5 Colo. Code Regs. § 1001-26-B-III
Current through Register Vol. 47, No. 16, August 25, 2024
Section 5 CCR 1001-26-B-III - [Effective until 9/15/2024] Reduction of Emissions from Oil and Natural Gas Midstream Segment Fuel Combustion EquipmentIII.A. Definitions III.A.1. "8-hour ozone control area" means the Counties of Adams, Arapahoe, Boulder (includes part of Rocky Mountain National Park), Douglas, and Jefferson; the Cities and Counties of Denver and Broomfield; and the following portions of the Counties of Larimer and Weld III.A.1.a. For Larimer County (includes part of Rocky Mountain National Park), that portion of the county that lies south of a line described as follows: Beginning at a point on Larimer County's eastern boundary and Weld County's western boundary intersected by 40 degrees, 42 minutes, and 47.1 seconds north latitude, proceed west to a point defined by the intersection of 40 degrees, 42 minutes, 47.1 seconds north latitude and 105 degrees, 29 minutes, and 40.0 seconds west longitude, thence proceed south on 105 degrees, 29 minutes, 40.0 seconds west longitude to the intersection with 40 degrees, 33 minutes and 17.4 seconds north latitude, thence proceed west on 40 degrees, 33 minutes, 17.4 seconds north latitude until this line intersects Larimer County's western boundary and Grand County's eastern boundary. III.A.1.b. For Weld County, that portion of the county that lies south of a line described as follows: Beginning at a point on Weld County's eastern boundary and Logan County's western boundary intersected by 40 degrees, 42 minutes, 47.1 seconds north latitude, proceed west on 40 degrees, 42 minutes, 47.1 seconds north latitude until this line intersects Weld County's western boundary and Larimer County's eastern boundary.III.A.2. "Co-benefits" for purposes of Section III. means the reduction of harmful air pollutants in disproportionately impacted communities.III.A.3. "Company emission reduction plan" or "company ERP" means a plan prepared by a midstream segment owner or operator, consistent with the guidance issued by the midstream steering committee, to achieve that owner or operator's proportionate reductions of greenhouse gas emissions to meet the requirements of Section III.III.A.5. "Harmful air pollutants" for purposes of Section III. means pollutants designated by EPA as criteria pollutants (carbon monoxide, lead, nitrogen dioxide, ozone, particulate pollution (PM) (PM2.5 and PM10) and sulfur dioxide) or hazardous air pollutants.III.A.6. "Midstream fuel combustion equipment" means engines, turbines, process and other heaters, boilers, and reboilers in the midstream segment.III.A.7. "Midstream segment" means the oil and natural gas compression segment and the natural gas processing segment that are physically located in Colorado and that are upstream of the natural gas transmission and storage segment.III.A.8. "Midstream segment emission reduction plan" or "segment ERP" means a plan establishing the process and timelines for the midstream segment to achieve twenty percent (20%) reduction in greenhouse gas emissions (in CO2e) from midstream segment fuel combustion equipment by no later than December 31, 2030.III.A.9. "Midstream steering committee" means a committee comprised of members approved by the Division to serve as a technical working group tasked with developing program guidance documents and developing a midstream segment emission reduction plan. To the extent practicable, the committee members will include two members representing the electric utility sector; three members representing the midstream segment (at least one representing the oil and natural gas compression segment and one representing the natural gas processing segment), or industry trade organizations representing owners or operators; at least three local government representatives (one from inside the 8hour ozone control area and northern Weld County and one from outside the 8hour ozone control area and northern Weld County); at least three members representing the general public (including a representative of an environmental organization and a representative of a disproportionately impacted community); and at least one Division staff person. The steering committee may also include two additional members: a representative from the Colorado Energy Office and a representative from the Public Utilities Commission.III.A.10. "Natural gas processing segment" means the operations engaged in the separation of natural gas liquids (NGLs) or non-methane gases from produced natural gas, or the separation of NGLs into one or more component mixtures. Separation includes one or more of the following: forced extraction of natural gas liquids, sulfur and carbon dioxide removal, fractionation of NGLs, or the capture of CO2 separated from natural gas