## SAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICT

MEMO

DATE: November 13, 2009

TO: Dave Warner

FROM: Jim Swaney/Brian Clements

SUBJECT: Estimate of SOx Impacts of Rule 2020 (Exemptions) Change

I. Purpose

This memo supports and further details the January 10, 2008, District Rule 2020 (Exemptions) update to revise the natural gas and liquefied petroleum gas (LPG) fuel sulfur content permit-exemption threshold fo r indirect-fired combustion devices such as boilers, steam generators, and process heaters.

II. Rulemaking Background

Rule 2020 Section 6.1.1 exempts indirect heat transfer units with a heat input rating 5 MMBtu/hr or less if they are fired exclusiv ely on natural gas, LPG or any combination thereof. LPG is a general term that includes propane, butane, and propane-butane blends. Previous versions of Rule 2020 requires that LPG have no more than 5% by weight hydrocarbons heavier than butane and su lfur content no more than 0.75 grains per 100 standard cubic feet (0. 75 gr S/100 scf) of gas.

Stakeholders requested amendments to Rule 2020 because the actual sulfur content of LPG is typically higher than the current rule’s sulfur content limit. District staff reviewed

other California air districts’ rules to det ermine the sulfur content limit of LPG and natural gas for permit-exempt small gas-fired units. Unlike Rule 2020, other air districts do not have sulfur-content limits for LPG or for natural gas. Gas Processors Association (GPA) liquefied petroleum gas specif ications for total sulfur content of LPG ranged from 123 parts per million by weight (ppmw) to 185 ppmw. Specifically, the total sulfur content specifications are as fo llows: (a) 185 ppmw for commercial propane; (b) 140 ppmw for commercial butane; and (c) 140 ppmw for commercial propane/butane mixtures. A survey of LPG distributor s indicates odorant (typically mercaptan) containing between 1 and 3 gr S/100 scf is added to LPG.

The District had modified Rule 2020, Section 6.1.1, to codify how the District has historically applied the exemption to small indirect heat transfer units. The following changes were made in the latest rulemaking decision:

• For natural gas, the total sulfur content limit would be changed from 0.75 grains per 100 scf to 1.0 grain per 100 scf of gas. This change was adopted as natural2 gas suppliers in the District can legally de liver gas with a sulfur content up to 1.0 gr/100 scf.

• For LPG, the total sulfur content limit would be no more than 15 grains per 100 scf of gas and no more than two (2) percent by volume hydrocarbons heavier than butane. This change was adopted since, as mentioned above, a survey of LPG distributors indicates odorant (typic ally mercaptan) containing between 1 and 3 gr S/100 scf is added to LPG, which was higher than the rule allowed (15 grains per 100 scf is allowed according to LPG standards).

III. Impacts of Rulemaking Changes

As detailed above, the rule was updated to reflect the actual sulfur content of commercially available natural gas and LPG. The rule amendment was necessary to
correct an error, in that the intent was to allow permitting exemption for units burning natural gas or LPG.

A. LPG Impacts

Strict interpretation of the previous exemption would have required permits for nearly all indirect-fired combustion dev ices fired on LPG, regardless of heat input, since the fuel sulfur content specification was lower than normal commercially available LPG. The intent of the District has never been to regulate and permit nearly all of these types of units, which would include such units as

travel trailer water heaters and home wate r heaters in areas without natural gas availability, which is common in the foothills of the San Joaquin Valley.

The rule change now allows the maximum amount of sulfur to be present in LPG (15 gr S/100 scf). As such, there is a potential increase in combustion SOx emissions (difference between 15 gr S/100 scf and the previous permitexemption limit of 0.75 gr S/100 scf). However, as mentioned above, there is no

actual increase in emissions since the su lfur content of San Joaquin Valley (SJV) LPG has always been 1-3 gr S/100 scf.

B. Natural Gas Impacts

SJV natural gas suppliers (PG&E, SoCal Ga s, etc) regulate t he quality of the gas supplied to customers and identify maximu m allowable fuel sulfur contents as

follows:

• Pacific Gas & Electric (PG&E) has a transportation agreement to deliver gas

with a maximum total sulfur content of 1. 0 gr/100 scf (actual: 0.3 to 0.5 gr/100 scf, based on source testing).

