1. Railroad Commission of Texas Victor G. Carrillo - Chairman Elizabeth A. Jones – Commissioner Michael L. Williams – Commissioner

2. Commercial Salt Water Disposal Well Permitting Gil Bujano P.E. Assistant Director Technical Permitting, Oil & Gas Division

3. Regulatory Background There are over 392,000 oil and gas industry wells in Texas The first injection well in Texas was permitted in 1936 There are 100,270 injection and disposal wells on the books There are 52,084 currently permitted injection and disposal wells as of 1/6/2010

4. Regulatory Background The RRC administers the Class II UIC program in Texas under authority delegated by EPA 20% of UIC funding comes from EPA EPA oversight is ongoing to ensure that the RRC program is effective RRC program must be equivalent to EPA, but not necessarily identical.

6. Over 160 Commercial Disposal Wells in the General Area Clay – 1 Comanche – 1 Cooke – 7 Denton – 3 Erath – 2 Grayson - 0 Hamilton – 2 Hill – 3 Hood - 16 Hamilton – 1 Jack – 15 Johnson – 28 Montague – 21 Palo Pinto – 10 Parker – 15 Somervell – 5 Tarrant – 4 Wise – 31

7. Permitting Staff 4 Engineer/Geologists review permit applications 1 Engineer supervises workgroup 1 Engineer supervises the Technical Permitting section and signs all permits

8. General Permitting Requirements Base of Useable Quality Groundwater depth Notice and Hearing Opportunity Area of Review Geologic Requirements Surface Casing Production Casing Packer Requirements

9. BUQW For new wells, surface casing must be set to the protection depth determined by the Texas Commission on Environmental Quality (TCEQ) This is called the Base of Useable Quality Water The surface casing is cemented to the surface.

10. Notice & Hearing surface owner adjacent landowners (Commercial Disposal) operators within ½ mile city clerk if in city limits published in general circulation paper Protest: affected person who has or will suffer actual injury or economic damages other than a member of the general public…including surface owners and adjoining offset operators

11. Area Of Review Statewide rules require that an applicant for an injection or disposal well permit examine the data of record for wells that penetrate the proposed injection zone within a one quarter (1/4) mile radius of the proposed well This is to determine if all abandoned wells have been plugged in a manner that will prevent the movement of fluids into strata other than the authorized injection or disposal zone. A permit applicant must submit a map showing the location of all wells.

12. Geological Requirements 1.This part of the permit review verifies that the proposed injection zone is adequately isolated by relatively impermeable strata to confine injected fluids to the proposed zone. 2.The authorized injection or disposal strata must be isolated from overlying usable quality water by a sufficient thickness of relatively impermeable strata, which is generally considered to be an accumulative total of at least 250 feet of clay or shale.

13. Completion Requirements Three Layers of Protection 1st Layer: Surface Casing 2 nd Layer: Production casing 3 rd Layer: Tubing and Packer

14. Surface Casing: 1 st layer of protection SWR 13 applies to all RRC wells and requires that surface casing be set and cemented through the groundwater to protect it before drilling beyond that depth into deeper formations Surface casing acts as a protective sleeve through which the deeper drilling occurs

15. Production Casing Completion Requirements: 2 nd layer of protection SWR 13 applies to all RRC wells Requires production casing to be cemented with enough cement to fill 600 ft above shoe and any other productive intervals SWR 9 applies to all RRC disposal wells Specifically for injection wells

16. Production Casing Completion Requirements cont… After drilling (inside the surface casing) to the target formation, the production casing is set and cemented to isolate the target formation SWR 9 Requires 400-600 ft. of cement at the top of the injection interval to ensure that injected fluids do not escape the permitted interval By running bond logs, or temperature surveys to increase confidence in the effectiveness of the cement, less vertical cement may be permitted.

17. Tubing and Packer : 3 rd layer of protection All newly drilled or converted disposal wells permitted under Rule 9 must be equipped with tubing set on a mechanical packer unless an exception is granted by the director for good cause. Pressure observation valves are required on the tubing and each annulus.. Tubing is slim pipe inserted into the center of the well bore inside the surface casing and production casing A packer is a mechanical device that seals the open space (annulus) between the tubing and the packer Disposal wells must have a packer set within 100 feet of the permitted disposal interval

19. Post-Permitting Annual Monitoring reports must be filed on every injection/disposal well to report activity, status, and monitoring 52,000 reports are received annualy and reviewed by staff and automated programs Initial and periodic Mechanical Integrity Tests must be performed to check for leaks RRC staff review 15,000 – 18,000 tests each year

20. Permitting of the Bosque Disposal Systems Sophia #3 The well application was filed under Statewide Rule 9 for disposal of oil and gas exploration and production (E&P) waste into the interval between 8,700 and 12,750 feet below ground surface. The well application is to dispose into the deeper Ellenburger formation, but would be carried in the shallower Barnet Shale for book keeping reasons.

21. Bosque Disposal Systems Sophia #3 Surface Casing Deepest groundwater is at 1395 ft. at the well location Rules require setting 1395 ft. of surface casing Surface casing in the Sophia SWD well is to be set at 1,475 ft. and cemented back to ground surface

24. Railroad Commission of Texas