Bonding

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Bonding

• ACT 223 - Sec. 215 Bonding
• (a)(1)upon filing an application for a
  well permit and before continuing to operate any
  oil or gas well, the owner or operator thereof
  shall file with the department a bond
  conditioned that the operator shall faithfully
  perform all of the drilling, water supply
  replacement, restoration and plugging
  requirements (4 pages)
• Chapter 78.301 Scope
• In addition to the requirements of section 215
  of the act (58 P. S.   601.215), this subchapter
  specifies certain requirements for surety bonds,
  collateral bonds, replacement of existing bonds,
  maintaining adequate bond and bond forfeiture.(9
  pages)

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More Bonding

• Guidelines for Submitting Oil and Gas Well Bonds-
  (64 pages) 77 pages of
• single well bond 2,500multiple bondedblanket
  bond 25,000acceptable bond -- surety or
  collateral attorney-in-factCollateralcashcerti
  fied checkbank checktreasurers checkmoney
  orderpayable to the Commonwealthletter of
  creditcertificate of depositnegotiable
  securitiesdoes not pay interest on cash held as
  collateral...collateral bond requirementsphased
  deposits of collateralindividualsnot to
  corporations, companies, or partnerships.
• Plan on 2 weeks to 3 months for Bond approvals
• A well will be released from bond coverage one
  year after it has been properly plugged and the
  site satisfactorily restored.

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Permit Application For Drilling Or Altering A Well

• Act 223 - Sec.201
• (a) No person shall drill a well or alter any
  existing wellwithout having first obtained a
  well permit.
•  78.11. Permit requirements.
• (a)  No person may drill or alter a well
  unless that person has first obtained a permit
  from the Department.
• (b)  No person may operate a well unless
  one of the following conditions has been met
• (1)  The person has obtained a permit
  under the act.
• (2)  The person has registered the well
  under the act
• (3)  The well was in operation on April
  18, 1985, under a permit that was obtained under
  the Gas Operations Well-Drilling Petroleum and
  Coal Mining Act

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Permits

• A permit will expire in 1year

at which time the applicant can submit an
affidavit, requesting renewal of the permit,
attesting that all applicable parties have been
notified and that all aspects of the original
application are the same.
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Lots of Applications

• Total applications for New, Drill Deeper and
  Re-drill Permits for 2010.
• Northwest 2345
• East Region 2299
• Southwest 1926
• Statewide 6570

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Staff to handle paperwork- NWRO

• 7 Clerical for administration
• -logging, tracking, issuing
• 7 Technical staff for technical review
• -plats, deviation surveys, environmental
  issues, notifications
• 1 Program Manager to sign every permit

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The hardest part is finding it in the office
(EFACTS)
Technical Review Log/Track
Admin review Log/track
Program Manager Sign
Date Stamp
Screen Tech Chief Re-review
Screen
Permit Issuance Log/Track
Copy/ Scan/ Send
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How do we keep track

• By adding Numbers to the application
• To each application we add the following
  numbers
• OGO number
• Bond number
• API number
• Authorization number
• Site number
• Client number
• APS number
• Account number
• Primary Facility number
• Sub-facility number
• Sometimes more
  numbers

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Most important part of the application

• Show me the money
• After the date stamp
• send the money to Harrisburg
• now the review can begin

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Form 5500-PM-OG0001

•  78.15. Application requirements
• (a)  An application for a well permit shall be
  submitted on forms furnished by the Department
  and contain the information required by the
  Department to evaluate the application.
• (b)  The permit application will not be
  considered complete until the applicant submits a
  complete and accurate plat, an approvable bond or
  other security, the fee, proof of notification,
  necessary requests for variance or waivers or
  other documents required to be furnished by law
  or the Department. The person named in the permit
  shall be the same person named in the bond or
  other security.

