Karin Ritter
Manager

Regulatory and Scientific Affairs

1220 L Street, NW Washington, DC 20005-4070
USA Telephone 202-682-8472
Fax 202-682-8270 Email ritterk@api.org www.api.org

May 3, 2011

William M. Irving Climate Change Division U.S. Environmental Protection Agency Office of Atmospheric Programs (MC 6207J) Ariel Rios Building 1200 Pennsylvania Avenue, N. W. Washington, DC 20460

Re: Mandatory Reporting of Greenhouse Ga ses: Subpart W: Best Available Monitoring Methods

Dear Mr. Irving:

I am writing regarding an issue of urgent concern - the availability, and imminent deadlines to apply for the use, of “Best Ava ilable Monitoring Methods” (BAMM) under Subpart W. At the outset, API appreciates EPA’s issuance of an administrative stay extending the initial deadlines for BAMM, as well as a guidance document regarding BAMM. The stay and the guidance are helpful, but they do not provide the full relief needed, as I explain below.

I. Background and Request for Extension

As you know, under the rule as amended by th e administrative stay, reporters may use BAMM until September 30 for well-related data a nd certain other specified activities without making a request to EPA. 40 C.F.R. §§ 98.234( f)(2)-(3), (5)(i)-(ii); 79 Fed. Reg. 22825 (April 25, 2011). Requests to use BAMM for these acti vities from September 30 to December 31, 2011 and for leak detection and quantification activi ties from January 1, 2011 to December 31, 2011 must be submitted by July 30, 2011. Id. . §§ 98.234(f)(4)-(7). Finally, if reporters want to extend the use of BAMM beyond December 31, 2011 “in ex treme circumstances,” they must submit a request by September 30, 2011. Id. § 98.234(f)(8). The current rules do not establish a deadline for EPA to respond to BAMM requests.

Given the extraordinary scope of Subpart W— both the hundreds of thousands of discrete sites and sources whose emissions must be quan tified and reported and their broad geographic dispersion—compliance with the monitoring and re porting deadlines and the deadlines to apply for approval to extend the use of BAMM are not only unrealistic bu t infeasible. These problems are compounded by the lack of clarit y in certain aspects of the rule which has made it difficult for reporters to even determine whether BAMM is required for some sources. Given our strong collaborative and successful relationship w ith EPA on many aspects of the GHG Reporting Program (GHGRP), we do not use such words li ghtly. However, for the reasons described2 below, compliance in many if not most instances will not be possible under the deadlines specified, particularly given the relatively shor t time from finalizati on of Subpart W and the looming deadlines and the vast sc ope of Subpart W requirements.

Subpart W thus imposes substantial burdens upon reporters and doe s not provide them adequate time to ensure compliance. As a resu lt, as EPA recognized in the final rule, reporters need to have the option to use BAMM in the early stages of the program as they gear up toward implementing all their measuremen t and quantification obligations. Unfortunately, the final rule limited “automatic BAMM” to six (now nine) mont hs, imposed tight deadlines for reporters to request the use of BAMM and unduly restricted its use beyond 2011. API believes that further modifications to Subpart W are needed to ma ke BAMM more widely available through 2012, by which time reporters should be in position to em ploy the required monitoring methods, subject to the safety and feasibility excep tions recognized by the rule.

Under the rule, reporters must identify the sources at which they seek to use BAMM and gather a substantial amount of information a nd data to support BAMM extension requests. See

id. §§ 98.234(f)(5)-(8). As we describe below, although API’s members have been working diligently to implement systems to ensure compliance with their data collection and reporting obligations under Subpart W, ther e is insufficient time before the July 30 and September 30 deadlines to (1) iden tify those locations which might re quire BAMM in 2011 or beyond, (2) provide the necessary level of detail to support BAMM requests, and (3) ensure compliance with the required monitoring methods at all locations once the BAMM a llowance sunsets. Reporters are required to spend more time navigating th e complexities of acquiring BAMM approval for facilities that have not been clearly defined by EPA than implementing systems for collecting actual data. Obviously having all equipment and systems in place for full compliance with the rule by June 30 is not feasible. Importantly, API is not requesting relief from ultimately employing the monitoring methods specified in S ubpart W or from submitting requests to use BAMM with the appropriate supporting data. Rath er, API respectfully requests that EPA extend

the automatic use of BAMM in 2011 and make BAMM more widely available through 2012 for all Subpart W source types.

