American Oil and Gas Reporter - November 2015 - 113

ConventionCoverage: Indiana Oil & Gas Association

Many segments of Indiana's oil
and gas industry object to the
production reporting requirements, relates Shawn Gallagher,
vice president of Gallagher Drilling.
If they take effect as written, the
rules will require operators to provide monthly production reports
annually that include lease name,
a purchaser or lease number, identification of the pool, well location,
and identification of contributing
wells for comingled production.

making considered new technologies,
public concerns, and recommendations
after the State Review of Oil and Natural
Gas Environmental Regulations (STRONGER) examined Indiana's oil and gas
rules in 2006. According to McDivitt,
STRONGER recommendations adopted
by Indiana regulators primarily cover pit
closures, tank batteries and management
of completion and production wastes.
Other rules were modeled after other
states' regulations, originated in new federal rules for underground injection control,
or were a response to new technologies,
he explained.
According to DNR, under the revised
rules, operators must prevent gas emissions
for any wells that test in excess of 100
parts per million of hydrogen sulfide,
either during development or production.
At such locations, storage tanks must be
secured, entry to tanks restricted, and
vapor emissions controlled either through
vapor recovery, filtration or combustor.
The rules specify site warning signs for
the presence of H2S and annual notification
of the nearest fire department and local
governments within five miles.
Regarding completions, the rules state
steel well casings must conform to API
specifications as published in July 2011,
DNR says. Casing materials must have
an internal pressure test rating at least 20
percent greater than anticipated maximum
well pressures. Likewise, cement specifications are updated to meet API 10A
well cementing specifications as published
in December 2010, DNR explains.
The department indicates revisions
also include guidelines for new or expanded underground gas storage facilities.
Applications are to include an investigation
into engineering and geological feasibility,
and an evaluation of the geologic structure,
surrounding formations, storage volumes
and maximum pressure.

Similar reviews will be required for
underground petroleum storage facilities,
coalbed methane, and test wells in areas
with commercially minable coal resources.
According to DNR, annual well fees
and well bond schedules are unchanged
and well setback distances are the same;
development is restricted within 200 feet
of a "house, barn, or other structure
without written consent of the owner."
Given the rule-making's scope, McDivitt expressed understanding about
companies' concerns. Even so, he said
he appreciated industry's participation.
"With a comprehensive reform like this,
if we didn't have the substantial support
of industry, it was not going anywhere,"
he acknowledged.
"Once the final draft is published, it
is fair game for the activist groups," McDivitt noted. "But I can defend the steps
we took getting here."
Air Quality Rules
Federal air quality regulations under
consideration could require operators to
survey production facilities for gaseous
leaks, make repairs, and maintain records

of compliance, indicated Charles Venditti,
regulatory assistant manager at CountryMark Energy Resources. Under a proposed
expansion of the Clean Air Act's New
Source Performance Standards as developed under Federal Register Section 60,
Subpart OOOOa, the Environmental Protection Agency is allowed to directly regulate methane and volatile organic compound emissions at new and modified
oil and natural gas sites, he noted. The
revisions would cover new and hydraulically fractured wells, pumps, controllers
and natural gas compressors.
The rule differentiates wildcat and delineation wells from field development
wells, Venditti explained. The former
can be completed with combustion devices
while the latter will be required to use
"green completion" techniques, he explained. After the regulation takes effect,
operators will have two months to develop
compliance programs, followed by three
months to submit initial reports. Any
leaks they discover must be repaired and
resurveyed within 15 days. Operators
also will be required to maintain five
years worth of compliance records, he
added.
"It is a huge information dump to
EPA on what is leaking and what was
done to fix it," Venditti characterized.
Among the challenges facing Illinois
Basin operators is a requirement that survey work be handled by independent
contractors who have not worked for the
operator for at least three years. "In a
small basin like this, where everybody
works for everybody else, finding a company to do the survey work will be hard,"
he assessed.
According to Venditti, the Obama administration will push to publish the rules

The Environmental Protection
Agency's looming New Source Performance Standards aim to directly
regulate methane and volatile organic compound emissions at new
and modified oil and natural gas
sites, indicates Charles Venditti,
regulatory assistant manager at
CountryMark Energy Resources.
During his remarks at InOGA's 2015
convention, held Oct. 8 in Evansville, In., Venditti predicted operators
actual reporting costs were likely
to exceed EPA's $1,200 estimates.

NOVEMBER 2015 113

American Oil and Gas Reporter - November 2015

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