NEW OIL AND GAS PROGRAM PENALTY RULES

During the 2020 General Legislative Session, the Utah legislature passed Senate Bill 148 requiring the Division of Oil, Gas and Mining to modify the process for imposing and collecting administrative penalties. 

Division staff worked with interested stakeholders to revise the current administrative rules regarding final orders, administrative remedies, and create a new rule establishing rules and procedures for imposing and collecting administrative penalties. Penalty rules were approved at the May 26 Utah Board of Oil, Gas and Mining (UBOGM) Hearing.

Below are highlights of R649-11, however the full rule is available here:

  • A Notice of Violation (NOV) describes the nature of the violation, action required, amount of time operators have to resolve violations, and a description of the operation/location.
  • Operators can resolve violations during the time specified in the NOV without receiving a penalty.
  • If violations are not resolved in the specified time listed in the NOV, the penalty accrual starts at the time the NOV was originally issued.
  • Operators can request a compliance conference with Division staff if they disagree with the NOV.
  • A Division assessment officer will determine whether a penalty will be assessed and if so, what amount. There are three classes of penalties, with a maximum Division penalty of $5,000/day and a Board maximum penalty of $10,000/day. Administrative penalties can reach a maximum of $200,000 per penalty.
  • Operators can appeal penalties to the UBOGM.
    Division staff now has clearly defined procedures to hold non-compliant operators fiscally responsible for violations not addressed. This rule provides Oil and Gas Program inspectors with an enforcement tool that ensures Utah’s resources are being developed responsibly.

NEW OIL AND GAS PROGRAM OPERATIONS MANAGER SELECTED

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.

YEAR IN REVIEW – 2020

While this past year presented us all with challenges and unforeseen circumstances, Division staff moved forward completing projects and adapting to new ways of doing business. Below are a few of the highlights from 2020.

Coal Program

Coal Program staff helped coal operators navigate the regulatory path nimbly and efficiently to continue their work. Skyline Mine operators determined that additional power was required for continued operations of their long wall miner. A corridor had previously been approved, however a larger corridor for the above ground powerline was needed, requiring additional permitting. Due to time constraints with the onset of winter, staff worked closely with the operator to get the additional permitting finalized so the powerline corridor could be completed.

50’ power corridor 

Deer Creek Mine
Reclamation of the Deer Creek mine was completed in late 2019. During 2020 spring runoff, several rills and gullies began to form on the reclaimed slopes. The operator and program staff immediately mobilized to the site and began working through the regulatory issues associated with repairing the erosion. A rogue culvert unknown during the operation of the Deer Creek Mine was identified as the issue. On-site field visits and conference calls with federal agencies were conducted to address regulatory issues and allow the operator to continue repair work before winter.

Deer Creek reclaimed slope with gully visible
Deer Creek rogue culvert

Minerals Program

Lisbon Valley Mine

On March 20, Division staff was notified that operations at the Lisbon Valley Mine in southeastern Utah had shut down. The Division subsequently issued an order for final reclamation to be complete by September 30, 2021. Over the next several months program staff spent many hours overseeing reclamation operations and reviewing the mine plan and reclamation cost estimate. In January 2021, the operator submitted an adequate bond and obtained Division approval to re-start operations. 

Rock art at Benjamin Quarry

In December 2019, staff issued tentative approval of the revised Notice of Intention (NOI) for the Benjamin Quarry in Utah County. This decision was appealed informally to the Division by concerned area residents and then formally to the Board of Oil, Gas and Mining, which upheld the Division’s decision to approve the NOI with certain conditions. One issue of the appeal included the concern for petroglyphs around the mine.

Staff continue using tablets to record inspections and are working to expand the efficiencies by developing an inspection prioritization application. The tablets help inspectors keep track of inspection frequency, which is a major aspect of determining inspection scheduling.

Abandoned Mine Reclamation Program

Despite a slow and unusual start to the construction season due to the uncertainties presented
by COVID, the Abandoned Mine Reclamation Program (AMRP) completed two coal and six
non-coal abandoned mine reclamation projects this year.

