### 2 

## REPORT OF SURVEY ON MIT FAILURES

Background Information

The Mechanical Integrity Test (MIT) has been identified as one of the most important parts of the Underground Injection Control (UIC) program since EPA began grantingClass II primacy to states in 1982. The Class II UIC regulatory program for oilfieldrelated saltwater disposal (SWD) and enhanced recovery (EOR) wells depends upon the success of the MIT program to show that primacy state programs administered under Section 1425 of the Safe Drinking Water Act (SDWA) are as protective of Underground Sources of Drinking Water (USDWs) as are those Direct Implementation (DI) programs administered under Section 1422 of SDWA. EPA regulations promulgated under SDWA require that each Class II injection well be tested for mechanical integrity once each five years (20% of inventory per year) and that, at minimum, tests 25% of all wells must be witnessed. State UIC program peer reviews since 1990 have shown that most states view witnessing of tests as a top priority activity. Most states witness over 60% of the MITs and a few try to have an agency field inspector present during all MITs. All states, as well as EPA, have policy or a guideline prescribing the MIT pressure loss acceptable before the test is deemed a failure. All states and EPA (DI) require repairs or other appropriate corrective action and subsequent retesting of the injection well before it can be used again for injection. Additionally some wells even require corrective measures prior to abandonment where routine plugging methods will not reduce the threat to USDWs.

In 1986- 7, a committee of oil and gas directors worked with EPA’s Office of Surface Water and Ground Water (formerly the Office of Drinking Water) to come up with a definition of Significant Non-Compliance (SNC) that most everyone, at least at that time understood. One of the points of agreement was that if the MIT failure was corrected within 90 days of the test, the result did not show up on the 7520 Form as a SNC. At that time, while all parties acknowledged that, in the empirical sense, a MI failure meant a violation had occurred; there were two types of well failure ; ones that posed no potential or actual threat to USDWs and those that did. In the intervening years, few of the personnel at both the state and federal levels who were involved with the original SNC definition are still accessible to serve as a resource to the current program managers in providing interpretations and definition of what is or what is not a SNC. The attitude by some state UIC program administrators toward the seriousness of a violation has also become more purist. The six criteria that comprise the SNC definition are on the back of

the EPA Form 7520-2B.

### 3 REASONS FOR CURRENT STUDY

Within the last three years, EPA has developed a set of Program Activity Measurements (PAMS) to use as a guide to show measures of progress within the UIC program. Primacy states, through the Ground Water Protection Council (GWPC) were able to provide n ominal input to the shaping of the PAMS to afford more realistic articulation of

the data submitted to EPA on 7520

- 2B forms and other reporting measures requested periodically by EPA. Parallel and subsequent to the development of National PAMS,

EPA has an ongoing initiative to develop a National UIC Database, which appears to go beyond the amount of information traditionally required on the 7520 Forms. EPA spokespersons who explained the need for such a database indicated that the 7520

information has not been used or collated into a report since the mid

- 1990s. EPA has endeavored to work with the Risk Based Data Management System (RBDMS) Workgroup within GWPC to tailor their effort toward a compatible system and these discussions have been somewhat positiv e. , Ongoing discussions have revealed that an opportunity for wide misinterpretations of MIT violations are possible when the EPA Office of Ground Water and Drinking Water shares this data with the Office of Compliance and Enforcement (OECA) and other pro gram or administrative divisions

within EPA. PAM SDW

- 14 (FY2006) asks for the number of wells maintaining MI versus the wells in the inventory while the report wants the number of failures. PAM 17 (FY2005); SDW

- 12, FY 2006 wants UIC program violations for each well

class.

Therefore, one purpose of this study was to provide a three

- year snapshot of reported MIT failures for Class II wells in comparison to the number of wells tested. Another objective was to determine how primacy states characterized MIT fa ilures in terms of how they are channeled through the violation>non

- compliance>SNC>formal

enforcement chain.

