Via Facsimile and First-Class Mail. March 22, 2010

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1 Via Facsimile and First-Class Mail March 22, 2010 Tom Doll, State Oil and Gas Supervisor Wyoming Oil and Gas Conservation Commission P. O. Box 2640, Casper, Wyoming FAX Dear Mr. Doll, On behalf of Powder River Basin Resource Council, Biodiversity Conservation Alliance, EARTHWORKS Oil & Gas Accountability Project, Wyoming Office of The Wilderness Society, Wyoming Outdoor Council and thousands of members throughout the state, including many who live and work in close proximity to oil and gas activities, thank you for the opportunity to comment on the proposed changes and additions to the Rules and Regulations of the Wyoming Oil and Gas Conservation Commission. We greatly appreciate the time and effort that the Commission has taken in revising these regulations. Although we support many of the proposed revisions, particularly the new provisions addressing hydraulic fracturing and seismic operations, we believe that the Commission could and should do more to protect citizens and the environment from the adverse effects of drilling operations. During the past decade, oil and gas operations in Wyoming have dramatically changed, both with respect to technologies being used, such as extensive hydraulic fracturing, along with the pace and scale of activity. Notwithstanding the recent (and most likely temporary) lull in drilling, the State is experiencing a significant and extended boom in oil and gas drilling, and new measures are needed to strengthen protections for water supplies and public health. Recent newspaper articles suggest a new oil boom may be ready to explode in Wyoming's eastern counties. Against this backdrop, and although we appreciate the Commission s efforts, we feel the new rules do not go far enough to achieve these essential goals. We offer the following comments and proposed changes that are needed to protect Wyoming citizens, their health and their livelihoods. Specifically, we urge the Commission to consider the adoption of: 1) an expanded definition of critical areas to include enumerated sensitive areas; 2) development of comprehensive development plans; 3) better notification for surface owners 4) better protection of groundwater, drinking water, underground sources of drinking water (USDWs) and surface water through a revised and updated comprehensive regulatory program for well casing 5) a revised and updated comprehensive regulatory program to reduce harmful environmental effects from pits; 6) more effective reclamation standards and requirements; 7) more effective public notice requirements, and 8) rules that ensure landowners will receive appropriate compensation for the use of their land during carbon sequestration. 1

2 At our meeting with Supervisor Doll on January 12, 2010, we were asked to submit proposals for rule changes that would help alleviate the problems related to water contamination and public health that communities around the state, including Pavillion and Clark, Wyoming, are facing. In this spirit of discussion, the Commission should seriously consider our proposed rule changes we expect nothing less from the administrative body charged with regulating the state s extensive oil and gas development. While we understand the value in protecting Wyoming s ability to promote development of our oil and gas resources, our proposals are aimed at ensuring that Wyoming s other resources are protected during oil and gas development; specifically, Wyoming s water, air, land, and our citizen s health and quality of life. In addition, we feel our comments reflect proposals that will help stop ongoing negative impacts and damages from oil and gas exploration and development in our state. Italicized-PRBRC-Comments Bold Italicized-Proposed Rule Change Critical and Sensitive Areas Neither the existing regulations nor the proposed revisions provide adequate protection for critical and sensitive areas. Critical and sensitive areas are areas that have particular value because of the presence of surface water, groundwater aquifers used for drinking water now and that may be used for drinking water in the future, and areas where balance in the natural environment, wildlife protection, and human health is dependent on clean air and clean drinking water sources. These areas must have stronger protections in place. We propose the following additions to: CHAPTER 1, AUTHORITY AND DEFINITIONS, Section 2. Definitions, page 1-5 through 1-6 (kkll) Pits in critical and sensitive areas. (i) locations which are within one-quarter (1/4) mile one half (1/2) mile of domestic water well, water supplies, residences, schools, hospitals, or other structures where people are known to congregate. (ii) areas vulnerable to potential significant adverse groundwater impacts, due to factors such as the presence of shallow groundwater or pathways for communication with deeper groundwater or areas when groundwater at the location is less than twenty feet (20'); fifty feet (50 ) from the surface; (iii) locations which are within five hundred feet (500') one half (1/2) mile of wetlands, ponds, lakes, perennial drainages, springs, stock watering tanks or within a floodplain; Other states have recognized sensitive areas and written rules to enforce better protections through stronger pit regulation, better well casing rules, and best management practices. We 2

