Regulatory Landscape for Engine Emissions: NESHAP ZZZZ Compliance Overview

1. The Air Emission Landscape for EnginesCoalbed Methane Association ofAlabama 29th Annual MeetingMay 28, 2015

2. Disclaimer • The content of this presentation reflects a brief summary of highly complicated emissions-related rules, regulations, legislation and the like, as well as the individual opinions of its drafters.  • It is not intended or offered as legal or operational opinions or advice. • No representations or warranties are made as to accuracy or completeness.  • Readers should independently consult their legal counsel, their HSE/emissions specialists, and all relevant rules, regulations, and legislation.

3. REGULATION OF ENGINES – BACKGROUND History of NESHAP ZZZZ? Intent of EPA in writing NESHAP ZZZZ? Every engine is now covered by one or both of these regulations: • NESHAP Subpart ZZZZ • Regulates major source facilities of HAP emissions and existingarea sources (OLD engines) • Formaldehyde (HCHO) is the HAP of concern with ZZZZ • Effective dates 2007, 2013 • NSPS Subpart JJJJ • Engines mfg. post June 12, 2006 • Coversnew, modified or reconstructed • Regulates NOx, CO, VOC • Effective date 1/18/2008 Image from Exterran

4. RICE MACT NESHAPZZZZ • “Regulations grow at the same rate as weeds.”- Norman Ralph Augustine

5. NESHAP ZZZZ • National Emissions Standards for Hazardous Air Pollutants for Stationary Reciprocating Internal Combustion Engines • §63.6580 • NESHAP is a federal rule • Applies to all states • Is NOT regional • Effective dates • Major sources in 2007 (Major sources are sites emitting more than 100 tpy of any air pollutant, or 10 tpy single HAP, or 25 tpy combined HAPs) • Area sources in 2013 (Area sources are minor sources)

6. Where does my engine fall under the ZZZZ requirements? • ZZZZ does not have a “trigger date” requirement • Horsepower (HP) • < 500 HP (300 HP for compression ignited/diesel engines) • > 500 HP • Engine stroke • 4 stroke RB and 4 stroke LB • 2 stroke • Location • Remote vs. non-remote NESHAP ZZZZ APPLICABILITY

7. > 500 hp • 1) Determine if it is remote or non-remote Remote - Management Practices Non-remote - Emission limitations annually = annual testing CO, HCHO, or THC limits ≤ 500 hp All ≤500 hp must follow: Management Practices NESHAP ZZZZ APPLICABILITY

8. MPs Required for: • Area sources • 2 stroke engines • 4 stroke < 500 HP (<300 HP for CI) • 4 stroke remote > 500 HP • What are the MP Requirements? • Oil change • Or option for oil analysis (Total Acid Number, viscosity, H2O content) • Spark Plugs • Belts and hoses • What are the MP Intervals? • 1,440 hrs of operation for 4 stroke < 500 HP (60 days) • 2,160 hrs of operation for 4 stroke > 500 HP (90 days) • 4,320 hours of operation for 2 stroke (180 days) • CI – 1,000 for oil and spark plugs • CI – 500 hours for belts/hoses MANAGEMENT PRACTICES

9. Remote definition summary (40 CFR 63.6675) • Offshore 2) All facilities on a pipeline through which gas moves in gathering, transmission, distribution or storage • If the engine is on a pipeline segment: • 10 or fewer occupied buildings and no buildings with more than 4 stories within 220 yards of any continuous 1-mile length of pipe • Not within 100 yds. of any occupied building or outside area (playground, recreation area, public assembly area) which is occupied by 20 or more people at least 5 days/week for 10 weeks in any 12-month period. • Same as Class 1 DOT Pipeline definition 3) If engine is not on a pipeline segment: • 5 or fewer occupied buildings w/in 0.25-mile radius of the engine • No buildings with 4 or more stories REMOTE vs. NON-REMOTE CLASSIFICATION

10. REMOTE vs. NON-REMOTE CLASSIFICATION • Concerns • October 19th definition - determination of remote/non-remote was made on 10/19/2013 • 40 CFR 63.6603 (f): “…engine must meet the definition of remote…on the initial compliance date…October 19, 2013, in order to be considered a remote stationary RICE under this subpart.” 2) Annual evaluations are required to maintain remote status Question:What if an engine moves from non-remote to a remote site, will it be considered non-remote for life? Answer:Not necessarily. Where was the engine located on 10/19/2013?

