DAQ-2025-002311

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DAQC-PBR158700001-25
Site ID 15870 (B1)
MEMORANDUM

TO: FILE – SM ENERGY COMPANY – Butcher Butte Pad 23-74H-21

THROUGH: Rik Ombach, Minor Source Oil and Gas Section Manager

FROM: Chris Jensen, Environmental Scientist

DATE: April 24, 2025

SUBJECT: OIL AND GAS PERMIT-BY-RULE EVALUATION

INSPECTION DATE: April 16, 2025

SOURCE LOCATION: Lat: -109.966896 Long: 40.2877388

Business Office:
SM Energy Company
1700 Lincoln Street, Suite 3200
Denver, CO 80203

SOURCE TYPE: Tank Battery
Uintah
API: 4304755843

SOURCE CONTACTS: James Lebeck, Corporate Environmental Contact
Phone: [phone], Email: [e-mail]
Ryan Sokolowski, Field Contact
Phone: [phone], Email: [e-mail]

OPERATING STATUS: Operating

PROCESS DESCRIPTION: Oil and gas products are brought to the surface. These products go
through a separator where the oil and any water products are sent
to storage tanks and the gas is used to power equipment on site
(pump jack engine, tank heater, separator, flare, combustor, etc.)
Any remaining gas is sent to a pipeline that feeds a local gas plant.
The oil and process water in the storage tanks is loaded into tanker
trucks and hauled off site for processing and disposal.

APPLICABLE REGULATIONS: Utah Administrative Code (UAC) R307-500 Series for the Oil and
Gas Industry, and UAC R307-201: Emission Standards: General
Emission Standards; and UAC R307-150: Emission Inventories.
Federal Subpart: NSPS(60) OOOOa

SOURCE EVALUATION: Site Type: PBR-Controlled
Controlled by flare, Site has Line Power. The source registered:
1,000,100 Estimated Oil BBL.

# - $ . ) . )
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DOGM current 12 month rolling production is: 11,896 BBLs.
Utah Statute R307-506 requires a source with throughput
greater than 8,000 BBLs to have controls.

REGISTERED EQUIPMENT: Engine - Engine - Natural Gas 4-Stroke Rich Burn Make - Doosan
Model - 8.1 Mfg Year - 2013 Horse Power - 115 Combustion -
Natural gas, Pneumatic, Tank
3 General Provisions
Visible emissions are within the following opacity limits: VOC Control Devices and Gasoline engines 0%, Diesel engines 20%, Natural Gas Engines and Boilers, Treater burners & Tank burners 10%, Mobile source
dust 10%. [ R307-201-3] In Compliance. No visible emissions were detected by use of the USEPA Method 9.
6 VOC emissions are, at all times, minimized as reasonably practicable by equipment design, maintenance and operation practices. [R307-501-4(1)] In Compliance. Associated gas is routed to a sales gathering line. Tanks all have thief hatches and PRV's that are closed and not leaking. The expected components were found installed. The DAQ observed the installation for a cycle and it seems to be operating as expected. A combustion device is installed and operating properly. The DAQ looked for design and installation parameters such as: The vessel vent line is sloped away from the inlet of the combustor, a two-phase scrubber is used to separate natural gas liquids or condensates, the combustor has a lit pilot with an auto-ignition device, and the inlet to the combustor is controlled by a pressure regulating device. 7 All natural gas-driven pneumatic controllers are in compliance with 40CFR 60.5390 or 60.5390a as applicable. Tagging and record keeping requirements are not required. [R307-502-4] In Compliance. The natural gas-driven pneumatic controllers at this source are not continuous bleed but are low-bleed or snap acting. 11 Tank Truck Loading Truck loading is done by bottom filling or submerged fill pipe. [R307-504(1)] In Compliance. The truck loading area is suitable for submerged loading and it is routine for truck drivers to load this way. 13 A vapor capture line is used during truck loading if subject to storage vessel emissions controls of R307-506-4(2). [R307-504-4(2)] In Compliance. This source has the required vapor capture line installed. 14 Storage Vessels Thief hatches are kept closed and latched. [R307-506-4(1)] In Compliance. All hatches were found closed at the start of the evaluation. 16 Vessel Vent Components: (valves, unions, pressure relief devices, etc.) are leak-free, in good repair, and working as intended. (Tank covers are leak free and form a continuous seal.). [R307-501-4] In Compliance. No leaking components were found during the survey. The components were all operated and installed as expected. 17

