Effluent Limitations Guidelines and New Source Performance Standards for Synthetic-Based and Other Non-Aqueous Drilling Fluids in the Oil and Gas Extraction Point Source Category

SUMMARY: This proposed rule would amend the technology-based effluent

limitations guidelines for the discharge of certain pollutants into

waters of the United States by existing and new facilities in portions

of the offshore and coastal subcategories of the oil and gas extraction

point source category.

This proposed rule would establish effluent limitations guidelines

and new source performance standards (NSPS) for direct dischargers

based on ``best practicable control technology currently available''

(BPT), ``best conventional pollutant control technology'' (BCT), ``best

available technology economically achievable'' (BAT), and for new

sources ``best available demonstrated control technology'' (BADCT). EPA

is proposing to amend the regulation by providing specific requirements

for the discharge of synthetic-based drilling fluids (SBFs) and other

non-aqueous drilling fluids. The wastestreams that would be limited are

drilling fluids and drill cuttings.

This rule would not amend the current regulations for water-based

drilling fluids. Also, this rule would not amend the zero discharge

requirement for drilling wastes in the coastal subcategory (except Cook

Inlet, Alaska) and in the offshore subcategory within three miles from

shore.

Controlling the discharge of SBFs as proposed today would reduce

the discharge of SBFs by 11.7 million pounds annually. Further,

allowing rather than prohibiting the discharge of SBFs would

substantially reduce non-water quality environmental impacts. Compared

to the zero discharge option, EPA estimates that allowing discharge

will reduce air emissions of the criteria air pollutants by 450 tons

per year, decrease fuel use by 29,000 barrels per year of oil

equivalent, and reduce the generation of oily drill cutting wastes

requiring off-site disposal by 212 million pounds per year.

DATES: Comments on the proposal must be received by May 4, 1999. A

public meeting will be held during the comment period, on Friday, March

5, 1999, from 9:00 a.m. to 12:00 p.m.

ADDRESSES: Send written comments and supporting data on this proposal

to: Mr. Joseph Daly, Office of Water, Engineering and Analysis Division

(4303), U.S. Environmental Protection Agency, 401 M St. SW, Washington,

DC 20460. Please submit any references cited in your comments. EPA

would appreciate an original and two copies of your comments and

enclosures (including references).

The public meeting will be held at the EPA Region 6 Oklahoma Room,

1445 Ross Avenue, Dallas, TX. If you wish to present formal comments at

the public meeting you should have a written copy for submittal. No

meeting materials will be distributed in advance of the public meeting;

all materials will be distributed at the meeting.

The public record is available for review in the EPA Water Docket,

Room EB57, 401 M St. SW, Washington, DC 20460. The public record for

this rulemaking has been established under docket number W-98-26, and

includes supporting documentation, but does not include any information

claimed as Confidential Business Information (CBI). The record is

available for inspection from 9 a.m. to 4 p.m., Monday through Friday,

excluding legal holidays. For access to docket materials, please call

(202) 260-3027 to schedule an appointment.

FOR FURTHER INFORMATION CONTACT: For additional technical information

contact Mr. Joseph Daly at (202) 260-7186. For additional economic

information contact Mr. James Covington at (202) 260-5132.

SUPPLEMENTARY INFORMATION:

Regulated Entities: Entities potentially regulated by this action

include:

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Category Examples of regulated entities

------------------------------------------------------------------------

Industry........................... Facilities engaged in the drilling

of wells in the oil and gas

industry in areas defined as

``coastal'' or ``offshore'' and

discharging in geographic areas

where drilling wastes are allowed

for discharge (offshore waters

beyond 3 miles from the shoreline,

in any Alaska offshore waters with

no 3-mile restriction, and the

coastal waters of Cook Inlet,

Alaska). Includes certain

facilities covered under Standard

Industrial Classification code 13

and North American Classification

System codes 211111 and 213111.

------------------------------------------------------------------------

The preceding table is not intended to be exhaustive, but rather

provides a guide for readers regarding entities likely to be regulated

by this action. This table lists the types of entities that EPA is now

aware could potentially be regulated by this action. Other types of

entities not listed in the table could also be regulated. To determine

whether your facility is regulated by this action, you should carefully

examine the applicability criteria in 40 CFR Part 435, Subparts A and

D. If you have questions regarding the applicability of this action to

a particular entity, consult the person listed for technical

information in the preceding FOR FURTHER INFORMATION CONTACT section.

Supporting Documentation

The regulations proposed today are supported by several major

documents:

1. ``Development Document for Proposed Effluent Limitations

Guidelines and Standards for Synthetic-Based Drilling Fluids and other

Non-Aqueous Drilling Fluids in the Oil and Gas Extraction Point Source

Category'' (EPA-821-B-98-021). Hereafter referred to as the SBF

Development Document, the document presents EPA's technical conclusions

concerning the proposal. This document describes, among other things,

the data collection activities in support of the proposal, the

wastewater treatment technology options, effluent characterization,

estimate of costs to the industry, and estimate of effects on non-water

quality environmental impacts.

2. ``Economic Analysis of Proposed Effluent Limitations Guidelines

and Standards for Synthetic-Based Drilling Fluids and other Non-Aqueous

Drilling Fluids in the Oil and Gas Extraction Point Source Category''

(EPA-821-B-98-020). Hereafter referred to as the SBF Economic Analysis,

this document presents the analysis of compliance costs and/or savings;

facility closures; changes in rate of return level. In addition,

impacts on employment and affected communities, foreign trade, specific

demographic groups, and new sources also are considered.

3. ``Environmental Assessment of Proposed Effluent Limitations

Guidelines and Standards for Synthetic-Based Drilling Fluids and other

Non-Aqueous Drilling Fluids in the Oil and Gas Extraction Point Source

Category'' (EPA-821-B-98-019). Hereafter referred to as the SBF

Environmental Assessment, the document presents the analysis of

relative water quality impacts for each regulatory option. EPA

describes the environmental characteristics of SBF drilling wastes,

types of anticipated impacts, and pollutant modeling results for water

[[Page 5489]]

column concentrations, pore water concentrations, and human health

effects via consumption of affected seafood.

All documents are available from the Office of Water Resource

Center, RC-4100, U.S. EPA, 401 M Street SW, Washington, DC 20460;

telephone (202) 260-7786 for the voice mail publication request. The

Development Document can also be obtained through EPA's Home Page on

the Internet, located at WWW.EPA.GOV/OST/GUIDE. The preamble and rule

can also be obtained at this site.

Overview

This preamble includes a description of the legal authority for

these rules; a summary of the proposal; background information on the

industry and its processes; and a description of the technical and

economic methodologies used by EPA to develop these regulations. This

preamble also solicits comment and data on all aspects of this proposed

rule. The definitions, acronyms, and abbreviations used in this notice

are defined in Appendix A to the preamble.

Organization of This Document

I. Legal Authority

II. Purpose and Summary of the Proposed Regulation

A. Purpose of this Rulemaking

B. Summary of the Proposed SBF Regulations

III. Background

A. Clean Water Act

B. Permits

C. Pollution Prevention Act

IV. Description of Well Drilling Process and Activity

A. Well Drilling Process Description

B. Location and Activity

C. Drilling Waste Streams

V. Summary of Data Collection Activities

A. Expedited Guidelines Approach

B. Identification of Information Needs

C. Stakeholder Technical Input

D. EPA Research on Toxicity, Biodegradation, Bioaccumulation

E. EPA Investigation of Solids Control Technologies for Drilling

Fluids

F. Assistance from Other State and Federal Agencies

VI. Development of Effluent Limitations Guidelines and Standards

A. Waste Generation and Characterization

B. Selection of Pollutant Parameters

C. Regulatory Options Considered for SBFs Not Associated with

Drill Cuttings

D. Regulatory Options Considered for SBFs Associated with Drill

Cuttings

E. BPT Technology Options Considered and Selected

F. BCT Technology Options Considered and Selected

G. BAT Technology Options Considered and Selected

H. NSPS Technology Options Considered and Selected

VII. Non-Water Quality Environmental Impacts of Proposed Regulations

A. Introduction and Summary

B. Method Overview

C. Energy Consumption and Air Emissions for Existing Sources

D. Energy Consumption and Air Emissions for New Sources

E. Solid Waste Generation and Management

F. Consumptive Water Use

G. Safety

H. Increased Vessel Traffic

VIII. Water Quality Environmental Impacts of Proposed Regulations

A. Introduction

B. Types of Impacts

C. Water Quality Modeling

D. Human Health Effects Modeling

E. Future Seabed Surveys

IX. Costs and Pollutant Reductions Achieved by Regulatory

Alternatives

A. Introduction

B. Model Wells and Well Counts

C. Method for Estimating Compliance Costs

D. Method for Estimating Pollutant Reductions

E. BCT Cost Test

X. Economic Analysis

A. Introduction and Profile of Affected Industry

B. Costs and Costs Savings of the Regulatory Options

C. Impacts from BAT Options

D. Impacts from NSPS Options

E. Cost Benefit Analysis

F. Small Business Analysis

G. Cost-Effective Analysis

XI. Related Acts of Congress, Executive Orders, and Agency

Initiatives

A. Executive Order 12866: OMB Review

B. Regulatory Flexibility Act and the Small Business Regulatory

Enforcement Fairness Act

C. Unfunded Mandates Reform Act

D. Executive Order 12875: Enhancing Intergovernmental

Partnerships

E. Executive Order 13084: Consultation and Coordination with

Indian Tribal Governments

F. Paperwork Reduction Act

G. National Technology Transfer and Advancement Act

H. Executive Order 13045: Children's Health Protection

XII. Regulatory Implementation

A. Analytical Methods

B. Diesel Prohibition for SBF-Cuttings

C. Monitoring of Stock Base Fluid

D. Upset and Bypass Provisions

E. Variances and Modifications

F. Best Management Practices

G. Sediment Toxicity and Biodegradation Comparative Limitations

XIII. Solicitation of Data and Comments

A. Introduction and General Solicitation

B. Specific Data and Comment Solicitations

Appendix A: Definitions, Acronyms, and Abbreviations Used in This

Notice

I. Legal Authority

These regulations are proposed under the authority of Sections 301,

304, 306, 307, 308, 402, and 501 of the Clean Water Act, 33 U.S.C.

1311, 1314, 1316, 1317, 1318, 1342, and 1361.

II. Purpose and Summary of the Proposed Regulation

A. Purpose of This Rulemaking

The purpose of this rulemaking is to amend the effluent limitations

guidelines and standards for the control of discharges of certain

pollutants associated with the use of synthetic-based drilling fluids

(SBFs) and other non-aqueous drilling fluids in portions of the

Offshore Subcategory and Cook Inlet portion of the Coastal Subcategory

of the Oil and Gas Extraction Point Source Category. The limitations

proposed today apply to wastes generated when oil and gas wells are

drilled using SBFs or other non-aqueous drilling fluids (henceforth

collectively referred to simply as SBFs) in coastal and offshore

regions in locations where drilling wastes may be discharged. The

processes and operations that comprise the offshore and coastal oil and

gas subcategories are currently regulated under 40 CFR Part 435,

Subparts A (offshore) and D (coastal). EPA is proposing these

amendments under the authority of the CWA, as discussed in Section I of

this notice. The regulations are also being proposed pursuant to a

Consent Decree entered in NRDC et al. v. Browner, (D.D.C. No. 89-2980,

January 31, 1992) and are consistent with EPA's latest Effluent

Guidelines Plan under section 304(m) of the CWA. (See 63 FR 47285,

September 4, 1998.) The most recent existing effluent limitations

guidelines were issued on March 4, 1993 (58 FR 12454) for the Offshore

Subcategory and on December 16, 1996 (61 FR 66086) for the Coastal

Subcategory. This proposed rule is referred to as the Synthetic-Based

Drilling Fluids Guidelines, or SBF Guidelines, throughout this

preamble.

Today's proposal presents EPA's preferred technology approach and

several others that are being considered in the regulation development

process. The proposed rule is based on a detailed evaluation of the

available data acquired during the development of the proposed

limitations. EPA welcomes comment on all options and issues and

encourages commenters to submit additional data during the comment

period. Also, EPA is willing to meet with interested parties during the

comment period to ensure that EPA has the views of all parties and the

best possible data upon which to base a decision for the final

regulation. EPA emphasizes that it is soliciting comments on all

options discussed in this proposal and that it may adopt any

[[Page 5490]]

such options or combination of options in the final rule.

B. Summary of Proposed SBF Guidelines

This summary section highlights key aspects of the proposed rule.

The technology descriptions discussed later in this notice are

presented in abbreviated form; more detailed descriptions are included

in the Development Document for Proposed Effluent Limitations

Guidelines and Standards for Synthetic-Based and other Non-Aqueous

Drilling Fluids in the Oil and Gas Extraction Point Source Category,

referred to hereafter as the ``SBF Development Document.''

EPA proposes to establish regulations based on the ``best

practicable control technology currently available'' (BPT), ``best

conventional pollutant control technology'' (BCT), ``best available

technology economically achievable'' (BAT), and the best available

demonstrated control technology (BADCT) for new source performance

standards (NSPS), for the wastestream of synthetic-based drilling

fluids and other non-aqueous drilling fluids, and cuttings contaminated

with these drilling fluids.

For certain drilling situations, such as drilling in reactive

shales, high angle and/or high displacement directional drilling, and

drilling in deep water, progress with water-based drilling fluids

(WBFs) can be slow, costly, or even impossible, and often creates a

large amount of drilling waste. In these situations, the well is

normally drilled with traditional oil-based drilling fluids (OBFs),

which use diesel oil or mineral oil as the base fluid. Because EPA

rules require zero discharge of these wastes, they are either sent to

shore for disposal in non-hazardous oil field waste (NOW) sites or

injected into disposal wells.

Since about 1990, the oil and gas extraction industry has developed

many new oleaginous (oil-like) base materials from which to formulate

high performance drilling fluids. A general class of these are called

the synthetic materials, such as the vegetable esters, poly alpha

olefins, internal olefins, linear alpha olefins, synthetic paraffins,

ethers, linear alkyl benzenes, and others. Other oleaginous materials

have also been developed for this purpose, such as the enhanced mineral

oils and non-synthetic paraffins. Industry developed SBFs with these

synthetic and non-synthetic oleaginous materials as the base fluid to

provide the drilling performance characteristics of traditional OBFs

based on diesel and mineral oil, but with lower environmental impact

and greater worker safety through lower toxicity, elimination of

polynuclear aromatic hydrocarbons (PAHs), faster biodegradability,

lower bioaccumulation potential, and, in some drilling situations, less

drilling waste volume. EPA believes that this product substitution

approach is an excellent example of pollution prevention that can be

accomplished by the oil and gas industry.

EPA intends that these proposed regulations control the discharge

of SBFs in a way that reflects application of appropriate levels of

technology, while also encouraging their use as a replacement to the

traditional mineral oil and diesel oil-based fluids. Based on EPA's

information to date, the record indicates that use of SBFs and

discharge of the cuttings waste with proper controls would overall be

environmentally preferable to the use of OBFs. This is because OBFs are

subject to zero discharge requirements, and thus, must be shipped to

shore for land disposal or injected underground, resulting in higher

air emissions, increased energy use, and increased land disposal of

oily wastes. By contrast, the discharge of cuttings associated with

SBFs would eliminate those impacts. At the same time EPA recognizes

that the discharge of SBFs may have impacts to the receiving water.

Because SBFs are water non-dispersible and sink to the seafloor, the

primary potential environmental impacts are associated with the benthic

community. EPA's information to date, including limited seabed surveys

in the Gulf of Mexico, indicate that the effect zone of the discharge

of certain SBFs is within a few hundred meters of the discharge point

and may be significantly recovered in one to two years. EPA believes

that impacts are primarily due to smothering by the drill cuttings,

changes in sediment grain size and composition (physical alteration of

habitat), and anoxia (absence of oxygen) caused by the decomposition of

the organic base fluid. The benthic smothering and changes in grain

size and composition from the cuttings are effects that are also

associated with the discharge of WBFs and associated cuttings.

