BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

UNOTICE
URECOMMENDATION

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

OF THE STATE OF ILLINOIS

CITATION OIL & GAS CORPORATION

Bio Desulfurization Unit

(Tax Certification)

PROPERTY IDENTIFICATION NUMBER

15-06-200-11 or portion thereof

Electronic filing

Service by mail

John Therriault, Assistant Clerk

Susette M. Harris

Illinois Pollution Control Board

Citation Oil & Gas

State of Illinois Center

8223 Willow Place Drive S

100 W. Randolph Street, Suite 11-500

Houston, Texas 77070-4631

Chicago, Illinois 60601

Service by mail

Steve Santarelli

Illinois Department of Revenue

101 West Jefferson

Springfield, Illinois 62794

PLEASE TAKE NOTICE that I have today electronically filed with the Office of

the Pollution Control Board the APPEARANCE and RECOMMENDATION

Illinois Environmental Protection Agency, a copy of which is herewith served upon the

applicant and a representative of the Illinois Department of Revenue.

Respectfully submitted by,

Assistant Counsel

Date: March 12, 2009

ILLINOIS ENVIRONMENTAL PROTECTION AGENCY

1021 North Grand Avenue East

Springfield, IL 62794-9276

Telephone: 217/524-9137

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

OF THE STATE OF ILLINOIS

CITATION OIL & GAS CORPORATION

Bio Desulfurization Unit

(Tax Certification)

PROPERTY IDENTIFICATION NUMBER

15-06-200-11 or portion thereof

I hereby file my Appearance in this proceeding on behalf of the Illinois

Environmental Protection Agency.

Respectfully submitted by,

Assistant Counsel

Date: March 12, 2009

ILLINOIS ENVIRONMENTAL PROTECTION AGENCY

1021 North Grand Avenue East

Springfield, Illinois 62794-9276

Telephone: 217/524-9137

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

OF THE STATE OF ILLINOIS

CITATION OIL & GAS CORPORATION

Bio Desulfurization Unit

(Tax Certification)

PROPERTY IDENTIFICATION NUMBER

15-06-200-11 or portion thereof

RECOMMENDATION

NOW COMES the ILLINOIS ENVIRONMENTAL PROTECTION AGENCY

(“Illinois EPA”), through its attorneys, and pursuant to 35 Ill. Adm. Code 125.204 of the

ILLINOIS POLUTION CONTROL BOARD’S (“Board”) procedural regulations, files

the Illinois EPA’s Recommendation in the above-referenced request for tax certification

of pollution control facilities. The Illinois EPA recommends a

of the applicant’s

request. In support thereof, the Illinois EPA states as follows:

On December 26, 2006, the Illinois EPA received a request and supporting

information from CITATION OIL & GAS CORPORATION (“Citation Oil”) concerning

the proposed tax certification of certain air emission sources and/or equipment associated

with a natural gas liquids (“NGL”) manufacturing plant. The plant is located near Odin

in Marion County, Illinois. A copy of the relevant portions of the application is attached

[Exhibit A]

The registered address of Citation Oil is:

Citation Oil & Gas

8223 Willow Place Drive S

Houston, Texas 77070-4631

The address of the NGL gas plant located in Illinois is:

Citation Oil & Gas Corporation

2302 Hoots Chapel Road

Odin, Illinois 62870

The pollution control facilities involved in this request consist of the

construction and installation of a Bio Desulfurization Unit. As a part of the NGL

manufacturing plant, the Bio Desulfurization Unit employs an innovative control

technology to control process emissions, using absorbtion techniques in combination with

biological treatment (i.e., hydrogen sulfide-eating bugs). The control technology

removes and breaks down the highly-concentrated hydrogen sulfide that is found in the

sour casing head gas that is processed in NGL manufacturing. The process produces both

elemental sulfur, which will be sent to a landfill, and a sweet residue gas, which will be

flared. As a result of the project’s implementation, neither the acid gas from the NPL

manufacturing plant nor the existing well sites will need to be flared. Moreover, the

resulting reduction in hydrogen sulfide will reduce ambient sulfur dioxide emissions

within a five square mile area by an estimated 1,200 tons per year.

Section 11-10 of the Property Tax Code, 35 ILCS 200/11-10 (2002),

defines “pollution control facilities” as:

“any system, method, construction, device or appliance appurtenant

thereto, or any portion of any building or equipment, that is designed,

constructed, installed or operated for the primary purpose of: (a)

eliminating, preventing, or reducing air or water pollution… or (b)

treating, pretreating, modifying or disposing of any potential solid, liquid,

gaseous pollutant which if released without treatment, pretreatment,

modification or disposal might be harmful, detrimental or offensive to

human, plant or animal life, or to property.”

Pollution control facilities are entitled to preferential tax treatment, as

provided by 35 ILCS 200/11-5 (2002).

Based on information in the application and the underlying purpose of the

Bio Desulfurization Unit to prevent, eliminate or reduce air pollution, it is the Illinois

EPA’s engineering judgment that the described project and/or equipment may be

considered “pollution control facilities” in accordance with the statutory definition and

consistent with the Board’s regulations at 35 Ill. Adm. Code 125.200.

[Exhibit B].

Because the Bio Desulfurization Unit will satisfy the aforementioned

criteria, the Illinois EPA recommends that the Board

the applicant’s requested tax

Respectfully submitted by,

ILLINOIS ENVIRONMENTAL PROTECTION

Assistant Counsel

DATED: March 12, 2009

ILLINOIS ENVIRONMENTAL PROTECTION AGENCY

1021 North Grand Avenue East

Springfield, Illinois 62794-9276

Telephone: 217/524-9137

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

I hereby certify that on the 12th day of March 2009, I electronically filed the

following instruments entitled

NOTICE, APPEARANCE

RECOMMENDATION

CERTIFICATE OF SERVICE

John Therriault, Assistant Clerk

Illinois Pollution Control Board

100 West Randolph Street

Chicago, Illinois 60601

and, further, that I did send a true and correct copy of the same foregoing instruments, by

First Class Mail with postage thereon fully paid and deposited into the possession of the

United States Postal Service, to:

Steve Santarelli

Susette M. Harris

Illinois Department of Revenue

Citation Oil & Gas Corporation

101 West Jefferson

8223 Willow Place Drive S

Houston, Texas 77070-4631

Springfield, Illinois 62794

Assistant Counsel

December 19, 2006

E. Sutton, Manager

of Air Pollution Control

Splingfield, IL 62794-9276

Re: Citation Oil

Gas Corp.'s Form APC 151 Application for Certification (Property Tax

Treatment), Pollution Control Facility

Dear Mr. Sutton:

Enclosed for filing with the Permit Section, Bureau

of Air is Citation Oil

("Citation") application for Certification (Property Tax Treatment) Pollution Control Facility.

Citation operates oil and gas wells located in Marion County, Raccoon Township.

InJuly 2005, Citation was granted a pennit (Application Number 05060022) to construct

a gas plant, the Salem Gas Plant, for the recovery natural gas liquids (NGLs) from casing head

Ii-om existing crude oil pumping wells. The construction permit also includes three

existing gas production facilities: Water Injection Plant, South BattelY, and the North Battery.

The existing facilities operate under a lifetime operating penni! number 73030968.

The construction phase

of the gas plant was completed in July 2006. The facility is

cunently undergoing testing.

Please let me know

if you have any questions or need further infonnation in aid of

reviewing this application.

CMRRR# 7006 0810 0000 9574 2450

lL EPA App!k!l1ion for

Cenificl\!;on 12192006.dox

8223 Willow Place South

Respectfully submitted,

Susette M. Hanis, CPA

Senior Tax Accountant

tEPA DAPC SPFLD

Houston, TX

...................

281/517-7800

INDEX OF ATTACHEMENTS

-Transmittal to Original ConstJUction Pennit Application

2005-ConstJUction Pennit Application prepared by Kane Environmental

Engineering, Inc.

2005-Application for ConstJUction Pennit- Form 199-CAAPP

2005-Notice of Additional Construction Penni! Application Fees

September 6,

2005-Construction Pennit granted

App\ic~!ion forTn~

Certification 12192006.dot

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

APPLICATION FOR CERTIFICATION (PROPERTY TAX TREATMENT)

This Agency is authorized to request this

POLLUTION CONTROL FACILITY

illfonnation under Illinois Revised Statues, 1979,

Chapter, 120, Section 502a-5. Disclosureoflhis

information is voluntary. However, failure to

ILLINOIS ENVIRONMENTAL PROTECTION AGENCY

comply could prevent your appl ication from

P. O. Box 19276,

Springfield, IL

being processed

or could result in denial of your

application for certification.

Certification No.

Cilation Oil & Gas Corp.

Person Authorized to Receive Certification

Person 10 Contact for Additional Details

Susette M. Harris

Willow Place Drive S

Willow Place Drive S

Municipality. State & Zip Code

Municipality, State & Zip Code

Telephone Number

Telephone Number

Location of Facility

Quarter Section

Hoots Chapel Road

Property Identification Number

Nature of Operations Conducted at the Above Location

Gas gathering system and NGL sales project with bio.desulfurization. See Attached Construction Permit

prepared by Kane Environmental Engineering, Inc.

Water Pollution Control Construction Permit No.

NPDES PERMIT No.

I Expiration Dale

Air Pollution Control Construction Permit No.

Air Pollution Control Operating Pemnit No.

Describe Unit Process

See Attachment in Support of Tax Application.

Materials Used in Process

See Attachment in Support of Tax Application.

Describe Pollution Abatement Control Facility

The pollution control facility includes a bio.desulfurization unit.

See Attached Construction Permit prepared

by Kane Environmental Engineering, Inc. June

Tax Certification/or Pollution Control Facilities

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

(1) Nature of Contaminants or Pollutants

Material Retained, Captured

DISPOSAL OR USE

hydrogen sulfide

bio-desulfurization

bio-desulfurization

of Waste Water Discharge

Plans and Specifications Attached

Are contaminants (or residues) collected bv the control facilitv?

