Onshore Oil & Gas Order \# 1

An Overview of the Application for Permit to Drill Process

SUPO

\>\> T. Spisak:

Now let\'s go to our segment with Jennifer where she has prepared for us
some remarks every Surface Use Plan of Operations or SUPOs.

\>\> J. Spegon:

The Surface Use Plan of Operations or SUPO is the fourth component of a
complete APD. The SUPO is changed from a 13‑point plan in the old order
to a 12‑point plan in the revised order. The operator certification was
taken out and is now a standalone requirement. I\'ll be discussing it
later in detail further in the program. As I cover the 12 items in the
SUPO, keep in mind the last component of an APD package, the onsite
inspection. The onsite inspection is used to go out to the ground and
look at all these items staked. I\'ll cover the onsite and staking for
the onsite portion of this program later on.

The goal of this portion of the program is to inform you of some of the
planning and details that help drive the efficiency of the process. When
operators know up front the detail required for their type of project,
BLM gets a better proposal, operators get faster approvals and the
surface owners are satisfied with the results.

As an overview, first I\'m going to cover some of the general
information listed in this portion of onshore order #1. Then I\'m going
to go over the 12 points as required in the SUPO. In general, the
purpose of the SUPO is to adequately describe the proposed project in a
narrative, as well as on maps and diagrams. The maps and the narrative
define the entire project, provide directions to the well, details of
the well pad, construction and roads, methods of safe operation and
waste disposal, and details surface protection and reclamation. Maps
illustrate information listed in the SUPO. Information can be shown on a
single map or may need to be on separate maps, depending on the
complexity of the project. Diagrams are submitted for constructed well
pads and engineered roads. The SUPO describes Best Management Practices
and includes certification of surface use agreement or provides an
adequate bond if the surface is on split estate. The 12 points lined out
in the SUPO are required for all APDs. The detail of information that\'s
necessary depends on the complexity of the proposal.

Bryce Barlan will talk later in the program about master development
plans. Yet, this is a good time to compare the difference in complexity
of a SUPO for an application to drill one exploratory well to a master
SUPO that would be necessary to describe a project that contained
multiple wells such as coal bed methane projects with multiple leases, a
number of different surface owners, multiple coal zones, gas, water and
electric line corridors, overhead power, compressor stations, well
discharge points, stock watering tanks or on-channel or off-channel
impoundments, along with land application disposal of water, water
treatment facilities and all the different types of roads that would be
required depending on the average daily traffic as required in the gold
book.

The fourth edition of the gold book, the surface operating standards for
oil and gas exploration and development, includes improved practices for
expediting the APD process. The gold book defines road types by average
daily traffic and introduces drawings, photographs and road diagrams.

There are 12 points listed in the SUPO. They are listed A through L. For
those of us who can\'t get past the letter D without using our fingers
and toes to count, the letter L is 10 fingers and 2 toes. It doesn\'t
mat for you use letters, numbers, fingers or toes, if you follow the 12
points there shouldn\'t be anything missing from your SUPO. We will tine
compare and contrast the difference between a single exploratory well
and multiple well projects throughout each of these 12 points. In the
first point of the SUPO, existing roads, the operator is to include a
map that shows the access route from the proposed well site to a
locatable public access point such as a county road. In this section the
operator describes what type of existing roads are planned, such as
crowned and ditched roads or primitive two‑track roads, and states how
they plan to maintain the existing roads. In point two, new and
reconstructed access roads. The operator defines all the temporary and
permanent access roads and proposed structures such as culverts and
water crossings. The operator is required to design new and upgraded
roads to applicable road standards, which is often a difficult balance
between traffic volumes, and environmental concerns. I\'d like to refer
back to the example with multiple wells. The average daily traffic
during the construction phase will differ greatly from the future
traffic which consists only of well maintenance. After all, the
construction is complete. Yet the construction phase, when people are
working with time constraints, is when safety is of the utmost concern.
Road standards such as road width, maximum grade, turn‑out, crown and
ditch design are all listed in the gold book and in manual 9113 road
standards for BLM. Item 3C, location of existing wells, can be submitted
either on a map or a table and should include all existing wells within
one mile ‑‑ within a one‑mile radius of the proposed location. That
means production wells, water wells and plugged and abandoned wells. In
our master SUPO example a map would work better than a table for
multiple proposed well locations.

