1 

### Kelly, Shaheerah

From: Patrick Flynn <Pflynn@resoluteenergy.com>

Sent: Thursday, November 20, 2014 12:50 PM

To: R9AirPermits
Cc: Patrick Flynn; dmallory@resolutenergy.com Subject: Comments to Permit Application No. NU 05- 01, McElmo Creek Unit, San Juan County,
Utah
Attachments: MCU PSD, Comments to Draft Permit.pdf; MCU PSD, Redline of Proposed Prevention of Significant Deterioration Permit.pdf

Ms. Kelly,

Attached comments and a red

‐ line of the draft PSD permit amendment No. NU 05

‐ 01 for the McElmo Creek Unit, San

Juan County, Utah. A hard copy will be hand delivered to the public meeting held tonight at the Aneth Chapter House
and mailed to EPA via certified mail. Please contact me with any questions.

Thanks ‐ Pat

Patrick E. Flynn

Vice President, Governmental & Corporate Affairs Resolute Energy Corporation

303.534.4600 (Office)

303.573.4886 X1145 (Direct)

303.941.0389 (Cell)

303.623.3628 (Fax) pflynn@resoluteenergy.com

This e

‐ mail message and any attachments are for the sole use of the intended recipient(s) and may contain confidential, privileged, and proprietary information of Resolute Energy Corporation. Any unauthorized review, use, disclosure or distribution may be prohibited under law. If you are not the intended recipient, please contact the sender by reply E

‐ mail of any erroneous transmission, and destroy the original E

‐ mail, any attachments, and all copies of the original

message. Thank you.RESOLUTE NATURAL RESOURCES COMPANY

– REDLINE OF PROPOSED REVISIONS TO THE DRAFT PSD

PERMIT FOR THE MCELMO CREEK UNIT OIL PRODUCTION FACILITY

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3513493.3

3513493.3 3513493.3 PROPOSED
PREVENTION OF SIGNIFICANT DETERIORATION
PERMIT ISSUED PURSUANT TO THE REQUIREMENTS AT 40 CFR § 52.21

U.S. ENVIRONMENTAL PROTECTION AGENCY, REGION 9

PSD PERMIT NUMBER: NU 05

- 01

PERMITTEE: Resolute Natural Resources Company 1675 Broadway, Suite 1950 Denver, Colorado 80202

FACILITY NAME: McElmo Creek Unit Oil Production Facility

FACILITY LOCATION: Section 31, Township 40 South, Range
25 East within the Four Corners Area on the Navajo Nation Indian Reservation near the city of Aneth, San Juan County, Utah

Pursuant to the provisions of the Clean Air Act (CAA), Subchapter I, Part C (42 U.S.C. § 7470, et. seq .), and the Code of Federal Regulations (CFR) Title 40, Section 52.21, the United States Environmental Protection Agency Region 9 (EPA) is issuing this amended Prevention of Significant Deterioration (PSD) air quality permit to Resolute Natural Resources Company (Resolute) for the McElmo Creek Unit Oil
Production Facil ity as described herein, in accordance with the permit application (and plans submitted with the permit application), federal regulations governing the Prevention of Significant Deterioration of air quality (40 CFR § 52.21), and other terms and conditions set forth in this amended PSD Permit.

Failure to comply with any condition or term set forth in this amended PSD Permit is subject to enforcement action pursuant to Section 113 of the Clean Air Act. This permit does not relieve Resolute from the responsib ility to comply with any other applicable provisions of the CAA (including applicable implementing regulations in 40 CFR Parts 51, 52, 60, 61 and 63), or other federal, tribal, and local requirements.

Per 40 CFR Section 124.15(b), this PSD Permit becomes e ffective 30 days after the service of notice of this final permit decision unless review is requested on the permit pursuant to 40 CFR Section 124.19.

Deborah Jordan Date Director, Air DivisionRESOLUTE NATURAL RESOURCES COMPANY

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2 ABBREVIATIONS & ACRONYMS

Act Clean Ai r Act [42 U.S.C. § 7401 et seq.] Applicant Resolute Natural Resources Company

BACT Best Available Control Technology

BTU British thermal units

CAA Clean Air Act [42 U.S.C. § 7401 et seq.]

