OIL AND GAS DOCKET NO. 7B

Transcription

1 OIL AND GAS DOCKET NO. 7B THE APPLICATION OF MORRIS R. GREENHAW FOR A COMMERCIAL PERMIT TO DISPOSE OF OIL AND GAS WASTE BY INJECTION INTO A RESERVOIR NOT PRODUCTIVE OF OIL OR GAS, GILBERT LEASE WELL NO. 1SW, PALO PINTO COUNTY REGULAR FIELD, PALO PINTO COUNTY, TEXAS HEARD BY: Andres J. Trevino P.E., Technical Examiner Mark Helmueller, Hearings Examiner APPEARANCES: APPLICANT: Lloyd Muennick Morris R. Greenhaw Roland Baker O. H. Gilbert REPRESENTING: Morris R. Greenhaw PROTESTANTS: Flip Whitworth John Hicks Peggy Tucker Wylie Tucker Billy Roger Keck Grady Jordan O. Dean Edwards Family Limited Partnership Himself Barbara Garcia PROCEDURAL HISTORY Application Filed: October 22, 2008 Request for Hearing: October 9, 2008 Notice of Hearing: October 24, 2008 Date of Hearing: December 18, 2008 Transcript Received: January 22, 2009 Proposal For Decision Issued: June 11, 2009

2 OIL AND GAS DOCKET NO. 7B Page 2 EXAMINERS REPORT AND PROPOSAL FOR DECISION STATEMENT OF THE CASE Morris R. Greenhaw, ( Greenhaw ) requests authority pursuant to Statewide Rule 9 to operate Well No. 1SW on its Gilbert Lease in Palo Pinto County as a commercial disposal well. This application is protested by the O. Dean Edwards Family Limited Partnership, Billy Roger Keck, Pastor, Palo Pinto County Cowboy Church and Barbara Garcia, all surface owners adjacent to the tract on which the proposed disposal well is located. Applicant s Evidence DISCUSSION OF THE EVIDENCE The subject well has not yet been drilled but an amended permit to drill was issued by the Commission on June 18, It is proposed that the well be drilled through the Ellenburger to a maximum depth of 4,999 feet. It is proposed that the well have 330 feet of 8e" surface casing with cement circulated from the casing shoe to the ground surface, and 5½" casing set into the Ellenburger. The top of cement behind the longstring casing will be circulated to the surface. Greenhaw proposes to circulate the cement behind the longstring by setting cement at the bottom of the casing and setting DV tools at 3,000 and 1,500 foot depths. The Texas Commission on Environmental Quality recommends that usable-quality ground water be protected from the land surface to a depth of 325 feet. TCEQ therefore recommends that surface casing be set no higher than 325 feet. The proposed injection will be through 2d" tubing set on a packer at approximately 4,650 feet, but no higher than 100 feet above the top of the injection interval. The proposed injection interval is the Ellenburger formation, the top of which is expected to occur at about 4,400 feet. The proposed injection interval is between 4,700 and 4,999 feet. This estimated depth of the Ellenburger is based on the log of the Trinity Oil and Gas - Floyd M. Lavender No. 1 well. This well is approximately 3,000 feet south - southwest of the proposed well. It is the closest well which penetrated the Ellenburger and for which an electric log is available. In the Lavender No. 1, the top of the Ellenburger is at 4,406 feet and the top of the Barnett Shale is at approximately 4,270 feet. The proposed maximum injection volume is 20,000 BWPD, with an estimated average of 4,500 BWPD. The proposed maximum injection pressure is 2,000 psig. There is only one wellbore within a ¼ mile radius of the proposed disposal well. This well is located to the south of the proposed disposal well and is a cathodic protection well drilled to a depth of 475 feet. The well does not penetrate the Ellenburger formation.

