new colorado air quality regulations for the oil

Davis Graham & Stubbs LLP

DGSLAW.COM

NEW COLORADO AIR QUALITY REGULATIONS FOR THE OIL AND GAS

INDUSTRY – HAS COLORADO GOTTEN IT RIGHT?

ROCKY MOUNTAIN LAND USE INSTITUTE

UNIVERSITY OF DENVER - STURM COLLEGE OF LAWJOHN R. JACUS

DAVIS GRAHAM & STUBBS LLP

MARCH 14, 2014


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DISCLAIMER – MY PERSONAL VIEWS

� Not speaking for any specific clients, trades

associations or for my firm.

� Views expressed are my own, not attributable

to any DGS clients, or the firm.

� Simply sharing perspectives of an advocate for

more workable and cost-effective regulations

in AQCC rulemakings for ozone since 2004.

� Thank all clients with whom I’ve worked.


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DID COLORADO GET IT RIGHT?

� In many ways, yes it did.

� In some ways, it could have done better (not

quite “right”).

� As was stressed to the Commission, these are

long-term challenges, so there will be

opportunities to revisit these issues, and the

new requirements, with benefit of experience.

� Continual reassessment - an EMS principle


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THE RIGHT STUFF

� A lengthy stakeholder process.

� A commitment from staff to meet frequently

with all stakeholders.

� Staff’s willingness to seek additional time from

the Commission, to allow for more progress.

� A willingness to revise concepts and

approaches taken in early strawman draft

proposals based on thoughtful dialogue.


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THE RIGHT STUFF (CONT.)

� A flexible Storage Tank Emissions Monitoring

(STEM) plan requirement

� A tiered leak detection and repair (LDAR)

requirement, based on amount of production

� Important exceptions to absolute

requirements, for safety, maintenance,

operational reasons

� Commission direction for further study


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THE NOT QUITE RIGHT STUFF

� “Shall not vent” vs. “minimize venting to maximum extent practicable” – tanks must vent

� State-wide application, even where oil & gas production are in decline, O3 in attainment

� Cost of rules underestimated, especially the impact on small operators, marginal wells

� Addressing “perceptions” in these rules without addressing the validity of those perceptions

� Creates unrealistic expectations, e.g., “Zero Tolerance” for CH4 emissions, or blaming oil and gas for ozone levels, so broader change unlikely


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SCOPE OF NEW REQUIREMENTS

• AQCC Regulation No. 3

• Removal of “Catch-all Provision”

• Removal of crude oil storage tank exemption


• Full adoption of NSPS OOOO (“Quad O”)

• “Storage Vessel” vs. “Storage Tank”


• STEM, LDAR, Low-bleed pneumatics & auto-igniters:

State-wide regulation of hydrocarbon emissions

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RULE SPECIFICS - STORAGE TANK

EMISSION MANAGEMENT “STEM”

• Must update STEM plans “as necessary” to achieve/maintain compliance

• STEM must include:• Selected control technologies

• Monitoring practices

• Operational practices

• Procedures for ongoing evaluation of capture performance

• Monitoring according to schedule

• STEM Plan – can apply to multiple sites

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RULE SPECIFICS – LEAK DETECTION AND

REPAIR

• Compressor stations and well production

facilities (upstream of gas plants)

• Approved Instrument Monitoring Method

(AIMM) and auditory, visual & olfactory (AVO)

• Infrared camera monitoring approved, other

methods/instruments subject to Division

approval

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REPAIR AT COMPRESSOR STATIONS

• Compressor stations – LDAR requirements begin

January 1, 2015

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LEAK DETECTION AND REPAIR AT WELL

PRODUCTION FACILITIES

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REPAIR AT WELL PRODUCTION FACILITIES

• Difficult/unsafe/inaccessible to monitor

• Leaks (Method 21):

• Constructed before May 1, 2014 a “leak”

• Hydrocarbon > 500 ppm for WPF

• Hydrocarbon > 2,000 ppm all other facilities

• Constructed after May 1, 2014 a “leak” is any hydrocarbon > 500 ppm

• Leaks (IR/AVO):

• Any “detectable emissions”

• Option to repair or quantify within 5 days

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REPAIR AT WELL PRODUCTION FACILITIES

• Leak repair and re-monitoring

• First attempt no later than 5 working days

• If parts are unavailable or shutdown required,

repair required within 15 days of receipt or next

scheduled shutdown

• Other “good cause” delay

• Re-monitor within 15 working days of repair

• Enforcement for failure to repair (not “leaks”)

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RULE SPECIFICS – PNEUMATIC DEVICES

• All pneumatics after May 1, 2014 must be low

or no-bleed (electric power on-site)

• All high bleed pneumatics in service before

May 1, 2014, replaced/retrofitted to low-

bleed by May 1, 2015 unless they must remain

in place for safety or process purposes

• Intermittent-bleed devices not covered, to be

studied

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RULE SPECIFICS – STATEMENT OF BASIS

AND PURPOSE

• Burden expressly placed on the owner,

operator to show compliance with “no

venting” standard

• Commission encouraged a “pilot study” to

evaluate effectiveness of LDAR programs

• Commission encouraged further evaluation of

emissions at downstream compressor stations

and from intermittent pneumatic devices

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AQCC REGULATION NECESSARY,

APPROPRIATE

� Oil and gas production a vital state interest

� State is better able to regulate technically

complex aspects of the industry, air quality

� State primacy a better framework for

cooperative governance

� State primacy a check on parochial extremes

� Local regulation of nuisance impacts (noise,

light, odor, dust, vibration, traffic) a given


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IS BROADER CHANGE LIKELY TO OCCUR?


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QUESTIONS?

[email protected]

Davis Graham & Stubbs LLP – 1550 17TH St. – Denver CO

Tel. 303.892.7305

new colorado air quality regulations for the oil

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