CEMS Continuous Emissions Monitoring System

CFR Code of Federal Regulations

CMS Continuous Monitoring System

CO Carbon Monoxide

CO2 Carbon Dioxide

DSCFM Dry standard cubic feet per minute

EPA United States Environmental Protection Agency

H 2 S Hydrogen Sulfide

HHV Higher Heating Value

Hr Hour lb, lbs Pound, pounds MCU Facility / Facility McElmo Creek Unit Oil Production Facility

min Minute

MMBTU Million British thermal units

MMCFD Million cubic feet per day
NAAQS National Ambient Air Quality Standards

NESHAP National Emission Standards for Hazard ous Air Pollutants

NNEPA Navajo Nation Environmental Protection Agency

NO x Oxides of nitrogen

O 2 Oxygen Permittee / Owner or Operator Resolute Natural Resources Company, or the owner and/or operator of the McElmo Creek Unit Oil Production Facility

ppm Parts per million

PSD Prevention of Significant Deterioration

PTE Potential to Emit

SCF Standard cubic feet

SCFM Standard cubic feet permit minute

SO 2 Sulfur Dioxide

SO x Oxides of sulfur
tpy Tons per year
VOC Volatile Organic Compounds as defined in 40 CFR § 51.100(s)RESOLUTE NATURAL RESOURCES COMPANY

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3 MCELMO CREEK UNIT OIL PRODUCTION FACILITY
PREVENTION OF SIGNIFICANT DETERIORATION PERMIT

PERMIT CONDITIONS

PROJECT DESCRIPTION

The McElmo Creek Unit Oil Production Facility (MCU Facility or Facility) is an existing oil and gas production operation located within the Four Corners Area on the Navajo Nation Indian Reservation near the city of Aneth, San Juan County, Utah. The Facility is owned, in partnership with the Navajo Nation Oil and Gas Company, and operated by the Resolute Natural Resources Company. The Facility is on the McElmo Creek Unit oilfield, which includes field operations and a gas compression plant.

The field operations consist of approximately 90 producing wells where petroleum crude oil is recovered from produc ing strata, and brought to the surface to be stored at either a satellite or a tank battery. There are eleven satellites that function as testing facilities for producing wells and four tank batteries.

The gas compression plant serves tertiary oil recover y operations for the McElmo Creek Unit oilfield. The gas compression plant receives produced gas through a gathering system, pressures the gas up to a suitable working pressure, and re

- injects the gas to maintain reservoir pressure in the oilfield. The

n atural gas is injected with produced water in a dual injection system. Due to varying water injection demands in the field, and to the number of wells being serviced at any time, the gas compression plant inlet volume can vary between 10 and 18 million st andard cubic feet per day (MMSCFD). The Main Flare is located at the gas compression plant.

This PSD Permit amendment incorporates requirements of the federal Consent Decree that applies to the MCU Facility’s Main Flare (see United States v. Mobil Explora tion and Producing U.S. Inc., Case No.

2:05

– CV

– 319, filed June 8, 2005), which include Best Available Control Technology (BACT) emission limitations for emissions of sulfur dioxide (SO 2 ), nitrogen oxides (NO
x ), carbon monoxide (CO), and volatile organic co mpounds (VOC). Air pollution emissions associated with this permit amendment will not cause or contribute to violations of any National Ambient Air Quality Standards (NAAQS) or any applicable PSD increments for the pollutants regulated under the PSD permi t.RESOLUTE NATURAL RESOURCES COMPANY

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4 EQUIPMENT LIST

The following devices and activities are subject to this PSD Permit.

Unit ID Description
Main Flare One (1) air

- assist flare, rated at 618,104 scf/hr, which combusts produced field gas in excess of the facility compression capacity
TEG Reboiler One (1) TEG Reboiler rated at 0.75 MMBtu/hr, which combusts purchased pipeline quality natural gas to provide heat to the Glycol Heater Glycol Heater One (1) Glycol Heater (TEG regenerator), rated at 12 MMCFD, which provides inter

- stage dehyd ration for the HOS

- 6 compressor Gasoline Storage Tank One (1) 10,000 gallon nominal capacity gasoline storage tank that is used for refueling of vehicles

PERMIT CONDITIONS

I. PERMIT EXPIRATION

As provided in 40 CFR § 52.21(r), this PSD Permit shall become invalid if construction:

A. is not commenced (as defined in 40 CFR § 52.21(b)(9)) within 18 months after the approval takes effect; or

B. is discontinued for a period of 18 months or more; or

C. is not completed within a reasonable time.

II. PERMIT NOTIFICATION REQUIREMENTS

The Permittee shall notify EPA Region IX by letter or by electronic mail of the:

A. date construction is commenced, postmarked within 30 days of such date;

B. actual date of initial startup, as defined in 40 CFR § 60.2, postmarked within 15 days of such date;

C. date upon which initial performance tests will commence postmarked not less than 30 days prior to such date. Notification may be provided with the submittal of the performance test protocol; and

D. date upon which initial performance evaluation of the continuous emissions monitoring system (CEMS) will commence in accordance with 40 CFR § 60.13(c), postmarked not less than 30 days prior to such date. Notification ma y be provided with the submittal of the CEMS performance test.