3 suggest the commission put in place a description for those sensitive areas by proposing a definition for: (qq) SENSITIVE AREA shall mean any area vulnerable to potential significant adverse groundwater impacts, due to factors such as the presence of shallow groundwater or pathways for communication with deeper groundwater; proximity to surface water, including lakes, rivers, perennial or intermittent streams, creeks, springs, irrigation canals, stock watering tanks and wetlands. Additionally, areas classified for domestic use, areas within 1/2 mile of a domestic water well, areas within 1/2 mile of a public water supply well, ground water basins, and surface water supply areas are sensitive areas. The creation of the proposed (qq) will result in the following changes: (ppqqrr) Shut-In Well (qqrrss) Special Sodium Drilling Area (rrsstt) Special Sodium Drilling Area (ssttuu) Spud (ttuuvv) Stratigraphic Test or Core Hole (uuvvww) Stripper Production (vvwwxx) Sump (wwxxyy) Supervisor (xxyyzz) Surface Owner (yyzzaaa) Temporarily Abandoned Well (zzaaabbb) Temporary Spacing Unit (aaabbbccc) Tertiary Production (bbbcccddd) Trona Mineral Resource (cccdddeee) Trona Interval (dddeeefff) Underground Source of Drinking Water (eeefffggg) Well (fffggghhh) Wildcat Well (ggghhhiii) Workover (hhhiiijjj) Wyoming Conservation Law Act (iiijjjkkk) Wyoming Split Estates Act CHAPTER 3 OPERATIONAL RULES, DRILLING RULES, Section 7. Forfeiture, Release, or Return of Surety Bond or Other Guaranty. page 3-15 (a) The purpose of a surety bond or other guaranty posted as security pursuant to the Commission's Rules is to insure that the principal or person posting same complies with the Oil and Gas Conservation Law, the Commission's Rules, and the orders of the Commission, the State Oil and Gas Supervisor, or their agents, including, but not limited to, proper plugging of wells and seismic holes and reclamation of the area affected by same. Site reclamation must be initiated within one (1) year of permanent abandonment within 30 days of permanent 3

4 abandonment of a well or last use of a pit and shall be completed in as timely a manner as climatic conditions allow. For just cause, the Supervisor may grant an administrative variance providing for additional time. Reclamation must be completed in accordance with the landowner s reasonable requests, and/or resemble the original vegetation and contour of adjoining lands. Where practical, topsoil Topsoil must be segregated and stockpiled in shortterm (4-6 months maximum) and shallow (less than 3 feet) piles during construction for use in reclamation. All disturbed areas on state lands will be recontoured and reseeded unless the Office of State Lands and Investments approves otherwise. Appendix F includes information on reseeding. All disturbed areas on state lands will be recontoured and reseeded unless the Office of State Lands and Investments approves otherwise. Appendix F includes information on reseeding. page 3-16 (b) (b) The proceeds of a surety bond or other guaranty become the property of the Commission and shall not be returned to the person posting same if the principal or person posting same fails to comply with the Oil and Gas Conservation Law, the Commission's Rules, or the orders of the Commission, the State Oil and Gas Supervisor, or their agents. This shall be determined by the Commission after notice and hearing in accordance with these Rules and the Oil and Gas Conservation Law. Notice of the hearing shall be given to the principal and surety on the bond, or to the person posting the cash or certificate of deposit, and the surface owner by mailing a copy of the notice of hearing and a copy of a complaint, stating the grounds for forfeiture or non-return to them, filed by the Commission staff. This shall be done by certified mail, return receipt requested, and addressed to their last known address listed with the Commission. If the principal or surety or person posting the cash or certificate of deposit has a defense to, or otherwise wishes to contest the complaint of the Commission staff, he must file a written statement or answer setting forth same with the Commission at least three (3) working days prior to the Commission hearing. Any defense or reason for contesting the complaint is waived if he fails to do so. The Commission may treat the failure to file such a defense or reason to contest the complaint or the failure to appear at the hearing on same as a default by the party. Comprehensive Development Plans Many of the impacts felt by people living in areas with increased oil and gas development are caused by the lack of a comprehensive plan to address development on the ground. We propose strengthening the rule below by implementing a plan that would help impacted citizens and companies proactively plan for oil and gas development and address impacts. The proposals we have added come from rules implemented across the Rocky Mountain region, in states where rules have already been revised. In addition to Colorado, New Mexico, Texas, Utah and Montana, we have gathered information and suggestions from citizens in Wyoming who are impacted and working on issues and impacts from oil and gas development. Accordingly, we propose significant revisions to Chapter 3, Section 8 including several new sections specifying elements that must be included in a comprehensive drilling plan. Section 8. Application for Permit to Drill or Deepen a Well (Form 1), page 3-15 through

5 (c) The Application for Permit to Drill or Deepen (Form 1) shall be accompanied by a Comprehensive Drilling Plan, which is intended to identify foreseeable oil and gas activities in a defined geographic area, facilitate discussions about potential impacts, and identify measures to minimize adverse impacts to public health, safety, welfare, and the environment, including wildlife resources, from such activities. Operators are encouraged to submit the most detailed information practicable about the future activities in the geographic area covered by the Comprehensive Drilling Plan. Detailed information is more likely to lead to identification of specific impacts and agreement regarding measures to minimize adverse impacts. The information included in the Comprehensive Drilling Plan shall be decided upon by the operator, in consultation with other participants. Information provided by operators to federal agencies to obtain approvals for surface disturbing activities on federal land may be submitted in support of a Comprehensive Drilling Plan. Included in the plan will be an accurate plat showing the location of the proposed well with reference to the nearest lines of an established public survey. Information to be included in such notice shall be the type of tools to be used, proposed depth to which the well will be drilled, estimated depth to the top of the important markers, estimated depth to the top of objective horizons, the proposed casing program, including size and weight thereof, the depth at which each casing string is to be set, and the amount and weight of cement to be used and the amount and weight of cement needed to kill the well. A plan for the management of exploration and production waste shall also be included. Information shall also be given relative to the drilling plan, together with any other information which may be required by the Supervisor. Where multiple Applications for Permit to Drill will be sought for several wells proposed to be drilled to the same zone within an area of geologic similarity, approval may be sought from the Supervisor to file a comprehensive drilling plan containing the information required above which will then be referenced on each Application for Permit to Drill. No Application for Permit to Drill shall contain the exact well name as another permitted well in the same quarter quarter, section, township and range. (i) The Owner or Operator shall have the burden of demonstrating that the proposed activity, including drilling, proposed hydraulic fracture stimulation, all well stimulation, and operations used during production will not endanger fresh and potable (USDW) water sources. (A) The intent of this section is to protect fresh and potable (USDW) water surface water, groundwater, drinking water, and underground sources of drinking water (USDWs)by requiring the Owner or Operator to expand upon information currently provided by requesting additional, readily available, information to the Commission. By this section the Commission is not trying to determine, specify or direct the application of the appropriate drilling, hydraulic fracturing other well stimulation and production operations for the recovery of oil and/or gas, but to insure protection of fresh and potable (USDW) water. surface water, groundwater, drinking water, and underground sources of drinking water (USDWs) (B) The Owner or Operator shall provide for the individual Application for Permit to Drill (Form 1) or for the comprehensive drilling plan or for a Sundry Notice (Form 4) the formation depth and areal extent of all useable fresh and potable water (USDW) underlying the drilling and spacing unit or the Commission approved well spacing or drilling location requirements under Chapter 3, Section 2. 5

