Oklahoma Department of Environmental Quality s18

OKLAHOMA DEPARTMENT OF ENVIRONMENTAL QUALITY AIR QUALITY DIVISION

MEMORANDUM June 23, 2006

TO: Dawson Lasseter, P.E., Chief Engineer, Air Quality Division

THROUGH: Phil Martin, P.E., New Source Permits Section

THROUGH: Grover Campbell, P.E., Existing Source Permits Section

THROUGH: Peer Review

FROM: Constance Burris, Existing Source Permits Section

SUBJECT: Evaluation of Permit Application No. 2005-302-O Mustang Gas Products, L.L.C. Spring Valley Gas Plant Section 5, T22N, R4W, Garfield County, OK Directions: From Enid, 8 miles east of Hwy 81 on Hwy 412/64, 1/2 mile north into site.

SECTION I. INTRODUCTION

Mustang Gas Products, L.L.C. (Mustang) has applied for a modified operating permit to modify the Spring Valley Gas Plant (SIC 1321). The facility is currently operating under Permit No. 96- 448-C (M-2). While completing the 2004 emission inventory calculations for the facility, Mustang submitted an excess emission report dated May 16, 2005. CO emissions exceeded the permitted limits of 0.01 lb/hr and 0.04 TPY at the Heater Treater Process Heater (PV-16-06). On May 31, 2005 Mustang submitted a Minor Source Permit Modification Application requesting an increase in the permit limit of CO emissions from PV-16.06 from 0.01 lb/hr and 0.04 TPY to 0.10 lb/hr and 0.20 TPY and a Self-Disclosure Letter notifying the DEQ the facility was operating under a construction, not operating permit. Additionally, at the request of the DEQ, Mustang submitted a Part 70 Operating Permit Application on August 3, 2005 along with the appropriate fees. This application requested an increase in the emissions limitation of fugitives from 4.59 TPY to 9.4 TPY and an emission limitation for flashing emissions of 30 TPY. The suggested limitations include a safety factor of 100% at each emission unit. Upon issuance, this facility will remain a “synthetic minor” source of emissions. PERMIT MEMORANDUM 2005-302-O DRAFT 2

SECTION II. EQUIPMENT Internal Combustion Engines Source Name/Model Serial No. Construction/ Modification Date CM-301 800-hp White 8G-825 engine 20904 1981 with catalytic converter Cat-4 1,265-hp Caterpillar G3516 4EK03353 2001 without catalytic converter CM-11.01 810-hp Waukesha L-7042-GNA 278335 1974 with catalytic converter CM-11.02 810-hp Waukesha L-7042-GNA 278334 1974 with catalytic converter

Glycol Dehydrator Point Installation Date Dehydrator Still Vent 1985

Process Heaters Source Point Installation Date HE-14.101 0.75 MMBTU/hr Glycol Reboiler 1979 HT.14.01 1.5 MMBTU/hr Regeneration Gas 1974 Heater PV-16.06 0.408 MMBTU/hr Heater Treater 1974

Storage Tanks Source Contents Capacity Construction Barrels Gallons Date TK-101 Methanol Tank 210 8820 1976 TK-102 Condensate 300 12600 1976 TK-103 Condensate 300 12600 1976 TK-104 Condensate 100 4200 1976 TK-105 Environmental 150 6300 1991 TK-106 Salt Water 210 8820 N/A TK-107 Salt Water 210 8820 N/A

SECTION III. EMISSIONS Emission estimates were calculated as discussed in the tables and list below.

Table 1 Emissions Factors Source Name/Model NOx(g/hp-hr) CO(g/hp-hr) VOC(g/hp-hr) CM-301 800-hp White 8G-825 engine 3.74 2.00 0.28 with catalytic converter Cat-4 1,265-hp Caterpillar G3516 2.2 2.09 0.48 PERMIT MEMORANDUM 2005-302-O DRAFT 3

without catalytic converter CM-11.01 810-hp Waukesha L-7042-GNA 2.71 3.28 0.34 with catalytic converter CM-11.02 810-hp Waukesha L-7042-GNA 2.71 3.28 0.34 with catalytic converter

 Based on manufacturer’s data, the emission factors for the compressor engines are presented in Table 1. Engines CM-301, CM-11.01, and CM-11.02 are all operated with air fuel ratio controls and exhaust gases passing through catalytic converters. Control efficiencies of 80% and 60% were applied to NOx and CO emission factors, respectively. The criteria pollutant emissions are estimated from the compressor engines based on 8,760 hours per year operation.

 Table 2 lists the engine specifications.

 Table 3 lists the fugitive VOC emissions from the facility. Fugitive emissions are based on Table 2-4 of “1995 Protocol for Equipment Leak Emission Estimates (EPA 453/R-95-017),” Oil and Gas Production Operations Average Emission Factors.