Date installation completed

status of installation on date of application

a. FAIR CASH VALUE IF CONSIDERED REAL PROPERTY:

b. NET SALVAGE VALUE IF CONSIDERED REAL PROPERTY:

c. PRODUCTIVE GROSS ANNUAL INCOME OF CONTROL FACILITY:

PRODUCTIVE NET ANNUAL INCOME OF CONTROL FACILITY:

PERCENTAGE CONTROL FACILITY BEARS TO WHOLE FACILITY VALUE:

The following information is submitted in accordance with the Illinois Property Tax Code, as amended, and to the best of my

knowledge, [s true and

claimed herein are "pollulion control fac[lit[es' as defined," Section 11-10 of the

IIlino[s Property T

Vice-President Taxalion

INSTRUCTIONS FOR COMPILING AND FILING APPLICATION

General: Separate applications must be completed for each control fadlity claimed. Do not mix types (waler and air). Where both air and

water operations are related, file two applications. If attachments are needed, record them consecutively on an index sheet.

Information refers

to applicant as listed In the tax records and the person to be contacted lor further details orror inspection of

facilities. Define facility location

by street address or legal description. A pial map location is required for facilities located

outside of municipal boundaries.

The property identification number is required.

Self -explanatory. Submit copies of

all pennits issued by local pollution control agencies.

(e.g. MSD Construction Permit)

to manufacturing processes or materials on which pollution control facility is used.

Narrative description of the pollution control facility, indicating that its primary purpose is to eliminate, prevent or reduce pollution.

State the type of

control facility. State permit number, date, and agency issuing permit. A narrative description and a process

flow diagram desaibing

the pollution control facility. Include a listing of each major piece of equipment included in the claimed

fair cash value for real property. Include

an average analysis of the influent and effluent of the control facility stating the

collection efficiency.

list air contaminants, or water pollution substances released as effluents to the manufacturing processes. list also the final

disposal of any contaminants removed from the manufacturing processes.

(1) - Refers to pollutants and contaminants removed from the process by the pollution control faCility.

Item (2) - Refers to water pollution but can apply to water-carried wastes from air pollution control facilities. Submit drawings,

which clearly show

(a) Point(s) of discharge to receiving stream, and (b) Sewer.;. and process piping to and from the control

(3) -If the collected contaminants are disposed of other than as wastes, slate the disposition of thl:; materials, and the value

in dollars reclaimed by sale or reuse of the colleced substances. State the cost of reclamation and related expense.

Item (4) - Stale the date which the pollution control facility was first placed in service and operated. If not, explain.

(5) - This information is essential to the certification and assessment actions. This accounting data must be completed to

activate project review prior to certification by this Agency.

Self-explanatory.

be a corporate authorized signature.

Spnngfield, IL 62794-9276

Division of Water Pollution Control

Tat Certification/or Pollution Control Facilities

Division of Air Pollution Control

ATTACHMENT IN SUPPORT OF TAX CERTIFICATION APPLICATION

Section C. Describe Unit Process. Unit.

Process described in attached Construction

Permit Application ID No. 121813AAA beginning at page 5.

The new Salem Gas Plant if located at 2302 Hoots Chapel Road, Marion

County, Illinois. The plant was constructed

to gather sour casing head

to process into a saleable product: natural gas liquids (NGLs).

miles of pipelines were installed to gather casing head gas from existing

oil pW11ping wells. This gas has been flared at the well site since 1938.

The process consists

of six separate sub processes (See Attachment 2 for

I. Inlet gas heating and separation.

2. Gas treating/Sulfur Recovery.

3. Refrigeration Unit/Process Cooling

4. Liquids recovery from Process Gas

5. Liquids Stabilization

Hydrate Inhibition and Stabilizer Heat Medium Supply

Section C. Materials used in process.

Materials described in attached Construction

Pennit ApplicationlD No. 121813AAA.

Shell-Pacques/Thopaq® solvent for removal

of H2S. MRU unit and dual

purpose ethylene glycol heating

and injection unit. Thiopaq®

of the genera Thiobacillus to oxidize the hydrogen sulfide.

Section D. Pollution Control Facility Description.

Pollution control facility described

in attached Construction Pennit Application

ID No. 121813AAA beginning at page 5.

Salem Gas Plant

The Salem Gas Plant pollution control facility consists of a bio-

desulfurization unit that removes entrained H2S for gathered casing head

There are three sections to the bio-desulfurization facility:

Absorption section, Reaction section, aerobic section, and the Sulfur

Recovery Section.

The absorption section washes the gas in

an absorption tower. The laden

washing liquid is led to the aerobic reactor in which the sulfides are

lSI 12142006..doc

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

The reaction section, aerobic reactor contains micro-organism that

oxidizes the absorbed sulfides into elemental sulfur. Reactor intemals are

to ensure complete mixing and optimal mass transfer of the oxygen

to the liquid phase. Exhaust air fonn the reactor can be nonnally

emitted without further processing.

The produced sulfur is separated from the liquid by means

unit. Solids content

of the settler underflow is typically between 10 and

20%. The sulfur slurry can be furthered dewatered by means

centrifuge or filter press

to obtain a dry solid concentration of about 60-

The sulfur product can use as a raw material for the production of sulfuric

acid at sulfuric acid plants for burning waste acid and slurries. Citation

to dispose of the sulfur by truck to a nearby solid waste landfill.

South Battery

The South Battery had an existing non-assisted flare that was converted to

a vapor recovery unit that will route vapors into the gas gathering system.

21 O-BBL vertical fixed roof condensate tank will be installed that will

include a vapor recovery unit that will also route vapors back into the gas

gathering system.

0506022 APC 151 ! 2142006.doc

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

Illinois Environmental Protection Agency

Pollution Control -- Permit Section

Springfield, Illinois 62794-9506

Air Permitting Construction Application

Gas Gathering and NGL Sales Project

It May Concern:

Gas Corp. (Citation) is pleased to present this permit application for the Salem Unit - Gas Gathering

and NGL Sales Project This project will be classified as a synthetic minor source and will require a FESOP

(Federally Enforceable State Operating Permit) since the facility's uncontrolled emissions would be major without

the pollution control device.

Gas Corp. (Citation) operates three oil and gas production facilities located southwest of Salem,

Illinois in Marion County, The facilities are the North Battery, South Battery and Water Injection Plant that operate

under a Lifetime Operating Permit (Permit No

.. 73030968) and are engaged in the separation of oil from water that is

extracted from the crude oil pumping wells in the surrounding area. With this application, Citation proposes to

construct a gas plant, the Salem Gas Plant, for the recovery of natural gas liquids (NGLs) from casing head gas

from existing crude oil pumping wells. Due the existing Lifetime Operating Permits for the North and

South Batteries and Water Injection Plant, guidance from tbe !EPA was to include these facilities in this

construction application. For the purposes of creating consistent and accurate representation of these operations,

Citation is providing revised plot plans and emission calculations for these facilities.

Since approximately 1938, pumping wells in the Salem area have been producing crude

oiL These, wells are

currently owned and operated by Citation and produce crude from over 200 active well sites. Current operations

include the extraction

of a water and crude oil mixture from the wells, The mixture is sent to one of two locations,

the North Battery or the South Battery, depending on the geographic location

of the wells. At each respective tank

battery, water is separated from the crude oil after passing through a series of freewater knockout rnnks, gunbarrels

and crude' oil stock tanks. Crude oil

is transferred to sales via a lease automated custody transfer (LACT) unit.

Produced water is transported to a centralized location, the Water Injection Plant, which stores the water prior

pumping into water injection wells located throughout the field, Gas from the freewater knockouts and the

gunbarrel tanks are collected and sent

to a combustion flare. The sour casing head gas that is produced fTom the

extraction of the liquids is flared at the wellhead in small .flares. These flares are not regulated under the air rules of

the Illinois EPA and have operated in this mode throughout the life of the field.

"'8223 Willow Place South

Houston, TX 77070-5623

Gas Gathering and NGL Sales Project

Since 2000, Citation has been actively conducting a study to evaluate the technical and economical feasibility of

processing and selling the casing head gas and the associated NGLs that can be extracted from the gas.

In 2001, Citation completed a Gas Gathering Pilot program to determine if the recovery of the casing head gas

would be feasible.

was determined that with the current economic conditions and the quantity of gas that is

currently produced at the well sites that the projectwas'feasible. Since that time, Citation has developed a plan, the

Salem Gas Gathering and NGL Sales Project, to collect the sour casing head gas to a central location and process the

gas for the collection ofnalural gas liquids (NGLs). The proposed location is the subject

of this construction permit

application, the Salem

Gas Plant, which is to be located adjacent to the existing South Battery, Note that the

of the casing head gas is independcnt of the crude oil production operations, The operation of the

and water injection plallt is essentially unaffected by this proposed construction.

is proposing to use an innovative control techoology that is provided by NATCO called bio-desulfurization.

This technology has been permitted and operated in the United States and Canada and utilizes absorbtion technology

in combination with biological treatment in the form of H,S-eating bugs. The protess achieves over 99% reduction

in H,S with the by-product of elemental sulfur and a sweet residue gas instead of highly concentrated H,S gas. The

elemental snlfur is removed from the site

as a moist cake while the residue gas is flared. This techoology eliminates

to flare acid gas at the plant and consequently eliminates the flaring of H,S at the existing well sites.

expected that the Salem Unit Gas Gathering and NGL Sales Project is one of the most significant environmentally

beneficial projects in the history

of Marion County, as it will contribute to the reduction of over 1,200 tons per year

of actual SO, emissions that have been emitted annually since 1938. Using innovative technology and vision,

Ciiation has proposes to construct this project that will:

Reduce ambient SO] emissions in a

square mile area by over 1,200 tons per year;.

