BEFORE THE CORPORATION COMMIS OF THE STATE OF OKLAHOMA OVERFLOW ENERGY, LLC

Transcription

1 ri F ILED NOV BEFORE THE CORPORATION COMMIS OF THE STATE OF OKLAHOMA CLERK'S OFFICE - 0KG O+ION COMMISSION OKLAHOMA APPLICANT: RELIEF SOUGHT: OVERFLOW ENERGY, LLC AUTHORIZATION FOR A CONVERSION OF THE 3330 SWD WELL TO A COMMERCIAL DISPOSAL WELL CAUSE PD NO LEGAL DESCRIPTION: NE/4 NE/4 NE/4 OF SECTION 2, TOWNSHIP 15 NORTH, RANGE 26 WEST, ROGER MILLS COUNTY, OKLAHOMA REPORT OF THE ADMINISTRATIVE LAW JUDGE This Cause came on for hearing before Michael Norris, Administrative Law Judge for the Corporation Commission for the State of Oklahoma in the Commission's Courtroom, Jim Thorpe Building, Oklahoma City, Oklahoma, pursuant to notice given as required by law and the rules of the Commission, for the purpose of taking testimony and reporting to the Commission. The Administrative Law Judge (AU) proceeded to hear the cause and filed a report herein. CASE SUMMARY: 1. The Applicant, Overflow Energy, LLC (Overflow) seeks approval to drill a commercial disposal well. Overflow met all the requirements under the statutes and rules. It demonstrated compliance with proper casing, tubing, packers and cementing. 2. Overflow will utilize the Wolfcamp formation below 3,480 feet as the disposal interval. The base of the treated water was established at 680 feet. The Applicant requested and injection pressure of 1,740 PSI and the injection rate of 15,000 barrels per day.

2 Page 2 3. The Protestants argued that one of the greatest concerns against this application is the traffic congestion. There are blind intersections onto Highway 33 within a few miles of the proposed well. There is already heavy traffic on the two main highways with a lot of petroleum development vehicles. The entrance to the proposed commercial disposal well is only 150 feet from the intersection of these two highways. 4. The Protestants are greatly concerned about the protection of the treatable water. The proposed well is approximately 100 yards from the only freshwater well for one protestant's business, the city of Durham and a nearby trailer park. They stated that their freshwater well is in the Ogallala aquifer. Protestants advocate an alternative site approximately 8 miles from the proposed location. They stated the alternative site is not located in the Ogallala aquifer and would not pose a threat to treatable water. RECOMMENDATIONS: 1. It is recommended that this application be approved with consideration given to the alternative site and incorporate all of the equipment and procedures proposed by the Applicant's expert engineer. 2. It is recommended that cement be circulated to the surface in this well or as close as possible. 3. It is recommended that the monitoring equipment, Murphy switch and redundant system be utilized as discussed by the expert engineer for the Applicant. 4. It is urged that the alternative site be scrutinized as a workable substitute. The protection of the fresh water is and should be a primary concern. Mr. Campbell, the expert witness, thoroughly demonstrated the actions to be taken by the Applicant to complete and utilize this well in a safe manner. However, the close proximity of the proposed site to the only freshwater source in this area causes great concern. The Protestants stated that their well is located in the Ogallala aquifer and suggested an alternative site in the Red Shale Hills that is not underlain by the aquifer. HEARING DATE(SI: September 16, 2011 APPEARANCES: Karl F. Hirsch, attorney at law appeared on behalf of the Applicant Overflow Energy, LLC. Richard J. Gore, attorney at law, appeared on behalf of off the Protestants Calvin and Julia Bachmann.

