Kobe Pumping Plant and Pipeline Project Narrative UPDATED 6/28/13

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1 Kobe Pumping Plant and Pipeline Project Narrative UPDATED 6/28/13 Introduction/Background The Kobe Pumping Plant and Pipeline (the Project ) is located in Mesa and Garfield Counties near DeBeque, Colorado. The Project is designed to divert water from the Colorado River and deliver it to (a) points on or near the intersection of the Reservoir Ditch and V.2 Road and (b) a point near the confluence of Roan Creek and the Dry Fork. Water delivered by the Project will be used for agricultural irrigation, industrial purposes associated with energy development, and other uses. The Project was partially constructed in the late 1980s to serve local and industrial (oil shale) demands. Construction was suspended when the momentum for oil shale development stalled. In 1989 the intake in the Colorado River and 3,704 feet of the 24-inch pipeline were constructed on the northern end of the project area, approximately four miles north of DeBeque. Features not yet constructed include the pump station and pipelines to the Reservoir Ditch at V.2 Road and near X.5 Road and Roan Creek. Project Description The Bluestone Management Committee, which manages the Kobe Project assets on behalf of the Bluestone Water Conservancy District and Colorado River Water Conservation District, proposes to construct the Kobe Pumping Plant and Pipelines. This entails a 1,000 horsepower (Hp) pumping plant on a previously developed site owned by the Colorado River Water Conservation District and the Bluestone Water Conservancy District and managed by their Bluestone Committee and approximately three and one half miles (18,000 feet) of 24-inch water pipelines. Current Phase The Project will be constructed in two phases. The first phase is the subject of the current permit application and includes completion of the pump station on the existing developed site owned by the Bluestone Committee and construction of sufficient pipeline to allow the Kobe Project to serve immediately the Reservoir Ditch and industrial uses in the vicinity of V.2 Road. This project will be constructed on private lands in a 75-foot temporary construction right-ofway (ROW) and several staging areas. After reclamation, there would be a permanent 50 to 100 foot ROW. The pipeline would be operated on a year-round basis. Landowner approval is provided with this application pending completion of ROW acquisition. This phase also includes boring under V.2 Road, facilitating an easy connection to the second phase of the Project. This will require only one mobilization of the boring contractor, and the area south of V.2 Road would be disturbed only once. Second Phase The second phase of the Project will be pursued as an amendment to this Mesa County permit application and includes the completion of the pipeline to a proposed pond and fill station near the headgates of the Reservoir and Town ditches. At the request of Chevron, an affected landowner, the second phase will be constructed concurrently with two other planned pipelines for produced water and natural gas gathering, in order to minimize impacts to Chevron land. This portion of the Kobe pipeline would be constructed within its own 50-foot right-of-way

2 (ROW) from the first phase pipeline on the north side of County Road V.2 to the connection with the previously constructed portion of the Kobe Pipeline, south of Mesa County Road X.5 (see attached maps). The second phase of the project may utilize in part an existing pipeline corridor on BLM lands depending on assessment of impacts and the BLM permitting process, as well as privately owned lands. Approximately 90% of the proposed pipeline would parallel existing pipelines. The necessary Mesa County permit amendment for the second phase will be pursued as alignment determination across BLM lands is completed. In addition, the second phase of the project plan includes a fresh water terminal pond of approximately 40 acre-feet (af) and a four-acre area for a truck fill station pump station in Garfield County adjacent to Mesa County Road X.5 (Garfield County Road 200) for industrial use in Garfield and Mesa counties. The second phase also includes a pipeline west of the terminal pond roughly parallel to Mesa County Road X.5 (Garfield County Road 200) in an existing pipeline corridor to deliver industrial water directly to previously permitted natural gas development. Specific alignment will be identified in the forth coming permit application amendment. The proposed pond and the fill station are planned for lands in Garfield County and would be supported by two additional pipelines. A pipeline would T off of the main line with a valve to fill the pond, and a pipeline would return from the pond to the fill area with three stations available for truck hook ups. The pond is proposed with a soil liner at a depth of ten feet. It would be situated at least 35 feet from the ordinary high water mark of Dry Creek and set back at least 15 feet from existing pipelines. The proposed embankments would not exceed 10 feet in height. The pond would be fenced with exclusion fencing to prohibit terrestrial wildlife and the general public from trespassing. Construction Construction of the first phase would begin upon receipt of the necessary agency approvals and permits, with a desired start date in summer Construction is anticipated to take approximately four months. The pipeline would be offset horizontally from existing pipelines and installed at a depth to allow approximately 36 inches of soil cover above the pipe. Unimproved roads and dry drainage ditches would be open cut. Crossings of Mesa County roads X.5 and V.2 required for completion of the second phase will be covered in that permit application. The contractor would primarily use existing roads to gain access to the ROW and construction workspace. No road improvements would be required. The first phase of the Project would be accessed from I-70 at Exit 62. From there, the pumping plant is accessed via Mesa County Road 44 and a gated private road previously developed to support the construction activity. The remainder of the proposed ROW would be accessed from Mesa County Road V.2. In addition to the proposed construction ROW of 75 feet, the first phase of the Project would require two extra work spaces (EWSs) to accommodate areas of pipe storage and additional equipment associated with boring under Mesa County Road 44 and the Union Pacific Railroad. It would also require two additional EWSs to accommodate additional equipment associated with

