September 4, 2014 Memorandum Subject: September 3, 2014 Meeting Between U.S. Environmental Protection Agency (EPA) and BP and XTO Energy From: Chris Stoneman, Policy Advisor

# CXw,

**~** Outreach and Information Division, Office ofAir Quality Planning and Standards (OAQPS) To: Docket- EPA-HQ-OAR-2011-0151 This memorandum to docket provides a briefsummary ofthe main discussion points made at the subject meeting requested by BP and XTO Energy concerning the Advance Notice ofProposed Rulemaking (ANPR): "Managing Emissions ftom Oil and Natural Gas Production in Indian Country." (79 Federal Register 32502, June 5, 2104) Meeting details: When: September 3, 2014; 12:00-3:00 p.m. ET Where: EPA Offices, RTP, NC Participants: Greg Green, EPA, OAQPS Chris Stoneman, EPA, OAQPS Mary Tom Kissell, EPA, OAQPS Claudia Smith, EPA, Region 8 Deirdre Rothery, EPA, Region 8 Jeffrey Adams, BP America Production Company Mike 0'Connor, XTO Energy During the meeting, BP and XTO Energy provided the attached overview presentation of the oil and natural gas industry and covered several key areas, including: 1) Oil and gas industry overview 2) Field, basin and reservoir basics 3) Life cycle ofa field 4) Drilling and completions 5) Life cycle ofa well 6) Production facilities 7) Production equipment The EPA also answered some basic questions about the content ofthe ANPR and offered to be available for further discussions. This memorandum will be filed in the docket for the proposed rule and will be available for public review.

# . ,. 

# Oil & 

# Gas Exploration & 

# Production Basics EPA Meeting On Tribal Minor Source NSR O&G Streamline Permitting ANPR March 4· 201 0


# Discussion Topics • Oil & 

## Gas Industry Overview • Field, Basin, Reservoir Basics • Life Cycle of a Field • Drilling, Completions • Life Cycle of a Well • Production Facilities • Production Equipment 8/29/2014

1• r 

# Oil 

# & Gas Overview • Size of Industry - 

## Its Big • Complexity- Highly Variable o 

### Operating Environments o 

### Number and Size of Sites o 

### Types of Operations o 

### Ages of Operations o 

### Business Arrangements u 

### Variability Operators- Size and Capabilities 

## • Remote, Dispersed Nature

,,g. Heavy Oi l to Dry Gas Old to New High Tech to LowTech Giant Companies toTiny Companies 

# Operating Environments and Complexity 8/29/2014

2Umted States & Canada Distribution ofWells by Production Rate Bracket

**Urul.edS1.D ~,1**  C....t. Conibln<d Olt Wctl.t: GasWcllJ Prod tor

**~~ or**  -r.or 

### '"' "of % of tar !!. of %of I of % or '!i. ar fof % or 

### I'"' 011 011 011 

### ,,. 0.. Cllll Oil Oll Oll 0... ()M OM Brpd-<et wen.. W cllt l'md \Vdl}; Wcll1 Prod. Wtlls Wcll• Prod Wdi J W ells, Prod Wclls

**~u~** WOEJDn''

0- / 125,933 35,< I 83,132 19 9 03

**382** 7.0 0. 1

**500** 6.2 0.1 11 7947 24% SNbtolal <•10 275,362 n.J 13.3 2"71, /09 6U 7.9 26,935 -13.1 7J J9,-IJ3 53.9 J..! 6 12 859 61% SMbtota/ q.JJ 302,220 8.1 19 . 9 309,J-10 73.9 IZJ 3<,632 J.!.S 13.1 -16,01l7 63.0 8.1 Mll7'J 7t,% 15-zo 13,589 3.8 u 22.9ts 55 3 .7 5,362