Recover otherwise wasted natural resources to generate nearly 350 barrels per day of saleable NGLs;

-600 Mcflday of sweet, high-Btu residue gas that has the potential to be used for future power

generation, feedstock for ethanol production, or supply

of clean burning natural gas to the city of Salem;

Improve the ambient air quality in the Marion County by eliminating over, 200 ground flares located

throughout the area.

Enclosed is a fee check for $12,000 along with an original and two additional copies of the application for your

review. Thank you in advance for you consideration ofthis permit application.

If you have any questions about this

application, or need additional information please do not hesitate to contact me directly at (281) 517-7196, or Mr.

of Kane Environmental at (512) 401-2444.

Environmental Coordinator

Mr. Clyde Finch, Citation Oil

Gas, Corp. Oklahoma City, OK

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

\ Citation Oil & Gas Corp.

,8223 WILLOW PLACE SOUTH

HOUSTON, TEXAS 77070-5623

STATE OF ILLINOIS

TOTAL INVOICES PAID

Wells Fargo Bank

115 Hospilal Drive

Payable Account

PAYEE; DETACH THIS STATEMENT BEFORE DEPOSITING

Citation Oil 8," Gas Corp.

8223 WilLOW PLACE SOUTH

EXAC~~~Q~12,OOOdo1s00cts

TWr;.LVE 'I'HOUSAND

STATE OF ILLINOIS

OF STATE TREASURER.

ENVIRONMENTAL PROTECTION AGENCY

SPRINGFIELD, It. 62794-9276

Wells Fargo Bank

115 Hospital Drive

Payable Account

Do not aCC!ptin;s d\lCument

unless you cansee a ghost

documl.'l1l has 10 iln,f1Cla1 Ylilte:marl;.

VOID AFTER 90 DAYS

COUNTER SIGNATURE REQUIRED IF AMOUNT GREATER THAN $50,000

c....:..=-_._'~

3y ________________________ _

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

Construction Permit Application

Salem Unit - Gas Gathering and NGL Sales Project

10 No. 121813AAA

8223 Willow Place South, Suite 250

Houston, Texas 77070-5623

Kane Environmental Engineering, Inc.

2801 Welton Cliff

Cedar Park, Texas 78613-4324

Project No. 04-035

TABLE OF CONTENTS

PROCESS DESCRIPTION

FACILITY DIAGRAMS

STATE REQUIREMENTS FOR PERMIT TO CONSTRUCT

FEDERAL REQUIREMENTS FOR PERMIT TO CONSTRUCT

EMISSION SOURCES AND CONTROLS

AIR DISPERSION MODELING

Appendix A: Required IEPA Forms and Tables

B: Emissions Calculations and Data

Appendix C: Supporting Documentation

D: Supporting Data for Alternative Control Technology

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

INTRODUCTION

Citation Oil & Gas Corp. (Citation) operates three oil and gas production facilities located

southwest of Salem, Illinois

in Marion County. The facilities are the North Battery, South

Battery and Water Injection Plant that operate under a Lifetime Operating Permit (Permit

No. 73030968) and are engaged in the separation of oil from water that is extracted from

the crude oil pumping wells

in the surrounding area. With this application, Citation

to construct a gas plant, the Salem Gas Plant, for the recovery of natural gas

liquids (NGLs) from casing head gas collected from existing crude oil pumping wells.

Since approximately 1938, pumping wells in the Salem area have been producing crude oil.

These wells are currently owned and operated

by Citation and produce crude from over

200 active well sites. Current operations include the extraction of a water and crude oil

mixture from the wells. The mixture is sent to one of two locations, the North Battery or the

South Battery, depending

on the geographic location of the wells. At each respective tank

battery, water is separated from the crude oil after passing through a series of freewater

knockout tanks, gunbarrels and crude oil stock tanks. Crude oil

is transferred to sales via a

lease automated custody transfer (LACT) unit.

is transported to a

centralized location, the Water Injection Plant, which stores the water prior

to pumping into

water injection wells located throughout the field. Gas from the freewater knockouts and

the gunbarrel tanks are collected and sent to a combustion flare. The sour casing head

is produced from the extraction of the liquids is flared at the wellhead in small

flares. These flares are not regulated under the air rules of the Illinois EPA and have

in this mode throughout the life of the field.

Gas Gathering and NGL

Since 2000, Citation has been actively conducting a study to evaluate the technical and

economical feasibility of collecting, processing and selling the casing head gas and the

associated NGLs that can

be extracted from the gas. In 2001, Citation completed a Gas

Gathering Pilot program

to determine if the recovery of the casing head gas would be

It was determined that with the current economic conditions and the quantity of

is currently produced at the well sites that the project was feasible. Since that

time, Citation has developed a plan, the Salem Gas Gathering and NGL Sales Project, to

collect the sour casing head gas

to a central location and process the gas for the collection

of natural gas liquids (NGLs). The proposed location

is the subject of this construction

permit application, the Salem Gas Plant, which

is to be located adjacent to the existing

South Battery. Note that the processing of the casing head gas

is independent of the crude

oil production operations, The operation of the batteries and water injection plant is

essentially unaffected by this proposed construction.

In evaluating the feasibility of this project, Citation has conducted studies of the production

and gas composition of the casing head gas. The analytical results of sampling conducted

in February 2004 is included

Appendix C. Because of the sour composition of the casing

Citation Oil and Gas Corporation

Construction Permit Application

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

head gas and need to remove the entrained hydrogen sulfide (H

S) for recovery of saleable

NGLs, a concentrated sour vent stream would be created and posed a complex air

pollution control issue. The casing head gas that

is currently flared at the wellheads

in aggregate, over 1,200 tons per year of sulfur dioxide (S02) by combusting the

H2S which ranges

in concentration from 2% to 5%, by volume. In order to flare this gas

collectively at the Salem Gas Plant, compliance with Illinois EPA Rule 214.301 could not be

demonstrated. Therefore, Citation explored

all options in controlling the acid gas created

from removing the H2S.

After significant review and analysis of control options, Citation is proposing to use an

innovative control technology that

is provided by NATCO called bio-desulfurization. This

technology has been permitted and operated

in the United States and Canada and utilized

absorbtion technology

in combination with biological treatment in the form of H2S-eating

bugs. The process achieves over 99% reduction in H2S with the by-product of elemental

sulfur and a sweet residue gas instead of highly concentrated H2S gas. The elemental

is removed from the site as a moist cake while the residue gas is flared. This

technology eliminates the need to flare acid gas at the plant and consequently eliminates

the flaring of H2S

at the existing well sites. It is expected that the Salem Unit Gas

Gathering and NGL Sales Project

is one of the most significant environmentally beneficial

in the history of Marion County, as it will contribute to the reduction of over 1,200

tons per year of actual S02 emissions that have been emitted annually since 1938. Using

innovative technology and vision, Citation has proposes

to construct this project that will:

square mile area by over

Recover otherwise wasted natural resources

to generate nearly

barrels per day of saleable

Mcf/day of sweet, high-Btu residue gas that has the potential to be used for future

power generation, feedstock for ethanol production, or supply of clean burning natural gas to the city

Improve the ambient air quality

in the Marion County area by eliminating over 200 ground flares

located throughout the area.

Due the eXisting Lifetime Operating Permits for the North and South Batteries and Water

Injection Plant, guidance from the IEPA was to include these facilities

in this construction

application. For the purposes of creating consistent and accurate representation of these

operations, Citation

is providing revised plot plans and emission calculatioris for these

facilities. A summary of the equipment at the existing and proposed Salem Gas Plant

provided below.

Equipment Summary

Existing equipment at the North Battery is listed below

• (2) 400-bbl vertical fixed-roof oil stock tanks;

• (2) 600-bbl vertical fixed-roof gunbarrel tanks;

(1) 3,300-bbl vertical open-roof overflow tank;

(6) 420-bbl freewater knockout tanks;

• (1) non-assisted flare;

• Equipment fugitive components

Construction Permit Application

Existing equipment at the Water Injection Facility is listed below

5,OOO-bbl vertical fixed-roof water tanks;

• (1) 5,000-bbl vertical open-roof overflow tank;

(1) 20,000-bbl vertical open-roof overflow tank;

(1) fluid separation pit*;

• Equipment fugitive components

'Note: This unit

previously authorized but has been closed and is no longer operational.

Existing equipment at the South Battery is listed below

• (2) 400-bbl vertical fixed-roof oil stock tanks;

• (2) 600-bbl vertical fixed-roof gunbarrel tanks;

• (1) 3,300-bbl vertical open-roof overflow tank;

• (6) 420-bbl free water knockout tanks;

• (1) non-assisted flare*;

• Equipment fugitive components

'Note: This flare will be eliminated and will be repiaced with a VRU that will route vapors into the

gas gathering system.

New equipment is proposed to construct the Salem Gas Plant and is listed below:

• (3) 30,000 gal pressurized NGL product tanks;

• (1) mechanical refrigeration unit

with gas-fired reboiler for glycol dehydration;

• (1) bio-desulfurization unit with ancillary equipment;

• (1) propane refrigeration compressor - electric motor drive

(1) chilled water skid;

21 O-bbl vertical fixed-roof condensate tank*;

• (1) air-assisted flare (located

-1,600 feet north of the plant);

(1) 250 hp electric drive, 2-stage gas compressor;

• Equipment fugitive components

'Note: This tank will be located at the South Battery and equipped with

VRU that will route

the gas gathering system.

Emissions Summary

The emissions generated at the Salem Gas Plant include carbon monoxide (CO), nitrogen

particulate matter (PM

sulfur dioxide (S02), hydrogen sulfide (H

volatile organic compounds (VOC). The sitewide emissions associated with the proposed

production increase will not trigger CAAPP (Title

V) applicability since the emissions of all

criteria pollutants are below 100 tpy. Single HAP emissions are not above 10 tons per year

(tpy) and the aggregate HAP emissions are below 25 tpy, so MACT will not apply to the

Salem Gas Plant. Since the Water Injection Plant and North Battery are located over '!.

mile from the Salem Gas Plant, the potential emissions from these facilities are not

in determining federal permit applicability. Since the South Battery

adjacent to the Salem Gas Plant, emissions from both locations will be evaluated together

to determine federal permit applicability.

