1. September 13, 2007 Erik Aaboe & Mark Jones NMED/Air Quality Bureau Four Corners Air Quality Task Force

3. Oil & Gas Wells in Four Corners (as of 2003)

4. Four Corners Air Quality Challenges Existing and proposed coal-fired power plants Existing and proposed coal-fired power plants Multiple jurisdictions Multiple jurisdictions 19,000 existing oil and gas wells 19,000 existing oil and gas wells 12,000 additional projected for next 20 years 12,000 additional projected for next 20 years Many small unregulated sources Many small unregulated sources Multiple operators Multiple operators Changing field conditions Changing field conditions

5. 4-Corners Air Quality Task Force (4CAQTF) Origins December, 2004 meeting in Denver – EPA Region VIII, BLM, CDPHE, NMED – regarding Northern San Juan Basin Cumulative Impact Analysis December, 2004 meeting in Denver – EPA Region VIII, BLM, CDPHE, NMED – regarding Northern San Juan Basin Cumulative Impact Analysis NMED just finishing San Juan County Early Action Ozone Task Force NMED just finishing San Juan County Early Action Ozone Task Force Decided to re-focus Ozone Task Force and broaden scope Decided to re-focus Ozone Task Force and broaden scope Planned 4CAQTF during 2005 with above plus USFS, NPS, EPA Region VI, tribes Planned 4CAQTF during 2005 with above plus USFS, NPS, EPA Region VI, tribes MOU signed Fall 2005 MOU signed Fall 2005

6. 4CAQTF Broadly representative volunteer group of stakeholders formed to look at air quality issues in the Four Corners region Broadly representative volunteer group of stakeholders formed to look at air quality issues in the Four Corners region ~100 task force members, ~150 interested parties ~100 task force members, ~150 interested parties Purpose Purpose Bring together diverse group of interested parties to learn about and discuss air quality issues Bring together diverse group of interested parties to learn about and discuss air quality issues Develop a broad list of mitigation options for improving air quality that will aid regulatory agencies in developing plans Develop a broad list of mitigation options for improving air quality that will aid regulatory agencies in developing plans Goals Goals Address planned development Address planned development Reduce nitrogen, sulfur & mercury deposition Reduce nitrogen, sulfur & mercury deposition Enhance visibility in Class I areas and the region Enhance visibility in Class I areas and the region

7. 4CAQTF Process Process Work Groups: Power Plants, Oil and Gas, Other Sources, Monitoring, Cumulative Effects Work Groups: Power Plants, Oil and Gas, Other Sources, Monitoring, Cumulative Effects Develop mitigation options Develop mitigation options Quarterly meetings with Work Group conference calls to review options and accomplish work (50-100 per) Quarterly meetings with Work Group conference calls to review options and accomplish work (50-100 per) Final report is on schedule to be completed by November 2007 Final report is on schedule to be completed by November 2007

8. 4CAQTF Progress / What Have We Done Progress / What Have We Done 4CAQTF in final stages 4CAQTF in final stages 125 mitigation options drafted (not consensus, instead some with differing views) 125 mitigation options drafted (not consensus, instead some with differing views) Cumulative Effects (including emission inventory) & Monitoring Sections Cumulative Effects (including emission inventory) & Monitoring Sections Draft Task Force Report Available at http://www.nmenv.state.nm.us/aqb/4C/DraftTask ForceReport.html Draft Task Force Report Available at http://www.nmenv.state.nm.us/aqb/4C/DraftTask ForceReport.html

9. Oil & Gas Group focus in the 4CAQTF project Largest Work Group (approx. 25 participants per meeting) Largest Work Group (approx. 25 participants per meeting) Active involvement from major producers in region Williams, BP, Conoco Phillips, Energen, Xcel, Devon Active involvement from major producers in region Williams, BP, Conoco Phillips, Energen, Xcel, Devon Drafted over 50 mitigation options Drafted over 50 mitigation options The draft task force report is a compilation of mitigation options drafted by members of the Four Corners Air Quality Task Force. The agencies involved have not reviewed or adopted these options at this time. These options will be considered following the completion of the Task Force in December 2007. The draft task force report is a compilation of mitigation options drafted by members of the Four Corners Air Quality Task Force. The agencies involved have not reviewed or adopted these options at this time. These options will be considered following the completion of the Task Force in December 2007.