 The tank VOC emissions are estimated using EPA TANKS 4.0 program and a net throughput of 348,000 gallons/year for all three condensate tanks, TK-102, TK-103, TK-104 (1,043,973 gallon per year total). VOC flash emissions due to the condensate transfer from the natural gas inlet separator to the atmospheric condensate tank are estimated based on the Vasquez-Beggs solution gas-to-oil ratio correlation method. A safety factor of 100% is included in the emission estimates.

 VOC emissions from methanol storage tanks are considered negligible and will not be discussed. Table 4 lists the total facility-wide emissions.

 Emissions for the process heaters were calculated using AP-42 (7/98) emission factors for small natural gas fired boilers with a maximum heat input capacity < 10 MMBTU/hr (Tables 1.4-1 and 1.4-2).

 The triethylene glycol dehydration unit is not listed as a HAP emission source. Although emissions of HAPs have been reported on past emission inventories from the glycol dehydrator, Mustang Fuel Corporation has previously modified this source to eliminate emissions. The changes to the glycol dehydration unit include adding a flash tank, heat exchanger and collection tank. The overhead still vapors from this dehydration unit will be captured and incinerated in the glycol reboiler as “fuel gas.” The vapors will be commingled with sweet natural gas to provide a fuel to the boiler comprised of 50 percent natural gas and 50 percent “fuel gas.” The off gas from the glycol dehydration unit flash tank is routed to the glycol dehydration unit reboiler or recycled to the facility inlet. Therefore, emissions of HAPs from this unit will be insignificant. PERMIT MEMORANDUM 2005-302-O DRAFT 4

Table 2 Engine Specifications Parameter CM-301 CM-11.01 & 11.02 Cat-4 Manufacturer White Waukesha Caterpillar Model 8G-825 L-7042-GNA G3516 Control Catalytic Converter Catalytic Converter None Input Parameter Horsepower (max) hp 800 810 1,265 Fuel Consumption (BTU/hp- 7,500 7,877 7,552 hr) Fuel Usage (SCFH) 6,000 6,380 9,366 Stack Diameter (Inches) 8 8 12 Height above Grade (Feet) 18.5 14.6 20 Exhaust Flow (ACFM) 4,000 3,404 7,179 Exhaust Temperature (oF) 950 969 869 Calculated Parameter Moisture Content (%) 18 23 11

Table 3 Fugitive VOC Emissions Emission Units Number of Units VOC (lb/hr-source) VOC Emissions lb/hr TPY Compressor Seals 106 0.0194 0.62 2.70 Pump Seals 4 0.0287 0.03 0.15 Valves 131 0.0055 0.22 0.95 Others 18 0.0194 0.10 0.46 Relief Valves 14 0.0194 0.08 0.36 Flanges 292 0.0002 0.02 0.09 ------1.07 4.71 Subtotal* ------2.15 9.43 * Includes a 100% safety factor and are based on Table 2-4 of “1995 Protocol for Equipment Leak Emission Estimates (EPA 453/R-95-017),” Oil and Gas Production Operations Average Emission Factors. PERMIT MEMORANDUM 2005-302-O DRAFT 5

Table 4 Facility-Wide Emissions NOx CO VOC Source lb/hr TPY lb/hr TPY lb/hr TPY 800-hp White 8G-825 engine w/cc 6.60 28.91 3.52 15.42 0.49 2.16 1,265-hp Caterpillar G3516 w/o cc 6.14 26.87 5.83 25.53 1.35 5.91 810-hp Waukesha L-7042-GNA w/ cc 4.84 21.20 5.86 25.68 0.61 2.67 810-hp Waukesha L-7042-GNA w/ cc 4.84 21.20 5.86 25.68 0.61 2.67 HE-14.101 Process Heater 0.15 0.66 0.03 0.14 0.01 0.03 HT-14.01 Process Heater 0.15 0.66 0.03 0.14 0.01 0.03 PV-16.06 Process Heater 0.04 0.18 0.10 0.20 0.00 0.00 Storage Tanks*,** ------9.61 42.09 Fugitive Sources* ------2.15 9.43 TOTAL 22.76 99.62 21.14 92.62 14.84 64.99 * Emission estimates include a safety factor of 100%. ** Storage tanks emission estimates include breathing, working, and flashing losses for Tanks TK-102, TK-103, and TK-104.

The internal combustion engines will have emissions of HAPs, the most significant being formaldehyde. Emissions of formaldehyde for all four engines were calculated using AP-42 Table 3.2-3 (7/00).

Table 5 Formaldehyde Emissions

Source lb/hr TPY 800-hp White 8G-825 engine w/cc 0.12 0.54 1,265-hp Caterpillar G3516 w/o cc 0.50 2.21 810-hp Waukesha L-7042-GNA w/cc 0.13 0.57 810-hp Waukesha L-7042-GNA w/cc 0.13 0.57 Total 0.89 3.89

SECTION IV. OKLAHOMA AIR POLLUTION CONTROL RULES

OAC 252:100-1 (General Provisions) [Applicable] Subchapter 1 includes definitions but there are no regulatory requirements.

