Category: Message from the Director

Message from Director John Baza – Spring 2019

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For the past four years, I have represented the Rocky Mountain region states on the Board of the Ground Water Protection Council (GWPC). It is an organization composed of the oil and gas directors and environmental water quality directors of multiple U.S. states. In April 2017, the GWPC Board approved Resolution 17-1, “Creating a National Study Group to Focus on Regulatory, Scientific and Technological Challenges concerning the Beneficial Use of Produced Water from Oil and Gas Production.”  Since that time, I have served as the Co-Chairman of that study group along with Ms. Shellie Chard, Director of the Oklahoma Water Quality Division. Following our two years of effort and over 400 pages of text contributed by a qualified team of scientists, petroleum industry and water quality professionals, and legal experts, the GWPC Board recently approved the results of the study for publication. I expect final editing and printing of the report to be accomplished in mid- to late-June.

As complex as the petroleum industry can be, the subset of knowledge pertaining to produced water from oilfields requires an even deeper level of understanding. Produced water has historically been handled as a waste by-product of oil and gas production. It often contains high concentrations of dissolved salt and traces of other materials. The traditional method of disposing of produced water has been to re-inject the fluid into deep wells far removed from shallower fresh water intervals or back into petroleum producing zones for secondary recovery of crude oil. But the basis of the GWPC Board resolution in 2017 was to ask, “what else can be done with produced water?” Even if produced water cannot be consumed or provide benefit to agriculture (and in some specific scenarios, agriculture use is viable), if it could displace current secondary uses of fresh water, then there may be potential win-win applications for the petroleum industry and the general public. And the current volumes of produced water being processed by the petroleum industry are not insignificant.

The conclusions of the report are summarized by the closing paragraphs of the soon-to-be-published Executive Summary:

“Operators and regulators alike are rethinking the economics and long-term sustainability of traditional produced water management practices. Many operators are reusing more produced water than ever. As water becomes scarcer, the increasing benefits of reusing produced water in some regions may outweigh the costs of managing, treating, storing, and transporting it if health and environmental risks can be understood and appropriately managed. While most near-term alternatives focus on reuse of produced water to reduce fresh water consumption in unconventional oil and gas operations, interest is growing in the potential for reuse outside the oil and gas industry.

Produced water is not uniform, and neither are the circumstances of its potential treatment and reuse. Research, treatment decisions, risk management strategies, and in some cases even approval processes should be tailored to address the reuse of a particular produced water for a particular type of reuse. Identifying specific reuse options that address current or emerging needs or drivers in specific regions is an important next-step opportunity in order to prioritize investment in purposeful and actionable research and development with a defined set of facts and circumstances. Additional regulations to protect public health and the environment may apply or be developed in response to increased beneficial reuse outside the oil and gas industry.”

I am proud to be associated with the creation of the coming report. I expect that it will establish a foundation for future consideration of legal framework modification, academic and research efforts, and any additional updates to the comprehensive study of produced water represented by the current report.

Message from Director John Baza – Winter 2019

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For the past several years I have been extolling the tri-part mission of the Division of Oil, Gas and Mining (OGM): 1) Foster responsible development of the state’s petroleum and mineral resources, 2) Protect the public from health and safety impacts of such development and 3) Preserve the environment by requiring effective restoration and reclamation of lands after development has ceased.  As we commence a new year and look back at OGM’s accomplishments of 2018, it allows us to assess how well we have achieved our objectives.  

The success of the extractive industries in Utah speaks for itself.  According to the most recent website references of the U.S. Energy Information Association, Utah ranks 10th in the nation for crude oil production, 13th for natural gas production, and 11th for coal production. The Utah Geological Survey released a report in December entitled “Utah Mining 2017” that characterizes the entire petroleum and mining industries in Utah equating to $5.8 billion in value during that year. OGM is proud to be a catalyst for this industrial activity as the chief regulatory agency responsible for oil, gas and mining permit activity as well as ensuring that such development occurs in a responsible manner.

