DEP Issues Finalized GP-5 and Proposed Revisions to Exemption No. 38

On February 2, 2013, the Pennsylvania Department of Environmental Protection ("DEP") issued a final, revised General Plan Approval and Operating Permit BAQ-GPA/GP-5 for Natural Gas, Coal Bed Methane or Gob Gas Production or Recovery Facilities ("New GP-5"). The DEP Bureau of Air Quality ("BAQ") also made available for comment proposed draft revisions to Air Quality Permit Exemption No. 38 ("Proposed Exemption No. 38"). Both documents were published in the February 2, 2013 issue of the Pennsylvania Bulletin. The New GP-5 is effective as of February 2, 2013.

The New GP-5 provides an expedited general permitting option (in lieu of an individual permit) for the construction, modification and/or operation of natural gas compression and/or gas processing facilities, which are not required to obtain permitting under federal programs applicable to major air sources. A production or recovery facility is defined in the New GP-5 as "a facility that produces, compresses and/or processes natural gas, coal bed methane or gob gas starting with gas dehydration, compression and storage." As compared with emissions limitations established under the prior version, the New GP-5 requires engines to meet more stringent standards for certain air contamination sources. However, the new general permit is intended to allow additional operational flexibility by permitting a greater number and variety of engines and turbines. Therefore, under the New GP-5, owners and operators of compressor stations will be afforded expedited permit approval timelines and operation flexibility in achieving emission limitations but with lower overall emission limits that may require the installation of additional control measures.

With regard to the Proposed Exemption No. 38, pursuant to 25 Pa. Code 127.14, DEP may identify air emissions sources which are not required to obtain state air permits. The current version of Exemption No. 38 exempts oil and natural gas exploration, development and production activities. The Proposed Exemption No. 38 differentiates between conventional and non-conventional operations, with non-conventional wells (identified as wells subject to 40 CFR Part 60, Subpart OOOO ["Subpart OOOO"]) being required to meet certain additional criteria in order to maintain the exemption. The deadline for public comments on the Proposed Exemption No. 38 is March 19, 2013.

Final GP-5

On February 2, 2013, the DEP finalized and issued the New GP-5, which it initially made available for comment in March 2012. The New GP-5 may be used to permit midstream facilities which are not subject to New Source Review ("NSR") or Prevention of Significant Deterioration ("PSD") programs or Title V permitting under the federal Clean Air Act.

The New GP-5 provides for emissions limitations for natural gas-fired rich and lean burn engines, as well as for natural gas-fired simple cycle turbines authorized under it. It includes various typical permit requirements, such as municipal notifications, recordkeeping, source testing and performance testing. It also provides for annual source reporting in accordance with 25 Pa. Code § 135.3 and for requirements to detect and repair equipment leaks.

Several significant changes come with the issuance of the New GP-5. The draft version published for comment purported to require permitting for upstream natural gas operations, including wellhead permitting and permitting of completions operations. In recognition that the recently finalized New Source Performance Standards applicable to upstream operations under Subpart OOOO do not create any requirement that DEP permit those facilities in order to enforce Subpart OOOO’s requirements, the New GP-5 does not apply to wellheads and associated upstream equipment.¹

As compared to the prior version of GP-5, the New GP-5 authorizes permitting of larger rich and lean burn engines and turbines, which were not covered by the prior version.

The draft New GP-5 expressly incorporated Subpart OOOO, rather than incorporating by reference. As issued as a final rule, the New GP-5 incorporates federal and state regulations by reference, allowing for consistency between the permit and those regulations, which is especially significant in light of the potential for changes to the applicable regulations.²

The New GP-5 also removes a provision found in the prior version which allowed an applicant to request that the General Permit "be used to limit a facility’s potential to emit ("PTE"), as defined in 25 Pa. Code § 121.1, … in accordance with the specifications in the Application for Authorization to Use GP-5." Instead, the New GP-5 now expressly provides that facilities authorized under it may not exceed major source thresholds and requires monthly recordkeeping of actual emissions demonstrating compliance.

Under applicable regulations and DEP policy, an administratively complete application for a New GP-5 is to be reviewed and, if appropriate, approved within 30 days of submission, as compared with 130 days for plan approvals under DEP’s current permit decision guarantee policy.

Authority to operate under the New GP-5 is granted for a fixed term of five years, and the DEP will notify each applicant in writing when authority to operate under the New GP-5 is granted. Any facility operating under the New GP-5 must comply with its terms and conditions.

In addition to instructions and application documents for the New GP-5, DEP has also made available on its website a New GP-5 fact sheet, its comment and response document, and a technical support document.

Proposed Exemption No. 38³

Currently, Exemption No. 38 provides a blanket exemption for oil and natural gas exploration and production activities as follows:

Oil and gas exploration and production facilities and operations that include wells and associated equipment and processes used either to: a) drill or alter oil and gas wells; b) extract, process and deliver crude oil and natural gas to the point of lease custody transfer; c) plug abandoned wells and restore well sites; or d) treat and dispose of associated wastes.

DEP Document No. 275-2101-003

The Proposed Exemption No. 38⁴ would provide state air permitting exemptions to (1) conventional wells, wellheads and associated equipment; (2) wells, wellheads and associated equipment subject to 40 CRF Part 60 Subpart OOOO; and (3) non-road engines as defined in 40 CFR, Part 89.⁵ Non-conventional wells⁶ subject to Subpart OOOO would be required to also meet the following criteria in order to be exempt:

1. The use of a forward looking infrared ("FLIR") detection or other leak detection monitoring device within 60 days after the completion of the well and annually subsequently thereto. Any leaks detected would be required to be repaired within 30 days, unless an extension is granted by DEP.
2. Storage vessels and storage tanks must be equipped with volatile organic compound ("VOC") emissions controls achieving reductions of 95 percent or greater.
3. Combined VOC emissions from all sources at the "facility" must be less than 2.7 tons per 12-month rolling basis. If the VOC emissions include hazardous air pollutants ("HAPs"), HAP emissions at the facility must be less than 1 ton of any single HAP or 1 ton of all HAPs combined in any consecutive 12-month period.
4. Flaring operations must be done in compliance with Subpart OOOO requirements. Flaring may be used by "exploration wells." Enclosed flares must be used for "other operations." Unenclosed flares may be used for "repair, rework or re-completion at a wellhead". Additionally, flares may be used for emergency or safety purposes with DEP notification within 24 hours.
5. Combined nitrogen oxide ("NOx") emissions from stationary internal combustion engines at the "facility" must be less than 100 lbs/hr, 1000 lbs/day, 2.75 tons per ozone season and 6.6 tons per year on a 12-month rolling basis.

Well owners or operators would be required to comply with notification, recordkeeping and reporting requirements of Subpart OOOO.⁷ Compliance would be demonstrated through "any generally accepted model or calculation methodology." Further, well owners or operators not meeting the requirements would be able to submit a Request for Determination ("RFD") to DEP seeking the exemption of a specific well site. If DEP denies the RFD, permitting through a general permit or plan approval would be required.⁸