streams. This segment also includes all residue gas compression equipment owned or operated by the natural gas processing plant.III.A.11. "Natural gas transmission and storage segment" includes onshore natural gas transmission pipelines, onshore natural gas transmission compression, underground natural gas storage, and liquefied natural gas (LNG) storage, as these terms are defined in 40 CFR Part 98, Section 98.230 (October 22, 2015) that are physically located in Colorado.III.A.12. "Northern Weld County" means the portion of the county that does not lie south of a line described as follows: Beginning at a point on Weld County's eastern boundary and Logan County's western boundary intersected by 40 degrees, 42 minutes, 47.1 seconds north latitude, proceed west on 40 degrees, 42 minutes, 47.1 seconds north latitude until this line intersects Weld County's western boundary and Larimer County's eastern boundary.III.A.13. "Oil and natural gas compression segment" means the oil and natural gas compression, midstream pipelines, and other equipment used to collect oil and/or natural gas from gas or oil wells and used to compress, dehydrate, sweeten, or transport the oil and/or natural gas to a natural gas processing facility, a natural gas transmission pipeline, or to a natural gas distribution pipeline. For purposes of Section III., equipment located at a well production facility, including but not limited to compressors, is excluded from the oil and natural gas compression segment.III.A.14. "Residue gas" and "residue gas compression" mean, respectively, production lease natural gas from which gas liquid products and, in some cases, non-hydrocarbon components have been extracted such that it meets the specifications set by a pipeline transmission company, and/or a distribution company; and the compressors operated by the processing facility, whether inside the processing facility boundary fence or outside the fence-line, that deliver the residue gas from the processing facility to a transmission pipeline.III.B. Beginning January 1, 2022, each midstream segment owner or operator must participate in this Section III. program to reduce greenhouse gas emissions from midstream fuel combustion equipment by twenty percent (20%) over the 2015 baseline as determined by § 25-7-140(2)(a)(II), C.R.S.III.C. Creation of the Midstream Steering Committee and Initial Information Collection III.C.1. By February 28, 2022, the midstream steering committee members will be approved by the Division. The first midstream steering committee meeting will be held no later than March 31, 2022, and thereafter at least monthly at a time and place determined by the midstream steering committee.III.C.2. By no later than April 30, 2022, the midstream steering committee will initiate an information and data collection process through which it will seek and obtain information in addition to the reports provided pursuant to Section III.C.3. necessary to inform its technical analyses and policy considerations and comply with its duties under Section III.III.C.2.a. The midstream steering committee will seek publicly available information concerning most recently filed electric utility Electric Resource Plans and Clean Energy Plans; regarding the forecast timing of upcoming Electric Resource Plan filings, electric utility energy sales and demand forecasts for 2023 through 2030; and regarding existing and contracted electric generation units, and approved future transmission lines in Colorado.III.C.2.b. The Division will provide the midstream steering committee with the 2015 baseline CO2e emissions from the industrial sector identified in § 25-7-105(1)(e)(XIII), C.R.S. (2021).III.C.3. By no later than July 31, 2022, each midstream segment owner or operator must provide the following information to the midstream steering committee on a Division-approved form to inform the guidance document that will be developed pursuant to Section III.D.1.III.C.3.a. The facility name, AIRS ID (if applicable), and location (with coordinates) of each of the owner or operator's natural gas processing plants and natural gas compressor stations.III.C.3.b. An inventory of all midstream fuel combustion equipment owned or operated by the midstream segment owner or operator including midstream fuel combustion equipment not located at a natural gas processing plant or natural gas compressor station. The inventory must identify which equipment is located within a disproportionately impacted community. The inventory must include the type of equipment (e.g., engine, boiler) and the total CO2, methane, and CO2e emissions from each piece of equipment in calendar years 2020 and 2021 as reported to the Division in accordance with Regulation Number 7, Part D, Section V. If different calculation methods were used to report