December 19, 2018

Mr. Darren J. Hunter
Rooney, Ripple & Ratnaswamy, LLP
Kingsbury Center, Suite 600
350 W. Hubbard St.
Chicago, IL 60654

Dear Mr. Hunter:

Thank you for your May 7, 2018, letter to Ms. Loren Sweatt, Deputy Assistant Secretary, Occupational Safety and Health Administration (OSHA). Your letter was forwarded to my directorate for response. This letter constitutes OSHA's interpretation only of the requirements referenced below and may not be applicable to any question not included in your original correspondence. Your inquiry relates to the enforcement of OSHA's Process Safety Management (PSM) standard, 29 CFR 1910.119, to two hypothetical scenarios you provided that are related to upstream oil and gas production facilities.

Background/Scenarios: In your letter, you describe the following scenarios involving natural gas processes that are in the production phase of upstream oil and gas operations. Both hypothetical scenarios include the following common characteristics:

• Raw wet natural gas (typically associated gas with a high gpm/btu content) is received from production well(s);
• The raw natural gas is sent for processing in treating facilities, such as CO2/H2S removal or dehydration facilities to remove contaminants from the gas stream;
  • One or more mechanical refrigeration units (MRUs) or Joule-Thompson (JT) plants and or stabilizers are installed downstream of the treating facilities, but upstream of the sales point to a natural gas gathering system. These facilities are used for the purposes of: (1) reducing the hydrocarbon dew point of the gas stream, and (2) flaring any excess gas.
• The total processing capacity is a maximum of 15 million cubic feet per day of gas and would likely be in range of 3 to 5 million cubic feet per day;
• With these types of facilities, the amount of flammable products stored can exceed 10,000 pounds; and
• The product is typically trucked off-site and taken to a gas plant for further treatment to convert the production gas into pipeline quality gas.

The differences between the two scenarios include:

• Scenario 1: Processing is typically conducted at or near the wellhead sites that either: (1) have no gathering system available for receipt of the associated gas stream, or (2) have an available natural gas gathering system to connect to, but the owner of the gathering system will not accept the production facility gas streams or liquid volumes; and
• Scenario 2: Processing is conducted in facilities where multiple lines of the gathering system connect, to prepare the product for the gathering pipeline by reducing the amounts of liquids and system contaminants.

In addition to describing your process, you also make the following statements:

• You state there is an enforcement stay for PSM enforcement in oil and gas production and refer to OSHA's memorandum to Regional Administrators, dated April 11, 2000, (2000 RA Memo) in which OSHA states that it "will not enforce the PSM standard at oil and gas production facilities" pending a feasibility determination.¹
• You quote OSHA's description of a production operation in its 2013 PSM rulemaking Request for Information (RFI):²

  Production, as recognized by the petroleum industry, is a phase of well operations that deals with bringing well fluids to the surface, separating them, and then storing, gauging and otherwise preparing the product for the pipeline. This production phase occurs after a well has been drilled, completed, and placed into operation, or after it has been returned to operation following workover or servicing.

• You correctly state that OSHA has previously indicated that the PSM standard applies to natural gas liquids (NGL) processing facilities, known as gas plants. Moreover, OSHA has stated this in the preamble³ to OSHA's PSM Final Rule, and in a 2005 Letter of Interpretation (LOI).⁴
• You describe gas plants as those facilities which separate various hydrocarbons and fluids to produce transmission pipeline quality gas. You further state that a typical gas plant processes in the range of 20 to 200 million cubic feet of gas per day, is located at the terminus of the gathering system, and is considered separate from production.

Question (paraphrased): Do the facilities/processes discussed in the two scenarios above fall within the scope of the enforcement stay regarding PSM enforcement in oil and gas production?

Response: No. The enforcement stay as described in the 2000 RA Memo does not apply to the scenarios described above, and OSHA will enforce the PSM standard at these facilities when there are 10,000 pounds or more of flammable gases or liquids contained in those processes, unless an exception to the standard at 29 CFR 1910.119(b) otherwise applies. The PSM enforcement policy for production facilities announced in 2000 only applies to facilities in SIC codes that were not covered by an economic analysis in the original PSM rulemaking. OSHA did, however, include SIC 1321 (Natural Gas Liquids)⁵ /NAICS 211130 (Natural Gas Extraction)⁶, during the PSM rulemaking process.⁷ The two facilities you described in your hypothetical scenarios are PSM-covered processes that are not stayed from enforcement because these processes recover natural gas liquids that are included in SIC 1321(NAICS 211130). These facilities conduct requisite activities that define a covered process, including manufacturing (processing well fluids to recover NGLs), handling, and on-site storage. As a result, facilities that recover NGLs may have enforceable PSM-covered processes when they contain a threshold quantity (TQ) of 10,000 pounds or more of flammable gases or flammable liquids.