**~·** 58 3,619 H 1.0 ., 51! S% 20-]5 8,670

**2~** 3,9

**1~. 41**  35 3 3,781 6, 1 S .J 2,.500 J.4

**~** 2V6112 l% 1S-JO 5,710 16 l , l 10,.1.03 25 26 2.899 H

**8** 2 053 28 I 8 2 1.065 _2%

.l(} . ,JQ 7,352 ll 

## ' 13,526 3.2 4,3

**099** 66 87 3,09!1 n H 2H.072 J % -10-50

**799** I.J

**1** 8,660 2. 1 3..! 2.772 4,4 7,6 2. 352 32 ]3 IS.SSJ 2% 50-100 7.703 22 9 .1) l9,038 45 II 6 5.806 9J 24 1 6,600 90 14.1 .)Y. t47 4% 100- zoo 3,009 08 n Jl,517 28 12 9 2, 193 l.J 16'8

**0111** 56 17.3 20&16 1% 200--100 1.311

**0~** 6A 5,173 1.2 IO 8 619 

### " " 7 ,8 1,810 H !H tl9 13 1% If)(} .

**~IJ(J** 606 02 58 1,852

**0~** 73 222 04 39 590 08 103 ),270 0% BOU- /6UU 253 U ,l a 8 14 02 67 52 0 l I I 228 03 82 1 . .347 0% 1600-3200 160 u n 450 U I 8. 1 4 0,0 0.4 77 0, 1 54 69 1 0% 3200-MOO 95 0 7.) 233 U . l 85 I 

### "" 02 40 0, 1 5.7 ]69 0% 6.100-/ZBOD 47 0 71 57 0 },9 II n , o n . o I 0 .0 u 112 II% > IZBOO ll 0 u 6 0 08 

### " 110 00 0 0 .0 0.0 19 0%

**ll ll.1**  **trd -.**  **'t** 53,317 IS 80 109.418 26 88 27.810 H 87 27.069 J7 92 217,6 1-' 24%

Tollll JS!,JJ7 100 roo .Jlll,7Jil /00 100 62.JJ2 /00. 0 100 . 0 73.1S6 100.0 /00.0 909,R9J 100% Then there is the collection, compression, treating, and processing 

# • U.S . gas well count and production

6 1000% 95.0')4 90.0% 85.0% 

# t I 80,0% +--l-+-i--f-+-..--+-+-:;o-:C:::'--I--+-t---+-+--1 

# 1

# t 1 75 .0%

45.0% 40.0% 35.0% 30,0% 25 .0% 20.0% 

# t' 1 _ t:t'-+---+--:-----+--t-;--t--+-r---'----'- r --;----'- 1

(;:J(o (d'V ... -v""">J """'""<,

**">J<?~>-ro** '>-(c{"'cc 41 /\,o

**~t;:frt/\, ('l.~**  ... (o

**«~.:P h~'>-**  'b(,...,,

**-x,~** f:f<,roc ';') ...

**ro~** ., ......

**~** cc ... **-.;~~~~~rcr::J** PtOduc.don a t.qoryiMSCF/d.ay) - Percent of wells

- % of2009Prod

- Cum Wells

- Cum Prod 

### 8/29/2014



### 3

# . -



# • Why Operate Low Volume Wells Reservoir Pressure vs. Oil and Gas In Place ')()" , CBM

**"~** Adsorption

IWo Conventional or Tight Gas Pore Volume Storage

ur·G 50"G ,.. ,. . ':'tfl. ,.,.. .. • ;r) . 11•, • 

### ,.

### ..,,

## ... 7 

# Basin, Reservoir, Field Basics • These terms are related, but frequently improperly used interchangeably. • The terms are defined in some regulations that may differ from the industry use ofthe term. Industry may use the term in different ways as well • Sedimentary Basins are regions were long-term subsidence creates for infilling by organic sediments. • Petroleum Reservoir is a subsurface pool of hydrocarbons contained in porous or fractured rock formations • Oil & Gas Field is a surface area with an abundance of wells producing crude oil, condensate and natural gas. • A single "field" (or even a single well) may tap multiple "reservoirs" at different depths • A "basin" often contains multiple fields. 8/29/2014



### 4

# •

• Permian Basin structure map with major Texas oil reservoirs



## GEOLOGY Petroleum System Source: Galloway ot al . (1983)•

PREDICTING SUB-SURFACE HYDROCARBONS (5 KEY PIECES) 

