The Colorado Air Pollution Control Division (APCD) has proposed new rules for the oil and gas industry that would make Colorado the first state in the nation to regulate methane emissions from oil and gas operations. Among other new monitoring requirements, the proposed regulations would require oil and gas operators to institute leak detection programs at all facilities regardless of size.

If instituted, the proposed revisions to Air Quality Control Commission (AQCC) Regulation 7 will apply to oil and gas exploration and production operations, well production facilities, natural gas compressor stations, and natural gas processing plants across the state. As part of its proposal, APCD has also proposed changes to Regulation 3, which would affect other stationary pollution sources as well as the oil and gas industry. A rulemaking hearing is planned for February 19-21, 2014.

APCD's proposal would adopt the federal New Source Performance Standards (NSPS) for the oil and natural gas sector (Subpart OOOO, also known as Quad O) promulgated by EPA earlier in 2013, and would also adopt state-only regulations that are more stringent than Quad O. The proposed state-only regulatory changes would apply statewide and focus on hydrocarbon emissions from storage tanks (including tanks manifolded together) and leak detection and repair programs. The earliest proposed compliance date is May 1, 2014, for some provisions; most would be effective January 1, 2015, or later.

Major proposed changes to Regulation 7 include:

  • Regulation of methane and ethane; the proposed regulation includes the control of "hydrocarbons" as well as volatile organic compounds (VOCs).
  • Leak detection and repair (LDAR) programs would be required at well production facilities, storage tanks and compressor stations (Quad O regulates natural gas processing plants). The LDAR requirements would be phased in, with higher-emitting facilities being subject to earlier deadlines (Jan. 1, 2015, at the earliest) than lower-emitting facilities.
  • All storage tanks with six tons per year (tpy) or more of uncontrolled actual VOC emissions must operate control equipment that achieves an average hydrocarbon control efficiency of 95 percent (if using combustion devices, those must be rated to 98 percent efficiency).
  • Controls are required on storage tanks at well production facilities during the first 90 days after the date of first production. The controls may be removed after the first 90 days as long as the source can demonstrate actual uncontrolled VOC emissions are less than six tpy.
  • Storage tank owners must develop a storage tank emission management (STEM) system to minimize emissions from venting at pressure relief devices and thief hatches or other access points. The proposal includes minimum monitoring frequency (depending on amount of uncontrolled actual emissions) and associated recordkeeping requirements.
  • The definition of "leak" would be narrowed to include a concentration of hydrocarbon greater than 2,000 ppm at existing facilities, except for existing well production facilities, where a leak would be 500 ppm or greater. For all facilities constructed after May 1, 2014, a leak would be defined as 500 ppm or greater.
  • Beginning May 1, 2014, hydrocarbon emissions from flowing wells must be captured or controlled unless venting is necessary for safety.

The proposed changes to Regulation 3 include the following:

  • Abolishing the complicated BIN system for determining when non-criteria reportable pollutants must be reported via an air pollution emission notice (APEN), and creating a uniform threshold of 250 pounds per year for non-criteria reportable pollutants.
  • Abolishing the so-called "catch all" requirement that sources subject to federal New Source Performance Standards (NSPS) or National Emission Standards for Hazardous Air Pollutants (NESHAP) must obtain a minor source permit from APCD regardless of emissions amounts.
  • Abolishing the exemption for crude oil storage tanks with a capacity of 40,000 gallons or less from operating permit requirements.