Chairman Christi Craddick Commissioner Ryan Sitton Commissioner Wayne

Chairman Christi Craddick Commissioner Ryan Sitton Commissioner Wayne Christian May 2017 Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 1

Oil and Gas Wells Groundwater Protection Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 2

Table of Contents • Railroad Commission – Oil and Gas Division Introduction • Regulatory Identification • Groundwater Advisory Unit • Groundwater Determination Uses • Injection Wells • Environmental Permits Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 3

Railroad Commission of Texas (RRC) • Mission Statement: – “Our mission is to serve Texas by our stewardship of natural resources and the environment, our concern for personal and community safety, and our support of enhanced development and economic vitality for the benefit of Texans. ” • 16 Tx. Admin. Code - Chapter 3 – Oil and Gas Division – “Statewide Rules” (SWR) – As opposed to “Field Rules” Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 4

Groundwater Protection, Generally • Pollution Prevention – Registration / Permitting – Reporting – Inspection • Enforcement – Compliance / Remediation – Penalties Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 5

Partial Oil and Gas Division Hierarchy Oil and Gas Technical Permitting Environmental Permits Groundwater Advisory Unit Field Operations Injection – Storage Permits Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) District Offices 6

Communication Oil and Gas Technical Permitting Environmental Permits Groundwater Advisory Unit Field Operations Injection – Storage Permits Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) District Offices 7

RRC Regulatory Steps & Forms Organization Report (Form P-5) Drilling Permit (Form W-1) Groundwater Determination (Form GW-1 & GW-2) Well Completion (Form G-1 & W-2) Injection Permit (Form H-1 & W-14) • Well Plugging (Form W-3 A & W-3) • • • Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 8

Regulatory Identification • Organization Report (SWR 1) – Operator identifying information and officers • Drilling Permit (SWR 5) – Operator and location Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 9

Lightning Strikes • Company began accepting saltwater and storing in tanks • District office becomes aware company is not an Operator nor permitted for disposal • Site Remediation cleans up • Saltwater haulers are fined Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 10

GROUNDWATER ADVISORY UNIT (GAU) Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 11

Groundwater Protection Determinations • Identifies groundwater protection intervals for oil and gas activities – Surface Casing depth for new wells – Plugging depths for abandoning wells • Provide base of Underground Sources of Drinking Water (USDW) for injection wells • Provides determination on disposal well interval isolation from freshwater Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 12

GAU Freshwater Classifications • Usable-quality water (UQW): < 3, 000 ppm TDS – May include more saline waters that are known to be used • Underground Sources of Drinking Water (USDW): < 10, 000 ppm TDS • Protection may include parts of formations without UQW or USDW, but are not isolated from parts that do have UQW or USDW Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 13

GAU Resources • • • Well Logs Water Well Data Reports Arc. GIS & Petra Sources: – GAU log library – Other agencies (TWDB, BEG, TCEQ, etc. ) – Oil & Gas Operators Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 14

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GROUNDWATER DETERMINATION USES Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 16

Well Conveyance • Oil & Gas wells are holes in the ground intended to convey hydrocarbons to the surface. • But, wells can convey anything to any permeable formation (incl. freshwater aquifers) that the well intersects if not properly installed. Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 17

Well Completion • • • Surface casing Production casing Cement Tubing Packer Perforations Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 18

Surface Casing and Cement • Surface Casing – Protects usable-quality water from drilling/completion process – Extra protection against leaks during production Usable-quality water • Cement – Prevents annular migration of fluids – Prevents corrosion of casing Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 19

SWR 13 - Groundwater • SWR 13 requires that surface casing protect groundwater as stated in Groundwater Advisory Unit (GAU) letter (Form GW-2) • Sets quality standards for cement and steel for well casing • Surface casing must be pressure tested before drilling deeper • Report well completion (Form W-2) Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 20

Plugging and Abandonment • A well must be plugged when it is dry, no longer Usable-quality water economically productive, or has ceased injection. • Plugs prevent fluid migration Producing Zone Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 21

SWR 14 - Groundwater • SWR 14 requires that cement plugs isolate groundwater as stated in Groundwater Advisory Unit (GAU) letter (Form GW-2) • Requires that a well be plugged within a year of inactivity • Sets quality and quantity standards for cement • Plugging procedure (Form W-3 A) must be preapproved by District Office and plugging report (Form W-3) submitted after • Authorizes the RRC to plug a well if necessary Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 22

State-Funded Plugging • Orphaned Wells • Fiscal Year 2017 Goals: – Plug 1, 050 wells – $14. 4 million budget Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 23

Case of the Lost Fish 1 2 Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 3 24

GAU & District Office • District office notified of unplugged abandoned section of well • GAU collaborated with the District office – GAU tailored groundwater recommendation to the situation with help of Operator information • District office denied request to leave hole open • Operator plugged well in accordance with plan at significant cost Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 25

Producing Wells in Reverse INJECTION WELLS Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 26

Why Inject Fluids Underground? • Enhanced recovery • Waste disposal • Storage Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 27

SWR 9 & 46 - Groundwater • Prohibits injection into freshwater (USDW) • Requires letter from GAU ensuring no freshwater is endangered (Disposal Wells – SWR 9) • Requires review of nearby wells to ensure no migration of fluids occurs through wellbores • Authorizes modification, suspension, termination of permits by RRC • Well constructed in compliance with SWR 13 Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 28

Reporting and Monitoring • Periodic well pressure test required – RRC staff determines pass/fail – Inspector may witness • Operators required to report injection volumes and pressures Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 29

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ENVIRONMENTAL PERMITS & SUPPORT Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 31

SWR 8 and Ch. 4 Subch. B • Water Protection – No pollution of surface or subsurface waters – Authorizes Management of Wastes at Drill Sites • Onsite Pits, Disposal, Non-Commercial Fluid Recycling – Permitting of other Disposal & Recycling Methods • • • Volume / Rate of Disposal Facility Construction Facility Operation Facility Monitoring Facility Closure Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 32

Thank You Sean Avitt sean. avitt@rrc. texas. gov Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 33