D ANA M URPHY C OMMISSIONER O KLAHOMA C ORPORATION C OMMISSION Environmental Federation of Oklahoma...
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DANA MURPHY COMMISSIONER OKLAHOMA CORPORATION COMMISSION Environmental Federation of Oklahoma 2015 Regulatory Newsreel June 26, 2015 www.occeweb.com Changing Dynamics of Oklahoma Oil & Gas Development
D ANA M URPHY C OMMISSIONER O KLAHOMA C ORPORATION C OMMISSION Environmental Federation of Oklahoma 2015 Regulatory Newsreel June 26, 2015
D ANA M URPHY C OMMISSIONER O KLAHOMA C ORPORATION C OMMISSION
Environmental Federation of Oklahoma 2015 Regulatory Newsreel June
26, 2015 www.occeweb.com Changing Dynamics of Oklahoma Oil &
Gas Development
Slide 2
OKLAHOMA CORPORATION COMMISSION The Agency was established by
the Oklahoma Constitution at statehood (1907) 3 Commissioners,
elected statewide, head the agency About 400 employees, 2 main
offices, 4 field offices The Oklahoma Corporation Commission (OCC)
has regulatory powers over: Transportation Oil and gas Petroleum
storage tanks Public utilities 06/26/20152
Slide 3
OKLAHOMA CORPORATION COMMISSION Jurisdiction 8 Electric utility
companies 8 Gas utility companies 367 Telephone companies 10 Water
companies 25 Cotton gins 3,000 Oil and gas well operators 231
Natural gas pipeline operators and 21 hazardous liquid pipeline
operators operating over 40,000 miles of pipeline 24 Railroads with
over 4,100 public at-grade crossings 7,473 For-hire and private
motor carriers authorized to operate in intrastate commerce 12,150
Petroleum storage tanks currently in use 1,743 Owners of 2,925
active retail fueling stations 306/26/2015
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OIL AND GAS CONSERVATION DIVISION Tim Baker, Director POLLUTION
ABATEMENT DEPARTMENT Tim Baker Underground Injection Control
Hydrology Brownfields TECHNICAL DEPARTMENT Virginia Hullinger
Engineering/ Geology Compliance/ Proration/ Production Document
Handling FIELD OPERATIONS DEPARTMENT Tony Cupp District 1 District
2 District 3 District 4 4 06/26/2015
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Oil and Gas Division District Offices 506/26/2015
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OKLAHOMA OIL AND GAS INDUSTRY Active wells: 65,500 Natural gas
117,000 Oil 11,673 Injection/disposal 194,173 Total active wells
~350,000 plugged and abandoned wells ~500,000 wells drilled in
Oklahoma history ~3,160 active operators of oil and gas wells
(1/2015) ~41,000 miles of gathering/transmission pipelines ~257
pipeline operators 6 06/26/2015
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* Data for 1961-1966 is Estimated 8 06/26/2015
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Intents to Drill: 2008 2015 Comparison 9 06/26/2015
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Statewide OCC Well Completions All OCC/IHS Wells
01/01/11-02/28/15 Updated to include May 2013 12 06/26/2015
Hydraulic Fracturing An accurate picture courtesy of Pinnacle
06/26/201517
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STATE DISCLOSURE SUMMARY ARCOKSLAMSMTNDOHOKPATXWY PRE-FRAC
REPORT NO Permit YES POST FRAC REPORT YES DISCLOSURE ALL CHEMICALS
YES YES* YES TRADE SECRET YES FRACFOCUS REPORTING NOYES NO HF RULES
YES New Rules 2012 YES New Rules 2012 YES 2013 YES 2011 YES 2011
Rev 2012 YES New Rules 2012 YES 2012 YES New Rules 2015 YES 2012
YES Rev YES 2010 STRONGER REVIEW YES 2012 HF YES YES 2011 HF YES
YES 1993 YES 2011 HF YES NO YES 1997 YES 2007 YES 2011 HF YES YES
2012 HF YES YES 2010 HF YES YES 2003 YES 1994 19
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2015 Rule Changes Notice of hydraulic fracturing operations
given at least 5 business days prior to the commencement of
hydraulic fracturing operations on a well to operators of producing
wells within 1/2 mile of the completion interval of the subject
well and which are completed in the same common source of supply as
the well. 165:10-3-10(b)(1) Notice of initial commencement of
injection and disposal operations in the Arbuckle formation.
165:10-5-7(b) Concurrent development - clarifying each unit shall
be independently operated and developed, and that the future
participation or non- participation of owners in one of the units
shall not impact the owners rights in the other unit being
concurrently developed. 165:5-7-6(j) Well location exception Well
location and exception to the 300/600 foot distance between wells
can be in one application. 165:5-7-9. 06/26/201521
Slide 22
House Bill 1909 Shale Reservoir Development Act HB 1909
provides two new tools for development of shale reservoirs: 1)Tool
1 - Allows drilling of horizontal wells in shale reservoirs across
existing unit boundaries, with the costs, production and proceeds
allocated to each of the affected units 2)Tool 2 - Creates a new
type of unit for horizontal shale development (a hybrid which
incorporates portions of existing legal authority for drilling and
spacing units and enhanced recovery units) The new unit hybrid
would be comprised of 2 governmental sections (i.e., 1,280 acres),
but could be expanded up to 4 governmental sections under certain
circumstances. Creation of the new hybrid unit requires approval by
63% of working interest owners and 63% of the royalty owners in the
proposed unit. (Analogous to the required approval for existing
enhanced recovery units.) 3)To utilize either of these new tools,
the applicant is required to submit a proposed plan of development
for approval by the OCC and provide notice to all affected owners.
