1. www.lampl-herbert.com …working with people and planetary processes People, Geology, and Public Policy By: Thomas A. Herbert, Ph.D, P.G. Lampl Herbert Consultants Tallahassee Florida

2. www.lampl-herbert.com …working with people and planetary processes Introduction Geology or geologic concepts make the news on a daily basis Virtually all such stories focus on public policy – New discoveries and theories are used in ongoing debates regarding: How to protect, and/or sustain natural resources How to recover, and use these same resources for human benefit How to categorize resources by sustainability – People make interpretations and judgments Yet the nature of geology – how its processes work – appears to be poorly understood and poorly used in the public arena ***** This presentation addresses geology and regulatory public policy as applied to the oil and gas industry in Florida from its beginnings through recent legislative debate The same analytical framework may be applied to other areas of geologic interest such as mining and development of freshwater resources

3. www.lampl-herbert.com …working with people and planetary processes THE PROFESSIONAL GEOLOGIST IN THE STATE OF FLORIDA Professional Regulation

4. www.lampl-herbert.com …working with people and planetary processes Florida Professional Geologists Florida State Geologist, Dr. R. O. Vernon was a Certified Professional Geologist (CPG) #164 and charter member of the American Institute of Professional Geologist (AIPG) Professional Geologist (PG) licensing legislation proposed in 1976 PG licensing, Chapter 492 enacted in 1987 Board of Professional Geologist created in 1987 1,280 licenses issued based on experience Currently nearly 3,000 licenses and a new Geologist in Training (GIT) Program ASBOG® membership allowed nationwide exam to be used ***** Thomas A. Herbert, Ph.D., P.G. Certified Professional Geologist #2551 Florida-licensed PG, No. 5 Served on the first Board of Professional Geologist in Florida – Lampl Herbert Consultants founded in 1978 – Regulatory consultants for major drilling and seismic projects since 1979 Applied geology Applied communication

5. www.lampl-herbert.com …working with people and planetary processes OIL AND GAS IN FLORIDA The Regulatory Framework

6. www.lampl-herbert.com …working with people and planetary processes Historic Overview The State Geologist was in charge of the Florida program from 1943-2002 – Dr. R.O. Vernon, AIPG Certified Professional Geologist oversaw regulation of exploration and production through 1975 – Present-day regulation is handled by the Oil and Gas Program, Florida Department of Environmental Regulation (FDEP) Regulatory structure – Oil and Gas Program was initially managed solely through what is now Chapter 377, Florida Statutes – Administrative rules promulgated in 1981 to supplement statutory authorities to regulate drilling – Statutes and rules modified between 1982 and 1984 to regulate geophysical exploration – creating a model program that requires seismic observers to document drilling, loading, detonation, and cleanup Current exploration, drilling, and production governed by same regulatory structure

7. www.lampl-herbert.com …working with people and planetary processes Key Considerations in Development of Oil and Gas Regulations Chapter 377, Florida Statutes (F.S.) A loose collection of policies were developed in the 1940s to direct oil and gas activities in Florida, drawn from: – Interstate Oil and Gas Compact Commission’s (IOGCC) “regulation template” – American Petroleum Institute’s (API) guidelines and standards Chapter 377, F.S. was codified in 1968 Spacing requirements, unitization, and severance tax provisions were added to Chapter 377 in the 1960s-1970s after Humble Oil and Refining Company (Exxon) discovered the West Felda Field in southwest part of the state and Jay Field in northwest Florida Chapters 62C-25 through 62C-30, F.A.C., Implement Oil and Gas Rules in 1981 Florida Administrative Procedures Act, Chapter 120, F.S., required agencies to provide technical details to augment the statutes In 1996, Governor Lawton Chiles had a “rule reduction campaign” and many sections of the oil and gas rules were repealed Most of the fields had been discovered and were in production before the rules were implemented in 1981

8. www.lampl-herbert.com …working with people and planetary processes OIL AND GAS IN FLORIDA History of Production

9. www.lampl-herbert.com …working with people and planetary processes Petroleum Geology of Florida Oil produced in two basins – South Florida carbonate basin South Florida has vuggy karstic zones and shoal mounds in the Cretaceous carbonate ramp system with evidence for hypogene speleogenesis 22-24 API gravity oil (medium weight) with small volume of gas – West Florida Conecuh Embayment Smackover carbonate and Norphlet sandstone 45-48 API gravity oil (light weight) with large volume of sour gas 741 million barrels of oil equivalent (BOE) in Florida – 460 producing wells since 1943 – All oil and gas produced by conventional methods