This document includes the required IEPA forms, area maps, plot plans, emissions data,

permit fee, process flow diagrams, and process descriptions, to demonstrate compliance

Construction Permit Application

with all applicable state and federal air permitting requirements.

summary of the existing

and proposed emissions is summarized in Tables

Bioreactor Ven1 Emissions

MBtu/hr Dehy Reboiter

Equipment FU!=Iitives

bbl Oil Slack Tank #1

400 bbl Oil Stock Tank #2

Eauipment Fuqitives

mg E miSSions -

Loading Emissions

Equipment Fugitives

. ,"\.':::PM'. ...

400 bbl Oil Stock Tank #1

bbl Oil Stock Tank #2

Loadinq Emissions

Equipment Fugitives

Construction Permit Application

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

PROCESS DESCRIPTION

OVERVIEW OF THE PROCESS

The equipment supplied

by NATCO for this project will integrate with existing and new

to be supplied by Citation Oil and Gas to enable value to be captured from

casing head gas.

The following process description is taken from the design

documentation provided

by NATCO, Proposal No. 2M994181 Rev. 2.

Heating and Separation

Associated (sour) process gas and liquids from field compression will enter the plant at

50 psig. It is expected that a primary gas-liquids separator will be supplied

by the client at this point of the system.

Gas from the primary separator will be routed to

the NATCO Shell-Paques

unit Free liquids are removed from the gas stream by a NATCO

vertical separator, followed

by a NATCO MistTrap coalescer.

These separators are vital

to the overall performance of the system

by preventing hydrocarbon liquids from entering

the H2S contactors / scrubbers. Because of the configuration of the system with first-stage

field compression and buried flow lines to the main plant, it

is expected that the gas will

enter the plant at a temperature value of between 60-70'F. Optimum process gas

temperature range for this Shell Paques design

is 60-85°F to allow for suitable temperature

difference between the process gas and Paques process solution. An in-line electric gas

is supplied within the pre-treat system to provide suitable gas temperature

conditions to the Shell Paques

unit The PLC control panel will have the capabilities to

operate the heater if the gas temperature is lower than 60°F, and/or to maintain a constant

85°F gas temperature to the H

S Gas Scrubbers.

Wet (sour) liquids from the plant inlet gas separator and the two NATCO supplied

separators are recycled back into the process. Treated gas from the H

routed to a conventional gas-liquid separator that uses a coarse vane pack demister (in lieu

of a wire mesh demister). A spray nozzle is provided in this separator to enable in-situ

water-washing of the demister section to scrub out any residual Paques solvent from the

Sulfur Recovery

Scrubbed process gas is routed to the two H

S Scrubber vessels (piped in series), where

the gas is allowed to contact the Paques solvent for removal of H

S from the process

stream, The Paques solvent

is discharged from the H

S Scrubbers to the Bio-regeneration

system, which regenerates the solvent and the bacteria produce elemental sulfur.

A slipstream of solvent is routed to a decanting centrifuge (supplied

by client) for collection

and removal of elemental sulfur in solid (paste) form. The sulfur is suitable for dumping into

a waste bin. Filtrate liquid from this process

is allowed to drain into a Filtrate Tank, where it

is pumped back to the regeneration system.

Construclion Permit Application

3. Refrigeration Unit

Process Cooling

Process cooling for the MRU and process cooling for the NATCO Shell Paques Unit are

by a closed loop refrigerant compression / condensing unit. This unit is a two-

stage Arial compressor with a discharge cooler / condenser and a receiver / accumulator

vessel. Refrigerant liquid from the receiver / accumulator are discharged

in parallel to the

MRU Chiller (evaporator) and to the Chilled Water evaporator.

Refrigerant vapors from the MRU chiller are routed to the compressor first stage suction.

The refrigerant compressor controls the pressure

on the evaporator shell. This indirectly

controls the process temperature

in the Cold Separator, which essentially controls the

amount of liquids allowed to condense from the process gas stream.

Refrigerant vapors from the Chilled Water evaporator are routed to the compressor second

stage suction, thus acting somewhat

as an economizer. Routing to the second stage

suction is vital

to prevent over-cooling of the chilled water to prevent inadvertent freezing of

the Paques solvent. A back-pressure valve

is supplied on the refrigerant vapor line to

provide further means of controlling the refrigerant bath temperature.

Liquids Recovery from Process Gas

The treated gas, with

S concentration of 4-10 ppmv, is further compressed in two

stages to a pressure of 550 - 785 psig, which

is more suitable for recovery of LPG and

heavier fractions. At these pressures the process gas

is chilled to a temperature of -20°F

in a conventional Mechanical Refrigeration Unit (MRU). The outlet gas is combined from

the MRU, stabilizer overhead, and wet condensate feed drum. At this time it

that this gas stream will be flared or possibly used to generate electrical power

5. Liquids Stabilization

Liquids from the Stabilizer Feed Drum, and liquids from the MRU Cold Separator are routed

to the Stabilizer Column. The Stabilizer

is a non-refluxed reboiled absorber. Depending on

the operating conditions of the stabilizer system, the product liquids may

be discharged to

LPG storage tanks, or they may be "spiked" into the crude oil storage tanks. Overhead gas

from the Stabilizer

is routed to the outlet gas system.

6. Hydrate Inhibition and Stabilizer Heat Medium Supply

The MRU unit is equipped with a dual-purpose Ethylene Glycol (EG) heating and injection

unit. The injection unit functions as a conventional reconcentrator to deliver a controlled

rate of lean (80%) EG to the MRU Gas-Gas Heat Exchanger and Chiller. The lean EG is

distributed as a thin film on the cold surfaces of the heat exchangers and piping, and

function to dissolve into solution any hydrates that form from the gas stream due to the

cooling processes. The rate is controlled to insure that the maximum dilution of EG is 10%

(thus minimum 70% rich EG). The diluted

EG solution is collected in the three-phase MRU

Cold Separator and returned to the

EG reconcentrator unit.

A separate closed-loop hot

EG stream is pumped through the Stabilizer Reboiler tube

bundle. This stream provides the energy required to condition the liquid product to the

Conslruciion Permit Application

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

desired vapor pressure value. The return EG stream is returned directly to the EG reboiler

firetube section.

THE BIO-DESULFURIZATION PROCESS

The following is taken from the Paques document entitled,

STREAMS Using THIOPAQ® TECHNOLOGY,

dated March 2003.

The THIOPAO process can be summarized

in a simplified block diagram:

Figure 2-1 Block diagram of the THIOPAO® process.

The gas enters a wet scrubber, typically a packed column,

and is desulfurized with a slightly

alkaline fluid. A demister section prevents carry-over of fluid. The cleaned gases leave the

scrubber at the top.

The spent scrubber liquid

is collected in the bottom of the scrubber and directed to the

In the reactor bacteria convert, under the consumption of oxygen, the dissolved

sulfide into solid elemental sulfur, thereby regenerating caustic soda. The sulfur is separated

as a solid and the sulfur slurry can optionally be pumped into a sulfur recovery unit. In this

unit the slurry can be dewatered

and discharged as a cake for further use. The liquor is

returned to the reactor. The bioreactor effluent is recycled to the scrubber for renewed

S. From the system a small bleed stream is taken in order to prevent built up of

Process Chemistry

The THIOPAO® process for treatment of gas can be considered

as a caustic scrubber

combined with a bioreactor in which the spent caustic solution is regenerated. A flow

diagram of the process

is shown in Figure 2-1.

In a scrubber hydrogen sulfide is absorbed under alkaline conditions, i.e. at pH 8-9. The

absorption of H

S proceeds according to the following equation:

From this equation it follows that alkalinity is consumed.

Construction Permit Application

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

S removal efficiencies are feasible, because the H

S concentration in the washing

liquid entering the scrubber will

be virtually zero due to the high activity in the bioreactor.

In the THIOPAO® process, the alkalinity consumption due to the absorption of H

completely compensated as a result of the oxidation of hydrogen sulfide to elemental sulfur

which proceeds under oxygen limited circumstances:

The THIOPAO® process uses bacteria of the genera

to oxidize the hydrogen

sulfide. Since there

is a significant biological overcapacity in the reactor, variations in the

S loading rate can easily be handled.

«5%) of the dissolved sulfide will be completely oxidized to sulfate according

40, -'t 2NaHS0

As a result of this reaction, caustic soda is required to neutralize the formed sulfuric acid.

to the production of a small bleed stream. The bleed stream (containing sodium

salts and some sulfur)

is harmless and can in most cases easily be discharged.

to caustic scrubbers the bleed stream is negligible and expensive treatment of

spent caustic is not necessary. Obviously caustic consumption figures for THIOPAO@

technology are significantly lower as for caustic scrubbers (savings are greater than 94%).

After dewatering, the produced sulfur

can be used for the production of sulfuric acid or as a

Process Configuration

The process of removing H

S from biogas consists of three main sections. These include

an absorber, an aerobic (biological) reactor and a sulfur separation step. A schematic

overview of the system

is shown in Figure 2-2.

Construction Permit Application

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

SULFUR RECOVERY

Figure 2-2 THIOPAQ® process for biogas desulfurization.

1. Absorption section

Hydrogen sulfide is absorbed in an absorption tower. The gas enters at the bottom of the

column and flows upwards. The washing liquid is sprayed downwards from the top by

means of nozzles. The laden washing liquid is led to the aerobic reactor in which the

sulfides are oxidized.

2. Reaction section, aerobic reactor

The aerobic reactor contains the micro-organisms that oxidize the absorbed sulfides into

elemental sulfur. Reactor internals are used to ensure complete mixing and optimal mass

transfer of oxygen into the liquid phase. The volume of

the aerobiC reactor is designed in

accordance with the optimal activity of the bacteria.

