{In Archive} ExxonMobil MCU

jennifer.wilder to: Shaheerah Fateen 07/27/2004 01:59 PM

Cc: neil.j.ryan, christopher.w.armstrong

From: jennifer.wilder@exxonmobil.com

To: Shaheerah Fateen/R9/USEPA/US@EPA, 

Cc: neil.j.ryan@exxonmobil.com, christopher.w.armstrong@exxonmobil.com

Archive: This message is being viewed in an archive.

Shaheerah,

Attached is a summary of ExxonMobil's view on the 

topic of Major Source

determination. Please review the document and let us 

know your thoughts.

If there is still a disagreement, I propose a phone 

meeting within the

week.

(See attached file: U.S.P.O --MCU Title V Major 

Source Issues.doc)

Jennifer Wilder Baird

Compliance Engineer

ExxonMobil Production Company

Office: (281) 654-1135 Fax: (281) 654-1147

jennifer.wilder@exxonmobil.com

U.S.P.O --MCU Title V Major Source Issues.doc
Summary of Title V Major Source Analysis for McElmo Creek 

 

In 2000, a Title V permit application was submitted for the former gas processing 

plant at the McElmo Creek Unit ("MCU"). Recently, EPA has requested additional 

information in order to facilitate the issuance of a draft Title V permit for the former gas 

processing plant. 

As part of its review, EPA requested information concerning field operations. It 

is our understanding that EPA is considering the inclusion of emission units from the 

field operations as part of the draft Title V permit. EPA contends that the field operations 

(or portions of it) are part of the same "major source" as the former gas processing 

facility, and as such, there is a single major source that must be reflected in the draft Title 

V permit. EPA believes that the definition and interpretation of the term "major source" 

in 40 C.F.R. Part 63, Subpart HH (40 C.F.R. § 63.760 et seq.) supports its position. We 

disagree with this approach, and our rationale is set forth briefly below. 

 Clean Air Act Section 112(n)(4) -- This statutory provision makes clear that 

emissions from E & P sources (and associated equipment) cannot be 

aggregated to establish that a source is a "major source" as defined in Title III 

of the Clean Air Act (and used to define Title V "major source" status). 

Therefore, EPA cannot aggregate emissions from individual wells, tank 

batteries and satellite locations to show that the E & P field operations at 

MCU should be combined with the former gas processing plant to create a 

single major source for Title III or Title V purposes.

 40 C.F.R. § 63.760 (Applicability) -- In order to be subject to regulation 

under the NESHAP for Oil and Natural Gas Production Facilities (Subpart 

HH), the oil and natural gas facilities must meet specific criteria in 40 C.F.R. 

§ 63.760(a)(1) and either of the criteria in 40 C.F.R. § 63.760(a)(2) or (3). 40 

C.F.R. § 63.760(a)(1) requires that an oil and natural gas production facility 

be a major source of hazardous air pollutants.

 The definition of "major source" under 40 C.F.R. § 63.761 also states that 

"[e]missions from processes, operations or equipment that are not part of the 

same facility, as defined in this section, shall not be aggregated..." The term 

"facility" is defined in this regulation in relevant part as

oil and natural gas production and processing equipment that is 

located within the boundaries of an individual surface site as 

defined in this section. Equipment that is part of a facility will 

typically be located within close proximity to other equipment 

located at the same facility. Pieces of production equipment or 

groupings of equipment located on different oil and gas leases, 
mineral fee tracts, surface fee tracts, surface lease tracts, or separate 

surface sites, whether or not connected by a road, waterway, power 

line or pipeline, shall not be considered part of the same facility. 

Examples of facilities in the oil and natural gas production source 

category include, but are not limited to, well sites, satellite tank 

batteries, central tank batteries, a compressor station that transports 

natural gas to a natural gas processing plant, and natural gas processing 

plants. 

