Friday, August 2, 2013

NOTES by Diana MEC and More

I am highlighting certain things  that popped out at me.
green is good yellow means I am concerned ,Red means it scares the hell out of me!

These notes combine Committee meetings and Commission meetings 
from June 27-28, and July 25-26, 2013 
Chair, James Womack (Lee County Commissioner)
Legislative maneuvering by DENR top brass and “mystery” MEC member (George Howard??) to prevent Trade Secrets on fracking fluid disclosure to DENR; MEC rushing rules at monthly Commission meeting by “waiving” the 30-day “review” period; Rule on Water Acquisition and Management approved by MEC; Rule on Wastewater Management needs more work; Two rules on Wellhead Construction and Baseline and Subsequent Testing Requirements for groundwater wells referred to MEC’s Rules Committee; Four study groups (Compulsory Pooling, Funding Levels & Sources, Local Government, Coordinated Permitting) drafting reports for Legislature;
MEC votes to retain Womack as chair, and selects Ray Covington as new vice Chair (dropping George Howard); Amy Pickle (and all members of Environmental Management Commission) removed July 31 by legislation
1.  Water and Waste Management Committee; Chair, Dr. Vikram Rao
Draft Wastewater Management rule was reviewed by DENR stakeholder group. 
Issues remaining to be addressed:  Use of in-ground pits vs. above-ground “corrals” for holding reuse water;
documentation of pit design and capacities;
requirement for sufficient tank capacity to hold all water at site;
how to reclaim pits after drilling ceases;
clarify if soil erosion plan (disturbed area) does/does not include pits in the acreage bond;
establish conditions for pits that may be left “open” for long period between fracks;
closure requirement for oil-based fluids from drilling (could be mineral oil);
“requiring” operator to clean up spills at pad, instead of just reporting spill;
require notification of neighbors if there is a surface spill;
reconsider placement of three monitoring wells around pit. 
Committee prefers to require reuse of flowback water (tech advances = more economical), and deal with residual at end of useful  life. 
 Rao is opposed to deep well injection [New Legislation S76 requires its consideration], and says residual could be treated for some purpose, like agriculture.  
Stakeholders said to document the feasibility of other options, instead of deep well injection in coastal area: Rao will write white paper by Sept 5. 
Exchange between Rao and Womack concerning Dr. Jackson, a Duke University professor, who prefers deep well injection.  Rao and Ken Taylor have read EPA’s report (330 pages) and Rao’s take is that NC should not use deep well injection of waste fluids because of geology, shale outcrops (caverns), not just because of transport distance and coastal aquifer.  Per Rao, NC flowback water will have less salinity since it comes from underground freshwater lakes. 
The Water Acquisition and Management rule passed review of the Rules Committee on June 27 and was presented for full MEC discussion the next day.  Since the rule was sent to MEC just a few hours prior to the June 28 meeting, Womack wanted the MEC to review/discuss immediately.  That required a 2/3 vote to waive MEC’s 30-day advance notification requirement before discussing a proposed rule.  Several MEC members protested this rush (rule is 6 pages), but Womack said they could go “slow.”
After the waiver passed, Charlotte Mitchell (Vik Rao absent) led the discussion through the marked-up version of the rule.  MEC made a decision about using the terminology of “permittee” instead of “operator” throughout the rules since “permittee” carries the liability and is the entity to be bonded.
Charles Holbrook said the “Water Management Plan” section of the rule should either be incorporated into the permit or be part of the permit application.  Ken Taylor had comments concerning language in the “Water Management Plan” section that appears to allow the operator to tie up a water resource indefinitely because they “may” apply to build more wellpads in future permits.  Ken was concerned that this could allow one operator to tie up the Deep River as their water resource.
That section was deleted.  The “Water Management Plan” must be approved by DENR prior to any implementation. 
The rule outlines the content of the “Water Management Plan,” which includes ID of applicant, written approval from real property owners for activities on their land and its location, all sources of water, maximum daily withdrawals, total QUANTITY of water to be withdrawn during the project, transport/storage of water, maps of “area of influence” of proposed water sources (such as water wells, streams, water wells, wetlands, areas of known contamination), utility rights of way, alternative water sources [such as reuse of frack water], alternatives in times of drought, monitoring, and reporting, and whatever additional information DENR may require to approve the plan.  The plan will document each water source with maps/locational information for (a) surface water sources [permittee can stick a pipe into any river or stream, as long as they have permission from the riparian owner], proposed start and ending dates of withdrawals, the average and maximum daily withdrawals in millions-of-gallons-per-day, expected TOTAL withdrawal, and estimate the lowest flow [7Q10] at the proposed intake which will govern how much they can pump during drought. 