However along with this valuable development and the important commodities that are produced for consumption by everyone, there are impacts. Risk mitigation becomes a key component of ensuring that development occurs responsibly. Several of the Division’s principal business processes revolve around risk mitigation. For example, the process of reviewing and approving permits for drilling or mining is performed by skilled personnel who have been trained in earth sciences, hydrology, and engineering.  By using discerning judgement and a sound regulatory framework, they help companies prudently plan their operations according to established standards. Similarly, the observations of on-the-ground inspection staff determine that extractive industry activities remain in compliance with those same established standards. Other risk mitigation OGM processes are effective data management and record-keeping for transparency to the public, and a public adjudicative process through the Board of Oil, Gas and Mining.

As a consumer society, we all benefit from the extractive industry commodities produced in Utah. As such we are also very much reliant on the efforts of Division personnel in keeping the industrial materials flowing to the marketplace with as minimal risk to the public and environment as possible.

Message from Director John Baza – Fall 2018

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When employed in the private sector of the petroleum industry in the 80s and 90s, I learned valuable business lessons about industry extractive operations that have remained with me throughout the years. I realized that my role as a company engineer revolved around three objectives: 1) increase the productive output of oil and gas wells, 2) reduce operational costs as much as possible, and 3) minimize future long-term liabilities to the company. These objectives were important for the cash flow and profitability of the organizations for which I worked, and their basis in corporate economic value was obvious.

As I transitioned into the public sector with state government employment, I learned that as a public servant, it was still important for me to provide value to my employer, the general public. But because of the diverse interests represented by the public, there was less clarity in a statement of objectives. I had to modify my fundamental economic lessons learned in the private sector to fit the expectations of the public.

Therefore, the first of the aforementioned objectives, rather than “increase production” could be translated to “foster, encourage, and promote the responsible development of mineral resources” to maximize the value of those resources to the general public for their good and for their greatest quality of life. The second objective of “reducing operational costs” could be restated as “minimize the public health impacts or the environmental impacts” of ongoing operations by ensuring compliance with established rules. And the third objective would translate from “minimizing future long-term liabilities to the company” to “minimizing future liabilities to the state or its subdivisions”.

The Division endeavors to achieve the last objective by ensuring that operating companies are complying with appropriate risk management rules including establishing appropriate financial assurance to provide the state with funds in the event those companies default. Both our Abandoned Mine Reclamation Program and our Oil and Gas Orphan Well Plugging activities also work to address legacy problems that occurred prior to the time of strident regulatory oversight on such operations. 

And finally, efforts are ongoing to require accountability of responsible parties when well sites or mines fall into a suspended or non-productive state of operations. In this manner, we continue to provide value to the general public of a sound regulatory framework for the extractive industries in Utah.

Message from Director John Baza – Summer 2018

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Utah’s natural resources of crude oil, natural gas, coal, metals, and other mineral commodities are valuable to the citizens of the state. Either by direct ownership or as a result of the processing and sales of commodities, these products improve the quality of life of Utahns.  

Since the 1950s, the Division of Oil, Gas and Mining (DOGM) has performed its stewardship responsibilities of ensuring that waste is prevented, recovery of underground resources occurs responsibly, and Utah residents receive the greatest possible good from these vital natural resources.

In recent years, technology has advanced, and much of the work of the Division incorporates these advancements. Regulatory processes are now performed via multiple electronic means including computerized databases, mobile devices for site monitoring, geographic information systems, unmanned aerial systems (drones), and live streaming conferences and meetings.  All of these advancements have extended the reach of Division personnel to accomplish more without large increases in staffing or budget, allowing for efficient expenditure of public funding.

To view past or future meetings, visit our YouTube account https://www.youtube.com/channel/UC38_VmKbbN8_ngTrkAqXe6Q

Message from Director John Baza – Spring 2018

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Occasionally the Division of Oil, Gas and Mining (OGM) finds it necessary to take enforcement action against companies operating in the state. These actions are taken for a variety of reasons, but most often because there is a substantial risk of harm if an operator remains out of compliance with established rules. The potential for harm could be to the environment, to public health and safety, or to the monetary obligations inherent with producing energy and mineral resources.