3 boring under Mesa County Road V.2 and other project construction facilitate. Table 1 identifies the location and size of the EWSs for the initial phase of the Project. Table 1. Extra Work Spaces Phase I Number Location Size (acres) 1 West of Mesa CR 44 for pipe storage and bore under CR NE Corner of CR V.2 and the center line of Section 20, T8S, R97W for pipe 2.0 storage 3 North bore location on CR V South bore location on CR V Access to the second phase of the Project would originate from Interstate 70 (I-70) at Exit 62 DeBeque, north up Roan Creek Road (also known as Mesa County Road 45), and then west on Mesa County Road X.5 and from Mesa County Road V.2. Specifics on access and staging areas will be included in the Mesa County permit amendment for this work. In addition to the proposed construction ROW of 75 feet, the second phase of the project would require five EWSs to accommodate areas of pipe storage and other project construction. Table 2 identifies the location and size of the EWSs for the second phase of the Project. Table 2. Extra Work Spaces Phase 2 Number Location Size (acres) 1 South of Mesa CR X NE of Mesa CR V.2 and the center line of Section 20, T8S, R97W for pipe storage 2.0 The following information briefly describes the various pipeline construction sequencing, typical for a project of this type. Clearing, grading, and other disturbance of soil and vegetation would be limited to the minimum area required for safe construction operations within the approved ROW and extra workspaces. Construction methods used to excavate a trench would vary depending on soil, terrain, and related factors. A typical trench would be excavated approximately 36 inches wide at the bottom, with the sides sloped to Occupational Safety and Health Administration (OSHA) specifications where human occupancy is necessary. The depth of the trench would be approximately 66 to 72 inches but would vary with the conditions encountered. Pipe installation would include stringing, bending for horizontal or vertical angles in the alignment, welding the pipe segments together, integrity testing and then lowering-in, bedding the pipe, backfill and pressure testing in place. Backfilling begins after a section of the pipe has been successfully placed in the trench and final inspection has been completed. Backfill would be conducted using bulldozers, loaders and track hoes. Cleanup and reclamation would occur after the pipeline is installed, tested and backfill activities are completed. After completion of construction, all disturbed areas (including the ROW, travel routes, and staging areas) would be returned to pre-construction grades and contours. The site would be stabilized via revegetation using one or more native seed mixes. This would facilitate stabilizing soils, controlling erosion, impeding infestations of noxious weeds, and returning the disturbed areas to a self-sustaining community of desirable native species as agreed upon with the landowner.