### 8/29/2014



### 5• r



# • O&G Variety of "Reservoirs" • Conventional O&G Reservoirs -High Permeability & 

### Porosity 

## • Unconventional Gas
, Deep Reservoirs - Typically Dry/High Pressure Gas



### - Low Permeability Coal Bed Methane- No Petrol. Liq.; Often Lower Pressure; Shallower Depth; Higher Water Production Tight Sands Gas Shale 

### • Field Pressure Decreases as Field is Produced.


# GEOLOGY WHAT TYPES OF ROCKS PRODUCE HYDROCARBONS? SANDSTONE 

### 8/29/2014



### 6

# • Schematic geology of natural gas resources

• r 

# . 

# Life Cycle of a Field Wild Cat Wells • Prospect Identification Basin Evaluation, Seismic and Other Geotechnical Evaluation, Offset Area Evaluation, Land Evaluation • Obtain a Land/Lease (mineral and surface) Position • Drill, Complete and Test Exploratory Well(s) 

### Initial Field Development • Evaluate Reserves, Costs, and Initial Full Cycle Economics • Drill, Complete and Test Initial Development Wells; • Install Infrastructure • Begin Production Operations • Competing Operators Start Developing the Field. 8/29/2014



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# • Life Cycle of a Field Mature Field Development • On-going Economic Evaluations/Optimization on a Well-by-Well Basis • Buy/Sellffrade Assets • Reservoir Drainage Evaluation • Step-Out Delineation (i.e. reservoir boundaries) • Explore Alternate Reservoir Potential (i.e. deeper prod. zones) Infield Development • Optimize Production Systems as Decline Progresses • Reduced Well Spacing to Increase Recovery of Reserves • Abandon Field at End of Economic Life


# Drill to Maintain Production Projected gas production from Colorado, New Mexico and Wyoming 16 

## :a 14 • Base Drilling

..... 'n 12 

## e. c 10 0 "'B 8 ::;, -g 6 

### ... a.. Ill 4 111 " 2 Drilling Represents Approximately 7,000 Wells/Yr

Source: Wood 111 CD ,... co en 0 ... N M .,.. 111 CD ,... co en 0 ... N M .,.. MacKenzie 

### g ? ? ? ? c; !"" !"" !"" !"" 

## o !"" !"" !"" !"" 

### S !'I !'I !'I !'I Upstream database, N N N N

**~~** Ongoing drilling, well WOlle, •nd lnfrutructureJnvestmant are required to maintain a stete of U£natural gasproduction. 8/29/2014



### 8

# • Variety of Business Arrangements • One Operator Fields Typically Only Young Fields Even These Have Partners Other Operators Drill Wells 

### • More Operators as Field Mature c. 

### Increasingly Complex as Multiple Companies Install Infrastructure Services (i.e. comp., dehyd., gas proc., etc.) are contracted within negotiated limits.
, Assets Bought/Sold/Traded/Change Operators Often 

### • Contracts and Ownership Issues Get Very Complex with Infinite Variations


# DRILLING 

# & EXPLORATION Where do we Drill? SEISMIC SURVEYS 

### I REGIONAL DATA 

### I SUBSURFACE MAPS "' 

# ...

Well Logs Structure Maps Stratigraphic Maps NetPay Maps 3D Seismic Interpretation 8/29/2014

9

# •



# • DRILLING 

# & EXPLORATION Compile Data Reservoir Data Geological Data BLM Permits Land Requirements City Permits Reservation Permits & Requirements State Permits FAA Permits Federal Permits



# ....

At the simplest level: • A deviated (or directional) well is a well that has been intentionally deviated from vertical. The deviation (or inclination) is measured from the vertical. • A horizontal well is a deviated well with an inclination at or near 90°

Deviated (directional) Well• Planned deviation of 85•- 95• Vertical Well • Planned deviation from vertical • Planned azimuth • Some unintentional deviation • Planned direction (azimuth) • Typical inclination < 3• • Inclination up to 85• 8/29/2014