10. www.lampl-herbert.com …working with people and planetary processes 10 Florida’s Drilling / Production : Crude Oil: 612 Million Bbls Natural Gas: 700 Billion CF ≈ 1,100 wells drilled ≈ 1,500 Drilling Applications ≈11,000 to 18,000 feet depth Peak Production 1978 48 Million Barrels 8 th in U.S. Peak Production 1978 48 Million Barrels 8 th in U.S. 19432015

11. www.lampl-herbert.com …working with people and planetary processes 11 Jay Sunniland Sunniland Trend : Discovery 1943 14 Oil/Gas Fields ≈ 450 wells drilled 121 Million Bbls Oil 10 Billion CF Gas Jay – Blackjack Trend : Discovery 1970 8 Oil/Gas Fields ≈ 300 wells drilled 500 Million Bbls Oil 700 Billion CF Gas

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13. www.lampl-herbert.com …working with people and planetary processes REGULATORY ISSUES OVER TIME 1981-2016

14. www.lampl-herbert.com …working with people and planetary processes Overview of Issues 1981 - 2013 Focus on environmental and land use topics Endangered and threatened species Wetlands Habitat Air quality Cultural resources Zoning Florida’s unique geology Fragile geology Acidization Disposal of produced water Induced seismicity / earthquakes Contamination of aquifers Pre-emption of local regulation 2013 – Present day Shift to hydraulic fracturing aka fracking

15. www.lampl-herbert.com …working with people and planetary processes CURRENT PUBLIC DEBATE ON GEOLOGIC/DRILLING ISSUES Key Issues

16. www.lampl-herbert.com …working with people and planetary processes Use of Acid in Well Drilling All wells drilled in carbonate formations create lime mud that cakes the wall in the well bore, clogging and sealing off the producing zones for – Drinking water (municipal/public, domestic/private wells) – Oil and gas – Aquifer storage and recovery (ASR) – Waste disposal (Underground Injection Control [UIC] Wells) Drillers use acid to flush detritus from all wells Fluids and detritus from oil wells are disposed of in Class II UIC wells (known as saltwater disposal wells) permitted by U.S. EPA and the FDEP 16

17. www.lampl-herbert.com …working with people and planetary processes Use of Freshwater for Drilling Fluids Water Management Districts (WMDs) issue General Water Use Permits (WUPs) for withdrawals from the Surficial Aquifer System (SAS) – Usually two water supply wells permitted and drilled at oil well sites – Permitted allocation is 10 million gallons per year A typical conventional oil well uses a total of 5-6 million gallons, intermittently, to drill and operate the well 17

18. www.lampl-herbert.com …working with people and planetary processes Aquifer Protection from Oil and Gas Activities Drinking water produced from the upper few hundred feet in the SAS Aquifers protected from Oil and Gas activities by: – All wells are cased and cemented to protect the Underground Sources of Drinking Water (USDW) – generally some 1,800 to 2,200 ft BLS in Florida – The receiving zone for produced waters disposed of in Class II UIC wells is the lower Floridan Aquifer System (Boulder Zone) below the USDW – Casing strings are set after determination of USDW – Geologist and state regulators determine USDW based on logs, water quality, and drilling/geologic data Some 1,500-3,000 barrels of fluids per day are produced at +30 wells in the Sunniland Trend 90-95% of the fluids are concentrated saltwater measured at 180,000+ parts TDS Oil field fluids are disposed in Class II UIC wells (43 total are permitted in Florida) 18

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20. www.lampl-herbert.com …working with people and planetary processes Chemicals Used for Drilling Water-based drilling fluid systems are used for the convention wells historically drilled in Florida – Fluid additives are disclosed in drilling permit application documents (MSDS data) – Major component of drilling fluids by volume is fresh water (99.2%) Chemicals used for hydraulic fracturing may be listed in FracFocus Chemical Disclosure Registry from the Ground Water Protection Council and IOGCC 20

21. www.lampl-herbert.com …working with people and planetary processes Induced Seismicity Induced seismicity has been linked to changes in fluid pressure in seismically active areas, as may be associated with geothermal energy development and oil and gas production and UIC wells Florida ranks lowest in seismic activity in the US North Dakota with extensive oil development also reports a low occurrence of seismic activity 21

22. www.lampl-herbert.com …working with people and planetary processes Questions and Comments

23. www.lampl-herbert.com …working with people and planetary processes LHC Professional Background Lampl Herbert Consultants formed in 1978 Principals (3) have over 100 years of geology and regulatory experience Geologic consultants for oil and gas basin studies Involved in regulatory and policy matters for oil exploration since 1973 in Florida Permitting consultant for major drilling and seismic projects Consultants for corporate social responsibility