EPA has recognized in other GHGRP contexts that various extension requests were warranted. EPA similarly should extend the BA MM deadlines here to ensure that member companies are in a position ultimately to comply with Subpart W and provide the underlying information requested by the Agency.

II. The Scope and Breadth of Subpart W Make it Infeasible for Reporters to Meet the Application Deadlines for Submitting Requests to Use BAMM.

The scope and scale of Subpart W and the re sulting effort and re sources necessary to develop and implement systems to comply with the rule are unprecedented, even for the GHGRR. It encompasses almost the entire natura l gas supply chain from the well-head to local distribution to end users, along with oil production both onshore a nd offshore. The number of

individual sites and emission sour ces covered, the geographical disper sion of these sites, and the amount of data and information required to be monitored and gathered from these sites and sources is substantial. These facts, when comb ined with the uncertainties associated with the rule, make it infeasible for reporters to collect and prepare the information needed to apply for3 the use of BAMM by the July 30, 2011 and Septembe r 30, 2011 application deadlines or to have all of the equipment and systems in place by September 30.

The Onshore Petroleum and Natural Gas Pr oduction segment of the Petroleum and Natural Gas Systems source category (Onshore Production) alone covers hundreds of thousands of well sites along with tens of thousands of sites “associated w ith a well pad” (which is not defined or discussed in the rule). These site s are widely dispersed ac ross hundreds of thousands of square miles in all of the oil and gas produc ing basins across the United States. The seven additional industry segments subject to Subpart W extend this coverage to tens of thousands of additional offshore platforms, onshore sites and f acilities, and natural ga s distribution sites. Within each of these industry segments, S ubpart W mandates that reporters monitor and determine emissions from multiple source types; for example, the Ons hore Production portion of the rule covers 22 distinct source types. Each of these source types requ ires the collection of a broad variety of information, data points, analys es, models, and/or measurements to determine emissions and submit emission reports.

Subpart W thus requires that each report er undertake a substantial effort to: (1) understand the rule and how the rule applies to its operations a nd sites; (2) assess its current information and monitoring systems against the ru le’s requirements; (3) determine what gaps exist; (4) engineer, plan, budget and schedule actions needed to close these gaps; and (5) put these actions into place. This entire chain of actions inevitab ly will take significant time and skilled resources to accomplish. Simply put, th ese actions cannot be completed in the time frames set forth in the final Subpart W rule. Mo reover, rushing to put equipment and systems in place without the proper engineering, planning, and evaluation is not a viable option, given that the materials handled by the industry – oil and natu ral gas – necessitate that any modifications to equipment be made with caution to ensure safety . Reporters should not be placed into a position where safety is potentially compromised si mply to meet unrealis tic and unnecessary requirements of the rule.

The problems created by the large number of fa cilities that are subject to the rule are exacerbated by their wide geographic distribution. Unlike a chemical plant or a refinery, oil and natural gas operations are spread out over huge ge ographic areas and are t ypically not staffed at all times. Often there is no electricity, difficu lt access, and little existing infrastructure or communications ability at these disparate locatio ns. Given this geographic dispersion of oil and natural gas facilities, installati on of any additional equipment, m onitors, and/or data acquisition and transmitting systems will be very challenging. Even traveling to each of these sites requires significant time and effort. When this is co mbined with the specific monitoring methods demanded by the rule, reporters cannot realistically meet the rule’s BAMM extension application deadlines or have the full suite of required monitoring and recordkeeping systems in place by September 30.

