FROM: Jeff Coburn, RTI International

TO: Brenda Shine, EPA/OAQPS

FOR: EPA Docket No. EPA-HQ-OAR-2003-0146

DATE: July 13, 2011

SUBJECT: Revised Impacts for Heat Exchange Systems at Petroleum Refineries

1. Purpose

This memorandum documents the costs and environmental impacts for regulatory alternatives considered for heat exchange systems at petroleum refineries.

2. Background

On October 28, 2009, EPA promulgated national emissions standards for hazardous air pollutants (NESHAP) for heat exchange systems at petroleum refineries as part of EPA’s review of promulgated NESHAP. These standards requ ired monthly monitoring of heat exchange systems using the modified El Paso method (T CEQ, 2003), which is a dynamic or flow-through system for air stripping a sample of the wate r and analyzing the resultant off-gases for VOCs using a common flame ionization detector (FID) analyzer. For existing source heat exchange systems, the leak threshold that required repa ir was defined as an air concentration in the stripping column of 6.2 parts per million by volum e (ppmv) as methane or greater. For new source heat exchange systems, the leak threshol d that required repair was defined as an air concentration in the stripping column of 3.1 ppmv as methane or greater. The monthly monitoring frequency and these leak threshold levels were determined to be the maximum achievable control technology (MACT) “floor” ba sed on a review of state permit requirements (see Lucas, 2008).

In reviewing these heat exchange system m onitoring requirements and considering their applicability to a wider range of industrial source categories, EPA evaluated a wider range of monitoring alternatives (Coburn, 2011) . An unexpected result of this analysis was that quarterly monitoring with a leak threshol d of 3.1 ppmv as methane in th e stripping air (equivalent to 40 parts per billion by weight (ppbw ) volatile hydrocarbons in the water) achieved equivalent emission reductions to monthly monitoring at a leak threshold of 6.2 ppmv as methane in the stripping air (or 80 ppbw volatile hydrocarbons in the water). Additionally, new information was obtained from vendors regarding co st of purchasing a modified El Paso stripping column as well as costs for outsourcing this monitoring activity. EPA is, therefore, reassessing the cost and environmental impacts of the heat exchange mon itoring requirements for petroleum refineries in light of this new information.Technical Memorandum – Revised Impacts for Heat Exchange Systems at Petroleum Refineries July 13, 2011

2 3. Approach

The impacts model developed for heat exchange system during the technology review was used to estimate the cost and environmental impacts fo r petroleum refineries. The model was tailored to the petroleum refinery industry by updating the labor costs used in the model to labor costs specific to the petroleum industry (May 2009 do llars for NAICS code 324100) as presented in Table 1

.

Table 1. Summary of 2009 Hourly Labor Rates for Petroleum Industry

Labor Class (A) Mean hourly labor rate 1 ($/hr) (B)

Fringe benefit loading

rate I

Overhead and profit rate (D = A x B x C)

Loaded wage rate ($/hr) 1. Environmental Engineering (SOC Code: 17-2081) 40.45 1.5 1.4 84.95

2. Executive, administrative and managerial (SOC Code: 11-9041) 62.03 1.5 1.4 130.26

3. Administrative support, including clerical (SOC Code: 43-0000) 19.61 1.5 1.4 41.18

4. Installation, Maintenance, and Repair (SOC Code: 49-0000) 26.48 1.5 1.4 55.61
5. Refinery Operators (SOC Code: 51-8093) 28.96 1.5 1.4 60.82

1 Labor rates as reported by U.S. Department of Labor, Bu reau of Labor Statistics (U.S . DOL, 2010). Labor rates for May 2009 for petroleum industry sector: 4-digit NAICS code 324100 ( http://stats.bls.gov/oes /current/oessrci.htm accessed in March 2011).

Based on previous analyses (Lucas, 2008), there ar e approximately 520 heat exchange systems at the roughly 150 U.S. petroleum refineries. Ba sed on the size distributi on of heat exchange systems presented by Lucas (2008) and the estimate of 520 heat ex change systems, there would be:

• 202 (38.85 percent) heat exchange system s represented by the 5,000 gpm model unit;

• 150 (28.85 percent) heat exchange system s represented by the 15,000 gpm model unit;

• 150 (28.85 percent) heat exchange system s represented by the 40,000 gpm model unit; and

• 18 (3.45 percent) heat exchange systems represented by the 100,000 gpm model unit.