 Similar rules for (b) Groundwater sources, including an aquifer pump test at the proposed pumping rate, area of influence, drought indicators to determine allowable withdrawals in times of drought; and
(c) Purchased water sources, including copy of contract with water owner, and type of water (treated wastewater, reclaimed water, etc.) One more section on monitoring and reporting that requires daily records of pumping schedules, received and purchased water, stored water, and quantities of flowback for recycling.
The Water Acquisition and Management rule, as amended during 6/28 MEC meeting, was passed. 
2.  Oil and Gas Administration Committee; Chair, Charles Holbrook.
The Well Construction Requirements rule passed review of the Rules Committee on July 25, staff made changes, and the revised rule was presented for full MEC discussion the next day. A 2/3 vote passed to waive MEC’s 30-day advance notification requirement, however, Vik Rao had not seen the 11-page rule in advance and requested more time.
Womack said staff still has the rule accessible, so they can make modifications before entire rule set goes to Rules Commission.  Rao had lots of questions regarding requirement for full cementing upon well abandonment, and also the cementing of intermediate casing, if used. 
Rao said many portions of the rule refers to API specs, why not just say “conform” to API specs.  Holbrook says API requirements are baseline; for instance they do not require full cementing on well abandonment, but MEC may choose differently. 
Regarding the intermediate casing, Holbrook said originally he wanted cementing top to bottom, then stakeholders recommended spacers, which also works if potential “incursions” are identified and those zones are cemented.  Holbrook says NC rules should require more cementing because of overlapping layers to ensure the well hole will minimize “communication” between layers of rock, deeper zones and shallow aquifers.  There will be three to four casings:  Conductor, Surface, Intermediate (optional), Production. The combination of cementing, pressure testing through the cement bond log (CBL) will provide redundancy to make sure the well can be operated safely.  
 Rao, said should let public know that we have minimized public concerns.  Rao asked if DENR has “inspection staff expertise” to handle requirements of “special notifications” if the operator reports defective casing or cementing.  Ken Taylor said DENR currently has that expertise.  Holbrook says the operator would bring samples/evidence of defect to DENR and then provide the remedy/solution for DENR to approve.  The section on “variance authority” is on hold...MEC does not have this authority and will seek Legislation.
MEC will vote on the Well Construction Requirements rule at Sept. 6 meeting.
Wellhead Requirements rule covers the wellhead assembly installation and maintenance, and site security:  fencing, gates, signage, contact information at site, and visual impact mitigation.  The “visual impact” mitigation language might “defer” to local zoning rules for appearance.  This rule was forwarded 7/26 to Rules Committee. 
Next area for rule writing:  Well Closure.  Holbrook gave brief history of well closures: 120 closures in NC, some plugged and abandoned with cement plugs in hole, using spacers.  If owner wants to reopen well someday, don’t want it fully cemented in.  The TX oil rush started in 1901 at Spindletop, and no rules for closure until 1919 under the TX Railroad Commission...lots of abandoned wells, no consideration of environmental protection until 1970s and the 1974 Safe Drinking Water Act to protect water zones  CA requires 200-ft plug with plug extending 100-ft below water strata.  Besides cement, other non-porous material like clays can be used to fill up spaces between cement plugs.  These plugs or full cementing will only occur in vertical shaft, not horizontal runs.  Ken Taylor says DENR does send “witnesses” whenever a vertical well is plugged in this state to make sure it is done correctly.
Holbrook sees four classifications for well abandonment, each needing rules: 
(a) Dry holes (no gas);
(b) Hole that has filled up with junk (various reasons), then abandoned;
(c) Shut-in well that is ready for production, but waiting on more infrastructure to be built so they can pump gas;
(d) Temporary abandonment of producing well...still needs cement plugs.
Setback hot potato.  DENR’s Katherine Marciniak investigated other states and current NC rules relative to setbacks from dwelling structures, water wells, surface waters, etc.  OH had most detailed and the most categories; PA has three.  Since several committees are looking at setbacks, decided to split the task and have MEC’s Environmental Standards Committee be responsible for rules on horizontal separations on the surface; and Administration of Oil and Gas to write rules for wellpad spacing of drilling unit and subsurface.  In OH they are drilling under water bodies, so need two sets of setback rules at wellpad, one horizontal, one vertical...Ken Taylor said no other state tackles vertical setbacks
Ken and Vik Rao will work on the vertical setbacks.  Ken Taylor said that one to one-and-a-half miles from the Deep River, the shale is at a depth of 2,000-ft.  Womack predicted that there will be vertical fracking along the Deep River because of slate outcrops and shallow depth of the slate. Womack said to build rule on “reasonable” public safety and health with practical not burden industry. 