11. 2002 O 3 Precursor O&G Area Source EI For San Juan & Rio Arriba County, NM (completed in 2006) Category NOx (tpy) VOC (tpy) RICE27,3213,060 Drill Rig 1,20029 Gas Wells 6,200105,000 Oil Wells 209982

12. Background: Innovative Strategies New Mexico San Juan VISTAS ( Voluntary Innovative Strategies for Today’s Air Standards ) New Mexico San Juan VISTAS ( Voluntary Innovative Strategies for Today’s Air Standards ) Four Corners Air Quality Task Force Four Corners Air Quality Task Force Colorado Regulation 7 Colorado Regulation 7 BLM Well Development Condition of Approval (“COA”) BLM Well Development Condition of Approval (“COA”)

13. What is San Juan VISTAS? Voluntary Innovative Strategies for Today’s Air Standards San Juan VISTAS is a voluntary emission control program administered by the New Mexico Environment Department (NMED) for the improvement of air quality. HISTORY began in 2005 as a result of EAC work modeled after EPA Gas STAR program

14. 4 Corners Air Quality Task Force Source Categories Engines: The work group addressed engines as a separate category in its analysis attributable to all processes in the oil and gas industry. The mitigation strategies were created to address the subcategories of stationary or mobile/non-road engines, drill rig engines, and turbines. [31 mitigation options developed] Engines: The work group addressed engines as a separate category in its analysis attributable to all processes in the oil and gas industry. The mitigation strategies were created to address the subcategories of stationary or mobile/non-road engines, drill rig engines, and turbines. [31 mitigation options developed]

15. 4 Corners Air Quality Task Force Source Categories Exploration & Production (E & P): the work group defined E & P as the upstream sector of the oil and gas industry, including all activities associated with drilling, completion, and putting the well on-line. The work group identified and developed mitigation strategies for specific equipment in E&P, including oil/condensate tanks, dehydrators/separators/heaters, fugitive emissions associated with pneumatic operations, completions, and wellhead considerations. [21 options] Exploration & Production (E & P): the work group defined E & P as the upstream sector of the oil and gas industry, including all activities associated with drilling, completion, and putting the well on-line. The work group identified and developed mitigation strategies for specific equipment in E&P, including oil/condensate tanks, dehydrators/separators/heaters, fugitive emissions associated with pneumatic operations, completions, and wellhead considerations. [21 options]

16. 4 Corners Air Quality Task Force Source Categories Midstream: the work group defined Midstream Operations as occurring after custody transfer, including facilities such as compressor stations, gas processing plants, and transmission or storage of natural gas. Where appropriate, the work group devised mitigation strategies that avoided general overlap with E & P options, and concentrated primarily on options unique to the “midstream operations” that were not otherwise examined in the context of E&P operations [2 options] Midstream: the work group defined Midstream Operations as occurring after custody transfer, including facilities such as compressor stations, gas processing plants, and transmission or storage of natural gas. Where appropriate, the work group devised mitigation strategies that avoided general overlap with E & P options, and concentrated primarily on options unique to the “midstream operations” that were not otherwise examined in the context of E&P operations [2 options] Overarching: 8 options Overarching: 8 options

17. 4CAQTF Oil and Gas Interim Emissions Recommendations A 2 g/hp-hr NOx limit is achievable and reasonable for all engines less than 300 hp (excluding very small engines with horsepower less than 40). An ambient monitoring program for ammonia should be initiated in the Four Corners region. A 1 g/hp-hr NOx limit is reasonable and achievable for engines greater than 300 hp. Drill rig NOx emissions are significant cumulatively in the region on a year-round basis and should be reduced by a requirement to comply with Tier 2 standards as expediently as possible.

18. Oil & Gas Workgroup Issues Quantity and proximity of sources. Quantity and proximity of sources. Multi well and pipeline ownership. Multi well and pipeline ownership. Twinning (two engines on same surface site going to two different pipelines). Twinning (two engines on same surface site going to two different pipelines). RICE emission control technologies to achieve 2.0 g/bhp-hr ( 300 HP) NOx emissions. RICE emission control technologies to achieve 2.0 g/bhp-hr ( 300 HP) NOx emissions. Implementing mitigation options (regulatory or voluntarily). Implementing mitigation options (regulatory or voluntarily).

