Environmental Challenges in Oil and Gas Production by Gary E. Slagel

1. ENVIRONMENTAL CHALLENGES
IN
OIL AND GAS PRODUCTION
Gary E. Slagel
Steptoe & Johnson PLLC
September 23, 2015

2. Federal Issues
• Endangered Species Act – Indiana and
Northern Long Eared Bats
• Waters of the United States
• Methane Emissions
• BLM – Federal leases
• Clean Power Plan

3. State Legislative Actions
• Pennsylavania
– Act 13, The Oil and Gas Act
• Ohio
– Senate Bill 315 of 2012
• West Virginia
– Horizontal Well Act
– Aboveground Storage Tank
– Legislative studies on noise, light, dust, VOCs

4. State Legislative Actions
• Kentucky
– Senate Bill 186 of 2015 - Oil and Gas
Modernization Act
• Virginia
– Oil and Gas Act
• Illinois
– Oil and Gas Act – November, 2014
– Hydraulic Fracturing Regulatory Act – Nov., 2014

5. State Regulatory Issues
• Pennsylvania
– Chapters 78 and 78a
• T&E and Other Critical Communities
• Water management
• Spill prevention and control
• Erosion and Sediment control
– TENORM
– Stray Gas
– Air Quality

6. State Regulatory Issues
• Pennsylvania
– Cuttings disposal
• Ohio
– Senate Bill 315 of 2012 - framework for a strong
regulatory program
– Horizontal Well Site Construction Rule
• Illinois
– HF Regulatory Act – extremely prescriptive

7. Regulatory Issues - PA
• What must be filed by the operator
– Well permit
– Well permit transfer application
– Water management plans
– Inactive status request
– ESCGP transfer
– ESCGP noncompliance reports
– ESCGP NOI for major modifications
– ESCGP notice of termination
– Centralized impoundment permit

8. Regulatory Issues - PA
– OG-71 (drill cuttings disposal)
– 26R Chemical analysis for residual waste
– Variance approval
– Coal pillar approval
– Road spreading approval
– Proposed alternate method – casing, venting etc
– Stray gas report
– Spill reports
– NOV responses
– Spud notice

9. Regulatory Issues - PA
– Cementing casing notice
– Pressure test notice
– Stimulation notice
– Plugging notice
– Completion of stimulation notice
– Preconstruction conference notice
– Seven day earth disturbance notice
– Three day bulk earth disturbance
– 911 emergency plan
– Emergency response plan
– Wastewater reduction plan
– Containment plan

10. Regulatory Issues - PA
– PPC plan
– E&S plan
– PCSM plan
– Water management plan
– Waste reports
– Mechanical integrity assessment
– Centralized impoundment certification
– Well record
– Country of origin – steel
– Completion report
– Completion report – CPI & trade secrets
– Production report

11. Regulatory Issues - PA
– Inactive status report
– NOI to plug certificate
– 26RW chemical characterization
– Site restoration report
– FracFocus chemical disclosure
– Industry logs
– Other industry data
– Centralized impoundment quarterly reports
– Centralized impoundment monitoring reports
– Pre-drill surveys
– Well locations

12. Conclusions
• Appalachian Basin & Midwest –
environmental activism is high
• State Regulators – either willingly or are
ordered (via legislative action) to give the
industry little leeway in permitting and
operating
• Industry is judged by the actions of its weakest
links

13. PA Act 214
Coal and Gas Resource
Coordination Act
Amended 2011

14. Overview
• Sets new standards for addressing the
development and location of multiple gas well
pads over active coal mine areas and on
surface areas over workable coal seams.
• Redefines workable coal seams and active coal
mines, establishes new gas well spacing
requirements and new coal operator consent
requirements.
• Calls for a new gas well pillar study.

15. New Definitions
• Operating Coal Mine – that portion of a
workable coal seam which is covered by an
underground mining permit issued by the
Department of Environmental Protection.