How big is the permit?  Ken Taylor brought in copies of a well permit from 8 states, [AR, CO, ND, OH, PA, TX, WV, WY] totaling 1,500 pages.  They had different components and schematics.  Ken noted that Ohio’s well completion report was 173 pages because of all the cement tickets, summaries, and pressure tests...most thorough. Of the 173 pages, 130 pages were frack material reports that measured the pumping schedule and fracking composition (sand, water/chemicals and “slick” water).  He said the detail would help inspectors spot problems. 
What’s In a Frack?  10 tons of sand; 60 barrels of water/chemicals per minute [there are 42 gallons in a barrel], and takes 20 hours
3.  Environmental Standards Committee; chair, George Howard.
Draft Baseline and Subsequent Testing rule.  Committee removed the Air Quality section..DAQ sets their own permits. 
Much discussion on what specific chemicals to include in follow-up water well testing: Vik Rao said divalent cations could be the proxy. 
Presentation by Dr. Nancy Coleman, Chesapeake Energy Corp., [industry] who is a former regulator [quelle surprise!]. She said the best indicators to see if produced water (from fracking) is getting into water wells are elevated chlorides, TDS (total dissolved solids) and divalent cations.
The fracking fluid is mostly silicates and water, just 1% are the chemicals. 
 She said Chesapeake “may” collect baseline samples beyond regulatory boundary, because of their internal “risk” evaluation of a particular geology. 
She said only CO requires subsequent testing...because of cost. She said baseline sampling costs can be $60,000 per wellhead.  Chesapeake has sampled 11,000 wells (human consumption)...not found subsequent problems from fracking...but some migration of stray gas from legacy wells. 
 Dissolved methane is found in over 30% of water wells tested in PA, at baseline.  She said this is safety hazard, but not toxic. She said choose a small group of parameters, then if find a problem conduct extensive metals and dissolved metals testing.  She said in TDS samples, evaporate liquid and see what salts/concentrations are left. 
She said some of the compounds on the NC baseline list have no EPA standard.  She said there was no point in testing for isotopic radium and isotopic strontium (from the USGS list) since diesel will not be allowed in frack chemicals.  No reason to test for trihalomethanes; and even pH has a seasonal fluctuations. She said there were no “action” levels in some of these test compounds.
She would add testing for dissolved methane.  After discussion, Committee kept the entire baseline list (including isotopics, and added dissolved propane and dissolved ethane). For the follow-up test in 12-months, repeat the same compounds as in base line.  If a third test is needed at 24-months, just a “canary in the mine” subset. 
 Ken Taylor said there is natural occurring radioactive materials that will be released with process water; doesn’t need to be tested until ready to dispose of the material.  Vik Rao is looking at life cycle of reuse water and final disposition.
The Baseline and Subsequent Testing rule was forwarded to the Rules Committee.
Setbacks redux. Surface setbacks (horizontal separation) will be handled by this Committee. 
Noise and lighting may need a variance procedure from local governments. Womack says Local Government Study Group should provide input regarding setbacks.  Womack said he wants a “reason” why setbacks should be a specific footage.  Difficult to find objective, quantifiable measures for setbacks.  Amy Pickle said there are statewide analogies for risk/benefit concerning permits for spray irrigation, same for air  emissions, and soil contamination (think of fertilizer plants).
Noise, odors, dust, lighting.  Excellent presentation by two student interns. 
Noise at 85 decibels (dB) causes hearing damage and should wear hearing protection. 
 Traffic is 100 dB;  jet taking off is 150 dB; and water well drilling rigs are 92 dB at 12-ft from the rig, and 110 dB at 6-ft from the rig. 
 Drilling noise levels are very loud (over 100-120 decibels) at gas drilling sites, lasting 24-36 hours during fracking.  However, at a distance of 50-ft. will sound like a loud motorcycle (104 dB) and even at 500-ft, noise level is 78 dB. 
There is little noise abatement in other states, but CO has different rules for AM or PM, and whether a remote site, and take noise measurements at 350-ft., or 25-ft. from a building
 API recommends use of noise abatement. 
