MEMORANDUM

TO: Docket ID No. EPA-HQ-OAR-2015-0764

FROM: Alexis McKittrick and Ma rk de Figueiredo, EPA/CCD

DATE: January 21, 2016

SUBJECT: Assessment of Impacts of the Leak Detection Methodology Revisions and Confidentiality Determinations for Petroleum and Natural Gas Systems

Introduction The EPA is proposing to add new monitoring methods for detecting leaks from oil and gas equipment in the petroleum and natural ga s systems source category in subpart W of the Greenhouse Gas Reporting Rule (40 CFR part 98, subpart W) (herea fter referred to as “subpart W”). Specifically, the EPA is proposing methods c onsistent with the leak detection methods in the recently proposed new source performance sta ndards (NSPS) for the oil and gas industry (80 FR 56593; September 18, 2015), also known as 40 CFR part 60, subpart OOOOa (hereafter referred to as the “NSPS subpart OOOOa”). In a ddition, the EPA is proposing to add emission factors for leaking equipment to subpart W to be used in conjunction with these monitoring methods to calculate and report greenhouse gas (GHG) emissions resulting from equipment leaks.
An increase in respondent burden is expect ed for subpart W reporters in industry segments that conduct leak dete ction surveys and become subjectto the proposed NSPS subpart OOOOa in the next 3 years. In this memorandum, we discuss the potential burden to reporters affected by these proposed amendments.
To accommodate the new methods and emission factors added by these proposed amendments, it is expected that these facilitie s would update their faci lity-specific calculation mechanism ( i.e. , calculation spreadsheet, recordkeeping database, etc.) to accommodate the new methodology and emission factors.
The costs of these proposed amendments to subpart W were estimated as the incremental change from the previously estimated costs of the requirements under subpart W. 1 This incremental cost was calculated based on the number of reporters in each industry segment that

1 The previously estimated costs of the requirements under subpart W are included in the proposed Information Collection Request for the Greenhouse Gas Reporting Program, OMB Control No. 2060-0629, EPA ICR No. 2300.17 (80 FR 68534; November 5, 2015).2 are likely to be affected by these proposed amendments. The details for estimating this incremental cost (the potential burden to reporters) are included in the sections below.
Determination of Count of Subpart W Facili ties That Would Become Subject to the Proposed NSPS Subpart OOOOa To determine the number of potential Ons hore Petroleum and Natural Gas Production facilities and Onshore Petroleum and Natural Ga s Gathering and Boosting facilities subject to subpart W that may become subject to th e proposed NSPS subpart OOOOa during the next 3 years, subpart W data from the Greenhouse Ga s Reporting Program (GHGRP) were used as described below.

Onshore Petroleum and Natural Gas Gath ering and Boosting Industry Segment Reporting requirements for the Onshore Pe troleum and Natural Gas Gathering and Boosting industry segment were added to s ubpart W on October 22, 2015 (80 FR 64262), so GHGRP data related to subpart W facilities in this industry segm ent have not yet been collected. However, the subpart W ICR for those final amendments assumed that there would be 200 facilities subject to subpart W. 2 Based on the fact that NSPS subpart OOOOa applicability for fugitive emissions components is proposed to be determined by an increase in capacity at the compressor level, a compressor station that is pa rt of a subpart W facili ty in this industry segment could theoretically become subject to the NSPS subpart OOOOa if one compressor at any of the facility’s compressor stations is m odified to increase the compressor capacity. An average subpart W facility in this industry segment was assumed to have eight compressor stations and each compressor station was a ssumed to contain multiple compressors. A conservative approach was used to estimate that a ll 200 of the subpart W faci lities in the industry segment would have at least one compressor sta tion that would become subject to the proposed NSPS subpart OOOOa over the next 3 years, or approximately 67 facilities per year.
Onshore Petroleum and Natural Gas Production Industry Segment For the proposed amendments to this s ubpart W industry segment, the applicable proposed NSPS subpart OOOOa aff ected facility is the coll ection of fugitive emissions components at a new or modified well site, wher e a modification is proposed to occur when a new well is drilled at an existi ng well site or a well at an ex isting well site is hydraulically fractured or hydrauli cally refractured.
Oil wells. Reporting requirements for oil we ll completions and workovers with hydraulic fracturing were added to subpart W on Oc tober 22, 2015 (80 FR 64262); previously, only

