February 11, 2015

State Oil &Gas Regulations

Designed to Protect Water Resources:

Reflecting the Continuing Progress of the States

Acknowledgments

Reflecting Continuing

Progress

Not reviewed

Federal regulations

Non oil and gas agency regulations

Local regulations

Underground Injection Control regulations

States Reviewed

Study MethodologyState (State Name)

Yes No Explanation

3 Formation Treatment, Stimulation or Fracturing

3A Specific regulations governing practice x

3B Prior authorization required x

3C Public notice required x

3D Specific requirements x

3D1 Specific materials/ chemicals prohibited (e.g. diesel

fuel, 2-BE, etc…) x Diesel oil and fuel

3D2 Agency requires submission of specific information

about constituents xExceptions for Trade

Secrets

3D3 Inspector witnessing required x

3D4 Pressure limitations specified x

3D5 Minimum Depth Required x

3D6 Adjacent water well testing and monitoring required x

3D7 Wellbore mechanical integrity test before

commencement of fracturing or re- fracturing required x

3D8 Monitoring and recording of stimulation operations

required throughout the stimulation process x

3D9 Cessation of operation is required upon evidence of

mechanical integrity breach or failure x

3D10 Surface equipment mechanical integrity test before

commencement of fracturing or re-fracturing required. x

2009- 2013 ComparisonsDemonstrating Continuous Regulatory Improvement

Areas Reviewed1. General authority

2. Permitting

3. Formation stimulation, treatment or fracturing

4. Well integrity

5. Temporary abandonment

6. Production operations

7. Well plugging

8. Storage in pits

9. Storage in tanks

10. Produced water transportation

11. Produced water re-cycling and re-use

12. Exempt waste disposal

13. Spill response

Reporting of materials required

Reporting of volumes required

Reporting of chemicals required

Reporting of pressures required

Reporting of depths required

Formation Treatment, Stimulation or FracturingRequired by Rule Number of states

Specific materials/ chemicals such as diesel fuel prohibited 4

Agency requires prior submission of specific information about

constituents 12

Inspector witnessing required 2

Pressure limitations specified 7

Minimum depth required 2

Adjacent water well testing and monitoring required 5

Wellbore mechanical integrity test before commencement required 7

Monitoring and recording of stimulation operations throughout the process

required 8

Suspension of operation required upon evidence of mechanical integrity

breach or failure 9

Surface equipment mechanical integrity test before commencement of

fracturing required 2

Confinement of fracturing fluid to target reservoir required 4

Cement evaluation logs required under specific conditions 14

Wellbore schematic including hole size and casing size for each string

required 17

Volumes of water used for hydraulic fracturing reported by category (e.g.

recycled, fresh) 10

Cemented from bottom to top

Cemented through all protected water zones

Groundwater depths determined well on well by well basis

Casing shoe below groundwater

Cement logs required case by case

Cement set-up time required

Limits on drilling fluid constituents

Inspector notice before drilling

Borehole static before cementing

Casing tested above frac. pressure

Minimum annular space > .75 in.

Corrective action required if cement deficient

Cementing or removal ofcasing

Cement must meet API standards

Materials other than cement

Cement above prod. zones

Cement over all protected water zones

Bridge plugs required

Timeframes for plugging wells

Notice of intent to plug required

Cement tickets instead of witnessing

Plugging method specified

Distance from surface water specified

Pits in water table prohibited

Separation from water table specified

Siting in 100 year floodplain allowed

Setback from drinking water

Inspection during operation

Duration of use specified

Pre-closure authorization required

Pre-closure notice to surface owner

Post-closure soil sampling required

Secondary containment required

Containment capacity specified

Containment permeability specified

No standing fluids in containment

Surface discharge regulated

Side streams regulated

Character of side streams determined

Produced water use limitations

Produced water use for drilling surface allowed

Spills regulated by agency

Spill notice to agency required

Volume for agency notice specified

Landowner notice of spill required

Volume for landowner notice specified

On-site remediation regulated

Cleanup standard specified

Beyond Rules: The importance of supplementary documents

Field Rules. These rules (sometimes called orders) are often specific to particular oil and gas field, pool, zone, or other narrowed geologic location, supplementing more broadly applicable statutory and regulatory requirements.

Guidance, Manuals, Instructions, and Handbooks. These documents break down certain aspects of rules and regulations, most often related to requirements or conduct necessary for particular processes or operations.

Policies, Notices, and Orders. Policies, notices, and orders can set forth the manner in which agencies expect operators to conduct their operations within the scope of the existing oil and gas rules.

Best Management Practices (BMPs). These documents describe practices in the oilfield that are recommended as the best available means of conducting a particular activity.

Forms. Forms are perhaps the most common supplementary documents used by state agencies to implement regulations. Although rules will sometimes specify the information that must be contained in a report to the agency, they will more often simply require that an operator report information about their activities on a form “prescribed by the agency.”