3 Page 3 Windle Turley, attorney-at-law in the State of Texas, appeared in his capacity as a property owner of a ranch located 3 miles east of the proposed well site. FINDINGS AND SUMMARY OF EVIDENCE. The Following Numbered Exhibits Were Accepted into Evidence: 1. Application for Administrative Approval dated May 27, Amended Application for Administrative Approval dated August 15, Map of 1/2 mile and one-mile radius of the proposed site. 4. Schematic of proposed well. 5. Drawing of the tanks. 6. Cumulative exhibit of the water analysis for various sites. 7. Radius of Endangering Calculation. 8. Geologic Section Chart. 1. Mr. Windle Turley requested and was granted the opportunity to make a statement concerning his objections to the proposed commercial disposal well. Mr. Turley stated that he is a property owner of a ranch located 3 miles east of the proposed well site and he is a personal injury lawyer in Dallas, Texas. 2. Mr. Turley stated that he has had an opportunity to investigate several serious accidents that occurred on Highway 33 within a couple or 3 miles of the proposed location. His great concern is over the traffic congestion. There is a crossroads at this location of Highway 33 and Highway 47. Mr. Turley stated that both highways are two-lane roads and they are just filled with petroleum development traffic at this time. 3. He related there was one accident 3 miles east of the proposed site where a tractor-trailer was pulling onto Highway 33 and a vehicle came over the top of a hill

4 Page 4 and collided with a tractor trailer and almost killed a lady. He related there are several blind intersections with the county roads intersecting Highway 33 within a few miles of this proposed location. He believes this is a very dangerous situation. 4. Mr. Turley has had other cases where employees of his ranch have been seriously injured when petroleum operating vehicles and construction equipment crashed into them as they were trying to turn on or off of Highway 33. He believes this proposed location is going to greatly raise the risk to the public and add a lot of additional transport truck traffic to this intersection area. Mr. Turley said that unless there is some overwhelming, compelling need for this disposal well at the proposed site it would be better located some other place. 5. Mr. Turley finished his statement and offered to answer any questions. There were no questions of Mr. Turley and he was excused. 6. Mr. Mark Lobmeyer testified upon direct examination that he is employed by the Applicant and his duties include acquisitions, permitting, disposal well drilling and other activities. He testified that he is familiar with the application in this cause and signed the original application. He also is familiar with the amended application. This application is for the drilling of a new well to act as a commercial disposal well in the captioned legal description. This well is named the thirty-three thirty (3330) Saltwater Disposal Number One Well. 7. Mr. Lobmeyer testified that they are seeking authority to dispose of fluids in the Wolfcamp formation from a depth of 3,500 feet to a depth of 7,650 feet. He stated that the depth of 680 feet for the base of the treatable water was obtained from the Corporation Commission. The Applicant is requesting an injection pressure of 1,740 PSI. The requested injection rate is 15,000 barrels per day. He testified that the application provides for surface casing, production string and tubing in the hole. He stated that the amended application contains the additional information concerning tubing and the injection zone. 8. There are no well bores producing or drilled and plugged within 1/2 mile of the proposed location according to the witness. There is one proposed well within 1/2 mile of the proposed site. 9. Mr. Lobmeyer stated that 120 feet of 20 inch conductor casing is the first thing done in the proposed well. The conductor casing is then cemented and then the 9 5/8 inch surface casing is set down to 730 feet. Surface casing will be 50 feet below the treatable water base. The surface casing is cemented up to the surface. Next they will place the 7 inch production casing to 6,750 feet, cement it and are required to run a cement bond log before the disposal well can be used. This log must be submitted to the Commission Technical Staff and approved before any injection occurs in this well.