6 (C) The Supervisor may will require the Owner or Operator to identify, drainages and stream crossings, oil or gas wells, riparian areas, all water supply wells known to the operator(s) and those permitted with the Wyoming Office of the State Engineer within one-quarter (1/4) one-half (1/2) mile of the proposed well or the drilling and spacing unit or the Commission approved well spacing, whichever is less, In addition the plan will identify all proposed access roads and gathering systems and existing and proposed buildings, roads, utility lines, pipelines and known mines. Also included in the plan will be a description of the wildlife resources at each oil and gas location, wildlife information that is determined necessary after consultation with Wyoming Game and Fish and proposed best management practices or mitigation to minimize adverse impacts to resources such as air, water, human health or wildlife resources. Locations of all proposed reference areas to be used as guides for interim and final Reclamation, past economic uses to which the land has been put in the previous ten (10) years reasonably known to the operator(s), and any planned variance requests that are reasonably known to the operator. The operator(s) shall invite the Wyoming Department of Environmental Quality, Wyoming Health Department, Wyoming Game and Fish, local governmental designee(s), all surface owners and adjacent surface owners to participate in the development of the Comprehensive Drilling Plan. In many cases, participation by these agencies and individuals will facilitate identification of potential impacts and development of conditions of approval to minimize adverse impacts. The operator(s), the Supervisor, and participants involved in the Comprehensive Drilling Plan process shall review the proposal, identify information needs, discuss operations and potential impacts, and establish measures to minimize adverse impacts resulting from oil and gas development activities covered by the Plan. A list of all parties that participated in creating the Comprehensive Drilling Plan shall be included, together with any other information which may be required by the Supervisor. The Supervisor shall place on the Commission s hearing agenda in a timely manner a Comprehensive Drilling Plan that has been agreed to in writing by the operator(s) and that the Supervisor considers suitable after consultation with the Wyoming Department of Health, the Wyoming Department of Environmental Quality (WDEQ) and the Wyoming Game and Fish, as applicable, and consideration of any other comments. The Director shall identify and document the agreed-upon conditions of approval for activities within the geographic area covered by the accepted Comprehensive Drilling Plan. Comprehensive Drilling Plans that have been accepted by the Commission shall be posted on the WOGCC website, subject to any confidential or proprietary information belonging to the operator or other parties being withheld. The Commission, the Wyoming Department of Health, the WDEQ, and Wyoming Game and Fish will keep all such data and information confidential to the extent allowed by the Wyoming Public Records Act. Before initiating a Comprehensive Drilling Plan, operators are encouraged to discuss with the Director and, as appropriate, the Wyoming Department of Health, WDEQ, Wyoming Game and Fish, and the surface owner(s), and adjacent landowners the scope of the Plan, the schedule for its preparation, the information to be included, and any public participation opportunities. ) A Comprehensive Drilling Plan may incorporate variances to any of these rules, provided that all of the requirements for granting variances are met. Practices and conditions agreed to in an accepted Comprehensive Drilling Plan shall be included as conditions of approval in any permits for individual wells or other ground-disturbing activity covered by the Plan. Any permit-specific condition of approval for wildlife habitat protection 6

