hydraulic fracturing water disposal

Davis Graham & Stubbs LLP DGSLAW.COM

HYDRAULIC FRACTURING: WATER RESOURCES AND MANAGEMENT

WASTE WATER MANAGEMENT AND REGULATORY COMPLIANCE IN OIL AND GAS WELL DEVELOPMENT

Adam Cohen, Partner, Davis Graham & Stubbs LLP
http://www.dgslaw.comhttp://www.dgslaw.com


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SESSION II

Legal, regulatory, and practical aspects of water acquisition for oil and gas development Zach Miller , DGS Kevin Rein, Deputy State Engineer, CDWR May 29, 2013


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What well cover: Wastewater storage Wastewater transportation Wastewater disposal and reuse

What we wont cover Water acquisition and water rights Subsurface impacts of water disposal Policy implications of water management A cartoon video showing how to stimulate a well


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SOME STATISTICS (COLORADO O&G)

Liquid waste: 13.5 billion gal Injected wastes: 7 billion gal (51%) Surface discharges: 1.6 billion gal (12%) Active UIC disposal well permits: 373 UIC disposal cost: $0.70 per barrel Waste water treatment: $2 to $5 per barrel Water purchase: $0.17 per barrel Total Colorado Water Use (2010): 5.3 trillion gal


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Q: Flowback and produced water from the hydraulic fracturing process are held in a lined pit at the well pad. Is this legal, and if so, what restrictions apply to the storage of these liquids?


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Yes. Produced water is E&P waste, subject to 900

Series Rules. C.R.S. 34-60-103(4.5): "Exploration and production waste"

means those wastes that are generated during the drilling of and production from oil and gas wells or during primary field operations and that are exempt from regulation as hazardous wastes under subtitle c of the federal "Resource Conservation and Recovery Act of 1976", 42 U.S.C. sec. 6901 to 6934, as amended.


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However, after August 1, 2013, must comply with new Setback Rules COGCC Rule 604.c.2.B: Pits are not allowed on Oil and Gas Locations within the

Buffer Zone Setback [1,000 of Building Unit], except fresh water storage pits, reserve pits to drill surface casing, and emergency pits. Closed loop drilling systems required instead.


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COGCC Pit Rules 902.b: minimum 2 feet of freeboard at all times 902.c: remove oil or condensate w/in 24 hours 902.d: netting or fencing where necessary to protect birds,

wildlife, public 904.a: liner required for most pits after May 1, 2009 907.c: produced water shall be treated prior to placement

in a production pit to prevent crude oil and condensate from entering the pit


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Q: Small amounts of excess, unused acidic hydraulic fracturing liquids remain after well stimulation is completed. The tank is rinsed out, and the rinse water is placed into a lined pit with the flowback and produced water. Is this legal?


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No. The E&P exclusion applies only to wastes

uniquely associated with exploration, development, or production.

Only used materials are considered to be uniquely associated wastes when disposed.

Discarded unused materials are not uniquely associated and therefore are not excluded.

If the unused fluids are characteristic, then RCRA applies (not E&P).


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Q: During well stimulation, some of the flowback and produced water spills onto the ground and onto a concrete pad. The contaminated soil and spilled water are containerized. Does E&P exclusion apply, and how should these wastes be handled?


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Yes. Produced water, including flowback, is E&P

waste. Same for contaminated soil. COGCC Rules 906 (Spills and Releases) and

907 (Management of E&P Waste) apply


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Reporting (Rule 906) (Form 19): Spills >5 barrels reported to COGCC within 10 days Spills >20 barrels reported w/in 24 hours Spills that threaten waters of the state, residence, or

livestock must be reported ASAP to COGCC and Incident Report Hotline

Surface owner to be notified of all reportable spills CRS 25-8-601

Notify WQCD of discharge that may cause pollution of waters of the state (including groundwater)


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Q: During well stimulation, acid solutions spill onto the ground and onto a concrete pad. The contaminated soil and spilled water are containerized. Does the E&P exclusion apply, and how should these wastes be handled?


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No. Spilled acid solutions and other fluids spilled

prior to use are not E&P wastes. Waste characterization required. If characteristic, RCRA hazardous wastes

regulations apply.


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Q: Flowback and produced water are collected by a well service provider and transported offsite for disposal. Does this custody transfer affect the E&P exemption? Is a hazardous waste manifest required? Are any other records required?


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No. No. Yes. Exempt wastes maintain their exempt status even

if they undergo custody transfer and are transported offsite for disposal or treatment. Custody transfer is used to define the endpoint of oil

and gas production operations, but it applies only to the change in ownership of the product (e.g., crude oil), not the waste.

RCRA regulations applicable to transport of hazardous waste do not apply to E&P wastes.


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COGCC Rule 907.b.2 Waste generator requirements. Generators of E&P waste that is transported off-site shall maintain, for not less than five (5) years, copies of each invoice, bill, or ticket and such other records as necessary to document the following requirements A through F:

A. The date of the transport; B. The identity of the waste generator; C. The identity of the waste transporter; D. The location of the waste pickup site; E. The type and volume of waste; and F. The name and location of the treatment or disposal site.

