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ORR # 2001-075
DEPARTMENT OF ENVIRONMENTAL QUALITY GEOLOGICAL AND LAND MANAGEMENT DIVISION OIL AND GAS OPERATIONS
Filed with the Secretary of State on December 13, 2002.
These rules take effect 7 days after filing with the Secretary of State
(By authority conferred on the supervisor of wells and the director of the department of environmental quality by section 61506 of 1994 PA 451, MCL 324.61506, sections 9 and 251 of 1965 PA 380, MCL
16.109 AND 16.351, and Executive Reorganization Order No. 1991-22, MCL 299.13).
R 324.102, R 324.103, R 324.202, R 324.203, R 324.207, R 324.210, R 324.211, R 324.213, R 324.501,
R 324.504, R 324.511, R 324.1014, R 324.1107, R 324.1122, R 324.1123, and R 324.1301 of the
Michigan Administrative Code are amended as follows:
PART 1. GENERAL PROVISIONS
R 324.102 Definitions; A to M.
Rule 102. As used in these rules:
(a) "Act" means 1994 PA 451, MCL 324.101 et seq.
(b) “ANSI” means the American national standards institute.
(c) “API” means the American petroleum institute.
(d) "Authorized representative of the supervisor" means a department of environmental quality employee who is charged with the responsibility for implementation of the act or these rules.
(e) "Blowout prevention equipment" means a casinghead control device designed to control the flow of fluids from the well bore by closing around the drill pipe or production tubing or completely sealing the hole in the absence of drill pipe or production tubing.
(f) “Brine" means all nonpotable water resulting, obtained, or produced from the exploration, drilling, or production of oil or gas, or both.
(g) "Central production facility" means production equipment which has been consolidated at a central location that provides for the commingling of oil or gas production, or both, from 2 or more wells or production units of diverse ownership or from 2 or more prorated wells or production units.
(h) "Conformance bond" means a surety bond that has been executed by a surety company authorized to do business in the state of Michigan, cash, certificates of deposit, letters of credit, or other securities that are filed by a person and accepted by the supervisor to ensure compliance with the act, these rules, permit conditions, instructions, orders of the supervisor, or an order of the department of environmental quality.
(i) "Development well" means a well which has as its objective an oil or gas pool known to be, or have been, productive through the discovery well of the oil or gas pool and which is located either within a 2- mile radius of the discovery well or on the same structure as the discovery well.
(j) "Directionally drilled well" means a well purposely deviated from the vertical using controlled angles to reach an objective location.
(k) "Discovery well" means a well that discovers a new and previously untapped oil or gas pool. A discovery well may open up a new field or it may locate a previously unknown oil or gas pool in an old field.
(l) "Drilling completion" means the time when a well has reached its permitted depth or the supervisor has determined drilling has ceased.
(m) “Drilling operations” means all of the physical and mechanical aspects of constructing a well for the exploration or production of oil or gas, or both, for injection of fluids associated with the production of oil or gas, or both, or the storage of natural hydrocarbons or liquefied petroleum gas derived from oil or gas, and includes all of the following:
(i) Moving drilling equipment onto the drill site.
(ii) Penetration of the ground by the drill bit and drilling of the well bore.
(iii) Casing and sealing of the well bore.
(iv) Construction of well sites and access roads.
(n) "Drilling unit" means the area prescribed by an applicable well spacing rule or order for the granting of a permit for the drilling and operation of an oil or gas well, or both.
(o) “Facility piping” means piping that connects any of the following:
(i) Compressors.
(ii) Flares.
(iii) Loadouts.
(iv) Separators.
(v) Storage tanks.
(vi) Transfer pumps.
(vii) Treatment equipment.
(viii) Vents.
(p) "Fence" means a structure which is designed to deter access and which consists of not less than 2 strands of barbed wire, 1 strand being approximately 18 inches above the ground and the other strand being approximately 42 inches above the ground, secured to supporting posts or means an equivalent structure that deters access.
(q) "Final completion" means the time when locating, drilling, deepening, converting, operating, producing, reworking, plugging, and proper site restoration have been performed on a well in a manner approved by the supervisor, including the filing of the mandatory records, and when the conformance bond has been released.