Some recent examples of enforcement action include:

  • Needing to reclaim a waste pile associated with mining operations
  • Requiring removal of produced water and oilfield wastes from an inactive petroleum site
  • Addressing a failure to report produced volumes of oil and gas from wells in order to properly pay mineral royalties and taxes
  • Requiring the posting of an adequate reclamation bond for extractive operations in order to avoid future public liability for closure and reclamation

Most of us understand the need for structured rules and regulations in society intended to maintain order and prevent harm. Whether it is traffic regulation, laws regarding investment practices or municipal ordinances for snow clearing in winter months, we all live in a system that expects compliance for a variety of daily activities. When we all work to apply these requirements, then life flows smoothly with minimal inconvenience. But when even one or two individuals skirt the rules or try to make exceptions for themselves, then many other persons can be affected or even injured.

OGM field operations staff works diligently to ensure compliance by operators by instructing, informing, and advising parties regarding requirements for workmanlike energy and mineral production in Utah. But there are occasional examples where such efforts over lengthy periods of time have failed. These are the cases where enforcement actions become necessary to achieve a desired outcome. Fortunately, there are many responsible operating companies in Utah, and it is rare that OGM must proceed to enforcement action, but it remains a tool for effective compliance that is used from time to time.

Message from Director John Baza – Winter 2018

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Much has been said over the years about the Energy–Water nexus, meaning that it takes energy to develop water for consumption and it takes water to develop energy resources. Whether it is coal mining, copper mining, or oil and gas drilling, it seems that water and energy development must coexist. 

At a recent Uinta Basin Oil and Gas Collaborative Group (UBOGCG) meeting held in Duchesne, the theme of the meeting was oilfield produced water. Several qualified speakers gave presentations on the management of water that is produced from oilfields in Utah during the process of extracting hydrocarbons from deep petroleum reservoirs in the Uinta Basin. The meeting was well attended, illustrating the interest garnered by the topic. For me, the meeting highlighted how little attention has been given in the past to putting this water to some kind beneficial use.

Oilfield water is produced in abundance out of petroleum reservoirs. For Utah oil wells, the production ratio of water to oil is 6:1 or higher – meaning that for every barrel of oil produced, there are six barrels of water. This is water that has remained in place with the hydrocarbons for eons, and it is generally brackish or mineral-laden, so for the most part it is unusable for human consumption or agriculture. 

In the past, it has been a waste management problem for oil producers with most operators either disposing of the produced water or recycling the water for enhanced recovery operations or injection stimulation of oil production in other wells. But recycling has only accounted for a portion of the produced water and historically, much of it has been reinjected back into underground formations that already contain unusable water. 

In Utah, there might be over 20,000 acre-feet of produced water that must be managed and/or disposed.  If even a small portion could displace fresh water use in industrial or residential processes not requiring fresh water, then there could be great benefit by allowing fresh water to move toward other consumptive purposes.

There have been efforts in the recent past to characterize the quantity and quality of produced water, most relevant to Utah operators is the report by the Utah Geological Survey entitled “Produced Water in the Uinta Basin, Utah: Evaluation of Reservoirs, Water Storage Aquifers, and Management Options.”  This report was described at the recent UBOGCG meeting, and it should serve as a valuable tool to the petroleum industry for operations in Utah.

Another study underway is being led by the Groundwater Protection Council (GWPC) based in Oklahoma City, Oklahoma, representing state government interests across the U.S. for groundwater regulation and protection matters. This study was initiated in July 2017 with a kickoff meeting in Salt Lake City and subsequent discussions in Oklahoma City; Boston, Massachusetts; and an upcoming meeting in Tulsa, Oklahoma. The purpose of the study is to provide the current regulatory landscape and state of scientific knowledge relative to produced water management and re-use.  It is organized in three modules: (1) the legal and regulatory framework; (2) industry infield re-use; and (3) re-use opportunities outside of the oilfield. The leaders of the individual modules are proceeding to use subject matter experts to draft portions of the study that is expected for publication in early 2019.