OAC 252:100-3 (Air Quality Standards and Increments) [Applicable] Primary Standards are in Appendix E and Secondary Standards are in Appendix F of the Air Pollution Control Rules. At this time, all of Oklahoma is in attainment of these standards. In addition, modeled emissions from the proposed facility demonstrate that the facility would not have a significant impact on air quality.

OAC 252:100-4 (New Source Performance Standards) [Not Applicable] Federal regulations in 40 CFR Part 60 are incorporated by reference as they existed on July 1, 2002, except for the following: Subpart A (Sections 60.4, 60.9, 60.10, and 60.16), Subpart B, Subpart C, Subpart Ca, Subpart Cb, Subpart Cc, Subpart Cd, Subpart Ce, Subpart AAA, and PERMIT MEMORANDUM 2005-302-O DRAFT 6

Appendix G. These standards are covered in the “Federal Regulations” section.

OAC 252:100-5 (Registration, Emission Inventory, and Annual Operating Fees) [Applicable] Subchapter 5 requires sources of air contaminants to register with Air Quality, file emission inventories annually, and pay annual operating fees based upon total annual emissions of regulated pollutants. Emission inventories have been submitted and fees paid for the past years.

OAC 252:100-7 (Permits for Minor Sources) [Applicable] Subchapter 7 sets forth the permit application fees and the basic substantive requirements of permits for minor facilities. Since by way of controls criteria pollutant emissions are less than 100 TPY for each pollutant, and emissions of HAPs will not exceed 10 TPY for any one HAP or 25 TPY for any aggregate of HAPs, the facility is defined as a synthetic minor source.

OAC 252:100-9 (Excess Emission Reporting Requirements) [Applicable] In the event of any release which results in excess emissions, the owner or operator of such facility shall notify the Air Quality Division as soon as the owner or operator of the facility has knowledge of such emissions, but no later than 4:30 p.m. the next working day. Within ten (10) working days after the immediate notice is given, the owner or operator shall submit a written report describing the extent of the excess emissions and response actions taken by the facility.

OAC 252:100-13 (Open Burning) [Applicable] Open burning of refuse and other combustible material is prohibited except as authorized in the specific examples and under the conditions listed in this subchapter.

OAC 252:100-19 (Particulate Matter) [Applicable]

This Subchapter specifies a particulate matter (PM) emissions limitation of 0.6 lb/MMBTU from new and existing fuel-burning equipment with a rated heat input of 10 MMBTUH or less. For heaters, boilers, etc., AP-42 (7/98), Table 1.4-2 lists the total PM emissions for natural gas to be 7.6 lbs/MMft3 or about 0.0076 lbs/MMBTU. For 4-cycle engines, AP-42 (7/00), Tables 3.2-2 and 3.2-3 list the total PM emissions to be 0.00991 lbs/MMBTU. This permit requires the use of natural gas for all fuel-burning equipment to ensure compliance with Subchapter 19.

This subchapter also limits emissions of PM from industrial processes. Per AP-42 factors, there are no significant PM emissions from any industrial activities at this facility.

OAC 252:100-25 (Visible Emissions and Particulates) [Applicable] No discharge of greater than 20% opacity is allowed except for short-term occurrences which consist of not more than one six-minute period in any consecutive 60 minutes, not to exceed three such periods in any consecutive 24 hours. In no case shall the average of any six-minute period exceed 60% opacity. When burning natural gas there is very little possibility of exceeding these standards.

OAC 252:100-29 (Fugitive Dust) [Applicable] No person shall cause or permit the discharge of any visible fugitive dust emissions beyond the property line on which the emissions originate in such a manner as to damage or to interfere with the use of adjacent properties, or cause air quality standards to be exceeded, or interfere with the maintenance of air quality standards. Under normal operating conditions, this facility will not PERMIT MEMORANDUM 2005-302-O DRAFT 7 cause a problem in this area, therefore it is not necessary to require specific precautions to be taken.

OAC 252:100-31 (Sulfur Compounds) [Applicable] Part 5 limits sulfur dioxide emissions from new equipment (constructed after July 1, 1972). For gaseous fuels the limit is 0.2 lb/million BTU heat input. This is equivalent to approximately 0.2 weight percent sulfur in the fuel gas which is equivalent to 2,000 ppmw sulfur. Thus, a limitation of 343 ppmv sulfur in a field gas supply will be in compliance. The permit requires the use of pipeline-grade natural gas or field gas with a maximum sulfur content of 343 ppmv for all fuel-burning equipment to ensure compliance with subchapter 31. Initial compliance testing of the fuel sulfur content and further testing whenever the gas supplier or gas field is changed will be used to ensure compliance with this limitation.

OAC 252:100-33 (Nitrogen Oxides) [Not Applicable] This subchapter limits new gas-fired fuel-burning equipment with rated heat input greater than or equal to 50 MMBTUH to emissions of 0.2 lb of NOx per MMBTU. There are no equipment items that exceed the 50 MMBTUH threshold.

OAC 252:100-35 (Carbon Monoxide) [Not Applicable] None of the following affected processes are located at this facility: gray iron cupola, blast furnace, basic oxygen furnace, petroleum catalytic cracking unit, or petroleum catalytic reforming unit.