The exhaust air from the reactor can normally be emitted without further treatment. The

reactor effluent is recycled to the absorber column to serve as scrubbing liquid.

An important process parameter is the amount of air being pumped into the reactor. This is

controlled accurately in order to minimize the formation of sulfate. The air dosage is therefore

automated based

on the oxygen content. This, and all other controls are controlled by a

3. Sulfur recovery section

The produced sulfur is separated from the liquid by means of a settling unit. Part of the

reactor contents is circulated over the settler to maintain the desired dry solid content in the

system. The dry solids content of the settler underflow

is typically between 10 and 20%.

Constructlon Permit Application

The sulfur slurry can be dewatered further by means of a decanter centrifuge or filter press

to obtain a dry-solid concentration of about 60-65%.

The sulfur will have a purity of about 95-98% on dry basis, the remainder is biomass. The

can be used as a raw material for the production of sulfuric acid at sulfuric

acid plants with facilities for burning waste acid and slurries.

In some countries the

biological produced sulfur

can be applied as a fertilizer. At this time, Citation proposes to

remove the sulfur

by truck for disposal in a nearby solid waste landfill.

Cons/ruction Permit Application

PROCESS FLOW

1------------------------------------------------------------------------------------

S) from Gas

Gathering System

Electric Inline

Bio-Desulfurization

Flare Stack

Reciprocating

Electric Compressor

Field Drip Trap

Fugitive Component Emissions

600 MCFD Residue Gas

Pressurized

Vapor Recovery into

Gas Gathering System

Pressurized NGL

Product Loading

Figure 3-1 Simplified Process Flow Diagram of the

Salem Gas Plant

Construction Permit Application

FACILITY DIAGRAMS

• Plot Pia n - North Battery

• Plot Plan - Water Injection Facility

• Plot Plan - South Battery

• Plot Plan - Salem Gas Plant

• Aerial Photo - North Battery

• Aerial Photo - South Battery and Proposed Flare and Gas Plant Locations

• USGS Topographic Map

Construction Permit Application

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

Oil Siock Tank Oil Sieck Tank

Equipment Leak Fugitives

Gunbarrel Tanks (2)

Freewater Kno,:kou\ Tanks (6)

EQUIPMENT LEGEND

NORTH BATIERY FLARE

GUNBARREL TANK #1

GUNBARREL TANK #2

FREEWATER KNOCKOUT TANK #1

FREEWATER KNOCKOUT TANK #2

FREEWATER KNOCKOUT TANK '#3

FREEWATER KNOCKOUT TANK #4

FREEWATER KNOCKOUT TANK #5

FREEWATER KNOCKOUT TANK #6

NORTH BATIERY FUGITIVES

North Battery Plot Plan

Marion County, Illinois

N 38" 34' 49.3" W 89' 0' 32.1"

Environmental Engineering, Inc.

Pipeline Drl1in<lge

Tanks are rOlllcd

Waler InjecHon Plant

EQUIPMENT LEGEND

LIME SUPPLY TANK

PIPELINE DRAINAGE

WVl WATER INJECTION PLANT VENT

WATER INJECTION PLANT FUGITIVES

EQuipment Leak Fugilives

Injection Plant Plot Plan

Marion County, Illinois

N 38" 33' 58.8" W 89" l' 25.2"

Em'iroomental Engineering,

Storage BlJildings

Equipment Leak Fugitives

Gunbarrel Tanks (2)

EQUIPMENT LEGEND

S11 OIL STOCK TANK

812 OIL STOCK TANK

513 CONDENSATE TANK

GUNBARREL TANK # 1

GUNBARREL TANK #2

FREEWATER KNOCKOUT TANK #1

KNOCKOUT TANK #2

FREEWATER KNOCKOUT TANK #3

FREI:WATER KNOCKOUT TANK #4

FREEWATER KNOCKOUT TANK #5

FREEWATER KNOCKOUT TANK #6

SFt SOUTH BATTERY FUGITIVES

Freewater Knockout Tanks (6)

South Battery Plot Plan

Marion County, Illinois

N 38" 33' 19.9" W 89"

Environmental Engineering, Inc.

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

North.Northwesr

NGL Product Tanks (3)

Control Building

Refligeration Plant

Glycol DehydratOf

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

Chilled Water Skid

l:lecllic Plant

Bio-Desulfurization Plant

Bioreactor Venl

EQuipment Leak Fugitives

EQUIPMENT LEGEND

GL yeOL DEHYDRATOR REBOILER

NGL PRODUCT TANK#1

NGL PRODUCT TANK#2

NGL PRODUCT TANK#3

Salem Gas Plant Plot Plan

BIOREACTQR VENT

PFl1 GAS PLANT FLARE

Marion County, llIinois

PF1 GAS PLANT FUGITIVES

N 38" 33' 21.8" W 89" 0' 52.0"

Environmental Engineering, Inc.

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

Aerial Photo - North Battery

Aerial Photo - South Battery and Proposed Salem Gas Plant Site

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

Name: CENTRALIA EAST

Scale: 1 inch equals 2000 feel

34' 05.96" N 089

Caplion: Cilalion Oil and

Salem Unil Area Map

Marion Counly, Illinois

STATE REQUIREMENTS FOR PERMIT TO CONSTRUCT

In reviewing the potential applicability of state emissions standards, Citation has

summarized the pertinent Subparts and Sections that are included below.

SUBTITLE B: AIR POLLUTION, CHAPTER I: POLLUTION CONTROL BOARD

a: PERMITS AND GENERAL PROVISIONS

C: PROHIBITIONS

Section 201.146

Exemptions from State Permit Requirements

c) Each fuel burning emission unit for indirect systems and for heating and

reheating furnace systems used exclusively for residential, or commercial

establishments using gas and/or fuel oil exclusively with a design heat input

capacity of less than 14.6 MW (50 MMBtu/hr) , except that a permit shall be

required for any such emission unit with a design heat input capacity of at least

10 MMBtu/hr that was constructed, reconstructed or modified after June 9, 1989

and that is subject to 40 CFR 60, Subpart 0;

Citation will be operating

gas-fired glycol dehydrator reboiler (PH

rated at 300 MBtu/hr.

Therefore, this unit

exempt from state permitting requirements.

k) Safety devices designed to protect life and limb, provided that a permit is not

otherwise required for the emission unit with which the safety device

is proposing to operate the proposed air-assisted flare during times that the plant

experiences mechanical malfunction, power outages,

or other causes that are beyond their

operational control. The operation of the flare in these scenarios will be required to prevent

of highly concentrated H

S gas to the atmosphere.

Storage tanks of:

Organic liquids with a capacity of less than 37,850 I (10,000 gal),

provided the storage tank is not used to store any material listed as a

hazardous air pollutant pursuant to Section 112(b) of the Clean Air Act,

and provided the storage tank

is not subject to the requirements of 35

III. Adm. Code 215.583(a)(2), 218.583(a)(2) or 219.583(a)(2);

Any size containing exclusively soaps, detergents, surfactants, waxes,

glycerin, vegetable oils, greases, animal fats, sweetener, corn syrup,

aqueous salt solutions or aqueous caustic solutions, provided an

organic solvent has not been mixed with such materials; or

Any size containing virgin or re-refined distillate oil, hydrocarbon

condensate from natural gas pipeline or storage systems, lubricating

oil or residual fuel oils.

and Gas Co/paratian

Construction Permit Application

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

Threaded pipe connections, vessel manways, flanges, valves, pump seals,

pressure relief valves, pressure relief devices and pumps;

Sampling connections used exclusively to withdraw materials for testing and

All storage tanks of Illinois crude oil with capacity of less than 151,400 I

(40,000 gal) located

on oil field sites;

All organic material-water single or multiple compartment effluent water

separator facilities for Illinois crude oil of vapor pressure of less than 34.5 kPa

Piping and storage systems for natural gas, propane and liquefied petroleum

210-bbl (8,820 gallon) condensate tank (ST3) for collecting

condensate produced from

the collection of casing head gas in the field. In addition,

ancillary equipment associated with the bio-desulfurization unit, separators, fugitive

components, and

NGL product tanks are exempt from state permitting requirements.

SUBTITLE B: AIR POLLUTION, CHAPTER I: POLLUTION CONTROL BOARD

c: EMISSION STANDARDS AND LIMITATIONS FOR STATIONARY

PART 212 VISIBLE AND PARTICULATE MATTER EMISSIONS

Subpart B Visible Emissions

Section 212.123 Visible Emissions Limitations for All Other Emission Units

Citation will be operating

gas-fired glycol dehydrator reboiler (PH1) and air-assisted flare

that will comply with the requirements

PART 214 SULFUR LIMITATIONS

SUBPART K:PROCESS EMISSION SOURCES

Section 214.301 General Limitation

Citation will be operating

biovent (PV1) with trace amounts

S and air-assisted flare

that will combust

during normal operations. These units will comply with

the requirements

ofthis Section.

PART 216 CARBON MONOXIDE EMISSIONS

SUBPART B: FUEL COMBUSTION EMISSION SOURCES

Section 216.121

Fuel Combustion Emission Sources

This section does not apply to the fuel combustion sources at the Salem

Construction Permit Application

PART 217 NITROGEN OXIDES EMISSIONS

B: NEW FUEL COMBUSTION EMISSION SOURCES

Section 217.121

New Emission Sources

This section does not apply

to the fuel combustion sources at the Salem

PART 232 TOXIC AIR CONTAMINANTS

D: SOURCE IDENTIFICATION AND REPORTING REQUIREMENTS

Section 232.430

Emissions Report

This section does not apply

to the emission sources at the Salem Gas Plant

PART 243 AIR QUALITY STANDARDS

SUBPARTB:STANDARDSANDMEASUREMENTMETHODS

Section 243.120

Standards. The ambient air quality standards for PM-10 are:

An annual arithmetic mean concentration of 50 micrograms per cubic

A maximum 24-hour concentration of 150 micrograms per cubic meter,

be exceeded more than once per year

The emissions sources at the Salem Gas Plant will comply with these standards.

