September 13, 2007Erik Aaboe & Mark Jones

NMED/Air Quality Bureau

Four Corners Air Quality Task Force

Oil & Gas Wells in Four Corners (as of 2003)

Four Corners Air Quality Four Corners Air Quality Challenges Challenges

Existing and proposed coal-fired power Existing and proposed coal-fired power plantsplants

Multiple jurisdictionsMultiple jurisdictions 19,000 existing oil and gas wells19,000 existing oil and gas wells 12,000 additional projected for next 20 12,000 additional projected for next 20

yearsyears Many small unregulated sourcesMany small unregulated sources Multiple operatorsMultiple operators Changing field conditionsChanging field conditions

4-Corners Air Quality Task 4-Corners Air Quality Task Force (4CAQTF) OriginsForce (4CAQTF) Origins

December, 2004 meeting in Denver – EPA December, 2004 meeting in Denver – EPA Region VIII, BLM, CDPHE, NMED – Region VIII, BLM, CDPHE, NMED – regarding Northern San Juan Basin regarding Northern San Juan Basin Cumulative Impact AnalysisCumulative Impact Analysis

NMED just finishing San Juan County NMED just finishing San Juan County Early Action Ozone Task ForceEarly Action Ozone Task Force

Decided to re-focus Ozone Task Force and Decided to re-focus Ozone Task Force and broaden scopebroaden scope

Planned 4CAQTF during 2005 with above Planned 4CAQTF during 2005 with above plus USFS, NPS, EPA Region VI, tribesplus USFS, NPS, EPA Region VI, tribes

MOU signed Fall 2005MOU signed Fall 2005

4CAQTF4CAQTF Broadly representative volunteer group of Broadly representative volunteer group of

stakeholders formed to look at air quality stakeholders formed to look at air quality issues in the Four Corners region issues in the Four Corners region

~100 task force members, ~150 interested ~100 task force members, ~150 interested partiesparties

PurposePurpose Bring together diverse group of interested parties to Bring together diverse group of interested parties to

learn about and discuss air quality issueslearn about and discuss air quality issues Develop a broad list of mitigation options for Develop a broad list of mitigation options for

improving air quality that will aid regulatory agencies improving air quality that will aid regulatory agencies in developing plansin developing plans

GoalsGoals Address planned developmentAddress planned development Reduce nitrogen, sulfur & mercury depositionReduce nitrogen, sulfur & mercury deposition Enhance visibility in Class I areas and the regionEnhance visibility in Class I areas and the region

4CAQTF4CAQTF Process Process

Work Groups: Power Plants, Oil and Work Groups: Power Plants, Oil and Gas, Other Sources, Monitoring, Gas, Other Sources, Monitoring, Cumulative EffectsCumulative Effects

Develop mitigation optionsDevelop mitigation options Quarterly meetings with Work Group Quarterly meetings with Work Group

conference calls to review options and conference calls to review options and accomplish work (50-100 per)accomplish work (50-100 per)

Final report is on schedule to be Final report is on schedule to be completed by November 2007completed by November 2007

4CAQTF4CAQTF Progress / What Have We DoneProgress / What Have We Done

4CAQTF in final stages4CAQTF in final stages 125 mitigation options drafted (not 125 mitigation options drafted (not

consensus, instead some with differing consensus, instead some with differing views)views)

Cumulative Effects (including emission Cumulative Effects (including emission inventory) & Monitoring Sections inventory) & Monitoring Sections

Draft Task Force Report Available at Draft Task Force Report Available at http://www.nmenv.state.nm.us/aqb/4C/http://www.nmenv.state.nm.us/aqb/4C/DraftTaskForceReport.htmlDraftTaskForceReport.html

Oil & Gas Group focus in Oil & Gas Group focus in the 4CAQTF projectthe 4CAQTF project

Largest Work Group (approx. 25 participants per Largest Work Group (approx. 25 participants per meeting)meeting)

Active involvement from major producers in Active involvement from major producers in region Williams, BP, Conoco Phillips, Energen, region Williams, BP, Conoco Phillips, Energen, Xcel, DevonXcel, Devon

Drafted over 50 mitigation optionsDrafted over 50 mitigation options The draft task force report is a compilation of The draft task force report is a compilation of

mitigation options drafted by members of the mitigation options drafted by members of the Four Corners Air Quality Task Force. The Four Corners Air Quality Task Force. The agencies involved have not reviewed or adopted agencies involved have not reviewed or adopted these options at this time. These options will be these options at this time. These options will be considered following the completion of the Task considered following the completion of the Task Force in December 2007.Force in December 2007.