3 OIL AND GAS DOCKET NO. 7B Page 3 The city of Santo and any residences outside the city of Santo rely on surface water from the Palo Pinto Lake reservoir for fresh water supply. The surface casing recommended by the TCEQ will protect any water wells in the area. There is an approved commercial disposal well approximately a miles southwest of the proposed well known as the Bob Phillips Brannon disposal well. According to testimony given by the applicant the Phillips well is a private commercial disposal well used only by Bob Phillips own trucks. The Phillip s well is permitted to dispose at a depth of 3,760 feet to 3,764 feet into the Conglomerate formation, above the Ellenburger and Barnett Shale. The proposed facility will consist of 30' by 120' concrete pond, six 750 bbl settling tanks, two 1,000 bbl gun barrels and a 400 bbl oil tank. All tanks will sit on gravel inside a concrete basin. All surface areas which are expected to handle fluids will be constructed of concrete. Greenhaw plans to use the proposed well to dispose of produced water and frac water generated as a result of the active and ongoing development of the Barnett Shale in north central Erath County near Morgan Mill and in Palo Pinto County. Currently water picked up from the Morgan Mill area is trucked to a disposal well located north of Mineral Wells. The trucks travel along Highway 281 thru a narrow bridge over the Brazos River and thru the town of Mineral Wells. Approving the disposal well will reduce truck traffic along Highway 281 and traffic thru the town of Mineral Wells. The applicant asserts that reduced travel will save fuel, traffic congestion and pollution and increase safety in the town of Mineral Wells. The applicant estimates that by approving the proposed Gilbert No. 1SW disposal well an average of 600,000 truck miles will be eliminated by taking produced water from the current Morgan Mill Barnett Shale area wells to the proposed Gilbert SWD disposal well. This estimate is based on 34 trucks per day (approximately 4,500 BWPD) saving 50 miles per round trip thru Mineral Wells, 360 days per year. Truck traffic to the Gilbert disposal well will generally come from Interstate 20 service roads and turn to the north onto FM 4. Because the disposal well is located nearest to the I-20 service road, truck traffic will have limited interaction with residential or church congregation traffic coming from Santo. The city of Santo is approximately 2 miles to the north from the I-20 service road on FM 4 while the disposal well is 400 feet from the service road. Maximum interaction will occur during baseball games and practices and during times of bible study and Sunday services. Greenhaw believes that his disposal facility is necessary to accommodate the active drilling that is occurring in Palo Pinto and Erath Counties. Mr. Greenhaw submitted a list of 115 approved and pending drilling permits in Palo Pinto County as evidence of a need for the disposal well. The Gilbert disposal well will service northern Erath County, Palo Pinto County and western Parker County. Mr. Greenhaw testified he had verbal commitments from Cude Oilfield Services and Lindley Trucking to use the Gilbert disposal well once it becomes available.

