DUG Midcontinent 2014
REGULATORY SPOTLIGHT: Oklahoma & Horizontal Drilling At the Crossroads of Technology and Regulation: Looking Back to Go Forward March 3, 2014
DANA MURPHY COMMISSIONER OKLAHOMA CORPORATION COMMISSION
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 03/03/2014
2
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 03/03/2014
3
OIL AND GAS CONSERVATION DIVISION Ron Dunkin, Interim Director POLLUTION ABATEMENT DEPARTMENT Tim Baker
TECHNICAL DEPARTMENT Ron Dunkin
Underground Injection Control
Engineering/ Geology
Hydrology
Compliance/ Proration/ Production
FIELD OPERATIONS DEPARTMENT Tim Baker District 1
District 2
District 3 Brownfields
Document Handling
District 4 03/03/2014
4
Oil and Gas Division District Offices
03/03/2014
5
OKLAHOMA OIL AND GAS INDUSTRY
• Active wells (2013): 65,500 Natural gas 117,000 Oil 11,200 Injection/disposal 193,700 Total active wells • ~350,000 plugged and abandoned wells • ~500,000 wells drilled in Oklahoma history • ~3,064 active operators of oil and gas wells (1/2014) • ~41,000 miles of gathering/transmission pipelines • ~257 pipeline operators 03/03/2014
6
Oklahoma Oil and Gas Production (1900 - 2011)
Barrels 600,000,000
500,000,000
400,000,000
Cumulative Production (1900 – 2011) Oil (BBLS): 14,982,947,921 Gas (BOE): 18,525,957,200 Total: 33,508,905,121
300,000,000
GAS PRODUCTION (BOE)*
200,000,000
100,000,000
OIL PRODUCTION (BBLS) 0 1900
1910
1920
1930
1940
1950
1960
Calendar Year 03/03/2014
1970
1980
1990
2000
2010
*BOE = BBLS OF OIL EQUIVALENT
7
03/03/2014
8
Oklahoma Intent to Drill (1945 - 2013) 25,000 22,500 20,000 17,500
Intents
15,000 12,500 10,000 7,500
5,000 2,500 0
* Data for 1961-1966 is Estimated
Year 03/03/2014
9
Intents to Drill: 2008 – 2013 Comparison 800 700
Intents
600 500
400 300 200 100 0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Total
2008
442
496
521
496
579
521
693
598
572
599
378
325
6,220
2009
265
244
220
228
176
260
217
148
152
213
188
189
2,500
2010
187
245
324
230
255
298
275
320
301
274
288
268
3,265
2011
290
259
312
311
346
354
302
310
306
320
310
312
3,732
2012
373
351
412
339
349
316
329
320
326
386
363
302
4,166
2013
332
301
320
365
371
332
382
353
328
385
367
275
4,111
03/03/2014
10
Completions by Drill Type
300
Completions
250 200 150
59
70
7
68 3
54 36 6
52
40 4
183 179 130 141 130 146
43
61
6
3
100 50
9
62
7
11
9
161 156 150 175
Vertical Directional Horizontal
0
Nov Dec Jan Feb Mar Apr May June July Aug 2012
2013 03/03/2014
11
Completions by Well Type
300
7
Completions
250
200
8
10
42
40
150
1 3
61
3 4
9
33
24
42
51
2 3
42
42
39
100 157
183
162
50
130
202
151
180
190
154
185
Dry Gas Oil
0 Nov Dec
2012
Jan
Feb Mar Apr May June July Aug 03/03/2014
2013
12
Average Oil and Gas Price Jan 2008 - Nov 2013 $14
$120
$12
$100
$10 $8
$60
$6
$40
$4
$20
$2
$0
$0
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul
$80
Per MCF
Per Barrel
$140
2008
2009
2010
2011
2012
Source: Oil - Average bulletin price posted by Conoco Phillips, Sunoco, Valero, and Plains All American Pipeline. Gas - Henry Hub Natural Gas Spot.
