The purpose of this paper is to provide comments on the Environmental Protection Agency (EPA) Notice in the Federal Register entitled, ''Oil and Gas Extraction Point Source Category, Offshore Subcategory; Effluent Limitations Guidelines and New Source Performance Standards; New Information and Request or Comments'' (53 FR 41356; October 21, 1988). This Notice announces the availability of new technical, economic and environmental assessment information relating to the development of Best Available Technology economically achievable (BAT and New Source Performance Standards (NSPS) regulations under the Clean Water Act governing the discharge of drilling fluids (muds) and drill cuttings from offshore oil and gas facilities. The Notice is part of a rulemaking process which formally began with the initial release of rules in August 1985 and which incorporates numerous comments and additional data received subsequent to the release of the 1985 rules. The comments in this paper will concentrate on the following five issues: Estimated project impacts are misrepresented by assuming weighted-average incremental costs of regulation. Economic impacts are inaccurate, since annual compliance costs will likely affect the number of wells drilled, by the effect of compliance costs on project economics and the reduction in industry cash flows on capital available for drilling. Initial well productivity assumptions for various scenarios do not vary with field size. The assumed lease costs, which are based on historical data, do not accurately reflect the future value of leases. The experimental decline rates assumed for the Pacific are too high.

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.

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