UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION IX 75 Hawthorne Street San Francisco, CA 94105·3901



## JUN 14Z012 Mr. PatrickE. Flynn Vice President, Governmental & Corporate Affairs Resolute Natural Resources Company, LLC 1675 Broadway, Suite 1950 Denver, Colorado 80202 RE: Installation and Operation ofTriethylene Glycol Dehydrator Unit, McElmo CreekFacility, Navajo Nation Dear Mr. Flynn: Thank you for your letter dated March 17,2011,requesting a determination regarding the applicability of certain Clean Air Actrequirements, 42 U.S.C. Sections 7401-7671q, to a project that your company is proposing to install and operate at the McElmo CreekFacility in Navajo Nation land in SanJuan County, Utah. We understand that your company intends to install and operate the following equipment: • one new 25 MMSCFD triethylene glycol dehydration unit with a 1.000 MMBtu/hrreboiler burner to replace an existing lower-capacity dehydrator; • one new air-assisted, ground level, refractory lined, enclosed flare unit; and • three new electric-powered screw compressors with a combined compression capacity ofup to 50 MMSCFD to replace the four existing electric-poweredreciprocal compressors. Furthermore, we understand that: • the new dehydrator will replace the existing dehydrator at the McElmo CreekFacility; • emissions from the project will not berouted to the McElmo CreekFacility MainFlare and will not cause an exceedance ofthe existing ConsentDecree's Main Flare emission limits [see Consent Decree, U.S. v. Mobil Exploration & Producing U.S. Inc. (No. 2:05-CV-319, Central District ofUtah, June 8, 2005)]; · • greenhouse gas emissions from the new projectwill not exceed the EPA's Greenhouse Gas Tailoring Rule's significance thresholds (see 75 Federal Register 31514-31608); • McElmo CreekFacility'sPrevention ofSignificantDeterioration ("PSD") significance thresholds and existing PSD permit limits will notbeexceeded by the replacement ofthe existing dehydrator with the new dehydrator and enclosed flare; and • the new project will be located in an area that is in attainment orunclassifiable for all National Ambient Air Quality Standards. The tablebelow contains the attainment area permitting thresholds as presented inTable 1 of40 C.P.R. Section 49.153 (Tribal Minor New Source Review), thePSD thresholds under 40 C.P.R. Section 52.21, and the project's potential to emit ("PTE") from the information your companyprovided. We note that the PTEs are based on

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emission factors for the specific units or those found in AP-42- Compilation ofAirPollutant Emission Factors.

Emissions Summary Project MinorNSR PSD

PTEs Thresholds Thresholds (tons (tons per (tons per per year) year) year) co 3.01 10 100 NOx 0.78 10 40 so2 0.14 10 40 voc 11.31 5 40 PM 0.076 10 25 PMw 0.076 5 15 PM2.s 0.076 3 10 Lead 0 0.1 0.6 Fluorides 0 1 3 Sulfuric acid mist 0 2 7 Hydrogen sulfide <0.01 2 10 Total reduced sulfur N/A 2 10 Reduced sulfur NIA 2 10 compounds C02e 1,202 NIA 75,000 As the table shows, the project's PTEs are expectedto bebelow major modification thresholds that require a PSD permit. However, the project's PTEfor VOC exceeds the minorNSR thresholdrequiring a minor NSRpermit. Theminor NSRprogram differs from the PSD program in several ways. For one, the degree oftechnologyreview to show compliance with national standards may generally be less stringent than that for a Best Available ControlTechnology analysis. Furthermore, an Air Quality Impact Analysis for a minor modificationpermit application maynotberequired unless theproject can cause orcontribute to a National Ambient Air Quality Standard or PSD increment violation. Based on the information your companyprovided, the issuance ofa minor modification permit wouldobviate the need for a PSD permit for a major modification. Werecommend that you submit an application for a minor NSR permit as soon as possible. Also, as you already know, the project after installation will berequired to obtain a revised Part 71 permit from Navajo Nation ifa national standard such as a NESHAP requires one. Your company must

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submit an application for suchto their office within 12 months afterthe source becomes subject to the permittingprogram (40 C.P.R. § 71.5(a)(l)(i)). We encourage you to continue working with our staffto help ensure that the project would comply with any applicable requirements. Ifyouhave any further questions, please contact Andrew Chew at (415) 947-4197.

cc: John Jacus, Esq.

# ~ Gerardo C. Rios Chief, AirPermits Office AirDivision