Second report of the National Pollutant Release Inventory working group 2001 to 2002: chapter 3


3. Upstream Oil and Gas Exemption

3.1 Introduction

3.1.1 Background

The recent addition of CACs to the NPRI stimulated the interest in more comprehensive coverage of emissions from the UOG industry. As a step in this direction, NPRI staff had suggested the option of removing the existing reporting exemption for emissions from activities related to the drilling and operating of oil and gas wells, beginning in the 2002 reporting year. It was decided, however, that more time was required to research and analyse various approaches to achieving an acceptable level of coverage from the UOG industry. In September of 2001, an UOG SG of the WG was formed, to assist EC in developing the background information necessary for the task of determining options, to identify and explore preferred options, and to provide a report back to the WG.

3.1.2 Context

The following points are important context for considering options:

3.1.3 Additional Considerations

Work on this issue underwent a number of iterations. At the May 30th-31st meeting of the WG, the UOG SG presented three options to the WG. Each involved some type of aggregation for reporting purposes, though the rationale for aggregation, and the associated approach, differed for each option.

At the May meeting, WG members agreed that these three "options" would be better viewed as general scenarios or approaches, and that a final recommendation might actually blend elements of each. In addition, industry members of the WG asked the SG to consider the following element that could be integrated into any option:

Wells, given that they are small emitters on an individual and a collective basis, can be treated as an area source, with emissions calculated via the application of emissions factors to the production-related data already provided to the provincial utility boards.

It was suggested that with this element in place, the SG could focus on preferred approaches for NPRI reporting from facilities associated with the gathering versus the production segment of UOG. Some industry representatives on the WG indicated that this approach would be more consistent with the current division between what is directly reported to the NPRI, and what is estimated by EC on an area-source basis. This would go some way towards addressing the concern that aggregation of UOG facilities could set a precedent of aggregating to trigger reporting from small facilities that would normally be treated as area sources (and whose emissions would therefore be estimated by EC, as opposed to reported to the NPRI).

At the same time, the ENGO members of the WG held the position that removal of the current reporting exemption for oil and gas wells is an essential step. They also reiterated some basic principles that they feel are key to an acceptable approach to reporting from the UOG industry, which include:

The WG as a whole also agreed that in determining how to achieve better coverage of UOG emissions, a guiding principle is that the UOG industry should report consistently in relation to other sectors reporting to the NPRI.

3.2 Options

Based on the direction received at the May meeting, and on additional research and discussion, the following options were developed by a technical committee of the UOG SG, with preliminary analysis of the options subsequently undertaken by EC. It is important to note that any of these options can be paired with removal of the existing activity exemption for "drilling and operating of wells to obtain oil and gas products".

Option 1: Subject all UOG industry facilities (other than drilling and operation of oil and gas wells) to the full set of NPRI reporting requirements, including the requirement to report CAC from stationary combustion equipment regardless of number of employees.

As previously noted, for the 2002 reporting year EC has allowed the 10-employee threshold to apply for the UOG industry in relation to CAC reporting from stationary external-combustion equipment. This allowance is unique to the UOG industry. Option 1 would require UOG industry facilities, excluding drilling and operating oil and gas wells, to assess and report based on the full set of NPRI requirements that are in place for other source sectors.

Based on the information provided in the Clearstone report and EC’s preliminary impact analysis, Table 3.1 provides an estimate of the number of UOG facilities that may be required to report for CAC to the NPRI under Option 1. It is important to note that the source populations for some "UOG Facility Types" in the Clearstone report were not available due to a lack of information, and the analysis is therefore incomplete at this time. For example, the source population for fuel combustion operations related to gas gathering systems were not provided in this analysis. The UOG Subgroup will continue to research and obtain more information in their efforts to complete the impact analysis.

Table 3.1: Preliminary Impact Analysis for Option 1
UOG Industry Sector Facility Type Number of Facilities Reportable Emission Substances
Gas Sour Gas Extraction Plants 58 CO2, NOx, CO, TPM, PM2.5
Gas Sour Gas Flaring Plants 197 PM2.5
Gas Sweet Gas Flaring Plants 394 NOx, VOC, CO, PM2.5
  Total Facilities 649  

N.B. This impact analysis remains incomplete, and facility type reportable emissions are related to combustion related processes only

Option 2: Option 1, plus removal of the employee threshold for reporting of CAC from all UOG sources (not just stationary combustion equipment).