• Southern California Edison’s (SoCal Gas) Standard Specifications for Natural

Gas and Substitute Fuel Gases (from SoCal Gas Company Procedures,12/26/85) has a recommended tota l sulfur limit of 0.75 gr/100 scf.3 • Mojave Gas Company’s FERC Gas Tariff General Terms and Conditions (12/30/91) requires delivered natural gas to contain no more than 0.75 gr/100

scf total sulfur.

Further, the California Air Resource Board (ARB), in their document Guidance for Power Plant Siting (Stationary Source Div., 6/99), determined that 1.0 gr S/100 scf is the maximum sulfur content of gas s upplied by a utility regulated by the Public Utilities Commission (PUC).

As such, the rule change allows the maximum amount of sulfur to be present in natural gas (1 gr S/100 scf) which in tu rn results in a potential increase in combustion SOx emissions (difference bet ween 1 gr S/100 scf and the previous permit-exemption limit of 0.75 gr S/100 scf).

However, historical fuel sulfur data indicates there is no increase in actual fuel sulfur content allowed, i.e., no increas e in actual combustion SOx emissions due to the rule change. As shown above, SJV natural gas s upplied by PUC regulated utilities such as SoCal Gas and Mojave Gas Com pany continue to meet their 0.75 gr S/100 scf agreement. As for PG&E, alt hough the maximum fuel sulfur content allowed is 1 gr S/100 scf, historic fuel sampling data indicated the sulfur content to meet 0.75 gr S/100 scf. As such, previous District permitting actions based SOx emissions on a fuel sulfur content of much less than 0.75 gr S/100 scf. So for natural gas-fired units, data indicates no additional units were brought under District permitting with the 0.75 gr S/100 scf.

C. Potential Emission Reduc tions from Other Regulations

Whether or not these units would be subj ect to District permitting requirements does not change the applicability of District pr ohibitory rule requirements such as Rule 4308 (Boilers, Steam Generators, and Process Heaters 0.075 to 2 MMBtu/hr) and Rule 4307 (Boilers, Steam G enerators, and Process Heaters 2 to 5 MMBtu/hr), so there are no emissions reductions avoided there.

However, there would be the potential for additional emission reductions from permitted units, if Best Available Contro l Technology (BACT) required it. BACT implications for each scenario are as follows:

1. LPG

In the SJV, BACT is triggered with a potential to emit of greater than 2 lb/day for any pollutant. As such, BACT would only be required for units with SOx emissions greater than 2 lb/day. For units above 5 MMBtu/hr, BACT is and has always been applicable since those units are subject to permitting due to the heat input. For units utilizing the discussed permitexemption (up to 5 MMBtu/hr), calculations indicate that even at the

maximum allowable fuel sulfur content of 15 gr S/100 scf, the emissions do not exceed 2 lb/day. As such, there are no additional emissions reductions missed via BACT due to the change in the exemption rule.4 Further, the actual inventory of emi ssions for these permit-exempt units can be more accurately quantified if based on the actual commercially available fuel sulfur content of up to 3 gr S/100 scf. Calculations indicate emissions of approximately 0.4 lb/day for units up to 5 MMBtu/hr if based on fuel sulfur content of up to 3 gr S/100 scf.

Finally, even if BACT were triggered, BACT requirements for SOx for the category of Boilers, Steam Generat ors, and Process Heaters has historically been the use of LPG or natural gas fuel. Feasibility studies

indicate that SOx reductions are bes t achieved by fuel sulfur content reductions, i.e. sulfur scrubbers, and that these devices are not cost effective per District policy, especially on smaller scale units below 5

MMBtu/hr.

2. Natural Gas

As shown in Section III.B above, no additional units were brought under District permitting with the previous pe rmit-exemption limit of 0.75 gr S/100 scf, there were no additional emissions reductions due to permitting regulations, e.g. BACT.

IV. Conclusion

The January 10, 2008, District Rule 2020 (Exemptions) update to correct and increase the natural gas and LPG fuel sulfur content permit-exemption threshold for boilers, steam generators, and process heaters to the actual commercially available maximum fuel sulfur contents for natural gas and LPG, has no impact on actual or potential emissions in the San Joaquin Valley.