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VOCs from storage vessels are recycled, recovered or controlled by a device that is compliant with R307-508. Exempt if <8000 bbls crude oil per year, <2000 bbls condensate, or if uncontrolled emissions are <4 tons VOC per year. [R307-506-4(2)(a)] In Compliance. Tank emissions are routed to an enclosed combustor. 18 Emissions from emergency storage vessels (NOT used as a storage tank) are controlled according to R307-506-4(2) - or - are only used in emergencies, are emptied within 15 days of receiving fluids and are equipped with a liquid level gauge. [R307-506-4(4)] In Compliance. No tanks are uncontrolled or used as an emergency tank. 22 Combustors and VOC Control Devices 23 Air pollution control equipment is installed appropriately, maintained and operated, pursuant to the manufacturer’s specifications, to control emissions. [R307-501-4(2)] In Compliance. The ECD is a brand of combustor that has been certified by the US EPA. 24 Vessel vent lines are sloped away from the flare inlet or to a separation vessel (scrubber). [R307-501-4(2)] In Compliance. The vent lines are sloped properly. 25 Combustor inlet lines are equipped with a fire arrestor, pressure gauge, inlet pressure regulating valve and other components according to the engineering design, the manufacturer's specifications or good practices for safety and emissions control. [R307-501-4(2)] In Compliance. This installation has a BMS, pressure gauge, fire suppressor, and inlet pressure regulating valve installed. 26 Air pollution control equipment is designed and sized to achieve the destructive efficiencies in rules and to handle fluctuations in emissions. [R307-501-4(2)] In Compliance. 28 The VOC control device(s) required by R307-506 or R307-507 has a control efficiency of 95% or greater, operates with no visible emissions and has a continuously burning pilot flame and an operational auto-igniter according to R307-503. [R307-508-3(1)] In Compliance. 32 Associated Gas Flaring 33 Associated gas is routed to a process unit for combustion, a sales pipeline or an operating VOC control device, except in an emergency. An emergency release is unanticipated, temporary, infrequent, unavoidable, =24 hrs. and is not due to operator negligence. Low pressure gas from working loss, breathing loss and oil flashing is not "associated gas". [R307-511-4(1)] In Compliance. Associated gas is gathered to a sales line. 39 Monthly inspections are conducted according to 40 CFR 60.5416a(c) on the closed vent system, openings, thief hatches and bypass devices if emissions control is required, and defects are repaired within 15 days. [R307-506-4(5)] In Compliance. Recordkeeping Requirements 41
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Emission Inventory An emissions inventory has been submitted within the past three years. [R307-150-9(1)] In Compliance. The operator submitted for the 2023 emissions inventory. Oil and Gas Industry Registration Requirement 53 The source is registered with the DAQ. [R307-505-3(3)] In Compliance. 54 Registration has been updated within 30 days of a company name change, removal or addition of control devices, or termination of operations. [R307-505-3(3)] In Compliance. Leak Detection and Repair The source has a source specific emissions monitoring plan. [R307-509-4(1)(a)] In Compliance. A field wide plan was produced to the DAQ for review during the records portion of the evaluation. The DAQ is not pursuing compliance action if this has not been prepared for each individual source. The monitoring plan addresses difficult-to-monitor and unsafe-to-monitor components. [R307-509-4(1)(b)] In Compliance. 46 Monitoring surveys are conducted to observe each fugitive emissions component for fugitive emissions. [R307-509-4(1)(c)] In Compliance. Consistent with the Emissions Monitoring Plan requirement for compliance with NSPS (60) OOOO. 47 Initial monitoring surveys were within 60 days after startup for new sources. Subsequent surveys are semi-annual (no further than 7 months nor nearer than 4 months apart) for regular components, annual for difficult-to-monitor components, and as required by the monitoring plan for unsafe-to-monitor components. [R307-509-4(1)(d)] In Compliance. The operator supplied LDAR inspection forms for review. These inspections are being conducted quarterly in excess of this requirement. 48 Monitoring surveys are done with OGI equipment or by Method 21. [R307-509-4(1)(e)] In Compliance. The operator uses a Flir GF 320 OGI camera. 49 Fugitive leaks are attempted within 5 days and repaired within 15 days unless infeasible, unsafe, etc., as stated in the rule, which require repair within 24 months per the rule. [R307-509-4(1)(f)] In Compliance. A survey conducted in August 2024 found leaks that were repaired and verified the same day. 50 Resurvey of the repaired components is completed within 30 days. [R307-509-4(1)(g)] In Compliance. 51