In the previous refinery analysis , two heat exchange systems were assumed to be in HAP service at refineries with crude capaci ty less than 75,000 barrels per ca lendar day (bbl/cd); four heat exchange systems were assumed to be in HAP se rvice at refineries with crude capacity of 75,000 to 200,000 bbl/cd; and six heat exchange system s were assumed to be in HAP service at refineries with crude capacity greater th an 200,000 bbl/cd. Based on these assumptions,Technical Memorandum – Revised Impacts for Heat Exchange Systems at Petroleum Refineries July 13, 2011

3 48 percent of the refineries are expected to have two affected heat exchange systems, 30.7 percent of the refineries will have four affect ed heat exchange systems, and 21.3 percent of the refineries will have six affected heat exchange systems. Therefore, costs were developed separately for these three different model facilities ( i.e. , facilities with two, four, or six affected heat exchange systems). As in the previous re finery analysis, we used $560/ton of VOC reduced as the VOC recovery credit.

The baseline leak distribution was adjusted within the heat exchange impacts model so that the model’s projected emission reductions for the mo nthly monitoring alternatives matched those projected previously for petroleum refineries. The baseline leak distribution used for the estimating impacts for petroleum refineries is provided in Table 2

.

Table 2. Model Leak Concentration Va lues and Initial Leak Distribution

Description of Representative Leak Interval Model Leak Concentration in Cooling Water (ppbw) Initial Leak Frequency Distribution No detectable leaks (0 to 5 ppbw) 1 0.45 Leaks from >5 to 25 ppbw 10 0.24 Leaks from >25 to 125 ppbw 50 0.15 Leaks from >125 to 600 ppbw 250 0.10 Leaks from >625 to 3,000 ppbw 1,200 0.042 Leaks greater than 3,000 ppbw 6,000 0.018

Table 3 summarizes the other key modeling para meters used in the analysis.

Table 3. Model Input Parameters used to Es timate Impacts for Petroleum Refinery Heat Exchange System

Model Input Parameter Value and Units
Number of heat exc hange systems at the fa cility 2, 4, or 6 Monitoring frequency / Leak repair threshold Option 1: Monthly / 80 ppbw Option 2: Quarterly / 40 ppbw Option 3: Monthly / 40 ppbw Option 4: Continuously / 40 ppbw Delay of repair threshold 800 ppbw
Leak reduction factor 0.3 Repair time for normal leak events 45 days Repair time for delayed repairs 120 days Fraction of detected leaks less than the delay of repair threshold that are delayed 0.50

Organic recovery credit $560/tonTechnical Memorandum – Revised Impacts for Heat Exchange Systems at Petroleum Refineries July 13, 2011

4 4. Results

The heat exchange impact model evaluates costs and environmental impacts on a per heat exchange system basis. The environmental impa cts per heat exchanger ar e dependent on the size of the heat exchange system, while the costs are a function of the num ber of affected heat exchange systems per facility (referred to as cost scenarios). The projected costs and environmental impacts for each model heat excha nge system in terms of system size and cost scenario were multiplied by the number of heat exchange systems expected for that size/cost scenario combination, and these results were su mmed to get a total esti mate of the costs and emissions reduction for the 520 heat exchange sy stems at the 150 petroleum refineries. The cumulative nationwide costs and emission reduc tions calculated for the petroleum refining industry for each of the control options are summarized in Table 4 . Based on the parameters used in the impacts model, a monitoring program using monthly monitoring at a leak threshold of 6.2 ppmv (as methane) in the stripping air (or 80 ppbw in the water) is expected to yield identical emission reductions to a monitoring pr ogram using quarterly monitoring at a leak threshold of 3.1 ppmv (as methane) in the strippi ng air (or 40 ppbw in the water). Most existing source petroleum refineries are expected to el ect the quarterly monito ring option, but existing source petroleum refineries that are already re quired to monitor monthly (or more frequently) due to state permit requirements are likely to us e the monthly monitoring alternative for existing

sources.

