WOGCC Supervisor presents at Joint Minerals and Economic Development Interim Committee
WOGCC Supervisor Mark Watson recently presented before the Joint Minerals and Economic Development Interim Committee on oil and gas development in Wyoming and state primacy.
In his presentation, Watson said the WOGCC has seen a notable increase in applications for permits to drill (APDs) during 2017. The increase is more about companies seeking to secure operatorship of a well versus actual drilling activity. In Wyoming, when a company receives approval for a drilling and spacing unit (DSU), it is not a guarantee that it will be the operator of the wells in that DSU. The company that receives the first approved permit for each well in that DSU will be the company that has the right to drill. Right to operatorship is critical to companies. Drilling and completing a well requires several million dollars of investment, and the successful outcome of a well hinges on technical downhole accuracy. This creates an urgency to be the first company that submits and receives approval of a permit in order to be able to call the shots when drilling and completing a well. Even though it costs $500 per application, it is well worth submitting APDs to get the right to be the operator.
Watson enumerated, that although 4847 APDs have been received and 3792 of those have been approved as of June 2017, only 25 rigs are operating throughout the state of Wyoming. The large amount of permits is more about securing the right to operatorship verses actual drilling.
Additionally, the WOGCC requires APDs for all mineral types i.e. Fee, State and Federal. The agency has jurisdiction for well spacing, force pooling, fracking and flaring and to assign an API number to each well.
When a well includes federal surface and/or federal minerals, it requires both state and federal permits. Approval of federal permits can take up to two years verses 30 to 60 days with the WOGCC. The Minerals Committee asked about state primacy as it relates to the oil and gas industry. Watson explained that unlike the EPA, the BLM does not have the authority to issue state primacy and to change that would be an arduous and lengthy process. Though there is a push among some state and federal legislators for state primacy with oil and gas, Watson recommended that working with the BLM to secure an MOU makes the most sense. This has been successful in other cases and would be the recommended course for a successful and expedited approach. However, with the new administration in place, Watson recommended a “wait and see” approach right now since there are many changes coming down from the White House.
In addition to touching on the WOGCC’s most recent rule changes including setbacks, baseline water sampling, authorization for flaring and venting of gas and bonding, the supervisor emphasized the state’s hydraulic fracturing rule. With the incorporation of Chapter 3, Section 45, the WOGCC implemented a comprehensive “Well Stimulation” rule in 2010, which applies to fee, state and federal minerals. The rule requires both pre and post chemical disclosure to the WOGCC including CAS numbers and is one of the most rigorous and transparent rules in the United States. Many states ask operators to use the FracFocus website to disclose their frac components. However, Wyoming is the only state that requires disclosure of a frac job’s makeup prior to operations. Additionally, unless a frac operation obtains Trade Secret Status for some chemicals, this information is accessible to the public on the WOGCC’s website.
In the final portion of his presentation, supervisor Watson touched on the timelines for the recent federal regulations. These include the BLM’s Frack Rule; the BLM Methane and Waste Prevention Rule; EPA’s Methane Emissions from Existing Sources; and EPA’s Emission Standards for New, Reconstructed and Modified Sources. All are in ongoing litigation.