Hiawatha Culvert before

Coal reclamation consisted of the Clear Creek Refuse Reclamation Project and the Hiawatha Culvert Maintenance Project located in Carbon County. Non-coal projects closed a total of 170 hazardous abandoned mines and completed maintenance at 30 previously closed mine openings. Projects included the completion of the Spor Project in Juab County that began in the fall of 2019, the White and Deer Flat Project in San Juan County, Phase I of the Willard Peak Project in Weber County, the Westdip Bat Cupola Project in Tooele County, and the Buckmaster-OIG Project in Emery County. Maintenance projects included the Jacob City Maintenance Project in Tooele County, and the Temple Mountain Maintenance Project in Emery County.

Hiawatha Culvert after

The Hiawatha Culvert Maintenance Project was located about 14 miles southwest of Price at the historic Hiawatha mine. In 1914 mine operators built a culvert over a stretch of Miller Creek to accommodate a road crossing. The 200-foot culvert is constructed of large sandstone blocks and features a rare and striking barrel vault top exhibiting fine craftsmanship representative of the Italian and Greek immigrant stonemasonry of the early 20th century.

In 2012, the Seeley forest fire destroyed much of the vegetation on the Wasatch Plateau above Hiawatha.  As a result, storms washed trees and rock debris down the watershed. Flooding washed out extensive portions of the century-old culvert walls and AMRP staff feared that the unsupported block culvert walls would collapse into the creek.  At best, this would dump sediment in the creek; at worst, the creek could be dammed and risk a catastrophic flood event  Besides losing a remarkable cultural feature and road access across the creek, structural failure of the culvert would have a significant effect on water quality and downstream fisheries.

Last September AMRP staff contracted with Strong Solutions, LLC of Fairfield, Utah to stabilized the damaged culvert by replacing the washed-out portions of the walls and floors with reinforced concrete. Immediately downstream of the culvert, a log jam was removed, and a deep gully head cut that threatened to undermine the culvert was stabilized by building a rock drop structure with stairstep basins to allow fish to migrate upstream.  

Coal mining at Hiawatha began around 1909 and continued until 1992 with extensive operations in four canyons and in multiple coal seams. The company town of Hiawatha, with a peak population of approximately 1,500 residents in the 1940s, supported the operations. 

Oil and Gas Program

The Division’s Oil and Gas Program successfully launched the Field Inspection Prioritization application that uses specific criteria to generate and implement data-driven decisions. Staff has worked with the Groundwater Protection Council (GWPC) to develop and implement the application designed to display in a spatial and report form which oil and gas sites should be inspected according to various inputs. 

All oil and gas wells were given a priority rating from one (highest priority) to three (low priority). Prioritization is based on operational factors such as compliance issues and history, age of the well and how long since the last inspection. Geographic factors include well proximity to surface water, groundwater, human population density and wildlife habitat. 

The program has been operational since January 2020 and has already helped our inspectors increase their inspection efficiency. The field application allows real time data collection that is automatically uploaded to the database saving inspectors time and reducing input errors. The program empowers program staff to consistently make decisions leading to reduced risk and more effective regulation through timely inspections.

This is an effective tool that will give management and staff the ability to make data driven decisions ensuring protection of Utah’s resources, while promoting responsible development. 

OIL AND GAS FIELD INSPECTION PRIORITIZATION PROGRAM

The Division’s Oil and Gas Program field inspectors perform many types of inspections on approximately 16,000 oil and gas wells statewide. Inspections are critical to protecting the citizens and environment, while promoting responsible development.

Over the last several years, staff has worked with the Groundwater Protection Council (GWPC) to develop and implement a Field Inspection Prioritization Program designed to display in a spatial and report form which oil and gas sites should be inspected according to various inputs.

All oil and gas wells were given a priority rating from one (highest priority) to four (low priority). Prioritization is based on operational factors such as compliance issues and history, age of the well and how long since the last inspection. Geographic factors include well proximity to surface water, groundwater, human population density and wildlife habitat. 

The program has been operational since January 2020 and has already helped our inspectors increase their inspection efficiency. The field application allows real time data collection that is automatically uploaded to the database saving inspectors time and reducing input errors. The program empowers inspectors to consistently make decisions leading to reduced risk and more effective regulation through timely inspections.

This is an effective tool that will give management and staff the ability to make data driven decisions ensuring protection of Utah’s resources, while promoting responsible development. 

EMPLOYEE HIGHLIGHT: RICHARD POWELL

Richard Powell is an environmental scientist/field inspector in the Oil and Gas Program. He’s been in the program for 15 years and is based in the Vernal field office. As a Uinta Basin oil and gas field inspector he monitors, inspects and advises operators in all aspects of oil and gas activity from initial pre-site inspections and drilling to final well plugging and reclamation.