2 Information Collection Request for the Greenhouse Gas Reporting Program, OMB Control No. 2060-0629, EPA ICR No. 2300.17 (80 FR 68534; November 5, 2015).3 completions and workovers for gas wells were re quired to be reported. As with the new Onshore Petroleum and Natural Gas Gathering and Boosti ng industry segment, GHGRP data related to these amendments have not yet been collected. However, according to the proposed ICR for the Greenhouse Gas Reporting Program, there are expected to be 50 new facilities with oil wells that will begin reporting to subpart W due to the increa se in emissions from oil well completions or workovers with hydraulic fracturing. 3 These completions and workovers with hydraulic fracturing would be considered new or modifi ed affected facilitie s under the proposed NSPS subpart OOOOa. Therefore, all 50 of these new subpart W facilities were assumed to have at least one well site that would become subjec t to the proposed NSPS subpart OOOOa over the next 3 years, or approximately 17 facilities per year.
Gas wells. According to 2014 subpart W GHGRP data, there were 503 facilities reporting in this industry segment, and 283 of these report ed at least one gas well completion or workover. Over the 4-year period of the GHGRP for subpart W, 399 facilities out of the total 628 facilities that have reported in this industry segment had at least one gas well completion or workover. In addition, the supporting documentation for the propos ed NSPS subpart OOOOa indicates that the number of new or modified oil well sites project ed for the year 2020 (16,562) is projected to be about three times the number of new or modified gas well sites (5,518). 4 Due to the increase in completions or workovers with hydraulic fracturing of oil wells, and the f act that the definition of subpart W includes all of a re porter’s production operations in an entire basin, it is highly probable that a facility currently reporting to subpart W in this industry segment could have a completion or workover with hydraulic fracturing for a gas well and/or an oil well. For these reasons, a conservative approach wa s used to estimate that all 503 of the facilities in the industry segment currently reporting to subpart W were assu med to have at least one well site that would become subject to the NSPS subpart OOOOa ove r the next 3 years, or approximately 167 facilities per year.
Total facilities. For purposes of calculating co st impacts, for the reasons described above, a conservative approach was used to estimate th at all 553 of the subpart W facilities in this industry segment would have at least one well site that would become subject to the proposed NSPS subpart OOOOa over the next 3 years, or approximately 184 facilities per year.

3 Information Collection Request for the Greenhouse Gas Reporting Program, OMB Control No. 2060-0629, EPA ICR No. 2300.17 (80 FR 68534; November 5, 2015). It is expected that these reporters have other subpart W emission sources at the facility but that the addition of emissions from oil well completions or workovers with hydraulic fracturing will increase emissi ons to 25,000 metric tons of CO 2 equivalent or more per year. 4 See Table 5-12 of Oil and Natural Gas Sector: Standards for Cr ude Oil and Natural Gas Facilities; Background Technical Support Document for the Proposed New Source Performance Standards (40 CFR Part 60, subpart OOOOa) . August 2015. Docket Item No. EPA-HQ-OAR-2010-0505-5120.4 Results of Analysis Costs to reporters associated with this proposal are expresse d as labor costs ( i.e. , the cost of labor by facility staff to meet the proposed amendments). Labor costs were determined using an approach consistent with previous impact s analyses associated with the GHGRP. For all industry segments, the labor rates are $129.83 for senior managers, $118.86 for middle managers, $99.18 for engineers and $52.84 for technicians. 5 The update to the facility-specific calculation mechanism is expected to take 2 hou rs for an engineer to perform at $99.18 per hour, or $198.36 per reporter.
As described above, approximately 184 On shore Petroleum and Natural Gas Production facilities and 67 Onshore Petroleum and Natural Gas Gathering and Boosting facilities per year (251 total facilities) would be expected to b ecome subject to the proposed NSPS subpart OOOOa and to incur labor costs under th ese amendments. Each of these 251 facilities are expected to incur a 2-hour increase in burde n and a nearly $200 increase in burden costs over the 3-year period covered by this impacts analysis.
There are no changes in bur den to the following industry segments: Offshore Petroleum and Natural Gas Production, Onshore Natura l Gas Processing, Onshore Natural Gas Transmission Compression, Underground Natural Gas Storage, Liquefied Natural Gas (LNG) Storage, LNG Import and Export Equipment, Natu ral Gas Distribution, and Onshore Natural Gas Transmission Pipeline. As noted in the preamble to the proposed amendments, reporters in these industry segments would need to add a few new em ission factors to their existing systems rather than fully transitioning their recordkeeping, ca lculating, and reporting systems, so we do not estimate any additional, quantifia ble burden for these reporters.
The estimated change in burden (labor hours) and cost for these proposed amendments to subpart W are summarized in Table 1.

5 The base hourly wages & salaries (not including benefits & overhead) are from BLS’s May 2014 National Industry-Specific Occupational Employment and Wage Es timates (http://www.bls.gov/oes/current/oessrci.htm).5 Table 1. Annual Average Change in Reporter Bu rden and Cost for Proposed Changes to Subpart W

Industry Segment Change in Total Burden (Technical Labor Hours) Change in Burden (Technical Labor Hours/Reporter) Change in Total Cost ($) Change in Cost ($/reporter) Onshore Petroleum and Natural Gas Gathering and Boosting 133 2.00 $13,224 $198 Onshore Petroleum and Natural Gas Production 369 2.00 $36,564 $198 TOTAL 502 $49,788

Small Entity Impacts The EPA has determined that some small businesses would be affected by these proposed amendments because their production processe s emit GHGs exceeding the reporting threshold. However, the EPA has determined that the bu rden of these proposed amendments is not a significant increase, regardless of the size of th e affected reporter. Th erefore, these proposed amendments would not have a significant economic impact on a substantial number of small entities.
Although these proposed amendments would not have a significant economic impact on a substantial number of small entities, the EPA non etheless has tried to reduce the impact of this rule on small entities. As part of the process of finalizing the subpart W 2010 final rule (75 FR 74458, November 30, 2010), the EPA took several step s to evaluate the effect of the rule on small entities. First, the EPA determined appropri ate thresholds that reduc ed the number of small businesses reporting. Also, the EPA supports a “help desk” for the GHGRP, which would be available to answer questions on the provisions in this rulemaking. Finally, the rule includes a mechanism in 40 CFR 98.2 to allo w facilities and suppliers that report less than 25,000 metric tons of CO 2 e/year for 5 years or less than 15,000 metric tons CO 2 e/year for 3 years to cease annual reporting to the EPA.