In the fourth item, D, location of existing and proposed production
facilities, it\'s apparent the detail required for a single well would
be extremely different than that would be required for multiple well
projects. A single well, if the proposal was detailed enough, could be
used as a site facility diagram, or it may just state that a sundry
notice form 3160‑5 will follow for production facilities if the well
becomes a producer. Compare this to the detail mentioned earlier in the
master SUPO with the complex web of facilities that are needed to
accommodate multiple well production. In the fifth item, E, location and
types of water supply, the operator identifies the source of water used
for drilling, such as a pond, lake or municipal water source, and the
route it will be brought in on. Will it be trucked in or will it be
piped in? The operator may attach a map or provide specific details as
long as the route can be analyzed. Item F, for those of you using your
finger and toe method, this is the first finger on the secondhand. The
6th item speaks to what is to be hauled in or taken off lease during
construction of the roads, pads and facilities.

Item G, methods for handling waste. This 7th item is where methods of
safe containment and disposal of waste material are described. This is
also the place to describe construction and lining of the pits. Number
8, the ancillary facilities, provides an area in the SUPO to describe
additional or supporting facilities such as staging areas. Information
on staging areas should describe the construction size and materials to
be stored on location. Ancillary facilities are to be identified on the
map and staked for the onsite. The 9th is the well site layout. It\'s
also called the pad diagram or constructed pad diagram. Well site
layouts requiring cuts and fills are designed on a site specific basis
by a licensed professional engineer. This schematic diagram of the well
site illustrates the orientation of the drilling rig, bore hole, reserve
pit, blooie line and flare pit. All of this is laid out on the drill pad
with pad dimensions, cut and fill depths, topographic fee features,
topsoil, spoil piles and access onto the pad is shown with any necessary
ditches and culverts. In H2S areas the well site layout will identify
emergency escape routes. On the opposite side of the spectrum would be
some of those coal bed methane wells in flat topography. These shallow
wells may use smaller rigs and therefore require no constructed pad. In
cases like this, all that\'s needed is a general pad diagram with
dimensions of surface disturbance, orientation of the reserve pit,
blooie line and the drilling rig layout in reference to the bore hole
location.

The 10th item, J, is the plan for reclamation. Plans for surface
reclamation are often the most in depth portion of the APD package. The
operator states a plan of how they\'re going to reclaim and stabilize
all the areas of disturbance. Each reclamation plan is site specific and
addresses interim as well as final reclamation. Interim and final
reclamation are going to be covered in more detail by Bryce Barlan
further in the program. Finger and toe counters, take off your shoes.
Item K is surface ownership. It\'s the 11th item where the operator
provides contact information for each of the private surface owners. Not
only those at the well location, but also the contact information for
all lands crossed by proposed roads that the operator plans to construct
or upgrade. This is where the new requirement comes in. The operator
needs to certify that they\'ve provided a copy of the SUPO to the
private surface owner of the land at the well site location. Due to some
SUPOs being complex documents, there\'s a high probability changes will
be made to the SUPO during the permitting process. Therefore, BLM leaves
the timing of delivery of the SUPO up to the Field Office, the operator
and the private surface owner. The onshore order requires the operator
certify they have made a good‑faith effort to provide a SUPO to the
private surface owner of the land at the well site before the APD will
be approved. The final item provides a place for other information such
as an integrated place management plan or as in our master SUPO example
a water management plan, and any additional maps that would be necessary
to describe the proposal.

In summary, if you follow the 12 points we just covered, there
shouldn\'t be anything missing from your SUPO. All of us working
together to preplan an approvable project is what drives the efficiency
of the permitting process. Operators get faster approvals, the BLM gets
clear‑cut proposals, and the private surface owners end up with
something they can live with.

\>\> T. Spisak:

Jennifer, in your presentation you discussed the potential need for
differing road standards for initial drilling and in the production
phase. Are you saying that we need to design the road differently, not
until we know whether it\'s a producer or not?

\>\> J. Spegon:

Sometimes and sometimes the opposite can be true. Sometimes we need to
design a better road so that we can get the drilling rig in there. The
important thing is to remember not to build roads greater than the
standards necessary. If you take a look at the gold book and use that to
plan your SUPO, that should help.

\>\> T. Spisak:

Very good. Thank you.