Section 243.122

Sulfur Oxides (Sulfur Dioxide)

Primary Standards. The primary ambient air quality standards for sulfur

oxides measured as sulfur dioxide are:

An annual arithmetic mean concentration of 80 micrograms per cubic

meter (0.03 ppm); and,

A maximum 24-hour concentration not to be exceeded more than once

per year of 365 micrograms per cubic meter (0.14 ppm).

Secondary Standard. The secondary ambient air quality standard for sulfur

oxides measured as sulfur dioxide is a maximum 3-hour concentration not to

be exceeded more than once per year of 1,300 micrograms per cubic meter

The emissions sources at the Salem Gas Plant will comply with these standards. In

particular, the operation

the air-assisted flare (PFL

for safety purposes during times of

plant shutdowns or mechanical failure have been modeled to demonstrate compliance with

the S02 standards.

The resulting predicted impacts are included in Section

Construction Permit Application

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

Section 243.123

Carbon Monoxide

Standards. The ambient air quality standards for carbon monoxide are:

A maximum 8-hour concentration

to be exceeded more than once

10 milligrams per cubic meter (9 ppm); and,

A maximum i-hour concentration not to be exceeded more

per year of 40 milligrams per cubic meter (35 ppm).

The emissions sources at the Salem Gas Plant will comply with these standards.

Section 243.124

Nitrogen Dioxide

a) Standard. The ambient air quality standard for nitrogen dioxide is an annual

arithmetic mean concentration of 100 micrograms per cubic meter (0.05 ppm).

The emissions sources at the Salem Gas Plant will comply with these standards.

Section 243.125

The ambient air quality standard for ozone is 0.12 ppm (235

micrograms per cubic meter) maximum

i-hour concentration not to be exceeded

on more than one day per year.

The emissions sources at the Salem Gas Plant will comply with these standards.

Section 243.126

a) Standard. The ambient air quality standards for lead and its compounds are 1.5

micrograms per cubic meter, maximum arithmetic mean average over a calendar

The emissions sources at the Salem Gas Plant will comply with these standards.

Construction Permit Application

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

FEDERAL REQUIREMENTS FOR A PERMIT TO CONSTRUCT

New Source Performance Standards (NSPS)

The emissions from the proposed facility will meet the requirements of any applicable

NSPS as listed under Title

40 Code of Federal Regulations (CFR) Part 60, promulgated by

the EPA under FCAA,

Subpart Dc--STANDARDS OF PERFORMANCE FOR SMALL INDUSTRIAL-

COMMERCIAL-INSTITUTIONAL STEAM GENERATING UNITS

Citation will be operating

gas-fired glycol dehydrator reboiler (PH

Therefore, this section does not apply per 60.40c(a) since it

rated <10MMBtulhr.

Kb-Standards of Performance for Volatile Organic Liquid Storage Vessels

Storage Vessels)

Construction,

Reconstruction, or Modification Commenced After July

gallon) condensate tank (ST3) for collecting

condensate produced from the collection

in the field and pressurized

NGL product tanks. These tanks are exempt from Kb standards under

(d) This subpart does not apply to the following:

(2) Pressure vessels designed to operate in excess of

kPa and without emissions to the

(4) Vessels with

design capacity less than or equal to

used for petroleum or

condensate stored, processed, or treated prior to custody transfer.

Subpart KKK-Standards of Performance for Equipment Leaks of VOC From

Onshore Natural Gas Processing Plants.

Citation will be extracting natural

liquids from the casing head

and will therefore be

required to comply with the requirements of this section. However, since the Salem

maximum production rate of

MMscfd, it will qualify for an exemption of

monitoring and recordkeeping pursuant to 60.633(d):

(d) Pumps in light liquid service, valves in gas/vapor and light liquid service, and pressure relief

devices in gas/vapor service that are located at

non fractionating plant that does not have the design

standard cubic meters per day (scmd) (10 million standard cubic feet per

day) or more of field

are exempt from the routine monitoring requirements

§§60.482-2(a)(1)

and 60.482-7(a), and paragraph (b)(1)

of this section.

Construction Permit Application

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

Since the air-assist flare will be used to control certain components applicable to NSPS

KKK standards, the flare will comply with the applicable requirements

Subpart A, Section

regarding exit velocity and heating value.

Subpart LLL-Standards of Performance for Onshore Natural Gas Processing: S02

NSPS Subpart LLL is applicable to the gas sweetening operations at the Salem Gas Plant.

Citation will certify that the facility

is exempt from the control requirements of the LLL

standards because it has a design capacity less that

2.0 L TID of H2S in the acid gas

(expressed as sulfur). Therefore, Citation shall keep, for the life of the facility, an analysis

demonstrating that the facility's design capacity

is less than 2.0 L TID of H2S expressed as

sulfur pursuant

to § 60.640(b):

(b) Facilities that have

design capacity

long tons per day (L TID) of hydrogen sulfide

sulfur) are required to comply with §60.647(c) but are not

to comply with §§60.642 through 60646.

40 CFR Part 61, National Emission Standards for Hazardous Air Pollutants

The emissions from the proposed facility will meet the requirements of any applicable

as listed under 40 CFR Part 61, promulgated by EPA under FCAA, §112, as

There are no NESHAPs under 40 CFR

applicable to the Salem Gas Plant.

40 CFR Part 63, NESHAP for source categories. The emissions from the proposed

facility will meet the requirements of any applicable maximum achievable control

technology standard as listed under 40 CFR Part 63, promulgated by the EPA under FCAA,

as listed under Chapter 113, Subchapter C of this title (relating to National

Emissions Standards for Hazardous Air Pollutants for Source Categories (FCAA §112, 40

Plant will not constitute

of hazardous air pollutants

by 40 CFR.63 or FCAA

Therefore, the plant will not be subject to any

emission standards under Subpart HH

40 CFR Part 51.165, Nonattainment Review

If the proposed facility

is located in a nonattainment area. it shall comply with all applicable

in this chapter concerning nonattainment review.

The Salem Gas Plant

is located in Marion County which is not

designated nonattainment

Construction Permit Application

40 CFR Part 52.21, Prevention of Significant Deterioration (PSD) Review

If the proposed facility is located in an attainment area, it shall comply with all applicable

in this chapter concerning PSD review.

This facility is

new source that will not exceed the major source threshold of 250 tons per

year. Therefore, PSD is not applicable to this project.

Construction Permit Application

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

EMISSION SOURCES AND CONTROLS

Emission sources from the Salem Gas Plant will include truck loading, gas flare, glycol

dehydrator reboiler, glycol dehydrator, bioreactor

and equipment fugitive components. The

proposed controls and the emissions bases for the affected sources are listed below.

Citation will operate one 250

hp, 2-stage electric driven compressor for inlet compression.

There will be no emissions associated with the operation of this unit.

electric line heater will be used to provide heat to the inlet gas at the plant. There will

be no emissions associated with the operation of this unit.

Combustion Units (Glycol Dehydrator Reboilerl

Citation will operate a gas fired reboiler to supply heat

to the glycol dehydration unit. The

reboiler is rated at 300 MBtu/hr and will burn sweet residue gas. NO

and CO emissions

from these units will

be quantified using current emission factors from AP-42, Fifth Edition,

(NOx & CO) and 1.4-2 (VOC, S02, & PM), NOx

emissions will be controlled

100 Ib-NOx/MMscf of natural gas burned and 84 Ib-CO/MMscf of natural gas burned.

Controll Emission

Good combustion and

sweet gaseous fuels

Good combustion and

sweet gaseous fuels

Good combustion and

sweet gaseous fuels

Good combustion and

sweet gaseous fuels

Good combustion and

sweet gaseous fuels

The flare at the Salem Gas Plant will

be designed and operated according NSPS 60.18

requirements. Streams that will be vented to the facility flare will qualify as high Btu

streams. Typical Btu content for vent streams will range between 1,100 and 1,250 Btu/scf,

Composition of flared streams

is listed in Appendix B. The flare calculation worksheet in

Appendix B demonstrates compliance with the maximum tip velocity and minimum heating

value requirements of 60.18. Air-assist will be employed

to maintain smokeless operation.

Construction Permit Application

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

Citation is proposing to operate the proposed air-assisted flare during times that the plant

experiences mechanical malfunction, power outages, or other causes that are beyond their

. control. The operation of the flare

in these scenarios will be required to prevent the release

of highly concentrated

H2S gas. Emissions are based on a maximum production of 1.0

MMscfd inlet gas and are estimated using gas volume and composition data provided

NATCO process simulation software and mass balance of all contributing vent sources.

Two scenarios were

run for the flare including the flaring of residue gas during normal

operation and the worst-case S02 emissions that will occur during the flaring of sour inlet

gas during plant downtime. The worst-case emissions from each scenario are listed in the

emissions summary with the maximum allowed operation of the flare while burning sour

gas of 480 hours per year, or the equivalent of approximately

20 days of continuous flaring.

Controll Emission

Good combustion,

0.0641 Ib/MMBtu

compliance with NSPS

Good combustion,

compliance with NSPS

Good combustion,

compliance with NSPS

Good combustion,

compliance with NSPS

Bioreactor Vent - Bioreactor vent will emit trace quantities of hydrocarbon emissions

H2S. Because of the relatively insignificant quantities of these pollutants, the vent will emit

uncontrolled to the atmosphere. Emissions are based on a maximum production of 1.0

MMscfd inlet gas and are estimated using gas volume and composition data provided by

NA TCO process simulation software.

Glycol Dehydrator Vent -

glycol dehydrator vent. is routed to the facility flare. The

will control the trace organics In the vent stream with at least 98% destruction effiCiency.