10

### 8/29/2014 

# • DRILLING AND EXPLORATION WHY 

## So MANY WELLS ON LOCATION?



# • Drilling & Exploration

11

# •

• DRILLING 

# & EXPLORATION

4 Systems Hoisting Rotary Circulating Power



# DRILLING 

# & EXPLORATION



# C.Y.A. Cover

Your Aquifer 8/29/2014

12

# • DRILLING 

# & EXPLORATION Circulating System



# COMPLETION EQUIPMENT 8/29/2014



### 13

# •

• COMPLETION PROCESS



# Gas well life cycle
• Early in a well's life it will tend to free-flow without added assistance • Once a well declines it will enter a period where liquids loading is an issue

but lifting liquids still relies on reservoir energy • Once reservoir energy is no longer adequate mechanical lift will be needed • Decline in reservoir energy and production begins when a reservoir

is put on production . • The ability of a well to economically

support deliquification defines its economic life • No emissions during "freeflow" • No well venting with "artificial lift" • Liquids unloading is not synonymous

With venting • Plunger lift operations may also vent 8/29/2014

14

# • U.S. gas well count and production 

# ':-: r

# l r ,**~:: :**  t 

# t 75.0% 70.0% 1 

# t-T' 65.0% ..-- • i--!---t-:...c;-----+- 60.0%

### ::~~**-~--'**--'-+---'->'-+-- 45.0% --**~~--+ ::::q**  - Percentofwells -f---!->"-t--l--1

- %of2009Prod**:~::** j -- Cum Wells 30.0% ..........**....J..-+-+--1~-!-** 1----+--+-J I-+..-L........-l--l--tl-1
- Cum Prod 20.0"-'**15.~ 10."'~**  I 5.0% f 0,0% J I**~'o** (cf""'),**,Y~** "\.'?'?'?**'?'i~'o** !>oro">rt, c,tt1'\f::3**'\c::f~ ().>~fa**  ro..!t'C,**~yta** 'bt'),'?'),**'J:'),~ ~"lfO(:J** **~~(o'V .yfo~**  'b .....**~~v"'""Oj"rt,f:S""** Productioncategory(MSCF/day) 

# Liquid Unloading 

# Key Points • Well-bore liquid management is a complex field with a large amount of on-going research and improvement There is no single answer to well-bore deliquification or to minimize venting to assist liquid unloading. 

### • Liquids unloading (deliquification) is not synonymous with venting

, Venting of gas wells to assist liquid unloading is the

source of emissions - not deliquification

· ) Deliquification techniques that do not vent do not

create emissions 8/29/2014

15

# • •

50 0 1.000 1.500



# - Pipe Size vs. Flowing Bottom Hole Pressure

Example : II a well with 2.5 Inch ID tubing was

**expe~enclng** liquids loading atlOO pslg nowlng tubing pressure: • Opening the tubing to atmosphere would f>Ut you Into

the "not loading' region and cause the liquids to be removed • This also results In zero gas to sales while venting

2.000 2.500 Tubing ID (inches) 3.000 AII IIOIO polnb lakunal • :.00 MSCF/doy • 20 bbi/MMSCf

-sno. 65

0 p1iorli' 3.500 4.000 

# Liquid Unloading Key Points Liquid Unloading Technologies • Use of reservoir energy Velocity Strings - Use of smaller tubing to increase tubing velocity; venting not inherent. Plunger Lifts- Use of a plunger (i.e. cup) to lift liquids to surface: venting depends on operation/situation Soap/Surfactants- Inject chemicals to create "bubbles" and reduce PO Intermitting- Scheduled shut-in of production to increase down-hole pressure; venting not inherent. Venting -Venting separator to atmoshere to increase pressure drop in tubing . 

### • Addition of external energy- Artificial 

### Lift- no emissions Down-hole pump- Examples: Sucker rod pumps, electric submersible, "power fluid" pumps Gas lift- high pressure gas sent down second string to lift liquids . 8/29/2014

16

# • WELL WORKOVERS

• r 

# O&G Production Sites Typical Production Sites • Disperse - often miles apart • Remote- closest receptor often mile+ • Unmanned - checked only periodically • Often No Utilities - generator, water and air comp. must be brought with operator if it is needed. 