(r) “Flow line” means piping that connects a well or wells to a surface facility.
(s) "Fresh water" means water which is free of contamination in concentrations that may cause disease or harmful physiological effects and which is safe for human consumption.
(t) “Gas storage” means the use of a depleted oil or gas pool, salt cavern, or other porous strata utilized for the purpose of injecting and withdrawing gas from the depleted oil or gas pool, salt cavern, or other porous strata.
(u) “Gathering line” means a pipeline that transports natural gas from a surface facility to a transmission pipeline.
(v) "Geologist" means a person who is certified as a geologist by a credible geological professional association or who, by reason of his or her knowledge of the natural sciences, mathematics, and the principles of geology acquired by professional education and practical experience, is qualified to engage in the practice of the science of geology.
(w) "Groundwater" means water below the land surface in the zone of saturation.
(x) "Injection well" means a well used to dispose of, into underground strata, waste fluids produced incidental to oil and gas operations or a well used to inject water, gas, air, brine, or other fluids for the purpose of increasing the ultimate recovery of hydrocarbons from a reservoir or for the storage of hydrocarbons.
(y) "Instruction" means a written statement of general applicability which is issued by the supervisor, which conforms with the act and rules promulgated under the act, and which clarifies or explains the applicability of the act or rules to commonly recurring facts or circumstances.
(z) “Multiple zone completion" means a well constructed and operated to separately produce oil or gas, or both, from more than 1 reservoir through 1 well bore.
R 324.103 Definitions; N to Z.
Rule 103. As used in these rules:
(a) “Nuisance odor” means an emission of any gas, vapor, fume, or mist, or combination thereof, from a well or its associated surface facilities, in whatever quantities, that causes, either alone or in reaction with other air contaminants, injurious effects to human health or safety; unreasonable injurious effects to animal life, plant life of significant value, or property; or unreasonable interference with the comfortable enjoyment of life or property.
(b) “Oil and gas operations” means permitting activities required under R 324.201, drilling operations, well completion operations, operation of oil and gas wells, plugging operations, and site restoration.
(c) “Operation of oil and gas wells” means the process of producing oil or gas, or both, or the storage of natural hydrocarbons or liquefied petroleum gas, including all of the following:
(i) Production, pumping, and flowing.
(ii) Processing.
(iii) Gathering.
(iv) Compressing.
(v) Treating.
(vi) Transporting.
(vii) Conditioning.
(viii) Brine removal and disposal.
(ix) Separating.
(x) Storing.
(xi) Injecting.
(xii) Testing.
(xiii) Reporting.
(xiv) Maintenance and use of surface facilities.
(xv) Secondary recovery.
(d) “Organization report” means a listing of all corporate officers, directors, incorporators, partners, or shareholders who have the authority to make, or are responsible for making, operational decisions, including the siting, drilling, operating, producing, reworking, and plugging of wells.
(e) “Permit” means a permit to drill and operate an oil or gas well, or both, or an injection well, including associated surface facilities and flow lines.
(f) “Plugging operations” means the sealing of the fluids in the strata penetrated by an oil or gas well, or both, upon abandonment of the well or a portion of the well bore, so that the fluid from one stratum will not escape into another or to the surface.
(g) “Ppm” means parts per million by volume.
(h) “Psi” means pounds per square inch.
(i) “Psig” means pounds per square inch gauge.
(j) “Secondary recovery” means the introduction or utilization of fluid or energy into or within a pool for the purpose of increasing the ultimate recovery of hydrocarbons from the pool.
(k) “Shut-in” means an action by a permittee to close down a producing well, a well capable of producing, or an injection well temporarily for any of the following reasons:
(i) Repair.
(ii) Cleaning out.
(iii) Building up reservoir pressure.
(iv) Planning for secondary recovery.
(v) Other injection projects.
(vi) While awaiting connection of a sales line.
(vii) Lack of a market.
(l) “Site restoration” means all of the following:
(i) The filling and leveling of all cellars, pits, and excavations.
(ii) The removal or elimination of all debris.
(iii) The elimination of all conditions that may create a fire or pollution hazard.
(iv) The minimization of erosion.
(v) The restoration of the well site as nearly as practicable to the original land contour or to a condition approved by the supervisor.