7 will be included only with the consent of the surface owner. Once accepted by the Commission, a Comprehensive Drilling Plan shall be valid for a period of six (6) years, after which the plan will be brought back to the commission with any modifications and revisions for Commission review. An accepted Comprehensive Drilling Plan may be modified using the same process as that leading to acceptance of the original Plan either upon the initiative of the operator or upon the initiative of the Supervisor and upon a showing that there has been a change in an applicable provision in these rules or a significant change to the basis upon which the Plan was developed. The review and approval of the modification shall focus only on the proposed modification(s). And modification shall include a description of the geology and hydrology of the area in which the well will be drilled. (ii) For individual Application for Permit to Drill (Form 1) or for the comprehensive drilling plan or for a Sundry Notice (Form 4), approval by the Supervisor or Authorized Agent, shall depend upon the Owner or Operator providing the following additional detail requirements: (A) Upper Hole Geology and Hydrology: In areas of known or anticipated shallow groundwater and/or shallow gas sands, the The Owner or Operator shall provide additional geological and hydrological detail to the Commission as an addendum to Form 1 or as part of the comprehensive drilling plan or for a Sundry Notice (Form 4). This review shall identify the geology and hydrology of the geologic interval from surface to proposed surface casing set point bottom hole. The Owner or Operator shall note if such areas are unknown. The Owner or Operator shall identify proposed means to control wellbore conditions to minimize stop drilling fluid invasion into these porous water sands and all groundwater, drinking water, and underground sources of drinking water (USDWs); to control hole erosion; to maintain well control; and to provide the proper cementing class and admixes, mixing water and displacement fluid. The Owner or Operator must manage the surface hole drilling, hole conditioning, casing running, cementing and displacement process to protect shallow ground water all groundwater, drinking water, and underground sources of drinking water (USDWs)and to isolate shallow ground water all groundwater, drinking water, and underground sources of drinking water (USDWs) and/or shallow gas sands. (I) Well receiving hydraulic fracturing stimulations shall be cased and the casing cemented in such a manner that damage will not be caused to oil, gas, or fresh water sources any groundwater, drinking water, and underground sources of drinking water (USDWs). A description of the casing must be provided on the individual Application for Permit to Drill (Form 1) or comprehensive drilling plan or for a Sundry Notice (Form 4), and at a minimum shall include API grade, weight per foot, burst pressure, tensile strength, yield pressure, manufacturer and date of manufacture, casing requirements revisions as listed in Section 22. General Drilling Rules and other information as required by the Supervisor. (II) A description of the cementing program shall be included, and at a minimum shall provide the API class of cement and additives to be used, mixed at a density approved by the Supervisor, with estimated volume of cement to be used, including percent excess volume. The Supervisor may will require a cement bond log to be run in the surface casing, prior to drill out, depending upon the specific area and geology and hydrology encountered to ensure protection of the 7

8 shallow ground water. all surface water, groundwater, drinking water, and underground sources of drinking water (USDWs) Additional well drilling detail shall be provided to the Commission as an addendum to Form 1 or as part of the comprehensive drilling plan or for a Sundry Notice (Form 4). The Owner or Operator shall report detail gathered throughout the drilling of the well that is usually captured by the drilling contractor, mud logger, directional driller, and geological and engineering onsite representatives. The purpose is to provide the Commission with better wellbore information to ensure production casing and cement programs isolate the production intervals from the upper hole and to ensure proper containment of the hydraulic fracture stimulation treatment in the productive interval. (I) Detail required on hole conditions includes all information regarding hole integrity, such as lost circulation zones by depth and barrels of fluid lost; hole drift; key seats or tight hole; stuck pipe and depths experienced; water flows or kicks and depths experienced. (II) The Owner or Operator shall provide geological names, geological description and depth of the formation into which hydraulic fracture stimulation fluids are to be injected. (III) The Supervisor may will require the Owner or Operator to provide open hole caliper logs if severe washed out hole conditions exist. (IV) The Supervisor may will require the Owner or Operator to provide cased hole bond logs to ensure adequate isolation between the productive interval and the upper hole (C) Hydraulic Fracturing Stimulation: Commission approval is required prior to the initiation of any hydraulic fracturing stimulation activity. Additional stimulation fluid information shall be provided to the Commission as an addendum to Form 1 or as part of the comprehensive drilling plan or for a Sundry Notice (Form 4). The purpose of this section is to provide the Commission with additional detail such that proactive information is available to ensure the public that ground water is protected. (I) The Owner or Operator shall provide detailed information to the Supervisor as to the base fracture fluid source; chemical additives and concentrations proposed to be mixed and injected, to include specific and/or proprietary chemical component detail; to include the proposed hydraulic fracturing fluid additives, identified by additive type (such as acid, biocide, breaker, brine, corrosion inhibitor, crosslinker, demulsifier, friction reducer, gel, iron control, oxygen scavenger, ph adjusting agent, proppant, scale inhibitor, surfactant); and the Supervisor may will require the Owner or Operator to provide for each additive type the main chemical element, compound name and/or formula (such as the additive biocide is a glutaraldehyde, or the additive breaker is an aluminum persulfate, or the proppant is silica or quartz sand, and so on for each additive used); and the Supervisor shall require the Owner or Operator to provided the proposed concentration for each additive (such as gel at pounds per 1000 gallons; or biocide at gallons per 1000 gals; or proppant at pounds per gallon; or other by expressed as percent by weight or percent by volume, or parts per million, or parts per billion); and the Owner or Operator shall 8