STUDY METHODOLOGY

A questionnaire was sent to seventeen primacy states, two DI states and two EPA Regional UIC offices. The questionnair e covered the gamut of issues that might arise from the time a MIT failure occurs, or is discovered through a scheduled test to the ultimate resolution of that failure by compliance interaction between the operator and the Class II regulatory authority. T he survey explored how states with primacy programs are addressing the conduct of MITs and what subsequent actions are taken when test failure has been found. The survey assumed all programs were operating under ongoing State/EPA Agreements and that all th ose programs had submitted original program descriptions, which were approved by EPA before primacy was awarded to the state. One objective of this study was to establish if variations in interpretation of key components

of the MIT violation/SNC definition s by states and/or EPA existed. Those unfamiliar with the “demonstration of equal effectiveness” caveat in the Class II Section 1425 programs might have difficulty in visualizing how USDWs are being protected when the route from a discovery of an MIT failu re to enforcement reaction by the regulatory

### 4

agency may vary somewhat from state to state. However, it is important to remember that each state acquired primacy via a separate application process and that the measure of equal effectiveness is, therefore, d etermined on a state

- by

- state and application

- by

- application basis.

RESULTS OF SURVEY

Number of MITs Conducted and Percentage of Failures

Question 1 : During the Federal Fiscal Year (FFY) period 2003

- 2005 (3 years ending October 1, 2005, how many MIT’s were conducted on Class II wells? Please give the number for each year.

Table I lists the number of MIT's reported by 17 primacy states. It should be noted that the bulk of injection wells in Ohio are under continuous positive annulus pressure

mon itoring program and are not tested on a five

- year cycle. Some states, such as

California test all wells, except steamflood wells

, more frequently than five years, which

skews a five

- year periodicity number but does constitute an MIT for each occasion a tes t is required from the operator. In Colorado, Montana, Utah and Wyoming, wells located on Bureau of Land Management (BLM) are, by mutual agreement, tested for MI by the state. Indian Lands in those and other states are under EPA’s Direct Implementation (DI ) program and are not included in this report.

Question 2(a): Of those wells tested during an official state or DI (five

- year test), how many failures (number or percentage acceptable) of MI occurred?

The second part of Table I lists numbers and perce ntages of MIT failures. The reported failure rate for UIC wells in most states is less than 10% for a given year. A couple of states that use a 5% permissible pressure loss (Louisiana) or no pressure loss tolerance (Texas) have a higher percentage of failu re. Texas, however, does not begin the test until stabilization within the well has been reached. Other factors that might account for variations of failures from year to year are the age of the selected injection wells in the year of the test, the additio n of wells back onto the schedule that were on Temporary Abandonment status during poorer economic times, the scheduling of larger than normal numbers of wells in a given year for various reasons, or the testing of wells belonging to operators who pretest prior to the scheduled test and the pretest failure is not counted into the yearly failure numbers.

Analysis: The figure reported by states for this three

- year period shows that MITs are being conducted on a scheduled basis and that a certain percentage of those tests fail. The numbers of failures that actually become a threat to USDWs or represent external integrity failure represent a small percentage of the total wells that failed a test. The

three

- year glimpse represents about 60% of the wells that sh ould be on the Class II inventory for a given state. Injection wells that are tested more that once during the five

year period should show up as a number in excess of the total state inventory. Wells that are on an alternate program such as Ohio’s continu ous annulus monitoring for what they

### 5

term “Conventional Class II” would have to be accounted for separately in terms of the

five

- year cycle as would the failures that are reported. The results in Table I do not depict a pattern of overall improvement or d ecline in well integrity. The only way to develop some understanding of program progress on MI, i.e., a decline in the percentage of failure would be to account for the number of failures per year/ tests conducted for the first five

year cycle and then com pare each successive year with the corresponding year in the first (original) cycle. States that received primacy after 1988 would have to compare results with EPA’s figures from the DI program. States in this category such as Indiana, Mississippi and Mont ana generally adopted the same pressure loss differential for testing as used by EPA; consequently, the pressure loss policy would be a constant.

Reported Loss of External Integrity

Question 2 (b) How many MI failures involved external breaches of int egrity or other potential threats to USDWs?

