Backgrounder

August 29, 2001

SULPHUR RECOVERY GUIDELINES FOR THE PROVINCE OF ALBERTA

The Alberta Energy and Utilities Board (EUB) and Alberta Environment (AENV) have completed a review of the sulphur recovery guidelines for sour gas plants in Alberta.

The new guidelines and requirements become effective January 1, 2002 and replace Informational Letter IL 88-13: Sulphur Recovery Guidelines Gas Processing Operations in its entirety.

Background

Until the implementation of Interim Directive 20013 Sulphur Recovery Guidelines For The Province Of Alberta Alberta's sulphur recovery guidelines had been stated in EUB Informational Letter (IL) 88-13, which was put into effect in 1988. When this was issued, existing sour gas plants were not required to meet these 1988 revised sulphur recovery guidelines. This decision was based on perceived environmental benefits relative to associated costs, and because many of these plants were believed to have only a short remaining life span. However, a number of these plants have been or may be upgraded, and now have longer life expectancies. There is also a broader awareness of environmental issues.

Hence, the EUB and AENV determined there was a need for a sulphur recovery review to clarify existing EUB sulphur recovery guidelines, including:

• sulphur recovery requirements for grandfathered sour gas plants,
• the application of sulphur recovery guidelines to other facilities, and
• proliferation guidelines for small gas plants and other facilities.

While AENV and the EUB believe all three items above are important, the central element from the public perspective is the review of grandfathering provisions. When the review began in 1999, there were 61 Alberta sour gas plants with approved sulphur recovery levels less than those specified for new or upgraded plants. Based on 1998 operating data, eliminating grandfathering would have reduced emissions by 91 tonnes per day (32% of total sour gas plant emissions). However, it is important to note that Alberta's air quality standards were being met at those current emission levels and this level of reduction could not be achieved without significant cost. Taking this into account, the review examined whether the grandfathering provisions set out over a decade ago remained relevant and if they were not, to determine how they should be changed.

Because IL 88-13 was originally intended to apply only to sour gas plants, the review also sought to clarify how sulphur recovery guidelines should be applied to other facilities with sulphur emissions such as production batteries, compressor-dehydrator sites, refineries and/or upgraders.

As well, IL 88-13's sulphur recovery requirements became more stringent with increasing sulphur throughput. This was thought to perhaps be providing an unintentional incentive to build and operate a greater number of smaller, lower sulphur recovery facilities than would otherwise be the case. Clarifying a policy for these small sour gas facilities was thus also necessary. This clarification also ties in with a recommendation of the Public Safety and Sour Gas Advisory Committee (Recommendation 6), asking that "there be more rigid enforcement by the EUB of its gas plant proliferation policy as presented in the report recently submitted to the EUB by the Sulphur Recovery Guidelines Review Group."

NOTE: The following is an abridged summary of selected portions of ID 2001-3 it is intended to offer the public some understanding of the issues. Please refer to the complete ID for detailed explanation.

New Sulphur Recovery Guidelines 2001

The sulphur recovery guidelines for new sour gas plants set out in IL 88-13: Sulphur Recovery GuidelinesGas Processing Operations and as described in Table 1 have been adopted as the basis for sulphur recovery and emissions reduction from

• sour gas processing plants,
• sour gas emissions at other types of upstream petroleum industry operations, and
• acid gas streams produced in downstream petroleum industry facilities, including refineries and heavy oil upgraders.

In this document "acid gas" refers to a gas mixture containing predominantly hydrogen sulphide (H₂S) and carbon dioxide (CO₂), which results from the treating or "sweetening" of sour gas. "Sulphur inlet" refers to the content expressed as tonnes sulphur equivalent contained in the feed stream to the processing plant. Sulphur inlet excludes sulphur contained in raw sour gas that bypasses treating processes and is pipelined to other facilities or in raw sour gas that is injected.

Both AENV and the EUB have regulatory responsibilities for many of the facilities covered by the sulphur recovery guidelines. Under its legislation, AENV, where warranted, may set more stringent sulphur dioxide (SO₂₎ emission limits for specific facilities than those resulting from the EUB's application of the sulphur recovery guidelines. Depending on unique circumstances, the EUB may also set specific sulphur recoveries that differ from Table 1 as a result of its facility applications and adjudication processes.