Based on the record to date, EPA finds that these impacts, which

are believed to be of limited duration, are less harmful to the

environment than the non-water quality environmental impacts associated

with the zero discharge requirement applicable to OBFs. Compared to the

zero discharge option EPA estimates that allowing discharge will reduce

air emissions of the criteria air pollutants by 450 tons per year,

decrease fuel use by 29,000 barrels per year of oil equivalent, and

reduce the generation of oily drill cutting wastes requiring off-site

disposal by 212 million pounds per year. In addition, EPA estimates

that compliance with these proposed limitations would result in a

yearly decrease in the discharge of 11.7 million pounds of toxic and

nonconventional pollutants in the form of SBFs. These estimates are

based on the current industry practice of discharging SBF-cuttings

outside of 3 miles in the Gulf of Mexico and no discharge of SBFs in

any other areas, including 3 miles offshore of California and in Cook

Inlet, Alaska.

As SBFs came into commercial use, EPA determined that the current

discharge monitoring methods, which were developed to control the

discharge of WBFs, did not appropriately control the discharge of these

new drilling fluids. Since WBFs disperse in water, oil contamination of

WBFs with formation oil or other sources can be measured by the static

sheen test, and any toxic components of the WBFs will disperse in the

aqueous phase and be detected by the suspended particulate phase (SPP)

toxicity test. With SBFs, which do not disperse in water but instead

sink as a mass, formation oil contamination has been shown to be less

detectible by the static sheen test. Similarly, the potential toxicity

of the discharge is not apparent in the current SPP toxicity test.

EPA has therefore sought to identify methods to control the

discharge of cuttings associated with SBFs (SBF-cuttings) in a way that

reflects the appropriate level of technology. One way to do this is

through stock limitations on the base fluids from which the drilling

fluids are formulated. This would ensure that substitution of synthetic

and other oleaginous base fluids for traditional mineral oil and diesel

oil reflects the appropriate level of technology. In other words, EPA

wants to ensure that only the SBFs formulated from the ``best'' base

fluids are allowed for discharge. Parameters that distinguish the

various base fluid are the polynuclear aromatic hydrocarbon (PAH)

content, sediment toxicity, rate of biodegradation, and potential for

bioaccumulation.

EPA also thinks that the SBF-cuttings should be controlled with

discharge limitations, such as a limitation on the toxicity of the SBF

at the point of discharge, and a limitation on the mass (as volume) or

concentration of SBFs discharged. The latter type of limitation would

take advantage of the solids separation efficiencies achievable with

SBFs, and consequently minimize the

[[Page 5491]]

discharge of organic and toxic components. EPA believes that SBFs

separated from drill cuttings should meet zero discharge requirements,

as this is the current industry practice due to the value of these

drilling fluids.

Thus, EPA is proposing limits appropriate to SBF-cuttings. EPA is

proposing zero discharge of neat SBFs (not associated with cuttings),

which reflects current practice. The new limitations applicable to

cuttings contaminated with SBFs would be as follows:

Stock Limitations on Base Fluids: (BAT/NSPS).

Maximum PAH content 10 ppm (wt. based on phenanthrene/wt.

base fluid).

Minimum rate of biodegradation (biodegradation equal to or

faster than C16-C18 internal olefin by solid

phase test).

Maximum sediment toxicity (as toxic or less toxic than

C16-C18 internal olefin by 10-day sediment

toxicity test).

Discharge Limitations on Cuttings Contaminated with SBFs:

No free oil by the static sheen test. (BPT/BCT/NSPS).

Maximum formation oil contamination (95 percent of

representative formation oils failing 1 percent by volume in drilling

fluid). (BAT/NSPS).

Maximum well-average retention of SBF on cuttings (percent

base fluid on wet cuttings). (BAT/NSPS).

Discharges remain subject to the following requirements already

applicable to all drilling waste discharges and thus these requirements

are not within the scope of this rulemaking:

Mercury limitation in stock barite of 1 mg/kg. (BAT/NSPS).

Cadmium limitation in stock barite of 3 mg/kg. (BAT/NSPS).

Diesel oil discharge prohibition. (BAT/NSPS).

EPA may require these additional or alternative controls as part of

the discharge option based on method development and data gathering

subsequent to today's notice:

Maximum sediment toxicity of drilling fluid at point of

discharge (minimum LC50, mL drilling fluid/kg dry sediment

by 10-day sediment toxicity test or amended test). (BAT/NSPS).

Maximum aqueous phase toxicity of drilling fluid at point

of discharge (minimum LC50 by SPP test or amended SPP test).

(BAT/NSPS).

Maximum potential for bioaccumulation of stock base fluid

(maximum concentration in sediment-eating organisms). (BAT/NSPS).

EPA is also considering a zero discharge option in the event that

EPA has an insufficient basis upon which to develop appropriate

discharge controls for SBF-cuttings:

Zero discharge of drill cuttings contaminated with SBFs

and other non-aqueous drilling fluids. (BPT/BCT/BAT/NSPS).

While EPA is proposing limitations on these parameters today, many

of the test methods that would be used to demonstrate attainment with

the limitations are still under development at this time, or additional

data needs to be gathered towards validating methods, proving the

variability and appropriateness of the methods, and assessing

appropriate limitations for the parameters. For example, as noted in

the list above, EPA is considering limitations in addition, or as an

alternative, to the limitations in today's proposal. The reason for

this is that EPA has insufficient data at this time to determine how to

best control toxicity and whether a bioaccumulation limitation is

necessary to adequately control the SBF-cuttings wastestream.

EPA would prefer to control sediment toxicity at the point of

discharge. While there is an EPA approved sediment toxicity test to do

this, EPA has concerns about the uniformity of the sediment used in the

toxicity test, the discriminatory power and variability of the test so

applied. Since the test is 10 days long, it poses a practical problem

for operators who would prefer to know immediately whether cuttings may

be discharges. Applying EPA's existing sediment toxicity test to the

base fluid as a stock limitation ameliorates these concerns, such that,

at this stage of the development of the test, EPA thinks that it is

more likely to be practically applied. As this would be the preferred

method of control, EPA intends to continue research into the test as

applied to the drilling fluid at the point of discharge. Industry also

has been conducting research to develop a sediment toxicity test that

may be applied to SBFs at the point of discharge with the cuttings.

Further, EPA intends to perform research into the aquatic toxicity test

to see if it can be used to adequately control the discharge through

modification. EPA may then consider applying an aqueous phase toxicity

test, either alone or in conjunction with a sediment toxicity test of

either the stock base fluid or drilling fluid at the point of

discharge.

In terms of the retention of SBF on cuttings, while EPA has enough

information to propose a limitation, EPA is still evaluating methods to

determine attainment of this limit. For the parameter of

biodegradation, EPA is proposing a numerical limit, but the analytic

method for measuring attainment of the limit has not yet been

validated. EPA wishes to do additional studies to validate the method

and provide public notice of any subsequently developed numerical

limit.

Because EPA plans to gather significant additional information in

support of the final rule, EPA intends to publish a supplemental notice

for public comment providing the proposed limitations and specific test

methods. These data gathering activities are summarized in Section V of

today's notice. Section VI details the information gathered to support

this selection of parameters, and the further information that EPA

intends to gather to support the methods and limitations for the

intended notice and subsequent final rule.

Therefore, the purpose of today's proposal is to request comment on

the candidate requirements listed above, identify the additional work

that EPA intends to perform towards promulgation of the limitations,

and request comments and additional data towards the selection of

parameters, methods and limitations development. EPA also intends that

this proposal serve as guidance to permit writers such that the

proposed methods can be incorporated into permits through best

professional judgement (BPJ). Such permits can be used to gather

supporting information towards selection of parameters, methods

development, and appropriate limitations.

The current regulations establish the geographic areas where

drilling wastes may be discharged: the offshore subcategory waters

beyond 3 miles from the shoreline, and in Alaska offshore waters with

no 3-mile restriction. The only coastal subcategory waters where

drilling wastes may be discharged is in Cook Inlet, Alaska. EPA is

retaining the zero discharge limitations in areas where discharge is

currently prohibited and these requirements are not within the scope of

this rulemaking.

EPA is limiting the scope of today's proposed rulemaking to

locations where drilling wastes may be discharged because these are the

only locations for which EPA has evaluated the non-water quality

environmental impacts of zero discharge versus the environmental

impacts of discharging drill cuttings associated with SBFs. For

example, EPA has only assessed the non-water quality environmental

impacts of zero discharge beyond three miles from shore. EPA expects

these impacts to be less where

[[Page 5492]]

the wastes are generated closer to shore. In addition, EPA has not

assessed the environmental effects of these discharges in coastal

areas. The current zero discharge areas are more likely to be

environmentally sensitive due to the presence of spawning grounds,

wetlands, lower energy (currents), and more likely to be closer to

recreational swimming and fishing areas. Further, dischargers are in

compliance with the zero discharge requirement and have only expressed

an interest in the use of these newer fluids where drilling wastes may

be discharged today.

III. Background

A. Clean Water Act

1. Summary of Effluent Limitations Guidelines and Standards

Congress adopted the Clean Water Act (CWA) to ``restore and

maintain the chemical, physical, and biological integrity of the

Nation's waters'' (Section 101(a), 33 U.S.C. 1251(a)). To achieve this

goal, the CWA prohibits the discharge of pollutants into navigable

waters except in compliance with the statute. The Clean Water Act

confronts the problem of water pollution on a number of different

fronts. Its primary reliance, however, is on establishing restrictions

on the types and amounts of pollutants discharged from various

industrial, commercial, and public sources of wastewater.

Direct dischargers must comply with effluent limitation guidelines

and new source performance standards in National Pollutant Discharge

Elimination System (``NPDES'') permits; indirect dischargers must

comply with pretreatment standards. EPA issues these guidelines and

standards for categories of industrial dischargers based on the degree

of control that can be achieved using various levels of pollution

control technology. The guidelines and standards are summarized below:

a. Best Practicable Control Technology Currently Available (BPT)--

sec. 304(b)(1) of the CWA.--Effluent limitations guidelines based on

BPT apply to discharges of conventional, toxic, and non-conventional

pollutants from existing sources. BPT guidelines are generally based on

the average of the best existing performance by plants in a category or

subcategory. In establishing BPT, EPA considers the cost of achieving

effluent reductions in relation to the effluent reduction benefits, the

age of equipment and facilities, the processes employed, process

changes required, engineering aspects of the control technologies, non-

water quality environmental impacts (including energy requirements),

and other factors the EPA Administrator deems appropriate. CWA

Sec. 304(b)(1)(B). Where existing performance is uniformly inadequate,

BPT may be transferred from a different subcategory or category.

b. Best Conventional Pollutant Control Technology (BCT)--sec.

304(b)(4) of the CWA.--The 1977 amendments to the CWA established BCT

as an additional level of control for discharges of conventional

pollutants from existing industrial point sources. In addition to other

factors specified in section 304(b)(4)(B), the CWA requires that BCT

limitations be established in light of a two part ``cost-

reasonableness'' test. EPA published a methodology for the development

of BCT limitations which became effective August 22, 1986 (51 FR 24974,

July 9, 1986).

Section 304(a)(4) designates the following as conventional

pollutants: biochemical oxygen demanding pollutants (measured as

BOD5), total suspended solids (TSS), fecal coliform, pH, and

any additional pollutants defined by the Administrator as conventional.

The Administrator designated oil and grease as an additional

conventional pollutant on July 30, 1979 (44 FR 44501).

c. Best Available Technology Economically Achievable (BAT)--sec.

304(b)(2) of the CWA.--In general, BAT effluent limitations guidelines

represent the best available economically achievable performance of

plants in the industrial subcategory or category. The CWA establishes

BAT as a principal national means of controlling the direct discharge

of toxic and nonconventional pollutants. The factors considered in

assessing BAT include the age of equipment and facilities involved, the

process employed, potential process changes, non-water quality

environmental impacts, including energy requirements, and such factors

as the Administrator deems appropriate. The Agency retains considerable

discretion in assigning the weight to be accorded these factors. An

additional statutory factor considered in setting BAT is economic

achievability across the subcategory. Generally, the achievability is

determined on the basis of total costs to the industrial subcategory

and their effect on the overall industry (or subcategory) financial

health. As with BPT, where existing performance is uniformly

inadequate, BAT may be transferred from a different subcategory or

category. BAT may be based upon process changes or internal controls,

such as product substitution, even when these technologies are not

common industry practice. The CWA does not require a cost-benefit

comparison in establishing BAT.

d. New Source Performance Standards (NSPS)--section 306 of the

CWA.--NSPS are based on the best available demonstrated control

technology (BADCT) and apply to all pollutants (conventional,

nonconventional, and toxic). NSPS are at least as stringent as BAT. New

plants have the opportunity to install the best and most efficient

production processes and wastewater treatment technologies. Under NSPS,

EPA is to consider the best demonstrated process changes, in-plant

controls, and end-of-process control and treatment technologies that

reduce pollution to the maximum extent feasible. In establishing NSPS,

EPA is directed to take into consideration the cost of achieving the

effluent reduction and any non-water quality environmental impacts and

energy requirements.

e. Pretreatment Standards for Existing Sources (PSES)--sec. 307(b)

of the CWA--and Pretreatment Standards for New Sources (PSNS)--sec.

307(b) of the CWA.--Pretreatment standards are designed to prevent the

discharge of pollutants to a publicly-owned treatment works (POTW)

which pass through, interfere, or are otherwise incompatible with the

operation of the POTW. Since none of the facilities to which this rule

applies discharge to a POTW, pretreatment standards are not being

considered as part of this rulemaking.

f. Best Management Practices (BMPs).--Section 304(e) of the CWA

gives the Administrator the authority to publish regulations, in

addition to the effluent limitations guidelines and standards listed

above, to control plant site runoff, spillage or leaks, sludge or waste

disposal, and drainage from raw material storage which the

Administrator determines may contribute significant amounts of toxic

and hazardous pollutants to navigable waters. Section 402(a)(1) also

authorizes best management practices (BMPs) as necessary to carry out

the purposes and intent of the CWA. See 40 CFR Part 122.44(k).

g. CWA Section 304(m) Requirements.--Section 304(m) of the CWA,

added by the Water Quality Act of 1987, requires EPA to establish

schedules for (i) reviewing and revising existing effluent limitations

guidelines and standards and (ii) promulgating new effluent guidelines.

On January 2, 1990, EPA published an Effluent Guidelines Plan (55 FR

80), in which schedules were established for developing new and revised

effluent guidelines for several industry

[[Page 5493]]

categories, including the oil and gas extraction industry. Natural

Resources Defense Council, Inc., challenged the Effluent Guidelines

Plan in a suit filed in the U.S. District Court for the District of

Columbia, (NRDC et al v. Browner, Civ. No. 89-2980). On January 31,

1992, the Court entered a consent decree (the ``304(m) Decree''), which

establishes schedules for, among other things, EPA's proposal and

promulgation of effluent guidelines for a number of point source

categories. The most recent Effluent Guidelines Plan was published in

the Federal Register on September 4, 1998 (63 FR 47285). This plan

requires, among other things, that EPA propose the Synthetic-Based

Drilling Fluids Guidelines by 1998 and promulgate the Guidelines by

2000.

2. Prior Federal Rulemakings and Other Notices

On March 4, 1993, EPA issued final effluent guidelines for the

Offshore Subcategory of the Oil and Gas Extraction Point Source

Category (58 FR 12454). The data and information gathering phase for

this rulemaking thus corresponded to the introduction of SBFs in the

Gulf of Mexico. Because of this timing, the range of drilling fluids

for which data and information were available to EPA was limited to

water-based drilling fluids (WBFs) and oil-based drilling fluids (OBFs)

using diesel and mineral oil. Industry representatives, however,

submitted information on SBFs during the comment period concerning

environmental benefits of SBFs over OBFs and WBFs, and problems with

false positives of free oil in the static sheen test applied to SBFs.

The requirements in the offshore rule applicable to drilling fluids

and drill cuttings consist of mercury and cadmium limitations on the

stock barite, a diesel oil discharge prohibition, a toxicity limitation

on the suspended particulate phase (SPP) generated when the drilling

fluids or drill cuttings are mixed in seawater, and no discharge of

free oil as determined by the static sheen test.

While the SPP toxicity test and the static sheen test, and their

limitations, were developed for use with WBF, the offshore regulation

does not specify the types of drilling fluids and drill cuttings to

which these limitations apply. Thus, under the rule, any drilling waste

in compliance with the discharge limitations could be discharged. When

the offshore rule was proposed, EPA believed that all drilling fluids,

be they WBFs, OBFs, or SBFs, could be controlled by the SPP toxicity

and static sheen tests. This is because OBFs based on diesel oil or

mineral oil failed one or both of the SPP toxicity test and no free oil

static sheen test. In addition, OBFs based on diesel oil were subject

to the diesel oil discharge prohibition.

