How VRUs Help You Take Advantage of Permit By Rule in Texas

Securing an air permit is a critical factor in getting oil & gas production facilities and well sites approved, drilled, and efficiently built. Failure to obtain permits in a timely and cost-effective manner can impair economic returns and create expensive delays for field development plans.

Oil & gas operators in Texas, however, can use a Vapor Recovery Unit (VRU) to take advantage of what is known as Permit by Rule, or PBR, for obtaining air permits.

The Texas Commission on Environmental Quality (TCEQ) has the responsibility for issuing federal and state air quality permits for oil and gas production facilities and well sites in that state. Essentially, the U.S. Environmental Protection Agency (EPA) has delegated its air permitting role to the TCEQ. Additionally, TCEQ offers operators an efficient way to obtain air quality permits and avoid expensive and time-consuming reviews.

If operators can demonstrate they are taking steps to mitigate the Potential to Emit (PTE) below a certain level from a given facility or well site, they can begin flowback and production without prior permit approval.

Emissions Types and Sources

Texas regulates emissions of volatile organic compounds (VOC) and nitrous oxides (NOx) and has set certain thresholds for purposes of determining what kind of permit an operator must obtain for its production facilities and well sites.

Emissions are classified into “minor” sources and “major” sources. If a well site or facility’s PTE is estimated classify it as a Major emissions source, it must apply for a Federal Title V permit, which can cost several tens of thousands of dollars just to prepare. The approval process itself can last as long as six months or more, and once granted requires continuous detailed recordkeeping, inspections and audits.

States have different Major source emissions thresholds, which are further complicated (i.e., reduced) if an area has been designated a non-attainment region for ozone. Since VOC and NOx contribute to ozone creation, EPA and TCEQ have more stringent emissions requirements for these substances. One area in Texas that is subject to more stringent Title V emissions thresholds is Bexar County, which includes the City of San Antonio, and is home to the active Eagle Ford Shale play.

A significant source of VOC and NOx emissions from oil and gas production facilities are above ground oil storage tanks. Flaring tank vapor as waste gas generates NOx and releases unburned VOCs, while faulty thief hatch seals and small leaks in the tanks themselves can cause fugitive emissions that contribute to PTE.

Air Permit Thresholds in Texas

TCEQ provides for three types of air permits, each with its own emissions levels, as summarized below.

• Federal Title V Permits are required for Major Sources (facilities or well sites) with PTE of 100 tons per year (TPY) or more of VOC

• Standard Permits are required for Minor Sources with PTE of 25 tpy or more but less than 100 tpy of VOC

• Permit by Rule (PBR) is available for True Minor sources with PTE consisting of less than 27 tpy of VOC

Note that the above are statewide thresholds and are typically more restrictive in non-attainment areas.

Why Qualify for Permit by Rule?

The advantage of qualifying for Permit by Rule is operators may begin flowback and production before receiving permit approval.

Above ground oil storage tanks are usually the most significant source of regulated emissions, which means capturing tank vapor gas and selling it instead of flaring or venting it is often the low-hanging fruit of reducing PTE.

At present, TCEQ allows operators to take a 95% credit against PTE by using a Vapor Recovery Unit (compressor) to capture tank vapor gas.

The implication is that if a production facility’s PTE is 500 tpy of VOC, which would fall squarely in the Federal Title V permit requirement, an operator could potentially reduce the facility’s PTE to 25 tpy VOC by installing a VRU and take advantage of the operational and administrative efficiencies of Permit by Rule.

We make some broad generalizations in this article, and caution operators to get expert advice on permitting, as there are many other factors involved in qualifying for Permit by Rule. One source of authoritative information is 30 TAC 106 of the Texas Administrative Code.

Advantages of Leveraging Permit by Rule

There are several operational, financial and environmental benefits to qualifying for Permit by Rule, including:

• Generate incremental profits by capturing tank vapor gas and selling it, instead of flaring it or unintentionally vent it

• Increased operational efficiencies from faster permit approvals

• Keep projects on track and on budget by avoiding lengthy and expensive Title V and Standard permitting requirements

• Improve environmental performance and compliance