OAC 252:100-37 (Volatile Organic Compounds) [Applicable] Part 3 requires storage tanks constructed after December 28, 1974, with a capacity of 400 gallons or more and storing a VOC with a vapor pressure greater than 1.5 psia to be equipped with a permanent submerged fill pipe or with an organic vapor recovery system. This applies to the condensate storage tanks. Part 3 requires VOC loading facilities with a throughput equal to or less than 40,000 gallons per day to be equipped with a system for submerged filling of tank trucks or trailers if the capacity of the vehicle is greater than 200 gallons. This facility does not have the physical equipment (loading arm and pump) to conduct this type of loading and is not subject to this requirement. Part 5 limits the VOC content of coatings used in coating lines or operations. Any painting operation will involve maintenance coating of buildings and equipment and emit less than 100 pounds per day of VOCs and is exempt. Part 7 requires fuel-burning and refuse-burning equipment to be operated to minimize emissions of VOC. The equipment at this location is subject to this requirement. Part 7 requires all effluent water separator openings which receive water containing more than 200 gallons per day of any VOC, to be sealed or the separator to be equipped with an external floating roof or a fixed roof with an internal floating roof or a vapor recovery system. No effluent water separators are located at this facility. Part 7 also requires all reciprocating pumps and compressors handling VOCs to be equipped with packing glands that are properly installed and maintained in good working order and rotating pumps and compressors handling VOCs to be equipped with mechanical seals. The equipment at this location is subject to this requirement. PERMIT MEMORANDUM 2005-302-O DRAFT 8

OAC 252:100-41 (Hazardous Air Pollutants) [Not Applicable] Part 3 addresses hazardous air contaminants. NESHAP, as found in 40 CFR Part 61, are adopted by reference as they exist on September 1, 2004, with the exception of Subparts B, H, I, K, Q, R, T, W and Appendices D and E, all of which address radionuclides. In addition, General Provisions as found in 40 CFR Part 63, Subpart A, and the Maximum Achievable Control Technology (MACT) standards as found in 40 CFR Part 63, Subparts F, G, H, I, J, L, M, N, O, Q, R, S, T, U, W, X, Y, AA, BB, CC, DD, EE, GG, HH, II, JJ, KK, LL, MM, OO, PP, QQ, RR, SS, TT, UU, VV, WW, XX, YY, CCC, DDD, EEE, GGG, HHH, III, JJJ, LLL, MMM, NNN, OOO, PPP, QQQ, RRR, TTT, UUU, VVV, XXX, AAAA, CCCC, DDDD, EEEE, FFFF, GGGG, HHHH, IIII, JJJJ, KKKK, MMMM, NNNN, OOOO, PPPP, QQQQ, RRRR, SSSS, TTTT, UUUU, VVVV, WWWW, XXXX, YYYY, ZZZZ, AAAAA, BBBBB, CCCCC, EEEEE, FFFFF, GGGGG, HHHHH, IIIII, JJJJJ, KKKKK, LLLLL, MMMMM, NNNNN, PPPPP, QQQQQ, RRRRR, SSSSS and TTTTT are hereby adopted by reference as they exist on September 1, 2004. These standards apply to both existing and new sources of HAPs. These requirements are covered in the “Federal Regulations” section. Part 5 was a state-only requirement governing sources of toxic air contaminants that have emissions exceeding a de minimis level. However, Part 5 of Subchapter 41 has been superseded by OAC 252:100-42, effective June 15, 2006.

OAC 252:100-42 (Toxic Air Contaminants (TAC)) [Applicable] Part 5 of OAC 252:100-41 was superceded by this subchapter. Any work practice, material substitution, or control equipment required by the Department prior to June 11, 2004, to control a TAC, shall be retained unless a modification is approved by the Director. Since no Area of Concern (AOC) has been designated anywhere in the state, there are no specific requirements for this facility at this time.

OAC 252:100-43 (Testing, Monitoring, and Recordkeeping) [Applicable] This subchapter provides general requirements for testing, monitoring and recordkeeping and applies to any testing, monitoring or recordkeeping activity conducted at any stationary source. To determine compliance with emissions limitations or standards, the Air Quality Director may require the owner or operator of any source in the state of Oklahoma to install, maintain and operate monitoring equipment or to conduct tests, including stack tests, of the air contaminant source. All required testing must be conducted by methods approved by the Air Quality Director and under the direction of qualified personnel. Emissions and other data required to demonstrate compliance with any federal or state emission limit or standard, or any requirement set forth in a valid permit shall be recorded, maintained, and submitted as required by this subchapter, an applicable rule, or permit requirement. Data from any required testing or monitoring not conducted in accordance with the provisions of this subchapter shall be considered invalid. Nothing shall preclude the use, including the exclusive use, of any credible evidence or information relevant to whether a source would have been in compliance with applicable requirements if the appropriate performance or compliance test or procedure had been performed. PERMIT MEMORANDUM 2005-302-O DRAFT 9