Clearly, some of the best minds in the country are pondering this situation, and it is my greatest hope that better uses for oilfield produced water can be found for the benefit of all Utah citizens.

Message from Director John Baza – Fall 2017

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Many communities in Utah recently underwent municipal elections in which local citizens were engaged in choosing their local government representatives. As I considered who I would vote for, I felt that who I voted for was not as important as what I saw as significant issues in my community that needed to be addressed. Regardless of what the issues may have been, I wanted to know where individuals stood on those issues, and I wanted to vote for the person who could passionately represent my interests in those issues.

City government leadership should be focused on those things that matter most to their community’s citizens. Ordinances and policies will differ from community to community dependent on the opinions of a majority of the residents of any particular city. However, as the size of the community increases, more issues are in play, and the community’s majority opinion may differ substantially from certain individuals who have a minority viewpoint. As one philosopher once stated, “the good of the many outweigh the good of the few.”

It is the same in state government. The substantially large population base leads to diverse opinions and differing views on everything from medical care to land use to transportation. As citizens, we hope that our concerns are adequately reflected by the efforts of our elected officials and in turn by those appointed and employed by state leaders in their various functions. Occasionally, however, there are differences of opinion between majority and minority interests that are seemingly unfair to those individuals whose lives are affected by state policy and implementation of administrative rules.

In the development of the energy and mineral resources of Utah, this is an ongoing discussion with substantial differences of opinion. The charge of the Division of Oil, Gas and Mining is to foster and encourage responsible development of Utah’s underground energy and mineral resources. We must do so with adherence to the governing statutes established by the legislature, and to the administrative rules adopted by our governing Board of Oil, Gas and Mining. In some cases, the application of such laws and rules seems unfair to various parties such as the developers, adjacent landowners, community activists, or members of the unconnected but observing public. Some may never fully agree with the decisions made by DOGM, but they should know that we will always abide by the statutes and rules established for petroleum and mining operations.

Ultimately, each citizen has the right to petition for a change in law or administrative rule to either the legislature or an administrative board such as ours. This is the process by which state policy is changed and interested parties have the ability to achieve correction in policy that affects them. But it must be remembered in the policy changing process that both elected and appointed officials will generally need to seek the good of the many that may contradict the good of the few.

Message from Director John Baza – Summer 2017

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As a teen growing up in the 1960-70’s, I witnessed the significant changes in governmental policies relating to environmental impact and protection during those two decades.

The Clean Air Act was established in 1963, with revisions in 1970 that greatly expanded the role of the federal government; the National Environmental Policy Act (NEPA) was introduced in 1969 and became effective on January 1, 1970; the first Earth Day was in April 1970; the U.S. Environmental Protection Agency was created in December 1970; and the Clean Water Act came about in 1972 with amendments to a previous water pollution law.  Each of these actions was intended to change the historical behavior of American citizens and American industry to be more aware and protective of the planet’s resources and environment.

As I have now been involved with the energy and mineral extractive industries since my university years, I can attest that the 1970s brought similar attention for environmental protection to the petroleum and mining industries in the U.S. The decades since have seen increasing laws and regulatory processes designed to progressively reduce environmental impacts and minimize risk to public safety and health as well as the ecosystems that humans can affect. 

Although the original Utah Oil and Gas Conservation Commission was established in 1955, this program was updated and revamped as a result of a legislative audit in 1982. The legislature also acted in 1975 to create the Utah Mined Land Reclamation Act that established a Minerals Regulatory Program in OGM. When the U.S. Congress passed the Surface Coal Mining and Reclamation Act in 1977, they included a provision for states to assume primacy delegation for the implementation of a coal regulatory system. Utah applied for and assumed that primacy in 1981. 

It is often asked in the context of economic development discussions whether or not environmental policies have gone too far.  Have we already accomplished what was intended by the environmental movement of the 1960s and 1970s?  Should we attempt to cease all extractive industry activity and its related impact in the cause of terminating any potential risk to our natural world? Humans need the resources to be produced from the earth’s underground energy and mineral resources as much as they need clean air to breathe and clean water to drink. Thus, it is a matter of balancing responsible development with the duty to be good stewards of earth. But to ensure that we perform these actions responsibly means effort must be placed on good analysis, review, and monitoring of extractive development operations. OGM strives to perform these efforts efficiently and effectively and with due regard to balancing the public’s needs.

