air quality and greenhouse gas issues for the oil and gas ... · air quality and greenhouse gas...

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Air Quality and Greenhouse Gas Issues for the Oil and Gas SectorERM 2015 Webinar Series

December 10, 2015

2The world’s leading sustainability consultancy



Agenda

Methane initiative – post comment period

Enforcement update

RY15 Subpart W changes

Early feedback from COP21

Q&A


Methane InitiativePhil Norwood & Andy Woerner




September 18, 2015EPA Published: Proposed modifications to NSPS Subpart OOOO Proposal for new NSPS Subpart OOOOa Proposed rule to clarify EPA’s source determination air

permitting rules as they apply to the oil and natural gas industry Proposed a Federal Implementation Plan for EPA’s Indian

Country Minor New Source Review (NSR) program for oil and gas production sources

Draft Control Techniques Guidelines for reducing VOC emissions from existing oil and gas sources in certain ozone nonattainment areas and states in the Ozone Transport Region


NSPS




NSPS Subpart OOOO

Sources constructed/modified/ reconstructed between August 23, 2011 and September 18, 2015

Proposed amendments to “improve implementation”




NSPS Subpart OOOOa Sources constructed/ modified/ reconstructed after September

18, 2015

Regulates VOC and Methane Social cost of methane

Potential permitting implications

111(d) implications

From wellhead to city gate…




NSPS Subpart OOOO Applicability

Natural Gas Distribution

Onshore Natural Gas Transmission and Storage City

Gate

Onshore Natural Gas Processing

Gathering & Boosting Stations

Onshore Oil & Natural Gas Production

Pneumatics (VOC)Storage vessels (VOC)Gas well completions and workovers (VOC)

Compressors (VOC)LDAR (VOC)Sweetening units (SO2)




NSPS Subpart OOOOa Applicability

Natural Gas Distribution


Gate




Pneumatics (VOC and methane)Storage vesselsGas well completions and workovers (VOC and methane)

Compressors(VOC and methane)LDAR(VOC and methane)Sweetening units (SO2)

Pneumatic pumps (VOC and methane)Fugitive emissions(VOC and methane)Oil well completions and workovers (VOC and methane)




Control and Compliance Assurance Requirements

Combustion Device Control Design and Operation

Initial and Periodic Performance Tests

Continuous Parameter Monitoring

Visible Emissions Observations

Closed Vent System and Cover Inspections

Flares - §60.18 (flow measurement, velocity limits)

By-Pass Monitoring

NSPS Storage Vessel Requirements





Gate




IN !

Out!Out!

Leak Detection and Repair – VOC

NSPS OOOO Applicability

“Traditional” LDAR @ Processing facilities…





Gate


Gathering Booster Stations


IN !

Leak Detection and Repair – VOC and Methane

NSPS OOOOa Applicability

Different requirements inside vs. outside of Processing facilities…




Leak Detection and Repair – Main Issues

Scale of Implementation Challenges

Scope / Definitions - CVS/Leak Detection Overlap

Availability of Qualified / Trained Resources

Delay of Repair Issues

Monitoring Frequency

Level of Compliance / Recordkeeping Burden

Reconciling with state programs (CO, OH, PA…)





Gate




Pneumatic Pumps – Not Applicable

Out!

NSPS OOOO Applicability





Gate




Pneumatic Pumps – VOC and MethaneNSPS OOOOa Applicability

IN !

Control if control device already present…Processing facilities – use zero bleed




Pneumatic Pumps – Main Issues

Feasibility & Safety Challenges No technical feasibility exemption in proposal

Chemical Injection and Diaphragm Pumps treated the same No leak threshold in proposal

Pulls in onerous compliance requirements for CVS and Control Device Centrifugal compressor control requirements cited in proposal




NSPS Subpart OOOOa – Other Issues

Next Generation Compliance (Preamble) Third Party Audits Design Review Requirements Submittal of data by Vendors

Electronic Reporting Requirements


Source Determination

1st Option: Proximity (Similar to NESHAP)

2nd Option: Proximity & Functional Interrelatedness

Everything within a

proximity distance.

Everything within a

proximity distance.

OR

Everything greater than or equal to a proximity distance.

And there is exclusive functional

interrelatedness

Gas and Oil WellsCompressorsFugitive Components

NSPS – CTGs – Tribal NSR – Source Determination – Methane Challenge

Equipment: wells, pneumatics, flares, control equipment Re-design/approach: monitoring equipment (IR cameras, sampling)Existing (retrofits) vs New

Check Gaps (vulnerability)Influence rule languageField trial of proposed methods (leaks: is it do-able?)Evaluate alternatives (voluntary programs)Look-ahead: future impacts?