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Completing the Drilling Application Form
Administration stuff Name Address Phone
Fax Well Name Number County
Muni Was location ever permitted before?
- Is this re-working an existing well not
registered or permitted? Please provide all known
information about the unregistered/ un-permitted
well. Pennsylvania Natural Diversity
Inventory any hits must be addressed and
mitigation standards might be included as a
Special Condition on the Permit.
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Permit Types

• Drill a new well
• Deepen a well
• Re-drill a well
• Alter a well
• Other

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Drill a New Well

• A location where a well has never been drilled
• location may have been permitted before

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Deepen a Well

• To drill an existing well to lengthen the well
  bore

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Re-drill a Well

• Drill through a well plug to put well in
  production

Plugged Well
Drill through
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Alter a Well

• Changes the well bore or drills out well bore
• 
  Drill out well bore

Drilled out larger well bore
Original well bore
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Alter a wellcasing

• In coal areasany work that effects the coal
  protective casingrequires a permit
• Work or replacement of casing that changes casing
  depth or diameterrequires a permit
• Work or replacement of casing of the same
  diameter to the same depth does not, by itself,
  require a permit.

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Other type ?

• If not a new, deepen, re-drill or alterationit
  is an other welland must be specified
• Change use from production to storage
  Rehabilitate an Orphan well for
  production

Replacement of casing. No re-drill of borehole.
DEP is no longer able to register wells
No re-drill of borehole.
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Type of well

• Gas
• Oil
• Comb.(gas oil)
• Injection, recovery
• Injection, disposal
• Coalbed methane
• Gas storage
• Other (specify)

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Application Fee

• The fee is an application processing charge for
  expenses incurred by the Bureau of Oil Gas
• and a surcharge for Abandoned
  Orphan Well Plugging Funds.

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Surcharges fees at a glance

• Permit fees can range from None, for rehabbing
  an Orphan Well
• to 3850 for a 15,000 Marcellus Well more if
  deeper!

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Fee calculator website

• http//www.dep.state.pa.us/dep/deputate/minres/oil
  gas/2011Permitcalculator.htm

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Payment

• Pay to the order of
• Commonwealth of PA
• We accept Money Orders, personal checks
  business checks.

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Coordination with regulations other permits

• The Oil Gas Act
• Oil Gas Conservation Law
• Coal Gas Resource Coordination Act
• Waste Management Act
• Clean Streams Law
• PACode Chapters 93, 102 105
• Among others

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Oil Gas Conservation Law

• If well is 3800 or deeper penetrates the
  Onondagathen Conservation Well.

Depth
Depth
3000-
5000 -
Onondaga
Onondaga
3800-
6000-
4000-
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What about these?

• DEP policy Proposed vertical wells with a
  non-vertical lateral, where the vertical portion
  penetrates the Onondaga by 200 or less, and the
  intent of that portion is only for logging
  purposes, can be considered non-conservation
  wells.

For production purposes
Onondaga
6000-
lt200
6200
gt200
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In areas with no spacing application or order,
the borehole, at Conservation depth, must be at
least 330 from outside lease boundary.
330
330
330
330
Onondaga
6000-
6100
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Coal and Gas Resource Coordination Act

• Applies to all proposed locations that penetrate
  coal seams, deemed workable by underground
  methods. Except Conservation wells and certain
  other wells as defined in the Act.
• Requires coordination of coal mine and gas well
  operators in areas where applicable proposed well
  locations are near active or permitted coal
  mines.

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Workable Coal Seams by underground methods

• Coal 28 thick with sufficient quality
• At least 100 overburden
• .for at least 1 sq mi aerial extent

Surface
100
28 sufficient quality 100 overburden Aerial
extent at least 1 mile
28
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If determined a workable coal seam and well is
not exempted from the Act and not a Conservation
Well

• Distance restrictions
• At least 1000 from any other well that
• -penetrates a workable coal seam
• -has not been plugged
• -is non-producing wells abandoned after 11/30/55

1000
1000
workable coal seam
Proposed location
Plugged well
After 11/30/55
Before 11/30/55
Non-Conservation well
Non producers abandoned
Conservation well
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House Bill 265

• House Bill 265 looks to amend the Coal and Gas
  Resource Coordination Act.
• Allowing Non-Conservation well clusters, on the
  same pad, to be located less than 1000 feet from
  each otheramong other things.