We are proud of the resulting outcome that the public continues to derive benefit from the production of oil, gas, coal and minerals in Utah with no significant impact to the vast majority of the citizens of the state.

Message from Director John Baza – Spring 2017

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Preventative maintenance is important for our health, home, and vehicles to avoid major expenses in the future. The same can be said for the extractive industries with maintenance including confirming equipment isn’t worn, leaks and spills are controlled, and valves or hatches are properly lubricated and functional. This preventive maintenance is not a function of available cash flow, but must be performed even when economic conditions are poor.

Regulatory agencies must also conduct routine monitoring and compliance at all inspectable units to avoid catastrophic failure of physical infrastructure, especially when the petroleum industry is in a downturn.

When I came to work for the Division over twenty years ago, the inventory of active oil and gas wells was approximately 5000 to 6000. Since then, the number has grown to over 16,000 active wells, a large responsibility for the nine inspectors working for the oil and gas program.

In order to have an effective regulatory program, we must commit to having adequate staffing within OGM to perform the necessary field monitoring and compliance efforts, even during lean times in the petroleum industry. Problems can be continually addressed and the overall health of the extractive industries sustained.

I do not anticipate that every person benefiting from the consumption of products obtained from mining and the petroleum industry will truly appreciate the efforts made to maintain a healthy and safe industry in Utah. My hope is that industrial operators and the general public can gain a greater understanding of the efforts of our dedicated OGM staff and that these industries can operate in Utah with relatively few negative impacts to the environment and citizens.

Message from Director John Baza – Fall 2016

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John Baza, Director Division of Oil, Gas and Mining

Can states more effectively regulate extractive mineral development than the federal government?

Many of my acquaintances know that my heritage is from the island of Guam in the Pacific Ocean. Guam has a long history of being overseen by governments distant to the island itself. 

The island was claimed by the country of Spain since the mid-1500’s after Magellan landed on the island in 1521.  Spain ceded the island to the United States as part of the Paris Treaty following the Spanish-American War in 1898.  Since then, Guam has been a possession of the U.S. except during the invasion and capture by Japan during World War II. After U.S. troops liberated the island from Japanese control in July 1944, Guamanian people have been citizens of the U.S., enjoying many of the same rights and privileges afforded other residents of the U.S. mainland.

I mention this because I see that the island of Guam has had its share of problems in recent decades, and they are working hard to overcome them. They have struggled to maintain a self-sustaining economic base, relying to a large extent on the economic development pertaining to U.S. military installations that have been part of the island’s scene for decades. They must live with policies and dictates of government officials far removed from the island’s inhabitants. Young people of the island wish to move away for greater opportunities, even though they can receive a good education through the island’s own schools and university.

So transporting through time and space to my current life in Utah, which I have called home since I was a lad of 12 years old, I find many of the same conditions existing in the less populated areas of this state. They live with the daily struggle for a sustainable economic engine, the governance by policies of officials based two time zones away, and the out-migration of their young people who desire better opportunities. These problems are consistent with the island of my own heritage.  So what is to be done to address these challenges?

At least in the extractive industries, I have seen an important initiative develop in the last couple of years that argues for states’ rights in managing the mineral resources of each state, rather than leaving it in the hands of policymakers in Washington, DC.  States First is a collaborative effort of two organizations (the Interstate Oil and Gas Compact Commission and the Ground Water Protection Council) that represent states in regulating for responsible development of oil, gas, and water resources. 

Suffice it to say that the initiative is an attempt to convince the public, the regulated industries, and the policymakers in government that U.S. states have always and are still leading the way in fostering responsible development, protecting public health and safety, and preserving the environment relative to operations of the mineral extractive industries.

Learn more of the important activities of the States First Initiative by visiting www.statesfirstinitiative.org.