emissions from midstream fuel combustion equipment to the U.S. EPA under the federal Greenhouse Gas Reporting Program, 40 C.F.R. Part 98 , the inventory must include the emissions reported to the U.S. EPA for the equipment included in this inventory and an explanation of the changed method of calculation.III.C.3.c. An estimate of the total annual power demand, along with total instantaneous power demand in kilowatt hours, or horsepower demand required for use of the midstream fuel combustion equipment identified in Section III.C.3.b.III.C.3.d. An inventory of all electric motors driving gas compressors or electric heaters owned or operated by the midstream segment owner or operator including the facility where located (as applicable) and the date the electric equipment commenced operation.III.C.3.e. An estimate of the total annual kilowatt hours and heat rate demand, along with total instantaneous power demand, being supplied by electric motors and electric heaters identified in Section III.C.3.d.III.C.3.f. An estimate of existing transmission and distribution capacity to serve estimated load in a specific location as supplied by the applicable electric, transmission, or distribution service provider.III.D. Midstream Steering Committee Duties, Guidance, Company ERPs, and Segment ERPs III.D.1. The midstream steering committee will develop and issue one or more guidance documents for midstream segment owners and operators to submit company ERPs to the steering committee. The guidance willIII.D.1.a. Identify the sources that a midstream segment owner or operator must include in its company ERP, including the facilities, activities, and midstream fuel combustion equipment.III.D.1.b. Identify the total tons of CO2e reduction to be achieved by the segment ERP, consistent with the requirements of § 25-7-105(1)(e)(XIII), C.R.S. (2021).III.D.1.c. Provide a methodology by which each midstream segment owner or operator will determine the total tons of CO2e reduction from midstream fuel combustion equipment to be achieved by that owner or operator. The methodology should take into account, without limitation, the emission reductions from midstream fuel combustion equipment achieved by the owner or operator from 2015 midstream fuel combustion equipment emission levels and the amount of emissions reduced by electrification of midstream fuel combustion equipment achieved by the midstream segment owner or operator.III.D.1.d. Prescribe how CO2e emissions and emission reductions will be calculated in the company ERP, consistent with, to the extent feasible, the requirements of §§ 25-7-105(1)(e) and-140, C.R.S. (2021) and Regulation Number 7, Part D, Section V. The Division must approve of emission calculation methodologies before they can be included in the midstream steering committee guidance document(s).III.D.1.e. To aid midstream owners and operators in ensuring CO2e emission reductions and co-benefits, identify and describe environmental justice considerations for midstream segment fuel combustion equipment affecting disproportionately impacted communities, including potential air quality impacts or improvements, other non-air environmental benefits or detriments, employment opportunities, and regional economic impacts that must be considered by midstream segment owners or operators in their company ERPs.III.D.1.f. Identify and describe methods by which midstream segment owners or operators can achieve the emission reductions necessary to comply with the requirements of § 25-7-105(1)(e)(XIII), C.R.S. (2021), including, but not limited to, equipment replacement, equipment retrofit, equipment shutdown, or electrification. The guidance should also seek to identify and describe issues that must be addressed by operators considering electrification as an emission reduction strategyIII.D.1.g. Describe how midstream segment owners or operators can account for changes in and avoid increases to NOx or VOC emissions in securing the CO2e emission reductions necessary to meet the requirements of § 25-7-105(1)(e)(XIII), C.R.S. (2021).III.D.1.h. Describe how midstream segment owners or operators should account for costs associated with achieving required emission reductions from midstream segment fuel combustion equipment in their company ERPs, including capital costs, annualized equipment costs, annual operating costs, and costs in dollars per ton of CO2e reduced.III.D.1.i. Describe how midstream segment owners or operators should incorporate midstream segment fuel combustion equipment that commences operation after September 30, 2023, into their company ERPs.III.D.2. No later than December 31, 2022, the Division will make the draft midstream steering committee guidance document(s) available for at least 30 days of public comment.III.D.3. By March 31, 2023, the