Responses to this question indicated that states were either confused by the term “external breaches of integrity” or did not understand that the study was calling for both situations where Part I MI failure may have created flow outside the wellbore and Part II MI tests showed that vertical communication had developed. Eight states (Alabama, Alaska, Arkansas, California, Colorado, Utah, West Virginia, and Wyoming) reported no such failures. Three states (Illinoi s, Montana and Texas) indicated they didn’t track this information. The remaining states reported as follows:

Kansas 2003

- 13 (<0.1%) 2004

- 21 (<0.1%) 2005

- 45 (1.6%)

Louisiana two failures over a three

- year period

Nebraska 2003

- 1 (1%) 2004

- 3 (2.3%) 200 5

- 6 (3.7%)

New Mexico 2003

- 3 (0.3%) 2004

- 0 2005

- 1 (<0.1%)

North Dakota 2003

- 9 (2.6%) 2004

- 13 (4.4%) 2005

- 9 (3.5%)

Ohio four in a three

- year period

Oklahoma 25% estimate of all failures (2003

- 1.2%, 2004

- 1.3%, 2005

- 1.3%)

No analysis of this informati on was made because the results are so mixed and may be incomplete. One conclusion, which can be drawn, is that external failures represent a small percentage of the total number of failures discovered through the MIT program.

MIT FAILURE: VIOLATION OR NOT?

Question 3(a) Does the agency consider any failed MIT a violation?

Question 3(b) Does the agency consider a failed MIT a non

- significant or significant

non

- compliance event?

Question 3(c) Does the agency considers a failed MIT a significant non

- com pliance only i f the failure threatens or actually contaminates a USDW?

### 6

Table II lists the state responses for Questions 3(a) through 3(c). Eleven states consider all MIT failures a violation regardless of seriousness or significance, however; only five

c onsider all failures to be matters of significant non

- compliance (SNCs). Three of those states: Illinois, Indiana, and Ohio are in EPA Region V; the other two are Kansas and

Louisiana. Four states do not consider an MIT failure a violation. Illinois do not consider an MIT failure a violation unless resolution of the problem extends past 90 days but still counts all failures, as SNCs. Oklahoma do es not call an MIT failure a violation unless it was not reported to the Oklahoma Corporation Commission. Texas us es a set of administrative criteria to determine whether a violation has occurred. Every state except Kansas believes that a SNC has automatically occurred if the failure threatens or

contaminates a USDW. Kansas indicated some situations arise where a thr eat would not necessarily count as a SNC.

Analysis: By purest definition, any injection well operating without mechanical integrity is a violation of the Safe Drinking Water Act (SDWA) and regulations promulgated

hereunder. This is because, by logical ex tension, any injection well without MI could potentially result in an endangerment of an USDW. This empirical tenet applies whether the well is in a primacy program under Section 1425 or under an EPA DI state or entity. The purpose of the five

- year MI cycl e is to ensure USDWs will be protected. A practical viewpoint is that once an operator runs an MIT under a state or DI program schedule and fails the test, the zeal and alacrity demonstrated by the operator to bring the well back into compliance (return to MI or proper plugging and abandonment) determines the seriousness of the “violation”. A well may come into a non

- compliance status at any time between tests, and unless the loss of integrity is so apparent that the operator should have known from general well performance or gain or loss of pressure, the return to compliance generally overshadows the violation. Table II indicates primacy state views range from fairly liberal to strict.