 No state rules for odors or fugitive dust abatement, except CO: spray roads with water.  Rest is left to local governments.  Same with lighting, left to local governments, except in CO.
George Howard asked for expert presentation on diabase dikes at the Sept 5 meeting because of public concern.  Holbrook says penetration by groundwater and contamination is unlikely because of the structure of the igneous rock, water cannot percolate through it.  Drilling will not go through the dikes because they act as walls. 
Draft Chemical Disclosure/Trade Secrets rule...pow!  The Environmental Standards Committee crafted a rule that allowed for DENR to “hold” the Trade Secrets, but asked for discloser of family of compounds, without concentration or name of specific element.
 This draft was submitted to Rules Committee, then Womack announced a few weeks later that he would draft another version [some exchange here with Halliburton], thus bringing the work of the Rules Committee to a stop. 
Womack said (6/28) his new Study Group includes a few attorneys from the School of Government, and Dr. Levine, an expert in Trade Secrets from Elon University, with a purpose to identify gaps in NC statutes to protect proprietary information of this industry that may be revealed in a permit application but should not become public record. 
 Ken Taylor said the State Geologist is required by S820 law to receive the 3D seismic data from exploration, which would be confidential. 
Womack said that is an example of information that should be protected from other competitors and not released to the public under public records law. 
 To further complicate the situation, on June 27 a provision (backed by DENR, Deputy Secretary Mitch Gillespie???) was added to pending bill, H94, saying that this industry did not need to provide Trade Secrets and further, that DENR would not hold them.  George Howard [the instigator?] said no problem, the Chemical Disclosure rule was not asking for “full” disclosure anyway.  Womack said the proposed H94 legislation bypasses the MEC to write this rule.  George Howard said he didn’t see a difference between MEC’s draft rule and the H94 provision. 
Womack said if that law passes, there are no options for DENR to hold Trade Secret information, and it cuts off debate.  Others mentioned that DENR and Commerce already hold trade secrets.  There were differing opinions on what H94 would do, Womack wanted the MEC to make the
 decision, not a hasty piece of legislation, and work through all provisions on proprietary disclosure.  George said the issue was who holds the Trade Secret, and he didn’t like DENR holding them, preferred to leave it with the oil company. 
The outcome:  A motion to send a letter of concern to Speaker of House and President pro tempore of Senate to allow the MEC process to proceed on rules without this provision.
Womack said he had concern about use of Trade Secrets, with example in PA that allowed municipal wastewater treatment to handle frack waste water (Trade Secrets), then a contractor exceeded limits and just started dumping, because the industry was self-policing. 
Under H94 the industry can claim anything as a Trade Secret to avoid regulations.  It must be certified as Trade Secret, but H94 doesn’t require any certification.  Ken Taylor again cautioned that from emergency response point of view, need to know chemical classification (solvents, acid) and don’t need actual concentrations.  It was pointed out that Alaska now is considering full disclosure law.
Outcome:  H94 (became H74 on last day) passed but did NOT include the section on Trade Secrets. 
The MEC will discuss the amended draft of Chemical Disclosure (Womack’s additions) in the fall.
See 6/29 News & Observer article about Trade Secrets flare-up: 
4.  Rules Committee; Chair, Amy Pickle.  Committee has reviewed and passed along to full MEC the Well Construction rules; prohibition on use of Diesel Fuel rules, and the Water Acquisition and Management rule.  Working on Wellhead Requirements, Baseline and Subsequent Testing (groundwater). Also noted that any discussion in the rules of “granting” variances will require legislation to give that authority to has none. 
Next Rules Committee meeting Aug 9, but will Pickle still be a member?
5.  Local Government Regulation Study Group; Chair, Charles Taylor
6.  Compulsory Pooling Study Group; Chair, Ray Covington. S76 expanded duties: Landman registry,  method and form of compensation to victims of bad leases.  
7.  Funding Levels and Funding Sources Study Group; Chair, Jane Lewis-Raymond.  Expanded responsibilities in new S76 legislation.
8.  Comprehensive Permitting Study Group; Chair, Ken Taylor.  Expanded responsibilities in new S76 legislation.
All Study Groups are working on their reports and should have sometime ready by end of August. 
See my email of July 25:  Notes, May to July MEC (Fracking) Study Groups.  That email covered the study groups and their current issues/thinking.
[Note:  Staff from DENR’s Division of Water Quality have been absent from these discussions.  Recent legislation placed DWQ under Division of Water Resources.]
Diana Hales, retired

Again I must say "Thanks Diana for another great report "

the only rule that will Really work !

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