Review of the cost-effectiveness of EPA`s offshore oil and gas effluent guidelines

The United States Environmental Protection Agency (EPA) published proposed Effluent Limitation Guidelines and New Source Performance Standards for the Offshore Subcategory of the Oil and Gas Extraction Point Source Category on March 13, 1991 (56 FR 10664). These guidelines include limitations for Best Practicable Technology (BPT), Best Conventional Technology (BPT), Best Available Technology (BAT), and New Source Performance Standards (NSPS) for produced water, drilling fluids, drill cuttings, well treatment fluids, deck drainage, produced sand, and sanitary and domestic waste. As a support document to these regulations, EPA published a Cost-Effectiveness (CE) Analysis (EPA, 1991). This report calculated the CE of several different BAT and NSPS treatment options for produced water and drilling fluids and drill cuttings. Separate calculations were made for restricted versus unrestricted drilling rights and for three different oil costs per barrel. Each treatment option has a different cost and will result in removal of different levels of pollutants. The report calculates the annualized cost for each option and the pound equivalents (PE) removed and expresses the CE as $/PE. While not officially required for decision-making, as long as the CE falls within some reasonable range, the selected treatment option is considered acceptable. This paper examines the premises and assumptions used in the CE analysis and recalculates the CE statistic using alternate assumptions.