HighPoint Operating Corporation Clean Air Act Settlement

(Denver, CO) On April 19, 2019, EPA, the Department of Justice, and the State of Colorado announced a settlement with HighPoint Operating Corporation that will require the company to identify and address emissions from vapor control systems at HighPoint’s condensate storage tank batteries.  The tank batteries are all located in an area that has not met EPA’s 8-hour National Ambient Air Quality Standards (NAAQS) for ground-level ozone (the “nonattainment area”). In addition to implementing measures that will ensure its vapor control systems in the area are properly designed, sized, operated, and maintained, HighPoint has agreed to perform an environmental mitigation project. When fully implemented, the settlement is expected to reduce harmful air pollution by an estimated 400 tons per year. This settlement is part of the EPA’s national compliance initiative to ensure energy extraction activities comply with environmental laws.

• Overview
• Violations
• Injunctive Relief
• Mitigation Projects
• Pollutant Impacts
• Health and Environmental Effects
• Civil Penalty
• Comment Period
• Contact

Overview of Company and Operations

HighPoint is an oil and natural gas exploration and production company headquartered in Denver, Colorado. HighPoint has operations in the Northeast Wattenberg Field of the Denver-Julesburg (DJ) Basin in Colorado and Wyoming. This case concerns HighPoint’s operations in an area of Colorado designated as nonattainment with the 8-hour NAAQS for ozone.

HighPoint’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 the 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 (VOC), which contribute to the formation of ground-level ozone and may contain hazardous air pollutants such as benzene.

This settlement covers 50 tank batteries and associated vapor control systems operating pursuant to Colorado State Implementation Plan requirements.

Violations

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

The settlement resolves alleged violations of Regulation 7, Section XII requirements relating to installation, operation, maintenance, design, and sizing of vapor control systems at condensate storage tanks. The settlement also resolves alleged violations of Regulation 7, Section XVII requirements to control VOC emissions from oil and gas operations, which are enforceable only by the State of Colorado.

Injunctive Relief

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

• HighPoint will ensure its vapor control systems are capable of capturing and routing emissions to a control device by performing an engineering evaluation addressing certain identified minimum considerations or modifying its vapor control systems to install and implement a closed loop design that will automatically control liquid and vapor flow rates to the tank system.
• HighPoint will perform an initial evaluation of the condition of all pressure relief valves, thief hatches, blowdown valves, and mountings and gaskets on each condensate storage tank to assess the need to repair, replace, or upgrade equipment and address any evidence of VOC emissions from that equipment.
• Engineering evaluations of the vapor control systems, and resulting modifications, will be verified by an engineer who did not conduct nor was employee of the company which conducted the original engineering evaluations.
• HighPoint 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.
• HighPoint will perform monthly infrared camera inspections at all tank systems to detect and respond to emissions.
• HighPoint 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. Systems using the closed loop design will satisfy the tank pressure monitoring requirements.
• The settlement includes measures to proactively detect recurring issues and identify and implement actions to prevent further recurrence. Each quarter, HighPoint will conduct a review of the indicia of possible emissions at any tank system to identify and address underlying and contributing causes. Additionally, HighPoint 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 $3 million and is estimated to result in  the reduction of approximately 350 tons per year of VOC emissions.

Mitigation Projects

HighPoint will implement an environmental mitigation project to install vapor balancing controls at ten well pads to control emissions from condensate tank truck loadout. This project will reduce VOC emissions by approximately 50 tons per year. Implementation of this project will cost $50,000.

Pollutant Impacts

Ozone is not emitted directly from air pollution sources. Instead, it is photochemical oxidant formed when certain chemicals—VOC and NOx—in the ambient air react with oxygen in the presence of sunlight. VOC 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 nonattainment for the 8-hour ozone NAAQS. 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 into the atmosphere. These inversion conditions can lead to an unhealthy—and even visible—air pollution buildup.

HighPoint’s oil and gas exploration and production operations emit VOC, NOx, and other pollutants. As a result of the consent decree’s injunctive relief and mitigation project, emissions of VOC will be reduced by approximately 400 tons per year. The settlement will also result in reductions of hazardous air pollutants in the Denver-area.

Health 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 nonattainment status generally, as well as the visible buildup of air pollution during inversion conditions.

Civil Penalty

HighPoint will pay the United States a $275,000 civil penalty, and will pay a civil penalty to Colorado and perform a State supplemental environmental project, with a combined value of $275,000. HighPoint will apply $220,000 of the State’s portion of the penalty to a supplemental environmental project.

Comment Period

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

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
303-312-7026
portmess.jessica@epa.gov

Jeff Kodish, Attorney
Air Enforcement Division
Office of Civil Enforcement
U. S. Environmental Protection Agency
1595 Wynkoop Street (8MSU)
Denver, CO  80202
303-312-7153
kodish.jeff@epa.gov