DAR File No. 42113

Environmental Quality, Air Quality

Rule R307-508

Oil and Gas Industry: VOC Control Devices

Notice of Proposed Rule

(New Rule)

DAR File No.: 42113
Filed: 09/14/2017 04:59:28 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of this new rule is to implement a permit-by-rule system for oil and gas wells to replace the current minor source permitting system implemented by the Division of Air Quality (Division). This amendment reflects the current Best Available Control Technology (BACT) that is required for gas and oil well facilities that currently apply for a permit to operate. The rule excludes sources that are currently permitted. Therefore, to ensure that the permit-by-rule rules are equivalent to current permitting requirements, this rule was amended to reflect BACT.

Summary of the rule or change:

The rule requires oil and gas well sources with storage vessels and dehydrators that meet certain emission limits to control their emissions and this rule defines the type of control device that is required.

Statutory or constitutional authorization for this rule:

• Subsection 19-2-104(1)(a)

Anticipated cost or savings to:

the state budget:

This rule does not have a cost or savings to the state budget because this rule regulates oil and gas sources.

local governments:

This rule does not have a cost or savings to local governments because this rule regulates oil and gas sources.

small businesses:

This rule may have an impact on about 10 small businesses. However, it is anticipated that most companies will rarely encounter a situation where this rule will result in a fiscal impact that would not already have occurred under the current air quality rules. This is because companies will typically not dig a well if the well would not be productive enough to require controls under Rule R307-506 or require a permit under the current air quality rules. Details of the cost analysis and compliance costs are under the department head's comments below. This impact is discussed in the department head's fiscal analysis. (EDITOR'S NOTE: The proposed new Rule R307-506 is under Filing No. 42111 in this issue, October 1, 2017, of the Bulletin.)

persons other than small businesses, businesses, or local governmental entities:

No--This rule does not have a cost or savings to "other persons" because the rule impacts owners or operators of oil and gas wells. The owners and operators of these wells are all businesses.

Compliance costs for affected persons:

It is anticipated that most companies will rarely encounter a situation where this rule will result in a fiscal impact that would not already have occurred under the current air quality rules. This is because companies will typically not dig a well if the well would not be productive enough to require controls under Rule R307-506 or require a permit under the current air quality rules. Details of the cost analysis and compliance costs are under the department head's comments below. The Division has considered methods of reducing the negative impact of the rule on small businesses in accordance with Subsection 63G-3-301(6) but cannot establish any additional less stringent requirements, schedules, or deadlines; simplify compliance or reporting requirements; replace design standards with performance standards; or exempt small businesses. However, through the stakeholder process, the Division made several changes to this rule and other rules involved in the permit-by-rule scheme that reduced costs for small businesses.

Comments by the department head on the fiscal impact the rule may have on businesses:

I. WHETHER A FISCAL IMPACT TO BUSINESS IS EXPECTED AS A RESULT OF THE PROPOSED RULE AND,IF SO, A DESCRIPTION OF WHY: Yes, a minor fiscal impact is expected as a result of proposed Rule R307-508. II. AN ESTIMATE OF THE TOTAL NUMBER OF BUSINESS ESTABLISHMENTS IN UTAH EXPECTED TO BE IMPACTED: The Division has identified 30 companies that may be impacted by this rule. III. AN ESTIMATE OF THE SMALL BUSINESS ESTABLISHMENTS IN UTAH EXPECTED TO BE IMPACTED: Of the 30 companies that will be impacted, at least 10 are small businesses. IV. A DESCRIPTION OF THE SOURCES OF COST OR SAVINGS AS WELL AS THE EXPECTED NET SAVINGS OR COST TO BUSINESS ESTABLISHMENTS AND SMALL BUSINESS ESTABLISHMENTS AS A RESULT OF THE PROPOSED RULE OVER A ONE-YEAR PERIOD, IDENTIFYING ONETIME AND ONGOING COSTS: Most well sites will not be impacted by this rule because they are already required to obtain a permit that would include the control device efficiency and minimum equipment inspection requirements that are found in Section R307-508-3. Also, sources that are already subject to an approval order are exempt from these requirements, and they will not have any additional costs as a result of this proposed rule. However, there are some new sources that begin operations on or after 01/01/2018 that may be impacted because they have to have VOC control devices as required by Rule R307-506. The sources that begin operations on or after 01/01/2018, and have actual emissions that are less than four tons per year, will need to operate with controls for one year in order to demonstrate whether their actual emissions qualify for an exemption under Subsection R307-506-4(6). The requirement to operate for a year with controls is not currently a part of the air quality rules. Currently, sources can show that they are a small source that is exempt from the requirement to obtain a permit by using their potential to emit. The few sources that will need to operate for a year to demonstrate that they qualify for the exemption will have to use controls that meet the efficiency and equipment inspection requirements that are found in Section R307-508-3. This is a one-time cost that would only apply to sources that operate for a year and then show that they have less than four tons of annual emissions. The cost will be equal to the cost of installing the control equipment required by Rule R307-506. Control equipment that meets the requirements of this rule amendment is approximately $40,000 to $60,000. The cost will be the same for both small and large businesses. The cost is considered a one-time cost because the control equipment is removed after a year, and it can be used on other sites. There may be an ongoing cost if new well sites are being drilled and the equipment that is already owned by the company is unusable. This cost is the same cost that is caused by Rule R307-506. It is a one-time cost that is only incurred once for both Rules R307-506 and R307-508. V. THE ABOVE ANALYSIS REPRESENTS DAQ'S BEST ESTIMATE AS TO THE FISCAL IMPACT THIS RULE AMENDMENT WILL HAVE ON BUSINESSES: The Division staff anticipates that most companies will rarely encounter a situation where this rule will result in a fiscal impact that would not already have occurred under the current air quality rules. This is because companies will typically not dig a well if the well would not be productive enough to require controls under Rule R307-506 or require a permit under the current air quality rules. The Division welcomes comments during the public comment period that provide further information regarding costs or savings that may result from the amendments being proposed.

Alan Matheson, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Environmental Quality
Air QualityRoom Fourth Floor
195 N 1950 W
SALT LAKE CITY, UT 84116-3085

Direct questions regarding this rule to:

• Mat Carlile at the above address, by phone at 801-536-4116, by FAX at 801-536-4136, or by Internet E-mail at [email protected]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

11/15/2017

Interested persons may attend a public hearing regarding this rule:

• 10/25/2017 01:00 PM, TriCounty Health, 133 S 500 E, Vernal UT
• 10/19/2017 01:00 PM, Department of Environmental Quality, 195 N 1950 W, Board Room 1015, Salt Lake City, UT

This rule may become effective on:

01/04/2018

Authorized by:

Bryce Bird, Director

R307. Environmental Quality, Air Quality.

R307-508. Oil and Gas Industry: VOC Control Devices.

R307-508-1. Purpose.

R307-508 establishes requirements for VOC control devices associated with oil and gas operations used to control emissions of VOCs.

 

R307-508-2. Applicability.

(1) R307-508 applies to each VOC control device located at a well site as defined in 40 CFR 60.5430a Subpart OOOOa Standards of Performance for Crude Oil and Natural Gas Production, Transmission and Distribution.

(a) R307-508 does not apply to VOC control devices that are subject to an approval order issued under R307-401-8.

 

R307-508-3. VOC Control Device Requirements.

(1) A VOC control device required by R307-506 or R307-507 must have a control efficiency of 95%or greater.

(2) To show compliance with the control efficiency, the VOC control device shall be operated according to the manufacturer's specifications and be certified by the manufacturer to reduce VOC emissions by 95% or greater.

(3) VOC control devices and all associated equipment shall be inspected monthly by audio, visual, or olfactory (AVO) means to ensure the integrity of the equipment is maintained and is operational. If equipment is not operational, corrective action shall be taken within 15 days of discovery.

 

R307-508-4. Recordkeeping.

(1) The owner/operator shall keep and maintain records of the following:

(a) the VOC control device's control efficiency guaranteed by the manufacturer;

(b) the manufacturer's written operating and maintenance instructions; and

(c) the VOC control device AVO inspections. These records shall include:

(i) the date of the inspection;

(ii) the status of the control device and associated equipment; and

(iii) date of corrective action taken, if applicable.

 

KEY: air pollution, oil, gas

Date of Enactment or Last Substantive Amendment: 2017

Authorizing, and Implemented or Interpreted Law: 19-2-104(1)(a)