As seen in Table 4, the overall cost-effectiven ess of any of the mon itoring options appears reasonable. However, the incremental cost-eff ectiveness is the key indicator for comparing between similar options. Since Options 1 a nd 2 yield the same emission reductions, the incremental cost-effectiveness is undefined be tween these options. The incremental cost effectiveness for Option 3, which can be consid ered a “beyond-the-floor” option for existing sources, is approximately $6,000 per ton volatile hydrocarbon reduced. The incremental cost effectiveness for Option 4, which is the “beyond-the-floor” option for new sources, is approximately $78,000 per ton volatile hydrocarbon reduced.Technical Memorandum – Revised Impacts for HeatExchange Systems at Petroleum RefineriesJuly 13, 20115Table 4. Impacts for Petroleum Refinery Heat Exchange System Monitoring Options1Control OptionDescriptionTotal CapitalCosts($)TotalAnnualizedCosts withRecoveryCredits($/yr)NationwideEmissionsReductions(tons volatilehydrocarbons/yr)CostEffectiveness($/ton volatilehydrocarbonsreduced)IncrementalCostEffectiveness($/ton volatilehydrocarbonsreduced)NationwideEmissionsReductions(tons HAP/yr)CostEffectiveness ($/tonHAPreduced)IncrementalCostEffectiveness ($/tonHAPreduced)Option 1.Monthlymonitoring; leak at6.2 ppmv in stripping gas[Existing source MACTfloor]$ 2,550,000 $ 96,900 4,140 $ 23 $ 23 621 $ 160 $ 160Option 2.Quarterlymonitoring; leak at3.1 ppmv in stripping gas[Equivalent option tothe existing sourceMACT floor]$ 1,550,000 ($ 518,000) 4,140 ($ 125) Undefined 621 ($ 830) UndefinedOption 3.Monthlymonitoring; leak at3.1 ppmv in stripping gas[New source MACT floor]$ 2,550,000 $ 525,000 4,310 $ 120 $ 6,050 647 $ 810 $ 40,000Option 4.Continuousmonitoring; leak at3.1 ppmv in stripping gas[“Beyond-the-floor” optionfor new sources]$ 12,900,000 $ 7,270,000 4,400 $ 1,650 $ 78,200 660 $ 11,000 $ 500,000Note:6.2 ppmv (as methane) in El Paso stripping gas is equal to 80ppbw volatile hydrocarbons in the water; 3.1 ppmv (as methane)in El Paso stripping gas isequal to 40 ppbw volatile hydrocarbons in the water.All estimates based on 520 heat exchange systems nationwide;delay of repair allowed for limited cases for leaks under 62 ppmv(800 ppbw); assumes 50 percentof leaks under delay limit qualify for delay of repair; used VOCrecovery credit of $560/ton VOC; HAP emission estimates uses 15 weight percent HAP for volatilehydrocarbons based on light hydrocarbonrefinery process stream data (API, 2002).Technical Memorandum – Revised Impacts for Heat Exchange Systems at Petroleum Refineries July 13, 2011

6 5. References

API (American Petroleum Institute). 2002. Refinery Stream Speciation . API Publication No. 4723. November 1, 2002.

Coburn, J. 2011. Memorandum from J. Coburn, RT I International, to B. Shine, EPA/OAQPS, for Project Docket File (EPA Docket No. EPA-HQ-OAR-2011-0002). Technology Review for Heat Exchange Systems . July 12, 2011.

Lucas, B. 2008. Memorandum from B. Lucas, EPA/ SPPD, to Project Docket File (EPA Docket No. EPA-HQ-OAR-2003-0146). Cooling Towers: Contro l Alternatives and Impact Estimates . October 30, 2008.

Texas Commission on Environmen tal Quality (TCEQ). 2003. Sampling Procedures Manual, Appendix P: Air Stripping Method (Modified El Paso Method) fo r Determination of Volatile Organic Compound Emissions from Water Sources

. U.S. Department of Labor (DOL), Bureau of Labor Statistics. 2010. Occupational Employment Statistics: May 2009 Employment and Wage Estimates

. http://stats.bls.gov/oes/current/oessrci.htm ; Last accessed in March 2011.