03/03/2014
2013 Oil
Gas 13
03/03/2014
14
Statewide OCC Well Completions All OCC/IHS Wells 01/01/11-10/31/13
Updated to include May 2013
03/03/2014
15
Oklahoma Corporation Commission Horizontal Wells 01/01/11-10/31/13
03/03/2014
16
Well Completion 4500 4000 3500 3000 2500 2000 1500 1000 500 0
Non-Horizontal Horizontal
3,938 3,654
2,237 2,046
1,901 1648 1515 1286
1,266 929 644
2007
770
588
2008
465
2009
2010
2011
2012
2013 Jan-Aug
03/03/2014
17
January Febuary March April May June July August Setember October November December January Febuary March April May June July August Setember October November December January Febuary March April May June July August
Horizontal Completions
160
140
120
100
80
60 Oil Gas
40
20
0
2011 2012
03/03/2014
2013 18
OCC Mississippi Well Completions OCC/IHS Wells 01/01/11-10/31/13
03/03/2014
19
Oklahoma Corporation Commission Gas Volumes Per County 2012
03/03/2014
20
Oklahoma Corporation Commission Oil Volumes Per County 2012
03/03/2014
21
Hydraulic Fracturing
• An accurate picture courtesy of Pinnacle
03/03/2014
22
STATES REPORTING THROUGH FRACFOCUS As of December 2013, thirteen states are using FracFocus for regulatory reporting: Alaska Colorado Kansas Louisiana Mississippi Montana North Dakota
Ohio Oklahoma Pennsylvania South Dakota Texas Utah
03/03/2014
23
STATE DISCLOSURE SUMMARY AR
CO
KS LA
PRE-FRAC REPORT
NO
NO
NO
NO Permit
POST FRAC REPORT
YES
YES
YES
YES
YES
YES
YES
DISCLOSURE ALL YES CHEMICALS
YES
YES* YES
YES
YES
YES
TRADE SECRET
YES
YES
YES
FRACFOCUS REPORTING
NO
YES
NO
HF RULES
YES New Rules 2012
YES New Rules 2012
STRONGER REVIEW
YES YES YES 2012 2011 1993 HF YES HF YES
YES 2013
MS MT
ND
YES 2011
OK
PA
TX
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
NO
YES 2012
YES Rev
YES 2010
YES YES 2010 2003 HF YES
YES 1994
YES
YES
YES
YES
YES 2011 Rev 2012
YES New Rules 2012
YES 2012
YES New Rules 2012
YES 1997
YES 2007
YES 2011 HF YES
YES 2012 HF YES
YES 2011 NO HF YES
WY YES
YES
YES
OH
24
03/03/2014
25
OKLAHOMA • Regulated by Oklahoma Corporation Commission • Approximately 500,000 wells drilled • More than 25 years ago, the Commission established ability to request/require reports and records on hydraulic fracturing/chemical treatment on any well • Cross references to rules regarding hydraulic fracturing (2010) • 48 hours advance notice of hydraulic fracturing required to the Conservation Division District Office or field inspector (2013) • Horizontal wells hydraulically fractured on or after January 1, 2013 and other wells hydraulically fractured on or after January 1, 2014 required to be filed with FracFocus Registry (2012) 03/03/2014
26
All Active Injection Wells Permitted at Greater Than 30,000 Bbls/day
03/03/2014
27
Non-Commercial Disposal Wells 12,000 10,838 10,107
10,000
10,371
9,581 9,155
8,631 8,120 8,000
7,600
6,000
4,000
2,000
0 2006
2007
2008
2009 03/03/2014
2010
2011
2012
2013 28
Devon Cana Project Canadian County, OK 500,000 bbls 5 years/ $1M surety 24/7 security
Approximately 5 acres in surface area
Water treatment of flow back water prior to input into pit
60 Mil liner
03/03/2014
29
Devon Cana Project Disposal Well facility Flow back water that Cannot Recycle
03/03/2014
30
Devon Cana Project
Collapsible, steel reinforced pipe to pump water in and out of pit
31
Pipe can be easily moved to well site locations
32
03/03/2014
33
Re-Use of Flow-Back Water • Devon CANA Project in Canadian County: • Opened in June 2012 • As of December 2013, re-used/recycled 6.5 million bbls (273,000,000 gallons) of water • Recycle approximately 90% of water used for hydraulic fracturing
03/03/2014
34