The following Oklahoma Air Pollution Control Rules are not applicable to this facility:

OAC 252:100-11 Alternative Emissions Reduction not requested OAC 252:100-15 Mobile Sources not in source category OAC 252:100-17 Incinerators not type of emission unit OAC 252:100-23 Cotton Gins not type of emission unit OAC 252:100-24 Grain Elevators not in source category OAC 252:100-39 Nonattainment Areas not in area category OAC 252:100-47 Landfills not in source category

SECTION V. FEDERAL REGULATIONS

PSD, 40 CFR Part 52 [Not Applicable] Final total emissions will be less than the threshold of 250 TPY of any single regulated pollutant and the facility is not one of the 26 specific industries with a threshold of 100 TPY.

NSPS, 40 CFR Part 60 [Subpart KKK Applicable] Subpart Kb, VOC Storage Vessels, regulates hydrocarbon storage tanks larger than 19,813 gallons capacity and built after July 23, 1984. Subpart Kb exempts condensate tanks prior to custody transfer. Therefore, the condensate tanks are not subject to this subpart. Subpart GG, Stationary Gas Turbines. There are no turbines at this facility. Subpart VV, Equipment Leaks of VOC in the Synthetic Organic Chemicals Manufacturing Industry. This facility is not a SOCMI plant. Subpart KKK, Equipment Leaks of VOC from Onshore Natural Gas Processing Plants. This subpart sets standards for natural gas processing plants which are defined as any site engaged in the extraction of natural gas liquids from field gas, fractionation of natural gas liquids, or both. Any equipment in VOC service that was constructed after January 20, 1984 is subject to this subpart. C- 4 is subject to this subpart. C-4 is an inlet compressor in wet gas service and, therefore, is subject to the record keeping requirements of 40 CFR 60.635(c) and 40 CFR 60.486(j). Subpart LLL, Onshore Natural Gas Processing: SO2 Emissions. There is no natural gas sweetening operation at this site.

NESHAP, 40 CFR Part 61 [Not Applicable] There are no emissions of any of the regulated pollutants: arsenic, asbestos, beryllium, benzene, coke oven emissions, mercury, radionuclides, or vinyl chloride except for trace amounts of benzene. Subpart J, Equipment Leaks of Benzene, concerns only streams that contain more than 10% benzene by weight. Analysis of Oklahoma natural gas indicates a maximum benzene content of less than 1%. All process streams at this facility are below this threshold.

NESHAP, 40 CFR Part 63 [Not Applicable] Subpart HH, Oil and Natural Gas Production Facilities. This subpart applies to affected emission points that are located at facilities which are major sources of HAPs and either process, upgrade, or store hydrocarbons prior to the point of custody transfer or prior to which the natural gas enters the natural gas transmission and storage source category. This facility is not a major source of HAPs. Subpart ZZZZ, Reciprocating Internal Combustion Engines (RICE). This subpart was promulgated on June 15, 2004, and affects RICE with a site rating greater than 500 brake PERMIT MEMORANDUM 2005-302-O DRAFT 10

horsepower that are located at a major source of HAPs: existing, new, and reconstructed spark ignition 4 stroke rich burn (4SRB) RICE, any new or reconstructed spark ignition 2 stroke lean burn (2SLB) or 4 stroke lean burn (4SLB) RICE, or any new or reconstructed compression ignition (CI) RICE. For this MACT standard, “new” is defined as having commenced construction or reconstruction on or after December 19, 2002. This facility is not a major source of HAPs.

Chemical Accident Prevention Provisions, 40 CFR Part 68 [Not Applicable] The definition of a stationary source does not apply to transportation, including storage incident to transportation, of any regulated substance or any other extremely hazardous substance under the provisions of this part. Naturally occurring hydrocarbon mixtures, prior to entry into a natural gas processing plant or a petroleum refining process unit, including: condensate, crude oil, field gas, and produced water, are exempt for the purpose of determining whether more than a threshold quantity of a regulated substance is present at the stationary source.

SECTION VI. COMPLIANCE

Inspection

A full compliance evaluation was conducted at the Mustang Gas Products LLC Spring Valley Gas Plant on September 1, 2005 from 1000 to 1100. Brandi Fitzgerald and Hilary Huber, Environmental Programs Specialists for the Air Quality Division of the Department of Environmental Quality conducted the evaluation. James Sharpe, Environmental Health and Safety Coordinator, and Sid Albritton, Field Supervisor, represented the Facility.

Testing

Periodic testing for the engines was provided and shows compliance with the applicable emission limitations. The most recent engine stack test results are included in Table 6 below.