EPA thought SBFs could also be adequately controlled by the

regulation based on comments received from industry. After the offshore

rule was proposed, EPA received several industry comments which focused

on the fact that the static sheen test could often be interpreted as

giving a false positive for the presence of diesel oil, mineral oil, or

formation hydrocarbons. For this reason, the industry commenters

contended that SBFs should be exempt from compliance with the no free

oil limitation required by the proposed offshore effluent guidelines.

In the final rulemaking in 1993, EPA's response to these comments

was that the prohibition on discharges of free oil was an appropriate

limitation for discharge of drill fluids and drill cuttings, including

SBFs. While EPA agreed that some of the newer SBFs may be less toxic

and more readily biodegradable than many of the OBFs, EPA was concerned

that no alternative method was offered for determining compliance with

the no free oil standard to replace the static sheen test. In other

words, if EPA were to exclude certain fluids from the requirement,

there would be no way to determine if at that particular facility,

diesel oil, mineral oil or formation hydrocarbons were also being

discharged.

Also in the final offshore rule, EPA encouraged the use of drilling

fluids that were less toxic and biodegraded faster. EPA solicited data

on alternative ways of monitoring for the no free oil discharge

requirement, such as gas chromatography or other analytical methods.

EPA also solicited information on technology issues related to the use

of SBFs, any toxicity data or biodegradation data on these newer

fluids, and cost information.

By focusing on the issue of false positives with the static sheen

test, EPA interpreted the offshore effluent guidelines to mean that

SBFs could be discharged provided they complied with the current

discharge requirements. EPA did not think, however, that many, if any,

SBFs would be able to meet the no free oil requirement.

In the final coastal effluent guidelines, EPA raised the issue of

false negatives with the static sheen test as opposed to the issue of

false positives raised during the offshore rulemaking. EPA had

information indicating that the static sheen test does not adequately

detect the presence of diesel, mineral, or formation oil in SBFs. In

addition, EPA raised other concerns regarding the inadequacy of the

current effluent guidelines to control of SBF wastestreams. Thus the

final coastal effluent guidelines, published on December 16, 1996 (61

FR 66086), constitute the first time EPA identified, as part of a

rulemaking, the inadequacies of the current regulations and the need

for new BPT, BAT, BCT, and NSPS controls for discharges associated with

SBFs.

The coastal rule adopted the offshore discharge requirements to

allow discharge of drilling wastes in one geographic area of the

coastal subcategory; Cook Inlet, Alaska, and prohibited the discharge

of drilling wastes in all other coastal areas.

Due to the lack of information concerning appropriate controls, EPA

could not provide controls specific to SBFs as a part of the coastal

rule. However, the coastal rulemaking solicited comments on SBFs. In

responding to these comments, EPA again identified certain

environmental benefits of using SBFs, and stated that allowing the

controlled discharge of SBF-cuttings would encourage their use in place

of OBFs. EPA also raised the inadequacies of the current effluent

guidelines to control the SBF wastestreams, and provided an outline of

the parameters which EPA saw as important for adequate control. The

inadequacies cited include the inability of the static sheen test to

detect formation oil or other oil contamination in SBFs and the

inability of the SPP toxicity test to adequately measure the toxicity

of SBFs. EPA offered alternative tests of gas chromatography (GC) and a

benthic toxicity test to verify the results of the static sheen and the

suspended particulate phase (SPP) toxicity testing currently required.

EPA also mentioned the potential need for controls on the base fluid

used to formulate the SBF, based on one or more of the following

parameters: PAH content, toxicity (preferably sediment toxicity), rate

of biodegradation, and bioaccumulation potential.

The final coastal rule also incorporated clarifying definitions of

drilling fluids for both the offshore and coastal subcategories to

better differentiate between the types of drilling fluids. The rule

provided guidance to permit writers needing to write limits for SBFs on

a best professional judgement (BPJ) basis as using GC as a confirmation

tool to assure the absence of free oil in addition to meeting the

current no free oil (static sheen), toxicity, and barite limits on

mercury and cadmium. EPA

[[Page 5494]]

recommended Method 1663 as described in EPA 821-R-92-008 as a gas

chromatograph with flame ionization detection (GC/FID) method to

identify an increase in n-alkanes due to crude oil contamination of the

synthetic materials coating the drill cuttings. Additional tests, such

as benthic toxicity conducted on the synthetic material prior to use or

whole SBF prior to discharge, were also suggested for controlling the

discharge of cuttings contaminated with drilling fluid.

EPA stated intentions to evaluate further the test methods for

benthic toxicity and determine an appropriate limitation if this

additional test is warranted. In addition, test methods and results for

bioaccumulation and biodegradation, as indications of the rate of

recovery of the cuttings piles on the sea floor, were to be evaluated.

EPA recognized that evaluations of such new testing protocols may be

beyond the technical expertise of individual permit writers, and so

stated that these efforts would be coordinated as a continuing effluent

guidelines effort. Today's proposal is a result of these efforts.

B. Permits

Four EPA Regions currently issue or review permits for offshore and

coastal oil and gas well drilling activities in areas where drilling

wastes may be discharged: Region 4 in the Eastern Gulf of Mexico (GOM),

Region 6 in the Central and Western GOM, Region 9 in offshore

California, and Region 10 in offshore and Cook Inlet, Alaska. Permits

in Regions 4, 9 and 10 never allowed the discharge of SBFs, and those

three Regions are currently preparing final general permits that either

specifically disallow SBF discharges until adequate discharge controls

are available to control the SBF wastestreams, or allow a limited use

of SBF to facilitate information gathering.

Discharge of drill cuttings contaminated with SBF (SBF-cuttings)

has occurred under the Region 6 offshore continental shelf (OCS)

general permit issued in 1993 (58 FR 63964), and the general permit

reissued on November 2, 1998 (63 FR 58722) again does not specifically

disallow the continued discharge of SBF-cuttings. The reason for these

differences between Region 6 and the other EPA Regions relates to the

timing of the 1993 Region 6 general permit and the issues raised in

comments during the issuance of that permit.

The previous individual and general permits of Regions 4, 9 and 10

were issued long before SBFs were developed and used. In Region 6,

however, the first SBF well was drilled in June of 1992 and the

development of the Region 6 OCS general permit, published December 3,

1993 (58 FR 63964), thus corresponded to the introduction of SBF use in

the GOM. After proposal of this permit, industry representatives

commented that the no free oil limitation as measured by the static

sheen test should be waived for SBFs, due to the occurrence of false

positives. They contended that a sheen was sometimes perceived when the

SBF was known to be free of diesel oil, mineral oil or formation oil.

These comments were basically the same as those submitted as part of

the offshore rulemaking, which occurred in the same time frame. EPA

responded as it had in the offshore rulemaking, maintaining the static

sheen test until there existed a replacement test to determine the

presence of free oil. EPA stated that if the current discharge

requirements could be met then the drilling fluid and associated wastes

could be discharged. This response indicated EPA's position that SBF

drilling wastes could be discharged as long as the discharge met permit

requirements. But again, in the context of these comments, EPA did not

expect that many, if any SBFs, would be able to meet the static sheen

requirements.

In addition to the requirements of the offshore guidelines, the

Region 6 OCS general permit also prohibited the discharge of oil-based

and inverse emulsion drilling fluids. Although SBFs are, in chemistry

terms, inverse emulsion drilling fluids, the definition in the permit

limited the term ``inverse emulsion drilling fluids'' to mean ``an oil-

based drilling fluid which also contains a large amount of water.''

Further, the permit provides a definition for oil-based drilling fluid

as having ``diesel oil, mineral oil, or some other oil as its

continuous phase with water as the dispersed phase.'' Since the SBFs

clearly do not have diesel or mineral oil as the continuous phase,

there was a question of whether synthetic base fluids (and more

broadly, other oleaginous base fluids) used to formulate the SBFs are

``some other oil.'' With consideration of the intent of the inverse

emulsion discharge prohibition, and the known differences in

polynuclear aromatic hydrocarbon content, toxicity, and biodegradation

between diesel and mineral oil versus the synthetics, EPA determined

that SBFs were not inverse emulsion drilling fluids as defined in the

Region 6 general permit. This determination is exemplified by the

separate definitions for OBFs and SBFs introduced with the Coastal

Effluent Guidelines (see 61 FR 66086, December 16, 1996).

In late 1998 and early 1999, all four Regions are (re)issuing their

general permits for offshore (Regions 4, 6 and 9) and coastal (Region

10) oil and gas wells. Once the effluent guidelines or guidance becomes

available, EPA intends to reopen the permits to add requirements that

adequately control SBF drilling wastes.

EPA intends for today's proposal to act as guidance such that the

Regions do not have to wait until issuance of a final rule planned for

December 2000, but may propose to add the appropriate discharge

controls through best professional judgement (BPJ). In this manner, the

controlled discharge of SBF may be used to further aid EPA in gathering

information subsequent to today's proposal.

C. Pollution Prevention Act

The Pollution Prevention Act of 1990 (PPA) (42 U.S.C. 13101 et

seq., Pub. L. 101-508, November 5, 1990) ``declares it to be the

national policy of the United States that pollution should be prevented

or reduced whenever feasible; pollution that cannot be prevented should

be recycled in an environmentally safe manner, whenever feasible;

pollution that cannot be prevented or recycled should be treated in an

environmentally safe manner whenever feasible; and disposal or release

into the environment should be employed only as a last resort * * *''

(Sec. 6602; 42 U.S.C. 13101 (b)). In short, preventing pollution before

it is created is preferable to trying to manage, treat or dispose of it

after it is created. The PPA directs the Agency to, among other things,

``review regulations of the Agency prior and subsequent to their

proposal to determine their effect on source reduction'' (Sec. 6604; 42

U.S.C. 13103(b)(2)). EPA reviewed this effluent guideline for its

incorporation of pollution prevention.

According to the PPA, source reduction reduces the generation and

release of hazardous substances, pollutants, wastes, contaminants, or

residuals at the source, usually within a process. The term source

reduction ``include[s] equipment or technology modifications, process

or procedure modifications, reformulation or redesign of products,

substitution of raw materials, and improvements in housekeeping,

maintenance, training or inventory control. The term `source

reduction.' does not include any practice which alters the physical,

chemical, or biological characteristics or the volume of a hazardous

substance, pollutant, or contaminant through a

[[Page 5495]]

process or activity which itself is not integral to or necessary for

the production of a product or the providing of a service.'' 42 U.S.C.

13102(5). In effect, source reduction means reducing the amount of a

pollutant that enters a waste stream or that is otherwise released into

the environment prior to out-of-process recycling, treatment, or

disposal.

In this proposed rule, EPA supports pollution prevention technology

by encouraging the use of SBFs based on certain synthetic materials and

other similarly performing materials in place of traditional oil-based

drilling fluids based on diesel oil and mineral oil. The waste

generated from SBFs is anticipated to have lower toxicity, lower

bioaccumulation potential, faster biodegradation, and elimination of

polynuclear aromatic hydrocarbons, including those which are priority

pollutants. With these improved characteristics, and to encourage their

use in place of OBFs, EPA is proposing to allow the controlled on-site

discharge of the cuttings associated with SBF. Use of SBF in place of

OBF will eliminate the need to barge to shore or inject oily waste

cuttings, reducing fuel use, air emissions, and land disposal. It also

eliminates the risk of OBF and OBF-cuttings spills. In addition, the

proposed regulatory option includes efficient closed-loop recycling

systems to reduce the quantity of SBF discharged with the drill

cuttings. A discussion of this pollution prevention technology is

contained in Section VI of this notice and in the Development Document.

IV. Description of Process and Well Drilling Activities

A. Well Drilling Process Description

Drilling occurs in two phases: exploration and development.

Exploration activities are those operations involving the drilling of

wells to locate hydrocarbon bearing formations and to determine the

size and production potential of hydrocarbon reserves. Development

activities involve the drilling of production wells once a hydrocarbon

reserve has been discovered and delineated.

Drilling for oil and gas is generally performed by rotary drilling

methods which use a circularly rotating drill bit that grinds through

the earth's crust as it descends. Drilling fluids are pumped down

through the drill bit via a pipe that is connected to the bit, and

serve to cool and lubricate the bit during drilling. The rock chips

that are generated as the bit drills through the earth are termed drill

cuttings. The drilling fluid also serves to transport the drill

cuttings back up to the surface through the space between the drill

pipe and the well wall (this space is termed the annulus), in addition

to controlling downhole pressure and stabilizing the well bore.

As drilling progresses, large pipes called ``casing'' are inserted

into the well to line the well wall. Drilling continues until the

hydrocarbon bearing formations are encountered. In areas where drilling

fluids and drill cuttings are allowed to be discharged under the

current regulations, well depths range from approximately 4,000 to

12,000 feet deep, and it takes approximately 20 to 60 days to complete

drilling.

On the surface, the drilling fluid and drill cuttings undergo an

extensive separation process to remove as much fluid from the cuttings

as possible. The fluid is then recycled into the system, and the

cuttings become a waste product. The drill cuttings retain a certain

amount of the drilling fluid that are discharged or disposed with the

cuttings. Drill cuttings are discharged by the shale shakers and other

solids separation equipment. Drill cuttings are also cleaned out of the

mud pits and from the solid separation equipment during displacement of

the drilling fluid system. Intermittently during drilling, and at the

end of the drilling process, drilling fluids may become wastes if they

can no longer be reused or recycled.

In the relatively new area of deepwater drilling, generally greater

than 3000' water depth, new drilling methods are evolving which can

significantly improve drilling efficiencies and thereby reduce the

volume of drilling fluid discharges as well as reduce non-water quality

effects of fuel and steel consumption and air emissions. Subsea

drilling fluid boosting, referred to as ``subsea pumping'', is one such

technology. Rotary drilling methods are generally performed as

described with the exception that the drilling fluid is energized or

boosted by use of a pump at or near the seafloor. By boosting the

drilling fluid, the adverse effect on the wellbore caused by the

drilling fluid pressure from the seafloor to the surface is eliminated,

thereby allowing wells to be drilled with as much as a 50% reduction in

the number of casing strings generally required to line the well wall.

Wells are drilled in less time, including less trouble time. To enable

the pumping of drilling fluids and cuttings to the surface, some drill

cuttings, larger than approximately one-fourth of an inch, are

separated from the drilling fluid at the seafloor since these cuttings

cannot reliably be pumped to the surface. The drill cuttings which are

separated at the seafloor are discharged through an eductor hose at the

seafloor within a 300' radius of the well site. For purposes of

monitoring, representative samples of drill cuttings discharged at the

seafloor can be transported to the surface and separated from the

drilling fluid in a manner similar to that employed at the seafloor.

The drilling fluid, which is boosted at the seafloor and transports

most of the drill cuttings back to the surface, is processed as

described in the general rotary drilling methods described above in

this section.

Once the target formations have been reached, and a determination

made as to which have commercial potential, the well is made ready for

production by a process termed ``completion.'' Completion involves

cleaning the well to remove drilling fluids and debris, perforating the

casing that lines the producing formation, inserting production tubing

to transport the hydrocarbon fluids to the surface, and installing the

surface wellhead. The well is then ready for production, or actual

extraction of hydrocarbons.

B. Location and Activity

This proposed regulation would establish discharge limitations for

SBFs in areas where drilling fluids and drill cuttings are allowed for

discharge. These discharge areas are the offshore waters beyond 3 miles

from shore except the offshore waters of Alaska which has no 3 mile

discharge restriction, and the coastal waters of Cook Inlet, Alaska.

Drilling is currently active in three regions in these discharge areas:

(i) the offshore waters beyond three miles from shore in the Gulf of

Mexico (GOM), (ii) offshore waters beyond three miles from shore in

California, and (iii) the coastal waters of Cook Inlet, Alaska.

Offshore Alaska is the only other area where drilling is active and

effluent guidelines allows discharge. However, drilling wastes are not

currently discharged in the Alaska offshore waters.

Among these three areas, most drilling activity occurs in the GOM,

where 1,302 wells were drilled in 1997, compared to 28 wells drilled in

California and 7 wells drilled in Cook Inlet. In the GOM, over the last

few years, there has been high growth in the number of wells drilled in

the deepwater, defined as water greater than 1,000 feet deep. For

example, in 1995, 84 wells were drilled in the deepwater, comprising

8.6 percent of all GOM wells drilled that year. By 1997, that number

increased to 173 wells drilled and comprised over 13 percent of all GOM

[[Page 5496]]

wells drilled. The increased activity in the deepwater increases the

usefulness of SBFs. Operators drilling in the deepwater cite the

potential for riser disconnect in floating drill ships, which favors

SBF over OBF; higher daily drilling cost which more easily justifies

use of more expensive SBFs over WBFs; and greater distance to barge

drilling wastes that may not be discharged (i.e., OBFs).

