Category: Admin

Division of Oil, Gas and Mining Director John Baza received the 2023 Service Award from the Energy & Geoscience Institute (EGI)

Hollie Brown
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EGI Operations Manager Al Walker presents John Baza with the EGI Service Award.

Mr. Baza has been the director since 2005 and administers the division’s efforts in the areas of petroleum, coal mining, and mineral mining, along with abandoned mine reclamation.

In addition to his responsibilities as director, he also serves as the Official Representative for Governor Spencer Cox of Utah on both the Interstate Mining Compact Commission (IMCC) and the Interstate Oil and Gas Compact Commission (IOGCC). He is also a state representative on the national Ground Water Protection Council (GWPC), and he currently serves on the Board of GWPC, having been elected by his peers to Board membership in 2015.

Castle Country Energy Field Tour

Hollie Brown

The Division of Oil, Gas and Mining, Utah Petroleum Association, and Emery and Carbon counties hosted a legislative tour sponsored by Senator Hinkins on August 2 to educate legislators and elected officials on the current status and opportunities of energy resources in the area. The trip included tours of the San Rafael Energy Research Center and Hunter Power Plant in Emery County. Additional presentations were provided by the division’s Coal, Oil and Gas, and Abandoned Mine Reclamation programs.

MESSAGE FROM DIRECTOR JOHN BAZA

Hollie Brown
Director, John Baza

In October, I attended the One Utah Summit in Cedar City. It was an opportunity to discuss topics that unite us in Utah including water scarcity and resiliency, outdoor recreation, the beauty of Utah’s landscapes, economic entrepreneurship and self-sufficiency, cultural heritage, and diversity. This conference previously had the name of the Utah Rural Summit, but as the name change implies, it is a hallmark of the Cox-Henderson administration to bring all the parts of the state under the same banner of One Utah.

The concept of One Utah is just as appropriate for energy and minerals extraction in the state. We all depend on abundant and affordable energy supplies and mineral resources that come from the earth. Even renewable sources of power, such as wind and solar, rely on materials derived from mined products at some point – whether it is the towers and blades that compose windmills or the minerals that end up in solar panels. In rural Utah, not only do we depend on the same consumer products of fuel and manufactured goods, but local economies are supported by industrial jobs and the service sector that is built around vibrant business activity.

It is easy to align ourselves with one faction or another in a political landscape. It allows us to disregard those sectors of society that do not comport with our views of the world. But the concept of One Utah is constructive by nature. By acknowledging and embracing our interdependence, we can build relationships, partnerships, and collaborations that provide benefit to Utahns wherever we reside. Our mutual successes in society are based on establishing and maintaining good working relationships in all corners of the state.

MESSAGE FROM DIRECTOR JOHN BAZA

Hollie Brown
Director, John Baza

Utah’s current drought conditions have raised public awareness toward water scarcity and water conservation by water users. It highlights the importance of protecting all potential water supplies both on the surface and underground.

Division staff takes these principles very seriously in our work to regulate and require responsible development of the state’s underground energy and mineral resources. It takes water to develop energy resources and it takes energy resources to develop water.

The Energy-Water Nexus is well-recognized by both the private sector and policymakers in government. Division staff belongs to the national association of state oil/gas and water regulators known as the Ground Water Protection Council (GWPC) that has established itself as a knowledge-based organization dedicated to protecting the nation’s groundwater resources, especially as it relates to the extraction of underground petroleum resources. The association is non-profit and is organized into work groups and committees that produce valuable information regarding hydraulic fracture stimulation in the oil and gas industry, produced water reuse, aquifer storage and recovery, source water protection, carbon capture utilization and storage, and groundwater data collection and management.

GWPC is holding its annual forum at the Sheraton Hotel in Salt Lake City on September 27 – 29. Subject matter experts and representatives from state regulatory agencies nationwide will convene to provide presentations and discuss pertinent information to the overall concept of the Energy-Water Nexus. The event is not only timely for Utah and other western states as drought conditions worsen, but it is also the first in-person meeting of the GWPC after two years of virtual meetings and conferences.

For more information about the 2021 GWPC Annual Forum in Salt Lake City, visit www.gwpc.org.