(m) “Structure used for public or private occupancy” means a residential dwelling or place of business, place of worship, school, hospital, government building, or other building where people are usually present at least 4 hours per day.
(n) “Supervisor” means the director of the department of environmental quality or his or her assistants as approved by the director of the department of environmental quality.
(o) “Surface casing” means the casing string or strings used primarily for protecting fresh water or mineralized water resources from potential contamination during the drilling and operation of an oil or gas well, or both.
(p) “Surface facility” means a facility used in the injection of fluids or in the production, processing, or treatment of oil or gas, or both, including any of the following:
(i) Pumping equipment.
(ii) Fluid disposal equipment.
(iii) Facility piping.
(iv) Load outs.
(v) Separators.
(vi) Storage tanks.
(vii) Treatment equipment.
(viii) Compressors.
(q) “Surface water” means a body of water, and the associated sediments, which has a top surface that is exposed to the atmosphere and which is not solely for wastewater conveyance, treatment, or control. Surface water may be any of the following:
(i) A Great Lake or its connecting waters.
(ii) An inland lake or pond.
(iii) A river or stream, including intermittent streams.
(iv) An impoundment.
(v) An open drain.
(vi) A wetland.
(r) “Well completion” means the time when a well has been tested and found to be incapable of producing hydrocarbons in commercial quantities and has been plugged or has been found capable of
producing commercial quantities of hydrocarbons or when the well has been equipped to perform the service for which it was intended.
(s) “Well completion operations” means work performed in an oil or gas well, or both, after the well has been drilled to its permitted depth and the production string of casing has been set, including perforating, artificial stimulation, and production testing.
(t) “Well location” means the surface location of a well.
(u) "Zoned residential” means a geographic area that was zoned by a local unit of government before January 8, 1993, as an area designated principally for permanent or recreational residences.
PART 2. PERMITS TO DRILL AND OPERATE
R 324.202 Directional redrilling.
Rule 202. (1) A permittee of a well who desires to directionally redrill an existing well to a different bottom hole location shall file an application for a new permit. The application shall set forth, in detail, the new bottom hole location and identify the plug-back depth of the existing well and shall be filed under R 324.201(3). The directional redrilling shall not be commenced until the application has been approved by the supervisor or authorized representative of the supervisor, except as provided in subrule
(2) of this rule. A new permit and an additional fee shall be required.
(2) A permittee of a well who desires to directionally redrill an existing permitted drilling well to a different bottom hole location with the drilling rig then on location shall obtain approval from the supervisor or authorized representative of the supervisor. Approval to redrill shall be obtained by contacting the authorized representative of the supervisor in person or by telephone and providing pertinent details of the proposed directional redrilling. Approval may be granted immediately if all of the following provisions are complied with:
(a) The existing drilled hole is plugged back before starting the new directional hole under the provisions of these rules.
(b) The new bottom hole location conforms to applicable spacing.
(c) The well has adequate bonding or a statement of financial responsibility has been filed under R 324.210.
(3) If approval to directionally redrill is granted, a permittee of a well shall obtain a new permit and pay an additional fee. The application for a new permit and additional fee shall be filed within 10 days at the offices of the Michigan Department of Environmental Quality, Geological and Land Management Division, P.O. Box 30256, Lansing, Michigan 48909. In addition to other enforcement actions, failure to comply with this subrule shall be cause for immediate suspension of any or all components of the oil and gas operations on the well.
(4) A well log and plugging record shall be filed on the plugged-back hole under these rules.
R 324.203 Lost holes.
Rule 203. (1) A permittee of a well shall obtain approval to skid a rig or move to start a new hole when a hole has been lost. A new permit or additional fee is not required if the new location for the well is within 165 feet of the lost hole and the drilling unit is not changed.
(2) A permittee of a well may obtain approval for skidding a rig or moving to a new location for the well because of a lost hole from the authorized representative of the supervisor in person or by telephone. Approval may be granted immediately if all of the following provisions are complied with:
(a) The lost hole shall be plugged before starting the replacement hole under the provisions of these rules.
(b) The new location for the well shall be made at a safe distance from the lost hole.
(c) The new bottom hole location shall conform to applicable spacing.