C. Drilling Wastestreams

Drilling fluids and drill cuttings are the most significant

wastestreams from exploratory and development well drilling operations.

This rule proposes limitations for the drilling fluid and cuttings

wastestream resulting when SBFs or other non-aqueous drilling fluids

are used. All other wastestreams and drilling fluids have current

applicable limitations which are outside the scope of this rulemaking.

A summary of the characteristics of these wastes is presented in

Section VI of this notice. A more detailed discussion of the origins

and characteristics of these wastes is included in the Development

Document.

V. Summary of Data Gathering Efforts

A. Expedited Guidelines Approach

This regulation is being developed using an expedited rulemaking

process. This process relies on stakeholder support to develop the

initial technology and regulatory options. At various stages of

information gathering, industry, EPA and other stakeholders present and

discuss their preferred options and identify differences in opinion.

This proposal, as part of the expedited process, is being presented

today in a shorter developmental time period, and with less information

than a typical effluent guidelines proposal. The proposed rule is then

a tool to identify the candidate requirements, and request comments and

additional data. EPA plans to continue this expedited rulemaking

process of relying on industry, environmental groups, and other

stakeholder support for the further regulatory development after

proposal.

EPA encourages full public participation in developing the final

SBF Guidelines. This expedited rulemaking process succeeds with more

open communication between EPA, the regulated community, and other

stakeholders, and relies less on formal data and information gathering

mechanisms. The expedited guidelines approach is suitable when EPA,

industry, and other stakeholders have a common goal on the structure of

the limitations and standards. EPA believes this is the case with the

SBF rulemaking; EPA is proposing to allow the controlled discharge of

the SBF-cuttings wastestream to encourage the use and further

development of this pollution prevention technology. Based on

information to date, EPA believes that this option has better

environmental results than the current use and subsequent land disposal

or injection of OBFs. Through the exchange of information among the

stakeholders, EPA understands the industry's interest in discharging

the SBF-cuttings wastestream because discharge of SBFs is more likely

to be cost effective as a replacement to the diesel and mineral oil

based OBFs. EPA was able to accommodate both environmental benefits and

business interests in today's proposal.

Throughout regulatory development, EPA has worked with

representatives from the oil and gas industry and several trade

associations, including the National Ocean Industries Association

(NOIA) and the American Petroleum Institute (API), SBF vendors, solids

control equipment vendors, the U.S. Department of Energy, the U.S.

Department of Interior Minerals Management Service, the Texas Railroad

Commission, and research and regulatory bodies of the United Kingdom

and Norway, to develop effluent limitations guidelines and standards

that represent the appropriate level of technology (e.g., BAT). The

Agency also discussed the progress of the rulemaking with the Natural

Resources Defense Council (NRDC) and invited its participation. The

Cook Inlet Keepers are participating in the rulemaking as well.

As part of the expedited approach to this rulemaking, EPA has

chosen not to gather data using the time consuming approach of a Clean

Water Act section 308 questionnaire, but rather by using data submitted

by industry, vendors, academia, and others, along with data EPA can

develop in a limited period of time. Because all of the facilities

affected by this proposal are direct dischargers, the Agency did not

conduct an outreach survey to POTWs.

Subsequent to today's proposal, EPA intends to continue its data

gathering efforts for support of the final rule. These continuing

efforts are discussed below in conjunction with the information already

gathered. Because of these continuing information gathering activities,

EPA expects that it will publish a subsequent notice of any data either

generated by EPA or submitted after this proposal that will be used to

develop the final rule.

B. Identification of Information Needs

As part of the final coastal effluent guidelines, published on

December 16, 1996 (61 FR 66086), EPA stated that appropriate and

adequate discharge controls would be necessary to allow the discharge

of SBF-cuttings under BPT, BAT, BCT, and NSPS in NPDES permits. As

detailed in Section III of today's notice, in the final coastal

effluent guidelines EPA recommended gas chromatography (GC) as a test

for formation oil contamination, and a sediment toxicity test as a

replacement for the suspended particulate phase (SPP) toxicity testing

currently required. EPA also mentioned the potential need for controls

on the base fluid used to formulate the SBF, controlling one or more of

the following parameters: PAH content, toxicity (preferably sediment

toxicity), rate of biodegradation, and bioaccumulation potential. EPA

summarized the information available from seabed surveys at SBF-

cuttings discharge sites.

Subsequent to the publication of the final coastal effluent

guidelines, EPA continued research into the appropriate controls for

the SBF-cuttings wastestream, and presented its findings to

stakeholders at meetings held in Dallas, Texas, on February 19, 1998,

and in Houston on May 8 and 9, 1997. EPA also presented data and

information requirements to develop adequate and appropriate controls

for the SBF-cuttings wastestream at four conferences, in Aberdeen,

Scotland, on June 23 and 24, 1997, in Houston, Texas on February 9,

1998, again in Aberdeen Scotland on June 18 and 19, 1998, and at the

Minerals Management Service Information Transfer Meeting held in New

Orleans, Louisiana on December 18, 1997. The conferences in Scotland

were germane because of the work that the Scottish Office Agriculture,

Environment and Fisheries Department had performed on sediment toxicity

testing, biodegradability testing, and seabed surveys at SBF-cuttings

and OBF-cuttings discharge sites. This detailed level of work has not

been performed in the United States.

EPA conducted literature reviews and in September 1997 published

documents entitled ``Bioaccumulation of Synthetic-Based Drilling

Fluids,'' ``Biodegradation of Synthetic-Based Drilling Fluids,''

``Assessment and Comparison of Available Drilling Waste Data from Wells

Drilled Using Water Based Fluids and Synthetic Based Fluids,'' and

``Seabed Survey Review and Summary.'' The purpose of these documents

was to help direct EPA's and other stakeholder's research efforts in

[[Page 5497]]

defining BPT, BAT, BCT, and NSPS, and address CWA 403(c) requirements

for SBFs.

Industry stakeholders, with the motivation of having SBFs addressed

in NPDES permits that allow the discharge of SBF-cuttings, assisted EPA

in the development of methods and data gathering to describe currently

available technologies. Thus, by means of meetings, conferences, and

other stakeholder meetings, EPA detailed the methods and/or types of

information required in order to support BPT, BCT, BAT, and NSPS

controls in NPDES permits. The past and anticipated future efforts by

various stakeholder groups and the EPA are presented below.

C. Stakeholder Technical Work Groups

In order to concentrate efforts on certain technical issues, in May

of 1997 industry prepared studies on the following subjects: (a) the

determination of formation oil contamination in SBFs, (b) toxicity

testing of SBFs and base fluids, (c) quantity of SBF discharged

(retention of base fluid on cuttings), and (d) seabed surveys at SBF-

cuttings discharge sites. Industry representatives formed work groups

to address these issues. The sections below describe their work.

1. Formation Oil Contamination Determination (Analytical)

The goal of this work group was to define the monitoring and

compliance method to determine crude oil (or other oil) contamination

of SBF-cuttings. The work group has issued several reports concerning

the static sheen test, and developed two replacement tests for

formation oil contamination, one based on fluorescence and the other on

gas chromatography with mass spectroscopy detection (GC/MS).

On September 28, 1998, the workgroup published the final draft of

the Phase I report entitled ``Evaluation of Static Sheen Test for

Water-based Muds, Synthetic-based Muds and Enhanced Mineral Oils. The

conclusions of the report are that the static sheen test is not a good

indicator of oil contamination in SBFs, and that in WBFs formation oil

contamination is often detected at 1.0 percent and sometimes as low as

0.5 percent.

On October 21, 1998, the work group published its final draft to

the Phase II report entitled ``Survey of Monitoring Approaches for the

Detection of Oil Contamination in Synthetic-based Drilling Muds.'' This

document lists thirteen methods that the work group considered as a

replacement to the static sheen test. From these thirteen, EPA selected

the reverse phase extraction method to be used on offshore drilling

sites, and the GC/MS method for onshore baseline measurements.

On November 16, 1998, the work group published its final draft of

the Phase III report entitled ``Laboratory Evaluation of Static Sheen

Replacements: RPE Method and GC/MS Method.'' This report provides the

methods. The future work of the Analytical Work Group is to validate

these methods.

2. Retention on Cuttings

The goals of this work group were to determine the SBF retention on

cuttings using the equipment currently used in the Gulf of Mexico

(GOM), and investigate ways of determining the total quantity of SBF

discharged when drilling a well. To address the first goal, API

reported data from GOM wells on the amount of SBF base fluid retained

on drill cuttings. The results were published on August 29, 1997, in a

report entitled ``Retention of Synthetic-Based Drilling Material on

Cuttings Discharged to the Gulf of Mexico.''

To address the second goal of determining the total quantity of SBF

discharged, the work group has created a spreadsheet which records

information allowing two independent analyses of the SBF quantity

discharged. One method is based on a mass balance of the SBF, and the

other is based on retort measurements of the cuttings wastestream. Both

methods of analyses carry certain benefits and drawbacks. By comparing

the results from the two analyses, EPA intends to select one method as

preferred for the final rule. The work group is currently gathering

these comparative data. The preferred method will then be validated for

inclusion in the final rule. At this time, EPA thinks that the retort

measurement is preferable to implement, and therefore it is the method

proposed today. As further information is gathered, however, EPA may

decide that attainment of the limit in the final rule is to be

determined by the mass balance method.

3. Toxicity Testing

The goal of this work group was to define the toxicity test for

monitoring and compliance of SBF-cuttings. EPA has indicated that the

test could be performed on either the stock base fluid, or the SBF

separated from the cuttings at the point of discharge.

Through data generated by members of the work group, the work group

has shown that SBF and synthetic base fluid toxicity are mainly evident

in the sedimentary phase. When measured in the suspended particulate

phase (SPP) in the current Mysid shrimp toxicity test, the toxicity is

not evident and the results are highly variable, and are easily

affected by the intensity of stirring and emulsifier content of the

SBF.

Having shown that an aqueous phase test is unlikely to yield

satisfactory results with SBFs and associated base fluids, the work

group has been investigating sediment toxicity tests, mainly the 10-day

sediment toxicity test with amphipods (ASTM E1367-92). To effect this

work, API funded a currently ongoing contract to evaluate four test

methods: 10-day acute sediment toxicity test with (a) Ampelisca abdita,

(b) Leptocheirus plumulosus, and (c) Mysidopsis bahia, and (d) microtox

tests. Main issues that the work group hopes to resolve are

discriminatory power of the method and variability in results. Since

the API contract work began, the work group has considered many

variables to the sediment toxicity test to ameliorate these problems.

The work group is investigating: organisms other than amphipods, such

as Mysid shrimp and polychaetes; shortening the length of the test,

i.e. from 10 days to 4 days; and the use of formulated sediments in

place of natural sediments. Work continues to determine the most

appropriate method to evaluate the toxic effect of the SBF discharged

with drill cuttings.

4. Environmental Effects/Seabed Surveys

The goal of this work group was to determine the spacial and

temporal recovery of the seafloor at sites where SBF-cuttings had been

discharged, and compare these effects with effects caused by the

discharge of WBF and WBF-cuttings discharge.

The work group performed a five-day screening cruise at three

offshore oil platforms where SBFs has been used and SBF-cuttings

discharged for the purpose of gathering preliminary environmental

effects information. This screening cruise, and its planning, was

performed in collaboration with EPA and with the use of the EPA Ocean

Survey Vessel Peter W. Anderson. The study conducted a preliminary

evaluation of offshore discharge locations and determine the areal

extent of observable physical, chemical, and biological impact. EPA

intended that this base information would provide (1) information

relative to the immediate concerns on impacts, and (2) valuable

preliminary information for designing future offshore assessments.

The study provided preliminary information on cuttings deposition,

SBF content of nearfield marine sediments,

[[Page 5498]]

anoxia in nearfield sediments, qualitative information on biological

communities in the area, and toxicity of field collected sediments. The

results of this survey were published on October 21, 1998, in a report

entitled ``Joint EPA/Industry Screening Survey to Assess the Deposition

of Drill Cuttings and Associated Synthetic Based Mud on the Seabed of

the Louisiana Continental Shelf, Gulf of Mexico.''

The ongoing effort of the work group is to address CWA 403(c)

permit requirements for seabed surveys by organizing collaborative

industry seabed surveys at selected SBF-discharge sites.

D. EPA Research on Toxicity, Biodegradation, Bioaccumulation

Subsequent to today's proposal, EPA plans to compare the relative

environmental effects of SBFs and OBFs in terms of (i) sediment and

aquatic toxicity, (ii) biodegradation, and (iii) bioaccumulation. The

methods development to occur as part of this research, and the

resulting data, are intended to be used towards the final stock base

fluid limitations and SBF discharge limitations proposed today.

The base fluids to consider in the sediment toxicity,

biodegradation, and bioaccumulation tests are the full range of

synthetic and oleaginous base fluids. These include the synthetic oils

such as vegetable esters, linear alpha olefins, internal olefins and

poly alpha olefins, the traditional base oils of mineral oil and diesel

oil, and the newer more refined and treated oils such as enhanced

mineral oil and paraffinic oils. These oily base fluids are common in

that they are immiscible (do not mix) with water, and form drilling

fluids that do not disperse in water.

The outline of this research plan in terms of goals and

considerations is as follows:

For sediment toxicity, this plan intends to investigate

the effects of base fluid, whole mud formulation, and crude oil

contamination on sediment toxicity as measured by the 10-day acute

sediment toxicity test performed in natural sediment with Ampelisca

abdita and Leptocheirus plumulosus. The goals of this research are

threefold:

Amend the EPA 10-day acute sediment toxicity test for

application to SBFs and base fluids.

Determine the LC50 values for the base fluids

by this method, potentially for determination of stock limitations

values.

Determine the effects of mud formulation and crude oil

contamination on sediment toxicity by maintaining the base fluid

constant. The purpose is to investigate the parameters which affect

toxicity in SBFs.

For aqueous phase toxicity, this plan intends to

investigate if any correlation exists between aqueous phase toxicity to

Mysid shrimp and sediment toxicity.

For biodegradation, this plan intends to perform the solid

phase test or modified solid phase test as developed by the Scottish

Office Agriculture, Environment and Fisheries Department for a range of

oily base fluids, and environments of the Gulf of Mexico, Offshore

California, Cook Inlet Alaska, and Offshore Alaska.

For bioaccumulation, this plan intends to test

bioconcentration in Macoma nasuta and Nereis virens.

The research concerning sediment toxicity testing that API supports

is seen as complementary to, and not overlapping with, this EPA plan.

API's goal is to identify a bioassay test organism and protocol to

accurately and reliably evaluate the toxicity of SBF and OBF in

sediments. The API research is concentrating efforts on using both

formulated and natural sediments, and possibly a test period shorter

than the standard 10-day EPA method. Thus, while EPA is focusing on

investigating the parameters that affect toxicity of SBFs, the API

research is looking ahead to discharge monitoring requirements with the

goal of identifying an appropriate and reliable test method.

E. EPA Investigation of Solids Control Technologies for Drilling Fluids

EPA has contacted numerous vendors of solids control equipment and

requested information on performance and cost of the various solids

separation units available. EPA has also received information from

operators data showing the performance of the vibrating centrifuge

technology. As part of its investigation of solids control equipment

used on offshore drilling platforms, EPA visited Amoco's Marlin

deepwater drilling project aboard the Amirante semi-submersible

drilling platform located in Viosca Knoll Block 915 approximately 100

miles south of Mobile, Alabama. The primary purpose of this site visit

was to observe the demonstration of the vibrating centrifuge drilling

fluid recovery device heretofore used only on North Sea drilling

projects. The device reportedly can produce drill cuttings containing

less than 6 percent by volume synthetic drilling fluid on wet cuttings

when well operated and maintained and used in conjunction with shale

shakers that are well operated and maintained. The information gathered

by the EPA during this trip is described in a report dated August 7,

1998, entitled ``Demonstration of the `Mud 10' Drilling Fluid Recovery

Device at the Amoco Marlin Deepwater Drill Site.''

