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Overview of Key Water Issues Affecting the Oil and Gas Industry


Overview of Key Water Issues Affecting the Oil and Gas Industry John Veil Argonne National Laboratory NPTO Seminar September 11, 2002 Three Hot Issues Phase II ... – PowerPoint PPT presentation

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Title: Overview of Key Water Issues Affecting the Oil and Gas Industry

Overview of Key Water Issues Affecting the Oil
and Gas Industry
  • John Veil
  • Argonne National Laboratory
  • NPTO Seminar
  • September 11, 2002

Three Hot Issues
  • Phase II Stormwater
  • SPCC
  • Section 316(b)

Stormwater Runoff - Background
  • Stormwater runoff must be covered under an NPDES
    permit (usually general permit)
  • Phase I runoff from industrial sites and from
    construction sites disturbing gt5 acres
  • Phase II - Runoff from construction sites
    disturbing from 1-5 acres
  • CWA exempts oil and gas exploration and
    production sites from stormwater permits
  • EPA interprets construction of lease roads, drill
    pads, and other disturbed areas to be outside of
    the scope of the exemption

  • EPA delegated NPDES authority to most states
  • States issue general permits
  • Where states do not take over program, EPA
    regions issue permits
  • Region 6 presents particular problem for industry
  • NM does not have primacy
  • OK and TX have primacy for all categories except
    for oil and gas
  • Region 6 writes oil and gas stormwater NPDES
    permits for these 3 heavy producing states

Region 6 Issued a Phase I Permit in July 1998
  • Permit technical requirements
  • must provide an ESA consultation
  • must provide information on whether the
    activities would affect any property on the
    National Register of Historical Places
  • where effects occur, must provide written
    agreement with State or Tribal Historic
    Preservation Officer
  • must conduct inspections at least every 14 days
    and within 24 hours of any rainfall gt 0.5

Phase I Permit Requirements (2)
  • must develop a stormwater pollution prevention
    plan (SWPPP)
  • describe BMPs (does not specify which BMPs must
    be used but must use one or more as necessary)
  • employ structural practices to divert flows,
    store flows, and/or control runoff
  • provide the timing and sequence of different BMPs
  • install and maintain any control measures in
    accordance with manufacturer's specifications
  • sediment traps and ponds must be cleaned out
    before accumulating more than 50 of their

What Is the Concern?
  • EPA will issue first Phase II permit in Jan.
    2003 and begin implementation in March 2003
  • EPA has not discussed permit conditions, but will
    probably have some or all of the conditions in
    the Phase I permit
  • Suddenly, most new EP operations will need to
    get a Phase II permit before starting
  • The huge increase in number of permits, ESA
    certifications, and historic preservation reviews
    is likely to cause
  • delays in starting to drill (drill rig scheduling
  • costs for additional studies and paperwork
  • Some wells wont get drilled

Next Steps
  • Participate in meetings, discussions, and
    conference calls
  • Comment on a related regulatory proposal
  • Effluent guidelines for construction industry
  • Review and comment on draft permit, when
  • Work with EPA and OMB to make permit conditions
    more flexible and reasonable

SPCC Background
  • SPCC spill prevention, control, and
  • Existing SPCC regulations have been in place
    since 1973
  • EPA has proposed a series of amendments over the
    ensuing years
  • These were captured in final regulations passed
    July 17, 2002
  • New rules are more comprehensive
  • Many provisions that previously were
    discretionary are now mandatory

  • Expands coverage to include users of oil
  • Facility definition is broadened
  • Can include individual pieces of equipment
  • Threshold increased to 1,320 gals of oil in
    aboveground tanks
  • Exemptions
  • Completely buried tanks
  • Containers of 55 gals or less
  • Tanks used for wastewater treatment (does not
    include produced water treatment)

SPCC Plans
  • Must be certified by Professional
  • Must be reviewed following material change to
    facility or every 5 years
  • Plan must be kept on site if facility is manned
    gt4 hours/day
  • Revision required following
  • Single spill gt1,000 gals
  • Two spills each gt42 gals within 12 month period

Content of SPCC Plans
  • More requirements for drawings, emergency
    procedures, etc.
  • Option for plan to be written in non-standard
  • Periodic integrity testing of tanks and leak
    testing of pipes and valves
  • Annual training for oil-handling employees

SPCC Plan Compliance Dates
  • Any facility in operation before August 17, 2002
    and having experienced a reportable release must
    prepare a plan in accordance with the new rule
    within six months and implement the plan within
    one year
  • A facility going into operation between August 16
    2002 and August 18, 2003 must implement the plan
    by August 18, 2003
  • Existing facilities required to have a current
    SPCC plan and that have not experienced a
    reportable release must revise the current plan
    within six months of the new five-year expiration
    period of the existing plan

Requirements for All Facilities Covered by Rule
  • Discharge control equipment (e.g., dikes, curbs,
    berms, sumps, weirs, etc.) is required for all
    equipment and facilities
  • Could include tank batteries, separators, pipes,
    flow lines, etc.
  • Any bulk storage containers virtually any tank or
    device used to store oil) must provide secondary
  • Containment must hold volume of largest container
    plus stormwater
  • Secondary containment can only be waived if
    technically impractical
  • High cost is not an excuse
  • Any field constructed aboveground tank undergoing
    repair must be tested before it is placed back
    into service

Other Requirements for Specific Facilities
  • New buried piping must have protective wrapping
    and coating
  • Drilling facilities must install blowout
    prevention before drilling below casing strings
    or during workovers
  • Additional inspections

Next Steps
  • The rule was only published last month so little
    has been done yet
  • This is a final rule so there is no opportunity
    to review and revisit it
  • Make sure all stakeholders are aware of new