## Types of Production Sites • Single well • Centralized Facilities/Tank Batteries/Compressor Stations • Pad Wells 8/29/2014



### 17

# • Onshore Development Options Single Wells Centralized Facilities

Pads 

# .------- , 

# ...
Typical O&G Production Operations • Liquids Unloading • Gas/Oil/Water Separation • Oil/Water Storage • Gas Measurement • Pneumatics ·Dehydration •Gas Gathering ·Compression •Gas Processing Plant ·Equipment Leaks Blue Text Indicates 

## •!liillt-e:ii>--:;a---, Primary Operations w/ Emissions 8/29/2014

18Q Row • OIIIW.lfl Q Woltr 

# .ou • WELLHEAD 8/29/2014

19

# •

• SEPARATION

Storage Vessels • Location
l) 

### Most often at well head l) 

### Central tank batteries for in-field development. • Requires same well operator and • Wells close together. 

## • Typically fixed roof, shop built vessels. • Emissions from ,) Flashing- separator pressure is primary driver, volatility of liquid is secondary driver. u 

### Working and breathing losses - minor emissions 8/29/2014

20

# • Storage Vessels • Regulations- NSPS 0000 

## & NESHAP HH • Uncontrolled - Emissions out vent 1 • Controlled -Tank Sealed

. Sample hatched - weighted or spring

Closed Vent System (CVS)

• Routes vapors to the control device 

## • Control devices



# • . Combustion - flares or enclosed combustors

. Vapor Recovery Units (VRU) • Compressors that inject vapors to sales - typically

require electrical power to be practical 

# Pneumatic Controllers ReuuJnlar H.,P,_,.,.

### ~ Go• Proc:es• Mootturornnnt Uquld Lovol, P r essum.. Ternperni\Jr&,

.,floW P-SupplyGa 115-.!IS ....typiciiQ**Modl$nlco~** or EIOC:Irics l,

ot0ll1<1t Sigral 

# L PowarGas Line To/From

Actuator

Conlrol V.l\lo BloediContl....,,.) or V-llnt.nn-l 8/29/2014

21

# • Pneumatic Controllers • Large number of controller manufacturers and models • Large number of field configurations • All typically control a valve via a valve actuator I • From an emissions standpoint, process controllers can

43 be classified into 4 buckets

**~**
.... C1) 

### o= C1) 

## 2 c. ...



### ~s 0 Type of Service On/Off Intermittent Vents on de-actuation with emissions near zero between de-actuation cycles Continuous Bleeds continuously, rate slows while process is "on", but average rate is -constant Throttling Vents some gas pressure when valve needs to move towards closed Bleeds continuously, rate varies with actuation, but average rate is -constant 

# Pneumatics Controllers Conclusions • The choice of controller types for a particular

application is dictated by the process needs/demands while ensuring safe and reliable operation • Different types and services of controllers

have scenarios where they are the lowest emission options • Intermittent controllers will be the low emission choice in

most applications • Ifthe process can tolerate the inherent delay in response

associated with a low-bleed continuous controller, a lowbleed continuous controller may, in limited situations, be a lower emission option 8/29/2014



### 22• t" !



# • Gas Dehydration • Water limitations in gathering/transmission lines for corrosion protection. • Wet/high pressure gas can causes hydrate formation (hydrocarbon/ice mixture) at warm temperatures. • Dehydration may be located at well head, compressor station, or gas processing plant depending on potential for hydrate formation. • Potential for hydrate formation increases at higher pressures and higher concentrations of heavy hydrocarbon gases (a.k.a. natural gas liquids (NGL)) • Dry gas (low NGL content) has lower hydrate formation concerns

Moist

I nlet Separator 

### Process Flow Diagram for Glycol Dehydration Field Unit

To Tanks Flit or Dry Natural Gas

Gas/Glycol ExQhai\QDr

Pump Flash Gasto Vont. Fool. or Stripping Gas

Phaso Separator Still Vonl Off·Gas 

### 8/29/2014



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# •

• CONTACTOR (ABSORBER)