9 provide a copy of the contractor s proposed hydraulic fracture stimulation program detail and/or a copy of the proposed hydraulic fracture stimulation modeling program output. (1.) As an example: Proposed fracturing fluid will be a total of X gallons of treated fresh water base fluid from the Named City water supply with biocide (name: glutaraldehyde) at A quarts per 1000 gallons, and B gelling agent (name: hydroxyethyl cellulose) at C pounds per 1000 gallons. The pad will be Y gallons of treated fresh water base fluid followed by a total of Z gallons of fresh water base fluid containing T pounds of proppant (name: grade silica sand) in two stages, stage 1 at D pounds per gallon in AA gallons and stage two with F pounds per gallon in BB gallons. The proppant will be flushed with CC gallons of treated fresh water base fluid also containing friction reducer (name: polyachrylamide) at G pounds per 1000 gallons. (II) The injection of hazardous chemicals, such as benzene, toluene, ethylbenzene and xylene, also known as BTEX compounds or any petroleum distillates, into fresh or potable (USDW) water is prohibited. except in hydrocarbon bearing zones and upon prior approval from the Supervisor. (1.) The Owner or Operator shall have the burden of demonstrating that the proposed chemicals will not endanger fresh and potable (USDW) water sources. The proposed use of hazardous chemicals, such as benzene, toluene, ethylbenzene and xylene, also known as BTEX compounds or any petroleum distillates for hydraulic fracture stimulation into oil and gas intervals shall require prior approval of the Supervisor. (2.) Upon written request to the Supervisor, the Commission can provide confidentiality protection for Owners or Operators who divulge the specific additives chemistry proposed for a minimum of one (1) year after the completion of the well, unless incidents occur that put human health at risk. (III) The Owner or Operator shall provide the anticipated surface average and maximum injection treating pressure and from a hydraulic fracturing simulation model shall provide the calculated fracture length and fracture height for the proposed stimulation. (IV) The Owner or Operator shall provide the Supervisor, on a Sundry Report (Form 4), the actual total treatment volume pumped; to include detail as to each stage pumped, including actual volume by stage, proppant concentration, surface pressure and rate at the end of each stage; the actual flush volume, rate and final pump pressure; and the actual instantaneous shut-in pressure, the actual 15 minute shut-in pressure, and the actual 30 minute shut-in pressure. A copy of the actual hydraulic fracturing contractor s field ticket or an Owner or Operator representative s hydraulic fracture treatment job log providing the above required information is acceptable. (V) The Owner or Operator shall provide on the Sundry Notice (Form 4) the actual base fracture fluid source; chemical additives and concentrations actually mixed and injected, to include specific and/or proprietary chemical component detail; to include the actual hydraulic fracturing fluid additives used identified by additive type and for each additive type the main chemical 9

10 element, compound name and/or formula and the actual concentration used for each additive. A copy of the actual hydraulic fracturing contractor s field ticket or an Owner or Operator representative s hydraulic fracture treatment job log providing the above required information is acceptable. (VI) The Owner or Operator shall provide detailed information, by sundry, to the Supervisor as to the proposed handling and disposal or reuse of hydraulic fracture fluid load recovered during flow back, swabbing, and/or recovery from production facility vessels. Notification of Surface Owners Unfortunately, in many cases neighboring landowners only find out about oil and gas development after it has already started. It is important to ensure that neighboring landowners have an opportunity to participate in the permitting process and express any concerns they may have. This will avoid future conflicts during the operations phase. Wyoming has increased notification requirements for wind and other types of development and it only makes sense to increase notification requirements for oil and gas operations as well. Section 8. Application for Permit to Drill or Deepen a Well (Form 1), page 3-23 (f) (ii) For horizontal wells, a diagram shall be submitted clearly showing the wellbore path from the surface through the terminus of the lateral. A horizontal well's number shall be appended with an "H" suffix, denoting horizontal, in Block 8 of Form 1. If more than one lateral borehole extends from the same vertical wellbore, each such lateral must be permitted as an individual horizontal well with an "H" suffix. The surface location and the proposed footage locations of both the initial penetration into the productive formation and the terminus of the lateral shall be entered under Location. If the application is for a permit to drill a horizontal well, notice of the application shall be given by certified mail to all mineral owner Owners within one-half (½) one (1) mile and surface owners within 5 miles of any point on the entire length of the horizontal wellbore, from the surface location through the terminus of the lateral. In the absence of any special Commission order, notice is not required for horizontal wells in federally supervised units or in API units provided that no portion of the horizontal interval is closer than six hundred sixty feet from a drilling or spacing unit boundary or any uncommitted tract Need for Stronger Well Casing Requirements Groundwater, drinking water, and potential drinking water aquifers across Wyoming and the United States have been contaminated because of faulty well casing. In order to protect Wyoming s water, we propose striking Section 22, General Drilling Rules, (a) (i) through (vi), and replacing with the following (i) through (ix). Section 22. General Drilling Rules. 10