Richard brings expertise and experience that gives him the skills necessary to ensure oil and gas development is done properly. Regulatory oversite is needed to make sure oilfield operations, such as produced salt water disposal, spill cleanup and drilling, are completed while protecting the resources of the state.

The best thing Richard likes about his job is working in very remote areas of the state. Because his truck is his office, he often deals with extreme temperatures, weather, potential flash flooding and lots of dust. 

Richard received his Bachelor of Science degree in Environmental Science from Utah State University.  Before joining the Division, he worked as a service supervisor for BJ Services, a worldwide oilfield pressure pumping service provider and as a licensed environmental health scientist for the TriCounty Health Department.

He is married with four children. He is active in church and community activities including youth sports coaching and most recently assistant coach for the Uintah High School mountain bike team the Rollin’ Utes. Richard has numerous hobbies including leather work, raising registered Black Hereford cattle and registered 100% New Zealand Kiko goats, archery, Dutch oven cooking, gardening and mountain biking.

Message from Director John Baza – Fall 2019

Director, John Baza

The Utah Division of Oil, Gas and Mining’s (OGM) Oil and Gas Program recently underwent a legislative audit completed by the Office of the Legislative Auditor General. Audit results, as well as the division’s response are available at OGM.Utah.Gov/Audit.

In an effort to sustain a culture of compliance, the division has created an action plan to improve regulatory responsibilities, prioritization, oversight of inspections and financial management. The actions will allow for better enforcement, refine program and employee performance metrics and update existing administrative bonding rules as recommended by the audit.

We are taking this audit very seriously. It has been a painful process to see where we have fallen short, but we are dedicated to improving our leadership, culture and expectations. Utahns need to know that we are protecting public safety and the environment while performing our jobs as oil and gas regulators. This audit gives us guidance on how to better fulfill that mission.

The Division is grateful for the time and effort the Legislative Auditor’s Office put into identifying opportunities for improvement within our Oil and Gas Program.

Application to Drill Permitting Process

The Oil and Gas Program often receives inquiries regarding how long it takes to process an application to drill permit (APD). Program staff strives to approve applications within 60 days, but there are many steps in the process that need to be completed before approval.

Once an operator submits a request, several staff members with specific expertise are involved in the review process. This system is necessary to ensure the environment and residents are protected, while allowing responsible development and conservation of oil and gas resources that benefits the citizens of Utah.

Technical Review

The purpose of the technical review is to evaluate relevant local and regional information that may be beneficial in assessing the location of a proposed drilling project and identifying any associated potential impacts.

Issues in the technical review include geologic assessment, cultural resources, soil assessment, regional precipitation, existing infrastructure, potential impacts to wildlife and habitat, previous area development, local/county ordinances, and well spacing requirements.

The geology/groundwater section of the permit is completed by a geologist who reviews the application for protection of water resources and other geology related issues. Items include the existence or absence of underground sources of drinking water and how it will be protected by the proposed casing program, location of any known water wells or nearby springs, and other mineral resources.

The Division’s petroleum engineer reviews the APD for well construction and safety standards consistent with industry standards and Division rules. This includes evaluating the drilling plan, casing and cementing design and blow out prevention pressure control systems to ensure the well is constructed properly to allow drilling to the depths proposed safely while isolating and protecting any oil, gas or water resources from migrating from one horizon to another.

Resources used in the evaluation include the Division’s database, Google Earth, ArcGIS, Utah Division of Water Resources data and mapping resources, Utah Geologic Survey data and mapping resources, Division of Wildlife Sage Grouse Management Area Map, USDA Web Soils Survey, along with well data and technical publications from the Utah Division of Water Rights.

Bonding

Staff check for adequate bonding to make certain the state is protected by ensuring sufficient monies are available for reclamation in the event an operator abandons a well. Once adequate bonding is verified, the well is attached to the bond record.

Pre-Site Evaluation

The purpose of the pre-site evaluation is to provide coordination between interested parties early in the permitting process allowing the opportunity for the operator, surface owner, and Division representatives to look at and evaluate a site. 

