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MURPHY P.O. BOX 100 copy to ~'SUII.L.t2.#tv

Oil USA, INC. MERAUX LA 70075-0100

tf/EI2.:zo09C1cro 2- CERTFIED MAIL: 7001 11400001 6091 2344

September 29,2009

Ms. Cheryl Nolan Assistant Secretary

Office of Environmental Services

Louisiana Department of Environmental Quality P.O. Box 4313

Baton Rouge, LA 70821-4313

RE: Murphy Oil USA, Inc. - Meraux Refinery Meraux, St. Bernard Parish, Louisiana

Part 70 Operating Permit Significant Modification Application Title V Permit No. 2500-00001-V4, Agency Interest No. 1238

Dear Ms. Nolan:

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Murphy Oil USA, Inc., Meraux Refinery (MOUSA) is submitting this information in response to questions from Mr. Syed Quadri of the Louisiana Department of Environmental Quality ("LDEQ") to a representative of MOUSA on September 23, 2009, requesting additional information regarding the Title V permit modification application submitted on February 25, 2009. MOUSA submitted this significant modification application primarily to construct and operate a benzene saturation unit (to be called the "BenFree Unit") at the Meraux Refinery to satisfy l,lSEPA's Mobile Air Sources Toxics rule to remove benzene from gasoline. LDEQ proposed a draft permit for the project, but requested additional information prior to issuance of a final permit.

LDEQ requested that MOUSA confirm that the BenFree Unit project is independent of the Clean Fuels Phase I and Clean Fuels Phase II projects. The Ben Free Unit is completely independent of the Clean Fuels Phase I and Phase II projects. The Clean Fuels Phase I project was permitted under Title V Permit Number 2500-00001-VO on April 17, 2001. It enabled MOUSA to produce low sulfur fuels in compliance with federal Clean Air Act rules. The project primarily involved an expansion of the Crude Unit, the construction of the Hydrocracker Unit and associated #3 Sulfur Recovery Unit (SRU), construction of two boilers to replace older, inefficient boilers, and the retirement of the #1 FCC and #1 SRU. The project involved significant S02 reductions and netted out of PSD. EPA Region 6 reviewed and did not object to that Title V permit. The permit was revised through issuance of permit No. 2500- OOOOI-VI on February 8, 2002, to authorize construction of the No.3 SRU and to update the netting analysis for the project. EPA Region 6 also reviewed and did not object to that permit modification. For a complete list of Clean Fuels Phase I projects, see Exhibit I, attached.

It should be noted that the primary factor that allowed the Clean Fuels Phase I project to net out of PSD was the shut-down of the No. I FCCU. This aspect of the project alone was sufficient to net out any increases due to the project. The No. I FCCU was shut down in June 2003, over six years ago.

(504) 271·4141

MURPHY USA,.

FAX (504) 278·5201

Ms. Cheryl Nolan - Page 2 September 29, 2009

The Clean Fuels Phase II project enabled MOUSA to meet the updated EPA standards for ultra low sulfur diesel. The permit authorizing the projects to accomplish this was issued on November 20, 2007 as No. 2500-00001-V2. This primarily involved a revamp of the #2 FCC for NOx reduction, and revamps of the MDH and DHT Units for increased capacity and for meeting fuel sulfur targets, resulting in the production of more elemental sulfur. The PSD analysis demonstrated that NOx emissions from the project were greater than 40 TPY, but the netting analysis showed that the project netted out of NO x PSD applicability. EPA Region 6 reviewed and did not object to that permit modification. The status of various components of the Clean Fuels Phase] and II projects can be found in Exhibit I, attached.

The BenFree Unit will be constructed and operated to meet the USEPA mandate to produce low-benzene gasoline, known as the Mobile Source Air Toxics rule (MSAT II) promulgated on February 26,2007. As noted in the application and draft permit, the BenFree unit will receive feed from the Platformer Unit; however, the Plat former Unit is not being modified. The emissions increases associated with new emission points or existing affected emissions points are described in Section 25 of the LDEQ Permit Application Form.

The increased emissions from the refinery as a result of the BenFree Unit are not projected to exceed any PSD Significant Emission Rates, even using a conservative actual to potential test, so MOUSA did not need to conduct a PSD Netting Analysis for the BenFree project. See Section 25 of the LDEQ Permit Application Form. LDEQ requested clarity on how MOUSA arrived at these numbers, so those calculations are attached in Exhibit 2, attached.