16. New Definitions (cont)
• Active Coal Mine – now refers to the five (5)
year mining area shown on a timing map
prepared by the mine operator that extends
beyond the current permit area of operating
coal mine. (This should include the area
reasonably expected to be mined in the five
(5) years beyond completion of mining in the
current permit area). These maps must
initially be submitted to the Department by
June 12, 2011

17. New Definitions (cont)
• Workable Coal Seam:
– A coal seam in fact being mined in the area in the
question under this act by underground mining
methods.
– A coal seam which, in the judgment of the
Department of Environmental Protection, can
reasonably be expected to be mined by
underground methods.

18. New Definitions (cont)
• Well Cluster – means an area within a well pad
intended to host multiple horizontal wells in
an area no greater than 5000 square feet.
– Maximum area of a well cluster may be modified
based on the pillar study required under Section
12.1 of the Act.

19. Mine Operator Consent
• All permit applications under the Oil and Gas
Resource Coordination Act that will penetrate
an “operating coal mine” – essentially any
portion of the mine covered by an
underground mining permit – must be
accompanied by the written consent of the
mine operator relative to the proposed
location of the well. This is not appealable by
the well operator.

20. Mine Operator Right to Object
• When a proposed gas well or well cluster is
located above an “active coal mine”, the owner of
the coal may file objections in writing within ten
(10) days of receipt of the required notice and
plat to such proposed drilling. Must set out in
detail the grounds for the objection.
• If well operator and coal owner/operator can’t
agree on a location, their differences are
submitted to a panel.

21. Objection Resolution
• Panel shall be convened consisting of one
person selected by the coal operator, one
person selected by the gas operator and one
selected by the two above.
• Panel shall choose a location, if any that
– Permits gas well to be drilled without endangering
the safety of persons in the coal mine
– Allows for maximum recovery of the gas and coal

22. Gas Well Spacing
• No permit for a gas well that is part of a well
cluster shall be issued unless the well cluster is
at least 2000’ from the nearest well cluster as
measured from the center of the nearest well
bore, unless the owner of the workable coal
seam and gas operator consent in writing to a
lesser spacing of the clusters

23. Gas Well Spacing (cont)
• Where the gas operator and coal operator
cannot agree on the spacing of well clusters,
either party may invoke the panel procedures
in the Act to reach an agreement.
• Where the well cluster will penetrate a
workable coal seam that is not part of an
active coal mine, the gas operator must
provide a copy of the plat to the coal owner
who will then have fifteen (15) days to provide
recommendations on the location.

24. Gas Well Spacing (cont)
• The 1000’ minimum spacing requirement still
applies to single wells not in a cluster. These
wells must be at least 1000’ from any other
single well and any other well cluster.
However, with coal operators consent, this
spacing requirement can be waived – the 900’
absolute minimum has been deleted. All new
consent provisions for operating coal mines
and active coal mines are applicable to these
single wells.

25. Additional Measures
• Any applicant for a gas well permit must send
to the coal owner, where the coal has been
severed from the surface, a copy of the plat,
regardless of whether the seam is workable.
• Within sixty (60) days of completion of
drilling, the well operator will supply to the
coal operator a copy of the well deviation
survey, if one was done.

26. Points to Consider – Planning Ahead
• For Coal Operators – update the 5 year map
(Active Coal Mine) whenever the permit area
is revised or amended.
• For Coal Operators – the “Operating Coal
Mine” includes all previously permitted areas
of the mine as well as future longwall/full
extraction areas that are currently approved
for development mining only.

27. Points to Consider – Planning Ahead
• Copies of 5 year map should be sent to the
DEP Oil and Gas office in Pittsburgh. Submit
by June 12.
• Some confusion on how or when “workable”
coal seams will be designated by DEP under
the new definition. DEP (California) believes a
thickness standard will likely be used – 28” is
the current standard – but is that reasonable?

28. Points to Consider – Planning Ahead
• For Gas Operators – current Conservation Well
permits will have to be revised to drill under
the new amendments.
• For Coal and Gas Operators – both industries
need to consider potential participants in the
coal pillar study that should commence in July.
• Pillar Study – set new minimum standards but
allow flexibility where coal and gas interests
agree.

29. Points to Consider – Planning Ahead
• The ability to drill wells under the
Conservation Act still exists, so …….?