III. FACILITY OPERATION

A. At all times, including periods of startup, shutdown, shakedown, and malfunction, the Permittee shall, to the extent practicable, maintain and operate the Facility, includingRESOLUTE NATURAL RESOURCES COMPANY

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5 associated air pollution control equipment, in a manner consistent with good air pollution control practice for minimizing emissions. Determination of whether acceptable operating and maintenance procedures are being used will be based on
information ava ilable to EPA, which may include, but is not limited to, monitoring results, opacity observations, review of operating maintenance procedures, and inspection of the Facility.

B. The operating staff with management authority at this Facility shall be advised o f and be
familiar with all the conditions of this PSD Permit.

IV. GENERAL MALFUNCTION REPORTING

A. The Permittee shall notify EPA at R9.AEO@epa.gov within two (2) working days following the discovery of any failure of air pollution control equipment or process

eq uipment, or failure of a process to operate in a normal manner, which results in an
increase in emissions above the allowable emission limits stated in Section IX of this permit.

B. In addition, the Permittee shall provide an additional notification to EPA in writing or electronic mail within fifteen (15) days of any such failure described under Condition IV.A. This notification shall include a description of the malfunctioning equipment or abnormal operation, the date of the initial malfunction, the period o f time over which emissions were increased due to the failure, the cause of the failure, the estimated resultant emissions in excess of those allowed in Section IX, and the methods utilized to mitigate emissions and restore normal operations.

C. Compliance wi th this malfunction notification provision shall not excuse or otherwise constitute a defense to any violation of this permit or any law or regulation such malfunction may cause.

V. RIGHT OF ENTRY

A. EPA and its contractors, consultants, and agents shall have au thority to enter the Facility at all reasonable times, and upon presentation of credentials, shall be permitted to:

1. Enter the premises where the Facility is located or where any records are required to be kept under the terms and conditions of this PSD Per mit;

2. During normal business hours, have access to and to copy any records required to be kept under the terms and conditions of this PSD Permit;

3. Inspect any equipment, operation, or method subject to requirements in this PSD Permit; and

4. Sample materials an d emissions from the Facility.

B. This provision in no way limits or otherwise affects any right of entry held by EPA pursuant to applicable federal, state, or local laws, regulations, or permits.RESOLUTE NATURAL RESOURCES COMPANY

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6 VI. TRANSFER OF OWNERSHI P

In the event of any changes in control o r ownership of the Facility, this PSD Permit shall be binding on all subsequent owners or operators. Within 14 days of any such change in control or ownership, the Permittee shall notify the succeeding owner or operator of the existence of this

PSD Permit and its conditions by letter. The Permittee shall send a copy of this letter to EPA Region IX within thirty (30) days of its issuance.

VII. SEVERABILITY

The provisions of this PSD Permit are severable, and, if any provision of the PSD Permit is held invalid, t he remainder of this PSD Permit shall not be affected.

VIII. ADHERENCE TO APPLICA TION AND COMPLIANCE WITH OTHER ENVIRONME NTAL LAWS

The Permittee shall construct in accordance with this PSD Permit, the application on which this permit is based, and all other appl icable federal, state, and local air quality regulations. This PSD Permit does not release the Permittee from any liability for compliance with other applicable federal, state, and local environmental laws and regulations, including the Clean Air Act.

IX. SPEC IAL CONDITIONS FOR T HE MAIN FLARE

A. Definitions

1. “CO 2 Breakthrough” shall mean an event where a gas or fluid injected in the Facility’s oil field for the purpose of promoting the production of oil contacts a producing well and results in an increase in gas vo lume to compressor station equipment.

2. “Day” shall mean a calendar day, unless expressly stated to be a working day. In computing any period of time under Section IX of this PSD Permit, where the last day of such period would fall on a Saturday, Sunday, or federal holiday, the period shall run until the close of business on the next day that is not a Saturday, Sunday, or federal holiday.

3. “Facility” shall mean the Permittee’s McElmo Creek Unit Oil Production Facility and associated oil fields, located near Aneth, Utah, on the Navajo Nation Indian

Reservation.

4. “Field Flares” shall mean the following flares at the Facility: (i) Tank Battery Flares at MCU Area 1 Battery, MCU Area 2 Battery, MCU Area 4 Battery, and MCU Area 6 Battery; and (ii) Satellite Flares at MCU Section 2, MCU Section 3, MCU Section 5, MCU Section 6, MCU Section 9, MCU Section 11, MCU Section 17, MCU Section 19, MCU Section 32, and MCU Section 33.

