Revisions to Colorado Regulation 22, Part B Affecting Midstream Operations

In December 2021, the Colorado Air Quality Control Commission (AQCC) adopted a broad range of new regulations aimed at reducing emissions of greenhouse gas (GHG) pollutants and ozone precursors, with emission reductions prioritized in disproportionately impacted communities (DIC). The regulations adopted covered several broad topic areas and spanned both Regulation 7 and Regulation 22.

This post is dedicated to the revisions adopted for Regulation 22 that affect Midstream Operations:

• The latest full version of Regulation 22 can be found at the following link.
• A redline version of Regulation 22, showing all changes adopted in December 2021, can be found at the following link.

Reduction of Emissions from Oil and Natural Gas Midstream Segment Fuel Combustion Equipment (Part B, Section III)

Reducing emissions from midstream segment fuel combustion equipment (engines, turbines, process and other heaters, boilers, and reboilers), particularly as it involves the electrification of large combustion equipment, will need to be carefully coordinated to ensure the reliability of Colorado’s power grid. As such, the AQCC established the Midstream Steering Committee (MSC) to guide this process, with the end goal of reducing GHG emissions from midstream fuel combustion equipment by 20% over the 2015 baseline. In order to meet this goal, the MSC will gather information and data from electric utilities, the Air Pollution Control Division (Division), and midstream operators to inform its technical analyses and policy considerations. The work and recommendations of the MSC will ultimately enable the Division to submit a regulatory proposal to address fuel combustion emissions from the midstream segment to the AQCC in August 2024 for a rulemaking hearing to adopt new rules in December 2024. The following table from the MSC Charter identifies milestones through December 2024:

Initial Information Collection (III.C.3.)

By July 31, 2022, operators of midstream segment fuel combustion equipment must submit combustion equipment information to the MSC on a Division‑approved form that includes the following:

• Facility name, AIRS ID (if applicable), and location (with coordinates) of each natural gas processing plant and natural gas compressor station.
• Inventory of all midstream fuel combustion equipment owned or operated. This includes midstream fuel combustion equipment not located at a natural gas processing plant or compressor station. The inventory must identify which equipment is located within a DIC, the type of equipment (e.g., engine, boiler), and the total carbon dioxide (CO2), methane, and CO2 equivalent (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.
• Estimate of total annual power demand, and total instantaneous power demand in kilowatt hours, or horsepower demand required for the equipment included in the inventory.
• Inventory of all electric motors driving gas compressors or electric heaters. The inventory must include where the facility is located and the date the electric equipment commenced operation.
• Estimate of total annual kilowatt hours, heat rate demand, and total instantaneous power demand being supplied by the electric motors and heaters.
• 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.

Company-Specific Emission Reduction Plan (III.D.4.)

By September 30, 2023, operators of midstream segment fuel combustion equipment must submit a company ERP to the MSC. The ERP must be consistent with and contain the information identified in the guidance document(s) published by the committee before March 31, 2023. The ERP will be expected to identify:

• Applicable midstream facilities, activities, and fuel combustion equipment.
• The total tons of CO2e reduction from midstream fuel combustion equipment to be achieved by that operator, as calculated per the MSC guidance.
• The methods (equipment replacement, retrofit, shutdown, electrification, etc.) by which the midstream segment operator can achieve those emission reductions from fuel combustion equipment, with consideration for environmental justice and nitrogen oxide (NOx) or volatile organic compound (VOC) emissions.
• The costs associated with achieving required emission reductions, including capital costs, annualized equipment costs, annual operating costs, and costs in dollars per ton of CO2e reduced.

Recordkeeping Requirements (III.E.)

• Retain records of information submitted to the Division or MSC, including information that supports the company ERP. Records must be kept for three (3) years and be made available to the Division upon request.
• Retain records of actions taken after January 1, 2022 to reduce CO2e emissions from midstream fuel combustion equipment.