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Permitted Coal Mines whose boundaries are within
1000 of proposed location

• Required to notify coal owners/operators

Permitted coal mine boundary
1000
Proposed location
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Notified coal owners/ operators have the right to
object

• Act 223 if the well will, in the opinion of the
  coal owner or operator, unduly interfere with or
  endanger such mine, then the coal owner or
  operator affected shall have the right to file
  objections

DEP will mediate a conference between the 2
parties to work out an agreement
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Coordination with gas storage operations

• Proposing to drill within 2000 of a gas storage
  reservoir. Storage operator must be notified
  with the casing and cementing plan.

The storage operator can object
DEP will mediate a conference between the 2
parties to work out an agreement
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Within perimeter of a landfill

• Whether a landfill is permitted, active or
  abandoned

if the proposed location falls within its
perimeter
label the landfill location on plat and identify
the owner
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Distance restrictions

• The proposed site must be gt 100 from any stream,
  spring, body of water, or a wetland gt 1 acre,
  unless approved through a waiver.

Well pad/site
100
100
100
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Waiver request Form 5500-FM-OG0057

• Requesting to waive the 100 distance restriction
  from any wetland gt 1 acre, spring, stream or body
  of water

Describe the waiver request in detail water
bodies, classifications, distances, etc..
addressing all of the following (1) Fluid
containment measures (drilling, stimulation,
formation production) (2) Handling large
volume of top-hole water (3) Site chemical
storage handlingspill clean-up (4) Disposal
methods for wastes and waste fluids (cuttings
muds) (5) When polluting substances will be
removed from site after well completion (6)
Waste removal during inclement weather (7)
Submittal of an E S Control Plan per Chapter 102
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Waiver request Form 5500-FM-OG0057

• Waiver request form goes out to the field
  representative for approval or disapproval

who might meet out in the field with operator
then make an educated decision
Approved waivers can have special conditions that
are incorporated into the permit
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more distance restrictions

• A new well may not be drilled within 200 of
  existing buildings (where someone normally works
  or lives), or a water well

gt200
without prior written consent from the owner
or an approved request for variance Form
5500-FM-OG0058
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Request for Variance From Distance
RestrictionFrom Existing Building or Water
Supply (5500-FM-OG0058)

• Explain the variance request
• -distances from the proposed well location to
  buildings and / or water supply
• -uses of buildings and water supplies, and
  frequency of use
• -proof of notification
• -type of insurance coverage for the project
• -explain how adherance to the 200-ft
  requirement would deprive the oil and gas owner
  of the opportunity to produce or share in the
  production of oil and gas underlying the surface
  tract
• -evidence that no location more than 200 feet
  from all buildings or water supplies is
  available where the well could be drilled.
• Plan Description. Describe measures, facilities,
  or practices to be employed during well site
  construction, drilling, and well operation to
  insure safety and protect persons and property,
  and to protect waters of the Commonwealth. Use
  additional blank sheets for narrative or sketches
  as needed

Define
How youre deprived
Safety measures
Insurance coverage
Project
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Coordination with Public Resources

• Section 205(c) of the Oil and Gas Act requires
  the Department to consider the impact of the
  proposed well on public resources, including
  publicly owned parks, forest, gamelands and
  wildlife areas national or state scenic rivers
  national natural landmarks habitats of rare and
  endangered flora and fauna and other critical
  communities historical and archaeological sites
  listed on the federal or state list of historic
  places

Wildlife Areas
Forests
Parks
Gamelands
Endangered species
The operator must fill out form 5500-PM-OG0076 if
on or near public resources.
We treat different public resources differently
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Coordination of a well Location with Public
Resources - form 5500-PM-OG0076

• Is proposed location in or within 200 of a
  publicly owned park/forest/etc., Natural National
  Landmarks or historical/archaeological sites?
• Within a corridor of a scenic river?
• Has a PA Natural Diversity Inventory search been
  run issues resolved?
• What addl measures to be taken to protect public
  resource.