Option 2 would require UOG industry facilities to assess and report based on the full set of NPRI requirements that are in place for other source sectors; but for CAC, to report when reporting thresholds are reached, regardless of number of employees. The rationale for removing the employee threshold for CAC reporting is that some smaller UOG facilities (such as sweet single-well batteries from convention crude oil production) may be large emitters of VOCs. (However, this situation may not be limited solely to the UOG industry.) Based on information provided from the Clearstone report and EC’s preliminary impact analysis, it is estimated that many more UOG industry facilities would be required to report under Option 2 than report at present. Based on information available to date, Table 3.2 provides an estimate of the number of UOG facilities that may be required to report for CAC. As noted above, the source population for some "UOG Facility Types" in the Clearstone report were not available due to a lack of information.

Table 3.2: Preliminary Impact Analysis for Option 2
UOG Industry Sector Facility Type Number of Facilities Reportable Emission Substances
Oil Central Batteries (sweet) 303 VOC, n-Hexane
Oil Cleaning Plants (heavy oil) 72 PM10
Oil Satellite Batteries (bitumen) 224 PM10
Oil Single-Well Batteries (sweet) 6,994 VOC
Gas Meter Stations 1,835 PM10
Gas Sour Gas Extraction Plants 58 CO2, NOx, CO, TPM, PM2.5
Gas Sour Gas Flaring Plants 197 PM2.5
Gas Sweet Gas Flaring Plants 394 Ox, VOC, CO, PM2.5
  Total Facilities 10,077  

N.B. This impact analysis remains incomplete; and the facility type reportable pollutants are related to both combustion and non-combustion processes. For example, VOC emissions from batteries may be fugitive-related rather than combustion-related.

Option 3: Option 2 plus complete removal of employee threshold.

Option 2 would require UOG industry facilities to assess and report based on the full set of NPRI requirements that are in place for other source sectors; but to report releases for all substances when reporting thresholds are reached, regardless of the number of employees. In other words, it would go beyond Option 2 in that all UOG facilities (regardless of number of employees) that meet the standard 10-tonne MPO thresholds for NPRI-listed substances listed at this threshold would have to report releases and transfers (e.g. hydrogen sulphide in a gas or oil stream); and similarly for facilities meeting ATHs for those substances listed at an ATH -- including PAHs, dioxins, furans, and mercury.

Additional analysis with respect to the level of coverage that can be anticipated with each of the above options will be developed over the next two months and provided to the WG prior to its September meeting.

3.3 WG Views and Recommendations

3.3.1 Status with Respect to a Recommended Option

Given that options are still being refined, and that additional analysis is pending, definitive views on the options have not yet emerged. Work will continue over the summer, in order to lay the ground for closure on this issue at the September meeting.

3.3.2 Reporting Structure

While the WG agreed that reporting from the UOG industry should be consistent with current NPRI requirements, there was consensus that some adaptation of the reporting structure, to take account of the unique conditions in the UOG industry, is reasonable. To that end, the WG recommends the following reporting elements, regardless of the option adopted:

Reporting by the owner or operator

Reporting responsibility should logically relate to the UOG production-reporting systems already in place at the provincial/territorial level.

Multi-facility reporting

Operators should be allowed to file multi-facility reports that detail individual facility emissions that meet NPRI reporting thresholds. This will allow for simplification of the reporting form.

3.4 Additional Issues and Ongoing Work Requirements Related to UOG

As noted, research will continue over the summer to clarify the coverage (proportions of emissions and of facilities, and number of reporters) that would be achieved with the different options. This research will be available for consideration by the WG at its September meeting.

EC will continue to research the implications of the "manufactured, processed and otherwise used" threshold for the UOG industry in cases where there may be reporting issues (e.g., undue reporting burden for the quantities released). Examples include: benzene in a gas stream that is transported to a dehydrator; and hydrogen sulphide in a sour gas stream.

The UOG technical committee (comprised of members of the UOG SG) will continue to meet to review, analyze and develop a reporting option for the UOG industry, in consultation with their respective members. Progress reports will be disseminated to the UOG SG. The SG will meet, if necessary, in early September to prepare a final report for consideration by the full WG at its September 23rd-24th meeting.

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