F. Assistance From Other State and Federal Agencies

The United States Department of Interior Minerals Management

Service (MMS) maintains data of the number of wells drilled in offshore

waters under MMS jurisdiction, i.e., those that are not territorial

seas. In general, this covers the offshore waters beyond 3 miles from

the shoreline, which corresponds with the area were drilling wastes are

currently allowed for discharge and so is the same area affected by

this rule. MMS supplied data for years 1995, 1996, and 1997 of the

number of wells drilled in the GOM and offshore California according to

depth (less than or greater than 1000 feet water depth) and type of

well (exploratory or development). Since Texas jurisdiction over oil

and gas leases extends out to 10 miles, information was requested and

received from the Texas Railroad Commission regarding the number of

wells drilled in Texas territorial seas from 3 miles to 10 miles from

shore. This is the area in the GOM that is affected by this proposed

rule, but not included in the MMS data.

Information concerning the number of wells drilled in the state

waters of Upper Cook Inlet, Alaska, was gathered from the Alaska Oil

and Gas Commission. The Alaska Oil and Gas Commission provided

information of the number of wells drilled in Upper Cook Inlet for the

years 1995, 1996, and 1997, according to type of well as exploratory or

development.

MMS also assisted in developing the cruise plan of the screening

seabed survey mentioned in section V.C.4 above.

The United States Department of Energy (DOE) has been active in

assisting EPA to gather information concerning drilling waste disposal

methods and costs, and type of fuel used on offshore platforms. In

November 1998 Argonne National Laboratory, under contract with DOE,

published the results of this information gathering effort in a report

entitled ``Data Summary of Offshore Drilling Waste Disposal

Practices.''

Also under contract with DOE, Brookhaven National Laboratory

developed a comparative risk assessment for the discharge of SBFs. The

risk assessment, published November 1998, is entitled ``Framework for a

Comparative Environmental Assessment of Drilling Fluids.''

[[Page 5499]]

VI. Development of Effluent Limitations Guidelines and Standards

A. Waste Generation and Characterization

Drill cuttings are produced continuously at the bottom of the hole

at a rate proportionate to the advancement of the drill bit. These

drill cuttings are carried to the surface by the drilling fluid, where

the cuttings are separated from the drilling fluid by the solids

control system. The drilling fluid is then sent back down hole,

provided it still has characteristics to meet technical requirements.

Various sizes of drill cuttings are separated by the solids separations

equipment, and it is necessary to remove the fines (small sized

cuttings) as well as the large cuttings from the drilling fluid to

maintain the required flow properties.

SBFs, used or unused, are considered a valuable commodity and not a

waste. It is industry practice to continuously reuse the SBF while

drilling a well interval, and at the end of the well, to ship the

remaining SBF back to shore for refurbishment and reuse. Compared to

WBFs, SBFs are relatively easy to separate from the drill cuttings

because the drill cuttings do not disperse in the drilling fluid to the

same extent. With WBF, due to dispersion of the drill cuttings,

drilling fluid components often need to be added to maintain the

required drilling fluid properties. These additions are often in excess

of what the drilling system can accommodate. The excess ``dilution

volume'' of WBF is a resultant waste. This dilution volume waste does

not occur with SBF. For these reasons, SBF is only discharged as a

contaminant of the drill cuttings wastestream. It is not discharged as

neat drilling fluid (drilling fluid not associated with cuttings).

The top of the well is normally drilled with a WBF. As the well

becomes deeper, the performance requirements of the drilling fluid

increase, and the operator may, at some point, decide that the drilling

fluid system should be changed to either a traditional OBF based on

diesel oil or mineral oil, or an SBF. The system, including the drill

string and the solids separation equipment, must be changed entirely

from the WBF to the SBF (or OBF) system, and the two do not function as

a blended system. The entire system is either (a) a water dispersible

drilling fluid such as a WBF, or (b) a water non-dispersible drilling

fluid such as an SBF. The decision to change the system from a WBF

water dispersible system to an OBF or SBF water non-dispersible system

depends on many factors including:

The operational considerations, i.e. rig type (risk of

riser disconnects with floating drilling rigs), rig equipment, distance

from support facilities,

The relative drilling performance of one type fluid

compared to another, e.g., rate of penetration, well angle, hole size/

casing program options, horizontal deviation,

The presence of geologic conditions that favor a

particular fluid type or performance characteristic, e.g., formation

stability/sensitivity, formation pore pressure vs. fracture gradient,

potential for gas hydrate formation,

Drilling fluid cost--base cost plus daily operating cost,

Drilling operation cost--rig cost plus logistic and

operation support,

Drilling waste disposal cost.

Industry has commented that while the right combination of factors that

favor the use of SBF can occur in any area, they most frequently occur

with ``deep water'' operations. This is due to the fact that these

operations are higher cost and can therefore better justify the higher

initial cost of SBF use.

The volume of cuttings generated while drilling the SBF intervals

of a well depends on the type of well, development or production, and

the water depth. According to analyses of the model wells provided by

industry representatives, wells drilled in less than 1,000 feet of

water are estimated to generate 565 barrels for a development well and

1,184 barrels for an exploratory well. Wells drilled in water greater

than 1,000 feet deep are estimated to generate 855 barrels for a

development well, and 1,901 for an exploratory well. These values

assume 7.5 percent washout, based on the rule of thumb reported by

industry representatives of 5 to 10 percent washout when drilling with

SBF. Washout is caving in or sluffing off of the well bore. Washout,

therefore, increases hole volume and increases the amount of cuttings

generated when drilling a well. Assuming no washout, the values above

become, respectively, 526, 1,101, 795, and 1,768, barrels.

The drill cuttings range in size from large particles on the order

of a centimeter in size to small particles a fraction of a millimeter

in size, called fines. As the drilling fluid returns from downhole

laden with drill cuttings, it normally is first passed through primary

shale shakers which remove the largest cuttings, ranging in size of

approximately 1 to 5 millimeters. The drilling fluid may then be passed

over secondary shale shakers to remove smaller drill cuttings. Finally,

a portion or all of the drilling fluid may be passed through a

centrifuge or other shale shaker with a very fine mesh screen, for the

purpose of removing the fines. It is important to remove fines from the

drilling fluid in order to maintain the desired flow properties of the

active drilling fluid system. Thus, the cuttings wastestream normally

consists of larger cuttings from the primary shale shakers and fines

from a fine mesh shaker or centrifuge, and may also consist of smaller

cuttings from a secondary shale shaker. Before being discharged, the

larger cuttings are sometimes sent through another separation device in

order to recover additional drilling fluid.

The recovery of SBF from the cuttings serves two purposes. The

first is to deliver drilling fluid for reintroduction to the active

drilling fluid system, and the second is to minimize the discharge of

SBF. The recovery of drilling fluid from the cuttings is a conflicting

concern, because as more aggressive methods are used to recover the

drilling fluid from the cuttings, the cuttings tend to break down and

become fines. The fines are not only more difficult to separate from

the drilling fluid, but as stated above they also deteriorate the

properties of the drilling fluid. Increased recovery from the cuttings

is more problematic for WBF than with SBF because the WBF water-wets

the cuttings which encourages the cuttings to disperse and spoil the

drilling fluid properties. Therefore, compared to WBF, more aggressive

methods of recovering SBF from the cuttings wastestream are practical.

These more aggressive methods may be justified for cuttings associated

with SBF so as to reduce the discharge of SBF. This, consequently, will

reduce the potential to cause anoxia (lack of oxygen) in the receiving

sediment as well as reduce the quantity of toxic organic and metallic

components of the drilling fluid discharged.

Drill cuttings are typically discharged continuously as they are

separated from the drilling fluid in the solids separation equipment.

The drill cuttings will also carry a residual amount of adhered

drilling fluid. TSS makes up the bulk of the pollutant loadings, and is

comprised of two components: the drill cuttings themselves, and the

solids in the adhered drilling fluid. The drill cuttings are primarily

small bits of stone, clay, shale, and sand. The source of the solids in

the drilling fluid is primarily the barite weighting agent, and clays

which are added to modify the viscosity. Because the quantity of TSS is

so high and consists of mainly large particles which settle quickly,

discharge of SBF drill cuttings can cause benthic

[[Page 5500]]

smothering and/or sediment grain size alteration resulting in potential

damage to invertebrate populations and alterations in benthic community

structure.

Additionally, environmental impacts can be caused by toxic,

conventional, and nonconventional pollutants adhering to the solids.

The adhered SBF drilling fluid is mainly composed, on a volumetric

basis, of the synthetic material, or more broadly speaking, oleaginous

material. The oleaginous material may also be toxic or bioaccumulate,

and it may contain priority pollutants such as polynuclear aromatic

hydrocarbons (PAHs). This oleaginous material may cause hypoxia

(reduction in oxygen) or anoxia in the immediate sediment, depending on

bottom currents, temperature, and rate of biodegradation. Oleaginous

materials which biodegrade quickly will deplete oxygen more rapidly

than more slowly degrading materials. EPA, however, thinks that fast

biodegradation is environmentally preferable to persistence despite the

increased risk of anoxia which accompanies fast biodegradation. This is

because recolonization of the area impacted by the discharge of SBF-

cuttings or OBF-cuttings has been correlated with the disappearance of

the base fluid in the sediment, and does not seem to be correlated with

anoxic effects that may result while the base fluid is disappearing. In

studies conducted in the North Sea, base fluids that biodegrade faster

have been found to disappear more quickly, and recolonization at these

sites has been more rapid.

As a component of the drilling fluid, the barite weighting agent is

also discharged as a contaminant of the drill cuttings. Barite is a

mineral principally composed of barium sulfate, and it is known to

generally have trace contaminants of several toxic heavy metals such as

mercury, cadmium, arsenic, chromium, copper, lead, nickel, and zinc.

B. Selection of Pollutant Parameters

1. Stock Limitations of Base Fluids

a. General.--EPA is proposing to establish BAT and NSPS that would

require the synthetic materials and other oleaginous materials which

form the base fluid of the SBFs and other non-aqueous drilling fluids

to meet limitations on PAH content, sediment toxicity and

biodegradation. The technology basis for meeting these limits would be

product substitution, or zero discharge based on land disposal or

injection if these limits are not met. These parameters are being

regulated to control the discharge of certain toxic and nonconventional

pollutants. A large range of synthetic, oleaginous, and water miscible

materials have been developed for use as base fluids. These stock

limitations on the base fluid are intended to encourage product

substitution reflecting best available technology wherein only those

synthetic materials and other base fluids which minimize potential

loadings and toxicity may be discharged.

b. PAH Content.--EPA proposes to regulate PAH content of base

fluids because PAHs are comprised of toxic priority pollutants. SBF

base fluids typically do not contain PAHs, whereas the traditional OBF

base fluids of diesel and mineral oil typically contain on the order of

5 to 10 percent PAH in diesel oil and 0.35 percent PAH in mineral oil.

The PAHs typically found in diesel and mineral oil include the toxic

priority pollutants fluorene, naphthalene, phenanthrene, and others,

and nonconventional pollutants such as alkylated benzenes and

biphenyls. Thus, this stock limitation would be one component of a rule

reflecting the use of the best available technology.

c. Sediment Toxicity.--EPA proposes to regulate sediment toxicity

in base fluids and SBFs as a nonconventional pollutant parameter, as an

indicator for toxic components of base fluids or drilling fluid. Some

of the toxic components of the base fluids may include enhanced mineral

oils, internal olefins, linear alpha olefins, paraffinic oils,

vegetable esters of 2-hexanol and palm kernel oil, and other oleaginous

materials. Some of the possible toxic components of drilling fluids may

include the same components as the base fluid, and in addition mercury,

cadmium, arsenic, chromium, copper, lead, nickel, and zinc, formation

oil contaminants, and other intended or unintended components of the

drilling fluid. It has been shown, during EPA's development of the

Offshore Guidelines, that establishing limits on toxicity encourages

the use of less toxic drilling fluids and additives. Many of the

synthetic base fluids have been shown to have lower toxicity than

diesel and mineral oil, but among the synthetic and other oleaginous

base fluids some are more toxic than others. Today's proposed discharge

option includes a sediment toxicity limitation of the SBF's base fluid

stock material, as measured by the 10-day sediment toxicity test (ASTM

E1367-92) using a natural sediment and Leptocheirus plumulosus as the

test organism.

Subsequent to this proposal and before the final rule, EPA intends

to gather information to determine how to most appropriately control

toxicity and solicit comment on these findings. The sediment toxicity

test may be altered, for instance, in terms of test organism (other

amphipods or possibly a polychaete), sediment type (formulated in place

of natural), or length of test (to shorten the 10-day test period).

Further, while today's proposal includes a sediment toxicity limitation

of the base fluid stock material, the final discharge option to control

toxicity might consist of a different option.

EPA would prefer to control sediment toxicity at the point of

discharge as opposed to controlling the base fluid. EPA realizes,

however, that the sediment toxicity test may be impractical to

implement as a discharge requirement due to potential problems in the

availability of uniform sediment and other factors affecting test

variability. If EPA finds, through subsequent research, that the

sediment toxicity test at the point of discharge is both practical and

superior to the base fluid toxicity as an indicator of the toxicity of

the SBF at the point of discharge, EPA might apply the sediment

toxicity test to the SBF at the point of discharge in place of today's

proposed method of the sediment toxicity test to the base fluid.

If the sediment toxicity test of neither the SBF at point of

discharge nor synthetic base fluid as a stock limitation is found to be

practical due to variability, lack of discriminatory power, or other

problems, EPA will search for an alternative toxicity test. One

candidate is modification to the current SPP toxicity test, or aquatic

phase toxicity test. EPA has several concerns with applying the current

SPP test to SBFs. EPA has received information from industry sources

and testing laboratories that the results from the SPP test applied to

SBFs are highly dependent on both the agitation when mixing the

seawater with the SBF and the amount and type of emulsifiers in the SBF

formulation. Further, results to date show that, compared to the

aquatic toxicity test, the sediment toxicity test provides a better

correlation with known toxicity effects of the various synthetic and

oleaginous base fluids, and the experimental situation more closely

mimics the actual fate of the drilling fluid. While EPA does not think

that the current SPP test is useful for application to SBFs,

modifications to either the method or limitation may render it

functional. Thus, EPA intends to investigate the aquatic phase toxicity

test as a possible control in the event that the sediment toxicity test

of the drilling fluid is impractical and the

[[Page 5501]]

sediment toxicity test of the base fluid is either impractical or

inadequate to control the toxicity of the SBF at the point of

discharge.

EPA intends, therefore, to investigate further the most appropriate

test method for controlling toxicity of SBF discharges, and to validate

this method. EPA intends to publish any additional data concerning this

limitation in a notice prior to publication of the final rule.

d. Biodegradation.--EPA proposes to limit biodegradation as an

indicator of the extent, in level and duration, of the toxic effect of

toxic components of nonconventional pollutants present in the base

fluids, e.g., poly alpha olefins, enhanced mineral oils, internal

olefins, linear alpha olefins, paraffinic oils, and vegetable ester of

2-hexanol and palm kernel oil. The various SBF base fluids vary widely

in biodegradation rate, as measured by the solid phase test and

simulated seabed tests. Based on results from seabed surveys at sites

where various base fluids have been discharged with drill cuttings, EPA

believes that the results from both measurement methods are indicative

of the relative rates of biodegradation in the marine environment. In

addition, EPA thinks this parameter correlates strongly with the rate

of recovery of the seabed where SBF-cuttings have been discharged.

While EPA is proposing to use the solid phase test to measure

compliance with the biodegradation limitation, this test is not yet an

EPA validated method. In addition to validating the method for the

final rule, EPA intends to gather additional data in support of the

biodegradation rate limitation. EPA plans to present any additional

data it collects towards this limitation in a notice subsequent to

today's proposed rule and before the final rule.

e. Bioaccumulation.--While not a part of today's proposal, EPA is

also considering establishing BAT and NSPS that would require the

synthetic materials and other base fluids used in non-aqueous drilling

fluids to meet limitations on bioaccumulation potential. The regulated

parameters would be the nonconventional and toxic priority pollutants

that bioaccumulate. Based on current information, EPA believes that the

base fluid controls on PAH content, sediment toxicity, and

biodegradation rate being proposed today are sufficient to control

bioaccumulation. EPA intends, however, to study the bioaccumulation

potential of the various synthetic base fluids for comparison, and

subsequently solicit comments on the results if EPA thinks that some

measure of bioaccumulation potential is needed to control adequately

the SBF-cuttings wastestream.