Regulatory proposals in 2013Formation treatment, stimulation or

fracturing:

Six states proposing rules on disclosure

Two states proposing new rules on mechanical integrity or casing and cementing witnessing

Well integrity:

Three states proposed specific requirements for remediation upon finding of integrity deficiency

Regulatory proposals in 2013 cont’d Storage in pits:

Four states limiting duration of pit use

Produced water:

Two states proposing new rules on characterization of side streams

Spill response:

Five states proposed specific requirements in areas such as timeliness of notification to regulator and surface owner, volume triggers, on-site remediation rules, and clean-up standards geared toward the substances spilled and the medium where the spill occurs.

State Programs Staffed with professionals in the fields of geology,

engineering, law and administration Conduct inspections of field operations including

well construction, mechanical integrity testing, surface facilities and well closure

Conduct permit reviews and implement compliance programs

Conduct public meetings and hearings Utilize data management systems such as the Risk

Based Data Management System (RBDMS) to regulate field operations and provide information to the public

North Dakota Industrial Commission GIS

State Program Facts for 2012

Nineteen states responded to a survey:

Combined budgets of just over $200 Million

1,043, 873 oil and gas related wells (oil, gas, coalbed methane, gas storage, injection)

459 field inspectors

Conducted 268,992 field inspections

53,571 wells in orphan well programs (Plugged more than 15,000 over the past 5 years)

Emerging IssuesWater sampling and analysis

In states where water sampling and analysis is required, differences exist in a number of details including the following:

Radius from wellsite in which sampling will be performed;

Number of required sampling locations and rationale for selecting these locations;

Frequency of sampling events (including pre- and post-drilling sampling);

Suite of analysis to be performed on each sample; and

Reporting of analytical results.

As part of any data gathering effort, it is important to specify sampling and analysis procedures and quality assurance and quality control activities to provide a basis for evaluation of analytical results and assist in a determination of potential impacts.

Emerging IssuesNaturally Occurring Radioactive Material (NORM)

Radium-226 (Ra-226) and radium-228 (Ra-228) have been documented in the formation waters in many sedimentary basins, and have been measured in water co-produced with oil and gas.

Concentrations of NORM in formation water vary regionally and depend on variations in the background radiation of surrounding sedimentary rock.

During E&P activities, NORM can be brought to the surface in produced water and drill cuttings and may end up being present in other equipment and facilities that routinely come in contact with these materials.

Radium may represent a potential health hazard if released into the environment where it can accumulate in plants and animals, water, and clay sediments.

State regulations and guidance regarding NORM in materials associated with oil and gas development is still in its early stages but is an emerging field for regulation, particularly in states overlying the Appalachian Basin.

Emerging Issues

Water Sourcing and Produced Water Management

- Competition for water drives the need for alternate sourcing for energy production

+- Treatment of produced and flowback water may reduce the need for fresh water but leads to the need for disposal of treatment residuals

+ Treated water may be re-used or disposed of using surface discharge under certain circumstances

- Treatment protocols require additional storage capacity and transportation infrastructure

+ Underground injection is still the best method for produced water, flowback water and residual disposal.

Regulatory coordination

MEMORANDUM OF AGREEMENT

BETWEEN THE INDIANA DEPARTMENT OF NATURAL RESOURCES

AND THE

INDIANA DEPARTMENT OF ENVIRONMENTAL MANAGEMENT

Purpose and Intent

1) This Memorandum of Agreement (MOA) establishes policies, responsibilities, and procedures pursuant to statutes and rules with respect to a regulatory program regarding notification for and cleanup of spills related to petroleum exploration and production activities.

State Oil and Gas Regulatory Exchange(SOGRE)

Part of an initiative developed by IOGCC and the

GWPC called States First includes the State Oil and

Gas Regulatory Exchange. The main goal of the

Exchange is to help states institutionalize a process

of continuous improvement of oil and gas

regulatory programs.

Efforts of the State Regulatory Exchange

It is anticipated the SOGRE will be able to offer the following services in2015:

Information and Education Services Efforts such as a multi-state survey of field inspector salaries,

technical workshops, or information gathered and exchanged between states experiencing common issues.

Assistance with Rule Updates Peer reviews or peer consultations on particular regulatory

topics

Convening Services Forums for state policy and technical staff to share the way

they do business, review internal operations, and open up opportunities for extrapolating effective practices from one state to another

Other States First Initiative Programs

Class II UIC Peer Reviews

The program involves a three-step process:

State completion of a questionnaire

A facilitated in-state review by a team of technical staff from UIC programs in other states and GWPC staff

A report by the review team that contains the team’s findings, conclusions, and recommendations.

Inspector Certification Course

The certification course is designed to evaluate the knowledge and expertise of field inspectors against an established set of criteria and to certify those that meet the criteria

What’s Next?

2015 Planning for next update

2016 Regulatory evaluation

2017 Publish an updated report

Mike Nickolaus-mnickolaus@gwpc.org