(d) The new location for the well shall not create surface waste.
(e) An amended application with corrected attachments and supplements shall be filed within 5 business days at the offices of the Michigan Department of Environmental Quality, Geological and Land Management Division, P.O. Box 30256, Lansing, Michigan 48909. In addition to other enforcement actions, failure to comply with this subrule shall be cause for suspension of any or all components of the oil and gas operations on the well.
(f) A well log and well plugging record shall be filed on all lost holes under the provisions of these rules.
R 324.207 Suspension of oil and gas operations due to failure to transfer permit.
Rule 207. If a permittee of a well conveys his or her rights as an owner of a well to another person, or ceases to be the authorized representative of the owner of a well, and a request for transfer of the permit under R 324.206(6) has not been approved, then, in addition to other enforcement actions, failure to comply shall be cause for immediate suspension of any or all components of the oil and gas operations on the well, including the removal or sale of oil, gas, or brine.
R 324.210 Conformance bond or statement of financial responsibility requirements.
Rule 210. (1) A person who files an application for a permit to drill and operate a well under R 324.201, or who acquires a well under R 324.206(6), shall file a conformance bond with the supervisor on a form prescribed by the supervisor or shall submit a statement of financial responsibility under subrule (2) of this rule.
(2) A statement of financial responsibility shall consist of all of the following:
(a) A written statement which is signed by the person, which lists data that show that the person meets the criteria specified in subrule (3) of this rule, and which states that the data are derived from an independently audited year-end financial statement.
(b) A copy of an independent certified public accountant’s report on examination of the person’s financial statements for the latest completed fiscal year.
(c) A special report from the person’s independent certified public accountant stating that the accountant has compared the data listed in the statement provided under subdivision (a) of this subrule with the amounts in the corresponding year-end financial
statement and that nothing came to the attention of the accountant which caused the accountant to believe that the financial records should be adjusted.
(3) When a person submits a statement of financial responsibility instead of a conformance bond, a person shall meet the criteria of either subdivision (a) or (b) of this subrule, as follows:
(a) A person required to file the statement of financial responsibility shall have all of the following:
(i) Two of the following 3 ratios:
(A) A ratio of total liabilities to net worth of less than 2.0.
(B) A ratio of the sum of net income plus depreciation, depletion, and amortization to total liabilities of more than 0.1.
(C) A ratio of current assets to current liabilities of more than 1.5. Projected oil and gas reserves may be utilized in determining current assets only to the extent that the value of the reserves exceeds the projected costs of development and production.
(ii) Net working capital and tangible net worth each of which is not less than 3 times the amount of the conformance bond provided in R 324.212, if the person had elected to file a conformance bond.
(iii) Total assets in Michigan that are not less than 3 times the amount of the conformance bond provided in R 324.212, if the person had elected to file a conformance bond. Projected oil and gas
reserves may be utilized in determining current assets only to the extent that the value of the reserves exceeds the projected costs of development and production.
(iv) A written statement from a certified public accountant which states that no matter came to the attention of the accountant which caused him or her to believe that the financial records should be adjusted.
(b) A person required to file a statement of financial responsibility shall have all of the following:
(i) A current rating for his or her most recent bond issuance of Aaa, Aa, A, or Bbb as issued by Standard and Poor’s or Aaa, Aa, A, or Baa as issued by Moody’s.
(ii) A tangible net worth of not less than $2,000,000.00.
(iii) Total assets in Michigan that are not less than 3 times the amount of the conformance bond provided in R 324.212, if the person had elected to file a conformance bond. Projected oil and gas reserves may be utilized in determining current assets only to the extent that the value of the reserves exceeds the projected costs of development and production.
(4) A person shall submit a statement of financial responsibility to the supervisor not less than 60 days before the date the financial assurance is scheduled to take effect.
(5) After the initial submission of a statement of financial responsibility, the person shall send an updated statement of financial responsibility to the supervisor within 90 days after the close of each succeeding fiscal year.
(6) If a person no longer meets the requirements of subrule (3) of this rule, he or she shall send notice to the supervisor of the intent to establish alternate financial assurance by filing a conformance bond as specified in subrule (1) of this rule. The notice shall be sent, by certified mail, within 90 days after the end of the fiscal year for which the year-end review of the financial records shows that the person no longer meets the requirements. The person shall provide the alternate financial assurance within 120 days after the end of the fiscal year.
