# E C 

# / R Incorporated Providing Environmental Technical Support Since 1989

1 MEMORANDUM

TO: Bruce Moore

, EPA/OAQPS/SPPD/CCG

FROM: Bradley Nelson, EC/R, Inc.

DATE: October 27 , 201 1

SUBJECT: Summary of the October 25

, 20 11

, Teleconference with the America’s Natural

Gas Alliance and the American Exploration and Production Council and the U.S. Environmental Protection Agency to D iscuss the Proposed Oil & Gas NSPS/NESHAP

1.0 INTRODUCTION

America’s Natural Gas Alliance (ANGA) and the American Exploration and Production Council (AXPC) requested this meeting with EPA to discuss questions on the proposed Oil and Gas NSPS (40 CFR Part 60, subparts KKK, LLL, and OOOO) and NESHAP (40 CFR Part 63, subpart HH and HHH ). This meeting summary will be available in the docket for this rulemaking (Docket ID No. EPA

- HQ

- OAR

- 20 1 0

- 0 505 ). The proposed rule for the oil and natural gas sector wa s published in the Federal Register on August 23, 20 11 (7 6 FR 52738 ).

2.0 ATTENDEES

U.S. Environmental Protection Agency

Bruce Moore Alex Macpherson

America’s Natural Gas Alliance /Amer ican Exploration and Production Council

Amy Farrell , ANGA Craig Brown, QEP Bryan Clode, Encana Ed Hance, Pioneer Bill Grygar, Anadarko2

Lee Hinman, Noble Inc. Tom Curry, MJ Bradley

Participating by Phone Gretchen Carr, Pioneer Joe Leonard, Devon Energy Chris Von Hatten, MJ Bradley Ronnie Beasley Grover Campbell, Chesapeake Ken Meade, Bunting

EC/R Incorporated

Heather Brown
Denise Grubert Bradley Nelson

3.0 SUMMARY OF MEETING

Bruce Moore started the meeting by stat ing that the proposed rules are currently still in the comment period and EPA could answer questions and provide clarifications , but could not provide any responses to comments on the proposed rules.

ANGA asked if there new developments for these proposed rules. EPA replied that Gina McCarthy had just signed a federal register notice that extends the comment period to November 30, 2011. The reasoning behind the extension was the complexity of the proposed rules and the fact that this comment period coincides with other proposed r ule comment periods. EPA also stated that the final date for promulgation of the final rule was also extended to April 3, 2012.

ANGA provided a meeting agenda that included topics that they wish to discuss with EPA . A copy of the meeting agenda is prov ided in Appendix A. The compliance date was the first topic on the meeting agenda. ANGA stated that the compliance dates should be extended by 180 days
for the different sources. The y believe that additional time is needed to replace the large number
of pneumatics and to add controls to the large number of tanks

. ANGA also stated that there should be provisions in the rule that would allow facilities to use the current inventory of high bleed controllers that have already been purchased. EPA responded that the rule would actually go into effect 60 days after publication for final review under the Congressional Review Act; however August 2011 will still define a new source. EPA further stated that these suggestions
should be included in their comments o n the proposed rules.3

The next topic was a proposal of a VOC threshold for wells and other sources. ANGA stated
that the assumed VOC

- to

- methane ratio that was used in the proposed rules did not take into account the variability of VOC from different type s of wells, for an example coalbed methane wells. Based on a sensitivity analysis that ANGA presented, lower VOC content wells can push the cost effectiveness of the control options above $6,000 per ton of methane. Because of this,
ANGA believes that EPA should develop a VOC threshold to remove requirements for low VOC
from the final rules

. EPA responded that they appreciated the comments and analysis and asked ANGA to include the analysis in their comments.