Actions

Operational Expenses

Capital Expenses

Operational Change

People: training, skillsets, MOC challengesEquipment Upgrades: records, reports, data systemsExternal Stakeholders: Agencies, NGOs, neighbors/publicLicense to Operate: Violation, Risk

Pneumatic EquipmentStorage VesselsControl Devices


Enforcement UpdateRyan Alam




USEPA “Peak Flow” Enforcement Issue USEPA national enforcement initiative for upstream

onshore oil and gas production operations (e.g. well sites and central gathering facilities)

Focuses on unauthorized air emissions from crude oil and condensate storage tanks

Evidence generated from site inspections (IR camera) & §114 information requests

USEPA claims oil and gas companies have not properly designed and/or operated their tank piping systems and air emission control devices to handle “peak flows”

Landmark settlement against Noble Energy finalized in June 2015 (i.e. Noble Consent Decree)

Open investigations with numerous oil and gas companies in intermountain, gulf, and northeast




Peak Flow Issue




Peak Flow Consent Decree Obligations

Sampling

Develop Modeling Guideline

and Design

Standard

Perform Design

EvaluationVCS

ModificationsSelf-

Certification3rd Party

Verification

Core Objectives – Tank VCS Evaluation and Modification




Additional Consent Decree Obligations Continued Next Generation enforcement requirements for continuous

tank headspace monitoring and 3rd party verification and audits

Pressurized liquid sampling verification (QC standard set at 30% of bubble pt)

Evaluation of PRV and thief hatches

Directed Inspection and PM Program

Ongoing IR Camera and AVO inspections

“Reliable information” triggers Root Cause Investigation and corrective action

Ongoing performance specifications for control devices (manf O&M)

Semi-annual reporting

Ongoing penalty structure for failure to comply with CD requirements ranging from $250 to $20,000 per day per violation




Business Implications $73MM* in civil penalties, estimated equipment

retrofits, and other commitments (EMP, SEP, etc.)

CD contains multiple avenues to trigger well shut-ins (including IR camera inspection triggers)

Provides mechanisms for continuous VCS design evaluation loop

Contains mechanisms to report to public on progress of enforcement resolution

Impact future well pad design and existing supply chain logistics

Limits ability for asset restructuring (divestitures/acquisitions)

*Based on EPA estimates




Peak Flow CAA §114 Requests Affirmative declaration on whether a design

analyses of VCS completed? Prior to construction Some other time Never

Design analysis objective to verify VCS has capacity to handle “reasonably foreseeable fluctuations” in flash gas volumes with “no detectable emissions” or “minimize emissions to atmosphere to maximum extent”

If never conducted design analysis, must conduct design analysis

Provide detailed information for USEPA to conduct independent design analysis: P&IDs, well configuration, separation stage approach, piping design, PRV/thief hatch set points, control device performance tolerance, O&M procedures, gas gathering line MAOP, etc.

Requires new sampling if not within 12 months

Timeline varies from phase approached 30/60 days depending on sample population




USEPA Enforcement Activities USEPA has issued several CAA §114 requests to

numerous operators in Region 8 and 6

USEPA is leveraging all available authority to pursue enforcement (e.g. NSPS OOOO including negative declaration reviews, SIP-approved regulations, permit representations, etc.)

Targeting small, medium , and large operators

USEPA is currently in negotiation with oil and gas operators on new consent decrees

USEPA is scheduling site inspections where the Agency brings IR cameras and FID instruments to look for emissions from storage tanks and control devices

Deputizing the states (e.g. NDDoH)




ERM Peak Flow Risk Assessment ERM has a systematic, efficient process for

measuring risk exposure to USEPA’s peak flow enforcement initiative

Objective is to minimize potential for enforcement

Risk assessment designed to prepare companies for responding to §114 requests, hardening asset for Agency inspections, and identification of regulatory exposure

Risks are categorized by severity, preliminary corrective actions identified, and cost estimates are provided to inform management decision analysis for optimum solution for risk tolerance

Project is conducted in close collaboration with Reservoir, Facilities, and Operations teams to ensure any lessons learned are incorporated into standard design philosophies and O&M practices

Analysis completed in conjunction with legal team to maximize available protection policies


Subpart WDenise Grubert




Report Year 2015

• Definitions:• Clarification and consistency (e.g. Associated Gas)

• Monitoring:• Reciprocating and Centrifugal Compressors (Screening tool); • Allow site-specific gas composition (e.g. Stationary combustion)

• Calculation Methods:• Liquids Unloading, • Completions and Workovers, • Storage Tanks, • Blowdown Vents • Associated Gas Venting and Flaring, • Reciprocating and Centrifugal Compressor Measurements• Flares

• Missing Data:• Clarifications

• Reporting:• Clarification and alignment• Additional facility level reporting requirements • Metric tons of GHG constituent and not in CO2e

January 1, 2015 – December 31, 2015

Reports are still due March 31st




2016 Major Changes to Subpart W

Addition of well ID reporting

Oil well completions with hydraulic fracturing− Wells with GOR <300 scf/stock tank bbl are exempt

“Onshore petroleum and natural gas gathering and boosting”