2. Discharge Limitations

a. Free Oil.--Under BPT and BCT limitations for SBF-cuttings, EPA

would retain the prohibition on the discharge of free oil as determined

by the static sheen test. Under this prohibition, drill cuttings may

not be discharged when the associated drilling fluid would fail the

static sheen test defined in Appendix 1 to 40 CFR Part 435, Subpart A.

The prohibition on the discharge of free oil is intended to minimize

the formation of sheens on the surface of the receiving water. The

regulated parameter of the no free oil limitation would be the

conventional pollutants oil and grease which separate from the SBF and

cause a sheen on the surface of the receiving water.

The free oil discharge prohibition does not control the discharge

of oil and grease and crude oil contamination in SBFs as it would in

WBFs. With WBFs, oils which may be present (such as diesel oil, mineral

oil, formation oil, or other oleaginous materials) are present as the

discontinuous phase. As such these oils are free to rise to the surface

of the receiving water where they may appear as a film or sheen upon or

discoloration of the surface. By contrast, the oleaginous matrices of

SBFs do not disperse in water. In addition they are weighted with

barite, which causes them to sink as a mass without releasing either

the oleaginous materials which comprise the SBF or any contaminant

formation oil. Thus, the test would not identify these pollutants.

However, a portion of the synthetic material comprising the SBF may

rise to the surface to cause a sheen. These components that rise to the

surface fall under the general category of oil and grease and are

considered conventional pollutants. Therefore, the purpose of the no

free oil limitation of today's proposal is to control the discharge of

conventional pollutants which separate from the SBF and cause a sheen

on the surface of the receiving water. The limitation, however, is not

intended to control formation oil contamination nor the total quantity

of conventional pollutants discharged.

b. Formation Oil Contamination.--Formation oil contamination of the

SBF associated with the cuttings would be limited under BAT and NSPS.

Formation oil is an ``indicator'' pollutant for the many toxic and

priority pollutant components present in formation (crude) oil, such as

aromatic and polynuclear aromatic hydrocarbons. These pollutants

include benzene, toluene, ethylbenzene, naphthalene, phenanthrene, and

phenol. (See Development Document Chapter VII). The primary limitation

is based on a fluorescence test. This test is considered an

appropriately ``weighted'' test because crude oils containing more

toxic aromatic and PAH components tend to show brighter fluorescence

and hence noncompliance at a lower level of contamination. Since

fluorescence is a relative brightness test, gas chromatography with

mass spectroscopy detection (GC/MS) is provided as a baseline method

before the drilling fluid is delivered for use, and is also available

as an assurance method when the results from the fluorescence

compliance method are in doubt.

c. Retention of SBF on Cuttings.--The retention of SBF on drill

cuttings would be limited under BAT and NSPS. This limitation controls

the quantity of SBF discharged with the drill cuttings. Both

nonconventional and priority toxic pollutants would be controlled by

this limitation. Nonconventionals include the SBF base fluids, such as

vegetable esters, internal olefins, linear alpha olefins, paraffinic

oils, mineral oils, and others. This limitation would also limit the

toxic effect of the drilling fluid and the persistence or

biodegradation of the base fluid. Several toxic and priority pollutant

metals are present in the barite weighting agent, including arsenic,

chromium, copper, lead, mercury, nickel, and zinc, and nonconventional

pollutants such as aluminum and tin.

The emulsifying and wetting agents of the SBF would also be

controlled by limiting the amount of SBF discharged. EPA solicits

information concerning the composition of the wetting and emulsifying

agents so that they can be classified as conventional, nonconventional,

or toxic pollutants.

Today's proposed rule uses the retort method to determine

compliance with the limit. The limit is expressed as percentage base

fluid on wet cuttings (weight/weight), averaged over the well sections

drilled with SBF. This method has not yet been validated by EPA.

Further, EPA is currently researching a mass balance method as an

alternative method to determine the quantity of SBF discharged. After

EPA has gathered sufficient data using the two methods in a comparative

analysis, EPA intends to validate the preferred method and solicit

comment concerning the method to be applied for the final rule.

3. Maintenance of Current Requirements

EPA would retain the existing BAT and NSPS limitations on the stock

barite of 1 mg/kg mercury and 3 mg/kg

[[Page 5502]]

cadmium. These limitations would control the levels of toxic pollutant

metals because cleaner barite that meets the mercury and cadmium limits

is also likely to have reduced concentrations of other metals.

Evaluation of the relationship between cadmium and mercury and the

trace metals in barite shows a correlation between the concentration of

mercury with the concentration of arsenic, chromium, copper, lead,

molybdenum, sodium, tin, titanium and zinc. (See the Offshore

Development Document in Section VI).

EPA also would retain the BAT and NSPS limitations prohibiting the

discharge of drilling wastes containing diesel oil in any amount.

Diesel oil is considered an ``indicator'' for the control of specific

toxic pollutants. These pollutants include benzene, toluene,

ethylbenzene, naphthalene, phenanthrene, and phenol. Diesel oil may

contain from 3 to 10 percent by volume PAHs, which constitute the more

toxic components of petroleum products.

C. Regulatory Options Considered for SBFs Not Associated With Drill

Cuttings

Today EPA proposes, under BPT, BCT, BAT, and NSPS, zero discharge

for SBFs not associated with drill cuttings. This option is technically

available and economically achievable with equipment commonly used. It

is also current industry practice due to the value of SBFs recovered

and reused. Since this option reflects current industry practice, it

has no non-water quality environmental impacts.

Industry sources have indicated that at times, there may be minor

drips or spills of SBFs that occur on the platform. EPA is considering

whether these discharges should be governed by the zero discharge

requirement, or whether to view the zero discharge requirements as

being limited to discharge of whole drilling fluids, and allowing

unintentional drips and spills to be treated as miscellaneous wastes.

EPA solicits comment on this approach. EPA thinks that the best way to

control these discharges would be through the use of BMPs and solicits

comment on what types of BMPs would be effective for controlling these

discharges and whether such BMPs should be part of this effluent

guideline or be applied by the permit authority.

D. Regulatory Options Considered for SBFs Associated With Drill

Cuttings

EPA considered two options for today's proposed rule for SBFs

associated with drill cuttings, or SBF-cuttings: a discharge option and

a zero discharge option. EPA has selected the discharge option as the

basis for today's proposal. As detailed above, this discharge option

controls under BAT and NSPS the stock base fluid through limitations on

PAH content, sediment toxicity, and biodegradation rate, and controls

at the point of discharge under BPT and BCT sheen formation and under

BAT and NSPS formation oil content and quantity of SBF discharged. The

discharge option maintains current requirements of stock limitations on

barite of mercury and cadmium, and the diesel oil discharge

prohibition. EPA at this time thinks that all of these components are

essential for appropriate control of the SBF cuttings wastestream.

Although not the basis for today's proposal, EPA considered zero

discharge as an option for BPT, BCT, BAT, and NSPS. Under zero

discharge all pollutants would be controlled in SBF discharges. This

option was clearly technically feasible and economically achievable

because in the past SBFs did not exist, and industry was able to

operate using only the traditional non-dischargeable OBFs based on

diesel oil and mineral oil.

EPA presently rejects zero discharge as the preferred option

because it would result in unacceptable non-water quality environmental

impacts. If EPA were to choose zero discharge for SBF-cuttings,

operators would not have an incentive to use SBFs since they are more

expensive than OBFs. Thus, if EPA requires zero discharge, OBF-cuttings

would continue to be injected or shipped to shore for land disposal.

EPA's analysis shows that under this option as compared to the

discharge option, for existing and new sources combined, there would be

172 million pounds annually of OBF-cuttings shipped to shore for

disposal in non-hazardous oilfield waste sites and 40 million pounds

annually injected, with associated fuel use of 29,000 BOE and annual

air emissions of 450 tons. EPA believes these impacts far outweigh the

water impacts associated with these discharges detailed in Section VIII

of this preamble. EPA's current analysis shows that the impacts of

these discharges to water are of limited scope and duration,

particularly if EPA controls the discharges of SBFs to the best

environmental performers that also meet the technical requirements

needed to drill. By contrast, the landfilling of OBF-cuttings is of a

longer term duration and associated pollutants may effect ambient air,

soil, and groundwater quality. For these reasons, under EPA's authority

to consider the non-water quality environmental impacts of its rule,

EPA rejects zero discharge of SBF-cuttings.

Nonetheless, while discharge with adequate controls is preferred

over zero discharge, discharge with inadequate controls is not

preferred over zero discharge. EPA believes that to allow discharge of

SBF-cuttings, there must be appropriate controls to ensure that EPA's

discharge limitations reflect the ``best available technology'' or

other appropriate level of technology. EPA has worked with industry to

address the determination of PAH content, sediment toxicity,

biodegradation, bioaccumulation, the quantity of SBF discharged, and

formation oil contamination. The successful completion of these efforts

is necessary for EPA to continue to reject zero discharge.

E. BPT Technology Options Considered and Selected

As previously discussed, Section 304(b)(1)(A) of the CWA requires

EPA to identify effluent reductions attainable through the application

of ``best practicable control technology currently available for

classes and categories of point sources.'' Generally, EPA determines

BPT effluent levels based upon the average of the best existing

performances by plants of various sizes, ages, and unit processes

within each industrial category or subcategory. In industrial

categories where present practices are uniformly inadequate, however,

EPA may determine that BPT requires higher levels of control than any

currently in place if the technology to achieve those levels can be

practicably applied. See A Legislative History of the Federal Water

Pollution Control Act Amendments of 1972, U.S. Senate Committee of

Public Works, Serial No. 93-1, January 1973, p. 1468.

In addition, CWA Section 304(b)(1)(B) requires a cost assessment

for BPT limitations. In determining the BPT limits, EPA must consider

the total cost of treatment technologies in relation to the effluent

reduction benefits achieved. This inquiry does not limit EPA's broad

discretion to adopt BPT limitations that are achievable with available

technology unless the required additional reductions are ``wholly out

of proportion to the costs of achieving such marginal level of

reduction.'' See Legislative History, op. cit. p. 170. Moreover, the

inquiry does not require the Agency to quantify benefits in monetary

terms. See e.g. American Iron and Steel Institute v. EPA, 526 F. 2d

1027 (3rd Cir., 1975).

In balancing costs against the benefits of effluent reduction, EPA

considers the volume and nature of expected

[[Page 5503]]

discharges after application of BPT, the general environmental effects

of pollutants, and the cost and economic impacts of the required level

of pollution control. In developing guidelines, the Act does not

require consideration of water quality problems attributable to

particular point sources, or water quality improvements in particular

bodies of water. Therefore, EPA has not considered these factors in

developing the limitations being proposed today. See Weyerhaeuser

Company v. Costle, 590 F. 2d 1011 (D.C. Cir. 1978).

EPA today proposes BPT effluent limitations for the cuttings

contaminated with SBF and other non-aqueous drilling fluids. The BPT

effluent limitations proposed today would control free oil as a

conventional pollutant. The limitation is no free oil as measured by

the static sheen test, performed on SBF separated from the cuttings.

In setting the no free oil limitation, EPA considered the sheen

characteristics of currently available SBFs. Since this requirement is

currently met by dischargers in the Gulf of Mexico, EPA anticipates no

additional costs to the industry to comply with this limitation.

EPA also considered a BPT level of control for the quantity of SBF

discharged with the cuttings consisting of improved use of currently

existing shale shaker equipment. However, EPA did not have enough

information to establish BPT beyond current performance. Further, EPA

is not setting a BPT limit based on current performance because

operators already have incentive to recover as much SBFs as possible

through the optimization of existing equipment due to the value of the

SBFs. Therefore, a BPT limitation based on the current equipment, and

as it is currently used, would not have any practical effect on the

quantity of SBF discharged with the cuttings. Further, given that the

BAT and NSPS limitations would be more stringent and control the

conventional pollutants in addition to the non-conventional and toxic

pollutants, EPA saw no reason to expend time and resources to develop a

different, less restrictive BPT limit.

F. BCT Technology Options Considered and Selected

In July 1986, EPA promulgated a methodology for establishing BCT

effluent limitations. EPA evaluates the reasonableness of BCT candidate

technologies--those that are technologically feasible--by applying a

two-part cost test: (1) a POTW test; and (2) an industry cost-

effectiveness test.

EPA first calculates the cost per pound of conventional pollutant

removed by industrial dischargers in upgrading from BPT to a BCT

candidate technology and then compares this cost to the cost per pound

of conventional pollutants removed in upgrading POTWs from secondary

treatment. The upgrade cost to industry must be less than the POTW

benchmark of $0.25 per pound (in 1976 dollars).

In the industry cost-effectiveness test, the ratio of the

incremental BPT to BCT cost divided by the BPT cost for the industry

must be less than 1.29 (i.e., the cost increase must be less than 29

percent).

In today's proposal, EPA is proposing to establish a BCT limitation

of no free oil equivalent to the BPT limitation of no free oil as

determined by the static sheen test. In developing BCT limits, EPA

considered whether there are technologies (including drilling fluid

formulations) that achieve greater removals of conventional pollutants

than proposed for BPT, and whether those technologies are cost-

reasonable according to the BCT Cost Test. EPA identified no

technologies that can achieve greater removals of conventional

pollutants than proposed for BPT that are also cost-reasonable under

the BCT Cost Test, and accordingly EPA proposes BCT effluent

limitations equal to the proposed BPT effluent limitations guidelines.

G. BAT Technology Options Considered and Selected

EPA today proposes BAT effluent limitations for the cuttings

contaminated with SBFs. The BAT effluent limitations proposed today

would control the stock base fluids in terms of PAH content, sediment

toxicity, and biodegradation. Controls at the point of discharge

include formation oil contamination and the quantity of SBF discharged.

This level of control has been developed taking into consideration the

availability and cost of oleaginous (SBF) base fluids in terms of PAH

content, sediment toxicity, and biodegradation rate; the frequency of

formation oil contamination at the control level; the performance and

cost of equipment to recover SBF from the drill cuttings. The technical

availability and economic achievability of today's proposed limitations

is discussed below by regulated parameter.

1. Stock Base Fluid Technical Availability and Economic Achievability

a. Introduction.--As SBFs have developed over the past few years,

the industry has come to use mainly a few primary base fluids. These

include the vegetable esters, internal olefins, linear alpha olefins,

and poly alpha olefins. Thus, these are the base fluids for which EPA

has data and costs to develop the effluent limitations of today's

proposed rule. In this document, vegetable ester means a monoester of

2-ethylhexanol and saturated fatty acids with chain lengths in the

range C8-C16, internal olefin means a series of

isomeric forms of C16 and C18 alkenes, linear

alpha olefin means a series of isomeric forms of C14 and

C16 monoenes, and poly alpha olefins means a mix mainly

comprised of a hydrogenated decene dimer C20H62

(95%), with lesser amounts of C30H62 (4.8%) and

C10H22 (0.2%). EPA also has data on other

oleaginous base fluids, such as enhanced mineral oil, paraffinic oils,

and the traditional OBF base fluids mineral oil and diesel oil.

The stock base fluid limitations presented below are based on

currently available base fluids, and the limitations would be

achievable through product substitution. EPA anticipates that the

currently available and economically achievable base fluids meeting all

requirements would include vegetable esters and internal olefins. EPA

also solicits data on linear alpha olefins and certain paraffinic oils

to determine whether these base fluids are comparable in terms of

sediment toxicity, biodegradation, and bioaccumulation.

b. PAH Content Technical Availability.--Today's proposed limitation

of PAH content is 0.001 percent, or 10 parts per million (ppm), weight

percent PAH expressed as phenanthrene. This limitation is based on the

availability of base fluids that are free of PAHs and the detection of

the PAHs by EPA Method 1654A. EPA's proposed PAH content limitation is

technically available. Producers of several SBF base fluids have

reported to EPA that their base fluids are free of PAHs. The base

fluids which suppliers have reported are free of PAHs include linear

alpha olefins, internal olefins, vegetable esters, certain enhanced

mineral oils, synthetic paraffins, certain non-synthetic paraffins, and

others. See the Development Document, Chapter VII. Compliance with the

BAT and NSPS stock limitations on PAH content may be achieved by

product substitution.

c. Sediment Toxicity Technical Availability.--EPA is today

proposing a sediment toxicity stock base fluid limitation that would

allow only the discharge of SBF-cuttings using base fluids as toxic or

less toxic, but not more toxic, than C16-C18

internal olefin.

[[Page 5504]]

Alternatively, this limitation could be expressed as the

LC50 of the base fluid minus the LC50 of the

C16-C18 internal olefin shall not be less than

zero. Based on information available to EPA at this time, the only base

fluids which would attain this limitation are the internal olefins and

vegetable esters.