Emissions are based

on a maximum production of 1.0 MMscfd inlet gas and are estimated

using gas volume and composition data provided by NATCO process simulation software.

Tank Working and Breathing Losses

A 210-bbl condensate storage tank

is used for collection of drip trap condensate in the field.

Vapors from the tank are collected with a vapor recovery unit and routed back into the Gas

. Gathering System. Therefore, there are no emissions from the tank released to the

atmosphere. Annual working

and breathing losses from the tanks are estimated using the

EPA Tanks 4.09b emissions model. Short-term emissions from the tanks (Lmax) are

calculated using TCEO Storage Tank Technical Guidance by multiplying the working losses

Construction Permit Application

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

by the maximum fill rate and dividing by the tank capacity and number of tank turnovers.

Potential emissions are based

on a maximum production of 120 BOPD.

Condensate Loading Losses

Condensate loading will be accomplished using submerged fill-pipe to atmospheric trucks. 0

Uncontrolled emissions are estimated using current AP-42 emission factors from Chapter

5, Section 5.2.2.1.1 and site-specific data. Since loading of the collected drip trap

condensate will occur

at this location, loading emissions are based on a maximum loading

rate of 120 BOPD.

Equipment Fuqitives

Equipment fugitive emissions were estimated using facility component counts

emissions factors derived for oil and gas production facilities from SOCMI

factors. Emissions from fugitives are estimated usi ng a laboratory analysis of the inlet gas

and estimated compositions of the tank vapors.

Since the Salem Gas Plant will trigger NSPS KKK applicability, Citation will implement a

Leak Detection and Repair program pursuant to the referenced section with a 10,000 ppm

leak definition and daily walkthroughs to visually inspect for leaks

.. The proposed fugitive

emission counts for the plant are very conservative and will be refined after construction.

NSPS KKK, daily

Daily walkthrough

:quipment Lea

emission factors

emission factors

Construction Permit Application

AIR DISPERSION MODELING

Upon request, Citation will conduct refined air dispersion modeling to demonstrate that the

all pollutants from the Salem Gas Plant are in compliance with applicable

state and federal standards. Citation has run preliminary dispersion modeling to determine

with impact of the proposed worst-case S02 emissions associated with the flaring of sour

gas during times that the plant experiences downtimes due

to mechanical failure, electrical

outages, or other conditions beyond their control. The results of the initial modeling are

in the table below. The maximum predicted ground level concentrations (GLCs) of

S02 that occur from the flare stack are less than 5% of the 3-hr standard of 1 ,300

Model Conditions: Flare stack modeled

40.0 feet and emission rate = 307 Ib/hr.

National Ambient Air Quality Standards (NAAQS) Analysis

Pollutant> High,

", ' : Predicted'

. "'High' ';.:'

[1] SO, GLCs compared to federal SO, NAAQS 3-hour, 24-hour and annual limits.

[2]. Background concentrations not considered in this analysis but expected to be insignificant.

[3], GLCs do not include "nearby" retrieval source contributions,

Construction Permit Application

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

Citation has completed a 197-FEE Form - Fee Determination for Construction Permit

Application which

is included in Appendix A of this document. The amount submitted

includes a fee of $5,000

for the synthetic minor construction permit application with an

additional $4,000 for the first emission unit (flare, PFL-1) and an additional $3,000 for the

other proposed emission units (glycol dehydrator reboiler PH-1, bioreactor vent

210-bbl condensate tank ST-3). Thus, the fee submitted with this application

Construction Permit Application

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

Illinois Environmental Protection Agency

Of Air Pollution Control -- Permit Section

Springfield. Illinois 62794-9506

Application Page

Application For

For Illinois EPA use only

Construction Permit

Permit number:

(For CAAPP & FESOP Sources only)

This form IS to be used

CAAPP and FESOP sources to supply Information necessary to obtain a construction permit. Please

attach other necessary information and completed CAAPP forms regarding this construction/modification project

Source Information

Source name:

Salem Unit - Gas Gathering and NGL Sales Project

Source street address:

2302 Hoots Chanel Road Odin IL 62870

Is the source located within city limits?

Township name:

Owner Information

Citation Oil & Gas Com.

8223 Willow Place South

Operator Information

different from owner)

Applicant Information

Who is the applicant?

All correspondence to: (check one)

Attenflon name and/or title for written correspondence:

Lee Ann Eisom, Environmental Coordinator

Technical contact person for application:

Contact person's tele'PhoAe number:

t.ilJlt:tr::~/I~

Sp,:

ThiS Agency IS authOriZed 10 require and you must disclose thiS Information under 415lLCS 5/39. Failure to do so could result In the

apPlical,onLD

being denied and penalties under 415 lLCS 5 el seq. It is not necessary to use this form in providing this information. Thisformhasbeen

approved by the forms monagemeni center.

Printed on Recycled Paper

Page 1 of 2

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

Application Page

Summary Of Application Contents

Does the application address whether the proposed project would

constitute a new major source or major modification under each of the

following programs:

a) Non-attainment New Source Review - 35 lAC Part 203;

of Significant Deterioration (PSD) - 40 CFR 52.21;

c) Hazardous Air Pollutants: Regulations Governing Constructed or

Reconstructed Maior Sources - 40 CFR Part 63?

Does the application identify and address all applicable emissions

standards, including those found in the following:

a) Board Emission Standards - 35 lAC Chapter I, Subtitle B;

b) Federal New Source Performance Standards -

40 CFR Part 60;

c) Federal Standards for Hazardous Air Pollutants - 40 CFR Parts 61

Does the application include a process flow diagram(s) showing all

emission units and control equipment,

and their relationship, for which a

oermit is beinq sought?

Does the application include a complete process description for the

emission units and control equipment for which a permit is being sought?

Does the application include the information as contained in completed

CAAPP forms for all appropriate emission units and air pollution control

equipment, listing all applicable requirements and proposed exemptions

from otherwise applicable requirements,

and identifying and describing

any outstanding legal actions by either the

USEPA or the Illinois EPA?

The use of "APC" application forms is not appropriate for

applications for CAAPP sources.

CAAPP forms should be used to

supply information.

If the application contains TRADE SECRET information, has such

information been properly marked and claimed, and have two separate

copies of the application suitable for public inspection and notice been

submitted, in accordance with applicable rules and regulations?

Not Applicable,

information in this

Does the application include a complete form 197-FEE, "FEE

DETERMINATION FOR CONSTRUCTION PERMIT APPLICATION" for

the emission units and control equipment for which a permit for

construction or modification is being sought?

Note1: Answering "No" to any of the above may result in the application being deemed Incomplete.

Signature Block

This certification must be signed by a responsible official. Applications without a signed

certification will

be deemed incomplete.

I certify under penalty of law that, based on information and belief formed after reasonable

inquiry, the statements and information contained in this application are true, accurate and

Environmental Coordinator

AUTHORIZED SIGNATURE

TITLE OF SIGNATORY

TYPED OR PRINTED NAME OF SIGNATORY

Note 2: An operating permit for the construction/modification

permitted In a construction permit must be

obtained by applying for the appropriate revision to the source's CAAPP permit, ifnecessary.

Printed on Recycled Paper

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

ILLINOIS ENVIRONMENTAL PROTECTION AGENCY

2171782-2113.

P.O. Box 19506,

SPRINGFIELD, ILLINOIS

Scott, Director

7002 3150 0000 1106 7193

NOTICE OF ADDITIONAL CONSTRUCTION PERMIT APPLICATION FEES

Citation Oil & Gas Corp

8223 Willow place South, Suite 250

Houston, Texas 77070-5623

Applicant's Designation:

Construction of:

Additional Fee Now Due:

Gathering and NGL Sales

2302 Hoots Chapel Road, Odin

This letter provides written notice that the Illinois EPA has determined that

the application for construction permit referenced above is subject to

additional application fees under Section 9.12 of Illinois' Environmental

Protection Act (Act).

Based on its initial review of the application for purposes of fees, the

Illinois EPA has determined that an additional fee of $1,000.00 is due.

You have £Q days to remit the assessed fee and revised Form 197-FEE to the

Illinois EPA. Please submit payment to the Illinois EPA at the following

address. Make either a check or money order payable to: "Illinois

Environmental Protection Agency" and reference both the application and 1. D.

numbers assigned above. The Illinois EPA will not accept cash payments.

Illinois Environmental Protection Agency

Division of Air Pollution Control

Permit Section (MC 11)

Springfield, Illinois 62794-9506

fee is not submitted within 60 days, the Illinois EPA is

not required to further review or process this application and the statutory

deadlines in Section 39(a) of the Act cease to apply to the application until

such time as the proper fee is submitted. The Illinois EPA may also deny the

application for failure to pay the appropriate fees. Also, please be aware

that the Illinois EPA's continuing review of the application during this 60-

day period may identify additional fees that are due or deficiencies in the

technical information that has been submitted in "the application.

The following explains the Illinois EPA's determination with respect to the

fees that are due for this application.

ROD R. BLAGOJEVICH, GOVERNOR

PRINTED ON RECYCLED PAPER

A construction permit for..a new synthetic minor ($5,000.00) plus first

new emission unit ($4,000.00) plus additional four units (4 x $1,000.00

= $4,000.00) for a fee total of $13,000.00. The $12,000.00 payment,

submitted by you, will be applied asa credit toward the $13,000.00

total construction permit application fee.

If you do not agree with the Illinois EPA's fee determination for this

application, you-may ask for reconsideration. A request for fee

reconsideration must include a new certified estimate (e.g., Form 197-FEE) of

the fees that are due and payment for any additional fees that are due based

on your new estimate.

TwO copies of this fee reconsideration request must be

submitted and must include any supporting material used in the new -estimate.

On all submittals, please reference both the application and

assigned above.

