1. WESTAR Oil & Gas Conference October 2008 Lori Bocchino Wyoming Oil & Gas Permitting and New Rule/Policy Revisions

2. Current Permitting BACT for Compressor Engines  NO x  Review on a case by case basis; and have seen a range of 0.7-1.5 g/hp-hr for NO x  VOC  For engines >100 hp, 0.7 g/hp-hr for VOC due to Subpart JJJJ and ozone concerns Presumptive BACT Guidance for Wellsite Production Facilities  Statewide requirements  Jonah-Pinedale area requirements  Current version applies to all wells spudded or facilities modified on/after September 1, 2007. 2 Wyoming DEQ 10/08

3. Submission/Installation Dates Permit Applications  90 days after First Production Prescribed Controls  60 days after First Production  Upon First Production in Jonah-Pinedale Completion Reports  60 days after First Production 3 Wyoming DEQ 10/08

4. First Date of Production (FDP): The date permanent production equipment is in place and product is flowing to sales lines, gathering lines or storage tanks. Production occurring during well completion activities which is routed to temporary production equipment is considered to occur prior to the FDP. If extended periods of time pass between zone completions and production from initially completed zones is flowing to permanent production equipment, the FDP is the date when production began flowing to the permanent equipment, even though more zones will be completed later. 4 Wyoming DEQ 10/08

5. Statewide Jonah-Pinedale Dehys:  Projected potential emissions ≥ 5 TPY HAPs or 15 TPY VOCs  98% control w/in 60 days of FDP Condensate tanks:  Projected potential emissions ≥ 20 TPY VOC  98% control w/ in 60 days of FDP  Control may be removed after one year if emissions have declined to < 15 TPY VOCs  BACT review required if total VOC > 15 TPY Dehys:  98% control upon FDP Condensate tanks:  98% control upon FDP  Control may be removed after one year if flash emissions have declined to < 15 TPY VOCs Pneumatic Heat Trace/Hot Glycol Circulation Pumps:  Discharge lines w/HC motive gas route into fuel gas supply or to a closed/controlled system upon FDP.  BACT review required if total VOC from any source > 15 TPY 5 Current BACT Guidance Wyoming DEQ 10/08

6. Presumptive BACT Revisions Identifying “Concentrated Development Areas”  More strict emissions control requirements Also, new requirements for:  Drilling, Completions, Workovers  Well Site Production Equipment  Wellheads, Wellsites, Pipelines, Gathering System Lines  Truck Loading  Best management practices to reduce well slugging 6 Wyoming DEQ 10/08

7. Drilling, Completions, Workovers Wyoming DEQ 10/08 7 Permits for well completions/re-completions requiring “green completion” techniques. Planned venting in preparation for and during workovers/downhole repairs must be flared or routed into a closed loop system or gathering/sales line. (No active evaporation of fluids from “drill” pits.)

8. Well Site Production Equipment Wyoming DEQ 10/08 8 Produced Water Tanks  NEW SITES: At sites where condensate flash must be controlled, produced water tanks must be closed top w/vapors routed to the flash emissions control device upon start up.  MODIFIED SITES: At sites where condensate flash must be controlled, new and existing produced water tanks must be closed top and all vapors from new and existing tanks must be tied into the condensate tank emissions control upon modification to the site. Pneumatic Pumps  NEW SITES: Discharge from natural gas activated pumps must be vented to emissions control or to a closed loop system (gas sales or collection line, fuel gas line, etc.). When routed to a fuel gas system, excess gas not used as fuel must be vented to an emissions control device.  MODIFIED SITES: New and existing natural gas-activated pumps must be controlled as above.  ELECTRIFIED NEW and MODIFIED SITES: All pumps must operate on instrument air.

9. Well Site Production Equipment (con’t) Wyoming DEQ 10/08 9 Pneumatic Devices  NEW SITES: Install no-bleed or low-bleed devices.  MODIFIED SITES: New devices must be no-bleed or low-bleed. Existing high-bleed* devices must be retrofit/replaced with no-bleed or low-bleed.  ELECTRIFIED NEW and MODIFIED SITES: All devices must operated on instrument air. Condensate/Oil Tanks  Tank vapors controlled upon start up. Controls may be removed after one year if VOC emissions, based on actual production rates, have declined to < 10 TPY. Dehydration Units  Reboiler still vent and glycol flash separator vapors must be controlled upon start up. * Natural Gas STAR Program: high-bleed = ≥ 6 scfh (50 Mcfy)

10. Wellheads, Wellsites, Pipelines, Gathering System Lines Wyoming DEQ 10/08 10 Gas associated with planned blowdown and venting episodes, including blowdown of lines to relieve fluid/ice/hydrate build-up, must be routed to a flare or closed system. At sites where flashing emissions are controlled, vapors associated with automatic, intermittent blowdown/venting must be routed to the emissions control or to a closed system.

11. Truck Loading, Well Venting/Blowdown Truck Loading  Where tank emissions are controlled, route vapors displaced during truck loading to the tank emissions control or other vapor balancing system. Well Venting/Blowdown  When the gas flow velocity from a well is not sufficient to lift reservoir liquids, eliminate well venting and blowdown to the atmosphere in order to expel the wellbore liquids by:  Installing velocity tubing strings (smaller ID tubing)  Installing plunger lift systems  When these options are not achievable, any gas vented or blown down to restore gas production must be flared or captured. 11 Wyoming DEQ 10/08

12. Drill Rig Engine Permitting VOLUNTARY partnership between industry and AQD.  Met with several operators to see how permitting will fit their drilling plans. BAT required in Jonah Infill ROD; permitting required in Pinedale Anticline ROD. Not looking to control emissions every rig. Full development drilling may have different requirements than exploratory drilling. Demonstration period for exploring different control measures.  EnCana found that switching to natural gas not only lowered emissions, but was more economical. 12 Wyoming DEQ 10/08

13. Sublette County Ozone Response Wyoming DEQ 10/08 13 AQD can no longer conclude that increases in NO X and/or VOC in Sublette County can be justified Interim permitting policy has been implemented on July 21, 2008  All applications will require a demonstration that the proposed facility will not prevent attainment or maintenance of an air quality standard

14. Interim Permitting Policy Three options  Modeling  Offsets  Alternate demonstrations AQD expects that offsets for VOC and/or NO X emissions is the most practical demonstration 14

15. Interim Policy (con’t.) Offset must be in Sublette County Offset must be enforceable or approved by AQD Reductions must occur after 4/1/08 Offset Ratios  For applications submitted prior to August 1, 2008:  1:1 offsets for NO X and VOCs  For applications received after August 1, 2008:  Offset of 1.5:1 for VOC and 1.1:1 for NO X 15

16. Other efforts in Sublette County Wyoming DEQ 10/08 16 Request for voluntary reductions Implementation of PAPA ROD  NO X reductions required  Liquids gathering required  Ozone modeling and mitigation Non-voluntary initiatives  May be through nonattainment SIP  Develop models then strategies

17. Questions?