2002 O2002 O33 Precursor O&G Area Precursor O&G Area Source EI For San Juan & Rio Source EI For San Juan & Rio

Arriba County, NM (completed in Arriba County, NM (completed in 2006)2006)

CategoryCategory NOx NOx (tpy)(tpy)

VOC (tpy)VOC (tpy)

RICERICE 27,32127,321 3,0603,060

Drill RigDrill Rig 1,2001,200 2929

Gas WellsGas Wells 6,2006,200 105,000105,000

Oil WellsOil Wells 209209 982982

Background: Innovative Background: Innovative StrategiesStrategies

New Mexico San Juan New Mexico San Juan VISTASVISTAS ((Voluntary Innovative Strategies for Today’s Air Voluntary Innovative Strategies for Today’s Air

StandardsStandards)) Four Corners Air Quality Task ForceFour Corners Air Quality Task Force Colorado Regulation 7Colorado Regulation 7 BLM Well Development Condition of BLM Well Development Condition of

Approval (“COA”)Approval (“COA”)

What is San Juan VISTAS? Voluntary Innovative Strategies for Today’s Air Standards

•San Juan VISTAS is a voluntary emission control program administered by the New Mexico Environment Department (NMED) for the improvement of air quality.

HISTORY

• began in 2005 as a result of EAC work

• modeled after EPA Gas STAR program

4 Corners Air Quality Task 4 Corners Air Quality Task Force Source CategoriesForce Source Categories

Engines: Engines: The work group The work group addressed engines as a separate addressed engines as a separate category in its analysis attributable category in its analysis attributable to all processes in the oil and gas to all processes in the oil and gas industry. The mitigation strategies industry. The mitigation strategies were created to address the were created to address the subcategories of stationary or subcategories of stationary or mobile/non-road engines, drill rig mobile/non-road engines, drill rig engines, and turbines. [31 engines, and turbines. [31 mitigation options developed]mitigation options developed]

4 Corners Air Quality Task 4 Corners Air Quality Task Force Source CategoriesForce Source Categories

Exploration & Production (E & P): Exploration & Production (E & P): the the work group defined E & P as the work group defined E & P as the upstream sector of the oil and gas upstream sector of the oil and gas industry, including all activities industry, including all activities associated with drilling, completion, and associated with drilling, completion, and putting the well on-line. The work group putting the well on-line. The work group identified and developed mitigation identified and developed mitigation strategies for specific equipment in E&P, strategies for specific equipment in E&P, including oil/condensate tanks, including oil/condensate tanks, dehydrators/separators/heaters, fugitive dehydrators/separators/heaters, fugitive emissions associated with pneumatic emissions associated with pneumatic operations, completions, and wellhead operations, completions, and wellhead considerations. [21 options]considerations. [21 options]

4 Corners Air Quality Task 4 Corners Air Quality Task Force Source CategoriesForce Source Categories

Midstream: Midstream: the work group defined the work group defined Midstream Operations as occurring after Midstream Operations as occurring after custody transfer, including facilities such as custody transfer, including facilities such as compressor stations, gas processing plants, compressor stations, gas processing plants, and transmission or storage of natural gas. and transmission or storage of natural gas. Where appropriate, the work group devised Where appropriate, the work group devised mitigation strategies that avoided general mitigation strategies that avoided general overlap with E & P options, and overlap with E & P options, and concentrated primarily on options unique to concentrated primarily on options unique to the “midstream operations” that were not the “midstream operations” that were not otherwise examined in the context of E&P otherwise examined in the context of E&P operations [2 options]operations [2 options]

Overarching: Overarching: 8 options8 options

4CAQTF Oil and Gas 4CAQTF Oil and Gas Interim Emissions Interim Emissions RecommendationsRecommendations

A 2 g/hp-hr NOx limit is achievable and reasonable for all engines less than 300 hp (excluding very small engines with horsepower less than 40).

An ambient monitoring program for ammonia should be initiated in the Four Corners region.

A 1 g/hp-hr NOx limit is reasonable and achievable for engines greater than 300 hp.

Drill rig NOx emissions are significant cumulatively in the region on a year-round basis and should be reduced by a requirement to comply with Tier 2 standards as expediently as possible.

Oil & Gas Workgroup Oil & Gas Workgroup IssuesIssues

Quantity and proximity of sources.Quantity and proximity of sources. Multi well and pipeline ownership.Multi well and pipeline ownership. Twinning (two engines on same Twinning (two engines on same

surface site going to two different surface site going to two different pipelines). pipelines).

RICE emission control technologies to RICE emission control technologies to achieve 2.0 g/bhp-hr (<300 HP) & 1.0 achieve 2.0 g/bhp-hr (<300 HP) & 1.0 g/bhp-hr (>300 HP) NOx emissions.g/bhp-hr (>300 HP) NOx emissions.

Implementing mitigation options Implementing mitigation options (regulatory or voluntarily).(regulatory or voluntarily).

RICE Mitigation OptionsRICE Mitigation Options

Replace existing RICE with new Replace existing RICE with new RICE.RICE.