The term "surface site" is defined in this same regulation as "any combination of 

one or more graded pad sites, gravel pad sites, foundations, platforms, or the immediate 

physical location upon which equipment is physically affixed." 

It is our view that the production equipment located at MCU is not in close 

proximity to other equipment and the former gas processing plant. The closest battery is 

approximately 3/5 mile from the former gas processing plant separated by rugged terrain 

and the next closest tank battery (Battery 2) is over one and a half miles away. As such, 

pursuant to the definition of "facility" and "surface site" set out above, these individual 

groupings of production equipment are separate, individual facilities whose emissions 

cannot be aggregated for purposes of determining whether a source is a major source. 

Clearly, the definition of "facility" requires "close proximity" before production field 

equipment can be grouped together as a single facility. That does not exist here. 

Moreover, the definition of "facility" contemplates that individual surface sites 

can exist within a single lease (similar to the situation at MCU) and provided that these 

individual surface sites are not in close proximity to one another, they cannot be 

aggregated to determine whether a major source exists. This is further supported by the 

list of examples of facilities provided in the definition of "facility". The use of the plural 

"facilities" strongly indicates that each listed example is typically its own, independent 

"facility" whose emissions must be compared individually against the HAP major source 

threshold to determine if the particular facility is a major source. To determine otherwise 

would be inconsistent with the definition of "facility" and would effectively nullify the 

Clean Air Act § 112(n)(4) prohibition against the aggregation of E & P sources and 

associated equipment. 

 The definition of a "major source" in 40 C.F.R § 63.761 for Subpart HH states 

that HAP emissions from Facilities that are "production field facilities" can 

only be aggregated for major source determination purposes from glycol 

dehydration units and storage tanks with flash potential. As stated in the final 

rule preamble, the definition of "production field facilities" was utilized to 

define what was intended to be covered by the term "associated equipment" in 

Clean Air Act § 112(n)(4). Specifically, the June 17, 1999 final rule preamble 

(64 Fed. Reg. 32610, 32619 -32620) states that

 Under the proposed approach, associated equipment was defined 

 as all equipment up to the point of custody transfer, excluding glycol 
 dehydration units and storage vessels with the potential for flash 

 emissions. This approach also included a definition of facility in the 

 rule that effectively limited the distance over which all emission points 

 (including glycol dehydration units and storage vessels with the potential 

 for flash emissions) may be aggregated. Based on discussions with 

 industry prior to proposal, as well as comments received supporting the 

 proposed definition of associated equipment, the Agency believes that 

 the proposed approach best meets both industry and EPA goals for 

 implementation of the language of section 112(n)(4). 

 This statement is consistent with the discussion of the term "facility" 

discussed above, and it clearly demonstrates that only the emissions from glycol 

dehydration units and storage vessels with flash potential that meet the 

definitional requirements of the term individual "facility" are to be aggregated. In 

other words, only those HAP emissions from glycol dehydration units and storage 

tanks with flash potential that are part of an individual surface site may be 

aggregated for major source determination purposes. As we have indicated 

previously, we don't believe our field equipment is located in close proximity to 

each other (or to the former gas processing plant), and therefore, we believe they 

constitute their own independent surface sites which must be independently 

evaluated to determined if they constitute a major source. As such, the field 

equipment must not be included in the Title V permit for the former gas 

processing plant. 

 Conclusion -- Clean Air Act § 112(n)(4) and the definition of "major source" 

in 40 C.F.R. § 63.761 clearly exempt E & P and associated equipment from 

emissions aggregation for major source determination purposes. The 

regulatory definition preserves the statutory exemption for "associated 

equipment" by utilizing the term "facility." In relevant part, this term states 

that emissions from equipment on separate surface sites are individual 

facilities that cannot be aggregated when undertaking a major source 

determination. Consistent with these provisions, we believe the field 

equipment at MCU are located on separate surface sites, and as such, their 

emissions cannot be aggregated for major source determination purposes.