midstream steering committee will publish its final guidance document(s) for the development of company ERPs.III.D.4. By September 30, 2023, each midstream segment owner or operator must submit to the midstream steering committee its company ERP, consistent with and containing all the information identified in the guidance issued by the midstream steering committee, to achieve CO2e reductions from the owner or operator's midstream segment fuel combustion equipment, prioritizing greenhouse gas emission reductions that have co-benefits. The Division will develop emission reduction requirements for an owner or operator that fails to submit a company ERP.III.D.5. By March 31, 2024, the midstream steering committee will develop a midstream segment ERP, and provide the proposed midstream segment ERP to the Division for review. The proposed midstream segment ERP willIII.D.5.a. Identify the total tons of CO2e reduction from midstream segment fuel combustion equipment to be achieved by the midstream segment ERP, consistent with the requirements of § 25-7-105(1)(e)(XIII), C.R.S. (2021).III.D.5.b. Identify the total tons of CO2e reduction from midstream segment fuel combustion equipment to be achieved by each midstream segment owner or operator, consistent with the requirements of § 25-7-105(1)(e)(XIII), C.R.S. (2021).III.D.5.c. Identify the midstream segment facilities and fuel combustion equipment addressed by the midstream segment ERP.III.D.5.d. Prescribe the process and timing for midstream segment owners or operators to implement CO2e emission reduction strategies for midstream fuel combustion equipment, including, but not limited to, electrification, retrofit, shut-down, or replacement.III.D.5.e. Describe how the implementation of the midstream segment ERP will affect disproportionately impacted communities within which midstream fuel combustion equipment is located, including a description of the percentage of CO2e emission reductions in disproportionately impacted communities that will be achieved by the midstream segment ERP as a percentage of total emission reductions to be achieved by the midstream segment ERP. The midstream segment ERP must ensure and prioritize CO2e reductions with co-benefits in disproportionately impacted communities, identify the disproportionately impacted communities in which the co-benefits will be achieved, and must attempt to quantify the co-benefits associated with the midstream segment ERP. III.D.5.f. Prescribe how emission reductions will be achieved for midstream segment fuel combustion equipment that is modified, constructed, or relocated to Colorado on or after September 30, 2023.III.D.5.g. Prescribe any additional recordkeeping and reporting requirements over and above existing provisions of Regulation Number 7, sufficient to ensure enforceability and verification of the midstream segment ERP.III.D.5.h. To the extent feasible, the midstream segment ERP will report the total estimated cost to midstream segment owners and operators to achieve the CO2e reductions in the midstream segment ERP and the impact on CO2e emissions from electrical generating units in Colorado resulting from electrification of midstream fuel combustion equipment as set forth in the midstream segment ERP.III.D.6. Following receipt of the midstream segment ERP from the midstream steering committee, the Division will make the draft midstream segment ERP available for at least 30 days of public comment.III.D.7. By no later than August 31, 2024, the Division will submit a regulatory proposal based upon the midstream segment ERP to the Air Quality Control Commission and request a rulemaking hearing for no later than December 31, 2024.III.E. Recordkeeping and Reporting. This Section III.E will be repealed upon adoption by the Air Quality Control Commission of regulations addressing midstream fuel combustion equipment to meet the requirements of § 25-7-105(1)(e)(XIII), C.R.S. (2021). III.E.1. Midstream segment owners or operators must retain records of information submitted to the Division or midstream steering committee, including information supporting the company ERP, for three (3) years and make them available for inspection by the Division upon request.III.E.2. Midstream segment owners or operators must retain records of actions taken after January 1, 2022, to reduce CO2e emissions from their midstream fuel combustion equipment.III.E.3. The Division will provide an update on the development of this program and initial implementation efforts to the Air Quality Control Commission during a scheduled Air Quality Control Commission meeting in or after July 2023.45 CR 01, January 10, 2022, effective 1/30/202245 CR 16, August 25, 2022, effective 9/14/202245 CR 24, December 25, 2022, effective 1/14/202346 CR 10, May 25, 2023, effective 6/14/2023