5. “Flaring Incident” shall mean continuous or intermittent flaring at the Main
Flare that resul ts in the emissions of SO 2 equal to, or greater than, five

- hundred (500) pounds in any twenty

- four (24) hour period; provided, however, that ifRESOLUTE NATURAL RESOURCES COMPANY

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7 five

- hundred (500) pounds or more of SO 2 have been emitted in a twenty

- four (24) hour period and the flaring continues into subsequent, contiguous, non

overlapping twenty

- four (24) hour period(s), each period of which results in emissions equal to, or greater than, five hundred (500) pounds of S O 2 , then only one Flaring Incident shall have occurred. Subsequent, contiguous, non

overlapping periods are measured from the initial commencement of flaring within the Flaring Incident.

6. 5. “Main Flare” shall mean the flare installed as part of the Facility’ s former gas processing plant.

7. 6. “Main Flare Emissions” shall mean the emissions from the Main Flare at fuel gas in the Main Flare’s pilot, (2) the closed drain and filter backwash operations, (3)

CO 2 Breakthroughs, (4) any Scheduled Maintenance, and (5) uns cheduled maintenance of the Facility’s compressors.

8. 7. “Malfunction” shall mea n, for the purposes of reporting under Condition IX.I.3
of this PSD Permit only , any sudden and unavoidable breakdown of process or pollution control equipment. CO 2 Breakthroughs a nd Scheduled Maintenance of the Facility’s compressors are not Malfunctions.

9. “Root Cause” shall mean the primary cause of a Flaring Incident as determined through a process of investigation; provided, however, that if a Flaring Incident encompasses multip le releases of SO 2 , the “Root Cause” may encompass multiple primary causes.

10. 8. “Scheduled Maintenance” shall mean work that is part of the routine work plan for the compressors located at the Facility's former gas processing plant. This work is typically pla nned and arranged on a set frequency, usually based on periods of time (e.g., daily, weekly or monthly) or on the operating hours of the equipment. Scheduled Maintenance shall not include work necessitated by the failure of a part of a compressor.

B. Air Poll ution Control Equipment

1. The Main Flare shall be an automatic air

- assisted flare system.

2. The Main Flare shall be operated with a variable speed fan.

C. Emission Limitations

1. The Permittee shall not discharge or cause the discharge of emissions from the
Main Fl are into the atmosphere in excess of the following the emission limitations, based on a cumulative 365

- day rolling total.

SO 2 NO x CO VOC 60.0 tpy 13.4 tpy 73.0 tpy 95.4 tpyRESOLUTE NATURAL RESOURCES COMPANY

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8 2. The Permittee shall calculate the 365

- day rolling emissions totals for SO 2 , NO x , CO, and VOC each day for the Main Flare.

3. The Permi ttee shall not use the Field Fla res to circumvent the emission
limitations in Condition IX.C.1.

4. All emissions during all modes of operation (including, but not limited to, emissions during periods of start up, shutdown, or malfunction) shall be used in determining compliance with the emission limitations in Condition IX.C.1.

5. Notwithstanding Paragraph IX.C.4.

, or any other condition of this Permit, Permittee may asser t, as an affirmative defense to an alleged violation of this Permit, that the alleged violation was due to a Malfunction. To qualify as a Malfunction, the Permittee has the burden of proof of demonstrating that:

a. The emissions in question were not the result of any CO 2 Breakthroughs or any Schedul ed Maintenance of the Facility’s compressors;

b. The emissions in question were caused by a sudden, unavoidable breakdown of process or pollution control equipment, beyond the

cont rol of Permittee, its contractors, or any entity controlled by Permittee;

c. The e missions in question (i) did not stem from activity or event that could have been foreseen and avoided, or planned for, and (ii) could not have been avoided by better operation and maintenance practices;

d. To the maximum extent practicable, the air pollution control equipment or processes were maintained and operated in a manner consistent with good engineering practice for minimizing emissions;

e. Repairs were made in an expeditious fashion ;

f. The amount and du ration of the emissions in question were minimized to the maximum extent practicable during periods of such emis sions;

g. All possible steps were taken to minimize the impact of such emissions in question on ambient air quality ;

h. All emission monitoring syste ms were kept in operation if at all possible ;

i. The actions of Permittee, its contractors, or any entity controlled by Permittee in response to the emissions in question were documented by properly signed, contemporaneous operating logs, or other relevant

ev idence ;

j. The emissions in question were not part of a recurring pattern indicative of inadequate design, operation, or maintenance ; andRESOLUTE NATURAL RESOURCES COMPANY

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9 k. Permittee properly and promptly notified EPA pursuant to the notification requirements of this Permit

.

4.

D. Main Flare Operat ional Requirements

1. The Permittee shall install, operate and maintain an automatic air

- assisted flare system on the Main Flare, pursuant to the provisions of 40 CFR § 60.18(c)(5) and (f)(6).

2. The Permittee shall operate and maintain the Main Flare in complia nce with 40 CFR § 60.18(c)(1), (c)(2), (c)(3)(ii), (c)(5), (d), (e), (f)(1) through (f)(4), and (f)(6).

