Monday, April 1, 2013

Report : Raleigh: MEC 4 Committees met March 7, 2013

Diana Hales goes to these meetings and does a fabulous job of writing highlights of the MEC meetings . We are fortunate to have her doing this and willing to share too.
March 7, 2013, Raleigh: Four Committees met, Mining & Energy Commission.
First draft rule for water withdrawals; DENR’s recommendations on wastewater management; well construction specifics; well abandonment practices; first draft rule for fracking fluid chemical disclosure requirements [trade secrets, no worries]; baseline water well sampling; mining statistics in NC
(1) Water and Waste Management Committee; Chair, Dr. Vikram Rao and Vice Chair, Charlotte Mitchell
a. Review of DENR Stakeholder meeting Feb 21. Stakeholders focused on stormwater management (Environmental Mgmt Commission has jurisdiction) at drilling sites, setbacks and bonding, which will be taken up by the MEC. Discussion about land application of drilling wastes (this is not flowback wastewater) and whether it should be driven by volume, or the characteristics of tailings. DENR’s Katherine Marciniak presented draft rule on surface water use that would limit withdrawals to 20% of the 7Q10 standard (i.e. lowest stream flow recorded 7 days in a 10-year period). Groundwater concerns included insufficient drought monitoring wells in potential drilling areas.
b. Draft rule for Water Acquisition, discussion. Draft rule requires operator to have a water management plan that includes: identification of source of water, storage of water onsite, location of water wells, streams, springs, wetlands, and areas with environmental contamination; and alternative water sources. For surface water sources, the draft requires operator to have permission from streamside land owner; propose a maximum daily withdrawal in millions of gallons and total maximum withdrawal; estimate the 7Q10 flow at the proposed intake location; show interactions with rare and endangered species; and account for cumulative impacts. Groundwater sources must be documented with maps, proposed daily withdrawals (millions of gallons per day), and maximum use; aquifer pump test and map showing area of influence and location of other surface wells; location of nearest drought-indicator well. Purchased water option must reveal name of supplier, copy of contract, type of water (treated wastewater, raw water, potable water), amount of water to be used, in millions of gallons, and method of transport from supplier to point of use. Alternative water sources asks operator to “evaluate” all options for water use to include flowback (produced water). Section asking details for transport and on-site storage; and monitoring and reporting, including metering of daily water pumping schedules from each source; and notification of DENR at least 48 hours to first withdrawal from any approved water source. Discussion: There is no State “limit” on water withdrawals (wells, or surface) except in the coastal plain. Engineer Holbrook said water withdrawal must accommodate “seamless operation” when rig arrives on site for fracking: can’t stop because of water inavailability. Several revisions suggested to staff, including adding a definition of “site.” Rao will approve changes.
c. Wastewater Management presentation, DENR’s Katherine Marciniak. DENR reviewed how “exploration” and “production” wastes are managed and stored on site in other states. Common construction practices: pit construction (using clay...Lee County has in abundance); synthetic plastic liners (welded seams, thickness); concrete pits (permanent structures). These are not stormwater cachements. Capacity issues: freeboard of 2-ft; able to contain a 10 year, 24-hour storm event; sloping of sides to prevent erosion and intrusions; and groundcover. Bottom of pit should be 10-ft above water table. Closure: timeframes of 60-90 days.
Types of wastewater to be handled: Produced water--when well is in operation; Encountered water while drilling—brine, oil components; Recycled water—reuse of frack fluids (ID types of wastes, onsite pretreatment, quality assurance and certifications/permits for holding these materials onsite).
Treatment and disposal: Bentonic drilling fluids must be dried and buried on NON-CROP land; land application requires surface landowner and operator to retain records of location. Reclaimed water must meet tertiary quality effluent standards (same as cities) PRIOR to storage.
Spills: All spills/leaks/released should be recorded [MEC to set threshhold quantity] and actions taken within 10-days minimum.
DENR’s recommendations for committee consideration:
Need further research into solid waste and land application of these materials in NC;
Site characterization for onsite treatment;
Pit closures, and timeframe: how to track dewatering and waste management; and
All spills (no matter how small) should be reported.