Newfield flow back pit Beckham County, OK 500,000 bbls
35
Continental Porta-dam facility Stephens County, OK Steel frame, double lined Constructed above surface
36
Water Usage in Perspective
* Agricultural Issues & Recommendations, OWRB, June 2011, p. 6 ** www.okc.gov/utilities *** http://www.okgazette.com/oklahoma/article-13296-water-hogs.html
37
Growth by Water Use Sector (2010-2060) Oil/Gas = 12%
M&I = 28% Irrigation = 25%
Thermoelectric = 31%
Source: 2012 Update of the Oklahoma Comprehensive Water Plan
38
Source: 2012 Update of the Oklahoma Comprehensive Water Plan 39
2013 RULES (Brief Summary)
Chapter 10 – Oil and Gas Conservation • Flow back water pits > 50,000 Bbls and new Form 1014F OAC 165:10-7-16 et seq. (Also allows temporary use by another operator) • Disposal wells and Form 1015 OAC 165:10-5-5 – Notice Non-commercial – 50 mcf/d – Administrative permits have been required • Exempt from permit for venting or flaring, newly re- or completed wells: • Initial flowback – Not to exceed 14 days – Requires 48 hour notice – Not economically feasible to market – Suitable stack, stand or line to prevent hazard to person/property • After flowback – for flaring only (after 14 day period) – Volume ≤ 300 mcf/d over a 30 day time period – No appropriate takeaway structure – Well is an exploration well or gas is not pipeline acceptable – Daily volume log during 30 days, kept for 3 years • Well site and surface facilities OAC 165:10-3-17 – Lease signs to include API number • Well logs OAC 165:10-3-26 – Wireline to well logs; wireline surveys to formation evaluation, digital or paper • Pressure tests for wells >20,000 bbls/d OAC 165:10-5-6 • Arbuckle disposal wells – daily monitoring/recording of volumes/pressures kept for 3 years and provided upon request to OCC OAC 165:10-5-7 03/03/2014
41
O&G Basic Applications
SPACING
03/03/2014
42
O&G Basic Applications
SPACING
OAC 165:10-3-28 (b) “(5) Completion interval shall mean, for open hole completions, the interval from the point of entry to the terminus and, for cased and cemented completions, the interval from the first perforations to the last perforations.”
03/03/2014
43
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., 640acre 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. 03/03/2014
44
Multiunit Horizontal Well
The Act treats the lateral in each section as a separate well. Example 6-1H(7) Well
Example 6-1H(6) Well
Shale Reservoir
Section 7
Section 6
4,500 feet
4,000 feet
8,500 feet Total Completion Interval
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 03/03/2014
45
CROSS UNIT APPLICATIONS (CUA)
• • • • •
(Through February 21, 2014)
SRDA (HB1909) First CUA filed Total CUA Operators with filed CUA Counties with CUA Grady Stephens Canadian Payne Garvin Logan Garfield
51 43 27 20 20 15 14
Kingfisher Pittsburg Johnston Carter Love Blaine Coal 03/03/2014
April 13, 2011 May 31, 2011 256 18 12 9 7 6 6 5 4
Noble Hughes Marshall Grant McClain Multi-county
4 3 3 2 1 4 46
Multiunit Horizontal Well Associated Common Source of Supply 18
19
Mississippi Woodford
Hunton
03/03/2014
47
SEISMICITY ISSUES
OCC regulates Class 2 injection wells (including disposal wells) in Oklahoma o First state granted primacy by federal government for regulation of such wells o Primary mission is to protect water Broad agreement on possibility of man-made seismicity o Oklahoma is a seismically active state o Recent earthquake swarm is unusual o Issue for OCC: What, if any, connection exists between any of the seismic events and the oil and gas industry, and if there is a connection, what to do Proactive response to seismic events in Oklahoma by OCC o Working with OGS on seismicity issue prior to the 2011 “Prague” earthquake o Helping fund further equipment deployment by researchers investigating Oklahoma’s seismic events (OCGS REPSEA Grant $1.8M) o Sharing data with researchers on oil and gas activity in area of seismic events o Sharing data and approaches with other states o Continue to develop best practices w/all stakeholders in relation to seismicity Rules have been proposed Adoption of National Academy recommended “stoplight” approach 03/03/2014