3. The Main Flare shall be operated with a flame present at all times when emissions may be vented to them.

4. The Permittee shall comply with the following requirements for ensuring proper combustion efficiency:

a. The Main Flare shall be operated with a variable speed fan.

b. The net heating value air assist dilution parameter (NHV dil ) shall be greater than or equal to 24.4 BTU/ft 2 , calculated as follows:

DF = Q vg X Diam (Eqn 1) Q vg + Q s + Q premix air + Q perimeter air

NHV dil = NHV vg X DF (Eqn 2)

where:

DF = Dilution factor, feet (ft).
Q

vg = Volumetric flow rate of the flare vent gas, scfm.
Q s = Cumulative volumetric flow of total steam, scfm.
Q premix air = Cumulative volumetric flow of premix assist air, scfm
Q perimeter air = Cumulative volumetric flow of perimeter assist air, scfm. Diam = Diameter of the flare vent gas release stack, ft.

NHV vg = Net heating value of flare vent gas, BTU/scf.

NHV dil = Net heating value air assist dilution parameter.

5. 4. The Permittee shall also perform any necessary operations to minimize emissions so that emissions are at or below the emission limits specified in this

Permit.

E. Monitoring, Testing, and Emissions Calculatio ns

1. The Permittee shall use the following requirements to determine compliance
with the emission limitations in Condition IX.C.1 for the Main Flare.RESOLUTE NATURAL RESOURCES COMPANY

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10 a. The Permittee shall measure and record the H 2 S concentration in the field gas at the Facility in each calend ar month at the inlet to the Facility’s former gas processing plant where the Main Flare is located.

b. The Permittee shall continuously measure and record the volume of gas
combusted in the Main Flare.

c. The Permittee shall install, operate and maintain contin uous monitoring systems on the Main Flare for the usage of pilot gas and purge gas (other than nitrogen or other inert gas) by the Main Flare, in standard cubic feet per minute (SCFM). Readings shall be taken at least once every 5 minutes and the average hourly values shall be recorded on an hourly and daily basis.

d. c. Each and every calendar day, the Permittee shall calculate and record the daily emissions from the Main Flare based on the last recorded
measurement of H 2 S concentration in the field gas at the Facility and that day’s recorded volume of gas combusted in the Main Flare.

e. d. Each and every calendar day, the Permittee shall calculate the 365

- day rolling total of emissions of SO 2 , NOx, CO, and VOC for the Main Flare.
Each 365

- day rolling total shall be c alculated using data from the previous 365 days. The Permittee shall maintain all records of actual operating data and calculations.

f. e. If the Permittee is unable to measure the volume of gas combusted in the Main Flare on any day, the volume of gas for that day shall be deemed to be equal to the daily average volume of gas combusted in the Main Flare based on the previous 12 months’ emissions data. However, the use of this daily average as substitute data neither relieves nor excuses the Permittee from compl ying with the sampling, data collection, and monitoring requirements.

2. The Permittee shall determine the net heating value of flare vent gas (NHVvg) using 40 CFR 60.18(f)(3). The Permittee shall use the following requirements to determine compliance with the operating limitations in Condition IX.D.4 for the
Main Flare. The Permittee shall calculate and record the net heating value air assist dilution parameter of the field gas being combusted in the Main Flare as
follows.

a. The Permittee shall continuously mea sure and record the following in
the Main Flare:

(1) The volume of field gas combusted; (2) The volume of perimeter assist air used; and (3) If pre

- mix assist air is used, the volume of premix assist air used.RESOLUTE NATURAL RESOURCES COMPANY

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11 b. The flow rate monitoring systems must be corrected for the temperature and pressure in standard conditions (i.e., a temperature of 20°C [68°F] and a pressure of 1 atm).

c. The Permittee shall automatically supply supplemental fuel to the Main Flare if the field gas does not have sufficient heating value.

d. Continuous pressure/temperature monitoring system(s) and appropriate engineering calculations may be used in lieu of a continuous volumetric flow monitoring systems provided the molecular weight of the gas is known. For assist air, use a molecular weight of 29 pound s per pound

- mole. For flare vent gas, molecular weight must be determined using compositional analysis.

e. The Permittee shall install a monitoring system capable of calculating and recording the net heating value air assist dilution parameter of the field g as being combusted in the Main Flare in sixty

- minute averages, rolled every five

minutes.

f. The Permittee shall determine the net heating value of flare vent gas (NHV vg ) using 40 CFR 60.18(f)(3).

3. The Permittee shall continuously monitor the Main Flare for th e presence of a flare pilot flame using a thermocouple or any other equivalent device to detect the presence of a flame, which monitoring shall be conducted in accordance with 40 CFR 60.18(f)(2). The heat sensing monitoring device shall be operated
at all times. The Main Flare shall be equipped with an alarm that informs Facility operators of any period when a pilot flame is not present in the flare and no gas shall be sent to the flare until a pilot flame is restored.