Table 6 Engine Stack Test Results PERMIT TEST LIMITS RESULTS Source Test Date NOx CO NOx CO lb/hr lb/hr lb/hr lb/hr CM-301 6.60 3.52 NA NA Engine has not operated >220 hours since 2003 Cat-4 6.14 5.83 3.88 1.99 2/22/2006 CM-11.01 4.84 5.86 NA NA Engine has not operated >220 hours since 2003 CM-11.02 4.84 5.86 NA NA Engine has not operated >220 hours since 2003 PERMIT MEMORANDUM 2005-302-O DRAFT 11

Tier Classification and Public Review

This application has been determined to be a Tier II. The applicant has submitted an affidavit that they are not seeking a permit for land use or for any operation upon land owned by others without their knowledge. The affidavit certifies that the applicant has a current lease or easement which is given to accomplish the permitted purpose. All Tier II permit drafts are also available for public review in the Air Quality section of the DEQ web page: www.deq.state.ok.us.

The applicant published the “Notice of Filing a Tier II Application” in the Enid News and Eagle, a daily newspaper in Garfield County, on August 10, 2005. The notice stated that the application was available for public review at the Public Library of Enid and Garfield County, 120 W. Maine Ave, Enid, OK 73701, or at DEQ Air Quality Office in Oklahoma City. A draft of this permit will also be made available for public review for a period of 30 days in another newspaper announcement.

This facility is located within 50 miles of the Oklahoma - Kansas Border. The state of Kansas will be notified of the draft permit.

Fees Paid

Title V application fee of $2,000.

SECTION VII. SUMMARY

The facility was constructed and is operating as described in the permit application. Ambient air quality standards are not threatened at this site. There are no active Air Quality compliance or enforcement issues. Issuance of the permit is recommended, contingent on public and EPA review. DRAFT

PERMIT TO OPERATE AIR POLLUTION CONTROL FACILITY SPECIFIC CONDITIONS

Mustang Gas Products, L.L.C. Permit No. 2005-302-O Spring Valley Gas Plant

The permittee is authorized to operate in conformity with the specifications submitted to Air Quality on June 7, 2005 and August 30, 2005. The Evaluation Memorandum dated June 23, 2006, explains the derivation of applicable permit requirements and estimates of emissions; however, it does not contain operating limitations or permit requirements. Continuing operations under this permit constitutes acceptance of, and consent to, the conditions contained herein:

1. Points of emissions and emission limitations for each point:

NOx CO VOC Source lb/hr TPY lb/hr TPY lb/hr TPY 800-hp White 8G-825 engine w/ cc 6.60 28.91 3.52 15.42 0.49 2.16 1,265-hp Caterpillar G3516 w/o cc 6.14 26.87 5.83 25.53 1.35 5.91 810-hp Waukesha L-7042-GNA w/ cc 4.84 21.20 5.86 25.68 0.61 2.67 810-hp Waukesha L-7042-GNA w/ cc 4.84 21.20 5.86 25.68 0.61 2.67 HE-14.101 Process Heater 0.15 0.66 0.03 0.14 0.01 0.03 HT-14.01 Process Heater 0.15 0.66 0.03 0.14 0.01 0.03 PV-16.06 Process Heater 0.04 0.18 0.10 0.20 -- -- Storage Tanks*,** ------9.61 42.09 Fugitive Sources** ------2.15 9.43 * Working, breathing, and flashing losses at TK-102, 103, and 104. ** Includes a 100% safety factor.

2. The facility shall be authorized to operate continuously (24 hours per day, every day of the year).

3. The engines shall be fueled only with pipeline-quality natural gas or with field gas with sulfur content not greater than 343 ppmv.

4. The engines at the facility shall have a permanent identification plate attached, which shows the make, model number, and serial number.

5. At least once per calendar quarter, the permittee shall conduct tests of NOx and CO emissions from the engine and from each replacement engine/turbine when operating under representative conditions for that period. Testing is required for any engine/turbine that runs for more than 220 hours during that calendar quarter. Engines shall be tested no sooner than 20 calendar days after the last test. Testing shall be conducted using a portable analyzer in accordance with a protocol meeting the requirements of the “AQD Portable Analyzer Guidance” document or an equivalent SPECIFIC CONDITIONS 2005-302-O DRAFT 2

method approved by Air Quality. When four consecutive quarterly tests show the engine/turbine to be in compliance with the emissions limitations shown in the permit, then the testing frequency may be reduced to semi-annual testing. Likewise, when the following two consecutive semi-annual tests show compliance, the testing frequency may be reduced to annual testing. Upon any showing of non-compliance with emissions limitations or testing that indicates that emissions are within 10% of the emission limitations, the testing frequency shall revert to quarterly. Reduced testing frequency does not apply to engines with catalytic converters.

6. When periodic compliance testing shows engine exhaust emissions in excess of the lb/hr limits in Specific Condition Number 1, the permittee shall comply with the provisions of OAC 252:100-9 for excess emissions during start-up, shutdown, and malfunction of air pollution control equipment. Requirements of OAC 252:100-9 include immediate notification and written notification of Air Quality.