At this point in the process the location has been surveyed and the proposed well locations and other features of the pad have been staked so that all parties can see the “footprint” of the project. Division field staff look at the proposed location and evaluate the planned drill pad for environmental and health risks including proximity to domestic or municipal water wells, surface waters, soil permeability, and natural drainages that could transport spilled fluids. Various mitigation techniques such as rerouting drainages, constructing containment berms,or requiring closed-loop drilling methods may then be stipulated. The pre-drilling land characteristics of the site are also noted which will help in the site reclamation when the well is plugged.  

Permitting

After all of the required steps are completed, the application is sent to the permit manager for final review and approval. If all permit requirements are in order, the permit is approved.

2018 Permits

Last year, 290 APDs were approved. While not all approved APDs will result in a well being drilled as operators’ priorities shift due to economic and other constraints, the number of approved APDs can provide an indication of what the oil and gas industry is projecting for future production, which has a direct impact on Utah’s economy and funding for the Oil and Gas Program.

Employee Highlight – Spring 2019

Mark Reinbold joined the Oil and Gas Program in January 2009 as an environmental scientist/geologist. His responsibilities have included writing permits for water injection wells in the Monument Butte waterflood project near Myton, in the Uintah Basin. When oil prices were high, there were numerous applications, but when oil prices decreased in 2014, his responsibilities changed. Since then his focus has shifted more to the field, still largely involving Monument Butte and nearby fields in the Basin, but now the primary responsibilities are well inspections for water injection wells and production wells. There are more than 1,300 water injection wells in the Monument Butte Field. Also, he witnesses mechanical integrity tests (MITs) on the injection wells.

Mark has worked on various other projects including writing permits for various saltwater disposal wells and the Oil and Gas Program’s Standard Operating Procedures and Guidance documents for field inspections and permitting procedures. 

Mark’s job ensures responsible resource development, while also protecting the environment by protecting groundwater and surface waters from contamination by the oil field. Mark works with operators to address little problems before they become larger issues. 

Mark likes that his job is largely independent, but that help is always available when needed. He enjoys having been given opportunities to see some beautiful areas and great geology in the state, even some beyond the Uintah Basin. 

Mark is native to southeastern Illinois and grew up on a farm. He has a Bachelor of Science Degree in Geology from Eastern Illinois University and a Master of Science Degree in Geology, specializing in stratigraphy from the University of Illinois. In the past, he has worked at the Illinois State Geological Survey, ARCO Exploration in Denver, the Colorado Geological Survey, and environmental engineering companies in Minnesota. He moved to Utah from the Twin Cities, Minnesota and as bad as this winter has been, he still doesn’t miss the Minnesota winters.

Mark has two grown children, a son in Phoenix and a daughter in Madrid, Spain. Mark met his wife Hang Dao in Salt Lake City in 2013. She is from Hanoi, Vietnam and they have taken several trips to visit. Mark says it is a fascinating place.

In addition to traveling, they enjoy hiking, biking, and camping.

Year in Review – 2018

Oil and Gas Program

Oil and Gas Program staff worked on the exploration and production waste disposal facilities five year permit renewals requiring operators to have full-cost bonding for their facilities. The state rule, modified and approved by the Utah Board of Oil, Gas and Mining in 2013, required an independent, third party review of reclamation and closure cost estimates be submitted by July 2018 and that the Division issue new permits for these facilities, which are valid for five years.

Twenty eight of the 30 facilities submitted permit applications by the deadline. Operators who did not submit an application are no longer permitted to operate; operators who do not post a full cost bond or otherwise fulfill the permit application requirements will not have their permits renewed and will not be allowed to operate. Operators without a valid permit will be required to reclaim their facilities.

Bonding protects the Division and the state of Utah against expensive reclamation costs requiring state funds.

The Uinta Basin has seen a boom in horizontal well development. There are presently about 200 horizontal wells drilled in the Basin. As operators drill more wells, they are becoming increasingly more productive with advancing technology and science.  Industry experts have estimated that there are 55 billion barrels of oil in place in the Uinta Basin, and this production per section can compete with any other fields in the the country.

Over the last year, three program managers retired with over 95 years Division experience between them. In addition, two experienced field inspectors also left the Division. It is always difficult to replace institutional knowledge and it has been a challenge to replace those valuable employees. However, staff stepped up to fill these voids and we have moved forward with hiring new staff so the program can continue providing quality services to the state of Utah. 

