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Well Permits and Approvals

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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)
                         More Bonding

• Guidelines for Submitting Oil and Gas
  Well Bonds- (64 pages) 77 pages of…
•   single well bond $2,500…multiple bonded…blanket bond $25,000…acceptable
    bond -- surety or collateral… attorney-in-fact…Collateral…cash…certified
    check…bank check…treasurer’s check…money order…payable to the
    Commonwealth…letter of credit…certificate of deposit…negotiable
    securities…does not pay interest on cash held as collateral...collateral bond
    requirements…phased deposits of collateral…individuals…not 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.
    Permit Application For Drilling Or Altering A Well

•   Act 223 - Sec.201
    (a) No person shall drill a well or alter any
    existing well…without 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
                             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.
        Lots of Applications
Total applications for New,
Drill Deeper and Re-drill
Permits for 2010.

Northwest      2345
East Region    2299
Southwest      1926
Statewide:     6570
 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
The hardest part is finding it in the
        office (EFACTS)

             Technical         Admin review
              Review            Log/track         Program
             Log/Track                            Manager
                                                    Sign




                                                      Date Stamp


 Screen
Tech Chief                 Permit             Copy/
Re-review                                     Scan/       Screen
                         Issuance
                         Log/Track            Send
        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
Most important part of the application

   * Show me the money *
After the date stamp…

…send the money to Harrisburg…

…now the review can begin
       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.
  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.
             Permit Types
Drill a new well

   Deepen a well

          Re-drill a well

                   Alter a well

                         Other
            Drill a New Well
• A location where a well has never been drilled




location may have been permitted before
                 Deepen a Well
• To drill an existing well to lengthen the well bore
                  Re-drill a Well
• Drill through a well plug to put well in production


                           Plugged Well




       Drill through
                  Alter a Well
• Changes the well bore or drills out well bore
                        Drill out well bore




                                        Drilled out larger well bore




              Original well bore
        …Alter a well…casing
• In coal areas…any work that effects the coal
  protective casing…requires a permit

• Work or replacement of casing that changes
  casing depth or diameter…requires a permit

• Work or replacement of casing of the same
  diameter to the same depth does not, by itself,
  require a permit.
                                 Other type ?
• If not a new, deepen, re-drill or alteration…it is
  an “other” well…and must be specified

Change use from production to storage          Rehabilitate an Orphan well for production




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



      No re-drill of borehole.
                Type of well
Gas
 Oil
       Comb.(gas & oil)
           Injection, recovery
                 Injection, disposal
                       Coalbed methane
                             Gas storage
                                  Other (specify)
           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.
 Surcharges & fees at a glance
  Permit fee’s can
  range from None, for
  rehabbing an Orphan
  Well…



…to $3850 for a 15,000’
 Marcellus Well…&
 more if deeper!
       Fee calculator website
• http://www.dep.state.pa.us/dep/deputate/minres
  /oilgas/2011Permitcalculator.htm
            $ Payment $
• Pay to the order of…
…”Commonwealth of PA”




We accept Money Orders, personal
 checks & business checks.
    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
           Oil & Gas Conservation Law
• If well is 3800’ or deeper & penetrates the
  Onondaga…then Conservation Well.
Depth
                               Depth




                                3000-

5000   -
                    Onondaga                    Onondaga




                                3800-
 6000-
                                4000-
                   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


6000-                                                                            Onondaga
        <200’
6200
                                      >200’
         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’




6000-                                                         Onondaga

6100
          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.
        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”
           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
                             Plugged well
                                            location          Before 11/30/55             After 11/30/55
Non-Conservation
     well
                Conservation well                                       Non producers abandoned
            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 other…among other
  things.
Permitted Coal Mines whose boundaries are
     within 1000’ of proposed location
• Required to notify coal owners/operators
         Permitted coal mine
         boundary
                               1000’




                                  Proposed location
     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
       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
     Within perimeter of a landfill
 • Whether a landfill is
   permitted, active or
   abandoned…

…if the proposed location falls within it’s perimeter…




 …label the landfill location on plat and identify the owner
                 Distance restrictions
• The proposed site must be > 100’ from any stream, spring, body of
  water, or a wetland > 1 acre, unless approved through a waiver.


 Well pad/site


                            100’


                             100’


                              100’
  Waiver request – Form 5500-FM-OG0057

• Requesting to waive the 100’ distance restriction from any wetland
  > 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 & handling…spill 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
   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
     …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…




                                             >200’




…without prior written consent from the owner…




             …or an approved request for variance Form 5500-FM-OG0058
               Request for Variance From Distance Restriction
           From 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 you’re                     Safety
                                          Insurance
                                                                            deprived                      measures
          Project                         coverage
  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…
          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 add’l measures to be taken
    to protect public resource.
       Public Resource’s common issues…
   •   Allegheny National Forest (ANF) and DCNR. DEP’s 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                                         DEP continues
                     Application until…                                Application review
    …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
        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
      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
                                                                         Included in permit
                             to…
PNDI- “Conservation Measures”
•   If Conservation Measures are generated, DEP will might include
    them in the permit as a Special Condition




Conservation
                                                        The world is happy
Measures

                       May be included in permit
  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
   Coordination with ESCGP-1
• If the proposed location is part of a larger
  development, disturbing >5 acres, list the
  ESCGP-1 approval date and number, if
  applicable.
                                Page 2 - Notifications
        •      The applicant shall notify…:
                    -The surface landowner
                    -Surface landowners whose water supplies are within 1000’ of the proposed location
                    -Water purveyor’s 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 well…and list them on page 2.


                                            Water supply
                                                                                        surface landowner




                                                                             Proposed
                                                                             Gas well
            Gas storage




                                                                         l

                                                           Workable coal (owner/lessee)

2000’                                   1000’
                     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
     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.




    < 6 months
    < 1000’                           Bad Water
    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 > 1000’
        from the drilling
     – 4) The water supply became
        affect >6 months after well
        completion
     – 5) The water supply became
        affected by some other cause
Objections
        • The right to
          object to an
          application is
          afforded to
          surface
          landowners and
          coal owner or
          operator’s in the
          Act and to gas
          storage
          operator’s in
          Chapter 79.
    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
        DEP’s 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 applicant’s 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 it’s
  issuance
          The Application Plat
• The plat is            .       .
  reviewed for
  consistency
  with the rest of
  the application,
  accuracy &
  completeness.
                            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
          Well name, number, type, permit number & project number if applicable
          Well Deviations and distances with total vertical depth and total measured depth
          Well graphic display from plan view
Typical plat – top half
   Typical plat




Typical Plat- bottom half
Deviation Survey
   “The
Department
   shall
  issue
     a
  permit
  within
    45
  days”
  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
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
                   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
   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.”
      Water Management Plan
  An Oil & Gas operator’s plans to withdraw from a
  source. The plan includes calculations and
  analysis of the environmental impacts associated
  with the withdrawal.




DEP will review the plan’s analysis of the
  environmental impact and, if in agreement, send
  an approval letter stating concurrence with the
  conclusions determined by the operator.

				
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