19. RICE Mitigation Options Replace existing RICE with new RICE. Replace existing RICE with new RICE. Utilize electric compressors. Utilize electric compressors. Compressor optimization & centralization. Compressor optimization & centralization. Meet SI EPA NSPS. Meet SI EPA NSPS. Adhere to Manufacturer’s O/M recommendations. Adhere to Manufacturer’s O/M recommendations.

20. RICE Mitigation Technology Options 3-way catalyst w/AFR for rich burn engine. 3-way catalyst w/AFR for rich burn engine. Install lean burn engines. Install lean burn engines. Oxidation catalysts to control HC’s, Formaldehyde & CO emissions from Lean burn engines. Oxidation catalysts to control HC’s, Formaldehyde & CO emissions from Lean burn engines. SCR for NOx control on lean burn engines. SCR for NOx control on lean burn engines.

21. Colorado Regulation 7 Revisions Adopted 12/06 > 63% Control of VOC “flash emissions” > 63% Control of VOC “flash emissions” > 90% Control of dehydrator VOC emissions commencing 05/01/08 > 90% Control of dehydrator VOC emissions commencing 05/01/08 Commencing 07/01/07 - 2, 4 &1 g/bhp-hr (NOx, CO & VOC’s) for natural gas fired RICE > 500 HP Commencing 07/01/07 - 2, 4 &1 g/bhp-hr (NOx, CO & VOC’s) for natural gas fired RICE > 500 HP 2011 limits 1, 2 & 0.7 g/bhp-hr for RICE >100 HP. 2011 limits 1, 2 & 0.7 g/bhp-hr for RICE >100 HP.

22. Farmington Field Office - BLM (“COA”) To Drill 300 HP or less RICE emit 2.0 g/bhp-hr NOx. 300 HP or less RICE emit 2.0 g/bhp-hr NOx. 300 HP or larger RICE emit 1.5 g/bhp-hr NOx. 300 HP or larger RICE emit 1.5 g/bhp-hr NOx. Federal Land Policy and Management Act of 1976 provides BLM authority. Federal Land Policy and Management Act of 1976 provides BLM authority. Compliance will mitigate incremental adverse impacts at surrounding Class I areas Compliance will mitigate incremental adverse impacts at surrounding Class I areas

23. NSR Permitting Implications Regional planning efforts will shape permit requirements. Regional planning efforts will shape permit requirements. Transition from an effects to technology based permitting approach. Transition from an effects to technology based permitting approach. Transition away from case-by-case permitting of minor sources. Transition away from case-by-case permitting of minor sources. Minor source aggregation could continue to be an issue. Minor source aggregation could continue to be an issue.

24. Multi-jurisdictions EPA, Federal Land Managers, Indian Tribes, States Multi-jurisdictions EPA, Federal Land Managers, Indian Tribes, States 4CAQTF has offered an opportunity to discuss regional issues and perhaps a seed for a regional policy group to make some concerted decisions 4CAQTF has offered an opportunity to discuss regional issues and perhaps a seed for a regional policy group to make some concerted decisions Policy Oversight group made up of NMED, CDPHE, EPA, NPS, FS, BLM, Tribes (continue to work together) Policy Oversight group made up of NMED, CDPHE, EPA, NPS, FS, BLM, Tribes (continue to work together) Navajo Nation EPA & Southern Ute Tribes Navajo Nation EPA & Southern Ute Tribes Made some headway in improving relations and coordination with Tribal environmental programs in 4 Corners area Made some headway in improving relations and coordination with Tribal environmental programs in 4 Corners area Education Education Educating the public and local agencies through presentations and informed discussions Educating the public and local agencies through presentations and informed discussions Associated Work: Associated Work: Ammonia monitoring, emissions inventory and modeling projects Ammonia monitoring, emissions inventory and modeling projects Challenges and Successes

25. Recent Events in Summer 2007 Public Review of Document in June & July Public Review of Document in June & July August 8 th 2007 Task Force Meeting in Durango, CO was our last working meeting August 8 th 2007 Task Force Meeting in Durango, CO was our last working meeting Attended by approx 70 stakeholders Attended by approx 70 stakeholders Formation of ORT, and beginning of work Formation of ORT, and beginning of work Final Task Force Report will be posted on our website by this October Final Task Force Report will be posted on our website by this October Final stakeholder meeting will be held November 7 th Final stakeholder meeting will be held November 7 th

26. Erik Aaboe NMED/AQB (505) 955-8081 erik.aaboe@state.nm.us Mark Jones NMED/AQB (505) 327-6854 mark.jones@state.nm.us