5 Page After the bond log is completed Mr. Lobmeyer testified that they would then run tubing in the hole to 3,500 feet. He stated that the tubing will be held in place by using a tubing anchor. Further, packers will be at 3,480 feet. Mr. Lobmeyer believes that the well will then be ready for the disposal of fluids below a depth of 3,480 feet. 11. Mr. Lobmeyer testified that the Wolfcamp formation is between the packer at 3,480 feet and the bottom of the 7 inch at 6,750 feet. He understood that the disposal well cannot be utilized until the completion of the well has been approved by Underground Injection Control (UIC). 12. Mr. Lobmeyer testified the tanks at the site will hold the saltwater and may be transferred from tank to tank. They will have steel tanks and no pits. Therefore there will be no issues with disposal fluids remaining in pits and the possibility of leaking pits. The saltwater will be injected down hole from the last tank in the line. The Applicant will build a berm around the tank area to maintain any spills. The height of the berm is calculated to hold the maximum volume in the tanks. Mr. Lobmeyer stated that the Applicant believes that by storing the disposal fluids in the tanks it will help to protect the groundwater and treatable water from potential pollution. 13. The witness stated that the required testing of the 3 water wells in the area was completed. The water analysis for each well was submitted with the application. 14. Mr. Lobmeyer testified that the required logs from the proposed well must be submitted to the UIC and approved before the well can be utilized. 15. It was established that notice was given to all parties entitled to be notified of this application. Said notice included all parties who filed an objection to the application. 16. The entrance to the commercial disposal well site is located approximately 150 feet from the intersection of Highway 33 and Highway 30 according to Mr. Lobmeyer. The Bachmann's store is across Highway 30 and approximately 50 feet south of the entrance. Mr. Lobmeyer stated that the trucks coming to this site are oil and gas trucks coming from oil and gas wells. He stated that these trucks are already in this part of the state. This site will service a 10 mile radius. Mr. Lobmeyer testified that the truck miles should be reduced because the proposed site is closer to the wells than the disposal facilities now being utilized. 17. Mr. Lobmeyer understands that a Mechanical Integrity Test must be performed and passed before the proposed well can be approved. He believes that the application is proper for this commercial disposal well and will protect treatable water.

6 Page Upon cross-examination Mr. Lobmeyer testified that he is aware that the Bachmann's store, The Hitching Post, is across the street. He understands that they have a freshwater well there that has been in existence for 29 years. He also understands that this well provides water to the town of Durham and is the only water well that is available to the public in that town. Mr. Lobmeyer stated that he is aware that this well is the only water source for the Bachmann's store and it is their livelihood. He further stated that he knows that it is very important to maintain the integrity of this water well and that if anything happens to pollute their water he would be responsible. 19. Mr. Robert Campbell, a consulting petroleum engineer and registered engineer, was the next witness for the Applicant. His qualifications as an expert engineer were accepted without objection. 20. Mr. Campbell testified that he had reviewed the radius of endangering calculation. He stated it's a calculation of the mechanical department at the Oklahoma Corporation Commission. The calculation is utilized in every saltwater disposal well application to gauge injection pressures and volumes relative to depths and all the factors that come into play when it comes to endangering freshwater zones. He further stated that this is utilized to indicate, that if there is a tubing failure during the injection process at the permitted pressures, how high the water will come up into the well bore. Mr. Campbell testified that the calculation for this application showed that the water would rise to about 700 feet from the surface. The freshwater is 680 feet from the surface so the calculation demonstrates that any injection of volume at the requested pressure, in the worst case scenario would still not reach the base of treatable water. 21. According to Mr. Campbell's testimony the Wolfcamp formation is a basal Permian Age of deposition. The Wolfcamp is a porous, permeable sand that has multiple sand shale sequences above it to retard any movement of fluid vertically. He stated that in his opinion from the evidence presented the fluids injected into this well bore will be contained within the Wolfcamp formation. Mr. Campbell said that there are sufficient barriers between the top of the Wolfcamp and the base of the treatable water to protect that treatable water. He stated that outside of the well bore there are a lot of bedding planes, sand shale sequences, and when water gets to the bedding planes it will go out horizontally because it is the path of least resistance. If any water should get out of the Wolfcamp formation it would come up and hit a shale plane in the multiple sand shale sequences above the Wolfcamp and then go out horizontally once it hit a bedding plane. Therefore even if it escapes away from the well bore it will not make it to the base of the treatable water.