LDEQ also requested that MOUSA further discuss the role of Boiler B-7 and how it related to the BenFree Unit. Boiler B-7. as noted in the application addendum submitted on May I, 2009, is not related to the BenFree Unit, nor to the Clean Fuels projects. A boiler designated as "Boiler B-7" was permitted in 2007 (Permit 2500-00001- V2) as part of the Clean Fuels Phase II project, but was never constructed. That authorization was for a full-time 250 MMBtulhr boiler. That project already went through PSD analysis along with the permitting of the Clean Fuels Phase II project. The combined project increases (without regard to decreases) did not trigger PSD for any pollutant except NOx. However, the netting analysis showed that NOx emissions were offset by a large margin; thus, PSD did not apply.

As an addendum to the currently pending modification request to add the BenFree Unit, MOUSA substituted permitted Boiler B-7 for a smaller, part-time rental 91.6 MMBtulhr boiler, which will now be called Boiler B-7. The rental boiler is needed periodically to provide refinery steam during periods of planned maintenance outages of other steam generators (i.e. Boilers B-5, B-6, TB-OI or the Platformer Unit). Prior to this permit, authorization to use the smaller rental boiler has been provided by permit variances. Therefore, the proposed draft permit decreases authorized emissions for Boiler B-7 compared to the prior permitted loads.

LDEQ also requested the status of excess VOC emissions from Tank 200-7 (EQT042) as part of the Heavy Oils Tank Cap (GRP0007). These emissions are subject to Compliance Order AE-CN-08-0 122A. Originally, MOUSA self-reported to LDEQ that VOC emissions from this tank were estimated at 558.8 #lhr, exceeding the Maximum Allowable Emission Rate of 1.15 #Ihr (with corresponding annual emission exceedances in tons per year). The suspected exceedances were based on MOUSA's calculation of emissions based on No.6-Oil flash point data and Reid Vapor Pressure determinations, whereas the permitted emissions were based on published AP-42 emissions factors. MOUSA also self-reported that the No.6 fuel oil may have exceeded the 1.5 psia trigger for controls at Tank 200-7. This VOC emission rate would result in an exceedance of the Heavy Oil Tanks Cap for 2008 (513.8 tpy actual vs. 7.2 tpy permitted).

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Ms. Cheryl Nolan ~ Page 3 September 29, 2009

MOUSA conducted an extensive evaluation of this issue pursuant to the Compliance Order and has submitted quarterly progress reports. In the most recent progress report submitted in July 2009, MOUSA indicated that the original estimates of VOC emissions from this tank, as self-reported to LOEQ, were found to be grossly exaggerated due to the use of a vapor pressure determination method (ASTM D323) found to be inappropriate for No.6 fuel oil. Per the recommendations of experts in this field, MOUSA had additional samples analyzed at a commercial laboratory using a more appropriate method (ASTM 02879). These results indicate that the TVP of MOUSA No.6 oil is well below 1.5 psia (and closer to historical AP-42 emissions factors) and the VOC emissions for the Heavy Oil Tanks Cap for 2008 should be estimated at 10.1 tpy, rather than the 513.8 tpy as originally reported.

MOUSA further discussed this with the LDEQ enforcement staff at a meeting on September 15, 2009. At that meeting, LDEQ enforcement requested that MOUSA submit a report along with a request to verify that use of A$TM D2879 is the appropriate test method for determination of emission factors. Please note that EPA has approved such methods in a SlP for another state for the same type of application. Thus, MOUSA believes that LDEQ will be able to approve this method. In summary, MOUSA believes that the No.6 Oil TVP is well below 1.5 psia and does not require controls per LAC 33:I1I.2103. If LDEQ approves this approach, MOUSA will seek a reconciliation of the permitted emissions for the Heavy Oils Tank Cap (and for heavy oil loading at the Dock) in accordance with LAC 33:II1.501.C.12.

If you have any questions or comments regarding this application, please call Mr. Matthew Dobbins at (504) 271-4141.