48
REGULATORY SPOTLIGHT: Oklahoma & Horizontal Drilling At the Crossroads of Technology and Regulation: Looking Back to Go Forward March 3, 2014
DANA MURPHY COMMISSIONER OKLAHOMA CORPORATION COMMISSION
DANA MURPHY COMMISSIONER OKLAHOMA CORPORATION COMMISSION
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 03/03/2014
2
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 03/03/2014
3
OIL AND GAS CONSERVATION DIVISION Ron Dunkin, Interim Director POLLUTION ABATEMENT DEPARTMENT Tim Baker
TECHNICAL DEPARTMENT Ron Dunkin
Underground Injection Control
Engineering/ Geology
Hydrology
Compliance/ Proration/ Production
FIELD OPERATIONS DEPARTMENT Tim Baker District 1
District 2
District 3 Brownfields
Document Handling
District 4 03/03/2014
4
Oil and Gas Division District Offices
03/03/2014
5
OKLAHOMA OIL AND GAS INDUSTRY
• Active wells (2013): 65,500 Natural gas 117,000 Oil 11,200 Injection/disposal 193,700 Total active wells • ~350,000 plugged and abandoned wells • ~500,000 wells drilled in Oklahoma history • ~3,064 active operators of oil and gas wells (1/2014) • ~41,000 miles of gathering/transmission pipelines • ~257 pipeline operators 03/03/2014
6
Oklahoma Oil and Gas Production (1900 - 2011)
Barrels 600,000,000
500,000,000
400,000,000
Cumulative Production (1900 – 2011) Oil (BBLS): 14,982,947,921 Gas (BOE): 18,525,957,200 Total: 33,508,905,121
300,000,000
GAS PRODUCTION (BOE)*
200,000,000
100,000,000
OIL PRODUCTION (BBLS) 0 1900
1910
1920
1930
1940
1950
1960
Calendar Year 03/03/2014
1970
1980
1990
2000
2010
*BOE = BBLS OF OIL EQUIVALENT
7
03/03/2014
8
Oklahoma Intent to Drill (1945 - 2013) 25,000 22,500 20,000 17,500
Intents
15,000 12,500 10,000 7,500
5,000 2,500 0
* Data for 1961-1966 is Estimated
Year 03/03/2014
9
Intents to Drill: 2008 – 2013 Comparison 800 700
Intents
600 500
400 300 200 100 0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Total
2008
442
496
521
496
579
521
693
598
572
599
378
325
6,220
2009
265
244
220
228
176
260
217
148
152
213
188
189
2,500
2010
187
245
324
230
255
298
275
320
301
274
288
268
3,265
2011
290
259
312
311
346
354
302
310
306
320
310
312
3,732
2012
373
351
412
339
349
316
329
320
326
386
363
302
4,166
2013
332
301
320
365
371
332
382
353
328
385
367
275
4,111
03/03/2014
10
Completions by Drill Type
300
Completions
250 200 150
59
70
7
68 3
54 36 6
52
40 4
183 179 130 141 130 146
43
61
6
3
100 50
9
62
7
11
9
161 156 150 175
Vertical Directional Horizontal
0
Nov Dec Jan Feb Mar Apr May June July Aug 2012
2013 03/03/2014
11
Completions by Well Type
300
7
Completions
250
200
8
10
42
40
150
1 3
61
3 4
9
33
24
42
51
2 3
42
42
39
100 157
183
162
50
130
202
151
180
190
154
185
Dry Gas Oil
0 Nov Dec
2012
Jan
Feb Mar Apr May June July Aug 03/03/2014
2013
12
Average Oil and Gas Price Jan 2008 - Nov 2013 $14
$120
$12
$100
$10 $8
$60
$6
$40
$4
$20
$2
$0
$0
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul
$80
Per MCF
Per Barrel
$140
2008
2009
2010
2011
2012
Source: Oil - Average bulletin price posted by Conoco Phillips, Sunoco, Valero, and Plains All American Pipeline. Gas - Henry Hub Natural Gas Spot.