These problems are compounded by the fact th at API’s members continue to have unanswered questions about the ap plicability of the rule to so me of their operations. These include: (1) whether stan dalone equipment (such as dehydrators, liquid separators, and amine treaters) constitutes a gas processi ng facility; (2) what constitutes a booster station; and (3) what constitutes a gathering line. While we understand th at EPA is evaluating possi ble clarifications to these source category definitions, companies will not know for certain how Subpart W applies to4 their operations and whether BAMM extension requests are needed. Companies face the prospect of losing the opportunity for case-by- case extensions unless “protective” applications are prepared and filed. The effort required to ma ke such filings will be significant (and will impose upon EPA a significant burden) and likely w ill become wasted effort once applicability is

clarified.

These unique complexities and burdens pos ed by Subpart W make it unrealistic and infeasible for reporters to (1) determine if the ru le applies and to what source category a facility belongs to, (2) determine the gaps between the rule requirements and their current information systems, (3) identify which sources will need to employ BAMM for the remainder of 2011 by July 30, and (4) ensure that all those sources have installed th e necessary monitoring equipment or ports by the end of 2011 and thus identify which sources will need to employ BAMM beyond 2011 by September 30, 2011. The final Subpart W ru le was published in the Federal Register on November 30, 2010. Such a compressed schedule even in ideal conditions would be difficult, if not impossible, to meet; winter conditions – lim iting site access – during much of this period exacerbate the problem. Moreover, the limited time between promulgation and the September 30, 2011 BAMM application d eadline for use of BAMM, combined with the fact that the rule significantly restricts the av ailability for BAMM beyond 2011 , is extremely problematic. Reporters will not have sufficient time to ensure that monitoring equipment or access ports are in place and ready to use by 2012 at all their sour ces. The challenges of complying with the deadlines in Subpart W are complicated by the lack of clarity in some of the rule’s requirements and the subsequent inability to implement data collection procedures until clarifications and

amendments are made. EPA needs to amend the rule to allow not only itself more time to clarify confusions inherent in the rule, but also allow reporters more time to apply for permission to use BAMM and to allow reporters to in stall and train staff to operate and collect data when using the required monitoring equipment.

III. The Difficulty of Complying with Subpart W Supports Making BAMM More Broadly Available.

As the previous section explains, EPA has not provided sufficient time for reporters to bring their emission sources into compliance with the monitoring requirements of Subpart W, thus necessitating an extension of both the appl ication deadlines for the use of BAMM and an extension of the time under which BAMM will be more broadly available as an option to reporters. In large part, this is because the measurements required for many of the sources subject to the rule have not been extensively performed in the past, and these sources do not employ equipment or ports to make the required measurements.

As a result, determining an approach to implement the monitoring or measurement requirements for many of the sources covered by the rule and then determining what can be accomplished in what time frames is, in itself, a significant undertaking. Before a reporter can prepare an application to use BAMM in 2011 or beyond, it must (1) determine the gaps between the rule requirements and their current systems to collect data, (2) determine what changes or improvements will be necessary, (3) determine the time and schedule requirements to make these changes or improvements, (4) determine what changes cannot be accomplished by September 30th (or December 31), (5) collect the necessary information to complete a BAMM extension5 request, and (6) file the extension requests for the large number of sites covered. As explained previously, this work cannot feasibly be completed under existing deadlines.

Moreover, it is already evident that many s ources do not currently have and will need to install monitoring equipment or ports to ensure th at they can be monitored in accordance with the rule’s requirements. The vast number of facilities subject to the rule, the compressed schedule for making these upgrades, and the safety and logistical challenges posed by these monitoring requirements means that re porters are unlikely to be able to ensure that this work is completed by the December 2011. Accordingly, EPA needs to allow reporters more time to make these upgrades.

Several examples highlight the need for this relief.