Application of the Sulphur Recovery Guidelines for New Facilities

Application to Sour Gas Plants

New sour gas processing plants must comply with the calendar quarter-year sulphur recoveries listed in Table 1 unless alternative requirements are set out as the result of a specific facility application review and approval. The sulphur recovery for sour gas processing plants must be determined based on mass (tonnes sulphur equivalent) and calculated on the following basis:

Sulphur Recovery = Sulphur Production / (Sulphur Production + Sulphur Emissions)

Where:

Sulphur Production = tonnes of sulphur product and/or tonnes sulphur equivalent contained in injected sour or acid gas streams

Sulphur Emissions = tonnes sulphur equivalent contained in flared sour and acid gas streams and in the sulphur recovery process tail gas or incinerator stack emissions

The EUB will monitor and enforce compliance with individual plant sulphur recovery requirements on a calendar quarter-year basis. For AENV's purposes, sulphur recovery and sulphur inlet rates are used in setting various SO₂ emission limits, with enforcement done through normal AENV processes.

Grandfathered Sour Gas Plants

As of January 1, 2002, sour gas plants with approved sulphur recoveries less than the calendar quarter-year values given in Table 1 (grandfathered approvals) are required to increase sulphur recovery, unless plant capacity use meets the criteria for continued grandfathering. A complete list of grandfathered plants as of June 2001, related Baseline Capacities and grandfathered approval sulphur recovery efficiencies is given in Appendix 1.

Sour gas plants with grandfathered sulphur recovery approvals operating in declining gas supply situations will be permitted to continue operations without upgrading sulphur recovery until January 1, 2017 providing they meet certain conditions.

Other Upstream Petroleum Industry Facilities

Upstream petroleum industry facilities other than sour gas processing plants approved prior to January 1, 2000 (the effective date of Guide 60 EUB Upstream Petroleum Industry Flaring Guide) must comply with the sulphur recovery guidelines on the same basis and time frame as established for grandfathered sour gas plants in the new sulphur recovery guidelines (i.e., facilities flaring acid or sour gas must comply with Table 1 by January 1, 2005, unless throughput is declining at greater than 7.5 per cent per year).

Industrial and Downstream Petroleum Industry Facilities

Recent approvals for heavy oil and bitumen upgraders in Alberta are consistent with the sulphur recovery guidelines.

Requirements for upgrading sulphur recovery to comply with the guidelines at other industrial and refining facilities have been determined on a sector-specific review basis with AENV. Any facility operator that remains unclear about the application of this ID to its operations should consult directly with AENV regional staff.

Sour Gas Facility Proliferation

To preclude the unnecessary development of new sour gas processing plants, applicants must vigorously explore and assess all existing facilities in the area that afford technically viable alternatives, regardless of ownership or interest, prior to applying for approval to construct a new sour gas plant. The assessment must thoroughly evaluate the feasibility of upgrading existing facilities and/or forging commercial partnerships with related operators. Operators of existing sour gas processing facilities are expected to cooperate in the assessment of alternatives, including the evaluation of upgrading existing facilities to accommodate additional sour gas volumes. Applicants must consult and involve local residents in their evaluation of alternatives. It is expected that proponents will assess, compare and document the following as a minimum:

• surface disturbance impacts of a new plant project with potential impacts of incremental pipelines and other facilities required to use existing facilities;
• overall air emissions (SO₂, NO_x, CO₂) of alternatives and estimated contribution to cumulative impacts in terms of acid deposition rates and ambient concentrations;
• public proximity to alternative facilities and relative health and safety risk concerns;
• views of local stakeholders regarding the alternatives under consideration; and,
• estimates of future local oil and gas development and the impacts such development may have on the viability of the options examined.

In particular, proponents must clearly demonstrate to the EUB that any proposed new sour gas plant within 15 km of an existing sour gas processing plant is justified in terms of social and environmental effects. It is recognized that there will be situations where construction of new sour gas processing plants will be more acceptable from an environmental and public impact standpoint than construction of lengthy sour gas pipelines and related facilities necessary to connect to existing processing plants.

Applicants must contact other reserve operators in the area, assess longer-term gas processing needs, and account for regional processing needs in the design of proposed new sour gas plants. As a minimum, the area to be assessed must be consistent with industry notification requirements for sour gas plants, as described in EUB Guide 56 EUB Energy Development Application Guide.

Appendix 1: Grandfathered sour gas plant approvals