03/03/2014
2013 Oil
Gas 13
03/03/2014
14
Statewide OCC Well Completions All OCC/IHS Wells 01/01/11-10/31/13
Updated to include May 2013
03/03/2014
15
Oklahoma Corporation Commission Horizontal Wells 01/01/11-10/31/13
03/03/2014
16
Well Completion 4500 4000 3500 3000 2500 2000 1500 1000 500 0
Non-Horizontal Horizontal
3,938 3,654
2,237 2,046
1,901 1648 1515 1286
1,266 929 644
2007
770
588
2008
465
2009
2010
2011
2012
2013 Jan-Aug
03/03/2014
17
January Febuary March April May June July August Setember October November December January Febuary March April May June July August Setember October November December January Febuary March April May June July August
Horizontal Completions
160
140
120
100
80
60 Oil Gas
40
20
0
2011 2012
03/03/2014
2013 18
OCC Mississippi Well Completions OCC/IHS Wells 01/01/11-10/31/13
03/03/2014
19
Oklahoma Corporation Commission Gas Volumes Per County 2012
03/03/2014
20
Oklahoma Corporation Commission Oil Volumes Per County 2012
03/03/2014
21
Hydraulic Fracturing
• An accurate picture courtesy of Pinnacle
03/03/2014
22
STATES REPORTING THROUGH FRACFOCUS As of December 2013, thirteen states are using FracFocus for regulatory reporting: Alaska Colorado Kansas Louisiana Mississippi Montana North Dakota
Ohio Oklahoma Pennsylvania South Dakota Texas Utah
03/03/2014
23
STATE DISCLOSURE SUMMARY AR
CO
KS LA
PRE-FRAC REPORT
NO
NO
NO
NO Permit
POST FRAC REPORT
YES
YES
YES
YES
YES
YES
YES
DISCLOSURE ALL YES CHEMICALS
YES
YES* YES
YES
YES
YES
TRADE SECRET
YES
YES
YES
FRACFOCUS REPORTING
NO
YES
NO
HF RULES
YES New Rules 2012
YES New Rules 2012
STRONGER REVIEW
YES YES YES 2012 2011 1993 HF YES HF YES
YES 2013
MS MT
ND
YES 2011
OK
PA
TX
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
NO
YES 2012
YES Rev
YES 2010
YES YES 2010 2003 HF YES
YES 1994
YES
YES
YES
YES
YES 2011 Rev 2012
YES New Rules 2012
YES 2012
YES New Rules 2012
YES 1997
YES 2007
YES 2011 HF YES
YES 2012 HF YES
YES 2011 NO HF YES
WY YES
YES
YES
OH
24
03/03/2014
25
OKLAHOMA • Regulated by Oklahoma Corporation Commission • Approximately 500,000 wells drilled • More than 25 years ago, the Commission established ability to request/require reports and records on hydraulic fracturing/chemical treatment on any well • Cross references to rules regarding hydraulic fracturing (2010) • 48 hours advance notice of hydraulic fracturing required to the Conservation Division District Office or field inspector (2013) • Horizontal wells hydraulically fractured on or after January 1, 2013 and other wells hydraulically fractured on or after January 1, 2014 required to be filed with FracFocus Registry (2012) 03/03/2014
26
All Active Injection Wells Permitted at Greater Than 30,000 Bbls/day
03/03/2014
27
Non-Commercial Disposal Wells 12,000 10,838 10,107
10,000
10,371
9,581 9,155
8,631 8,120 8,000
7,600
6,000
4,000
2,000
0 2006
2007
2008
2009 03/03/2014
2010
2011
2012
2013 28
Devon Cana Project Canadian County, OK 500,000 bbls 5 years/ $1M surety 24/7 security
Approximately 5 acres in surface area
Water treatment of flow back water prior to input into pit
60 Mil liner
03/03/2014
29
Devon Cana Project Disposal Well facility Flow back water that Cannot Recycle
03/03/2014
30
Devon Cana Project
Collapsible, steel reinforced pipe to pump water in and out of pit
31
Pipe can be easily moved to well site locations
32
03/03/2014
33
Re-Use of Flow-Back Water • Devon CANA Project in Canadian County: • Opened in June 2012 • As of December 2013, re-used/recycled 6.5 million bbls (273,000,000 gallons) of water • Recycle approximately 90% of water used for hydraulic fracturing
03/03/2014
34
Newfield flow back pit Beckham County, OK 500,000 bbls
35
Continental Porta-dam facility Stephens County, OK Steel frame, double lined Constructed above surface
36
Water Usage in Perspective
* Agricultural Issues & Recommendations, OWRB, June 2011, p. 6 ** www.okc.gov/utilities *** http://www.okgazette.com/oklahoma/article-13296-water-hogs.html
37
Growth by Water Use Sector (2010-2060) Oil/Gas = 12%
M&I = 28% Irrigation = 25%
Thermoelectric = 31%
Source: 2012 Update of the Oklahoma Comprehensive Water Plan
38