11 page 3-33 to 3-38 (a) The following shall apply to the drilling of all wells unless altered, modified, or changed for a particular well, pool, unit, area or lands upon hearing before the Commission: (i) Freshwater-based drilling fluid, with full disclosure of all constituents used, or air must be used when drilling the surface hole prior to setting surface casing and when drilling through all ground water, drinking water, and underground sources of drinking water (USDWs). (ii) The casing program adopted for each well must be so planned and maintained as to protect any potential oil or gas bearing horizons penetrated during drilling from infiltration of injurious waters from other sources, and to prevent the migration of oil, gas or water from one (1) horizon to another, that may result in the degradation of all ground water, drinking water, and underground sources of drinking water (USDWs). A Sundry Notice including a detailed work plan and a wellbore diagram, shall be submitted and approved by the Supervisor prior to any routine or planned casing repair operations. During well operations, prior verbal approval for unforeseen casing repairs followed by the immediate filing of a Sundry Notice shall be acceptable. (iii) Surface casing in all areas, including where subsurface conditions have been established by drilling experience, and areas where pressures and formations are unknown, and when drilling in wildcat territory or in any field where high pressures are probable, the conductor and surface strings of casing must be cemented throughout their lengths, and be ran to reach a depth below all groundwater, drinking water, and underground sources of drinking water (USDWs), and to prevent blowouts or uncontrolled flows, and shall be of sufficient size to permit the use of an intermediate string or strings of casings. All subsequent strings of casing must be securely anchored, and shall be cemented by the pump and plug or displacement or other approved method with sufficient cement to fill the annulus to the top of the hole, all in accordance with reasonable requirements of the Supervisor. If cement is not circulated to the surface during the primary operation, the operator shall perform supplemental cementing operations to assure that the annular space from the casing shoe to the surface is filled with cement. In areas where ground water and drinking water aquifers are of such depth as to make it impractical or uneconomical to set the full amount of surface casing necessary to comply fully with the requirement to cover or isolate all aquifers, no drilling shall occur. (iv) The operator shall ensure that all surface and intermediate casing cement required under this rule shall be of adequate quality to achieve a minimum compressive strength of three hundred (300) psi after twenty-four (24) hours and eight hundred (800) psi after seventy-two (72) hours measured at ninety-five degrees Fahrenheit (95 F) and at eight hundred (800) psi. All surface casing shall be cemented with a continuous column from the bottom of the casing to the surface. Cement placed behind the surface and intermediate casing shall be allowed to set until three hundred (300) psi calculated compressive strength is developed prior to commencing drilling operations. If the surface casing cement level falls below the surface, remedial cementing operations shall be performed. (v) The operator shall ensure that all cement required under this rule placed behind production casing shall be of adequate quality to achieve a minimum compressive 11

12 strength of at least three hundred (300) psi after twenty-four (24) hours and eight hundred (800) psi after seventy-two (72) hours measured at ninety-five degrees Fahrenheit (95 F) and at eight hundred (800) psi. Cement placed behind the production casing shall be allowed to set until eight hundred (800) psi calculated compressive strength is developed prior to the undertaking of any completion operation. (vi) Based on the geology and hydrology and the casing used, the installed production casing shall be adequately pressure tested for the conditions to be encountered during completion and production operations. (vii) In the event drilling operations are suspended before production string is run, the Supervisor shall be notified immediately and the operator shall take adequate and proper precautions to assure that no alien water enters oil or gas strata, nor any ground water and underground sources of drinking water (USDWs)during such suspension period or periods. If alien water is found to be entering the production stratum or to be causing adverse environmental impact to ground water, drinking water, and underground sources of drinking water (USDWs) during completion testing or after the well has been put on production, production shall be put on hold until the condition is promptly remedied. (viii) (a) All operators shall be required to perform bradenhead monitoring on all wells in all fields. On any well, the bradenhead access to the annulus between the production and surface casing, as well as any intermediate casing, shall be equipped with fittings to allow safe and convenient determinations of pressure and fluid flow (b)all operators shall have thirty (30) days after the effective date of this rule to commence the taking of bradenhead pressure readings in all wells which are equipped for such readings. The operator shall equip any well which is not so equipped within ninety (90) days of the effective date, and within thirty (30) days thereafter the operator shall take the required reading. Such readings shall include the date, time and pressure of each reading, and the type of fluid reported. Such readings shall be taken annually and shall be immediately reported to the Supervisor by sundry form. (ix) (a) The Commission shall require correction, in a manner to be prescribed or approved by it, of any condition which is causing or is likely to cause waste or pollution; and require the proper plugging and abandonment of any well or wells no longer used or useful in accordance with such reasonable plan as may be prescribed by it. Need for Stronger Pit Regulation Inadequate construction, lining and closure of earthen pits used during oil and gas development continue to contaminate soils, groundwater, drinking water, and underground sources of drinking water (USDWs). Many of the proposals below are from New Mexico s oil and gas regulations, where pit rules have been substantially strengthened. We encourage the Commission to move toward regulation that will require closed loop drilling systems and closed containment systems for all oil and gas development and production in Wyoming. 12