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The following records are kept: The emissions monitoring plan, for life of the site LDAR inspections, repairs and resurveys, for 3 years [R307-509-5] In Compliance. Combustors and Emissions Control 61 Records for each of the following are kept for three years: Monthly storage vessel vent system inspections (openings, thief hatches, pressure relief devices, bypasses, etc.), if controlled. Monthly crude oil throughput Emission calculations, actuals and sampling data when used to justify an exemption to storage vessel rules Emergency storage vessel usage (dates used, emptied, and volumes), if not controlled. [R307-506-5] In Compliance. The operator supplied inspection forms for review. These inspections were conducted monthly as required by 40 CFR (60) OOOO and this requirement. The operator indicated on the monthly inspection records that they use the EPA method 22 to detect visible emissions. 63 A signed and stamped engineering assessment (with required statement) certifying that the closed vent system is of sufficient design and capacity. [40 CFR 60 Subpart OOOOa] Out of Compliance. The previous owner (Altamont Energy) has either not provided SME with this document or they did not complete this requirement. SME is engaged in playing catch up with several deficiencies found at the new acquisitions. Monthly AVO and USEPA method 22 inspections are conducted on VOC control devices and associated equipment, and corrective actions are taken within 5 days and completed within 15 days. [R307-508-3(3)] In Compliance. 65 The following records are kept: VOC control device efficiency, for life of the equipment. Manufacturer operating and maintenance instructions for VOC control devices, for life of the equipment. AVO and USEPA method 22 inspections of the VOC control device(s), associated equipment and any repairs, for 3 years. [R307-508-4] In Compliance. Associated Gas Flaring The following records are kept: The time and date of event Volume of emissions Any corrective action taken for 3 years. [R307-511-5(1)(a)(b)] In Compliance. No reported venting or breakdowns.

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Applicable Federal Regulations NSPS (Part 60) OOOOa: Standards of Performance for Crude Oil and Natural Gas Facilities for which Construction, Modification or Reconstruction Commenced After September 18, 2015 [40 CFR 60 Subpart OOOOa] Not In Compliance. This source has an Approval (PBR) from the State of Utah with legal and enforceable limits. This source is exempt from OOOOa for the collection of fugitive emissions components. A monitoring, repair, and record keeping program is in place that would satisfy the requirements of 40 CFR (60) OOOOa for the collection of fugitive emissions components, closed vent system, and storage vessel facilities. The engineered design analysis was either not supplied or not prepared by the previous owner. SME has hired an outside firm (Valor) to evaluate all of the new sources recently purchased. There are no other affected facilities installed.

PREVIOUS ENFORCEMENT
ACTIONS: None in the past 5 years.

COMPLIANCE STATUS &
RECOMMENDATIONS: In regards to the site, the overall status is: Not In Compliance.
The source was surveyed by AVO and with an OGI camera and
was found to be well-kept with no visible or fugitive emissions.
The DAQ conducted a review of the rules requiring recordkeeping
and looked for installation/operation issues. The operator's
representatives were pleasant and cooperative. Requested records
were provided in a timely manner and reviewed at the local field
office. This is a multi-well pad of long horizontal wells. Yet, it is
permitted twice because it had separate ownership/control. Both
XCL Resources and Altamont Energy have been purchased by SM
Energy. Both PBR 101849 and this source (PBR 15870) should be
integrated into one permit. The DAQ has suggested that this
permit (PBR 15870) be retained as it is the older and original,
permitted with an AO, and has history and previous inspections.
The other (PBR 101849) is new and this is the first evaluation.
The DAQ suggests PBR 101849 be rescinded. This source has
registered the use of a generator. It has since been removed and is
on line power. There is however a NG compressor for artificial lift
for the other wells (registered under 101849). That engine will be
evaluated on a separate memo. This source has some issues with
recordkeeping inherited from the previous owner. For instance,
there is not a design analysis required by NSPS (60) OOOOa. SM
Energy is aware of the deficiencies and are actively trying to
rectify them both in physical components and recordkeeping. A
third party firm has been contracted to perform this analysis on all
of the newly purchased assets as well as import other data and
forms into the new software and database SME has purchased. As
such, no enforcement action is recommended.

RECOMMENDATION FOR
NEXT INSPECTION: The DAQ recommends the next inspector watch out for
compressor engine and associated gas flare that should now be a
part of the inspection when the other permit is rescinded that has
not been included in the equipment for this well’s evaluation. The
DAQ was joined by SME personnel during the site inspection.

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RECOMMENDATIONS FOR NSR: None

ATTACHMENTS: None