7. Replacement (including temporary periods of up to 6 months for maintenance, etc.) of internal combustion engines shown in this permit with engines of lesser or equal emissions of each pollutant is authorized under the following conditions:

a. The permittee shall notify AQD in writing within 10 days of start-up of the replacement engine(s)/turbine(s). Said notice shall identify the old engine/turbine and shall include the new engine/turbine make and model, horsepower rating, fuel usage, stack flow (ACFM), stack temperature (F), stack height (feet), stack diameter (inches), and pollutant emission rates (g/hp- hr, lb/hr, and TPY) at maximum horsepower for the altitude/location.

b. Quarterly emissions tests for the replacement engine(s)/turbine(s) shall be conducted to confirm continued compliance with NOx and CO emissions limitations. A copy of the first quarter testing shall be provided to AQD within 60 days of start-up of each replacement or additional engine/turbine. The test report shall include the engine/turbine fuel usage, stack flow (ACFM), stack temperature (oF), stack height (feet), stack diameter (inches), and pollutant emission rates (g/hp-hr, lb/hr, and TPY) at maximum rated horsepower for the altitude/location.

c. Replacement of equipment and emissions are limited to equipment and emissions that are not subject to NSPS, NESHAP, or PSD. SPECIFIC CONDITIONS 2005-302-O DRAFT 3

8. The permittee shall maintain records of operations as listed below. These records shall be maintained on-site or at a local field office for at least two years after the date of record- ing and shall be provided to regulatory personnel upon request.

a. Periodic testing for NOx and CO emissions from the engines and each replacement engine. b. Operating hours for each engine if less than 220 hours per quarter and not tested. c. Analysis of current fuel gas sulfur content (updated whenever the supply changes). d. Condensate throughput (monthly and 12-month rolling total) for the facility. e. Records required by 40 CFR Part 60, Subpart KKK.

9. The permittee shall comply with the Standards of Performance for Equipment Leaks of VOC from Onshore Natural Gas Processing Plants, NSPS 40 CFR Part 60, Subpart KKK, including, but not limited to, the following:

a. Information and data used to demonstrate that a reciprocating compressor is in wet gas service to apply for the exemption in § 60.633(f) shall be recorded in a log that is kept in a readily accessible location as per § 60.635(c).

b. Information and data used to demonstrate that a reciprocating compressor is not in VOC service shall be recorded in a log that is kept in a readily accessible location as per § 60.486(j).

10. The condensate tanks (TK-102, 103, and 104) shall be equipped for submerged fill and annual condensate throughput shall not exceed 1,043,973 gallons in a 12-month period, combined.

11. This permit supersedes all existing air quality permits for this facility, which are now null and void. MINOR SOURCE PERMIT TO OPERATE / CONSTRUCT AIR POLLUTION CONTROL FACILITY STANDARD CONDITIONS (September 1, 2005)

A. The issuing Authority for the permit is the Air Quality Division (AQD) of the Oklahoma Department of Environmental Quality (DEQ) in accordance with and under the authority of the Oklahoma Clean Air Act. The permit does not relieve the holder of the obligation to comply with other applicable federal, state, or local statutes, regulations, rules, or ordinances. This specifically includes compliance with the rules of the other Divisions of DEQ: Land Protection Division and Water Quality Division.

B. A duly issued construction permit or authorization to construct or modify will terminate and become null and void (unless extended as provided in OAC 252:100-7-15(g)) if the construction is not commenced within 18 months after the date the permit or authorization was issued, or if work is suspended for more than 18 months after it is commenced. [OAC 252:100-7-15(f)]

C. The recipient of a construction permit shall apply for a permit to operate (or modified operating permit) within 60 days following the first day of operation. [OAC 252:100-7-18(a)]

D. Unless specified otherwise, the term of an operating permit shall be unlimited.

E. Notification to the Air Quality Division of DEQ of the sale or transfer of ownership of this facility is required and shall be made in writing by the transferor within 10 days after such date. A new permit is not required. [OAC 252:100-7-2(f)]

F. The following limitations apply to the facility unless covered in the Specific Conditions:

1. No person shall cause or permit the discharge of emissions such that National Ambient Air Quality Standards (NAAQS) are exceeded on land outside the permitted facility. [OAC 252:100-3] 2. All facilities that emit air contaminants are required to file an emission inventory and pay annual operating fees based on the inventory. Instructions and forms are available on the Air Quality section of the DEQ web page. www.deq.state.ok.us [OAC 252:100-5] 3. All excess emissions shall be reported to the Director of the Air Quality Division as soon as practical during normal office hours and no later than the next working day following the malfunction or release. Within ten (10) business days further notice shall be tendered in writing containing specific details of the incident. [OAC 252:100-9] 4. Open burning of refuse and other combustible material is prohibited except as authorized in the specific examples and under the conditions listed in the Open Burning subchapter. [OAC 252:100-13] 5. No particulate emissions from new fuel-burning equipment with a rated heat input of 10 MMBTUH or less shall exceed 0.6 lbs/MMBTU. [OAC 252:100-19] 6. No discharge of greater than 20% opacity is allowed except for short-term occurrences which consist of not more than one six-minute period in any consecutive 60 minutes, not to exceed three such periods in any consecutive 24 hours. In no case shall the average of any six- minute period exceed 60% opacity. [OAC 252:100-25] 7. No visible fugitive dust emissions shall be discharged beyond the property line on which the emissions originate in such a manner as to damage or to interfere with the use of adjacent properties, or cause air quality standards to be exceeded, or interfere with the maintenance of air quality standards. [OAC 252:100-29] 8. No sulfur oxide emissions from new gas-fired fuel-burning equipment shall exceed 0.2 lbs/MMBTU. No existing source shall exceed the listed ambient air standards for sulfur dioxide. [OAC 252:100-31] 9. Volatile Organic Compound (VOC) storage tanks built after December 28, 1974, and with a capacity of 400 gallons or more storing a liquid with a vapor pressure of 1.5 psia or greater under actual conditions shall be equipped with a permanent submerged fill pipe or with an organic material vapor-recovery system. [OAC 252:100-37-15(b)] 10. All fuel-burning equipment shall at all times be properly operated and maintained in a manner that will minimize emissions of VOCs. [OAC 252:100-37-36]