13 page 3-34 and 3-35 (b) Before drilling commences, approval to construct proper and adequate reserve pits for the reception and confinement of mud and cuttings and to facilitate the drilling operation shall be applied for and received in accordance with Chapter 4, Section 1 of these rules. Special precautions including, but not limited to, an impermeable liner and/or membrane, monitoring systems, or closed systems, shall be taken, if necessary, to prevent contamination of streams and potable water and to provide additional protection to human health and safety in instances where drilling operations are conducted in close proximity to water supplies, residences, schools, hospitals, or other structures where people are known to congregate. at minimum, two layers of impermeable liners and/or membrane, with a leak detection system between the layers, to prevent contamination of streams and potable water and to provide additional protection to human health and safety. Pits will have fences tall and strong enough to keep out wildlife, and nets or other devices installed to prevent birds from coming in contact with the wastes. In sensitive and critical areas, as designated in Chapter 1, Section 2, (kk), closed containment systems such as steel tanks, with secondary containment and leak detectors will be used, and then wastes will be transported off site for permanent disposal. Pits, wellheads, pumping units, tanks, and treaters shall be located no closer than three hundred fifty feet (350') from any of the aforementioned items. one half mile (1/2 mile) from any surface water, including lakes, rivers, perennial or intermittent streams, creeks, springs, irrigation canals, stock watering tanks, wetlands, areas classified for domestic use, domestic water wells, residences, schools, hospitals, other structures where people are known to congregate, or public water supply wells. The Supervisor may impose greater distances for good cause. and likewise grant exceptions to the 350-foot rule. Chapter 3, Section 43, Carbon Sequestration. Carbon Sequestration Unitization Process The Commission s proposed regulations to implement W.S , et seq. are appropriate. The legislature worked with many stakeholders, including our organizations, to address concerns that may arise during the unitization process and therefore strictly adhering to the legislative text is a good way to implement the unitization process. Nevertheless, we remain concerned about the undetermined nature of the economic benefits landowners will receive if their pore space is unitized. We encourage the Commission to ensure that landowners will receive appropriate compensation for the use of their land. We suggest you strike the following language from the rules: (Economics related to the sequestration of carbon are currently unknown. However, economic drivers will be in place in the future to value the carbon being sequestered; generation of electricity, methane from coal gasification, cap and trade credits, as examples.) It does not make sense to speculate in the rules. If these economic drivers are not in place at the time of the carbon sequestration proposal, unitization may not be appropriate. The legislature s intent is clear: unitization does not amount to a taking of property and landowners must economically benefit from the use of their pore space. 13

14 Pits Chapter 4, ENVIRONMENTAL RULES, INCLUDING UNDERGROUND INJECTION CONTROL PROGRAM RULES FOR ENHANCED RECOVERY AND DISPOSAL PROJECTS, Section 1. Pollution and Surface Damage (Forms 14A and 14B). page 4-1 (a) (a) These rules are intended to protect human health and the environment by avoiding preventing contamination of the soils and underground and surface waters groundwater, drinking water, underground sources of drinking water (USDWs), and surface waters at drilling or producing locations. Applications to construct pits, provided for in these rules, shall be approved if the pit will not cause the contamination of surface or underground water, and endanger human health or wildlife. Approval by the Commission of applications for permits for reserve or produced water pits does not relieve the Owner or Operator of the obligation to comply with the applicable federal, local, or other state permits or regulatory requirements. (c) Permits. (i) The Wyoming Department of Environmental Quality administers the following regulatory programs: (A) commercial ponds and pits used for the retention and disposal of fluids; (B) Class I hazardous waste and nonhazardous waste wells under the Underground Injection Control Program; (C) National Pollutant Discharge Elimination System Program (NPDES); (D) regulations for releases of oil and hazardous substances into waters of the state and Wyoming Contingency Plan; (E) roadspreading, landspreading, and landfarming of exploration and production wastes; (F) solid waste disposal facilities operated by municipalities and privately by the oil and gas industry; (G) cathodic protection wells; (H) underground storage tanks; (I) sanitary waste treatment systems; and (J) air quality standards. page 4-2 (i) A. A person shall not construct or use a pit or below-grade tank except in accordance with a commission-issued permit. Only an operator may apply for a commissionissued permit. B. In lieu of using a pit or below-grade tank, an operator may use a closed-loop system or other commission-approved alternative method. However, an operator may not conduct operations using a closed-loop system or proposed alternative method except in accordance with a 14

15 commission-issued permit. An operator requesting a permit for a closed-loop system that uses a temporary pit shall comply with the requirements for temporary pits. C. The division may issue a single permit for all pits, below-grade tanks, closed-loop systems or division-approved alternative methods associated with a single application for permit to drill. D. The permit application shall include a detailed plan as follows. (1) Permanent pits. A registered professional engineer shall certify engineering, design and construction specifications as contained in the plan for permanent pits. The plan shall include: (a) a quality control/quality assurance construction and installation plan; (b) operating and maintenance procedures; (c) a closure plan; (d) a hydrogeologic report that provides sufficient information and detail on the site s topography, soils, geology, surface hydrology and ground water hydrology to enable the Commission and the Wyoming Department of Environmental Quality (WDEQ) to evaluate the actual and potential effects on soils, surface water, ground water, drinking water, and underground sources of drinking water (USDWs); (e) detailed information on dike protection and structural integrity; and leak detection, including an adequate fluid collection and removal system; (f) liner specifications and compatibility; (g) freeboard and overtopping prevention; (h) prevention of nuisance or hazardous odors, including H2S; (i) an emergency response plan, (j) type of oil field waste stream; (k) climatological factors, including freeze-thaw cycles; (l) a monitoring and inspection plan; (m) erosion control; (n) full disclosure of all fluids and fluids constituents to be placed in the pit(s), and (o) other pertinent information the (WDEQ) requests. E. In addition to the permits required by the Commission and the Bureau of Land Management, the following agencies may also have authorities over the management of oil and gas field wastes: (1) The Wyoming Department of Environmental Quality administers the following regulatory programs: (a) commercial ponds and pits used for the retention and disposal of fluids; (b) Class I hazardous waste and nonhazardous waste wells under the Underground Injection Control Program; (c) National Pollutant Discharge Elimination System Program; (d) regulations for releases of oil and hazardous substances into waters of the state and Wyoming Contingency Plan; (e) roadspreading, lanspreading, and landfarming of exploration and production wastes; (f) solid waste disposal facilities operated by municipalities and privately by the oil and gas industry; (g) cathodic protection wells (h) underground storage tanks; (i) samitary waste treatment systems; and 15