Sincerely,

MURPHY OIL USA, INC.

~~~~

Refinery Manager

Attachments

LGB:msd

cc: Mr. Syed Quadri - LDEQ

ClEAN FUELS PHASE 1- Permit 2S00-00001-VO (2/8/2002)

UNIT SCOPE STATUS
Hydrocracker New unit Completed - Jan, 2004
#3SRU New unit Completed - Oct, 2004
..
Boiler B-5 New unit (250 MMBtu/hr boiler) Completed - Dec, 2003
Boiler B-6 New unit (250 MMBtu/hr boiler) Completed - Dec, 2003
Cooling Tower New unit Completed - Jan, 2004
~~
Crude Unit Modify unit to increase capacity from 110,000 bpd to Completed - Oct, 2003
125,000 bpd
~~~ ----._--".-
Platformer Unit Modify unit to Increase capacity to 16,000 bpd Completed - Oct, 2003
Hydrobon Unit Modify unit to increase capacity to 35,000 bpd Completed - Oct, 2003
.-.-----
R05E Unit Modify unit to increase capacity to 22,000 bpd Completed - Oct, 2003
--- ---
112 FCCU Modify unit to increase throughput (but not coke make) for Completed - Oct, 2003
. p-!~~ssin~ hydrocracked feed
Boiler B-1 (Vogt Boiler, 8-72) Retire unit Retired - Ju n, 2003
Boiler B-2 (Wickes Boiler, 9-72) Retire unit Retired - Ju n, 2003
... -~~-~~~---.....-
#1 FCCU Retire unit Retired - Ju n, 2003
#1 FCCU Wet Gas Compressors (1- Retire compressors Retired - Ju n, 2003
88C, 1-880, 1-880)
Asphaltene Tanks Route tanks vapors to MOH Heater Can celled - tan ks retired - ju n 2003
-------. --_._ ..
Install Hi-Jet system to route vapors from #1 SWS Feed Flash
Flash Drum Vent Gas Compression Drum and #1 Amine Rich Amine Flash Drum to refinery fuel Complete - Nov, 2002
gas C:\DOCUME-l\dobbinm\LOCALS-l\Temp\notes6030C8\[090928.Ciean Fuels Update to EPA.V5.xlsjClean Fuels Phase 1

CLEAN FUELS PHASE 2 - Permit 2S00-00001-V2 (11/20/2007)

UNIT SCOPE STATUS
MDH Revamp Modify unit to increase capacity to 40,000 bpd and In progress - anticipated completion in
produce ultra low sulfur diesel Oec2009
--- ----- .. - ---
OHTRevamp Modify unit to produce ultra low sulfur diesel In progress - anticipated completion in
Jul2012
--
Modify unit to reduce excess flue gas oxygen in the In progress - anticipated completion in
#2 FCCU Revamp Regenerator to lower oxygen demand, resulting in NOx
reductions. Dec 2011
--_.
#4SRU New unit On hold - construction commenced in
2007
-
Boiler B-7 New unit (250 MMBtu/hr boiler) On hold
------
Boiler TB-01 New unit (110 MMBtu/hr boiler) Completed - Nov, 2007
Tank 250-4 New tank In progress - anticipated completion
date TBO
--- -""<----.. ___ ,...,~_~_-·-_n.~_
Tank 250-5 New tank In progress - anticipated completion
date TBO
_._--"-- ----
Tank 250-6 New tank In progress - anticipated completion
date TBO
Tank 250-7 New tank In progress - anticipated completion
dateTBD
------
Tank 300-1 Modify Tank 250-1 No update
Tank 300-2 Modify Tank 250-2 Completed - Feb, 2008
-~~------.-
Tank 300-3 Modify Tank 250-3 No update
Vent Gas Reduction Route Vacuum Hot Well off-gas from Vacuum Heater to In progress - anticipated completion in
fuel gas system Jul2010
-~--~--
Vent Gas Reduction Route Oily Water Stripper off-gas from flare to fuel gas Cancelled in -V5 application
--- system --_._._-_ ..
Vent Gas Reduction Route MDH Product Fractionator Overhead Receiver from In progress - anticipated completion in
~~~!..u~L~_as system Jul2010
Vent Gas Reduction Route ROSE Solvent Surge Drum from flare to fuel gas In progress - anticipated completion in
system Jul2010
r_n_~ ____
LPG Caustic Treating Route saturated butane to new caustic treater in the In progress - anticipated completion in
Naphthfiner Unit Dec 2011
-- --- C\DOCUMEN1\dobbinm\lOCAL5Nl\Temp\notes6030C8\[090928.Clean Fuels Update to EPA.V5.xlsjClean Fuels Phase 2

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