EPA Grants Permit for $500 Million Corpus Christi Condensate Splitter

Oil Tanker Leaving Port of Corpus Christi

The Environmental Protection Agency (EPA) has given a subsidiary of Conneticut-based Castleton Commodities International the green light for the construction of new petroleum process facilities near Corpus Christi, TX. The EPA issued the final greenhouse gas and prevention of significant deterioration construction permit to the subsidiary, CCI Corpus Christi, LLC, on Sept. 15th.

The company plans to build two fractionation units, capable of producing a combined 100,000 b/d and a bulk petroleum terminal. The terminal will include storage tanks and barge loading operations that can handle 500,000 barrels a day of crude condensate for export.

Castleton hopes to get some skin in the condensate export game, according to the EPA, but will need additional approval from the federal government. So far, only two companies, Pioneer Natural Resources Co. and Enterprise Product Partners LP, have been authorized to export minimally processed condensate from the Eagle Ford Shale. More than half of all production from play is condensate, which is an ultralight crude oil.

Read more: Oil Exports to Foreign Buyers Begins

In addition to exporting product, Castleton also plans to use the crude condensate to produce diesel, jet fuel, naphtha, and other petroleum products. The project is expected to cost the company $500-million.

Read more at epa.gov

Eagle Ford Flaring Impact on South Texas - Video

Since the Eagle Ford oil boom began in 2009, the prolific development of the liquids-rich shale formation has put Texas in an enviable position on the world-stage as a top oil producer. As with any boom, there have been positives and negatives associated with development. This week, the San Antonio Express News published an investigative report highlighting one of the negatives - the flaring of natural gas. As companies have aggressively developed the Eagle Ford Shale to benefit from the current high price of oil, natural gas, a lower priced commodity, has been flared in the process. A lack of natural gas pipeline infrastructure in some areas has also contributed to flaring. Federal rules implemented in 2011 that require greenhouse gas permits for things like compressor stations and processing plants have likely tied up pipeline projects that would've otherwise been implemented. Still, pipeline companies, which generally conduct an open season prior to beginning construction on a project, have had trouble getting enough commitments for natural gas pipelines in other oily plays like the Bakken Shale in North Dakota, which is the second most significant U.S. domestic shale play to the Eagle Ford. The Bakken Shale currently flares nearly 30% of its natural gas.

Read more: MDU Resources' Natural Gas "Dakota Pipeline" Update - March 2014

According to the paper, oil producers flared and vented 32.7 billion cubic feet (Bcf) of casinghead gas from 2009 to 2012. That's nearly 8% of all casinghead gas produced in the region, and 10 times higher than the flaring rate in the rest of Texas. During the same time frame, La Salle County, a top producer in the play, flared or vented about a fifth of its production — more than 10 million cubic feet (MMcf). At oil wells in Atascosa and Frio Counties, energy firms flared a quarter of the 17 Bcf of casinghead gas they produced. Companies operating in Wilson County produced nearly 1.4 Bcf of gas from oil wells, but flared or vented more than a third of it.

The question is could flaring be affecting health and quality of life. For some South Texas residents, there's no question - Yes! The paper revealed that an estimated 15,000 tons of volatile organic compounds and other contaminants were released into the air in 2012 from flaring.

Eagle Ford Study Shows Significant Increase in Pollution Through 2018

Eagle Ford Satellite Image

The Eagle Ford Shale's economic impact has been felt across the state, particularly in South Texas, but a recent study shows that it may be at a cost to the environment.

In early April 2014, the Alamo Area Council of Governments (AACOG), released data correlating rising Eagle Ford production with an increase in air pollutants.

By 2018, AACOG predicts that unhealthy levels of ozone could have an impact on South Texas as volatile organic compounds (VOCs) rise as much as 281% over 2012 levels. Nitrogen Oxide (NOx) levels are also expected to rise by 2018, but not as drastically. Ground level ozone (i.e. smog) is produced when VOCs and NOx react to sunlight, especially during the summer.

The majority of NOx emissions in 2012 were emitted by drilling rigs and well hydraulic pump engines (47%). By 2018, these sources are expected to account for only 9% of these emissions as engines are replaced with models that meet Tier 4 standards*. Compressors and mid-stream sources accounted for 39% of NOx emissions in 2012, but this number is expected to rise through 2018.

“The health effects associated with ozone exposure include respiratory health problems ranging from decreased lung function and aggravated asthma to increased emergency department visits, hospital admissions and premature death. The environmental effects associated with seasonal exposure to ground-level ozone include adverse effects on sensitive vegetation, forests, and ecosystems.”

— EPA (Environmental Protection Agency)

The report mentioned the San Antonio area, which is the largest city in the Eagle Ford's wake, has recorded ozone violations since August 2012 in excess of the EPA's 2008 ozone standard. That puts the region on the brink of a potential non-attainment designation, which could result in federally mandated Clean Air Act sanctions. Beyond the San Antonio area, the study looked at 25-core Eagle Ford counties, including Karnes, Webb, DeWitt and Dimmit Counties. According to the report, all 25 Eagle Ford counties are currently in attainment of all air quality regulatory standards.

Read the full report

*Tier 4 is comprised of two significant stages for different engine horsepower ratings. The first stage is a significant reduction of particulate matter (PM) and NOx , and the second stage is a further but substantial reduction of NOx only emissions.

Eagle Ford Task Force Turns to Natural Gas Flaring

Natural Gas Flare

The Eagle Ford Task Force is turning its attention to natural gas flaring. Texas set a record for flaring permits earlier in the year and the trend will continue until pipelines and gathering systems catch up with drilling.

In oil producing areas like the Eagle Ford, drilling and first production is reached weeks and sometimes months before pipeline companies get natural gas infrastructure to the area. Oil can be moved with a truck, but natural gas needs pipelines.

Flaring is commonplace in oil producing areas and is very rarely abused. More often than not, flaring lasts only a few days or weeks. It is in the operators best interest to get paid for natural gas they're producing.

The task force plans to work with companies to increase the use of natural gas generators on location. On-site generators can power electric machinery and will help limit the amount of flaring.

A main concern for the region is whether or not the Eagle Ford will push the San Antonio Metro Area over the federal limits for ozone standards. The ozone issue alone will have politicians anxious.

Comments from David Porter indicate the TX RRC is going to review its rules to make sure they are relevant in the modern shale era. I suspect there won't be major changes. Even if big changes come, infrastructure in the Eagle Ford will be catching up and flaring won't be near as prevalent by the time any legislation is enacted.

Eagle Ford Air Quality to be Monitored - TCEQ

The Texas Commission on Environmental Quality (TCEQ) has plans to monitor emissions levels related to the Eagle Ford Shale. The commission will place monitors in 24-Eagle Ford counties. This comes as no surprise as San Antonio is already close to reaching nonattainment. That means San Antonio is close to not meeting EPA standards for emissions. Dallas-Fort Worth and Houston are the only two areas in Texas considered nonattainment areas. If the Eagle Ford development adds significant emissions in the San Antonio metropolitan area, it's not likely the city will stay in compliance with federal standards. With monitors in place, we should know relatively soon. Natural Gas and oil production do not directly contribute to higher emissions levels, but truck traffic and remote power sources do. The use of both will decrease as adequate pipeline infrastructure comes online and as electric utilities bring power to the more remote areas of drilling. 

With recent Texas and EPA squables regarding water in the Barnett Shale, it will be interesting to see how this evolves in South Texas. Eagle Ford Shale water concerns have lead headlines to date, but it won't take much publicity from the EPA to bring air quality to the forefront of everyone's thoughts.

Read more about the commissions monitoring at bizjournals.com