4. The Permittee shall operate the Main Flare with no visible emissions, except for periods not to exceed a total of 5 minutes during any 2 consecutive hours. EPA Test Method 22 in Appendix A of 40 CFR Part 60 shall be used to determine the compliance of flares with the visible emission provis ions. The observation period is 2 hours and shall be used according to Method 22. The Permittee shall perform monthly visible emissions tests during a flaring event using Method 22.

F. Operation and Maintenance of Main Flare and Compressors

1. The Permittee sh all at all times and to the extent practicable, including during periods of startup, shutdown, Malfunction, CO 2 Breakthrough, Scheduled Maintenance, or unscheduled maintenance of the Facility’s compressors, operate and maintain the compressor station equip ment and Main Flare in a manner consistent with good air pollution control practices for minimizing

emissions.

2. The Permittee shall comply with the provisions of the Operations and Maintenance Plan in Appendix A of this PSD Permit. The Permittee’s failure toRESOLUTE NATURAL RESOURCES COMPANY

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12 comply with any requirement of the Operations and Maintenance Plan shall
constitute a violation.

3. The Permittee shall follow the procedures for the inspection of the Facility’s compressors and associated equipment as set forth in the Life Cycle

Maintenan ce Plan in the Operations and Maintenance Plan in Appendix A of this PSD Permit, and shall maintain inspection logs at the Facility documenting that these inspections have been conducted.

4. The Permittee shall maintain daily records at the Facility regarding operation of the Facility’s compressors on a Daily Plant Reading Form in the Operations and Maintenance Plan in Appendix A of this PSD Permit.

5. The Permittee shall maintain a supply of designated spare parts for the Facility’s compressors and associated eq uipment that includes all of the equipment on the Spare Parts List in the Operations and Maintenance Plan in Appendix A of
this PSD Permit.

6. After using equipment on its Spare Parts List, the Permittee shall replace such equipment as expeditiously as possib le. The Permittee shall place a purchase order for such equipment within 45 days after it is used.

7. The Permittee shall conduct training of Facility operators in accordance with the Training Program for Plant Operators in Section IV of the Operations and

M aintenance Plan in Appendix A of this PSD Permit. The Permittee shall maintain records documenting that the training has been conducted.

8. The Permittee shall retain copies of inspection logs and other records required by Section IX.F (Operations and Mainte nance of Main Flare and Compressors) of
this PSD Permit.

9. The Permittee shall maintain inspection, maintenance and repair log(s) or other similar records and identify any occasion when the Permittee was unable to carry out its establish ed maintenance procedures, with explanation.

9. 10. Within 180 days of the effective date of this Permit, Permittee shall provide EPA with a modified Operations and Maintenance Plan that shall conform in all material respects with the applicable and appropriate substantive requ irements of the Operation and Maintenance Plan set forth in the federal Consent Decree

, taking into account the Facility ’s current operations and equipment

. EPA shall approve, deny, or propose modifications to the modified Operations and
Maintenance Plan within 3 0 days of receipt. Upon approval by EPA, the modified Operations and Maintenance Plan shall be incorporated as Appendix A
to the Permit and shall superseded and replace the existing Operations and
Maintenance Plan under this Permit.

G. Root Cause An alysisRESOLUTE NATURAL RESOURCES COMPANY

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13 1. No later than 72 hours after an event first qualifies as a Flaring Incident, the Permittee shall notify by telephone, at (415) 947

- 8700, the Manager of the Air/TRI Enforcement Office, Enforcement Division of EPA Region IX, of such Flaring Incident. Telephone notification shall be followed by a detailed written notification to EPA, at the address in Condition X.C of this PSD Permit, made within seven (7) working days after the event first qualifies as a Flaring Incident.

2. For a Flaring Incident caused by Scheduled Maintenance or a CO 2 Breakthrough, the Permittee shall submit a report to EPA, at the address in Condition X.C of this PSD Permit, no later than sixty (60) days following the end of such a Flaring Incident that sets forth the following inform ation listed below. Except for those Flaring Incidents caused by Scheduled Maintenance or a CO2 Breakthrough, the Permittee shall conduct a Root Cause Analysis in accordance with the Root Cause Failure Analysis Program in Appendix B of this PSD Permit to evaluate the cause of each Flaring Incident and shall submit a report to EPA, at the address in Condition X.C of this PSD Permit, no later than sixty (60) days following the end of a Flaring Incident, that sets forth all of the following:

a. The date and time that the Flaring Incident started and ended. To the extent that the Flaring Incident involved multiple releases either within
a twenty

