No. 42111 (New Rule): Rule R307-506. Oil and Gas Industry:Storage Vessels

(New Rule)

DAR File No.: 42111
Filed: 09/14/2017 04:58:54 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 that meet certain operational limits to control their emissions.

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 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.

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.

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 R307-506. 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 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. V. THE ABOVE ANALYSIS REPRESENTS DAQ'S BEST ESTIMATE AS TOT HE 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 [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:

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

RULE TEXT

R307. Environmental Quality, Air Quality.

R307-506. Oil and Gas Industry: Storage Vessels.

R307-506-1. Purpose.

R307-506 establishes requirements to control emissions of volatile organic compounds (VOCs) from storage vessels associated with oil and gas operations.

 

R307-506-2. Definitions.

"Modification to a well site" means;

(1) a new well is drilled at an existing well site,

(2) a well at an existing well site is hydraulically fractured, or

(3) a well at an existing well site is hydraulically refractured.

"Storage Vessel" means storage vessel as defined in 40 CFR 60.5430a, Subpart OOOOa Standards of Performance for Crude Oil and Natural Gas Production, Transmission and Distribution, which is incorporated by reference in R307-210.

 

R307-506-3. Applicability.

(1) R307-506 applies to each storage vessel 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) R307-506 does not apply to storage vessels that are subject to an approval order issued under R307-401-8.

 

R307-506-4. Storage Vessel Requirements.

(1) Thief hatches on storage vessels shall be kept closed and latched except during vessel unloading or other maintenance activities.

(2) A storage vessel or collection of storage vessels, that is in operation as of January 1, 2018, with a site-wide throughput of 8,000 barrels or greater of crude oil per year on a rolling 12-month basis shall comply with R307-506-4(2)(a) unless the exemption in R307-506-4(2)(b) applies.

(a) VOC emissions from storage vessels shall either be routed to a process unit where the emissions are recycled, incorporated into a product and/or recovered, or be routed to a VOC control device that is in compliance with R307-508.

(b) A storage vessel or collection of storage vessels shall be exempt from R307-506-4(2)(a) if VOC emissions are demonstrated to be less than four tons per year on a rolling twelve month basis by the following methods:

(i) VOC working and breathing losses shall be calculated using site-specific sampling data and the TANKS 4.09D Emission Estimation Software provided by the EPA.

(ii) VOC flash emissions shall be calculated using site-specific sampling data and the Vasquez-Beggs Equation.

(iii) VOC emissions determined by an alternative method approved by the Director.

(3) Storage vessels that begin operations on or after January 1, 2018, are required to control VOC emissions in accordance with R307-506-4(2)(a) upon startup of operation for one year and then evaluate control requirements in accordance with R307-506-4(6).

(4) An owner or operator that is required to control emissions in accordance with R307-506-4(2) and R307-506-4(3) shall inspect at least once a month each closed vent system, including vessel openings, thief hatches, and bypass devices, for defects that can result in air emissions according to 40 CFR 60.5416a(c).

(a) If defects are discovered, the defects shall be corrected or repaired within 15 days of identification.

(5) Modification to a well site shall require a re-evaluation of site-wide throughput and/or emissions in accordance with R307-506-4(2).

(6) After one year of operation, controls may be removed when site-wide throughput is less than 8,000 barrels of crude oil on a rolling twelve-month basis or actual emissions are demonstrated to be less than four tons per year after one year of operation.

 

R307-506-5. Recordkeeping

(1) Records of thief hatch inspection shall be kept for three years.

(a) Records of thief hatch inspections shall include the date of the inspection, the status of the thief hatches, and the date of corrective action taken if required.

(2) Records of crude oil throughput shall be kept for three years and shall be determined on a monthly basis using the production data reported to the Utah Division of Oil, Gas, and Mining.

(3) Records of emission calculations, actual emissions, and site-specific sampling data used to determine applicability with R307-506-4(2)(b) shall be kept as long as the well site is in operation.

 

KEY: air pollution, oil, gas

Date of Enactment or Last Substantive Amendment: 2017

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

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