MESSAGE FROM DIRECTOR JOHN BAZA

Hollie Brown
John Baza, Director, Division of Oil Gas and Mining

Two news articles caught my attention this past month. The first one described a proposed lithium mine in northern Nevada. Lithium is a key component used for large storage batteries in electric vehicles and for energy storage.

Of main concern was the potential impacts to nearby rural communities including traffic, noise, nighttime lighting, air and water quality, and the effect that an influx of numerous workers would have on rural communities. These same impacts could play out at other sites throughout the western U.S. and in Utah where lithium deposits may be found.

If the dream of an electric vehicle transportation fleet is to become reality, these impacts must be addressed.

The second article was an opinion piece by Mr. Thom Carter, Energy Advisor to Governor Spencer Cox, who wrote about the need for extractive energy and mining operations to keep an “all of the above” energy mix of renewable and non-renewable energy projects active in Utah. He provided the message that “keep it in the ground” was not possible if we wish to produce the critical minerals necessary to manufacture solar panels, wind turbines, and all the energy storage and power transmission infrastructure to keep renewable energy moving. His premise is that “advocating for renewable energy sources also means maintaining, if not expanding, our mining infrastructure.” I totally agree with his point of view.

The bottom line is that the development of renewable and non-renewable energy and the production of critical minerals is not a zero-sum scenario vis-à-vis the importance of climate change, public land management, environmental impacts, or economic benefits to rural communities. It is not one or the other of two competing alternatives, because the goal of a more livable world for people relies on those materials that we can extract from the earth. All considerations must be weighed in the balance to produce the best possible outcome for Utah citizens.

Division of Oil, Gas and Mining staff attempts to perform its regulatory function in this manner. We do not pick winners and losers in the extractive industries based on political or ideological preference. Our decision-making on permit approvals and compliance enforcement are science and logic-based and designed to achieve acceptable outcomes for responsible development. I truly believe that we can find innovative solutions to many of the challenges facing humanity as we work collaboratively to achieve a better quality of life through energy and mineral development.

NEW OIL AND GAS PROGRAM OPERATIONS MANAGER SELECTED

Hollie Brown

Division management recently selected Ammon McDonald as the new Oil and Gas Program Operations Manager. This position manages and oversees field staff, with a priority on ensuring they have the proper tools and adequate resources to successfully complete their jobs. 

Since 2011, Ammon has worked for the Division as a geologist/environmental scientist III where he was responsible for the permitting and inspection of Class II underground injection control (UIC) wells and waste disposal facilities. He conducted a variety of inspections and investigations ensuring compliance with Division’s rules. He provided technical expertise to staff members, the Utah Board of Oil, Gas and Mining, other government agencies, and the public.

In 2008 he began working for the Utah Geological Survey as a geological technician where his duties included digitizing well logs, constructing base maps using GIS software, conducting digital core photography, data analysis and compilation, sample collection, and field work. 

Prior to 2008, Ammon was a staff geologist/environmental scientist for IHI Environmental where he conducted environmental site assessments, fugitive emissions and ambient air monitoring, soil and groundwater sampling, and borehole core logging.

Ammon graduated from the University of Utah with Bachelor of Science Degrees in Chemistry and Geology.

MESSAGE FROM DIRECTOR JOHN BAZA

Hollie Brown
John Baza, Director, Division of Oil Gas and Mining

New years are always a time for transition and renewal, and boy, do we need some renewal after the last year! Now is a time to look forward with hope and commitment to seeing better days ahead.

We have worked hard this past year not only to keep the machine of government humming, but to move faster and farther down the road of progress than before. Some notable accomplishments include:

  • Shortly after in-person office work was curtailed in March, we used electronic tools previously developed to move seamlessly into a new remote workplace.
  • Electronic permitting and reporting have been in place for several years
    allowing continued interaction with the regulated community with very few hiccups.
  • Division field inspectors were able to extend their reach with remote work processes for
    collecting data and recording information on our databases.
  • Staff implemented new tools for prioritizing workloads, inspection frequency, and monitoring
    conditions in areas of higher concern.
  • Board of Oil, Gas and Mining hearings are being held remotely for both Board members and participants. Meetings have been held in a hybrid in-person/electronic format for several years, so the transition was relatively simple.

