and triggers subpart OOOO . GPA requested additional time for the facility to comply with OOOO. According to GPA, a coup le of valve replacements would trigger as a modification, and the facility would need time to replace all the valves to comply OOOO. GPA did point out that it would not be much of a deal if the LDAR leak definition is raised to 5,000 ppm. GPA stated that

t his also poses a permitting issue because now they are subject to the NSPS.

Issue 15

. Other

. GPA stated that they feel that the proposed affirmative defense language is too restrictive, and believes EPA should develop less onerous affirmative defense lang uage for small VOC emission sources. GPA stated that the affirmative definition language seems like overkill for these types of sources given unmanned remote facilities. EPA responded that this language is the same for everything.

GPA stated that currentl y, subpart HH does not contain language to indicate that if an affected source is subject to subpart OOOO, then the source is in compliance

. GPA suggested having7

language in subpart OOOO that says you are satisfying the requirements of subpart OOOO, you are satisfying the requirements of subpart HH

. GPS said this also applies to the LDAR requirements and that they would prefer to be able to comply with subpart OOOO

. Right now there is not language to this effect.

In closing, EPA suggested that any c hanges that can be made without decreasing emissions rates

would be better received

. In making these proposed regulations, EPA stated that they had picked the most emitting devices

. GPA stated that their issue was with the MRR and compliance

assurance and startup date notification

. GPA asked if EPA wants actual language, when they

submit their comments

. EPA responded that actual language would be very helpful.