4 Operation The Bluestone Management Committee would be responsible for monitoring the operation of the pump station and pipeline once construction is completed. Operations for irrigation are proposed from spring through fall. Industrial uses may require water at any time during the year. The pump station and river intake would be operated remotely, requiring few onsite visits. Once completed, the pipeline would require only intermittent maintenance checks. Inclusion in the second phase of the pipeline extension to a point near the headgates of the Reservoir and Town ditches will include a 40 acre-foot terminal pond will enable some more operational flexibility which will be described in the supplemental information associated with a permit amendment. The terminal pond will be fenced to exclude wildlife and provide for public safety and will only be used for fresh water. Inclusion of the terminal pond will allow operations to be tailored to meet demands as water is moved through the system to industrial, municipal or agricultural users. Purpose and Need The first phase of the Project for which this permit is sought will provide additional water supply and operational flexibility for agriculture/irrigation and municipal/domestic users in addition to the natural gas industry that would rather pump water than truck it. Supplemental water supplied to the Reservoir Ditch will improve supplies to the ditch users and possibly take the Reservoir Ditch call off Roan Creek, firming up municipal and other irrigation water supplies. Industrial costs and environmental impacts could be reduced by pumping as it takes approximately 50 af (about 3,000 truckloads) of water for one natural gas well completion. The current phase would be successful and meet a significant portion of the overall purpose and need should the second phase not be completed. Impacted Property Description The property impacted by this current phase includes parcels owned by the Colorado River Water Conservation District and Bluestone Water Conservancy District and managed by the Bluestone Committee, three other private parcels, Mesa County Road X.2 and Union Pacific RR ROW. The proposed project would impact approximately 45 acres. The first phase will impact approximately 11 acres. The intake and pump station parcels are owned by the Colorado River Water Conservation District and Bluestone Water Conservancy District and managed by the Bluestone Committee and are accessed via ROW previously acquired. A portion of the pipeline alignment north of the crossing of V.2 Road has been previously acquired from private land owners. ROW south of and west along V.2 is being acquired from a private landowner whose permission to make this land use application is included. This property is owned by Chevron and leased to a rancher for cattle grazing. There is substantial oil and gas pipeline development in this vicinity including surface developments for pipeline activities such as pig launching and other related activities. There are no buildings on this portion of the property. The property also contains some existing fencing to restrict livestock and access.

5 The primary vegetation types along the proposed pipeline route include dryland and irrigated agricultural fields (dominated by agricultural grasses), big sagebrush (Artemisia tridentata) shrubland, and Gambel s oak (Quercus gambelii)-mixed montane shrublands. The ROW parallels a number of existing ROWs and existing roads; therefore, existing surface disturbances are present in the general area. These previous disturbances have resulted in some populations of noxious weeds along the existing roads and ROWs and in existing plant communities in the vicinity of the proposed ROW. Other Permits Required Union Pacific Railroad Crossing A license is being secured from the Union Pacific Railroad for the crossing of their tracks along Mesa County Road 44 using a bore. Mesa County Road 44 Crossing The above referenced railroad crossing will be extended to enable Mesa County Road 44 to be crossed using the same bore. A permit for same will be secured. Clean Water Act Section 404 Permits Permits for pipeline crossings of the Reservoir Ditch and other wetlands identified during the project development process will be secured as necessary under the Nationwide 12 Utility Permit from the US Army Corps of Engineers. No Clean Water Act permits are anticipated for the pump station as the site was developed when the intake was constructed under a previously issued permit. Other Federal Permits The current phase of the project for which this Conditional Use Permit is sought will not impact any federal lands; therefore, no other federal permits would be required. To specifically address approval criteria for the requested Conditional Use Permit: A. The current proposed project would be consistent with existing land uses and would not hinder continued ranching activities. It is not anticipated that fences and stock watering sources would be affected by the proposed project. The increase in human activity during construction is anticipated to be temporary and would be expected to have a minor impact on livestock grazing. The temporary open trench during construction could present a hazard to livestock and limit movement within the affected areas. Traffic along access roads is only anticipated to increase temporarily during construction of the proposed pipeline and would be reduced after piped water deliveries are possible B. As the proposal does not include residential development or require supporting infrastructure (beyond power previously developed), available facilities and services will be

6 adequate to serve this completed proposal and still maintain adequate levels of service to existing and future development C. As stated above, the contractor would primarily use existing roads to gain access to the ROW and construction workspace; no road improvements would be required. Access to the existing intake site and pumping station would be via Mesa County Road 44 and a gated private road, while the remainder of the proposed ROW would be accessed from Mesa County Road V.2, which is off of CR 44. One purpose of the proposed project is to reduce heavy truck traffic on the southern portion of Roan Creek Road, which would likely increase public safety and potentially reduce the frequency of required road maintenance D. Ongoing maintenance to the pipeline is addressed in the reclamation and weed plan. More regular maintenance, requiring onsite personnel would be required at the pumping plant. The pipeline would be drained each winter not in use to avoid damage from freezing E. No critical wildlife habitat as identified by the US Fish and Wildlife Service exists within the project area. The area is mapped by the Colorado Division of Wildlife (CDOW) (now Colorado Parks and Wildlife) as mule deer winter range. No cutthroat trout would be affected by the proposal. The soils map is included in this application package. Preliminary geotechnical work has been conducted to ensure that the project can proceed on stable ground F. In addition to the supplemental water supply and operational flexibility the Kobe Pumping Plant and Pipeline would provide agriculture/irrigation and municipal/domestic users, there are potential customers in the natural gas industry that would rather pump water than truck it. This project would facilitate that option and reduce heavy truck traffic on Roan Creek Road.