(7) The supervisor may, based on a reasonable belief that the person no longer meets the requirements of subrule (3) of this rule, require a report at any time from the person in addition to the information required by subrule (3) of this rule. If the supervisor finds, on the basis of a review of the report or other information, that the person no longer meets the requirements of subrule (3) of this rule, then the supervisor or authorized representative of the supervisor shall notify and inform the person. Within 30 days of the notification, the person shall provide alternate financial assurance by filing a conformance bond as specified in subrule (1) of this rule or shall bring the well to final completion. Failure to comply with this subrule shall be cause for immediate suspension of any or all components of the oil and gas operations on the well.
(8) The supervisor may require additional conformance bonds to ensure compliance with orders of the supervisor, excluding proration, compulsory pooling, or spacing orders. The conformance bond shall be in addition to the conformance bonds filed under R 324.212(a), (b), or (c) and shall be required only if the supervisor determines that the existing conformance bond is not adequate to cover the estimated cost of plugging the well and conducting site restoration or other obligations of the permittee under the order. A person is not required to file additional conformance bonds under this subrule if the person has filed a blanket conformance bond or bonds in an aggregate amount of $250,000.00 or more, under R 324.212(d). Subject to the provisions of R 324.213, the additional conformance bond shall be released when the permittee has complied with all provisions of the orders of the supervisor.
(9) Conformance bonds that were in effect before the effective date of these rules shall remain in effect under the conditions upon which they were filed and accepted by the supervisor. However, in place of conformance bonds that were in effect before the effective date of these rules, a permittee may file conformance bonds or submit a statement of
financial responsibility under these rules for wells permitted under the act before the effective date of these rules.
R 324.211 Liability on conformance bond.
Rule 211. (1) The liability on the conformance bond is conditioned upon compliance with the act, these rules, permit conditions, instructions, or orders of the supervisor. Subject to the provisions in R 324.213, liability shall cover all oil and gas operations of the permittee as follows:
(a) Through transfer of the permit for the subject well under R 324.206(6).
(b) Through final completion approved by the supervisor of the subject well.
(c) Otherwise as approved by the supervisor.
(2) The supervisor shall look to the conformance bond for immediate compliance with, and fulfillment of, the full conditions of the act, these rules, permit conditions, instructions, or orders of the supervisor. All expenses incurred by the supervisor in achieving compliance with, and fulfillment of, all conditions of the act, these rules, permit conditions, instructions, or orders of the supervisor shall be paid by the permittee or the surety or from cash or securities on deposit. The claim shall be paid within 30 days of notification to the permittee or surety that expenses have been incurred by the supervisor. If the claim is not paid within 30 days, the supervisor, acting for and on behalf of the state, may bring suit for the payment of the claim.
R 324.213 Cancellation of conformance bonds issued by a surety.
Rule 213. (1) A surety company may cancel a conformance bond acquired under these rules upon 90 days’ notice to the supervisor of the effective date of cancellation. However, the surety company shall retain liability for all violations of the act, these rules, permit conditions, instructions, or orders of the supervisor that occurred during the time the conformance bond was in effect.
(2) Forty days before the effective date of cancellation, as provided in subrule (1) of this rule, a permittee shall secure a conformance bond from another surety company authorized to do business in the state of Michigan, deposit cash or other securities, or bring the well to final completion. Failure to comply with this subrule shall be cause for the immediate suspension of any or all components of the oil and gas operations on the well.
(3) A surety company shall remain liable until the violations have been corrected and the corrections are accepted by the supervisor for all violations of the act, these rules, permit conditions, instructions, or orders of the supervisor that occurred at the well during the time the conformance bond was in effect before the effective date of cancellation.
PART 5. COMPLETION AND OPERATION
R 324.501 Responsibility for oil and gas operations.
Rule 501. A permittee of a well is responsible for the oil and gas operations of his or her well.
R 324.504 Well sites and surface facilities.