Rao said he doesn’t need more presentations from DENR on solid waste: He charged DENR staff assigned to MEC to bring this info directly to committee. Rao assumed injection wells (proposed in S76) are not a good idea for NC, but investigate further. Question on regulating “well closure” since the industry is only about 5 years old and no wells have been closed: Holbrook said a well could be productive for 10 years. If the operator “might”return in the future to refrack an existing well, why would you close pits (very expensive)? Womack said he wants an “updatable” permit so operator can modify it for future refracking, instead of “creating more bureaucracy for the operators.” Tex Gilmore asked if any states had monitoring wells downgrade of their pits. Marciniak said she did not find any monitoring networks, but did see a monitoring “ditch” surrounding some pits. Pickle (member from EMC) said there are seasonal high water tables, and the 10-year, 24-hour storm should be considered under those conditions.
(2) Administration of Oil and Gas Committee; Chair, Charles Holbrook and Vice Chair, Jane Lewis-Raymond
a. DENR staff reviewed well construction standards in OH, CO, PA, AR (Arkansas) for spacing, composition, cementing, pressure testing, and logging information. All use American Petroleum Institute (API) standards as baseline (minimum). Four Casings: Conductor (foundation for well, isolates shallow groundwater); Surface (set within the conductor and protects groundwater aquifers); Intermediate (set within surface casing and isolates subsurface formations that could cause instability; Production (set within intermediate casing to provide isolation between producing zone and other subsurface formations—used for collection and pumping of hydrocarbon fluids. Reviewed current NC rules for vertical wells: 15A NCAC 05D. Discussion on how far each casing should extend; should surface casing extend 100 or 200-ft below deepest freshwater zone (or 650-ft, whichever is greater); and should each casing be “cemented” in, and to what length? Cement standards an issue and material strength (compression or torque tests) and require bonding of cement contractors [think, BP Gulf of Mexico oil spill from drilling]. Holbrook said the surface casing must be in “competent” bedrock. Discussion of pressure testing of the casing, and blowout prevention. Actual well-head construction (fencing, well tags) will be separate topic. Holbrook said DENR should establish “approved” vendor list for drilling [and cementing?]. Ken Taylor said API standards are the minimum, but in many areas they are too general. Ken will review compression strengths vs. torque as the best gauge for strength. DENR to now develop draft rule set.
b. Abandonment procedures. Will operator come back to refrack in future? This could tie up land for up to 25 years, if operator “intends” to come back and reopen. Abandonment practices include removing well-head and cementing hole; expensive and permanent. Ken Taylor said there is another classification to consider in the permit: “Temporary abandonment,” which assumes resumption of operations.
c. Permit Variances. Who will grant, DENR or MEC? Ken Taylor mentioned that Arkansas’ equivalent of MEC meets every two weeks because of requests for variances! Discussion, there should be “compelling” reason.
d. Dikes and Faults. Faults are everywhere and, per Holbrook, operator will try to avoid...they use seismic info as they drill. He says dikes do not transmit fluid because they are tightly packed granite-like crystals further underground, and do not offer a conduit to the surface. His example was trying to shoot a granite tombstone...can’t break it. Still need rules about this, can’t depend on industry practice.
e. Thumper trucks. DOT wants to know: these trucks lower a big pan to the road surface and create pavement problems; industry uses to capture 3D seismic info.
(3) Environmental Standards Committee; Chair, George Howard and Vice Chair, Ray Covington
a. Draft rule for Chemical Disclosure and Trade Secrets, discussion. Amy Pickle wants DENR to hold confidential “trade secret” information as the central source for emergency responders, and suggested it could be delineated, through legislation, as an “exception” to the public information law [other exceptions currently exist]. Attorney General’s staff said S820 does not indicate that information could be protected as trade secrets, and established no court procedure for challenges; nor did S820 grant authority to either DENR or MEC. Needs to be resolved, and Legislature can revisit this issue. Womack said an omnibus bill [happening?] can capture some of these issues for empowering the MEC...he assured members that the Legislature would “give us what we need.He wants the MEC to hold trade secrets...NOT DENR. This would mean MEC acts as an independent authority to hear petitions for trade secrets. Rao asked if there were “known” challenges to trade secrets; no response. Who has greatest authority...DENR or MEC? Once the final authority is decided, their job will be determine whether something actually is a “trade secret;”and also be the contact for first responders. That should put DENR in the front position....not MEC. Amy Pickle wants an agency with institutional experience rather than MEC to hold these responsibilities.