316(b) - Background
  • 316(b) of the CWA requires location, design,
    construction, and capacity of cooling water
    intakes to reflect best technology available to
    minimize adverse environmental impact
  • Primarily affects power plants and manufacturing
    facilities that use a lot of cooling water
  • Also affects refineries and offshore drilling
  • In mid-1990s, EPA was sued by environmental
    groups and agreed to develop new rules

EPAs Regulatory Schedule
Category Proposal Date Final Rule Date
Phase I - New facilities 8/10/00 - done 12/18/01- done
Phase II - Existing utility and non-utility power producers 4/9/02 - done 8/28/03
Phase III - Other existing facilities 6/15/03 12/15/04
Commonly Considered Impacts from Cooling Water
  • Impingement
  • Organisms are trapped on intake
  • Entrainment
  • Organisms pass through intake

Note Some but not necessarily all impinged and
entrained organisms are killed.
Basic Principles of Phase I Proposal
  • Two-track process
  • Track I requires closed-cycle cooling for most
  • Track II allows companies to demonstrate that
    other measures short of closed-cycle cooling are
  • EPA is currently being sued by both industry and
    environmental groups

Basic Principles of Phase II Proposal
  • Different sets of requirements for water bodies
    with different presumed sensitivity
  • Technology based standards for impingement
    mortality and/or entrainment
  • reductions compared to a baseline of
  • Shoreline intake
  • No fish protection technology
  • May use mitigation methods as part of reduction
  • Several alternative ways of complying
  • Cost-to-cost variance
  • Cost-to-benefit variance
  • Install closed-cycle cooling

Overview of Phase II Requirements
  • All facilities must reduce impingement mortality
    by 80-95 and some must reduce entrainment by
  • Requirements based on water body type

  • Operator must demonstrate that suite of
    mitigation measures will maintain fish and
    shellfish to a level comparable to that resulting
    from the use of CWIS technologies
  • Mitigation can be part of a compliance program or
    the entire program

What Are the Concerns?
  • What will the flow threshold be for Phase III?
  • 2 MGD was threshold for Phase I
  • How many offshore facilities will be included?
  • What types of controls may be placed on them?
  • Mobile offshore drilling facilities have
    different construction and design issues than
    fixed onshore facilities

Next Steps
  • Work with EPA and industry to accurately
    characterize offshore drilling facilities
  • Cooling water intake volume
  • Number of facilities
  • Opportunities for cost-effective retrofits
  • Review EPA work regarding refineries and offer
    comments as necessary

Other Water Regulatory Issues
  • Discharge Issues
  • Water quality standards
  • Total maximum daily loads (TMDLs)
  • Wetlands

Discharge Issues
  • NPDES permits required
  • Coal bed methane discharges

Water Quality Standards (WQS)
  • EPA continues to develop new water quality
    criteria for toxics, nutrients, microorganisms
  • http//www.epa.gov/ost/standards/wqcriteria.html
  • WQS used to set NPDES permit limits
  • Need to consider mixing zone policies
  • May result in very strict limits
  • May serve as CERCLA or RCRA clean up standards
  • If WQS are set very low, the cost of complying
    can be quite high

Total Maximum Daily Loads (TMDLs)
  • Maximum amount of a given pollutant that a water
    body can receive and still meet water quality
  • TMDLs are pollutant-specific
  • May need more than one TMDL for a given water
  • Based on the capacity of the water body, not on
    the sources of the pollutant

Final TMDL Regulations
  • Adopted in 2000
  • Controversial EPA adopted this rule against the
    wishes of Congress
  • Includes point sources and nonpoint sources
  • Air deposition from utilities
  • Nitrogen deposition in Chesapeake Bay watershed
  • Mercury in Great Lakes
  • Strong potential for economic impact over 5-20
    year time frame

2000 Rule Whats in a TMDL?
  • Name of water body and pollutant
  • Water quality standard that must be met
  • Allowable pollutant load
  • Load reduction needed and sources of pollutant
  • Allocations for point and nonpoint sources
  • Implementation plan

2000 Rule Implementation Plan
  • List of actions needed to reduce pollutant
  • Time line
  • Reasonable assurance that implementation will
  • Monitoring plan with milestones for measuring
  • Plans for revising TMDL if suitable progress is
    not made

Actual Example of TMDL for Mercury in the Middle
and Lower Savannah River
  • Acceptable instream mercury 2.8 ppt
  • Using average annual flow and loading, final TMDL
    is 32.8 kg/year (2/28/01)
  • Current loading is 58.8 kg/year
  • Needed reduction is 26 kg/year
  • Assumes that 99 of mercury comes from
    atmospheric sources
  • Load allocation (atmospheric sources) 0.99
    (32.8) 32.6 kg/year
  • Wasteload allocation (NPDES sources) 0.01
    (32.8) 0.3 kg/year

How Will Mercury TMDL Be Achieved?
  • Assumes that 44 reduction in atmospheric
    allocation will be met be 40-50 reduction in
    mercury deposition by 2010 (CAA MACT controls)
  • Assumes that NPDES permits will employ water
    quality based limits for mercury and some
    facilities will implement mercury minimization

  • Many regulatory initiatives on wetlands
  • Nationwide permits
  • Mitigation banking
  • Could affect ability to install, maintain, or
    repair pipelines or to drill wells in some areas
  • There have been and continue to be precedential
    court decisions
  • Need to follow developments to avoid costly or
    time-delaying rules

  • There are lots of water issues that affect the
    oil and gas industry
  • Some are developing and DOE can play a role in
    shaping their outcome
  • Others are finalized and DOE can help
    stakeholders implement the requirements
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