EPA finds this limit to be technically available because

information in the rulemaking record supports that internal olefin SBFs

and vegetable ester SBFs together have performance characteristics

enabling them to be used in a wide variety of drilling situations

offshore. Marketing data given to the EPA shows that, at least for

certain of the major drilling fluid suppliers, internal olefin SBFs are

currently the most popular SBFs used in the Gulf of Mexico.

Various researchers have performed toxicity testing of the

synthetic base fluids with the 10-day sediment toxicity test (EPA/600/

R-94/025) using a natural sediment and Leptocheirus plumulosus as the

test organism. The synthetic base fluids have been shown to have lower

toxicity than diesel and mineral oil, and among the synthetic and other

oleaginous base fluids some are more toxic than others. For example,

Still et al. reported the following 10-day LC50 results,

expressed as mg base fluid/Kg dry sediment: diesel LC50 of

850, enhanced mineral oil LC50 of 251, internal olefin

LC50 of 2,944, and poly alpha olefin LC50 of

9,636. A higher LC50 value means the material is less toxic.

Similar results, with the same trend in toxicity in the base fluids

above, have been reported by Hood et al. Candler et al. performed the

10-day sediment toxicity test with the amphipod Ampelicsa abdita in

place of Leptocheirus plumulosus, and again obtained very similar

results as follows: diesel LC50 of 879, enhanced mineral oil

LC50 of 557, internal olefin LC50 of 3,121, and

PAO LC50 of 10,680.

None of these researchers reported sediment toxicity values for

vegetable esters. Recently, industry has evaluated a number of base

fluids including vegetable esters. While the absolute values are not

comparable because the tests were performed on the drilling fluid and

not just the base fluid, the results showed the vegetable ester to be

less toxic than the internal olefin.

Researchers in the United Kingdom and Norway investigating effects

in the North Sea have conducted sediment toxicity tests on other

organisms, namely Corophium volutator and Abra alba. Similar trends

were seen in the measured toxicity, with vegetable ester having very

low sediment toxicity (very high LC50), poly alpha olefin

having a mid range toxicity, and internal olefin having a higher

toxicity, in this comparison.

While the poly alpha olefins were found to have the lowest toxicity

of the measured base fluids (excludes vegetable esters), EPA did not

base the toxicity limitation on poly alpha olefins because, as

presented below, they biodegrade much more slowly and so are unlikely

to pass the biodegradation limitation. EPA intends to generate and

gather additional data comparing the toxicity of the various base

fluids, especially to compare the vegetable ester toxicity with that of

the olefins since, at this time, directly comparable data is not

available. If vegetable esters are found to have significant reduced

toxicity compared to the other base fluids, EPA may choose to base the

toxicity limitation on vegetable esters. EPA has concerns, however,

over the technical performance and possible non-water quality

implications with the use of vegetable ester as the only technology

available to meet the stock base fluid limitations, as discussed below

under biodegradation.

As an alternative, EPA solicits comment on a numeric limitation of

a minimum LC50 of 2,600 mg base fluid/Kg dry sediment as an

appropriate level of control, based on the toxicity of

C16-C18 internal olefins as determined by the 10-

day sediment toxicity test using Leptocheirus plumulosus as the test

organism. If EPA pursues this approach, EPA expects that it may need to

revise this numeric limitations due to the variability currently

experienced with this test.

d. Biodegradation Rate Technical Availability.--Today's proposed

limitation of biodegradation rate for the base fluid, as determined by

the solid phase test, is equal to or faster than the rate of a

C16-C18 internal olefin. Alternatively, this

limitation could be expressed as the percent of the base fluid degraded

at 120 days minus the percent of C16-C18 internal

olefin degraded at 120 days shall not be less than zero. With this

limitation the base fluids currently available for use include

vegetable ester, linear alpha olefin, internal olefins, and possibly

certain linear paraffins. Combined with the other stock base fluid

limitations of PAH content and sediment toxicity, the base fluids for

which EPA has data that would attain all three limitations are internal

olefins and vegetable esters.

EPA finds this limit to be technically available because

information in the rulemaking record supports that internal olefin SBFs

and vegetable ester SBFs together have performance characteristics to

address the broad variety of drilling situations found offshore.

As an alternative to today's proposal, EPA solicits comment on a

numeric limitation of a minimum biodegradation rate of 68 percent base

fluid dissipation at 120 days for the standardized solid phase test. If

EPA pursues this approach, EPA expects that it may need to revise this

numeric limitations as additional test results are generated.

As with the sediment toxicity test presented above, due to the lack

of data from the biodegradation test EPA again intends to propose a

limitation based on comparative testing rather than propose a numerical

limitation. Therefore, if SBFs based on fluids other than internal

olefins and vegetable esters are to be discharged with drill cuttings,

data showing the biodegradation of the base fluid should be presented

with data, generated in the same series of tests, showing the

biodegradation of the internal olefin as a standard. EPA prefers this

approach rather than set a numerical limitation at this time because of

the small amount of data available to EPA upon which to base a

numerical limitation. EPA sees this as an interim solution to the

problem of having insufficient information at the time of this proposal

to provide a numerical limitation, in that it still provides a

limitation based on the performance of available technologies.

Rates of biodegradation for synthetic and mineral oil base fluids

have been determined by both the solid phase and the simulated seabed

test, and the relative rates of biodegradation among these two tests

agree. These tests have found that, the order of degradation, from

fastest to slowest, is as follows: vegetable ester > linear alpha

olefin > internal olefin > linear paraffin > mineral oil > poly alpha

olefin.

EPA has selected the internal olefin as the basis for the

biodegradation rate limitation instead of the vegetable ester for two

reasons: technical performance and non-water quality environmental

impacts. Industry representatives have reported that SBFs using esters

currently on the market today are not adequate choices for most

deepwater drilling applications. Reportedly, the available esters

thicken considerably at the cold temperatures encountered in the riser

in deep water. This thickening can cause excessive pressure surges when

attempting to re-initiate circulation. These pressure surges can result

in breakdown of exposed formations resulting in severe SBF losses to

the destabilized formations. In addition to SBF losses, pressure surges

can destabilize the formation to the extent of hole collapse and loss

of any

[[Page 5505]]

drilling tools downhole. EPA solicits comment concerning the maximum

depth at which vegetable ester SBFs are practical, the development on

new esters with lower viscosity, and if special systems, such as subsea

pumping systems, ameliorate the pumping difficulties.

Cost is a factor in encouraging the use of SBFs in place of OBFs.

Industry representatives have told EPA that vegetable ester SBF costs

about twice as much as internal olefin SBF. EPA believes that if the

lower cost internal olefin SBFs can be discharged, then more wells

currently drilled with OBF would be encouraged to convert to SBF than

if only the more expensive vegetable ester SBFs were available for

discharge. This conversion is preferable for the improvements in non-

water quality environmental impacts (see section VII below). If future

research shows that vegetable esters have a significantly reduced

toxicity in addition to the proven faster rate of biodegradation, EPA

may consider more stringent stock base fluid limitations to favor the

use of vegetable ester SBFs for the final rule.

e. Economic Achievability of Stock Base Fluid Controls.--EPA finds

that the proposed stock base fluid controls are economically

achievable. Industry representatives have told EPA that while the

synthetic base fluids are more expensive than diesel and mineral oil

base fluids, the savings in discharging the SBF-cuttings versus land

disposal or reinjection of OBF-cuttings more than offsets the increased

cost of SBFs. Thus, it reportedly costs less for operators to invest in

the more expensive SBF provided it can be discharged. The stock base

fluid limitations proposed above allow use of the currently popular

SBFs based on internal olefins ($195/bbl) and vegetable esters ($380/

bbl). For comparison, diesel oil-based drilling fluid costs about $65/

bbl, and mineral oil-based drilling fluid costs about $75/bbl.

According to industry sources, currently in the Gulf of Mexico the most

widely used and discharged SBFs are, in order of use, based on internal

olefins, linear alpha olefins, and vegetable esters. Since the stock

limitations allow the continued use of the preferred internal olefin

and vegetable ester SBFs, EPA attributes no additional cost due to the

stock base fluid requirements other than monitoring (testing and

certification) costs. EPA expects that these monitoring costs will fall

upon the base fluid suppliers as a marketing cost. As further described

in Section XII, EPA anticipates that PAH monitoring would occur

batchwise, and sediment toxicity and biodegradation monitoring would

occur once annually per synthetic base fluid per supplier.

Pursuant to EPA's further research into sediment toxicity and

biodegradation, EPA may propose limits for the final rule that are

different than the limits proposed today. If the limits were to allow

only more expensive SBFs, such as the vegetable ester, EPA would likely

estimate a cost to comply with the stock base fluid limits for those

operators who currently use and discharge the less expensive SBFs, for

instance those based on internal olefins.

2. Discharge Limitations Technical Availability and Economic

Achievability

a. Formation Oil Contamination of SBF-Cuttings.--Today's proposed

formation oil contamination limitation of the SBF adhered to the drill

cuttings is ``weighted'' to detect contamination by highly aromatic

formation oils at lower concentrations than formation oils with lower

aromatic contents. Under the proposed limitation approximately 5

percent of all (all meaning a large representative sampling) formation

oils would fail (not comply) at 0.1 percent contamination and 95

percent of all formation oils will fail at 1.0 percent contamination.

The majority of formation oils would cause failure when present in SBFs

at a concentration of about 0.5 percent (vol/vol).

EPA is proposing two methods for the determination of formation oil

in SBFs. Analysis by gas chromatography with mass spectroscopy

detection (GC/MS) would apply to any SBF being shipped offshore for

drilling to allow discharge of the associated cuttings. During

drilling, the SBF would be required to comply with the limitation of

formation oil contamination as determined by the reverse phase

extraction (RPE) method. SBFs found to be non-compliant by the RPE

method could, at the operators discretion, be confirmed by testing with

the GC/MS method. Results from the GC/MS method would supersede those

of the RPE method.

EPA intends that the limitation proposed on formation (crude) oil

contamination in SBF is no less stringent that the limitation imposed

on WBF through the static sheen test. A study concerning this issue

found that in WBF, the static sheen test detected formation oil

contamination in WBF down to 1 percent in most cases, and down to 0.5

percent in some cases.

Currently, only a very small percent of WBF cannot be discharged

due to presence of formation oil as determined by the static sheen

test. EPA solicits information regarding the frequency of formation oil

contamination at this level of control. EPA has received some anecdotal

information to the effect that far less than one percent of SBF

cuttings would not be discharged due to formation oil contamination at

this level of control. Based on the available information, EPA believes

that only a very minimal amount of SBF will be non-compliant with this

limitation and therefore be required to dispose of SBF-cutting onshore

or by injection. EPA thus finds that this limitation is technically

available. EPA also finds this option to be economically achievable

because there is no reason why formation oil contamination would occur

more frequently under this rule than under the current rules which

industry can economically afford. For calculation purposes, EPA has

determined that no costs are associated with this requirement other

than monitoring and reporting costs, which are minimal costs for this

test for this industry.

b. Retention of SBF on Cuttings.--This limitation considers the

technical availability of methods to recover SBF from the cuttings

wastestream. EPA evaluated the performance of several technologies to

recover SBF from the cuttings wastestream and their costs, as detailed

in the Development Document. EPA also considered fuel use, safety, and

other considerations.

The solids control system typically consists of, at a minimum, a

primary shale shaker to remove the larger cuttings. Typically, all or a

portion of the drilling fluid is then passed through a secondary shale

shaker or ``mud cleaner'' to remove the small particle cuttings, or

``fines,'' before being recirculated to the active mud system. Greater

efficiencies in the use of these currently used technologies through

reduced loadings and more even flow across the screens, better

maintenance of the screens, and better integration of the solids

control system would help operators achieve these proposed discharge

limitations. An ancillary or alternative method to reduce SBF

discharges is to retain the fines for on shore disposal. Because of

their small size and large surface area, the fines retain more drilling

fluid than an equal amount of larger cuttings coming off the shale

shakers. Therefore, while the bulk of the cuttings may be discharged,

retaining the fines for on shore disposal can be used to

disproportionately reduce the overall discharges of SBF.

The American Petroleum Institute (API) performed a study in 1997

which gathered data on SBF retention on drill cuttings. Data gathered

in the study show the long term average retention

[[Page 5506]]

rate of SBF on cuttings, weighted by hole volume, is 10.6 percent from

the primary shale shaker and 15.0 percent from the secondary shale

shaker, expressed as weight synthetic base fluid per weight of wet

cuttings. Industry representatives further estimated that the cuttings

from the primary shale shaker comprise 80 percent of the total cuttings

wastestream, and the remaining 20 percent is removed by either the

secondary shale shaker or other devices to remove very small cuttings,

or fines. EPA used this information to calculate a long term average

weighted retention of 11.5 percent base fluid on wet cuttings using the

current technologies employed in the Gulf of Mexico.

Recently, in the wake of the development of SBFs and discharge

limitations in the North Sea, new cuttings cleaning devices have been

developed which reduce SBF retained on the cuttings. An effective

device consists of a conically shaped vibrating centrifuge, which

removes recycle-grade SBF from the cuttings coming off the primary

shale shakers. EPA selected this conical vibrating centrifuge as the

model technology on which to base its performance and cost

calculations. The manufacturer of the device has supplied EPA with

detailed performance data and some cost information of this device. The

performance has been confirmed by one operator, showing retention data

for twelve wells and comparing the vibrating centrifuge with shale

shaker technology. In addition, EPA was invited by an operator in the

Gulf of Mexico to observe the operation of the vibrating centrifuge.

EPA has learned that the operator has written a report concerning the

operation of this SBF recovery device, but this report has not been

made available to EPA. The operator has informed EPA as to the cost of

implementing the vibrating centrifuge, and EPA used this cost

information in determining the total cost of implementation. EPA is

aware of at least one other company that makes a similar centrifugal

device to recover SBFs from drill cuttings, although EPA has not

received performance or costs for this machine.

The limitation proposed today for retention of SBF is 10.2 percent

base fluid on wet cuttings (weight/weight), averaged by hole volume

over the well sections drilled with SBF. Those portions of the cuttings

wastestream that are retained for no discharge are factored into the

weighted average with a retention value of zero. The limit assumes that

SBF-cuttings processed by the vibrating centrifuge technology comprise

80 percent of the wastestream while the remaining 20 percent is

comprised of SBF-cuttings from the secondary shale shaker. Thus, from

the available data EPA determined that the retention attained for 95

percent of volume-weighted well averages was 7.22 for the vibrating

centrifuge and 22.0 for the secondary shale shakers. Applying the

assumption of an 80/20 split between the two wastestreams, EPA

determined the weighted average retention regulatory limit of 10.2

percent.

Based on current performance of the vibrating centrifuge

technology, 95 percent of all volume-weighted average values for

retention of drilling fluids over the course of drilling a well are

expected to be less than the proposed limit. Some, but not all, of the

variability between wells is due to factors under the control of the

operators. EPA believes that the proposed limit can be met at all times

by providing better attention to the operation of the technology and by

keeping track of the weighted average for retention as the well is

being drilled. If the trend in weighted average retention appears to

the operator as if the average retention for a particular well will

exceed the limitation prior to completion of the well then EPA

recommends that the operator retain some or all of the remaining

cuttings for no discharge. This is feasible because retention of SBF on

drill cuttings is generally low in the early stages of drilling a well

and it increases as the well goes deeper.

EPA used the same statistical analysis to determine the long term

average retention values. These values were used for cost and loadings

calculations. For the vibrating centrifuge and the secondary shale

shaker, respectively, EPA determined that the long term between-well

average percent retention of SBF on cuttings was 5.14 and 15.00.

Applying the assumption of an 80/20 split between the two wastestreams,

the long term average value for cost and loading calculations is 7.11

percent SBF retained on wet cuttings. Cost and loadings calculations

also assumed 7.5 percent washout of the well bore.

EPA finds that a well-average limit of 10.2 percent base fluid on

wet cuttings is economically achievable. According to EPA's analysis,

in addition to reducing the discharge of SBFs associated with the

cuttings, EPA estimates that this control will result in a net savings

of $5.0 MM. This savings results because the value of the SBF recovered

is greater than the cost of implementation of the technology. This

analysis is presented in Section IX of today's notice, and in greater

detail in the Development Document.

