Best Operating Practices for Reducing Emissions F rom Natural Gas STAR Partners EPA’s Natural Gas STAR Program, Pioneer Natural Resources USA, Inc., and Pioneer Natural Resources USA, Inc., and The Gas Processors Association June 17, 2003

Page 2 Reducing Emissions, Increasing Efficiency, Maximizing Profits Why Are Company Reported Opportunities Important? p Many processing facilities have identified practical cost effective methane emissions practices p Processing partners have reported saving 1.6 Bcf since 1990, 100% from PRO’s

Page 3 Reducing Emissions, Increasing Efficiency, Maximizing Profits Why Are Company Reported Opportunities Important? p Partners share successes to reduce methane emissions and improve profitability u BMP’s: the consensus best practices u PRO’s: Partner Reported Opportunities u Lessons Learned: expansion on the most advantageous BMP’s and PRO’s u All posted on the Gas STAR website:

Page 4 Reducing Emissions, Increasing Efficiency, Maximizing Profits Gathering & Processing Best Management Practices p BMP 1: Replace Gas Pneumatics with Instrument Air Systems p BMP 2: Install Flash Tank Separators on Glycol Dehydrators p BMP 3: Implement Directed Inspection & Maintenance at Gas Plants and Booster Stations p BMP 4: Partner Reported Opportunities (PRO’s )

Page 5 Reducing Emissions, Increasing Efficiency, Maximizing Profits Gas STAR PRO Fact Sheets pPRO Fact Sheets from Annual Reports u54 posted PRO fact sheets u26 PRO’s applicable to Gathering & Processing  16 focused on operating practices  10 focused on technology uSeveral new PRO sheets under development

Page 6 Reducing Emissions, Increasing Efficiency, Maximizing Profits Lessons Learned p14 Lessons Learned on website p8 applicable to processing u 3 focused on operating practices u 5 focused on technology p New Lessons Learned under development u Composite Wrap

Page 7 Reducing Emissions, Increasing Efficiency, Maximizing Profits Operating Practice Lessons Learned p Directed Inspection & Maintenance at Compressor Stations p Reducing Emissions when Taking Compressors Off-line p Reduce Glycol Circulation Rates on Dehydrators

Page 8 Reducing Emissions, Increasing Efficiency, Maximizing Profits One of the Best of the Best! p BMP 3: Implement Directed Inspection & Maintenance at Gas Plants and Booster Stations Farmington, New Mexico - Gas Booster Station Source:

Page 9 Reducing Emissions, Increasing Efficiency, Maximizing Profits What is the Problem? p Gas leaks are invisible, unregulated and go unnoticed p STAR partners find that valves, connectors, compressor seals and open-ended lines (OEL) are major sources u 27 Bcf of methane are emitted per year by reciprocating compressors seals and OELs u Open ended lines contribute half these emissions p Gas plant fugitive methane emissions depend on operating practices, equipment age and maintenance

Page 10 Reducing Emissions, Increasing Efficiency, Maximizing Profits Natural Gas Losses by Source Combustion Equipment 9.9% Amine Vents 0.5% Flare Systems 24.4% Non-leaking Components 0.1% NRU Vents 0.3% Storage Tanks 11.8% Leaking Components 53.1% Source: Clearstone Engineering, 2002

Page 11 Reducing Emissions, Increasing Efficiency, Maximizing Profits Natural Gas Losses by Equipment Type Control Valves 4.0% Open-Ended Lines 11.1% Other Flow Meters 0.2% Orifice Meters 0.1% Pressure Relief Valves 3.5% Valves 26.0% Blowdowns 0.8% Connectors 24.4% Compressor Seals 23.4% Crankcase Vents 4.2% Pump Seals 1.9% Pressure Regulators 0.4% Source: Clearstone Engineering, 2002

Page 12 Reducing Emissions, Increasing Efficiency, Maximizing Profits How Much Methane is Emitted?

Page 13 Reducing Emissions, Increasing Efficiency, Maximizing Profits How Much Methane is Emitted?

Page 14 Reducing Emissions, Increasing Efficiency, Maximizing Profits How Can These Losses Be Reduced? p Implement a Directed Inspection and Maintenance (DI&M) Program Source: CLEARSTONE ENGINEERING LTD

Page 15 Reducing Emissions, Increasing Efficiency, Maximizing Profits What is a DI&M Program? p Directed Inspection and Maintenance Program u Voluntaryprogram to identify and fix leaks that are cost effective to repair u Voluntary program to identify and fix leaks that are cost effective to repair u Outside of mandatory LDAR program u Survey cost pays out in the first year u Provides valuable data on leakers