The draft “chemical disclosure requirements” were revised and approved for forwarding to the MEC Rules Committee. Some provisions include timing of disclosure (prior to drilling) of all chemicals to be used (not trade secrets) to county emergency management office, DENR, and Chemical Disclosure Registry; provide descriptions on general classifications of chemicals within “trade secret” mix; provide 24-hr. vendor contact information in event of spill or other emergency; and require operator to identify and give actual amount of all “trade secret” chemicals in a frack solution to health professional or emergency responders within 2 hours of emergency, or DENR will provide it. Those receiving the “trade secret” chemical analysis must sign a Confidentiality Agreement. NC Business Court appears to be forum for legal action if public (landowner, lessee, or anyone having a legal interest in real property—including government-owned property) wants to challenge “trade secrets” under public records act.
b. Baseline Water sampling. Current NC law (S820) says operators have a “presumptive liability” for water contamination out to 5,000 feet from well head. The law requires baseline water well testing 30 days prior to drilling and two follow-up tests within 24 months. OH had only 300-ft. testing requirement and has now extended it to 1,500-ft.; PA has 2,500-ft; CO, 2640-ft. [DENR estimated that testing the 42 private wells within 5,000-ft of existing Simpson #1 well would cost $1,600/well or $67,200.] Discussion about whether to test every well (human use, livestock) in the 5,000-ft radius prior to drilling, or, choose some sample wells (up-gradient, down-gradient). If different operators overlap within the 5,000-ft radius, who pays for testing? Ken Taylor said need to do simple geometry so wells are sampled in all directions, not just a few clusters; he also suggested installation of monitoring wells, especially in unpopulated areas. Rao said monitoring wells are “too much,” but need adequate baseline test not just for groundwater, but surface water in the area. Counties each maintain different records on private wells. Discussion on changing legal language from “presumptive liability” to “joint and several liability” for overlapping radii of operations. Some agreement that baseline should include testing of all wells prior to drilling, and again six months after drilling; then perhaps use a geographic subset for subsequent tests. Committee adopted the National Ground Water Association (NGWA) baseline water sampling parameters.
4. Mining Committee Meeting; Chair, Tex Gilmore; Robert Mensah-Biney, Vice Chair
This committee existed prior to formation of MEC and was rolled in under S820 with new membership. This was their first meeting under new structure.
1. Basic information session that overviewed mining in NC, the 1971 Mining Act (GS 74-47), and permits DENR requires for 1 acre of disturbance, sediment control, dam safety, and now “energy.” DENR can deny permits for seven reasons: (a) Nature of activity violates law; (b) Adverse effects on potable groundwater supplies, wildlife, surface water quality; (c) Operation standards violate air or water quality; (d) Substantial physical hazard (i.e. slopes, buffers); (e) Adverse impact on publicly owned parks, forest, recreation areas; (f) Previous experience with similar operations (e.g. landslides resulted); (g) Operator’s bad record of civil penalties. Permits are good for 10 years. Requires reclamation bond of $500 to $5,000/acre, or blanket bond for $500,000 max. Discussion about bonding, renewals, forfeiture.
In 2011: there were 176 new mining permit applications; 878 total active permits in NC.
Breakdown of “permitted” mining operations: 68% sand and gravel; 17% crushed stone; 4% clay, 2% dipping.
Of the acreage bonded, the highest commodities are phosphate (47%), sand and gravel (28%) and crushed stone (14%).
Note: Lots of unpermitted mining going on, typically sand and gravel, with Billy Bob’s back hoe and dump truck.
2. Mining NC statistics. Value of mining in 2010 NC economy is estimated at one billion dollars; roughly $100 value/per person, generated from less than 48,000 sq. miles.
NC ranks 24th in 50 states. Crushed stone and phosphate employ 10,000 people, with payroll impact of $1.4 million. No domestic owners [how about that!] in the high purity quartz, feldspar (60% of US consumption mined here); and mica and other emerging minerals. NC has lithium, glass sand, quartz, garnet, emerald deposits. And GOLD deep under Charlotte, close to the Bank of America stadium.
Diana Hales, retired

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