If you have any questions on this fee determination, please call George Kennedy

E. Sutton, P.E.

Manager of Permit Section

Division of Air Pollution Control

Illinois EPA, FOS Region 3

Paulette Blakes

ILLINOIS ENVIRONMENTAL PROTECTION AGENCY

1021 NORTH GRAND AVENUE EAST,

Box 19506, SPRINGfIELD, ILLINOIS 62794-9506 - ( 217) 782-2113

ROD R. BLAGOJEVICH, GOVERNOR

Citation Oil and Gas Corporation

Attn: Lee Ann Elsom

8223 Willow Place South, Suite

Application No.:

I.D. No.: 121813AAA

Applicant's Designation:

Date Received: June 9, 2005

Subject: Gas Gathering and NGL Sales Project

Date Issued: September 6,

Expiration Date: See

Location: 2302 Hoots Chapel Road, Odin

This permit is hereby granted to the above-designated Permittee to CONSTRUCT

emission unit(s) and/or air pollution control equipment consisting of:

II=PA OAPC SPFLD

Bioreactor Vent Emissions (PV1)

0.3 mmBtu/Hour Dehydrator Reboiler (PH1)

Facility Flares (PFL1)

Equipment Fugitives (PF1)

8,820 Gallon Condensate Storage Tank (ST-3)

pursuant to the above-referenced application. This permit is subject to

standard conditions attached hereto and the following special condition(s)

No person shall cause or allow any visible emissions of fugitive

particulate matter from any process, including any material handling or

storage activity beyond the property line of the emission source,

pursuant to 35 Ill. Adm. Code 212.301.

This permit is issued based upon emissions of photochemically

organic materials, as defined under 35 Ill. Adm. Code 211.4690, from

source or operation using organic material, being less'

than 8 pounds per hour, pursuant to 35 Ill. Adm. Code 218.301.

No person shall cause or allow the emission of sulfur dioxide in the

atmosphere from any process emission source to exceed 2000 ppm pursuant

to 35 Ill. Adm. Code 214.301.

Equipment Fugitive Emissions shall not exceed the following limits:

PRINTED ON RECYCLED PAPER

Electronic Filing - Received, Clerk's Office, March 12, 2009

* * * * * PCB 2009-068 * * * * *

These limits are based on number of sources i.e. valves, flanges etc.,

Texas Commission on Environmental Quality (TCEQ), American Petroleum

Institute. and 8760 hours/year of operation. Compliance with the

annual limits shall be determined from a running total of 12 months of

Emissions form the facility flares shall not exceed the following

These limits are based on 227 mmscf/yr residue and sour plus 0.13

mmscf/year pilot gas, and gas analysis provided in application.

Compliance with annual limits shall be determined from running total of

12 months of data

Emissions and operation of the dehydrator reboiler emissions shall not

exceed the following limits,

Emission Rate

These limits are based on maximum reboiler operations, standard

emission factors AP-42, and 8,760 hours/year of operation. Compliance

with the annual limits shall be determined from a running total of 12

months of data.

This permit is issued based on negligible emissions of volatile organic

materials (VOM) from the condensate storage tank.

For this purpose,

emissions shall not exceed nomirtal emissions rate of 0.1 Ib/hour and

0.44 tons/year.

The flares shall have a heat sensing device, such as an ultraviolet

beam sensor or thermocouple, at the pilot light to indicate continuous

presence of a flame.

The Permi ttee shall maintain monthly records of the following items,

Amount of gas burned in the facility flares (mmBtu/month,

'sef/month, scf/year and mmBtu/year) ;

Amount of gas burned in the dehydrator reboiler (mmBtu/month.,

scf/month, scf/year and mmBtu/year); and

Monthly and annual

S, and CO emissions with supporting

calculations (tons/month, tons/year).

All records and logs required by this permit shall be retained

at a readily accessible location at the source for at least

three years from the date of entry and shall be made available

for inspection and copying by the Illinois EPA upon request.

Any records retained in an electronic format (e.g., computer)

shall be capable of being retrieved and printed on paper

during normal source office hours so as to be able to respond

to an Illinois EPA request for records during the course of a

source inspection.

If there is an exceedance of the requirements of this permit as

determined by the records required by this permit, the Permittee shall

submit a report to the Illinois EPA's Compliance Section in

Springfield, Illinois within 30 days after the exceedance. The report

shall include the emissions released in accordance with the

recordkeeping requirements, a copy of the relevant records, and a

description of the exceedance or violation and efforts' to reduce

emissions and future occurrences.

Two (2) copies of required reports and notifications concerning

equipment ope'ration or repairs, performance testing or a continuous

monitoring system shall be sent to:

Illinois Environmental Protection Agency

Division of Air Pollution Control

Compliance Section (#40)

Springfield, Illinois 62794-9276

and one (1) copy shall be sent to the Illinois EPA's regional office at

the following address unless otherwise indicated:

Iliinois'Environmental Protection Agency

Division of Air pollution Control

9511 West Harrison

Des Plaines, Illinois 60016

It should be noted that during the analysis of this permit application, it

was determined that your facility has the potential to emit more than 100 tpy

of VOM and will be classified as a major source under the Clean Air Act

Permit Program (CAAPP).

To avoid the CAAPP permitting requirements, you may

want to consider immediately applying for a Federally Enforceable State

Operating Permit (FESOP). A FESOP is an operating permit which contains

Federally enforceable limits in the form of permit conditions which

effectively restrict the potential emissions of a source to below major

source thresholds, thereby excluding the source from the CAAPP.

contact the Permit Section at 217/782-2113 to request the necessary

application forms.

Please note that this permit will expire one year from

the initial date of issuance.

have any questions on this permit, please contact George Kennedy at

E. Sutton, P.E.

Manager, Permit Section

Division of Air Pollution Control

STATE OF ILLINOIS

ENVIRONMENTAL PROTECTION AGENCY

DIVISION OF AIR POLLUTION CONTROL

P. O. BOX 19506

SPRINGFIELD, ILLINOIS 62794-9506

STANDARD CONDITIONS FOR CONSTRUCTION/DEVELOPMENT PERMITS

ISSUED BY THE ILLINOIS ENVIRONMENTAL PROTECTION AGENCY

The Illinois Environmental Protection Act (Illinois Revised Statutes, Chapter

Section 1039) authorizes the

Environmental Protection Agency to impose conditions on permits which it issues.

The following conditions are applicable unless susperseded by special condition(s).

1. Unless this permit has been extended or it has been voided by a newly issued permit, this permit will expire one

year from the date of issuance, unless a continuous program of construction or development on this project has

started by such time.

The construction or development covered by this permit shall be done in compliance with applicable provisions of

the Illinois Environmental Protection Act and Regulations adopted by the Illinois Pollution Control Board.

3. There shall be no deviations from the approved plans and specifications unless a written request for modification,

along with plans and specifications as required, shall have been submitted to the Agency and a supplemental

written permit issued.

4. The permittee shall allow any duly authorized agent of the Agency upon the presentation of credentials, at

reasonable times:

a. to enter the permittee's property where actual or potential effluent, emission or noise sources are located or

where any activity is to be conducted pursuant to this permit,

b. to have access to and to copy any records required to be kept under the terms and conditions of this permit,

c. to inspect, including during any hours of operation of equipment constructed or operated under this permit,

such equipment and any equipment required to be kept, used, operated, calibrated and maintained under this

d. to obtain and remove samples of any discharge or emissions of pollutants, and

e. to enter and utilize any photographic, recording, testing, monitoring or other equipment for the purpose of

preserving, testing, monitoring, or

any activity, discharge, or emission authorized by this permit.

5. The issuance of this permit:

shall not be considered as in any manner affecting the title of the premises upon which the permitted

facilities are to be located,

not release the permittee from any liability for damage to person or property caused by or resulting from

the construction, maintenance, or operation of the proposed facilities,

does not release the permittee from compliance with other applicable statutes and regulations of the United

States, of the State of Illinois, or with applicable local laws, ordinances and regulations,

does not take into consideration or attest to the structural stability of any units or parts of the project, and

!L 532-0226

Printed on Recycled Paper

Environmental Protection Agency

For assistance

preparing a permit

contad the Permit Section:

Divisiou of Air Pollution Control

Springfield, Illinois 62794-9506

'Or contact a regional office of the Field

Operations Sectwn. The regicnlll

and their areas of responsibairy

lire shown on the map. The addresses

lind telephone numbers

of the regional

offices are as follows:

9511 West Harrison

Des Plaiues, Illinois 60016

5415 North Univiversity

Peoria, Illinois

2009 Mall Street

Collinsville, Illinois 62234

ILLINOIS ENVIRONMENTAL PROTECTION AGENCY

1021 NORTH GRAND AVENUE EAST,

Box 19506, SPRINGFIELD, ILLINOIS 62794-9506 - ( 217) 782-2113

ROD R. BLAGOIEVICH, GOVERNOR

Technical Recommendation for Tax Certification Approval

December 05, 2007

C. Bakowski'\;'

Subject: Citation Oil

& Gas Corporation TC-06-12-26

This Agency received a request on December 26, 2006 from Citation Oil & Gas Corporation for an

Illinois EPA recommendation regarding tax certification of air pollution control facilities pursuant to

Adm. Code 125.204. I offer the following recommendation.

The air pollution control facilities

in this request include the following:

Bio Desulfurization Unit which reduces

S02 emissions by removing sulfur while

the residue gas

is flared. Because the primary purpose of this unit is to reduce or

eliminate air pollution, it is certified as a pollution control facility.

is located at 2302 Hoots Chapel Road, Odin, Marion County

The property identification number is 15-06-200-011

Based on the information included

in this submittal, it is my engineering Judgement that

the proposed facility may be considered "Pollution Control Facilities" under 35 lAC

125.200(a), with the primary purpose of eliminating, preventing, or reducing air pollution,

or as otherwise provided

in this section, and therefore eligible for tax certification from

the Illinois Pollution Control Board. Therefore, it is my recommendation that the Board

issue the requested tax Certification for this facility .

....................

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