Page 1 of 5 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY WASHINGTON, D.C. 20460

OFFICE OF
AIR AND RADIATION

Petroleum and Natural Gas Systems (Subpart W) of the Greenhouse Gas Reporting Rule Docket: EPA-HQ-OAR-2009-0923

Title: Equipment Threshold for On shore Production Storage Tanks

Summary: This memo discusses the development of a minimum throughput of oil production sent to onshore production field storage tanks, be low which emissions could be calculated using emission factors rather than rule specifi ed flash calculation models.Page 2 of 5 Equipment Threshold for Tanks

This memo discusses the development of a minimum throughput of oil production sent to onshore production field storage tanks, below which emissions could be calculated using emission factors rather than rule specified fl ash calculation models. Industry commenters noted that many oil wells (e.g. stripper wells) have ve ry small production rates and small gas evolution, for which application of the April 2010 propos ed rule tank emissions model would be a

substantial burden for little contribution to em issions. EPA determined that crude oil or gas condensate well pad production under 10 barrels per day (bbl/day) re presents a large fraction of well pads while contributing a small fraction of to tal emissions from storage tanks receiving this oil. This memorandum describes the analysis th at was conducted to determine this threshold.

EPA examined existing regulations related to onshore production storage tanks for potential equipment thresholds. Subsequently, EPA devel oped an acceptable equipment threshold using aggregated data from the HPDI database. As pa rt of the analysis, it estimated the number of separators and tanks that are above and below the threshold.

Precedence for Onshore Producti on Storage Tanks Thresholds

The National Emission Standards for Hazardous Ai r Pollutants (NESHAP) regulations require operators to follow standards on installation, ope ration, monitoring of control devices for major sources of hazardous air pollutants. For oil and na tural gas production facil ities, the standards are set forth in 40 CFR Part 63 Subpart HH 1 . Under section §63.761, stor age vessels with the potential for flashing em ission are defined as:

any storage vessel that contai ns a hydrocarbon liquid with a stock tank GOR equal to or greater than 0.31 cubic meters per liter [1740 cubic feet per barrel] and an API gravity equal to or greater than 40 degrees and an actual annual average hydrocarbon liquid throughput equal to or grea ter than 79,500 liters per day [500 barrels per day] . Flash emissions occur when dissolved hydrocarbons in the fluid evolve from solution when the fluid pressure is reduced.

This definition sets a threshold of 79,500 liters per day (500 bbl/day), below which it is not considered a major source of HAP emissions.

Quantitative Analysis of Threshold Options Applying the 80:20 rule criteria fo r selecting sources required to be reported in subpart W, EPA

selected a threshold for onshore production storage tanks that s hould make the top emitters that produce 80% of the emissions report using a pr ocess simulator while allowing the remaining 20% of emissions to be quantified using simpler methods.

Methodology

HPDI database contains oil a nd gas production data from thou sands of reporting properties across the U.S. EPA aggregated to the reporting properties by field, then estimated the petroleum

1 EPA. 40 CFR Part 63 63.760 – 63.779. Subpart HH—National Emission Stan dards for Hazardous Air Pollutants

From Oil and Natural Ga s Production Facilities. http://ecfr.gpoaccess. gov/cgi/t/text/textidx?c=ecfr&sid=2c6a4334a98427e866966423764af7f6&rgn=div6&view=text&node=40:10.0.1.1.1.8&idno=40Page 3 of 5 and natural gas production rates and well counts for each field, and organized each field by the oil produced per well.

The number of well pad separators in a pa rticular field was estimated using the U.S Inventory of

Greenhouse Gas Emissions and Sinks (U.S. Inventory). Industry e xperts approximated that for every four oil wells there is one field production storage tank. The number of tanks in each field was estimated using this ratio. The ratio of we lls per separator was cal culated by dividing the number of separators by the tota l number of wells. This ratio was used to calculate the number of separators in a pa rticular field.

To calculate the uncontrolled methane emissions fr om oil tanks in each field, an emission factor based on tank throughput was needed. The emission factor, valued at 5.28 scf per barrel, was obtained from the U.S. Inventory. This is an ar ithmetic average of the methane emissions per

barrel from all the E&P Tank model default factors for oil less than 45 ° API gravity. A companion methane emission factor of 22.2 scf/ bbl for E&P Tank oil equal or greater than

45 ° API gravity is used in the U.S. Inventory fo r gas condensate storage tank emissions. Under the above referenced NESHAP regulation, operators of tanks with a thro ughput greater than 500 bbl/day are required to reduce their hazardous air po llutants by 95%. As a result, to calculate the actual methane emissions, the uncontrolled methane emissions from storage tanks with a throughput greater than 500 bb l/day were reduced by 95%.