Coal Program

Coal Program staff oversaw the reclamation of the Horizon coal mine, a bond forfeiture site in Carbon County. It took roughly three months to remove the coal mine’s five-acre footprint and re-contour the site to match the surrounding landscape. Reclamation involved demolishing and sealing the portals, re-establishing the stream channels through the facility and parking fill pads, and applying topsoil, mulch and seed to the final contoured slopes.

The  program had a very busy year with 69 permit amendments processed, 271 field inspections, 90 water quality reports produced, and two bond release applications. Program staff approved significant coal lease additions at several operations extending coal mining well into the future in Utah. Additionally, the Emery No. 2 Mine began producing coal in earnest this year and the Division has received a new permit application package for the construction of the Kinney No. 2 Mine located near Scofield Reservoir. 

The program also saw the retirement of two long-time and devoted employees: Program Manager Daron Haddock and Biologist Joe Helfrich with 68 years of combined experience. A new program manager will be hired in February.

Minerals Program

The Minerals Program received new applications for five large mines in 2018. Three are for engineered rock products and two are for salts. The most significant application is the Sevier Playa project which is proposed to produce 328,500 tons of potassium sulfate fertilizer annually. This project would cover much of the bed of Sevier Lake and would include other processing and transportation facilities. The Division is not yet ready to approve the project. 

The Scipio Pass quarry has been issued tentative approval and would disturb 160 acres near I-15 in Millard County. Clyde Companies anticipates producing 200,000 tons of aggregate products per year for the first five years, with the life of mine currently expected to be 30 years. Two other large mines for aggregate products have been proposed for Washington County.

Abandoned Mine Reclamation Program

In 2018, the Abandoned Mine Reclamation Program (AMRP) completed three coal and six non-coal abandoned mine reclamation projects. Work consisted of the construction of 1,600 feet of stream channel at Kenilworth, a previously reclaimed abandoned coal mine, the installation of a concrete plug and backfilling of a subsidence hole with over 13,000 cubic yards of fill material, and the closure of approximately 243 hazardous abandoned mine openings statewide. In addition, maintenance was performed at 15 previously closed abandoned mine sites.  

The program received an award for work completed on the Wolf Den Fire reclamation project in the Uintah Basin. The National Association of Abandoned Mine Land Programs (NAAMLP) publicly recognized Utah for the exemplary physical safety hazard mitigation in the reclamation of abandoned hard rock mines and presented them the nation’s highest achievement at its annual conference in Williamsburg, Virginia. Steve Fluke, AMRP manager and AMRP Archaeologist Seth Button attended the banquet and accepted the award.

Education outreach efforts included the distribution of more than 23,000 “Mining Utah’s Heritage” workbooks to 4th grade classes, designing and printing 1,700 calendars for distribution featuring historic coal mines from Carbon County’s Spring Canyon, and participating in 13 public outreach events.

Exploration and Production Waste Disposal Facilities Five-Year Plan Renewal

Oil and gas exploration and production waste disposal facilities in Utah are required by state rule R649-9-8.5.1 Bonding of Disposal Facilities to post full cost bonds for their operations by July 1, 2018. Operators must submit a completed application and estimated bond by July 1, subject to review by Division staff.

This rule was modified and approved by the Utah Board of Oil, Gas and Mining in 2013 requiring an independent, third party review of reclamation and closure cost estimates to ensure coverage. Adequate bonding protects the Division of Oil, Gas and Mining and the state of Utah against expensive reclamation costs requiring state funds. Requiring full cost bonds ensures each step of remediation is covered including waste and equipment management, re-contouring sites, and reseeding.

The majority of exploration and production waste is handled through use of three types of waste disposal facilities permitted in the state: injection wells, evaporative ponds, and land farms. Injection wells take produced water and inject it deep into underground rock formations. Evaporative ponds are filled with produced water and then use evaporation to vaporize the water. Land farms use microorganisms in the soil to naturally biodegrade hydrocarbon contaminated soils.

Currently there are 30 permitted facilities in Utah- one in Sevier, two in San Juan, two in Grand, seven in Duchesne and 18 in Uintah counties.

Oil and gas program staff has worked to notify and remind operators of the upcoming deadline to ensure compliance by July 1 through letters and information on the Division website. Staff will follow-up with non-responsive operators in May to make certain everyone has been notified. Operators who do not post a full cost bond will have their permits revoked until the bond requirements are met.

For more information on the five-year permit renewal process, visit https://oilgas.ogm.utah.gov/oilgasweb/publications/publications-main.xhtml