Rule 504. (1) A person shall use every reasonable precaution to stop and prevent waste. All wells, surface facilities, gathering lines, and flow lines shall be constructed and operated so that the materials contained in the facilities do not cause waste. An oil and gas operation shall not be commenced or continued at a location where it is likely that a substance may escape in a quantity sufficient to pollute the air, soil, surface waters, or groundwaters or to cause unnecessary endangerment of public health, safety, or welfare until the permittee has complied with the methods and means to prevent pollution or eliminate the unnecessary endangerment of public health, safety, or welfare as specified by the supervisor.
(2) The surface facilities shall be located not less than 300 feet from all of the following:
(a) Existing recorded freshwater wells and reasonably identifiable freshwater wells utilized for human consumption.
(b) Existing structures used for public or private occupancy.
(c) Existing areas maintained for public recreation.
(d) The edge of the traveled portion of an existing interstate, United States, or state highway. Pump jacks are exempt from this requirement.
(3) Surface facilities may be located closer than 300 feet from existing recorded freshwater wells and reasonably identifiable freshwater wells utilized for human consumption and existing structures used for public or private occupancy under either of the following conditions:
(a) Upon presentation to the supervisor of a written consent signed by the owner or owners of all existing recorded freshwater wells and reasonably identifiable freshwater wells utilized for human consumption and existing structures used for public or private occupancy.
(b) After a hearing under part 12 of these rules, the supervisor determines that the surface facility location will prevent waste, protect environmental values, and not compromise public safety.
(4) A permittee of a well shall not begin the installation of a surface facility or flow line without approval of the supervisor or authorized representative of the supervisor. A permittee shall make a written request for approval to construct and operate or to substantially reconstruct and operate a surface facility or flow line and shall file the request with the supervisor. The request may be filed with the application for a permit to drill and operate a well. The request shall have a detailed description and plan of the proposed facility, which shall include all of the following information:
(a) An environmental impact assessment if the surface facility is located more than 300 feet from the well or wells it serves.
(b) The location of the proposed surface facility or flow line.
(c) Identification of the well or wells to be connected to the surface facility or flow line.
(d) Reasonable and necessary measures to protect environmental values associated with existing adjacent land uses, including berming, screening, and access road location.
(e) Information relative to the approximate distances and directions from the surface facility or flow line to special hazards or conditions identified in R 324.201(2)(b)(iv).
(5) Upon receipt of a written request for approval to construct and operate or to substantially reconstruct and operate a surface facility or flow line under subrule (4) of this rule, other than a request to construct and operate a surface facility or flow line made as part of an application for permit to drill and operate a well, the supervisor or authorized representative of the supervisor shall have up to 30 days to review the request to determine if the request is accurate and complete. If the request is determined to be inaccurate or incomplete, the supervisor or authorized representative of the supervisor shall provide, within the 30-day period, to the person making the request, a notice that the request is inaccurate or incomplete and what changes or additional information shall be submitted. Upon receipt of the requested information, the supervisor or authorized representative of the supervisor shall have up to an additional 15 days to review the information to determine if the request is accurate and complete. Upon completion of the review process, the supervisor or authorized representative of the supervisor shall approve or deny the request within 10 business days. A request shall be approved if the supervisor determines that construction and operation of the proposed surface facility or flow line will prevent waste, protect environmental values, and not compromise public safety. Upon approval by the supervisor or authorized representative of the supervisor, a request made under this rule shall become part of, and subject to, the provisions of the permit to drill and operate the well or wells served by the surface facility.
(6) A person or permittee of a well shall not install a gathering line, carrying gas with more than 300 ppm hydrogen sulfide or a flow line or facility piping carrying gas from a class I H2S well and that is subject to a maximum working pressure of more than 125 psig that does not meet the construction requirements in R 324.1130.
(7) Surface facilities constructed after November 15, 1989, shall have secondary containment under R 324.1002.
(8) If discharges to the air, surface waters, or groundwater of the state are likely to occur at a surface facility, then a permittee shall apply for and obtain all necessary state and federal discharge permits before operating the surface facility.
R 324.511 Change of well status.
