Category: Oil and Gas

Year in Review – 2018

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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

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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

Employee Highlight – Spring 2018

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Dayne Doucet is a petroleum engineer and was recently selected to oversee the well permitting in the oil and gas program. As the permit manager, he reviews all applications to drill (APDs) verifying requirements of the Division rules are met and that development is done responsibly.

He utilizes his engineering skills by assisting with shut-in temporarily abandoned (TA) wells, and reviews well designs. Dayne also participates in Board hearings by providing technical expertise in Division matters. He often fields questions from both the public and operators and does his best to provide answers and education on what the Division does and why.

According to Dayne, the best part of his job is the people with whom he works. Whether meeting with internal staff or working with operators in the field, he feels lucky to be involved with smart, passionate, and hardworking people. He also values working for an organization that uses responsible development, protecting public health and safety, and preserving the environment as the guiding objectives for doing business.

Dayne has worked for the Division since February 2015. Before working for the state, he worked in the oil and gas industry in Wyoming, Texas, Colorado, and Utah. He has a Bachelor of Science Degree in Petroleum Engineering from Montana Tech in Butte, Montana.

When Dayne isn’t working, he enjoys everything Utah Jazz, golfing, reading, fishing, and spending time with his wife and family.

Oil and Gas Program Update

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The Oil and Gas Program implemented a new database system June 2017, a project that has taken nearly four years to complete. The database replaced an outdated system with newer technology and functions.

Data management is a critical element to the success of the program as it helps track all well data, production, injection, inspection, and compliance information. Over 16,000 wells and facilities statewide create a tremendous amount of data accessed daily by entities including federal, state and county governments. In addition, this data is critical to operators who use the records for exploration research and by the general public who may want information on wells and activities in their area.

Staff has also worked to update current policies and procedures and drafted the Division Standard Operating Procedures, which includes documents guiding staff through a multitude of program processes. These procedures are utilized as training material for new employees, as well as references for field staff.

Staff developed Guidance Documents for operators and stakeholders to use in an effort to reduce many of the variable interpretations of Division Statutes that have occurred in the past. Staff identified several hot topic issues including spills and reclamation activity and developed documents to aide operators with such events.

The development of Standard Operating Procedures and Guidance Documents is an ongoing project within the Oil and Gas Program that will be updated as additional policies and processes are identified and developed.

Produced Water in Utah

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Produced water is a byproduct of oil and gas production. In 2016, Utah produced approximately 30.5 million barrels of oil and 158.8 million barrels of produced water, equating to roughly 5.2 barrels of produced water for every barrel of oil.

Produced water contains salts, petroleum residue and naturally occurring inorganic and organic chemicals. The proper handling of produced water is a critical part of the petroleum production process and must be disposed of in permitted facilities designed exclusively for oil and gas production water.

In Utah, two types of facilities exist for the disposal of produced water. Evaporative ponds, approximately one to eight acres by 15 feet deep, are doubled lined with synthetic liners and leak detection systems. These facilities have very strict regulations and are monitored on a regular basis by the Division (Rule R649-9 Waste Management and Disposal). In this process, the water is evaporated and the residual solid material is left behind and will be disposed of when the facility is closed. Approximately 5 percent of all produced water goes into evaporative ponds.

Class II injection wells are the second type of disposal facility where produced water is injected back into the ground. The Division has primacy from the Environmental Protection Agency (EPA) for regulating these injection wells on non-Indian countr

y in Utah. The Division has very strict regulations defining criteria for wells that can be permitted as a Class II injection well (Rule R649-5. Underground Injection Control of Recovery Operations and Class II Injection Wells). 

A detailed analysis of engineering, geology, nearby water sources both surface and ground are all considered to determine the integrity of the well before a permit is given. Analysis ensures that water injected into an accepting rock formation will prevent wastewater from migrating to the surface or to ground water. In Utah approximating 95% of produced water is disposed of in class II injection wells.