Page 16 Reducing Emissions, Increasing Efficiency, Maximizing Profits How do you Implement a DI&M Program? SCREEN and MEASURE leaks Estimate repair cost, fix to a PAYBACK criteria Develop a PLAN for future DI&M Record savings/REPORT to Gas Star CONDUCT Baseline survey FIX on the spot leaks

Page 17 Reducing Emissions, Increasing Efficiency, Maximizing Profits Screening and Measurement

Page 18 Reducing Emissions, Increasing Efficiency, Maximizing Profits Cost-Effective Repairs

Page 19 Reducing Emissions, Increasing Efficiency, Maximizing Profits Partner Experience: Dynegy p Surveyed 30,208 components in two processing plants p Identified 1,156 leaking components or 3.8% p Repaired % of the identified leaking components p Methane Emissions Reductions = 100,000 Mcf/yr = 100,000 Mcf/yr p Savings = $300,000 /yr (at $3/Mcf)

Page 20 Reducing Emissions, Increasing Efficiency, Maximizing Profits More Operating Practices p COMPRESSORS & ENGINES u Convert Engine Starting to Air  SAVES…1,356 Mcf/yr  PAYOUT…< 1 year u Convert Engine Starting to Nitrogen  SAVES… 1,350 Mcf/yr  PAYOUT…< 1yr u Reduce Frequency of Starts with Gas  SAVES… 132 Mcf/yr  PAYOUT… < 1yr u Lower Purge Pressure for Shutdown  SAVES… 500 Mcf/yr  PAYOUT… 3-10 yrs

Page 21 Reducing Emissions, Increasing Efficiency, Maximizing Profits What is the Problem? Compressor starts vent methane p How much methane is emitted? u Up to 135 Mcf per start p How can these losses be reduced? u Alternative operating practices  Use air  Use nitrogen u Alternative technology  Use electric starters  Convert to electric drive

Page 22 Reducing Emissions, Increasing Efficiency, Maximizing Profits Partners Experience Compressor starts vent methane p Partners report 1,350 Mcf/yr savings per compressor using air or nitrogen assuming ten starts per year u Availability and cost of air and nitrogen are issues u Capital costs for electric starters reduce payout u Coordinating starts and shutdowns with maintenance needs u Modification of purge procedures to recover gas prior to venting can gain savings with no cost

Page 23 Reducing Emissions, Increasing Efficiency, Maximizing Profits More Operating Practices p OTHER u Eliminate Unnecessary Equipment or Systems  SAVES… 2,000 Mcf/yr  PAYOUT… < 1yr p PIPELINES/PIPING u Use Inert Gases and Pigs for Purges  SAVES… 90 Mcf/yr  PAYOUT… > 10 yrs

Page 24 Reducing Emissions, Increasing Efficiency, Maximizing Profits What is the Problem? Unnecessary equipment or systems provide sources of methane emissions p How much methane is emitted? u One unnecessary process controller vents 1 cfm or 0.5 MMcf/yr u Replacing multiple reciprocating compressor engines with one turbine compressor can save >2 MMcf/yr p Other benefits u Increases efficiency u Lowers operating & maintenance costs

Page 25 Reducing Emissions, Increasing Efficiency, Maximizing Profits Partner Experience Unnecessary equipment or systems provide sources of methane emissions p One partner reports savings of 7940 Mcf/yr by eliminating 31 dehydrators with an average of 4 controller loops u Payback was < 1 year

Page 26 Reducing Emissions, Increasing Efficiency, Maximizing Profits More Operating Practices p VALVES u Inspect & Repair Compressor Station Blowdown Valves  SAVES…2,000 Mcf/yr  PAYOUT… < 1 yr u Test & Repair RV’s  SAVES…170 Mcf/yr  PAYOUT… < 1 yr u Test & Repair Gate Station RV’s with Nitrogen  SAVES… 8 Mcf/yr  PAYOUT… >10 yrs

Page 27 Reducing Emissions, Increasing Efficiency, Maximizing Profits What is the Problem Leaking valves are another large source p How much methane is emitted? u As RV components wear or foul leakage occurs u Estimate 200Mcf/yr per leaker p How can these losses be reduced? u Leak check & repair on a planned schedule

Page 28 Reducing Emissions, Increasing Efficiency, Maximizing Profits Partner Experience Leaking valves are another large source p One partner reports saving 3,907 Mcf/yr by repairing 7 valves. Payback was immediate. p Another partner reports saving 853 Mcf/yr by repairing compressor RV’s.

Page 29 Reducing Emissions, Increasing Efficiency, Maximizing Profits Discussion Questions p To what extent are you implementing these PRO’s? p Can you suggest other opportunities? p How could these opportunities be improved upon or altered for use in your operation(s)? p What are the barriers (technological, economic, lack of information, regulatory, etc.) that are preventing you from implementing this technology?