Modifies Section 87.1 of Title 52 to clarify the ability to utilize
irregular shaped units (e.g., 640- acre unit that is 1/2 mile wide
by 2 miles long). Modifies Section 287.1 of Title 52 to clarify
that enhanced recovery units are not available for primary
production (confirming a recent ruling by the OCC). HB 1909 passed
the House on March 17, 2011, by an 87-0 vote and the Senate by a
45-0 vote on April 6, 2011. It was signed by the Governor on April
13, 2011. 2206/26/2015
Slide 23
Multiunit Horizontal Well 4,500 feet4,000 feet 8,500 feet Total
Completion Interval Section 6Section 7 Shale Reservoir 100,000 mcf
produced from Example 6-1H 52,941 mcf from Example 6-1H(7) 100,000
mcf X 4,500/8,500 = 52,941 mcf 47,059 mcf from Example 6-1H(6)
100,000 mcf X 4,000/8,500 = 47,059 mcf The Act treats the lateral
in each section as a separate well. Example 6-1H(6) WellExample
6-1H(7) Well 2306/26/2015
Slide 24
CROSS UNIT APPLICATIONS (CUA) (Through June 12, 2015) SRDA
(HB1909) April 13, 2011 First CUA filed May 31, 2011 Total CUA 671
Operators with filed CUA 32 Counties with CUA 24
Grady132Logan18Custer7 Kingfisher109Garfield16Grant4
Stephens87Carter14Noble4 Canadian58Hughes14Beaver3 Garvin
52Pittsburg14Dewey3 Blaine33Johnston13Marshall3
Payne30McClain11Bryan1 Love22Coal10Okfuskee1 Multi-county12
06/26/2015
Slide 25
PUBLIC UTILITY DIVISION ENERGY RATE CAUSES FINAL AND PENDING As
of June 22, 2015 Twenty-one (21) Energy Causes filed and/or being
processed Notice of Intent filed by Oklahoma Natural Gas for a
general rate review PUD Cause No. 201500213 Notice of Intent filed
by Public Service Company of Oklahoma for general rate review and
recovery of Environmental Compliance Costs PUD Cause No. 201500208
Worth noting, there are 355 Telecommunication Causes currently
pending at the OCC While the number of Telecommunication causes
exceeds the number of Energy causes, the processing time for one
Energy cause greatly exceeds the processing time for a
Telecommunication cause 2506/26/2015
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WIND NOTICE OF PROPOSED RULEMAKING Cause No. PUD 201500004 On
May 19, 2014, Senate President Pro Tem Brian Bingman requested the
OCC open a Notice of Inquiry Cause No. PUD 2014000232 on the
following: SITINGan examination of whether there is a need to place
the siting of new facilities under the oversight of the OCC or some
other agency DECOMMISSIONING development of guidelines for proper
decommissioning of wind energy facilities, along with the possible
costs and enforcement mechanisms NOTIFICATIONwhether procedures
required for notification to landowners UPDATE The Notice of
Inquiry, initiated by the OCC was concluded and a Notice of
Proposed Rulemaking (NOPR) was filed on January 29, 2015. The NOPR
addressed development of wind energy facilities, decommissioning of
wind energy facilities, and will establish procedures for
informational submissions related to such wind energy facilities.
The first technical conference was scheduled for March 31, 2015.