The next topic that ANGA wanted to discuss wa s completions and recompletions of hydraulically fractured gas wells. ANGA believes that there are legal implications of the determination that recompletions are modifications for NSPS. ANGA believes that recompletions are a routine operation and part of the normal operation or maintenance of a well. EPA asked what percentage of wells are recompletions. One member of the ANGA group responded that 1% of their wells were recompletions. Another member responded roughly 500 well are recompletions with appr oximately 5% of those being gas wells. Another member stated they are essentially adding additional zones to draw the natural gas from. EPA stated that they would like to receive additional data that shows that recompletions were overestimated in the

pro posed rule. EPA also stated that they will review the data that was used to estimate the number of recompletions. ANGA stated that the flare requirements in the proposed rules did not take into account safety considerations, land owner considerations, or type of gas that is being
combusted (sometimes mostly CO 2 ) . They also pointed out issues with connecting to a sales line, such as; proximity to the sales line, right of way on land owners property, and whether the pipeline has the capacity to accept the g as. EPA stated that they should include these issues in their comments. EPA asked ANGA to provide specific requirements or approaches for
enforcement.

The next topic that was discussed was reporting requirements. ANGA stated they agreed with
the Title V reporting exemption; however they believe there is still some duplicate reporting. One example was the 30 day notification of completions, which they believe is already included in the state permits. EPA asked if ANGA had any suggestions for notificat ion. ANGA responded that the state oil and gas commission or the companies themselves can provide information on drilling activities. They also noted that the completion operations change frequently. EPA stated that ANGA should provide comments on what reporting requirement are practicable, but still allow inspectors to know what companies are doing. EPA does not want to stand in the way of production.

Third party verification was the next topic that was discussed in the meeting. ANGA believes
third party verification is not appropriate for the oil and natural gas industry. They believe this creates liability and contains concepts that operators are not familiar. They also believe this puts4

a burden on regulatory agencies and asked EPA to streamline the process. EPA stated that they should include their concerns in their submitted comments on the proposed rules.

The next topic of discussion was pneumatic controllers. ANGA stated they appreciate that EPA included operational standards rather than emission limits for these devices. They noted that some facilities are moving toward non

- natural gas driven pneumatics, but additional time is needed for training. In some cases, residual or field gas may need to be used if the primary air

compressor sys tem fails. They also believe the requirements in the proposed rules should be more consistent with the requirements in subpart W, and the affected source should be high bleed controllers and not include zero bleed controllers. EPA noted that they include d costs for a backup generator in their pneumatic cost analysis.

Storage vessels were the next topic of discussion. ANGA believes an applicability threshold should be used for storage vessels based on an emissions factor for the particular basin the

stor age vessels are used at. They also stated that a 90 day evaluation period should also be in place to determine applicability. They suggested that the Wyoming storage vessel requirements should be used. EPA asked that ANGA include these suggestions in th eir comments. ANGA also asked if temporary storage vessels used for flowback or fracking would be exempt from the rule. EPA stated that they would need rationale to exclude these tanks from the rule. ANGA
also believes that EPA underestimated the number of tanks in the proposed rule. EPA asked for additional data on the inventory of storage vessels.

Definitions were the next topic that was discussed in the meeting. ANGA stated they will provide suggested changes to the definitions to make them consist ent with the definitions in subpart W. They also will provide a new definition for modification. EPA stated that they planned to remove the modification definition from the proposed rules.

ANGA asked for well count estimates, VOC content assumptions, an d pneumatic vendor data that were used to develop the cost for the proposed rules. They stated they would follow

- up with
Bruce Moore on this information.5 ATTACHMENT A

ANGA/AXPC Meeting Agenda6 ANGA/AXPC Meeting Agenda re: Oil and Gas NESHAP/NSPS October 25, 2011, EPA Research Triangle Park

I. Introductions

II. Compliance date

III. VOC threshold

IV. Completion/Recompletion of hydraulically fractured gas wells

V. Reporting requirements

VI. 3rd party verification

VII. Pneumatic Controllers

VIII. Storage vessels

IX. Definitions

X. Data Requests