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Public Resources common issues

• Allegheny National Forest (ANF) and DCNR. DEPs
  consideration is elevated when the ANF or DCNR
  objects to a drilling application. DEP will hold
  the application until a site visit by DEP field
  personnel. DEP will consider the objections
  raised by the agency and make a determination.

ANF/DCNR objection
objection consideration, through field
personnel, make a determination
DEP holds Application until
DEP continues Application review
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more other Public Resource common issues

• Policy for Pennsylvania Natural Diversity Index
  (PNDI) coordination during permit review
  Evaluation Form 400-0200-001
• The application needs to include the PNDI Project
  Environmental Review Receipt, obtained from
  www.naturalheritage.state.pa.us, with the
  application. There are 4 types of results

Potential Impact
Avoidance Measures
Conservation Measures
No Impact
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PNDI Potential Impacts

• If there is a potential impact a clearance letter
  is required from the jurisdictional agency, which
  may include measures the applicant must take to
  minimize impacts, DEP will include them in the
  permit as a Special Condition.

Measures to take
Included in permit
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PNDI- Avoidance Measures

• If avoidance measures are generated the
  applicant needs to initial that they will abide
  by the measures during the project. DEP will
  include these measures as Special Conditions.

Avoidance measures
avoidance measures
Initials adherence to
Included in permit
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PNDI- Conservation Measures

• If Conservation Measures are generated, DEP will
  might include them in the permit as a Special
  Condition

Conservation Measures
The world is happy
May be included in permit
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Special Protection Watersheds

• Applicant identifies if proposed application is
  in a HQ or EV watershed. DEP will stamp permits
  and plats accordingly, if applicant does not
  identify watershed appropriately.

Listings for specific stream identification can
be found in PA Code Chapter 93
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Coordination with ESCGP-1

• If the proposed location is part of a larger
  development, disturbing gt5 acres, list the
  ESCGP-1 approval date and number, if applicable.

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Page 2 - Notifications

• The applicant shall notify
• -The surface landowner
• -Surface landowners whose water supplies are
  within 1000 of the proposed location
• -Water purveyors whose water supplies are
  within 1000 of the proposed location
• -Gas storage operations, with storage fields,
  within 2000
• -Coal owner and lessee, of all underlying
  seams, in workable coal areas
• -Underground coal mine operators with mine
  operations within 1000
• of their intentions to drill a welland list
  them on page 2.

Water supply
surface landowner
Proposed Gas well
Gas storage
l
Workable coal (owner/lessee)
2000
1000
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Notification details

• The applicant shall notify appropriate parties by
  certified mail, with proof of notification or,
  show proof of notification with appropriate
  signature on page 2.
• The notification shall include the complete
  application and form 5500-FM-OG0052 Landowner
  Notification Of A Well Drilling Or Alterations,
  if applicable

Rights under the law
Signature on page 2
Certified mail
Signature also waives the 15 day objection period
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Notification- Water Supply Protection

• Form OG0052 Landowner Notification Of Well
  Drilling Or Alterations informs the water supply
  of their rights under Section 208 of the Act.

Operators who pollute or diminish a water supply
shall restore or replace the supply, adequate in
quality/quantity for purposes served.
Operators are presumed responsible for polluting
or diminishing affected water supplies within
1000 of the drilling, if the supply became
affected during drilling or within 6 months of
completion of the drilling or alteration.
lt 6 months lt 1000
Bad Water
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Operator is presumed guilty, unless

• He rebuts the presumption by proving either
• 1) Pollution was pre-existing (pre-drilling
  survey)
• 2) The water supply refused access for
  pre-drilling survey
• 3) The water supply is gt 1000 from the drilling
• 4) The water supply became affect gt6 months after
  well completion
• 5) The water supply became affected by some other
  cause

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Objections

• The right to object to an application is afforded
  to surface landowners and coal owner or
  operators in the Act and to gas storage
  operators in Chapter 79.

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DEP responds to objections from surface
landowners whose water supplies are within 1000-
even if it is not afforded to them in law or
regulation.

• DEP responds to written objections with a letter
  stating receipt of the objection and that DEP
  will contact them, during the review, if the
  application comes in.