Finally, the U.S. Environmental Protection Agency (EPA) may cover the types of processes you describe under their Risk Management Program (RMP) rule, 40 CFR 68. OSHA recommends consulting with EPA on the potential applicability of the RMP rule to your processes.

Thank you for your interest in occupational safety and health. We hope you find this information helpful. OSHA sets requirements by statute, standards, and regulations. Our letters of interpretation do not create new or additional requirements but rather explain these requirements and how they apply to particular circumstances. This letter constitutes OSHA's interpretation of the requirements discussed. From time to time letters are affected when OSHA updates a standard, a legal decision impacts a standard, or changes in technology affect an interpretation. To assure that you are using the correct information and guidance, please consult OSHA's website at http://www.osha.gov. If you have further questions, please contact the Office of Chemical Process Safety and Enforcement Initiatives at (202) 693-2341.

Sincerely,

Kimberly Stille, Acting Director
Directorate of Enforcement Programs

¹ OSHA will not enforce the PSM standard at oil and gas production facilities. - [1910.119(a)], OSHA LOI (April 11, 2000).

² Process Safety Management and Prevention of Major Chemical Accidents, Request for information, 78 FR 73756 (12/9/2013).

³ ". . . OSHA disagrees with commenters that gas processing should be excluded from coverage. While OSHA is very concerned with explosions, OSHA is also concerned with fires resulting from releases of highly hazardous chemicals (55 FR at 29150), which as indicated above, can occur and clearly endanger employees in the area. Therefore, OSHA believes that gas plants are appropriately covered by the process safety management standard." OSHA PSM Final Rule Preamble, 57 FR 6371 (2/24/92) (emphasis added).

⁴ ". . . Facility A under the original owner and Facility B under the new owner are covered by PSM because they are gas plants. OSHA covers gas plants under PSM." Evaluation of scenarios regarding PSM requirements related to normally unoccupied remote facilities and natural gas processing plants (gas plant), OSHA LOI (February 16, 2005) (emphasis added).

⁵ The U.S. Census Bureau and OSHA describe SIC 1321/NAICS 211130 as establishments that are primarily engaged in activities that include the recovery of liquid hydrocarbons from oil and gas field gases. North American Industry Classification System, U.S. Census Website, https://www.census.gov/cgi-bin/sssd/naics/naicsrch?input=211130&search=2017+NAICS+Search&search=2017; Description for 1321: Natural Gas Liquids, OSHA Website, https://www.osha.gov/pls/imis/sic_manual.display?id=388&tab=description. These liquids include butane (natural) production, casing-head butane and propane production, cycle condensate production (natural gas), ethane (natural) production, NGL production, and natural gasoline production.

⁶ SIC 1321 was later changed to NAICS 211112 when SICs were converted to NAICS code by U.S. Census Bureau. NAICS 211112 was changed in 2017, and the relevant NAICS is now 211130. See North American Industry Classification System, Concordances, U.S. Census Website, https://www.census.gov/eos/www/naics/concordances/concordances.html.

⁷ As seen in all the tables regarding the PSM standard's economic impact, OSHA included SIC 1321 in its economic impact analysis during PSM rulemaking. Final Regulatory Impact and Regulatory Flexibility Analysis of the Final Standard for Process Safety Management of Highly Hazardous Chemicals, pp. VI-1 – VI-22 (February 1992). "The population at risk is an estimated 3.0 million workers . . . and is found throughout manufacturing, particularly in Standard Industrial Classification (SIC) code 28 . . . In addition to manufacturing, natural gas liquids (SIC 1321) . . . contain workers at risk. The extent of the impact will vary by industry depending on current practice, the number of processes, and the quantities of highly hazardous materials on site." OSHA PSM Final Rule Preamble, V. Summary of Regulatory Impact and Regulatory Flexibility Analysis, International Trade Impact Analysis, and Environmental Impact Assessment, 57 FR 6401 (February 24, 1992) (emphasis added).