Lean Glycol_ • Avoid corrosion & hydrate formation • Countercurrent contacting of

incoming wet gas and lean TEG to reduce water content • Glycol also absorbs some

organics (including HAPs) from gas stream

, Benzene also adsorbs Inlet Gas- • Parameters impacting emissions o Gas composition

., Gas temperature & Pressure
, Glycol flow rate (set by water

removal requirement) 

# TEG REGENERATION

• Gas Burner supplies heat • Still column/reflux assures TEG/water separation • Dissolved hydrocarbons emitted with water vapors • Reboiler and surge tanks are partitioned in one vessel • Glycol pump may be electric or gas (a.k.a. Kimray) driven • Gas from Kimray pumps exit glycol still stack 

### 8/29/2014

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# •

• TEG DEHYDRATION CONTROLS • Rich Glycol Flash Tank • Flash tank used to remove flash gases before the surge tank • Predominately light hydrocarbons (methane, ethane, propane) • Needs beneficial use (i.e. fuel) or low pressure process Fla$hGas to V ent Fuel, or Stnppong Gas Phaso Separator Rich Glycol To Surge Tank • Condenser used to recover heavier hydrocarbons (including Benzene) • May be required by NESHAP HH • Liquids returned to crude tank • Water routed to produced water tank • Uncondensable vapors to atmosphere or control device 

# Compressor Location • Well head compression most often used in older, low pressure fields with multiple production operators in gathering system. • Compressor stations used for better utilization of existing pipe. • Most gas processing Plants have pre/post compression. • Reciprocating natural gas fired engines are

# ~~{;;i~iliiiJ~~ typically the only 

# 1 choice. 8/29/2014

25

# • m1ss1ons rom Compressors • Compressor Seals • All new compressors regulated under NSPS 0000 

## • Engine Exhaust • All engines are regulated • NSPS 

### JJJJ • NESHAP ZZZZ • Non Road Engines hp !> l3j0 S00-1 SO 1----'=-1---':'=--t-'-':==-t-:..:==1--=-



# •**~0!).5 00** 

250-300 IUO.: lSU S0-100 25-SO <2S


# GAS PROCESSING PLANTS PREPARATION FOR THE TRANSMISSION SECTOR 8/29/2014



### 26• r 

### Gas Processing Plant • Removes NGL (natural gas liquids) and lowers hydrocarbon dew point. Liquids in gathering/transmission lines causes operational problems (corrosion and pressure drop in pipelines). Heavy hydrocarbons cause consumer problems 

### • Gas Processing also removes impurities, such as water and sulfurs. • Gas processing also includes fractionation of NGLs into individual components (ethane, propane, isobutane, n-butane, natural gasoline). LPGs used as chemical plant feed stock Heavier NGLs used as feed stock and gasoline blending.

• r 

# Equipment Leaks

• Equipment leaks has traditionally been fugitive emissions from connectors; valve, pump and compressor packing; relief valves seepage; and open-ended valves. • Leak Detection And Repair (LDAR) programs have been applied to large facilities. • NSPS 0000 determined LDAR was cost effective at gas processing plants, but not the small, remote, dispersed, and unmanned production sites. • Studies finding LDAR programs at production sites have been based on only cost of repair and have not included the cost of finding the leak. Additionally, these "directed maintenance programs do not include regulatory burdens of recordkeeping and compliance assurpnce or production and gas loss required to repair within regulatory timeframes. 8/29/2014

27

# • '11 

# Equipment Leaks • Agencies also want to include unintended emissions from operations and malfunctions, i.e.

,, Emissions from thief hatches and CVS on controlled tanks. These are actually violations of tank control requirements.
, Emissions from stuck separator dump valves. These are

easily heard and resolved on operator rounds. 

### • These type of leaks are typically large leaks that are often identified by sensory inspections • Typical LDAR programs (Method 21) would not find them because outside of the measurement range.

• r 

# Questions? 8/29/2014



### 28