“Onshore natural gas transmission pipeline” industry segment

Allowed for January 1, 2016- December 31, 2016

Onshore Production

Addition of Two New Industry Segments

Best Available Monitoring Methods (BAMM)

Effective date is January 1, 2016 for monitoring




Gathering and Boosting - Boundary

Well PadWell(s)

Well PadWell(s)

• Natural Gas Processing

• Transmission Pipeline

• Natural Gas Distribution Pipelines

Onshore Production Gathering/Boosting

AAPG Basin AAPG Basin

Well PadWell(s)

Compressor Station

Central Tank Battery

Well PadWell(s)

Tank Battery

excludes pipelines with

GOR <300 scf/STB




Gathering & Boosting- Applicable Sources Pneumatic devices

Pneumatic pumps

AGR’s (throughput less than 25 MMscf/year)

Dehydrators

Blowdown vents (> 50 scf)

Storage tanks

Flare stacks

Centrifugal compressors (count)

Reciprocating compressors (count)

Equipment leaks (Population count)

Gathering pipeline equipment leaks (Population count)

Stationary combustion

Portable combustion

All equipment between onshore production and either a natural gas processing facility, natural gas transmission pipeline or natural gas distribution pipeline.




Gathering and Boundaries – Key Challenges

Applicability for Boundaries Determining GOR for all pipelines (pipelines <300 scf/STB are exempt) Intermingling of wells at several points along the pipeline Ownership issues Number of stages of separation along the process Underground Lines

Equipment Reporting Issues Stationary Combustion – including portable combustion Blowdown Vent tracking across entire basins AGR throughput determines applicability between gathering and boosting

and onshore processing Determining Length of Applicable Pipe Flaring Subpart W versus Subpart C




Transmission Pipelines

Applicable Sources: All pipeline blowdowns

Facility: All US transmission pipeline mileage

Monitoring Requirements: Pressure/Temperature Volume of Pipe Track events by state and pipeline blowdown type as specified by EPA

Challenges: Contractor Management – training on requirements Event Management – system for tracking data/events Interpretation of applicable definitions




Path Forward

Complete applicability reviews and understand impacts to your business as soon as possible, if you have not already

Strategize and develop compliance plan prior to summer 2016: Complete equipment inventory end of year Implement plan for tracking blowdowns along entire gathering and boosting

system Miles of gathering pipeline by pipe type within the basin boundary Portable combustion equipment

Do not overly rely on BAMM! This could result in over or under estimating the emissions, which has longer

term reporting consequences or compliance issues, respectively.


COP21Lisa Campbell




COP 21

Scheduled to deliver an international agreement/framework for post-2020 GHG reduction commitments

The aim is to reach a universal, legally binding agreement that addresses climate change and the transition towards low-carbon future

All Parties (governments) signed up to a timetable and format for delivering their ‘Intended Nationally Determined Contributions’ or ‘INDCs’ for national action on GHGs

What is different this time? Bottom up approach with countries making commitments prior to COP; heads of state endorsing importance; more business engagement in process




Navigating the Path to 2°C INDC commitments by around 200 countries – will not achieve

goal of 2 degrees of warming

Additional commitment options that have been discussed range from: 40-70% net emission reductions below 2010 levels by 2050

Net zero emissions by 2050 or 2100

Decarbonization of energy supply

Mitigation agreement in Paris has long-term implications for business, especially O&G industry




International Challenges

COP21 expected to place new demands on business to reduce their GHG emissions, improve energy efficiency, and switch to less carbon–intensive fuels

Challenge for O&G to comply with a emerging patchwork of obligations

Some companies calling for action -price on carbon in attempt to harmonize requirements, reduce uncertainties

Natural gas opportunities for coal switching

Carbon capture and storage (CCS) necessary for O&G to be viable in net zero carbon future


Q&A Session




ERM 2015 Sustainability Report

2015 Sustainability Report

Highlights

About this report

CEO message

Our value chain

Sustainability at ERM

http://www.erm.com/en/sustainabilityreport2015/home-page/



http://www.erm.com/en/sustainabilityreport2015/home-page/about-this-report/

http://www.erm.com/en/sustainabilityreport2015/home-page/highlights/

http://www.erm.com/en/sustainabilityreport2015/home-page/ceo-message/

http://www.erm.com/en/sustainabilityreport2015/home-page/sustainability-at-erm/our-value-chain/

http://www.erm.com/en/sustainabilityreport2015/home-page/sustainability-at-erm/




Contact Information

Phil NorwoodRaleigh, [email protected]

Andy WoernerPhiladelphia/Pittsburgh, [email protected]

Ryan AlamDenver, CO 303-720-5397 [email protected]

Today’s Speakers and additional contacts:

Denise GrubertRaleigh, NC919-855-2282 [email protected]

Lisa CampbellRaleigh, NC [email protected]

Toby HannaEwing, [email protected]

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