1. John James Tintera, PG #325 Texas Alliance of Energy Producers Injection Well Regulatory Update April, 2016

2. Outline 1. Seismic Rule (SWR 9) Review 2. Industry Work Group Recommendations 3. Commercial Wells “Economic Need” 4. TexNet -CISR

3. The main components of the adopted rule amendments, which became effective Nov. 17, 2014: requiring applicants for new disposal wells to conduct a search of the U.S. Geological Survey seismic database for historical earthquakes within a circular area of 100 square miles around a proposed, new disposal well;

4. Main Components cont. Clarifying the Commission’s authority to 1.modify or suspend or terminate a disposal well permit, 2.including modifying disposal volumes and pressures or shutting in a well if scientific data indicates a disposal well is likely to be or determined to be contributing to seismic activity;

5. Cont... allowing Commission to require operators to disclose the current annually reported volumes and pressures on a more frequent basis if staff determines a need for this information; and allowing Commission to require an applicant for a disposal well permit to provide additional information including pressure front boundary calculations, to demonstrate that disposal fluids will remain confined if the well is to be located in an area where conditions exist that may increase the risk that the fluids may not be confined.

6. Seismic Rule Requirements cont Only for disposal wells, not EOR Only for new permits Current permits are “grandfathered”

7. Seismic Rule Requirements Must submit USGS data (screen shot) with application for radius of 9.08 km (5.6 miles) with application = 100 square miles of coverage

8. USGS sample Web Page

9. 1900 to present – Magnitude 2 or greater Radius = 300 km (1.0 k =.621 miles) lat = 31.6 long = -99.4 178 earthquakes in map area

10. Texas Joint Industry Guidelines for New Disposal Well Siting (draft) These guidelines were developed to provide operators a set of parameters to consider when investing in new salt water disposal wells. Recognizing that seismic events in Texas are rare, these are suggestions only.

11. Guidelines cont Each company should develop its own internal procedures based upon its individual assessment of potential seismicity. Our Industry supports the Railroad Commission of Texas and its authority to regulate salt water disposal wells.

12. Guidelines: Perform a risk assessment using established information: 1.If possible, identify known crystalline basement faults with an orientation that may be conducive of induced seismicity. Need to define known, what one company knows another may not. 2.Define basic reservoir parameters of the disposal zone.

13. Guidelines Continued: Investigate seismic risk using the PUBLICLY AVAILABLE USGS historic shake maps to look at previous event history near the location of the proposed SWD.  Magnitude of historic events  Moment tensor analysis from USGS (seismic moment is a measure of the size of an earthquake based on the area of fault rupture, the average amount of slip, and the force that was required to overcome the friction sticking the rocks together that were offset by faulting. Seismic moment can also be calculated from the amplitude spectraof seismic waves.)slipspectra  Proximity to known crystalline basement faults identified in first bullet  Knowledge of historic disposal near the surface location (from RRC public records within ¼ mile)

14. Guidelines Continued: Consider the local population density. Do not dispose intentionally into known crystalline basement faults. Obtain initial BHP data once well is drilled. Monitor, record and maintain daily volume and daily pressure. Consider developing a company specific plan to respond to unexpected seismicity near operated disposal wells.

15. Suggestions for this plan may include: Set up team to review seismicity (public relations, technical, governmental affairs, legal and operations) Review area and identify all potential causes of seismicity Use the USGS or other seismic array to monitor events. Perform a review of historic pressure and volumes. Cooperate with RRC investigations.

16. Commercial Injection Wells ? How do you demonstrate Economic Need?

17. Here Comes - - - TEXNET

18. TEXNET

27. John James Tintera, PG #325 Texas Alliance of Energy Producers Injection Well Regulatory Update April, 2016