Marcellus Drilling Operations: Air Quality Requirements Overview

Introduction

For as much excitement as there has been about the potential benefits of drilling in the Marcellus Shale from the perspective of energy needs and employment opportunities, it is also hard to ignore the sometimes vociferous opposition from environmentalists and concerned citizens.  Although the issues that are most commonly raised seem to be the environmental impacts of water use and management and the composition of the fluids used during the hydraulic fracturing (hydrofracking) process, it is important for drillers to not lose sight of the significant air quality implications of drilling operations associated with Marcellus Shale.  Depending upon the size of the facility, drillers can be subject to a host of air quality regulations governing everything from volatile organic compound (VOC) emissions from equipment leaks, flash emissions from storage tanks, and malodors to emissions of greenhouse gases (GHGs) from flares and hazardous air pollutants (HAPs) from engines.  Going through the air quality permitting process is a crucial step for drillers to ensure that they can continue to tap these valuable resources while minimizing any negative air quality impacts associated with exploration, drilling, processing, transmission, and storage.

Regulations and the Sources Subject To Them

At each phase of the natural gas drilling process, there are a number of air emission sources that may be subject to regulation.  The practice of processing natural gas to pipeline dry gas quality levels includes such steps as the removal of oil, condensate, and water vapor; the separation of natural gas liquids (NGLs); the removal of hydrogen sulfide (H2S) (i.e., “sweetening” the gas); and the recovery of sulfur in its elemental form.  During the natural gas transmission and storage phase, potential emission sources of concern include dehydrators, compressor engines, sulfur recovery units, gas sweetening units, and flares.

Federal Regulations

Requirements for a number of these sources are codified at 40 CFR Parts 60 and 63.  40 CFR Part 60, Subpart KKK (Standards of Performance for Equipment Leaks of VOC from Onshore Natural Gas Processing Plants) contains provisions for VOC leak detection and repair (LDAR) for gas processing plants, while 40 CFR Part 60, Subpart LLL (Standards of Performance for Onshore Natural Gas Processing: SO2 Emissions) governs emissions of sulfur dioxide (SO2) from gas processing plants, specifically gas sweetening units and sulfur recovery units.

Additionally, Marcellus Shale facilities operating engines at compressor stations should be cognizant of the New Source Performance Standards (NSPS) for internal combustion engines codified at 40 CFR Part 60, Subparts IIII (for compression ignition engines) and JJJJ (for spark ignition engines).

40 CFR Part 63, Subpart HH (National Emission Standards for Hazardous Air Pollutants (NESHAP) from Oil and Natural Gas Production Facilities) governs air toxics emissions from oil and natural gas production operations.  The rule contains provisions for both major sources (i.e., facilities that emit at least 10 tons per year of any single HAP or 25 tons per year of combined HAP) and area sources of HAP.  Emission sources that would be affected by this regulation include tanks with flash emissions (major sources only), equipment leaks (major sources only), and glycol dehydrators (major and area sources).  Glycol dehydrators located at major sources of HAP will also be subject to 40 CFR Part 63, Subpart HHH (NESHAP from Natural Gas Transmission and Storage Facilities).

In addition, Subpart W of the recently-promulgated Mandatory GHG Reporting Rule (40 CFR Part 98) requires reporting of emissions of carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O) from a long list of source types at natural gas production facilities, processing facilities, transmission operations, storage facilities, and distribution facilities.

State Regulations

At the state level, the Pennsylvania Air Quality Permit Exemption List currently contains a blanket exemption for oil and gas exploration and production facilities (excluding gas compressor station engines with a capacity greater than or equal to 100 horsepower or gas extraction wells at landfills).  However, on May 29, 2010, the Pennsylvania Department of Environmental Protection (PADEP) proposed a new conditional exemption pertaining to gas exploration that would replace the current blanket exemption.  The proposed conditional exemption contains significant detail around emissions of nitrogen oxides (NOX) from engines, sources of uncontrolled VOC emissions, operation of temporary flares, minimization of emissions from liquid storage tanks and truck loading facilities, and sources of uncontrolled HAP emissions.  Facilities engaging in the drilling phase of Marcellus Shale exploration activities may still be deemed exempt from the construction permit (i.e., plan approval) and operating permit requirements of 25 Pa. Code Chapter 127 by meeting the requirements of the proposed Category 38 or, alternatively, on a case-by-case basis via the submittal of a Request for Determination (RFD) to PADEP.  Facilities not receiving approval via an RFD would be required to submit an application for a general permit or plan approval to PADEP.

To date, PADEP has issued a number of plan approvals and operating permits to facilities engaging in the processing, transmission, and storage of natural gas.  In addition to the Federal regulations discussed earlier, Pennsylvania natural gas facilities that are operating air emission sources in this arena can expect to be subject to the visible emission opacity regulations at 25 Pa. Code §123.41, the Best Available Technology (BAT) requirements at 25 Pa. Code §127.12(a)(5), and the regulations for malodorous emissions at 25 Pa. Code §123.31, among others.

What’s Next?

Federal Regulations

U.S. EPA is currently in the process of reviewing the existing Subpart KKK and LLL NSPS regulations and the Subpart HH and HHH NESHAP regulations to assess whether they are sufficiently stringent.  As part of this review, U.S. EPA is examining operations across the entire sector with the goal of identifying emission sources, quantifying emissions from these sources, considering mitigation opportunities, and analyzing environmental and economic impacts.  To date, U.S. EPA has identified several types of emission sources at natural gas facilities that are not governed by the current rules, including gas-driven pneumatic devices, reciprocating compressor rod packing, and leaks from pipelines and compressor stations.  U.S. EPA expects to complete the review and take final action by November 2011.

State Regulations

PADEP recently rescinded their Technical Guidance for Performing Single Stationary Source Determinations for the Oil and Gas Industries and reopened the public comment period.  PADEP feels that it is “appropriate to seek a comprehensive public comment period” for this Technical Guidance as well as for proposed revisions to GP-11 (General Plan Approval and/or General Operating Permit for Non-road Engines) and for the Air Quality Permit Exemption list.  PADEP will be accepting written comments until May 26, 2011. However, they will continue to make single source determinations on a case-by-case basis (in accordance with current U.S. EPA source aggregation guidance) to determine applicability of Prevention of Significant Deterioration (PSD), Nonattainment New Source Review (NNSR), and Title V operating permit requirements.

Revisions to GP-5 (General Plan Approval and/or General Operating Permit for Natural Gas, Coal Bed Methane, or Gob Gas Production or Recovery Facilities) were proposed in September 2010 for public comment.  PADEP is currently reviewing the public comments received regarding GP-5 and a revised GP-5 is anticipated later this year.  By all accounts, GP-5 will have no significant changes from its published form in the Bulletin.

Conclusions

As the vast natural gas reserves in the Marcellus Shale continue to be tapped in the coming months and years, we can expect U.S. EPA and state agencies to continue to review the current air quality regulations and to adopt new regulations as they see fit.  Those involved in the exploration and drilling of the Marcellus Shale would do well to stay informed of these regulatory actions, to make use of the public comment period when possible, and to be diligent about achieving compliance with all existing regulations and any regulations that are adopted in the future.