Rule 511. (1) A permittee of a well who desires to change the status of a well by an oil and gas operation, including temporary abandonment, except as allowed by R 324.704, and additional acid or other stimulation treatment, shall file an application for change of well status with the supervisor. The application shall set forth, in detail, the kind of oil and gas operation to be accomplished and the plan for protecting all oil, gas, brine, or fresh water strata the well has penetrated. A permittee shall not begin the oil and gas operation until he or she has received approval from the supervisor or authorized representative of the supervisor and provided notification to the supervisor or authorized representative of the supervisor of the date the oil and gas operation will commence.
(2) A permittee of a well who changes the status of a well shall file, with the supervisor, within 60 days, a complete change of well status record on forms prescribed by the supervisor, except that a record shall not be filed when the change of well status operation is for temporary abandonment purposes.
PART 10. WELL SITES AND SURFACE FACILITIES; PREVENTION OF FIRES, POLLUTION, AND DANGER TO, OR DESTRUCTION OF, PROPERTY OR LIFE
R 324.1014 Suspension of oil and gas operations due to threat to public health and safety.
Rule 1014. (1) The supervisor or authorized representative of the supervisor shall have the authority to immediately require corrective action, including suspending any or all components of the oil and gas operations, if the oil and gas operations have been determined by the supervisor to be in violation of the provisions of the act, these rules, permit conditions, instructions, or orders of the supervisor and threatens the public health and safety.
(2) A suspension of oil and gas operations shall be in effect for not more than 5 days or until the operation is in compliance and protection of the public health and safety is ensured. To extend the suspension beyond 5 days, the supervisor shall issue an emergency order to continue the suspension of oil and gas operations and may schedule a hearing under part 12 of these rules. The total duration of the suspension of oil and gas operations shall not be more than 21 days, as provided in section 61516 of the act.
PART 11. HYDROGEN SULFIDE MANAGEMENT
R 324.1107 Training.
Rule 1107. (1) A permittee of a well is responsible for ensuring that all agents, employees, or other representatives of the permittee who are involved in drilling, completing, testing, producing, repair, workover, or servicing operations on an H2S well have received training from persons qualified in hydrogen sulfide safety. The training shall include all of the following matters:
(a) The physical properties and physiological effects of hydrogen sulfide.
(b) The effects of hydrogen sulfide on metals and elastomers.
(c) Emergency escape procedures.
(d) The location and proper use of safety equipment.
(e) The locations of primary and secondary briefing areas.
(f) The location and operation of the hydrogen sulfide detection and warning system.
(g) The corrective actions, shut-in procedures, H2S well ignition procedures, and procedures for notifying off-site public authorities listed in the contingency plan to be followed in an emergency.
(h) The contents of the permittee's contingency plan.
(2) Not less than 2 persons per crew shall be trained in emergency first aid procedures, including red cross-approved techniques of cardiopulmonary resuscitation.
(3) When a drilling contractor or other independent contractor is involved in drilling, completing, testing, producing, repair, workover, or servicing operations on an H2S well, a permittee of a well may rely on written certification obtained from the contractor that the agents and employees of the contractor involved in the operations have received the training required by this rule. A permittee shall retain the written certification. Failure to ensure that employees receive adequate training and are current in the training is sufficient cause for the suspension of any or all components of the oil and gas operations on the well. A suspension shall continue as provided in R 324.1014(2).
R 324.1122 Vessels used for storing hydrogen sulfide-bearing liquid hydrocarbons or hydrogen sulfide-bearing brine; equipment requirements.
Rule 1122. (1) A permittee of a well shall ensure that a vessel which is located at an H2S well site or in a central production facility serving an H2S well and which is used for the storage of hydrogen sulfide- bearing liquid hydrocarbons or hydrogen sulfide-bearing brine is equipped with a sealing, pressure- vacuum-type hatch, except that a pressure-vacuum-type hatch is not required on a storage vessel if the venting of vapor to the atmosphere is permitted under subrule (4) of this rule. A hatch shall be kept closed when a tank is not being gauged.
(2) If a storage vessel described in subrule (1) of this rule releases a total 24-hour volume of 5 mcf or more of vapors, then a permittee of a well shall ensure that the vessel is equipped with a vent line for conveying released gasses and vapors to an incinerator, flare, or vapor recovery system. A flashback prevention system shall be installed on the line between a vessel and the incinerator or flare. If a vapor recovery system is used to control tank vapor emissions, then a flare or incinerator shall be available for standby or emergency use. Installing a vapor recovery system does not exempt a flare or incinerator from being in compliance with the requirements of R 324.1123.