Recently, class II injection wells have been associated with induced seismicity or earthquakes in Oklahoma, Arkansas, Texas, Ohio and Kansas. Current studies conclude that earthquakes are associated with large volumes of water disposal and unique geological conditions. The volumes and geology are significantly different in Utah than that of the mid-west. Utah has not experienced induced seismicity from water injection, but the Division will continue to monitor and react if conditions change.

Management of produced water is critical to the success of a well. If costs become too large, the well becomes uneconomic and resources are left in the ground. With further study and technological advancements, new methods can make this process more efficient and increase safety. The treatment and processing of produced water can benefit industry, the environment and Utah’s citizens.

Orphan Well Program

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The Division oversees the state orphan well program- wells that are unplugged or abandoned.
The program has plugged over 100 wells and is funded by producers of oil and gas through a .002 levy on the value of production. 

Staff from the program recently went to Mexican Hat to inventory the orphan wells in the area.

Mexican Hat is the oldest oil field in the state. After oil was found in San Juan County in 1908, approximately seven oil companies had started work on no less than 25 wells near Mexican Hat. Over the next few decades, many wells were drilled in the area- some produced and some were drilled as exploratory and never used.

A database is used to mark all the known wells on the map, which makes finding the wells  easier. Information such as when it was drilled, depth, gas or oil, status of well (shut-in, producing, plugged and abandoned, or temporarily abandoned) is included in the database. Photos can also be added for additional reference. Staff compares the information in the database to what is found in the field. It is not unusual for legacy wells to be found that are not accounted for in the database. Legacy wells were generally drilled prior to the establishment of the Oil and Gas Commission (now the Division) and before regulations were in place governing well drilling in Utah. 

Currently there are six wells on the orphan list to be plugged, but as a result of the field work, 11 additional wells were identified and added to the list. When staff is ready to begin plugging, they will work with State Purchasing to acquire and evaluate bids. After a contractor has been selected, staff will witness and direct operations for properly plugging and abandoning the wells.

As part of the Division’s mission to preserve the environment, it is important for staff to go in the field and verify the status of each well to prevent any incidental damage to the environment.

While many of the well locations are located in beautiful desert country like Mexican Hat, staff also encounters hazards including rattlesnakes, flash flooding and remote areas while on inspections.

Petroleum Engineer Dustin Doucet identifying an orphan well in San Juan County.

Oil and Gas Rule Change

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On October 26, the Utah Board of Oil, Gas and Mining approved the repeal and reenactment of Oil and Gas Rule R649-3-32, which establishes standards for the reporting of fluid spills and natural gas releases by oil and gas companies to the Division. Stakeholders and the Division recognized the rule needed more clarification, plus updates to the standards after comparison to nearby states.

The Division pursued a collaborative approach to the rule making, utilizing an informal rule process from April to August, in addition to the formal process in September and October.

The Utah Petroleum Association and the Western Energy Alliance expressed support for the rule change and the rulemaking process undertaken by the Division and the Board. No opposition to the rule was expressed during the informal or formal rule making. The rule becomes effective November 1.

Bureau of Land Management Hydraulic Fracturing Rule

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– Assistant Attorney General John Robinson

In March 2015, the Bureau of Land Management (BLM) publicized a new regulation known as the Hydraulic Fracturing Rule. This Rule came after more than four years of BLM efforts to govern hydraulic fracturing or “fracking” operations on all federal and Indian lands in the U.S.

Specifically, the Rule was aimed at protecting groundwater resources through new casing and cementing requirements and increasing transparency through greater public disclosure of chemicals used. However, the Rule’s one-size-fits-all approach added red tape and bureaucracy without actually improving resource protection.

A coalition of states and two industry groups immediately challenged the Rule in federal court. Colorado, Wyoming, North Dakota and Utah argued that the Rule should be struck down for two reasons. First, the Rule was outside of the BLM’s authority and second, the BLM did not support the Rule with the best available science required.

In June 2016, the court sided with the states and held that the Rule was outside of the BLM’s power. This decision is currently on appeal.

