Trisha Fanning
Environmental Consultant
303-503-7359
tfanning@trihydro.com

Craig Smith
Senior Geologist
307-232-8091
csmith@trihydro.com


Trihydro provides environmental, engineering, energy, transportation, and water resources services to public and private clients. From its initial start-up as a two-man firm in 1984, Trihydro has grown into a successful, dynamic firm of over 270 employees with 13 offices nationwide.

 

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May 2009

Summary of the Proposed Rule for Greenhouse Gas Reporting Requirements for Oil and Natural Gas Systems

ALERT: Your facility may be one of the 13,000 facilities in the US potentially impacted by EPA’s proposed greenhouse gas emissions regulations.

On March 10, 2009, the Environmental Protection Agency (EPA) proposed rule 40 CFR 98, which would require mandatory reporting of greenhouse gas (GHG) emissions from large sources in the United States. The proposed rule was published in the Federal Register on April 10, 2009, and the public comment period is open until June 9, 2009. The rule would require collecting and reporting comprehensive emissions data from certain facilities, suppliers of fossil fuels and industrial GHGs, manufacturers of vehicles and engines, and some facilities that emit 25,000 metric tons per year or more of GHGs. The purpose of this memorandum is to provide a brief overview of the proposed rule relative to this industrial sector.

This white paper provides an overview of Subpart W of the Draft EPA Mandatory GHG reporting rule as it relates to the oil and natural gas industry. Based on the proposed rules, companies may also be subject to other proposed Subparts depending on what other potential GHG emission sources may be present (i.e. C, NN and PP).

General Provisions – 40 CFR Part 98
If enacted, the rule would require reporting of annual emissions of carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), sulfur hexafluoride (SF6), hydrofluorocarbons (HFCs), perfluorochemicals (PFCs), and other fluorinated gases (e.g., nitrogen trifluoride, hydrofluorinated ethers [HFEs]). The rule would apply to certain facilities that emit GHGs, including producers and transporters of oil and natural gas and to suppliers of fossil fuels.

Background – Oil and Natural Gas Systems
The proposed rule’s natural gas segment involves production, processing, transmission, storage, and distribution of natural gas. EPA reports that there are an estimated 1,375 affected facilities in the US and its territories. Emissions from oil and natural gas systems account for approximately 160 million metric tons of CO2 equivalents (CO2e) in 2006, representing approximately 2 percent of nationwide GHG emissions. Fugitive emissions from the petroleum and natural gas industry are defined as unintentional equipment emissions and intentional or designed releases of CH4 and/or CO2 containing natural gas or hydrocarbon gas (not including combustion flue gas) to the atmosphere from emission sources, including but not limited to open ended lines, equipment connections, or seals.

Definition of a Facility
The proper definition of a facility is important when reporting emissions to minimize the potential for double counting GHG emissions. For some industries, identifying the facility is clear, since there are physical boundaries and ownership structures that assist in identifying scope and reporting responsibility (on-shore vs. off-shore). In other segments, such as pipelines between compressor stations, and on-shore petroleum and natural gas production, such distinctions are not straightforward. Along with this distinction, EPA would request that all facets of industry related to natural gas extraction, production, distribution, storage, transmission and products placed into commerce be defined. In defining a facility, EPA reviewed current definitions used in Clean Air Act and International Organizational Standards CAA and ISO definitions, consulted with industry, and reviewed current regulations relevant to the industry; the full result of the assessment can be found in the Oil and Natural Gas Systems Technical Support Document (TSD) (EPA-HQ-OAR-2008-0508-023).

Subpart W – Oil and Natural Gas Source Category
The proposed rule defines oil and natural gas system as follows:

“…owners or operators of oil and natural gas systems that emit 25,000 metric tons of GHGs per year or more (expressed as carbon dioxide equivalents) from stationary combustion, miscellaneous use of carbonates, and other source categories…”

The source category consists of the following:

Monitoring of Emissions and Calculations
In the proposed rule, EPA calls for facilities to conduct annual leak detection of natural gas fugitive emissions whether in operation or standby through use of an infrared remote detection device, organic vapor analyzer (OVAs), or toxic vapor analyzer (TVAs). For each individual source for which a leak is detected, the facility would measure volumetric fugitive emissions using a high-volume sampler; calibrated bagging; or rotameters, turbine meters, or other meters depending on the individual component. Mass emissions of CO2 and CH4 would be estimated based on the annual mole percentage and density of each GHG.

Infrared remote fugitive emission detectors, OVAs, or TVAs would be used to monitor fugitive emissions that are safely accessible. For these sources, if a leak is detected, the facility would estimate CO2 and CH4 emissions using direct measurement or an engineering calculation method specified in the rule. The engineering calculation methods use monitored process operating parameters and, depending on the source, either simulation models or emission factors provided by the equipment manufacturer. These sources include:

GHGs to Report / Inventory
If enacted, the rule would require facilities to report the following information:

Annual CO2 and CH4 emissions reported separately for each of these operations:

Within each operation, CO2 and CH4 emissions would be aggregated for each source type (i.e., the source types listed above). For example, an onshore natural gas processing plant would report emissions for all pump seals combined, flare stacks combined, etc. Emissions would be reported separately for equipment in standby mode. Equipment counts would be collected together from different sources and considered as a whole for each of the source types listed above.

Proposed reporting would require companies to gather the following information in order to have a transparent GHG inventory:

Recordkeeping / Reporting
If enacted, all affected oil and natural gas systems would begin monitoring GHG sources on January 1, 2010. As proposed, oil and natural gas systems would report all GHG emissions on March 31, 2011, for the 2010 reporting year. Each annual GHG report would be certified by the facility to be true, accurate, and complete. EPA would have the jurisdiction to perform selective random audits of all facilities in respective EPA regions. The rule would require a QA/QC document and demonstrations on how each emission source was calculated. Facility record maintenance would be required for 5 years.