(3) If a storage vessel described in subrule (1) of this rule releases a total daily volume of 5 mcf or more of vapors, then a permittee of a well shall install a fence around the vessel equipped with a gate. A fence shall be located not less than 20 feet from the base of a storage vessel. A permittee shall ensure that warning signs with the word “Danger” or “Caution” followed by the words “Poison Gas” are installed on all sides of the fence. If the supervisor or authorized representative of the supervisor finds that a threat to the public safety exists due to emissions of sulfur-bearing gas or vapor, then fencing other than that specified in R 324.102(p) may be required.
(4) If a storage vessel described in subrule (1) of this rule releases a total daily volume of 5 mcf or less of vapor, then it may be vented to the atmosphere if the vent is located not less than 10 feet above the tank top and if the opening of the vent is within the diked area or not less than 20 feet above the ground if the opening of the vent is outside the diked area. The supervisor may prohibit venting of vapor to the atmosphere if a verified chronic nuisance odor results from the sulfur-bearing compounds being vented.
(5) If the hydrogen sulfide concentration at the tank thief hatch is more than 500 ppm by volume, then a permittee of a well shall ensure that a tank has a latched gate at the foot of the catwalk stairs. A permittee of a well shall ensure that a sign reading “Self-contained Breathing Apparatus is Recommended Beyond This Point if Hatches are to be Opened” is posted on the gate.
(6) The supervisor may require the use of a tank gauging system that does not require the opening of the tank hatches if a verified chronic nuisance odor results from tank gauging.
(7) A person or a permittee of a well shall not install a tank which is used for the storage of hydrogen sulfide-bearing liquid hydrocarbons or brine from an H2S well if the separator or treater immediately upstream of the tank has an operating pressure of more than 250 psig unless an independent registered engineer certifies that the facility is designed and constructed such that any release of liquids or gas to the tank shall not cause a release of hydrogen sulfide to the atmosphere.
R 324.1123 Incinerators and flares; equipment and design requirements; additional requirements. Rule 1123. (1) A permittee of a well shall ensure that an incinerator or flare installed under R 324.1117, R 324.1122, or R 324.1124 is designed and equipped to prevent the release of unburned gas to the atmosphere. If the daily volume of gas handled by the incinerator or flare contains 28 pounds or more of hydrogen sulfide, then a permittee shall ensure that the incinerator or flare is equipped with a mechanism that operates upon failure of the pilot light to shut off the flow of fluid from the wellhead.
(2) A permittee of a well shall ensure that an incinerator or flare required by R 324.1122 is fenced. A fence shall be located not less than 20 feet from the base of the incinerator or flare. A permittee of a well shall ensure that warning signs that have the word “Danger” or “Caution” followed by the words “Poison Gas” are posted on all sides of the fence. If the supervisor or authorized representative of the supervisor finds that a threat to the public safety still exists due to emissions of the incinerator or flare, then fencing other than that specified in R 324.102(p) may be required.
(3) If the supervisor or authorized representative of the supervisor finds that a threat to the public health or safety exists due to the emission of sulfur-bearing gasses or vapors, then a flare stack or incinerator stack that is more than 20 feet high, as specified in R 324.1101(f) and (h), may be required.
PART 13. ENFORCEMENT
R 324.1301 Authority of supervisor.
Rule 1301. The supervisor, under section 61506 of the act, may do any of the following:
(a) Enforce all rules, issue orders, determinations, and instructions necessary to enforce the rules and regulations, and do whatever may be necessary with respect to the subject matter stated in these rules to carry out the purposes of these rules and the act, whether or not the orders, determinations, or instructions are indicated, specified, or enumerated in the act or rules.
(b) Order the suspension of any or all components of the oil and gas operations when a violation exists. The suspension time shall continue until a correction is made and a violation no longer exists under section 61516 of the act. The supervisor may also prohibit the purchaser from taking oil, gas, or brine from the lease during the required suspension time.
(c) Order a well plugged for a continuing violation of the act or these rules.