DEP calls objecting party
Application arrives
DEP sends acknowledgement letter
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DEPs objection response

• Most objections are from water supplies that are
  not the surface landowner of where the well is
  being drilled.
• DEP re-informs the objecting party that there are
  casing standards in regulation for groundwater
  protection, as well as remedies afforded water
  supplies that are affected by drilling.
• DEP will inform the objecting party of the
  applicants rights to a permit within 45 days as
  long as
• 1) The well site is not in violation, or be in
  violation when permit is issued
• 2) The application is complete and accurate
• 3) There are no unresolved objections by coal
  mine owner/operator
• 4) Bonding requirements have been met
• 5) The applicant is not under a legal document
  from DEP which restricts its issuance

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The Application Plat
. .

• The plat is reviewed for consistency with the
  rest of the application, accuracy completeness.
  

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Plat requirements

• Prepared by registered professional Engineer or
  Surveyor with seal (4 copies)
• Show
• Municipality County
• Surface Landowner
• Surface landowner water supplies of water
  supplies within 1000 of proposed location.
• Owner of workable coal seams
• Tract Acreage
• Proposed location surveyed from at least 2
  permanent points on tract boundary
• Proposed well angle and direction
• Well number
• Workable coal seams cased off
• Latitude and longitude of surface location-10
  meter accuracy (NAD 83)
• All buildings and water supplies within 200 of
  proposed location
• Water supplies within 1000 of proposed
  location
• Wetlands within 100 of proposed location
• Every spring, stream or body of water within
  100 of disturbed area
• USGS topographic map name section number with
  topographic mark and offsets
• Applicable metadata- 10 meter accuracy
• Target formation

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Typical plat top half
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Typical plat
Typical Plat- bottom half
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Deviation Survey
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The Departmentshallissueapermitwithin45day
s


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Chapter 78 update. 78.52(d) requires the
submittal of all predrill data to be used by an
Operator to preserve their defense under section
208(d)(1) within 10 business days of receipt of
such data. DEP is requesting your assistance and
cooperation. We ask that you please submit your
pre-drill data in the following method and format
to

• Please submit all data electronically on a CD
  with a cover letter to the appropriate regional
  office
• Predrill Data, Oil and Gas Management Program
• Northwest Regional Office
• 230 Chestnut St.
• Meadville, PA 16335
  or
• NCRO Predrill Data
• Oil and Gas Management Program
• Northcentral Regional Office
• 208 West Third Street, Suite 101
• Williamsport, PA 17701
  or
• Predrill Data, Oil and Gas Management Program
• Southwest Regional Office
• 400 Waterfront Drive
• Pittsburgh, PA 15222-4024

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• 2.) All data should be submitted in .pdf form.
• 3.) The CD cover should clearly list the
  following
• Company Name
• Well Farm Name (Pad) and Permit Number(s) (if
  available)
• County of Well Pad(s), Municipality of Well
  Pad(s)
• 4.) Folders should be created within the CD using
  the following file structure
• Well Farm Name/Pad ID
• County of Sampling Location, Municipality of
  Sampling Location
• Sample ID
• Example (each line is a separate folder)
• Smith Well Pad
• Clairon County
• Knox Township
• John Smith Residence
• please include latitude/longitude of water sample
  location somewhere on the data sheet

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Permit denials

• Operators will be notified of inaccurate/
  insufficient/incomplete applications and have 60
  days to rectify the situation, or DEP may deny
  the application.

After 60 days
Insufficient application
Application denied
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Special Condition on Permit

• For shale formations with a significant
  horizontal well bore through the formation
• The permittee shall not withdraw or use water
  from water sources within the Commonwealth of
  Pennsylvania, for well fracing activities, unless
  the permittee does so in accordance with a Water
  Management plan approved by the Department.

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Water Management Plan

• An Oil Gas operators plans to withdraw from a
  source. The plan includes calculations and
  analysis of the environmental impacts associated
  with the withdrawal.
• DEP will review the plans analysis of the
  environmental impact and, if in agreement, send
  an approval letter stating concurrence with the
  conclusions determined by the operator.