No. 43211 (New Rule): Rule R307-511. Oil and Gas Industry:Associated Gas Flaring

(New Rule)

DAR File No.: 43211
Filed: 09/14/2018 02:48:55 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

In January of 2018, the Air Quality Board adopted a series of oil and gas rules that allowed the source category's minor source permitting process to be streamlined. These rules require the majority of oil and gas wells in the state to follow a set of rules instead of obtaining and complying with an approval order. As the rules have been implemented and applied, the Division of Air Quality (DAQ) has learned that some oil and gas wells have been unable to take advantage of this streamlined approach as the set of rules did not include the control of associated gas from some wells. This rule is necessary to require the flaring of associated gas in these oil and gas wells so they can utilize the new permitting process.

Summary of the rule or change:

This rule requires the associated natural gas from operating wells to be controlled as is required for other equipment, such as storage vessels and dehydrators. It defines key terms, identifies the applicability, identifies flaring requirements, and establishes required recordkeeping.

Statutory or constitutional authorization for this rule:

• Subsection 19-2-104(1)(a)

Anticipated cost or savings to:

the state budget:

This new rule will not have a direct fiscal impact on the state budget.

local governments:

This new rule will not have a direct fiscal impact on local governments.

small businesses:

This new rule will have a direct fiscal cost and benefit on an unknown number of small businesses operating in Utah. These small businesses could spend between $800 to $1,500 in a one-time equipment installation cost. The installation of equipment would make the businesses eligible to utilize permitting-by-rule, which will then save the same companies $2,050 in permitting costs.

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

This new rule will not have a direct fiscal impact on persons other than small businesses, businesses, or local government entities.

Compliance costs for affected persons:

This new rule does not have a compliance costs for affected persons.

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

After conduction a thorough analysis, it was determined that there is an inestimable impact on oil and gas extraction small businesses operating in Utah. Although each site could have an $800 to $1,000 one-time equipment cost associated with this rule, those same businesses would be eligible to participate in the new permitting rule that would generate a one-time fiscal benefit of $2,050.

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:

• Thomas Gunter at the above address, by phone at 801-536-4419, by FAX at , or by Internet E-mail at [e-mail]

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:

10/31/2018

This rule may become effective on:

12/05/2018

Authorized by:

Bryce Bird, Director

RULE TEXT

Appendix 1: Regulatory Impact Summary Table*

Fiscal Costs

FY 2019

FY 2020

FY 2021

State Government

$0

$0

$0

Local Government

$0

$0

$0

Small Businesses

$0

$0

$0

Non-Small Businesses

$0

$0

$0

Other Person

$0

$0

$0

Total Fiscal Costs:

$0

$0

$0

Fiscal Benefits

State Government

$0

$0

$0

Local Government

$0

$0

$0

Small Businesses

$0

$0

$0

Non-Small Businesses

$0

$0

$0

Other Persons

$0

$0

$0

Total Fiscal Benefits:

$0

$0

$0

Net Fiscal Benefits:

$0

$0

$0

 

*This table only includes fiscal impacts that could be measured. If there are inestimable fiscal impacts, they will not be included in this table. Inestimable impacts for State Government, Local Government, Small Businesses and Other Persons are described above. Inestimable impacts for Non - Small Businesses are described below.

 

Appendix 2: Regulatory Impact to Non - Small Businesses

No non-small businesses are expected to be impacted by this rulemaking. Non-small industrial businesses are already required to maintain and utilize the controls that this rule would require. This rule will primarily apply to smaller oil and gas operations that are susceptible to releases of produced gas. Therefore, non-small businesses will not be impacted.

 

There are an inestimable amount of oil and gas extraction (extraction) small businesses (NAICS 2111) operating in Utah. These extraction sites can be included in the Utah oil and gas registration, but their total numbers are currently unknown. These businesses could experience a one-time fiscal cost of $800 to $1,500 associated with purchasing and installing the required control devices. The full impact to these small businesses cannot be estimated because the lack of extraction site inventory and control equipment already installed at those sites is not available.

 

Regardless of the fiscal impact possible on these small extraction sites, there is also a possibility for these same sites to experience a one-time benefit associated with the installation of the control devices.Sites identified as needing to flare releases are likely required to be permitted. With the recently passed rule that allows permitting by rule, these small extraction sites will be eligible for the one-time permitting cost of $250 if they have the controls installed, as opposed to the original one-time cost of $2,300 to obtain a permit. That equals a potential benefit of $2,050. The amount saved through the use of this rule is greater than the amount required to purchase and install the controls.

 

The Executive Director of the Department of Environmental Quality, Alan Matheson, has reviewed and approved this fiscal analysis.

 

 

R307. Environmental Quality, Air Quality.

R307-511. Oil and Gas Industry: Associated Gas Flaring.

R307-511-1. Purpose.

R307-511 establishes control requirements for the flaring of produced gas associated with well sites.

 

R307-511-2. Definitions.

"Emergency release" means a temporary, infrequent and unavoidable situation in which the loss of gas is uncontrollable or necessary to avoid risk of an immediate and substantial adverse impact on safety, public health, or the environment. An "emergency" is limited to a short-term situation of 24 hours or less caused by an unanticipated event or failure that is out of the operator's control and is not due to operator negligence.

"Flaring" means use of a thermal oxidation system designed to combust hydrocarbons in the presence of a flame.

"Associated Gas" means the natural gas that is produced from an oil well during normal production operations and is either sold, re-injected, used for production purposes, vented (rarely) or flared. All gas from storage vessels and low pressure separators is not associated gas.

 

R307-511-3. Applicability.

(1) R307-511 applies to each producing well 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.

(2) VOC control devices used for controlling associated gas are subject to R307-508.

(3) R307-511 does not apply to producing wells that are subject to an approval order issued under R307-401-8.

 

R307-511-4. Associated Gas Flaring Requirements.

(1) Associated gas from a completed well shall either be routed to a process unit, routed to a sales pipeline, or routed to an operating VOC control device except for the following condition:

(a) Under emergency release situations as defined in R307-511-2.

 

R307-511-5. Recordkeeping.

(1) The owner or operator shall maintain records for releases under R307-511-4(1)(a).

(a) The time and date of event, volume of emissions and any corrective action taken shall be recorded.

(b) These records shall be kept for a minimum of three years.

 

KEY: air quality, nonattainment, offset

Date of Enactment or Last Substantive Amendment: 2018

Authorizing, and Implemented or Interpreted Law: 19-2-104; 19-2-108

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