Many have questioned the need to return to a fully in-person workplace as we have seen
benefits of more efficient communication between managers and staff, employees working
within their own flexible schedules, and the improvements in air quality. At some point, we will likely return to a hybrid telework scenario with fewer employees onsite, but still deriving the benefits of remote work.

Recognizing that we are also faced with a transition of governmental administration in
Washington DC, the new year brings substantial uncertainty for the extent of new federal
policy and the impact of those changes on Utah’s economy and quality of life. The commitment
from Division staff to continue meeting our responsibilities is unwavering. We will continue to ensure
responsible development of our underground energy and mineral resources while protecting
the public health, safety and welfare and preserving the environment. We like to think that our
efforts will continue regardless of who is in White House, and our processes for continuous
improvement will forge ahead.

2020 LEGISLATION

Hollie Brown

During the 2020 legislative session, there were three bills passed affecting the Division of Oil, Gas and Mining.

Senate Bill 148 requires review of rules made related to bonding requirements; modifies the process for imposing and collecting administrative penalties; creates the Oil and Gas Administrative Penalties Account; and makes technical and conforming changes.

In response to the Oil and Gas Program audit, the Board of Oil, Gas and Mining Chairman Ruland Gill helped to educate lawmakers about this bill which allows the Division to collect administrative penalties from non-compliant operators as if the penalty were a judgment issued by a court of law. Before this bill, any fines issued by the Board were required to be collected through district court, which was expensive and time consuming. SB 148 allows the Board to collect fines directly and deposit them into an account used to offset risks the bonds do not cover.

This bill also gives the Board authority to review bonding requirements to ensure there is adequate fiscal security to the state.

Two separate bills, Senate Bill 131 and House Bill 294 affect the Minerals Program. SB 131 changes the size of small mining operations from 10 to 20 acres in unincorporated areas and 5 to 10 acres in incorporated areas. This bill affects approximately 20 permits currently in our system. The requirements for small mines are less stringent than those for large mines so this may encourage smaller operators to open new pits under the new size definitions.  This will allow for smaller operators to have more opportunity to enter the market.

HB 294 exempts basalt operations under 50 acres from the Division’s regulations. Approximately five currently permitted operations will no longer be under our jurisdiction, and the bill also allows for more operations to start up without requiring a permit. This legislation is intended to be very narrow and only apply to a certain type of geology found in Southern Utah, where it is beneficial to remove basalt in order to access sand and gravel.  

The Division will create and amend rules where necessary to address the new legislation.

Division Staff Participate in Annual Stem Fest

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Division staff hosted a booth at the annual STEM Fest held at the Mountain America Expo Center. STEM Fest focuses on science, technology, engineering, and math (STEM) and is geared towards educating 4th through 10th grade students. It is an opportunity to highlight what the Division does through hands-on activities with the goal of inspiring students to pursue higher education and careers in STEM.

This year the booth focused on oil production in Utah. Staff provided oil samples, including black and yellow wax, taken from various sites in Utah. Students could smell and touch the wax, which many kids compared to shoe polish. Core samples were on display to illustrate how scientists locate where to drill for oil. The big hit was two large drill bits used for oil extraction. Students were amazed that the bits could drill through rock and how deep they can go into the Earth.

What the Rapid Decline of Energy Prices Means for the Division

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Oil Prices

The rapid decline of energy prices has proved challenging for Utah and the Division. Earlier this year no new oil wells were being drilled in the state- a first since the late 1960’s. As of July 20, there are four rigs operating, compared with 17 in 2015 and 25 in 2014.

In 2014, oil prices topped out at $100 a barrel. Last year, they bottomed at $30 and have gone as low as $20 this year. Oil currently is selling for under $50 a barrel.

The Division relies heavily on monies generated from a conservation tax, which is two-tenths of one percent (.002) of the value of oil and gas produced and saved, sold, or transported from the field in Utah where the oil or gas is produced. Due to the rapid decline of the value of oil and gas, the Division is facing budget shortages impacting the oil and gas program and administration. Voluntary out-of-state travel restrictions have been implemented and vacant positions have not been filled.

We monitor the prices daily and hope for a rebound of prices in the near future.