EPA thinks that this regulatory limitation is necessary to both

hasten and broaden the use of improved SBF recovery devices, even

though industry may be inclined to implement the SBF recovery

technology to save valuable SBF irrespective of the limitation. There

could be several reasons why industry does not already use the model

SBF recovery technology even though, in EPA's assessment, it saves the

operator money. For one, market acceptance and market penetration of

the vibrating centrifuge could be a reason. The vibrating centrifuge

recovery technology is a new technology that was developed in the North

Sea and has only been demonstrated a few times in the United States.

Secondly, the cost and resources devoted to retrofitting might only

benefit a small portion of the wells drilled by an operator. This is

because only a small fraction of wells, about 13 percent in EPA's

analysis, are drilled with SBFs. To counter this, however, is the fact

that most SBF wells are concentrated in the deep water. EPA projects

that 75 percent of all wells drilled in the deepwater would use SBFs.

In addition, retrofitting costs and market forces would encourage the

dedication of drill platforms equipped with improved SBF recovery

technology to the drilling of SBF wells. The use of improved SBF

recovery devices in the North Sea is a case in point. Operators have

reported to EPA that in the North Sea they were reluctant to use

improved SBF recovery devices, and eventually did so only in response

to more stringent regulatory requirements. These operators report that

their total cost to drill an SBF well actually went down as they

implemented the improved SBF recovery devices because of the value of

the SBF recovered.

H. NSPS Technology Options Considered and Selected

The general approach followed by EPA for developing NSPS options

was to evaluate the best demonstrated SBFs and processes for control of

priority toxic, nonconventional, and conventional pollutants.

Specifically, EPA evaluated the technologies used as the basis for BPT,

BCT and BAT. The Agency considered these options as a starting point

when developing NSPS options because the technologies used to control

pollutants at existing facilities are fully applicable to new

facilities.

EPA has not identified any more stringent treatment technology

option which it considered to represent NSPS level of control

applicable to the SBF-cuttings wastestream. Further, EPA has made a

finding of no barrier to entry based upon the establishment of this

[[Page 5507]]

level of control for new sources. See section X, Economic Analysis.

Therefore, EPA is proposing that NSPS be established equivalent to BPT

and BAT for conventional, priority, and nonconventional pollutants.

VII. Non-Water Quality Environmental Impacts of Proposed

Regulations

A. Introduction and Summary

The elimination or reduction of one form of pollution has the

potential to aggravate other environmental problems. Under sections

304(b) and 306 of the CWA, EPA is required to consider these non-water

quality environmental impacts (including energy requirements) in

developing effluent limitations guidelines and NSPS. In compliance with

these provisions, EPA has evaluated the effect of this proposed

regulation on air pollution, energy consumption, solid waste generation

and management, consumptive water use, safety, and vessel traffic.

Based on this evaluation, EPA currently prefers the discharge

option over the zero discharge option because of the non-water quality

environmental impacts that would occur with zero discharge, compared to

the water quality impacts that would occur with discharge as controlled

by this proposed rule. Thus, non-water quality environmental impacts

are a major consideration for this rule because of the nature of the

wastes and where the wastes are generated and disposed.

If SBF-cuttings cannot be discharged, cuttings from SBF wells would

have to be transported to shore for treatment and disposal, or made

into a slurry and injected on-site. In this case, EPA assumes that most

operators will not use SBF in place of OBF, because SBFs cost more than

OBFs. On the other hand, if SBF-cuttings can be discharged, not only

are non-water quality environmental impacts from current SBF wells

drastically reduced, but EPA also estimates that some OBF wells would

convert to SBF, further decreasing these impacts. EPA estimates that in

the Gulf of Mexico (GOM) 20 percent of OBF wells will convert to SBF

wells. EPA also estimates that these GOM OBF wells are in shallow water

(less than 1000 feet). In deep water, EPA assumes that those wanting to

use SBFs are already doing so and therefore these facilities are not

considered to yield non-water quality environmental impacts reductions.

In offshore California and Cook Inlet, Alaska, EPA assumes that all OBF

wells will convert, because of the greater expense of OBF-cuttings

discharge and an ever greater concern for non-water quality

environmental impacts in these areas as compared to the GOM. For

example, disposal of OBF-cuttings in Cook Inlet, Alaska, would likely

require the barging of the waste to the lower 48 States. Air quality in

California is a continuing concern and therefore there is pressure to

keep air emissions from oil and gas drilling activities in the

neighboring offshore waters at a minimum.

In total, for existing and new sources under the discharge option,

EPA estimates that air emissions would be reduced by 72 tons per year,

based on OBF facilities switching to SBF. If the zero discharge option

was selected, however, air emissions would increase by 378 tons per

year, based on SBF to OBF conversion. Therefore, in moving from the

zero discharge option to the discharge option, air emissions would be

reduced by 450 tons per year. In addition, EPA estimates than 29,359

BOE less fuel would be used.

Other favorable non-water quality environmental impacts occur with

the elimination of the long term disposal of OBF-cuttings on shore,

because the pollutants present in OBF-cuttings may affect ambient air,

soil, and groundwater quality. EPA estimates that allowing discharge of

SBF-cuttings compared to zero discharge would decrease the amount of

OBF-cuttings disposed at land based facilities by 172 MM pounds

annually, and the amount injected by 40 MM pounds. The methodology used

to arrive at these numbers is described in the sections which follow,

and the results are discussed in more detail.

In consideration of the many non-water quality benefits with SBF-

discharge, EPA currently prefers to allow the controlled discharge of

SBF-cuttings despite some additional SBF-cuttings discharges that may

occur as a result of this rule. EPA's authority to consider the non-

water quality environmental impacts of its rule, therefore, forms the

primary basis in EPA's rejection of zero discharge of SBF-cuttings.

B. Method Overview

EPA estimated annual energy consumption (i.e., fuel usage), air

emissions, and solid waste generation rates from information on model

well characteristics and current drilling activity gathered from

industry, State, and Federal agency sources. This framework is based

upon the model well, well count, and control technology data that is

detailed in the compliance cost and pollutant reductions discussions of

today's notice (Section IX). EPA's calculations are based on the

following projections: wells drilled with SBF in the Gulf of Mexico

currently discharge SBF-cuttings containing an average 11 percent by

weight synthetic base fluid; under the discharge option SBF-cuttings

would retain an average 7 percent base fluid on cuttings; and of the

wells drilled with OBF 80 percent practice zero discharge by hauling

OBF-cuttings to shore for land-based disposal, and the remaining 20

percent inject on-site. In the context of the non-water quality

environmental impacts analysis, SBF wells using standard solids control

equipment and discharging SBF-cuttings at 11 percent retention are

defined as the baseline. Increases or decreases in non-water quality

environmental impacts are compared to this baseline. For example,

current OBF wells that EPA projects would convert to SBF in the

discharge option are assigned baseline impacts because these wells use

energy consuming technologies (i.e., transportation for disposal or

injection) beyond standard solids control equipment.

After establishing baseline impacts, EPA calculated impacts

resulting from compliance with the proposed discharge and zero

discharge options, details of which are given in the following

discussions. EPA then calculated the incremental impacts by subtracting

the compliance impacts from the baseline impacts.

The discussions below adopt the following acronyms for the four

model well types developed for well-specific analyses: DWD (deep-water

development), DWE (deep-water exploratory), SWD (shallow-water

development), and SWE (shallow-water exploratory).

C. Energy Consumption and Air Emissions for Existing Sources

1. Energy Consumption

a. Baseline Energy Consumption.--EPA's estimated non-water quality

environmental impacts for the discharge and zero discharge options, for

existing sources, are presented in Table VII-1. EPA set baseline energy

consumption according to SBF wells discharging SBF-cuttings at 11

percent retention of base fluid on wet cuttings. Table VII-1 shows,

therefore, that the baseline energy consumption (i.e., fuel usage) is

zero for existing Gulf of Mexico SBF wells, because increases or

decreases in fuel use and air emissions are compared to this level.

[[Page 5508]]

Table VII-1.--Summary Annual Baseline, Compliance, and Incremental Compliance, Non-Water Quality Environmental Impacts of SBF Cuttings Management from

Existing Sources

--------------------------------------------------------------------------------------------------------------------------------------------------------

Gulf of Mexico Offshore California Cook Inlet, Alaska Total

-----------------------------------------------------------------------------------------------------------------

Technology basis Air Air Air Air

emissions Fuel usage emissions Fuel usage emissions Fuel usage emissions Fuel usage

(tons/yr) (BOE/yr) a (tons/yr) (BOE/yr) a (tons/yr) (BOE/yr) a (tons/yr) (BOE/yr) a

--------------------------------------------------------------------------------------------------------------------------------------------------------

Baseline Non-Water Quality

Environmental Impacts:

Currently SBF Discharge (11%

reten.).......................... 0 0 NA NA NA NA 0 0

Currently OBF Zero Discharge b.... 47.92 3,433 36.61 2,121 2.08 285 86.61 5,839

Compliance Non-Water Quality

Environmental Impacts:

Discharge Option (7% reten.)...... 12.54 3,035 0.76 187 0.01 4 13.30 3,226

Zero Discharge Option............. 338.55 24,125 NA NA NA NA 338.55 24,125

Incremental Non-Water Quality

Environmental Impacts Reductions

(Increases):

Discharge Option (7% reten.)...... 35.38 398 35.86 1,934 2.07 281 73.31 2,613

Zero Discharge Option............. (338.55) (24,125) 0 0 0 0 (338.55) (24,125)

--------------------------------------------------------------------------------------------------------------------------------------------------------

a BOE (barrels of oil equivalent) is the total diesel volume required converted to equivalent oil volume (by the factor 1 BOE = 42 gal. diesel) and the

volume of natural gas required converted to equivalent oil volume (by the factor 1,000 scf = 0.178 BOE).

b Baseline non-water quality environmental impacts from the 23 (20 percent) OBF wells that convert to SBF upon promulgation of today's proposed rule.

Baseline fuel usage rates for OBF wells in offshore California and

coastal Cook Inlet, Alaska derive from activities associated with

transporting waste drill cuttings to shore and land-disposing the

cuttings. For this analysis, EPA used the method developed to estimate

zero discharge impacts under the Offshore and Coastal Oil and Gas

Rulemakings. EPA used the volumes of drilling waste requiring onshore

disposal to estimate the number of supply boat trips necessary to haul

the waste to shore. Projections made regarding boat use included types

of boats used for waste transport, the distance traveled by the boats,

allowances for maneuvering, idling and loading operations at the drill

site, and in-port activities at the dock. EPA estimated fuel required

to operate the cranes at the drill site and in-port based on

projections of crane usage. EPA determined crane usage by considering

the drilling waste volumes to be handled and estimates of crane

handling capacity. EPA also used drilling waste volumes to determine

the number of truck trips required. The number of truck trips, in

conjunction with the distance traveled between the port and the

disposal site, enabled an estimate of fuel usage. The use of land-

spreading equipment at the disposal site was based on the drilling

waste volumes and the projected capacity of the equipment. The annual

baseline fuel usage in barrels of oil equivalents (BOE) is 2,121 BOE

for offshore California, and 285 BOE for coastal Cook Inlet.

In the Gulf of Mexico analysis, EPA projected that 20 percent of

OBF wells in shallow water would become SBF wells as a result of this

rule, and therefore they are included in the zero discharge analysis.

Baseline fuel usage rates (and all other impacts) for OBF wells in the

Gulf of Mexico are based on the assumption that 80 percent of these

wells use land-disposal for zero discharge and the remaining 20 percent

use on-site injection to dispose of OBF-cuttings. This assumption is

discussed further in Section IX of this Preamble, and in the

Development Document. Baseline fuel usage rates for zero discharge via

land-disposal were calculated using the same analysis used in the

offshore rule for California wells and coastal rule for Cook Inlet

wells. Baseline fuel usage rates for Gulf of Mexico wells that inject

waste cuttings onsite were calculated as the sum of the fuel usage for

the model turnkey injection system considered for the zero discharge

option, which consists of transfer equipment for moving cuttings,

grinding and processing equipment, and injection equipment. The per-

well fuel usage rates for wells that use on-site injection are weighted

averages of diesel usage rates and natural gas usage rates, according

to the estimate that 85 percent use diesel and 15 percent use natural

gas as primary power sources in the Gulf of Mexico. By multiplying the

average per-well baseline fuel usage rates by the projected annual

drilling activity for the four model wells in the Gulf of Mexico, EPA

calculated an annual baseline fuel usage of 3,433 BOE for the Gulf of

Mexico, and 5,839 BOE for all wells in the baseline.

b. Compliance Energy Consumption.--Energy consumption for the

discharge option was calculated by identifying the equipment and

activities associated with the operation of a vibrating centrifuge to

reduce the retention of the synthetic base fluid on drill cuttings from

an average 11 percent to seven percent, measured on a wet-weight basis.

Details regarding the technology basis for this option are presented in

Section VI of this Preamble, and in the Development Document. Using the

characteristics of the four model wells (see Section IX.B), EPA

calculated per-well energy consumption based on the horsepower demand

specified for the vibrating centrifuge by its manufacturer. The

horsepower demand was multiplied by the fuel usage rate and the hours

of operation required to drill the SBF section of the well, specific to

each model well type.

Since they are based on the same technology, the discharge option

per-well energy consumption rates are the same for the three geographic

areas, but vary based on the fuel source employed in each area. In the

Gulf of Mexico, industry sources recently estimated that approximately

85 percent of drilling operations use diesel oil as the primary fuel

source, and the remaining 15 percent use natural gas. Information

regarding fuel sources for the offshore California area indicates a

variety of sources, including diesel, natural gas, and for some

platforms, submerged electrical cables connected to shore-based power

supplies. For this analysis, it was determined that deep water wells in

offshore California use diesel as the primary fuel source, and shallow

water wells use natural gas. For coastal Cook Inlet wells, natural gas

was determined to be the primary fuel source, based on information

supplied by the industry both recently and submitted in the Coastal Oil

and Gas Rulemaking effort. Based on these determinations and projected

drilling activity estimates, EPA calculated the following annual

[[Page 5509]]

discharge option fuel usage rates for the three geographic areas: 3,035

BOE for the Gulf of Mexico, 187 BOE for offshore California, and 4 BOE

for Cook Inlet, for a total annual fuel usage rate of 3,226 BOE for

existing sources in the discharge option.

EPA calculated energy consumption for compliance with the zero

discharge option for the Gulf of Mexico wells that EPA estimates

currently discharge SBF cuttings, since these wells would need to

convert from discharge to zero discharge under this option. EPA

estimated fuel usage rates were estimated by identifying the equipment

and activities associated with two zero discharge technologies

currently in use in the Gulf of Mexico: 1) transporting waste cuttings

to shore-based land disposal sites; and 2) on-site injection. The

methods developed for calculating fuel usage for both these zero

discharge technologies are described above for baseline OBF wells.

While the same line-items were used to estimate impacts for the

transport and land-disposal technology scenario in all three geographic

areas, the per-well fuel usage rates vary between the three geographic

areas due to the various distances traveled by and trip frequencies of

boats and trucks in these areas. By multiplying the weighted average

per-well fuel usage rates by the projected annual drilling activity for

the four model wells in the Gulf of Mexico, EPA calculated a total

annual fuel usage rate of 24,125 BOE for existing sources in the zero

discharge option.

c. Incremental Compliance Energy Consumption. Incremental

compliance impacts are the difference between the baseline and the

compliance impacts, and indicate the amount by which baseline impacts

would be reduced with implementation of the compliance technologies

considered. Table VII-1 lists the total annual incremental fuel usage

rates for each geographic area for both the discharge and zero

discharge options. With the implementation of the discharge option,

there would be a reduction in fuel use of 2,613 BOE annually for

existing sources. This reduction is due to the elimination of transport

and land disposal equipment used to manage waste cuttings from baseline

OBF wells that switch to SBFs. Under zero discharge, there would be an

increase in fuel use of 24,125 BOE per year for existing sources. This

increase is due to the addition of transport and land disposal

equipment to manage waste cuttings from baseline SBF wells that

currently discharge cuttings.

2. Air Emissions

EPA estimated air emissions resulting from the operation of boats,

cranes, trucks, and earth-moving equipment necessary to dispose of

waste cuttings onshore, or the operation of on-site grinding and

injection equipment, by using emission factors relating the production

of air pollutants to time of equipment operation and amount of fuel

consumed. The baseline emissions, emissions reductions under the

discharge option, and emissions increases under the zero discharge

option are presented in Table VII-1.

D. Energy Consumption and Air Emissions for New Sources

Based on curr

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