Such records shall be signed by the transporter, made available for inspection by the Director during normal business hours, and copies thereof shall be furnished to the Director upon request.


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DOT Hazardous Materials Regulations (49 CFR 171 -177) Establish hazardous materials regulations

(HMRs) for transportation activities Designate hazardous materials for purposes of

transportation Establish requirements for pre-transportation

functions, documentation, packaging, and labeling


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Barium, acids, and a long list of other chemicals used in well development are subject to HMRs (49 CFR 172.101)

HMRs apply to each person who offers a hazardous material for transportation in commerce or causes a hazardous material to be transported in commerce (pre-transportation functions -- 49 CFR 171.1(b))


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Depending on the type of material, the HMRs specify: Whether transportation is forbidden Proper shipping name Labeling and packaging requirements Preparation and retention of shipping papers


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Q: A surface owner is willing to have waste liquids from a hydraulic fracturing operation used for dust control on lease roads. Is this a proper means of disposal?


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Yes. Rule 907.c.2.D Produced water may be disposed of by roadspreading on lease roads outside sensitive areas for produced waters with less than 3,500 mg/l TDS when authorized by the surface owner. Roadspreading of produced waters shall not impact waters of the state, shall not result in pooling or runoff, and the adjacent soils shall meet the concentration levels in Table 910-1. Flowback fluids shall not be used for dust suppression.


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Rule 100 (Definitions) SENSITIVE AREA is an area vulnerable to potential significant adverse groundwater impacts, due to factors such as the presence of shallow groundwater or pathways for communication with deeper groundwater; proximity to surface water, including lakes, rivers, perennial or intermittent streams, creeks, irrigation canals, and wetlands. Additionally, areas classified for domestic use by the Water Quality Control Commission, local (water supply) wellhead protection areas, areas within 1/8 mile of a domestic water well, areas within 1/4 mile of a public water supply well, ground water basins designated by the Colorado Ground Water Commission, and surface water supply areas are sensitive areas.


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Q: The Companys marketing department is pushing an initiative for 100% recycling and re-use of flowback and other waste liquids generated from hydraulic fracturing operations. Can this be done in Colorado?


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Yes. COGCC Rule 907.a.3 Reuse and recycling. To encourage and promote waste minimization, operators may propose plans for managing E&P waste through beneficial use, reuse, and recycling by submitting a written management plan to the Director for approval on a Sundry Notice, Form 4, if applicable. Such plans shall describe, at a minimum, the type(s) of waste, the proposed use of the waste, method of waste treatment, product quality assurance, and shall include a copy of any certification or authorization that may be required by other laws and regulations. The Director may require additional information.


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COGCC Rule 907.c.3 Produced water reuse and recycling. Produced water may be reused for enhanced recovery, drilling, and other approved uses in a manner consistent with existing water rights and in consideration of water quality standards and classifications established by the WQCC for waters of the state, or any point of compliance established by the Director pursuant to Rule 324D.


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Q: There is a creek adjacent to the well pad, and the nearest injection well is 10 miles away. Can waste water be discharged to the creek? Can produced water be disposed in the injection well? Can the Company construct a closer injection well for disposal?


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Yes. Yes. Yes.

COGCC Rule 907.c.2.E Produced water disposal. Produced water may be disposed as follows: E. Discharging into state waters, in accordance with the Water Quality Control Act and the rules and regulations promulgated thereunder. Obtain CDPS Permit from WQCD (effluent limits, monitoring,

reporting) Provide permit number, coordinates, and source on Form 26 (Source

of Produced Water for Disposal), and map showing location of outfall to COGCC


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COGCC Rule 907.C.2.A Produced water disposal. Produced water may be disposed as follows: A. Injection into a Class II well, permitted in accordance with Rule 325 Class II UIC wells (for injection of fluids from oil and gas

production, 40 CFR 144.6(b)) are permitted by COGCC Rules 325 and 326 establish requirements for Class II well

permit application, well integrity testing, public notice, and record keeping (Form 26)


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Other disposal options: 907.c.2.B: Evaporation/percolation in a properly

permitted pit 907c.2.C: Disposal at a commercial facility 907c.2.D: Road spreading 907.c.2.F: Evaporation in a properly lined pit at a

centralized E&P waste management facility permitted in accordance with Rule 908


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In the news March 26, 2013. New Texas Railroad Commission Rules make non-

commercial recycling of produced water and flowback fluids (16 TAC 3.8) easier no permit for treated fluids reused in the well bore.

March 28, 2013. In Re: Stonehaven Energy Management. EPA Environmental Appeals Board finds EPA failed to demonstrate Class II UIC permit for injection well in Venango County, PA adequately considered possible seismic impacts.

April 25, 2013 (Inside EPA) Rep. Cartwright (D-PA) is developing legislation to end E&P hazardous waste exemption; would require Class I UIC permits.

April 30, 2013. Arapahoe County, CO adopts MOU for oil and gas operations. Expedited permitting if comply with best practices.

April 30, 2013. Comment period on EPA hydraulic fracturing study extended by six months to November 15, 2013 (78 FR 25267).


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Questions and Discussion

Adam Cohen Davis Graham & Stubbs LLP 1550 17th Street Denver, Colorado 80202 303.892.7321 [email protected]
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