4 OIL AND GAS DOCKET NO. 7B Page 4 Greenhaw urges that the possibility of spills entering the Palo Pinto Reservoir though a creek east or west of the site is unlikely. The spilled water would be required to travel approximately ten miles through the generally dry creek undetected to reach the reservoir. There is not sufficient storage capacity on the proposed site to support a stream to travel that distance. Additionally, the terrain between the disposal site and reservoir is hilly and presents numerous obstacles that would impede water flow into the reservoir. Greenhaw has an active P-5 on file with the Commission, with $50,000 financial assurance. There are no pending enforcement actions against Greenhaw. Notice of the subject application was published in The Lake Country Sun, a newspaper of general circulation in Palo Pinto County, on September 5, A copy of the application was mailed on August 27, 2008 to the Palo Pinto County Clerk s Office and the offsetting surface owners and operators within ½ mile of the proposed well. O. H. Gilbert owns the surface of the 20 acre tract on which the well is proposed and is a partner with Morris R. Greenhaw on the disposal well. Protestant s Evidence The application is protested by several parties, the O. Dean Edwards Family Limited Partnership, Pastor Billy Roger Keck and Barbara Garcia. Wylie Tucker is a partner of the O. Dean Edwards Family Limited Partnership and was present to represent the Partnership. The O. Dean Edwards Family Limited Partnership donated 25 acres of land to the Santo Youth Association to build three baseball fields across the road from the proposed Gilbert disposal well. Mr. Tucker is concerned that truck traffic using the disposal well may endanger people using the ball fields on FM 4. Grady Jordan, was representing Barbara Garcia, an adjacent landowner to the Gilbert disposal well. Mr Jordan is a ranch manager employed by Barbara Garcia to look after her ranch and property in Palo Pinto county. Mr Jordan raised concerns of truck traffic safety, impacted property values and possible contamination of drinking water supplies. Mr Jordan stated numerous accidents have occurred at the intersection of FM 4 and the north service road to Interstate 20 due to people failing to stop at the stop sign. He fears increased truck traffic will increase accidents. He believes the disposal facility is not needed because adequate facilities currently exist in the area. He mention the Phillips Brannon commercial disposal well located 1/3 of a mile from the proposed location of the Gilbert disposal well. Mr. Jordan believes a surface release of disposal water from the Gilbert disposal site will enter Santo s drinking water supply thru a creek east of the property that feeds into Palo Pinto Reservoir. Billy Roger Keck is Pastor of the Palo Pinto County Cowboy Church. The Palo Pinto County Cowboy Church currently meets in the Tri-county sales barn. The members of the Cowboy Church have purchased a 10 acre tract of land to the east and northeast of the Gilbert disposal well to build on. The future Cowboy Church is expected to accommodate

5 OIL AND GAS DOCKET NO. 7B Page 5 about 150 to 200 cars on Sunday morning and about 50 to 60 cars on Wednesday bible study. Pastor Keck is concerned for the safety of individuals or the congregation of the Cowboy Church along FM 4. Both congregation traffic and disposal truck traffic will use FM 4 to access their respective facilities. EXAMINERS OPINION The examiners believe that this application should be approved. The Gilbert No. 1SW will be completed in a manner which will confine disposal fluids to the proposed disposal interval in the Ellenburger. Surface casing will be set and cemented through the base of usable quality water. The longstring production casing will also be cemented to the surface and through the Barnett Shale to prevent migration from the injection interval. There are no oil or gas wells within the one-quarter mile radius of review and any water wells in the area will be protected by surface casing as recommended by the TCEQ. The evidence indicates that the operation of the subject disposal well and facility will not adversely impact any surface or subsurface useable quality water. The examiners agree that the possibility of disposal site spills entering the Palo Pinto Reservoir though a creek east or west of the site is very small. It is unlikely that sufficient quantities of water would be stored at the site to travel the ten miles of dry creek necessary to reach the reservoir. Additionally, terrain and other obstacles would impede water flow into the reservoir. Approval of the requested permit is in the public interest because it will support continued development of the Newark, East (Barnett Shale) Field in the area. Development of the Barnett Shale wells in Parker, Erath and Palo Pinto Counties will be promoted by the use of the Gilbert No. 1SW well as the well will provide a safe and economic means of disposal of the fluids associated with completion and production of the wells. Additionally, Greenhaw provided evidence of a need for an additional commercial well in the area as shown by the commitments obtained to use the well for disposal operations from operators in the area. There is also evidence that the proposed well will reduce water hauling truck traffic miles. Produced water from Palo Pinto, northern Erath, and western Parker County wells is currently taken to a disposal facility located northeast of Mineral Wells. It is estimated that by approving the proposed Gilbert No. 1SW disposal well an average of 600,000 truck miles will be eliminated by taking produced water from the just the Morgan Mill Barnett Shale area wells as the proposed well will be 25 miles closer to the area of current development. Having a disposal facility closer to the producing wells will reduce disposal costs as it will reduce the truck miles and operating costs for the producing wells. Lower disposal costs will extend the economic life of the Barnett Shale wells which will result in the recovery of additional reserves.