Source: 2012 Update of the Oklahoma Comprehensive Water Plan 39
2013 RULES (Brief Summary)
Chapter 10 – Oil and Gas Conservation • Flow back water pits > 50,000 Bbls and new Form 1014F OAC 165:10-7-16 et seq. (Also allows temporary use by another operator) • Disposal wells and Form 1015 OAC 165:10-5-5 – Notice Non-commercial – 50 mcf/d – Administrative permits have been required • Exempt from permit for venting or flaring, newly re- or completed wells: • Initial flowback – Not to exceed 14 days – Requires 48 hour notice – Not economically feasible to market – Suitable stack, stand or line to prevent hazard to person/property • After flowback – for flaring only (after 14 day period) – Volume ≤ 300 mcf/d over a 30 day time period – No appropriate takeaway structure – Well is an exploration well or gas is not pipeline acceptable – Daily volume log during 30 days, kept for 3 years • Well site and surface facilities OAC 165:10-3-17 – Lease signs to include API number • Well logs OAC 165:10-3-26 – Wireline to well logs; wireline surveys to formation evaluation, digital or paper • Pressure tests for wells >20,000 bbls/d OAC 165:10-5-6 • Arbuckle disposal wells – daily monitoring/recording of volumes/pressures kept for 3 years and provided upon request to OCC OAC 165:10-5-7 03/03/2014
41
O&G Basic Applications
SPACING
03/03/2014
42
O&G Basic Applications
SPACING
OAC 165:10-3-28 (b) “(5) Completion interval shall mean, for open hole completions, the interval from the point of entry to the terminus and, for cased and cemented completions, the interval from the first perforations to the last perforations.”
03/03/2014
43
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., 640acre unit that is 1/2 mile wide by 2 miles long).
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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. 03/03/2014
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Multiunit Horizontal Well
The Act treats the lateral in each section as a separate well. Example 6-1H(7) Well
Example 6-1H(6) Well
Shale Reservoir
Section 7
Section 6
4,500 feet
4,000 feet
8,500 feet Total Completion Interval
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 03/03/2014
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CROSS UNIT APPLICATIONS (CUA)
• • • • •
(Through February 21, 2014)
SRDA (HB1909) First CUA filed Total CUA Operators with filed CUA Counties with CUA Grady Stephens Canadian Payne Garvin Logan Garfield
51 43 27 20 20 15 14
Kingfisher Pittsburg Johnston Carter Love Blaine Coal 03/03/2014
April 13, 2011 May 31, 2011 256 18 12 9 7 6 6 5 4
Noble Hughes Marshall Grant McClain Multi-county
4 3 3 2 1 4 46
Multiunit Horizontal Well Associated Common Source of Supply 18
19
Mississippi Woodford
Hunton
03/03/2014
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SEISMICITY ISSUES
OCC regulates Class 2 injection wells (including disposal wells) in Oklahoma o First state granted primacy by federal government for regulation of such wells o Primary mission is to protect water Broad agreement on possibility of man-made seismicity o Oklahoma is a seismically active state o Recent earthquake swarm is unusual o Issue for OCC: What, if any, connection exists between any of the seismic events and the oil and gas industry, and if there is a connection, what to do Proactive response to seismic events in Oklahoma by OCC o Working with OGS on seismicity issue prior to the 2011 “Prague” earthquake o Helping fund further equipment deployment by researchers investigating Oklahoma’s seismic events (OCGS REPSEA Grant $1.8M) o Sharing data with researchers on oil and gas activity in area of seismic events o Sharing data and approaches with other states o Continue to develop best practices w/all stakeholders in relation to seismicity Rules have been proposed Adoption of National Academy recommended “stoplight” approach 03/03/2014
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REGULATORY SPOTLIGHT: Oklahoma & Horizontal Drilling At the Crossroads of Technology and Regulation: Looking Back to Go Forward March 3, 2014
DANA MURPHY COMMISSIONER OKLAHOMA CORPORATION COMMISSION