Utilize electric compressors.Utilize electric compressors. Compressor optimization & Compressor optimization &

centralization.centralization. Meet SI EPA NSPS.Meet SI EPA NSPS. Adhere to Manufacturer’s O/M Adhere to Manufacturer’s O/M

recommendations. recommendations.

RICE Mitigation RICE Mitigation Technology OptionsTechnology Options

3-way catalyst w/AFR for rich burn 3-way catalyst w/AFR for rich burn engine. engine.

Install lean burn engines.Install lean burn engines. Oxidation catalysts to control HC’s, Oxidation catalysts to control HC’s,

Formaldehyde & CO emissions from Formaldehyde & CO emissions from Lean burn engines.Lean burn engines.

SCR for NOx control on lean burn SCR for NOx control on lean burn engines.engines.

Colorado Regulation 7 Colorado Regulation 7 Revisions Adopted 12/06Revisions Adopted 12/06

> 63% Control of VOC “flash > 63% Control of VOC “flash emissions” emissions”

> 90% Control of dehydrator VOC > 90% Control of dehydrator VOC emissions commencing 05/01/08emissions commencing 05/01/08

Commencing 07/01/07 - 2, 4 &1 Commencing 07/01/07 - 2, 4 &1 g/bhp-hr (NOx, CO & VOC’s) for g/bhp-hr (NOx, CO & VOC’s) for natural gas fired RICE > 500 HPnatural gas fired RICE > 500 HP

2011 limits 1, 2 & 0.7 g/bhp-hr for 2011 limits 1, 2 & 0.7 g/bhp-hr for RICE >100 HP.RICE >100 HP.

Farmington Field Office - Farmington Field Office - BLM (“COA”) To DrillBLM (“COA”) To Drill

300 HP or less RICE emit 2.0 g/bhp-300 HP or less RICE emit 2.0 g/bhp-hr NOx.hr NOx.

300 HP or larger RICE emit 1.5 300 HP or larger RICE emit 1.5 g/bhp-hr NOx.g/bhp-hr NOx.

Federal Land Policy and Management Federal Land Policy and Management Act of 1976 provides BLM authority.Act of 1976 provides BLM authority.

Compliance will mitigate incremental Compliance will mitigate incremental adverse impacts at surrounding Class adverse impacts at surrounding Class I areasI areas

NSR Permitting NSR Permitting ImplicationsImplications

Regional planning efforts will shape Regional planning efforts will shape permit requirements.permit requirements.

Transition from an effects to Transition from an effects to technology based permitting technology based permitting approach.approach.

Transition away from case-by-case Transition away from case-by-case permitting of minor sources.permitting of minor sources.

Minor source aggregation could Minor source aggregation could continue to be an issue.continue to be an issue.

Multi-jurisdictions EPA, Federal Land Multi-jurisdictions EPA, Federal Land Managers, Indian Tribes, StatesManagers, Indian Tribes, States 4CAQTF has offered an opportunity to discuss 4CAQTF has offered an opportunity to discuss

regional issues and perhaps a seed for a regional regional issues and perhaps a seed for a regional policy group to make some concerted decisionspolicy group to make some concerted decisions

Policy Oversight group made up of NMED, Policy Oversight group made up of NMED, CDPHE, EPA, NPS, FS, BLM, Tribes (continue to CDPHE, EPA, NPS, FS, BLM, Tribes (continue to work together)work together)

Navajo Nation EPA & Southern Ute TribesNavajo Nation EPA & Southern Ute Tribes Made some headway in improving relations and Made some headway in improving relations and

coordination with Tribal environmental programs coordination with Tribal environmental programs in 4 Corners areain 4 Corners area

EducationEducation Educating the public and local agencies through Educating the public and local agencies through

presentations and informed discussionspresentations and informed discussions Associated Work: Associated Work:

Ammonia monitoring, emissions inventory and Ammonia monitoring, emissions inventory and modeling projectsmodeling projects

Challenges and Challenges and SuccessesSuccesses

Recent Events in Recent Events in Summer 2007Summer 2007

Public Review of Document in June & Public Review of Document in June & JulyJuly

August 8August 8thth 2007 Task Force Meeting in 2007 Task Force Meeting in Durango, CO was our last working Durango, CO was our last working meetingmeeting Attended by approx 70 stakeholdersAttended by approx 70 stakeholders

Formation of ORT, and beginning of Formation of ORT, and beginning of workwork

Final Task Force Report will be posted Final Task Force Report will be posted on our website by this Octoberon our website by this October

Final stakeholder meeting will be held Final stakeholder meeting will be held November 7November 7thth

Erik Aaboe

NMED/AQB

(505) 955-8081

erik.aaboe@state.nm.us

Mark Jones

NMED/AQB

(505) 327-6854

mark.jones@state.nm.us