Utah already regulates hydraulic fracturing on both state and federal lands, and there have been no fracking-related undesirable events in the state. As such, the Rule would have been a burden to operators working on federal land without any additional environmental protections; that is, the Rule imposed costs without benefits.

The Division’s Oil and Gas Program will continue to require best engineering practices for any given location that provides maximum protection to groundwater and other natural resources, the environment, and the citizens of Utah.

Hydraulic fracturing produces fractures in the rock formation that stimulate the flow of natural gas or oil, increasing the volumes that can be recovered. Fractures are created by pumping large quantities of fluid at high pressure down a wellbore and into the target rock formation. Hydraulic fracturing fluid commonly consists of water, sand and chemical additives that open and enlarge fractures within the rock formation.

Once the injection process is completed, the fluid is pumped to the surface through the wellbore. This fluid is known as produced water and may contain the injected chemicals plus naturally occurring materials such as brines and hydrocarbons. The produced water is typically stored on site in tanks or pits before treatment, disposal or recycling. In many cases, it is injected underground for disposal.

The first commercially successful application of hydraulic fracturing occurred in 1950. Today it is a common practice and is generally necessary to achieve adequate flow rates in oil and gas wells.

Busy Oil and Gas Program Despite Slowed Drilling Activity

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With lower, fluctuating oil prices, drilling activity in Utah has slowed considerably. However, staff in the oil and gas program remains busy ensuring wells and disposal facility sites are maintained and safe. There are 16,302 inspectable oil and gas units statewide and eight field inspectors located in Salt Lake, Vernal and Price.

In addition to well and disposal facility inspections, staff is responsible for the following:

  • Approve engineering plans for work on existing wells
  • Monitor mechanical integrity tests of well bores
  • Respond to environmental spills and releases
  • Establish and witness plugging procedures
  • Ensure compliance of oil and gas rules and statutes
  • Maintain database for all well information
  • Maintain environmental integrity of  industry
  • Ensure adequate bonding
  • Audit for accuracy of reporting

Over the last several months, program staff worked on the plugging and reclamation of seven orphan wells in the Vernal, Price and Crescent Junction areas.  Due to the delinquency of the well operators, the Division claimed the bonds and assumed responsibility to oversee and pay for plugging operations. 

Staff also witnessed pluggings in the Anschutz Ranch area near Evanston, Wyoming. Four wells were plugged from January through the beginning of April. Snow and freezing temperatures slowed progress and posed challenges to plugging crews and division staff. 

Other well pluggings are scheduled in the Coalville area this summer.

About the Oil and Gas Program

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The Oil and Gas Program is responsible for providing drilling permits, completing site inspections to ensure compliance both before and after drilling, monitoring well completions and overseeing the abandonment and plugging of wells no longer in operation. The program was established in 1955 to prevent the waste of oil and natural gas, encourage conservation and protect correlative rights of oil and natural gas owners.

Currently there are 4,813 oil wells and 7,179 natural gas wells operating statewide. The majority of Utah’s oil and gas is produced in Uintah, Duchesne, San Juan, Carbon, Emery, Summit and Grand counties.

Oil and gas production plays a vital role to Utah’s economy by providing energy-related jobs, boosting local businesses and generating oil and gas tax revenues. The demand for reliable and affordable energy is essential for the well-being of our state. Utah plays a major part in sustaining petroleum production and ranks 11th in oil and gas production in the United States.

The Division supports the environmentally responsible development of essential petroleum resources with a commitment to public safety, needs and education. Staff is committed to protecting the environment through the regulatory processes that monitor the growth of responsible energy development. 

In addition to the affordable energy provided by oil and gas production, many other products are made from petroleum. Products made from or byproducts of petroleum include asphalt, ink, crayons, bubble gum, tires, skis, hand lotion, lipstick, movie film, soft contact lenses and much more.  Natural gas is an essential raw material for many products such as paint, fertilizer, plastics, antifreeze, medicines and explosives.

For more information on oil and gas facts, maps, data and publications, visit oilgas.ogm.utah.gov/index.htm.