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Oil and Gas Industry Faces Regulatory Climate Change - Zephyr ...

Oil and Gas Industry Faces Regulatory Climate Change - Zephyr ...

Oil and Gas Industry Faces Regulatory Climate Change - Zephyr

OCTOBER 2010 a quarterly publication of zephyr environmental corporation Oil and Gas Industry Faces Regulatory Climate Change After enjoying the benefi ts of a relatively stable air regulatory climate, the oil and gas exploration, production, processing and transmission industrial sector (“the O&G industry”) is entering a period of rapid regulatory warming; the trend is irreversible, and the industry will have to adapt to the rising tide of state and federal regulatory changes in order to meet new compliance demands. The changes the industry faces through 2011 are myriad: state permitting rules are being added and revised, maintenance startup and shutdown permitting requirements are being imposed, new ambient air quality standards are coming into effect, production-specifi c greenhouse gas recordkeeping and reporting is mandatory, and revisions to New Source Performance Standards (NSPS) and National Emission Standards for Hazardous Air Pollutants (NESHAPS) are being expanded. To put this in perspective, the refi ning and petrochemical industries had 15 years to adapt to levels of changes in the air quality rules that the O&G industry must deal with in the next two years. New State Requirements Perhaps nowhere does the shifting regulatory landscape have more impact on the O&G industry than in Texas — a state unique in the level of scrutiny and pressure its air regulatory programs have received from EPA. For instance, the TCEQ has proposed major revisions to its O&G Standard Permit (SP) and Permit by Rule (PBR) — authorization mechanisms that have been used to build and modify tens of thousands of facilities. Due to new and more restrictive qualifi cation requirements under the proposed O&G PBR, companies will experience a signifi cant increase in the effort required to demonstrate their eligibility. Specifi cally, if they want to use the O&G PBR, companies will need to submit PBR registrations to the TCEQ regardless of the type of activity being authorized. In addition, they will have to perform rigorous effects evaluations for multiple pollutants and will be required to demonstrate that best management practices will be used in operating, maintaining, and monitoring processes and equipment and in the way records are kept. Also, the rule imposes requirements for the detection and repair of fugitive leaks. And, hourly emissions limits for NO x , SO 2 , H 2 S, CO, PM 10 /PM 2.5 , VOC, formaldehyde, benzene, toluene, and xylene will be specifi ed in the PBR. For the fi rst time, planned maintenance, startup and shutdown (MSS) are addressed in the O&G PBR. Under the proposed rule, companies that register to use the PBR after January 5, 2012 will be required to quantify their planned MSS emissions and to demonstrate they will not cause the PBR emissions limitations to be exceeded. In addition, records suffi cient to demonstrate compliance with the PBR’s MSS requirements will have to be kept. Federal Rules: Stricter Limits and Changing Focus The national ambient air quality standards have been signifi - cantly tightened in the last year — in particular, the new 1-hour standards for NO 2 and SO 2 may pose signifi cant challenges in the permitting of some O&G projects. In many cases, proposed new equipment, by itself, may not contribute signifi cantly to modeled impacts. However, it may be diffi cult, without signifi - cant design and operational changes, to “model in” to compliance if new sources are planned at sites that already have large oil and gas >>> continued on page 8 c o n s u l t i n g ◆ t r a i n i n g ◆ d a t a s y s t e m s

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