- four (24) hour period or within subsequent, contiguous, non

overlapping twenty

- four (24) hour periods, the Permittee s hall set forth the starting and ending dates and times of each release;

b. An estimate of the quantity of SO 2 that was emitted and the calculations that were used to determine that quantity;

c. The steps, if any, that the Permittee took to limit the duration and/or quantity of SO 2 emissions associated with the Flaring Incident;

d. Except for those Flaring Incidents caused by Scheduled Maintenance or

a CO 2 Breakthrough, a detailed analysis that sets forth the Root Cause and all contributing causes of that Flaring Incident, to the extent determinable; however, if a Flaring Incident is caused by Scheduled

Maintenance or CO 2 Breakthrough, then the Permittee need only identify the Root Cause as Scheduled Maintenance or CO 2 Breakthrough (whichever is applicable), and ei ther (i) describe the nature of the work done for Scheduled Maintenance or (ii) identify the specific wells that most likely experienced the CO 2 Breakthrough;

e. An analysis of the measures, including possible design, operational, and maintenance changes, tha t are available to reduce the likelihood of a recurrence of a Flaring Incident resulting from the same Root Cause or contributing causes in the future. If the Permittee concludes that corrective action(s) is (are) required under Section IX.H (Corrective

A ction) of this PSD Permit, the report shall include a description of the action(s) and, if not already completed, a schedule for its (their) implementation, including proposed commencement and completionRESOLUTE NATURAL RESOURCES COMPANY

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14 dates. If the Permittee concludes that corrective ac tion is not required under Section IX.H (Corrective Action) of this PSD Permit, the report shall explain the basis for that conclusion;

f. To the extent that investigations of the causes and/or possible corrective actions still are under way on the due date o f the report, a statement of the anticipated date by which a follow

- up report fully conforming to the requirements of Conditions IX.G.2.d and IX.G.2.e of this PSD Permit will be submitted. Nothing in this Permit Condition shall
be deemed to excuse the Per mittee from its investigation, notification, reporting, and corrective action obligations in this PSD Permit for any Flaring Incident that occurs after the Flaring Incident for which the Permittee has requested an extension of time under this Permit
Condit ion.

g. To the extent that completion of the implementation of corrective action(s), if any, is not finalized at the time of the submission of the report required under this Permit Condition, then, by no later than thirty (30) days after completion of the imp lementation of corrective action(s), the Permittee shall submit a report identifying the corrective action(s) taken and the dates of commencement and completion of implementation.

H. Corrective Action

1. In response to any Flaring Incident, the Permittee shall t ake, as expeditiously as practicable, such interim and/or long

- term corrective actions, if any, as are consistent with good engineering practice to minimize the likelihood of a recurrence of the Root Cause and all contributing causes of that Flaring Incide nt.

I. G. Compliance Reporting

1. Within thirty (30) days following the end of each calendar semiannual period (i.e., January 1 to June 30, and July 1 to December 31), the Permittee shall submit to EPA a semiannual report.

2. All semiannual reports shall be signed and affirmed by a responsible official, and bearing the certification statement as follows:

“ I certify under penalty of law that I have examined and am familiar with the
information submitted in this document and all attachments and that this
document and its attachments were prepared either by me personally or under my direction or supervision in a manner designed to ensure that qualified and knowledgeable personnel properly gathered and presented the information contained therein. I further certify, based o n my personal knowledge or on my inquiry of those individuals immediately responsible for obtaining the information, that the information is true, accurate, and complete. I am aware that there are significant penalties for submitting false information, in cludingRESOLUTE NATURAL RESOURCES COMPANY

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### 15

15 the possibility of fines and imprisonment for knowing and willful submission of a materially false statement.”

3. All semiannual reports shall include the following information:

a. A list of the rolling 365

- day cumulative Main Flare emissions for each
da y in that semiannual period;

b. A list of each day in the semiannual period when the emissions limits that apply to the Main Flare were exceeded and, for each such day, the limit(s) exceeded and the amount(s) of excess emissions;

c. A list of all emissions for t he semiannual period that the Permittee claims are attributable to Malfunctions;

d. A list of all emissions for the semiannual period that may be attributable

to CO 2 Breakthroughs, Scheduled Maintenance, or unscheduled maintenance of the Facility’s compressor s;

e. The date(s) and time(s) during the semiannual period when the thermocouple or flow meter associated with the Main Flare was inoperative;

f. The date(s) and time(s) during the semiannual period when the
Permittee failed to measure or record the H 2 S concentr ation in the field gas at the Facility or failed to continuously measure or record the volume of gas combusted in the Main Flare;

g. A certification that during the semiannual period the Permittee operated and maintained the compressor station equipment and M ain Flare in a manner consistent with good air pollution control practices for minimizing emissions, and performed all of the obligations (including, but not limited to, inspection and training obligations) contained in the Operations and Maintenance Plan in Appendix A of this PSD Permit;

h. A certification that the Field Flares have not been used to circumvent the emission limits that apply to the Main Flare;

i. A list of total emissions from the Field Flares and the reason for Flaring;
and

j. Any and all reports g enerated from the root cause analysis and corrective action program of Conditions IX.G and IX.H of this PSD

Permit.