16 (j) air quality standards. page 4-3 (f) The Supervisor may administratively approve field-wide or area-wide applications covering the standardized construction and operation of earthen retaining pits in accordance with Chapter 4, Section 1 (c). After implementation of these rules, unlined permanent pits will be prohibited and the Supervisor shall not issue a permit for an unlined permanent pit. (g) (g) Optional Form 18 (Soil & Groundwater Information), is provided for the Owner s/operator's use, if they choose, to supplement Forms 14A and 14B to record and document shallow groundwater and subsoil types when they drill shallow holes such as the rat hole, mouse hole or conductor on the drill site. This Form 18 can be used to demonstrate that a well is not in a critical or sensitive area, where groundwater is at a depth of less than twenty feet (20') fifty feet (50 ) or in an area that has permeable subsoil and in accordance with Chapter 4, Section 1 (c). page 4-3 and 4-4 (h) (h) Centralized Pits. Owners or Operators must obtain approval of the Supervisor for the location, construction and closure of noncommercial centralized pits located within a lease, unit, or communitized area used for field operations. Requirements may be more stringent than individual reserve or produced water pits depending on pit size, waste type, and location. Applicants, upon request of the Supervisor, shall provide additional notice, plats and plan views, and information relative to the location of water supplies, residences, schools, hospitals, or other structures where people are known to congregate, all domestic water well, drinking water supplies, water supplies, residences, schools, hospitals, or other structures where people are known to congregate, stock watering tanks, and in accordance with Chapter 4, Section 1 (c), site security, groundwater monitoring and leak detection. These permits will be issued for a term of five (5) years and may be renewed at the discretion of the Supervisor. page 4-4 (i) Emergency Pits. Prior to construction, permanent emergency pits must be approved on Form 14B (Application For Permit To Construct and Use an Earthen Pit for Temporary Use, or Reserve Pit). Within twenty-four (24) hours of the first business day after construction of a temporary emergency pit or use of a permanent emergency pit, the Owners or Operators shall verbally advise the Supervisor of the existence of the pit and of the estimated time it will be in use. Form 14B must be submitted and approved in conjunction with an Application for Permit to Construct and Use an Earthen Pit for Temporary Use, or Reserve Pit. The plan for a temporary pit shall use appropriate engineering principles and practices and follow applicable liner manufacturers requirements. The plan shall include operating and maintenance procedures, a closure plan, hydrogeologic data that provides sufficient information and detail on the site s topography, soils, geology, surface hydrology and ground water hydrology to enable the appropriate division district office to evaluate the actual and potential effects on soils, surface water and ground water, and full disclosure of all fluids and fluids constituents to be placed in the pit. 16

17 (j) (j) Reserve Pits. Form 14B must be submitted and approved in conjunction with an Application for Permit to Drill (Form 1). Approval of this permit must be obtained before drilling commences. The staff must be provided at least one (1) working day week to evaluate the location (for distance from surface waters, depth to useable ground water, soils, distance from human habitation, etc.) including lakes, rivers, perennial or intermittent streams, creeks, springs, irrigation canals, stock watering tanks and wetlands, depth to ground water, soils, public water supply wells, domestic water well, water supplies, residences, schools, hospitals, or other structures where people are known to congregate and to evaluate the fluids which potentially will be retained in the pit (for types of drilling and completion fluids (which will be fully disclosed) proposed for use, for presence of salt sections, and for the length of time the pit will be in use, etc.), and must be in accordance with Chapter 4, Section 1 (c). The Commission may request additional information to complete its evaluation. Owners and Operators using closed systems who wish to use a pit to receive drill cuttings must apply for and receive permission to construct on Form 14B, and shall comply with the requirements for temporary pits. (l) (l) Workover and Completion Pits in Critical and Sensitive Areas. Approval of workover and completion pits proposed to be constructed in locations meeting the definition of pits in critical and sensitive areas must be applied for and obtained on Form 14B prior to their construction and use. page 4-5 (o) (o) Workover and Completion Pits in Non-Critical Areas. Workover and completion pits proposed to be constructed in locations not meeting any of the criteria listed in the definition of Pits in Critical and Sensitive Areas, Chapter 1, Section 2(jjll) (kk), of these rules, will require either: (i) submittal of a Form 14B application for a field or individual well basis to receive a one-time approval to construct and use workover and completion pits. As long as the Owner or Operator complies with the approved Form 14B terms and conditions, no further application/notice will be required for future construction and use of workover and completion pits. (ii) notification to the Supervisor via Sundry Notice (Form 4), subsequent to the construction and use of a workover or completion pit. This must be submitted within thirty (30) days of completion of operations immediately and include the following information: (A) schematic diagram showing the location of the workover or completion pit in relation to existing production equipment; (B) length of time the pit was in use; and (C) statement addressing the types of fluids placed in the pit 197 and that those fluids were removed prior to closure. closure, and Section 1 (c). (D) upon pit closure, statement that those fluids were removed prior to (E) shall comply with the requirements in accordance with Chapter 4, (p) General Information for Workover and Completion Pits. Upon review of Form 14B applications, the Commission staff will evaluate well locations to determine if their proposed siting is in a critical and sensitive area as sited in CHAPTER 1, AUTHORITY AND 17