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PDC Energy, Inc., Clean Air Act Settlement

(Washington, D.C. – October 31, 2017) - EPA, the Department of Justice, and the State of Colorado today announced a settlement with PDC Energy, Inc., that will comprehensively identify and address issues with vapor control systems at PDC’s condensate storage tank batteries. The tank batteries are all located in a region that has not met EPA’s national air quality standards for ground-level ozone. In addition to implementing measures that will ensure its vapor control systems in this area are properly designed, sized, operated, and maintained, PDC has agreed to perform significant environmental mitigation projects at many of its well pads. When fully implemented, the settlement is expected to reduce harmful air pollution by more than 2,025 tons per year.

Overview of Company

PDC is an oil and natural gas exploration and production company headquartered in Denver, Colorado. PDC’s operations span the Wattenberg Field in Colorado, the Delaware Basin in West Texas, and the Utica Shale in Ohio. This case only concerns PDC’s operations in Colorado.

PDC’s Colorado operations include oil and gas wells and condensate storage tanks. A condensate storage tank collects liquid hydrocarbons that have been separated from natural gas after production from an oil and gas well. The liquid hydrocarbons, or condensate, are stored in tanks until transfer for sale via tank truck or pipeline. Multiple tanks sited together are called a tank battery. Vapor control systems are required at tank batteries to capture and recover or combust the condensate’s hydrocarbon vapors. Multiple tank batteries can be served by the same vapor control system, which is designed to prevent uncontrolled vapors from being released into the atmosphere. Improperly or inadequately designed, sized, operated, or maintained vapor control systems can lead to uncontrolled emissions of volatile organic compounds (VOCs), which contribute to the formation of ground-level ozone and may contain hazardous air pollutants such as benzene.

This settlement covers approximately 650 tank batteries and associated vapor control systems, which represent essentially all of PDC’s vapor control systems in the nonattainment area operating pursuant to Colorado State Implementation Plan requirements.

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The settlement resolves alleged violations of Colorado’s Regulation 7, Section XII requirements for controlling VOC emissions from oil and gas operations. The 2008 version of the Section XII requirements was incorporated into Colorado’s federally-approved State Implementation Plan. Colorado’s State Implementation Plan is federally enforceable under the Clean Air Act. 

The settlement resolves alleged violations of Regulation 7, Section XII requirements relating to operation, maintenance, design, and sizing of vapor control systems at condensate storage tanks. The settlement also resolves liability to the State of Colorado for alleged violations of state-only regulations aimed at controlling VOC emissions from oil and gas operations. 

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Injunctive Relief

The settlement requires the following actions to resolve the alleged Clean Air Act violations:

  • PDC will perform engineering evaluations addressing certain identified minimum considerations to ensure its vapor control systems are properly designed and sized to control VOC emissions.  
  • Following the engineering evaluations, PDC must make any necessary modifications to ensure each vapor control system is properly designed and sized. PDC will also perform an initial evaluation of the condition of all pressure relief valves, thief hatches, and mountings and gaskets on each condensate storage tank and address any evidence of VOC emissions from those devices. Following these actions, PDC will perform infrared camera inspections to ensure that the vapor control systems are controlling emissions and the tanks are not emitting VOCs.
  • PDC’s third-party engineering evaluations of the vapor control systems, and resulting modifications, will be verified by an in-house PDC engineer.  
  • PDC will develop and implement a directed inspection and preventative maintenance program to ensure proper upkeep and operation of the vapor control systems and associated operations.  
  • PDC will perform periodic infrared camera inspections at all tank systems to detect and respond to emissions on a frequency ranging from monthly to semi-annually, depending on total tank battery emissions (before controls).  
  • PDC will install pressure monitors with continuous data reporting on a cross-section of tank systems to verify that storage tanks are not experiencing increased pressure readings indicative of tank over-pressurization and possible VOC emissions. 
  • In addition to responding to emissions, the settlement includes measures to proactively detect recurring issues and identify and implement opportunities to prevent further recurrence. Where a tank system has recurring indicia of possible emissions in a given time period, PDC will conduct a review in an attempt to identify and address underlying and contributing causes so as to proactively prevent further recurrence. Additionally, PDC will conduct an annual records review of maintenance and corrective action work to identify recurrent or systemic issues and associated opportunities for improved operations.

Implementation of these actions will cost approximately $18 million and is estimated to result in  the reduction of more than 1600 tons per year in VOC emissions.

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Mitigation Projects

PDC will implement the following environmental mitigation projects that will reduce ozone precursor emissions – VOCs and nitrogen oxides (NOx) – by an estimated combined total of 425 tons per year:

  • Loading condensate from certain PDC storage tanks into tanker trucks in a closed system consisting of pipes and hoses designed to prevent vapors from being emitted to the atmosphere; and
  • Installing and operating an emissions control package on certain natural gas-fueled compressor engines that PDC owns and operates within the nonattainment area.

Implementation of these projects will cost $1.7 million.

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Pollutant Impacts

Ozone is not emitted directly from air pollution sources. Instead, it is a photochemical oxidant formed when certain chemicals – VOCs and NOx – in the ambient air react in the presence of sunlight. VOCs and NOx are called “ozone precursors.” Sources that emit ozone precursors are regulated to reduce ground-level ozone in the ambient air. The Denver-area is currently classified as moderate nonattainment for the 8-hour ozone National Ambient Air Quality Standard. The nonattainment area spans Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, Jefferson, and parts of Larimer and Weld counties.

The Denver-area’s location next to the Rocky Mountains makes it prone to temperature inversions, in which warm air traps cooler air near the ground such that pollutants do not rise in the atmosphere. These inversion conditions can lead to an unhealthy – and even visible – air pollution buildup.

PDC’s oil and gas exploration and production operations emit VOCs, NOx, and other pollutants. As a result of the consent decree’s injunctive relief and mitigation projects, the following emissions reductions will be achieved:

  • VOCs: Greater than 1,800 tons per year; and

  • NOx: An estimated 225 tons per year.

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Health Effects and Environmental Benefits

Ground-level ozone can cause temporary breathing difficulty for people with asthma, airway inflammation, and even permanent scarring of lung tissue from repeated exposure. This settlement’s emissions reductions will help address the Denver-area’s ozone moderate nonattainment status generally, as well as the visible buildup of air pollution during inversion conditions.

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Civil Penalty

PDC will pay a $2.5 million civil penalty divided as follows: $1.25 million to the United States; and $1.25 million to the State of Colorado, with up to $1 million of the state’s share being directed to state-only supplemental environmental projects.

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Comment Period

The proposed settlement, lodged in the U.S. District Court for the District of Colorado, is subject to a 30-day public comments period and final court approval.  Information on submitting comment is available at the Department of Justice website.

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Contact Information

Jessica Portmess, Attorney
Regulatory Enforcement Unit
Legal Enforcement Program
U.S. Environmental Protection Agency – Region 8
1595 Wynkoop Street (8ENF-L)
Denver, CO  80202

Virginia Sorrell, Attorney
Air Enforcement Division
Office of Civil Enforcement
U. S. Environmental Protection Agency
1595 Wynkoop Street (8MSU)
Denver, CO  80202

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