DAR File No. 42114

Environmental Quality, Air Quality

Rule R307-509

Oil and Gas Industry: Leak Detection and Repair Requirements

Notice of Proposed Rule

(New Rule)

DAR File No.: 42114
Filed: 09/14/2017 04:59:55 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. 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. These sources that are required to control their emissions will be required to perform inspections for leaks and repair any leaks discovered.

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. This impact is discussed in the department head's fiscal analysis. 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.

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:

Most well sites will not be impacted by this rule because they are already required to obtain a permit that would include the storage vessel requirements that are found in Rule R307-506. However, new sources that begin operations on or after 01/01/2018 may be impacted. 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 from the control requirements under Subsection R307-506-4(6). The requirement to operate for a year with controls is not a requirement in the current 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. 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. This cost will be approximately $40,000 to $60,000 to install the control equipment. The cost will be the same for small and large businesses. The cost is considered a one-time cost because the control equipment is removed after a year if the exemption applies, and the equipment can be used on other sites. There may be an ongoing cost if new well sites are constructed and the equipment that is already owned by the company is unusable on those sites. This ongoing cost would be an additional $40,000 to $60,0000 per site. (EDITOR'S NOTE: The proposed new Rule R307-506 is under Filing No. 42111 in this issue, October 1, 2017, of the Bulletin.)

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 fiscal impact is expected as a result of proposed Rule R307-509. 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: Many well sites will not be impacted by this rule because they are already subject to leak detection and repair (LDAR) inspection requirements through their permit. Existing small sources will also be exempt from the LDAR requirement as long as they can demonstrate that they are exempt in accordance with Rules R307-506 and R307-507. Well sites that do not meet the minor-source exemption threshold and have failed to obtain the required permit do not face additional fiscal impacts as a result of this rule. This is because those sites should have obtained a permit, and the permit would require LDAR inspections. The only well sites that this rule would have a fiscal impact on are those sites that have to be in operation for a year to demonstrate the small source exemption for the purpose of Rule R307-506. Storage vessels that begin operations on or after 01/01/2018 are required to control VOC emissions in accordance with Subsection R307-506-4(2)(a) to demonstrate that they would be exempt from maintaining emission controls on their equipment. These sources would need to conduct up to two LDAR inspections during the year that they are maintaining emission controls on their equipment as required by Subsection R307-506-4(2)(a). The EPA has estimated that hiring a consultant to conduct an LDAR inspection would cost approximately $600 per site. see 80 Fed. Reg. at 56,641 (TSD at 72 "The cost for OGI monitoring using an outside contractor was assumed to be $600 for a well production site."). Since each site will be inspected twice, the total cost would be $1,200 per site. The state of Colorado estimated a lower cost of $450 per site for similar LDAR inspections. A large business that is already conducting many LDAR inspections for their permitted sources may find the price to be less than a smaller company that may have only a few well sites. In order to aid businesses, the Division will provide a camera to owners that would like to be trained on how to use it for LDAR inspections. This service will significantly reduce the cost of conducting LDAR inspections. Therefore, the cost of the LDAR inspections required by this rule will be about $600 per site, but it could be less if a business takes advantage of the Division's services. This will be a one-year cost because controls can be removed if the small source exemption applies, and Rule R307-309 would no longer require LDAR for that site. If the small source exemption does not apply, then the site would need to follow the permit-by-rule, which does not require any costs in addition to what the current permitting system would currently require. This is because LDAR inspections are already required for newly permitted sources. If a leak is detected, there could also be a one-time cost for repairs. The cost for repairing a leak can range between zero and thousands of dollars depending on the type of leak and the cost of preventing further leakage. This cost for repair will be the same for both small and large businesses. 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. (EDITOR'S NOTE: The proposed new Rule R307-507 is under Filing No. 42112 in this issue, October 1, 2017, of the Bulletin.)

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 mcarlile@utah.gov

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.

R307-509. Oil and Gas Industry: Leak Detection and Repair Requirements.

R307-509-1. Purpose.

R307-509 establishes requirements for conducting leak detection and repairs at oil and gas operations to control emissions of volatile organic compounds.

 

R307-509-2. Definitions

"Fugitive emissions" are considered any visible emissions observed using optical gas imaging or a Method 21 instrument reading of 500 ppm or greater.

"Fugitive emissions component" means any component that has the potential to emit fugitive emissions of VOC, including but not limited to valves, connectors, pressure relief devices, open-ended lines, flanges, covers and closed vent systems, thief hatches or other openings, compressors, instruments, and meters.

 

R307-509-3. Applicability.

(1) R307-509 applies to each fugitive emissions component 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 and is required to control emissions in accordance with R307-506 and R307-507.

(a) R307-509 does not apply to a fugitive emissions component that is subject to an approval order issued under R307-401-8.

 

R307-509-4. Leak Detection and Repair Requirements.

(1) Applicable sources shall comply with the following:

(a) The owner/operator shall develop an emissions monitoring

plan that will be available upon request to review. At a minimum, the plan shall include:

(i) monitoring frequency;

(ii) monitoring technique and equipment;

(iii) procedures and timeframes for identifying and repairing leaks;

(iv) recordkeeping practices; and

(v) calibration and maintenance procedures for monitoring equipment.

(b) The plan shall address monitoring for

difficult-to-monitor and unsafe-to-monitor components.

(c) The owner/operator shall conduct monitoring surveys on

site to observe each fugitive emissions component for fugitive emissions.

(d) Monitoring surveys shall be conducted according to the

following schedule:

(i) No later than 180 days after January 1, 2018, or no later than 60 days after startup of production, as defined in 40 CFR 60 Subpart OOOOa Standards of Performance for Crude Oil and Natural Gas Production, Transmission and Distribution, whichever is later.

(ii) Semiannually after the initial monitoring survey. Consecutive semiannual monitoring surveys shall be conducted at least four months apart.

(iii) Annually after the initial monitoring survey for "difficult-to-monitor" components.

(iv) As required by the owner/operator's monitoring plan for "unsafe-to-monitor" components.

(e) Monitoring surveys shall be conducted using one or both of the following to detect fugitive emissions:

(i) Optical gas imaging (OGI) equipment. OGI equipment shall be capable of imaging gases in the spectral range for the compound of highest concentration in the potential fugitive emissions source.

(ii) Monitoring equipment that meets U.S. EPA Method 21, 40 CFR Part 60, Appendix A.

(f) If fugitive emissions are detected at any time, the

owner/operator shall repair the fugitive emissions component as soon as possible but no later than 15 calendar days after detection. If the repair or replacement is technically infeasible, would require a vent blowdown, a well shutdown or well shut-in, or would be unsafe to repair during operation of the unit, the repair or replacement shall be completed during the next well shutdown, well shut-in, after an unscheduled, planned or emergency vent blowdown or within 24 months, whichever is earlier.

(g) The owner/operator shall resurvey the repaired or replaced fugitive emission component no later than 30 calendar days after the fugitive emission component was repaired.

 

R307-509-5. Recordkeeping.

The owner/operator shall maintain records of the emissions monitoring plan, monitoring surveys, repairs, and resurveys.

 

KEY: air pollution, oil, gas

Date of Enactment or Last Substantive Amendment: 2017

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