G. Any owner or operator subject to provisions of NSPS shall provide written notification as follows: [40 CFR 60.7 (a)]

1. A notification of the date construction (or reconstruction as defined under §60.15) of an affected facility is commenced postmarked no later than 30 days after such date. This requirement shall not apply in the case of mass-produced facilities which are purchased in completed form. 2. A notification of any physical or operational change to an existing facility which may increase the emission rate of any air pollutant to which a standard applies, unless that change is specifically exempted under an applicable subpart or in §60.14(e). This notice shall be postmarked 60 days or as soon as practicable before the change is commenced and shall include information describing the precise nature of the change, present and proposed emission control systems, productive capacity of the facility before and after the change, and the expected completion date of the change. The Administrator may request additional relevant information subsequent to this notice. 3. A notification of the actual date of initial start-up of an affected facility postmarked within 15 days after such date. 4. If a continuous emission monitoring system is included in the construction, a notification of the date upon which the test demonstrating the system performance will commence, along with a pretest plan, postmarked no less than 30 days prior to such a date.

H. Any owner or operator subject to provisions of NSPS shall maintain records of the occurrence and duration of any start-up, shutdown, or malfunction in the operation of an affected facility or any malfunction of the air pollution control equipment. [40 CFR 60.7 (b)]

I. Any owner or operator subject to the provisions of NSPS shall maintain a file of all measurements and other information required by this subpart recorded in a permanent file suitable for inspection. This file shall be retained for at least five years following the date of such measurements, maintenance, and records. [40 CFR 60.7 (d)]

J. Any owner or operator subject to the provisions of NSPS shall conduct performance test(s) and furnish to AQD a written report of the results of such test(s). Test(s) shall be conducted within 60 days after achieving the maximum production rate at which the facility will be operated, but not later than 180 days after initial start-up. [40 CFR 60.8] DRAFT

PERMIT AIR QUALITY DIVISION STATE OF OKLAHOMA DEPARTMENT OF ENVIRONMENTAL QUALITY 707 N. ROBINSON STREET, SUITE 4100 P.O. BOX 1677 OKLAHOMA CITY, OKLAHOMA 73101-1677

Permit No. 2005-302-O

Mustang Gas Products, L.L.C. having complied with the requirements of the law, is hereby granted permission to construct the Spring Valley Gas Plant in SW/4 Section 21, T12N, R26W, Roger Mills County , Oklahoma, subject to the following conditions, attached: [X] Standard Conditions dated September 1, 2005 [X] Specific Conditions

______Division Director, Air Quality Division Date

DEQ Form #100-885 Revised 12/6/02 Mustang Gas Products, L.L.C. Attn: Mr. Gary D. Sump P.O Box 24300, MC E656 Oklahoma City, Oklahoma 73124-0300

Re: Construction Permit No. 2005-302-O Spring Valley Gas Plant Section 5, T22N, R4W Garfield County, OK

Dear Mr. Sump:

Air Quality Division has completed the initial review of your permit application referenced above. This application has been determined to be a Tier II. In accordance with 27A O.S. § 2-14-302 and OAC 252:4-7-13(c) the draft permit is now ready for public review. The requirements for public review of the draft permit include the following steps which you must accomplish:

1. Publish at least one legal notice (one day) in at least one newspaper of general circulation within the county where the facility is located. 2. Provide for public review (for a period of 30 days following the date of the newspaper announcement) a copy of the permit application at a convenient location within the county of the facility. 3. Send AQD a written affidavit of publication for the notice from Item #1 above together with any additional comments or requested changes which you may have for the permit application within 20 days of publication.

Thank you for your cooperation. If you have any questions, please refer to the permit number above and contact me at (405) 702-4207.

Sincerely,

Constance Burris Existing Source Permits Section AIR QUALITY DIVISION

Copy: Garfield County DEQ office

Cardinal Engineering, Inc. Attn: Deanne D. Hughes, PE Address: 6520 North Western Ave., Ste. 206 OKC, OK 73116

Enclosure