A. Hot-Tapping.

During our discussion, EPA obser ved that the ports needed for measurements equipment under Subpart W under the rule could be installe d by use of “hot-tappi ng.” API respectfully disagrees that hot-tapping is a viable and safe compliance option. Indeed, EPA already agreed to provide more flexibility in GHGRP settlement discussions due to hot-tapping concerns.

API and its members do not undertake hot-tappi ng of live lines lightly in light of the nature of the procedure and the attendant risks. Hot-tapping – installing devices which penetrate the pipe or vessel wall while in service – invol ves welding a “fitting/nipple” on the pipe or vessel exterior, installing a full-bore opening valve on this “fitting/nipple,” using specialty tools to drill a hole through the pipe or vesse l wall, and then installing th e device through the penetration created. Because it involves welding and drillin g on a pipe or vessel which is under pressure and contains flammable/explosive gasses the risks are:

• Uncontrolled release of gas and/or ignition and fire or flash fire; and

• Burn-through and ignition while welding th e “fitting/nipple” on the pipe/vessel.

These risks can lead to loss of life, injury, equipment damage, facility shut-down, and large economic impacts. As a result, companies only use hot-tap procedures in extremely critical

situations and have strict rest rictions on when they can be used and how they are performed.Marginal improvement to the accuracy of emissions estimates is not a valid reason for hottapping. Hot-tapping is both risky and is not an option for reporte rs to meet their measurement and reporting obligations under Subpart W. Indeed, EPA has acknowledged these risks by allowing for BAMM extensions under GHGRP Subpart s P, X and Y due in part to concerns about hot-tapping. See 75 Fed. Reg. at 79096 – 79097 (Dec. 17, 2010).

The risks associated with hot-tapping mean that reporters will need to shut down units in order to install ports or othe r intakes for monitoring equipmen t. Moreover, EPA should not require sources, such as compressor stations, to shut down and depressu rize simply to enable installation of ports and/or mon itoring equipment. As with Subparts P, X and Y, EPA should allow reporters to wait until the “next schedule d turnaround” to make such installations. This will extend the time it will take to complete this wo rk at the thousands of sites and units subject to Subpart W because it cannot realistically be completed in just over one year.6 B. Gas well venting during well completi ons and workovers from hydraulic fracturing.

There are two calculation methods for dete rmining volume this category of sources. See 40 C.F.R. § 98.233(g). Neither of these methods ha ve been widely implemented or practiced in the industry – particularly in a compliance setting where it must be accomplished and documented strictly in accordance with the rule’s requirements. More time is needed to allow the necessary equipment to be designed, built and available and these sources to be modified to perform the required measurements to calcu late emissions as required by Subpart W.

Calculation Method 1 for these sources requi res measurement of flow-back volume from clean-up of a well after hydrauli c fracture stimulation. This is extremely difficult to do, especially in light of the rule’s provisions that any such measurement be done in accordance with the provisions of 40 C.F.R. § 98.234(b), which in turn requires the metering be done in conformance with the requirements of 40 C.F.R. § 98.3(i). Flow-back fluids vary widely during flow-back for clean-up of a well pos t-fracture stimulation. They st art as mostly fracture carrier fluids (typically water) with pr oppant (typically sand), progress to a mixture of fracture carrier fluids and formation fluids, and, only towards the end of a clean-up, do they become mostly formation fluids. These facts preclude meteri ng without first separati ng the sand and liquids from the gas. Due to the erosive nature of th e high pressure and high rate flow-back with sand, which can quickly cut through piping and surfac e equipment, such separation would typically have to be accomplished using specially “purpos e designed” equipment engineered to avoid or

withstand the erosive nature of the flow-back. Despite the voluntary practice of “green completions” by many companies in the Onshore Production industry, this type of “purpose designed” equipment is not abundant or readily available in the quantities needed to satisfy the requirements of the rule. Besides being very expensive, engineering and constructing enough equipment to accomplish the number of measurements required under the rule will take years, not weeks or months. This is especially true in that each covered operator in each of the relevant 44,000 + EIA named fields must do an initial me asurement during 2011 and then subsequent measurements every two years in each “field” if using Calcula tion Method 1. The necessary equipment to safely separate the liquids and sand from flow-back fluids simply will not be available quickly enough to meet the rule’s requirements.