7 LI Cause PD No Page In his opinion Mr. Campbell believes that this commercial disposal well into the Wolfcamp has been prepared in such a manner as to protect the treatable water in this area. He believes there are multiple layers of protection. He has reviewed well logs for wells that have been drilled through the Wolfcamp in this immediate area. He believes that the Wolfcamp will be a good source for disposing of water. 23. Mr. Campbell testified that there is in excess of 2,500 feet between the top of the injection interval and the base of the treatable water. He has done a lot of environmental cases and in 40 years he stated he has never seen a case where there was vertical migration out away from the well bore. There are issues involving the well bore, holes in tubing, holes in some casing or the combination of both but the vertical migration away from the well bore is not a concern he has. Mr. Campbell believes that there are adequate safety systems required for this well that will protect the treatable water in case of any failure. 24. Mr. Campbell was asked by Mr. Bachmann why they must inject at 1,740 PSI. Mr. Campbell stated that it is the maximum permitted pressure they have to where the hydrostatic pressure would not raise the water back up to the fresh water levels even if there was a failure in the tubing string. 25. Mr. Campbell was asked why they chose this formation. He answered because it is a thick porous and permeable formation that would require the lowest pressure possible to get all of this water put away. Mr. Campbell testified that the natural occurring aquifer might be corrosive but it will not affect the well bore because they are not taking anything out. They will be diluting it with the fluids being injected. Further, there is cement outside of the casing string that comes up to 3,250 feet. The cement is covering the Wolfcamp formation and the cement is not affected by corrosion. Mr. Campbell stated that with the cement sheath there the water cannot get to the steel to cause corrosion. 26. Mr. Calvin Bachmann requested the opportunity to state the reasons for their protest and their opposition to the proposed site. He stated that he has lived in Durham over 72 years and his grandfather came to the Durham area in His grandfather came to the area to find good grass and good water. Mr. Bachmann stated that he can drink today out of a spring that his grandfather used where he homesteaded. He hopes that his great-great-grandchildren in 2121, which will be 110 years from now, can say the same thing about the water at his Hitching Post Store. He said that is the reason he is opposing this commercial disposal well. 27. Mr. Bachmann said there is a large area in Roger Mills County that is not overlaid by the Ogallala aquifer which is what they have. This area is the Red Shale Hills and there is no water bearing formations in the area to be contaminated. This

8 Page 8 area is only 8 or 9 miles from his well and the proposed disposal site. He stated this would be a great site to inject oilfield water. 28. Mr. Bachmann asked why take a chance of ruining a God-given gift of the freshest, best water in the world for a few measly dollars. He stated the oilfield will be gone because it will be depleted. But for thousands of years the Ogallala has been there. He stated he has two grandchildren that are his concern. He said he won't be here much longer but there will be people there that depend on this fresh good water. There is no municipality there to furnish water. His well is there only source of water. 29. He believes from his experience that the horizontal well injections, perforations and fracturing have caused a lot of problems with water contamination. Mr. Bachmann further said let's not destroy something that you cannot replace. You cannot repair it. 30. There was no further testimony and the parties rested. RECOMMENDATIONS AND CONCLUSIONS 1. After taking into consideration the facts, circumstances, testimony and evidence presented in this cause, it is my recommendation that the application of Overflow Energy, LLC filed in Cause PD No be approved with consideration given to the alternative site. 2. The Applicant has complied with the requirements of the Oklahoma Corporation Commission for approval of the requested commercial disposal well. The prerequisites have been met and sufficient evidence has been presented for approval. 3. It is recommended that this application be reviewed by UIC to determine the viability of the alternative site suggested by the Protestants. As presented, it appears to be a feasible option that would protect the only fresh water source in this area. RESPECTFULLY SUBMITTED THIS 7th day of November, , 67A N thael D. orris Administrative Law Judge,

9 - Cause PD No Page 9 MN:sc Karl F. Hirsch Richard J. Gore Windle Turley Oil-Law Records Commission File