J. H. Recordkeeping RequirementsRESOLUTE NATURAL RESOURCES COMPANY

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16 1. The Permittee shall maintain a file of all records, data, measurements, reports, and documents related to operati on of the Facility. All records shall be in a permanent form suitable for inspection.

2. The Permittee shall retain the following records at the facility for a period of at least five (5) years from the date of monitoring, sampling, measurement, or reporting . All applicable records shall be maintained at the nearest manned facility and shall be readily accessible.

a. Each 365

- day rolling total for SO 2 , NO x , CO, and VOC emissions;

b. Emissions calculations of SO 2 , NO x , CO, and VOC for the Main Flare,
which shall include the emission factors, operating data and other supporting documentation that the Permittee used to calculate emissions of each pollutant;

c. Monthly H 2 S concentration in the field gas at the Facility;

d. Daily total volume of gas combusted in the Main Flare;

e. Gas throughput;

f. Records of gas analyses and testing;

g. Records of flare design for the Main Flare in accordance with 40 CFR 60.18 (including whether the flare is steam

- assisted, air

- assisted, or

non

- assisted);

h. Semiannual reports required in Section I X. G I (Compliance Reporting), of this PSD Permit;

i. A written log of the monthly inspections of the Main Flare containing the following information for each inspection: (i) the date and time of the inspection, and the name of the observer; (ii) a description of any corrective actions taken and repairs made; and (iii) the date(s) of corrective actions and repairs;

j. Visible emission readings, heat content determinations, flowrate measurements, and exit velocity determinations made;

k. Periods when the pilot flame is absent or spark igniter(s) is inoperable;

l. Any and all reports generated from the root cause analysis and corrective action program, which shall include the following:

(1) Date, time and duration of flaring; (2) Description of the event, including the flare(s) i nvolved in the event and a discussion of the cause(s) and probable cause(s) of the event;RESOLUTE NATURAL RESOURCES COMPANY

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17 (3) Confirmation that the flare(s) functioned properly, i.e., a flame was present and any visible emissions that occurred were in compliance with 40 CFR 60.18(f)(1); (4) Corr ective actions taken during the event; and (5) A description of any actions taken to prevent or reduce the
likelihood of similar future occurrences.

m. l. Inspection, maintenance and repair log(s) or other similar records; and

n. m. Any other records and reports required by this PSD permit.

X. AGENCY NOTIFICATION

A. Permit Applications & Permit

- Related Requests.

The owner or operator shall submit permit applications, permit amendments, and other applicable permit information, which includes but not limited to installation of con trol equipment, replacement of an emissions unit, and changes that contravene permit
terms, to:

Director, Air Division (Attn: AIR

- 3) U.S. Environmental Protection Agency Region 9
75 Hawthorne Street San Francisco, CA 94105

B. Submittals to Navajo Nation Envi ronmental Protection Agency.

The owner or operator shall submit copies of all correspondence required by this PSD

Permit to:

Navajo Nation Environmental Protection Agency Air Quality Control Program and Operating Permits Program

P.O. Box 529 Fort Defiance, AZ 86504

C. Compliance Reporting.

Unless otherwise directed by the EPA or this PSD Permit, the owner or operator shall submit a copy of all test plans, reports, certifications, notifications, and other information pertaining to compliance with this PSD Perm it to the following address. All notices and submissions shall be sent by certified mail, express mail, or similar overnight mail delivery with return receipt requested and addressed to:

Director, Enforcement Division (Attn: ENF

- 2

- 1)
U.S. Environmental Protection Agency, Region IX
75 Hawthorne Street San Francisco, California 94105RESOLUTE NATURAL RESOURCES COMPANY

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18 All notices and submission made in accordance to Condition X.C.1 shall be deemed submitted on the date postmarked. All notices and submissions made in accordance to
Conditi on X.C.1 shall be signed and affirmed by a responsible official, and bearing the
certification statement as follows:

“ I certify under penalty of law that I have examined and am familiar with the
information submitted in this document and all attachments an d that this document and its attachments were prepared either by me personally or under my direction or supervision in a manner designed to ensure that qualified and knowledgeable personnel properly gathered and presented the information contained therein. I further certify, based on my personal knowledge or on my inquiry of those individuals immediately responsible for obtaining the information, that the information is true, accurate, and complete. I am aware that there are significant penalties for subm itting false information, including the possibility of fines and imprisonment for knowing and willful submission of a materially false statement.”