The NOPR is in the process of being amended to reflect and/or
address recent legislative changes concerning the development of
wind energy. 2606/26/2015
Slide 27
DISTRIBUTED GENERATION Senate Bill 1456 Amending Section 156 of
Title 17 Governor Fallin signed into law, April 21, 2014, and
issued Executive Order 2014-07: Corporation Commission to conduct
transparent evaluation of distributed generation consistent with
the Oklahoma First Energy Plan; to protect all Oklahoma customers
and encourage all forms of Oklahoma energy use Evaluation mandates
inclusion of all stakeholders, including representatives of the
solar and distributed wind industries and utilities Prior to
implementation of any fixed charge, allows Commission to consider
use of all available alternatives, including other rate reforms
such as increased use of time-of-use rates, minimum bills, and
other demand charges The OCC held three public meetings and
requested from stakeholders a list of suggestions for required data
and/or information that should be included in all tariff
applications filed at the OCC. The final technical conference was
on June 16, 2015. The next step will be utilities may file
applications that will include information from the list received
for the tariff application. The utilities must have tariffs
implemented by December 31, 2015, in accordance with Senate Bill
1456. 2706/26/2015
Slide 28
OG&E - PUD CAUSE No. 201400229 ENVIRONMENTAL COMPLIANCE
PLAN PENDING In response to EPA regulations: Regional Haze rule and
the Mercury and Air Toxics Standards ("MATS"), OG&E filed a
plan to meet new emission limits: Scrubbers $530 million Conversion
$76 million Low NOX Burners $99.4 million ACI$24.3 million Total
ECP $729.7 million Also filed for replacement of aging facilities
at Mustang Mustang Replacement$390 million Hearing was completed in
April June 8, 2015, Administrative Law Judge offered report on
findings; June 18, 2015,Parties filed exceptions to the ALJ report
June 25, 2015, Oral Arguments to be heard 28 06/26/2015
Slide 29
State Implementation Plans: In the proposed Clean Power Plan
EPA calculates a target emissions reduction rate for each state,
but states have flexibility to determine how to achieve that target
Reduction targets established based on level of carbon emissions
from fossil- fired power plants divided by its total electricity
generation. Electricity generation in this case includes fossil
generation, nuclear, renewables, plus generation avoided through
the use of energy efficiency programs. A target for 2030 is then
established for each state based on its capacity to achieve
reductions using the following four building blocks identified by
EPA: 1. Make fossil fuel power plants more efficient 2. Use
low-emitting natural gas combined cycle plants more where excess
capacity is available 3. Use more zero and low-emitting power
sources such as renewables and nuclear 4. Reduce electricity demand
by using electricity more efficiently States can use above blocks
to meet targets in the best manner or state. States could also join
multi-state programs to reduce emissions collectively, for example
through a cap-and-trade program. EPA 111d CLEAN POWER PLAN RULE
EXISTING POWER PLANTS 2906/26/2015
Slide 30
The Final Rule is expected August 2015. The final rule was
delayed due to the EPA extension of the comment period from October
2014 to December 2014. Murray Energy and 12 states, including
Oklahoma, have law suits pending against the EPA in Federal court
as to the agencys statutory authority to regulate power plant
greenhouse gas emissions. Litigation likely as, the Federal Court
said it could not make a decision until a final rule is issued. On
April 28, 2015 Oklahoma Governor Mary Fallin signed executive order
2015-22 which prohibits the Department of Environmental Quality
from beginning efforts to develop a State Implementation Plan (SIP)
related to carbon dioxide emissions from power generation sources
under Section 111 (d) of the Clean Air Act in response to the Clean
Power Plan. Development of a SIP may only proceed if such action is
determined to be required by the Attorney General of Oklahoma or a
court of competent jurisdiction. Additionally, such action may not
begin absent express written authority of the Governor of Oklahoma.
If the Clean Power Plan rules are finalized by the EPA, the
governor orders the Office of the Attorney General of Oklahoma to
immediately review such rules and publish on its website a white
paper on the legal efficacy of such federal regulations. EPA 111d
CLEAN POWER PLAN RULE EXISTING POWER PLANTS 06/26/2015 30
Slide 31
EPA 111d - Clean Power Plan Rule Existing Power Plants State
Reduction levels 3106/26/2015
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32 SEISMICITY ISSUES YELLOW LIGHT PERMITS For proposed disposal
wells that dont otherwise qualify for red light but are in area of
concern, defined as: Within 3 miles of a seismically active fault
Within 3 miles of a stressed fault, even in areas where there has
been no seismicity Within 6 miles of a seismic swarm Must go
through public court process and be approved by Commissioners
Orders are interim Requires operator to have equipment necessary
for seismicity monitoring, shut in every 60 days for bottom hole
pressure tests, shut in if there is a rise in background seismicity
or earthquake, abide by any changes in the language in the permit.
Language can be changed at any time. Made possible through vastly
improved data on faults, partly the result of a voluntary effort by
the oil and gas industry to provide such data to the Oklahoma
Geological Survey, which then generates improved fault maps used by
the OCC in the permitting process. 06/26/2015
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33 2013 FAULT MAP
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06/26/201534 2015 FAULT MAP
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UIC Program In Oklahoma there are: 4,626 Disposal Wells 7,037
EOR Wells Of the 4,626 disposal wells there are 969 wells that are
authorized for disposal into the Arbuckle formation.
3606/26/2015
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Evolution of Area Of Interest Area Of Interest (AOI) includes
seismic swarms. 1. Swarm is defined as an area consisting of at
least (2) two events with epicenters within.25 mi. of each other,
with at least one event with a magnitude 3.0 or greater 2. AOI is a
ten (10) km area (6 mi) with central mass of the swarm as center
Directive sent to operators of Arbuckle disposal wells within an
AOI 3806/26/2015
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02/10/201543 SEISMICITY
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D ANA M URPHY C OMMISSIONER O KLAHOMA C ORPORATION C OMMISSION
Environmental Federation of Oklahoma 2015 Regulatory Newsreel June
26, 2015 www.occeweb.com Changing Dynamics of Oklahoma Oil &
Gas Development