11. What are the requirements? • Options to measure percent reduction CO, THC, or HCHO • Rich burn –30% reduction THC or 270 ppmvd CO • Lean burn – 93% reduction CO or 47 ppmvd CO • Essentially requires all affected engines to install emission control systems • Portable ASTM or Reference Method testing allowed • Compression Ignited/Diesel engines • 300 < HP < 500 – 70% CO reduction or 49 ppmvd CO • > 500 HP – 70% reduction CO or 23 ppmvd CO EMISSION LIMITS and TESTING

12. EMISSION LIMITS - Continued • Continuous Parametric Monitoring Systems or High Temperature Shutdown • CPMS or alternative is required if the engine is subject to emission controls • CPMS as originally written in rule requires monitoring exhaust temperatures pre-catalyst every 15 minutes • Alternative to CPMS later published in rule is to install a high temperature shutdown device (1250F for 4SRB and 1350F for 4SLB)

13. Can an Engine be Subject to Both ZZZZ and JJJJ? • YES • For modified engines: • Example: Mfg. date in 2000 (pre-JJJJ date of 6/12/2006), but • modified from 1200 rpm to 1400 rpm in 2015. • But, per 40 CFR Part 60 Subpart ZZZZ, §63.6590(c): • Stationary RICE subject to Regulations under 40 CFR Part 60. An affected source…must meet the requirements of this part [ZZZZ] by meeting the requirements of … 40 CFR Part 60 subpart JJJJ for spark ignition engines. • Therefore,if an engine is subject to both rules then it complies with ZZZZ by complying with JJJJ. The engine should follow JJJJ.

14. Can an Engine be Subject to Neither ZZZZ or JJJJ? • Yes, sort-of • JJJJ allows for “gap” engines that are manufactured after the magic date of 6/12/2006 that do not have requirements per JJJJ: • hp 100-499 – 6/12/2006 to 7/1/2008 • hp 500-1349 LB– 6/12/2006 to 1/1/2008 • hp > 500 RB – 6/12/2006 to 7/1/2007 • hp > 1349 LB – 6/12/2006 to 7/1/2007 • But,these same engines are also subject to ZZZZ because they will either have MP requirements or emissions testing requirements. • If an engine is subject to both JJJJ and ZZZZ the engine meets ZZZZ by complying with JJJJ. JJJJ says there are no requirements. • Therefore, these “gap” engines are still technically subject to JJJJ and ZZZZ, but the regulations say these have engines no requirements.

15. Aggregation • EPA’s intent is to group together multiple, related operations in close proximity • for air permitting purposes, and to treat the combined sources as a single source • The general test questions to determine whether sources should be aggregated: • Are the facilities contiguous or adjacent? • Do the facilities share common • control or ownership? • 3) Do the facilities use the same SIC code? • If the answer to all three is “yes,” then • the sources should be aggregated Image from DalyNews.org, CASSE

16. Aggregation - Are the facilities contiguous or adjacent? • Example – Can facilities be miles apart, have connecting pipelines, and still be considered contiguous/adjacent and subject to aggregation? • Summit Petroleum Corp. v. EPA (2012) • Summit’s natural gas wells feed into a sweetening plant via subsurface pipeline. Summit owns and operates the production wells, pipelines, and plant, but not the property between well sites or between wells and the plant. EPA looked at functional interrelationships to determine adjacency and determined the wells and refinery should be aggregated for air permitting. • Court held that EPA could not aggregate natural gas wells and a gas plant that were not geographically adjacent into a single source for permitting.

17. Questions?

18. Contacts • We are here to help! Contact your Exterranaccount manager or the Exterran Air Quality Team at AQT@Exterran.com • Bonnie Barrera • Bonnie.Barrera@Exterran.com • 281-836-7056