6 OIL AND GAS DOCKET NO. 7B Page 6 Additionally, the Gilbert disposal well will generally come from Interstate 20 service roads and turn to the north onto FM 4. Because the disposal well is located nearest to the I-20 service road, truck traffic will have limited interaction with other traffic. The examiners therefore recommend the application be approved and that the a Final Order be entered adopting the following Findings of Fact and Conclusions of Law. FINDINGS OF FACT 1. Notice of this hearing was given to all persons entitled to notice at least ten (10) days prior to the hearing. Notice of the application was published in The Lake Country Sun, a newspaper of general circulation in Palo Pinto County, on September 5, The Gilbert No. 1SW has not been drilled. Morris R. Greenhaw plans to drill the well to a maximum depth of approximately 4,999 feet. The top of the Ellenburger is expected to occur at approximately 4,400 feet. 3. The maximum requested injection volume is 20,000 barrels of water per day and the maximum requested surface injection pressure is 2,000 psi. The requested disposal interval is the Ellenburger formation between approximately 4,700 and 4,999 feet. 4. The Gilbert No. 1SW will be cased and cemented in a manner to protect usable quality water and injection will be confined to the injection interval. a. The subject well will have 330 feet of 8e" surface casing cemented to surface. b. The subject well will have approximately 4,999 feet of 5½" casing with top of cement at approximately 2,996 feet, which is above the top of the Barnett Shale. DV tools will be set at 3,000 and 1,500 feet to circulate the cement to the surface. c. Injection will be through tubing set on a packer no higher than 100 feet above the top of the injection interval. d. The Texas Commission on Environmental Quality recommends that usablequality water be protected to 325 feet in the area of the proposed well. 5. There is one wellbore within one-quarter mile of the proposed disposal well. The well is a cathodic protection well drilled to a depth of 475 feet. 6. Greenhaw established that use of the proposed commercial disposal well is in the public interest.

7 OIL AND GAS DOCKET NO. 7B Page 7 a. Increasing development of the Newark, E. (Barnett Shale) Field in Palo Pinto, Erath and Parker counties requires the disposal of large quantities of produced water. b. Use of the Gilbert No. 1SW well as a commercial disposal well is in the public interest to promote this development by providing a safe and economic means of disposal of the fluids associated with production. c. Greenhaw provided evidence of a need for an additional commercial well in the area as shown by the commitments obtained to use the well for disposal operations from operators in the area d. The proposed Gilbert No. 1SW disposal well will eliminate an average of 600,000 truck miles as the proposed well is 25 miles closer to the area of current development then the nearest currently permitted disposal well open to the public. e. A disposal facility closer to the current development in the area will reduce disposal costs as it will reduce the truck miles and operating costs for the producing wells. Lower disposal costs will extend the economic life of wells which will result in the recovery of additional reserves. 7. Greenhaw has an active P-5 on file with the Commission, with $50,000 financial assurance. CONCLUSIONS OF LAW 1. Proper notice was issued in accordance with the applicable statutory and regulatory requirements. 2. All things have occurred to give the Railroad Commission jurisdiction to consider this matter. 3. The use or installation of the proposed injection well is in the public interest. 4, The use or installation of the proposed injection well will not endanger or injure any oil, gas, or other mineral formation. 5. With proper safeguards, as provided by terms and conditions in the attached final order which are incorporated herein by reference, both ground and surface fresh water can be adequately protected from pollution.

8 OIL AND GAS DOCKET NO. 7B Page 8 6. Morris R. Greenhaw has made a satisfactory showing of financial responsibility to the extent required by Section of the Texas Water Code. 7. Morris R. Greenhaw has met its burden of proof and satisfied the requirements of Chapter 27 of the Texas Water Code and the Railroad Commission's Statewide Rule 9. EXAMINERS RECOMMENDATION Based on the above findings and conclusions, the examiners recommend that the application be approved as set out in the attached Final Order. Respectfully submitted, Andres J. Trevino Technical Examiner Mark Helmueller Hearings Examiner