Calculation Method 2 poses similar challenges . This method requires calculation of both subsonic and sonic flow through a “choke” during flow-back for well clean-up. As noted above, the fluid composition varies sign ificantly throughout flow-back for well-cleanup post fracture stimulation. As the nature and composition of the overall fluid changes, the flow behavior through a restricted path (choke) will change radi cally and quickly. C oupled with the non-steady and widely varying flow volume as a well clean s-up and unloads liquids in slugs identifying periods of sonic and sub-sonic flow cannot t echnically be accomplished and accounting for each

of the flow conditions cannot be accomplished under the rule. 1 Although theoretically possible, this method is unlikely to be technica lly possible in actual practice.

1 In its comments, API offered an alternative calculation method of assu ming fluid properties equivalent to the produced fluids (predominantly gas) in a sub-basin area, assuming choke flow (sonic) throughout a well clean-up, monitoring and recording pressure upstream and downstream7 In short, it will take reporters a considerab le amount of time to obtain the necessary equipment for Method 1 or be able to install sufficient instrumentation to enable Method 2 (which may not be technically achievable, as e xplained in section iii.7 of API’s Petition for Reconsideration). BAMM needs to be more wi dely available for these sources while these actions are underway.

C. Compressor venting.

Although compressor venting will be discu ssed in more detail in a subsequent submission, measurement of compressor venti ng required by 40 C.F.R. §§ 98.233(o) and (p) has not been widely practiced in the past, and no prov en methodologies have been applied outside of study or research settings. Such measurements also face a large number of safety challenges. With the new “vents” added in the final rule, the bur den to collect the require d data is significant. This challenge is amply demonstrated by the stu dy being led by the University of Texas that EPA is funding, which is struggling to achieve the measurements require d by the rule for a truly small number of facilities and compressors.

The novelty of these measurements is co mpounded by the fact that the final rule substantially expanded the repor ting requirements for centrifugal and reciprocating compressors at onshore natural gas processing facilities, by adding dry seal centrifugal compressors, blow down valve leakage, and isolation valve leakage. These additions more than doubled the number of required measurements as compared to the pr oposed rule. Reporters thus need more time to evaluate these additional sources, including co ordinating assessments with operations and qualified personnel across the country, identifyi ng the necessary changes in configuration, and properly planning the implementa tion of these measures. The la rge number of compressor vents and their dispersion over wide ar eas creates significant logisti cal problems. Extending BAMM will make it feasible to complete these step s in a safe and comprehensive manner.

* * *

As the above sections demonstrate, the scope , burdens and novelty of the requirements of Subpart W make it necessary to expand the time during which BAMM may be liberally

of a choke, and recording flow-back time in order to arrive at a volume/unit-of-time to apply to other completions in the same sub-basin area. Although this approach sh ould yield “higher than actual” gas volumes and emissions, it likely could be accomplished in a more reasonable timeframe than EPA’s required methods. It is possible, over time a nd on a small number of cases, to conduct both the suggested method and EPA’s required measurements “side-by-side” to establish the degree of emissions bias associated with the suggested approach. EPA would still receive emission estimations, number of comple tions done, and the flow-back time from each sub-basin area. Nevertheless, even if API’s suggested methodology were authorized, reporters would need a significant amount of time and effort to craft and test pro cedures, to obtain and install the necessary monitoring equipment, to design and implement data acquisition systems, and to design data handling and archive systems.8 employed and extend the deadlines for BAMM applica tions. API appreciates this opportunity to

share its concerns with EPA.

Sincerely,

Karin R. Ritter

cc: Roger Fernandez Paul Gunning

Norman Rave Ragan Tate