Results

Exhibit 1 shows the results of quantitative analysis. EPA ex amined minimum throughputs (i.e. “floors”) of 5 and 10 bbl/day, and the NESHAP regulation floor of 500 bbl/day. At 5 bbl/day, 10 % of all emissions, and 227,111 separators and 72,508 tanks would be calculated by the U.S. Inventory emission factor. At 10 bbl/day, 21% of total emissions, and 285,409 separators and 91,121 tanks would be calculated by an emission fact or. If the floor is se t at 10 bbl/day, 18% of all storage tanks, which represents the top emitters, would report 79% of emissions using a process simulator. A 500 bbl/day threshold would require 99.8% of storag e tanks to calculate emissions using the inve ntory emission factor.

Exhibit 1: Options for threshold on oil throughput per tank.

Percentage of

Population
Emissions Covered by Population
Emission Factor Estimated Population
Emissions Covered by Population
Emission Factor (scf/yr) Oil Throughput (bbl/day) Number of tanks
with an Oil throughput below

the Equipment

threshold (assuming 4 wells per tank) Number of Separators with an Oil throughput

below the Equipment

threshold

10% 744,466,420 5.00 72,508 227,111

21% 1,471,541,143 10.00 91,121 285,409

96% 6,909,737,129 500.00 111,489 349,204

Total 7,169,918,328 111,697 349,859

Emission Factor for Tanks EPA investigated several sources of emission fact ors to determine which would be suitable for calculating emissions from tanks that receive hydrocarbon liquids from we llhead separators orPage 4 of 5 wells with less than 10 bbl/day of average production. EPA determ ined that the emission factors for oil and condensate storage tanks that are curr ently used in the U.S. Inventory are the best publicly available emission factor s for these tanks. These factor s provide the volume of methane

and carbon dioxide that is emitte d per barrel of throughput.

EPA investigated how to further reduce burde n on reporters while pr oviding the necessary quality of data to inform policy, by developing fact ors that would not require reporters to collect information on the throughput of each individual tank. The U.S. Inventory provides the average production rate of marginal wells in the U.S. at 2.2 bbl/day. Since this is the production collected in the storage tanks that will be es timated using emission factors, EPA assumed that

each of these tanks has an aver age throughput of 2.2 bbl/day so th at reporters would only be required to know the number of wells flowing di rectly to tanks or wellhead separators that produce less than 10 bbl/day to storage tanks. Th is calculation and the results are provided in

Table 2.

Exhibit 2. Development of Emission Fact or for Onshore Production Storage Tanks Receiving Hydrocarbon Liquids from Wells or Separators with Less Than 10 bbl/day Output.

Methane Emissions scf/bbl 2 x bbl/day 2 x days/year = scf/year

Crude Oil Tanks 5.36 x 2.2 x 365 = 4,305

Gas Condensate Tanks 22.2 x 2.2 x 365 = 17,832

Carbon Dioxide Emissions scf/bbl 2 x bbl/day 2 x days/year = scf/year

Crude Oil Tanks 3.58 x 2.2 x 365 = 2,877

Gas Condensate Tanks 3.58 x 2.2 x 365 = 2,877
Note: Emission factor from the U.S. Inventory are adjusted from 60  ̊ F and 14.7 psia to 68  ̊ F and 14.7 psia. Each column is rounded independently for the purposes of displaying in this Exhibit; thus, the final emission factors may differ slightly from using the rounded parameters above.

The resulting emission factors for crude oil tanks receiving wellhead production less than 10 bbl/day are 4,305 scf/year of methane and 2,877 sc f/year of carbon diox ide. The resulting emission factors for gas condensate tanks receiv ing wellhead production less than 10 bbl/day are 17,832 scf/year of methane and 2,877 scf/year of carbon dioxide. These factors would be multiplied by the number of separators or wellheads with average production less than 10 bbl/day sent to storage tanks.

Conclusion If the equipment threshold is set at 5 bbl/da y, over 122,000 separators, 35%, will report 90% of the emissions from onshore production storage us ing rigorous model calculation methodologies. This threshold was deemed overly burdensome on reporters. At 500 bbl/day, approximately 100% of the separators will report emissions us ing the U.S. Inventory emission factor. Although the burden on industry is minimized, the data gath ered would be no better than the U.S. National Inventory, and inadequate to inform future policy. A 10 bbl/day equipment threshold on

2 EPA. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 – 2008 . April 2010, U.S. EPA # 430-R-10- 006. <http://epa.gov/climatechange/emissions/usinventoryreport.html>.Page 5 of 5 separators and wells flowing directly to tanks satisfies the significant contribution criteria for subpart W by requiring the 19% of largest oil th roughput separators to report approximately 79% of the total estimated production tank emissi ons using the more rigorous tank flashing model methodologies. EPA has determined that the mo st appropriate threshold for onshore production storage tanks would be 10 bbl/day for the purposes of subpart W.

EPA developed emission factors for both methane and carbon dioxide emitted from these tanks for both crude oil and gas condensate storage. In order to minimize reporting burden for these smaller sources, EPA developed annual tank emi ssion factors per separator or well pad flowing directly to tanks by assuming the average margin al well production rate as a throughput. This enabled EPA to develop emission factors that would not require reporters to monitor the throughput of each small produc tion separator or well pad.