### 7 TABLE I

Number of MITs Run (FFYs 2003

- 2005); Percentage of Failed MITs

State Conducted MITs Number/% Failed

2003 2004 2005 2003 2004 2005

Alabama 63 72 89 4/6.4% 6/8.3% 12/13.5%

Alaska 300 431 440 29/9.7% 35/8.1% 64/14.5%

Arkansas 110 147 168 6/5.4% 16/10.9% 11/ 6.4%

California 10,084 11,469 11,336 77/0.8% 80/0.7% 106/0.9%

Colorado 271 194 212 14/5.2% 16/6.0% 28/13.2%

Illinois 1,579 1,214 1,312 91/5.7% 73/6.1% 61/4.6%

Indiana 469 252 224 49/10.4% 12/4.7% 13/ 5.8%

Kansas 2,425 2,497 2,762 149/6.1% 166/6.6% 226/8.1%

Louisiana 1,107 1,319 1,195 168/15.2% 197/14.9 181/15.2%

Montana 288 221 358 *34/12% 27/12% 43/12%

Nebraska 88 130 160 7/8.0% \ 18/14% 22/14%

New Mexico 938 601 1,607 98/10.4% 61/10.1% 272/16.9%

North Dakota 342 295 256 38/11.1% 18/6.1% 17/6.6%

Ohio ** 42 43 42 total of 43 failures in three years (18 per year for 280 wells/ 6%)

Oklahoma 2,855 3,384 2,537 135/4.7% 18 6/5.4% 139/5.4%

Texas 13,102 14,070 15,996 1,451/11.1% 2,782/19.8% 2,151/13.4%

Utah * 123 123 123 8/7.5% reported for each year

West Virginia 60 60 60 1 0 0

Wyoming 591 599 533 61/10.3% 58/9.6% 48/9.0%

TOTAL__

_____________________________________________________________________________

* Montana projects failure rate of 12% for each year; Utah 7.5 % for each year

### 8

** Ohio uses continuous monitoring of the annulus as its means for maintaining mechanical integ rity on its conventional Class II injection wells

### 9 Definition of Significant Non

- Compliance (SNC)

Question 4(a): Please give us your definition of what “Significant Non

- Compliance” (SNC) is insofar as it applies to the MIT portion of the UIC program.

Th is question was included in the survey because it was desirable to determine if most states were using the same definition when applying it to the UIC program in general, and in particular to the MIT program element. The definition 2 b. provided on the bac k of

EPA Form 7520

- 2B states:

“ Mechanical Integrity

- Well operation without mechanical integrity which

causes the movement of fluid outside the authorized zone

- if injection of such fluids may have the potential for endangering a USDW.”

Table III show t hat most states conform fairly close to the above definition and interpret a

SNC to include a failure that threatens to cause contamination or has caused contamination to a USDW. About half the states use the entire six parts of the definition

on EPA Form 7520

- 2B. Even though the definition of a SNC is printed out clearly on the

back of EPA Form 7520

- 2B, some newer Class II program directors are unclear as to what all a SNC definition encompasses

. Some EPA Regions appear to have adopted a sterner, less flex ible approach for primacy states in their region.

Question 4(b) Using this definition, how many SNCs were reported to EPA on Form 7520 or other reporting vehicle for the above three

- year period?

Question 4(c) How many SNCs were recorded for FFY 2005?

T en states reported no SNCs for the three

- year study period. Those that did report SNCs provided the following information:

State 2003 2004 2005 Comments

Alaska three over total period

Illinois 299 61 246

Kansas * 

### 24 22 36

New Mexico three for two year period 1

Nebraska 3 0 0

Ohio 22 for two

- year period 20

Oklahoma 53 for two

- year period 0

Texas 994 966 1,101

* Kansas broke down the FFY2005 statistic as follows: Unauthorized injection

– 6 , 29 for failure to repair in a timely manner and 1 for falsification of information provided to agency. Oklahoma and Texas use the

same criteria to count SNCs.

### 10 TABLE II

MIT Failure Versus Violation: Non

- Significant or Significant?

State Violation ( all MIT Failures) All SNCs Threat to

USDW (only)

Alabama Yes No Yes

Alaska No (generally no USDWs) No Yes

Arkansas Yes No Yes

California No (generally) No Yes

Colorado Yes No Yes

Illinois No (unless 90 days non resolution) Yes Yes

Indiana Yes Yes No

Kansas Yes (by regulation) Yes Yes and No

Louisiana Yes Yes No

Montana Yes No Yes

Nebraska Yes No Yes

New Mexico Yes No Yes

North Dakota Yes No Yes

Ohio Yes Yes Yes

Oklahoma No (unless not reported) No Yes

Texas No (unless of six criteria violated) No Yes

Utah Yes (but depends upon geology) No Yes

West Virginia No No Yes

Wyoming No No Yes

### 11 TABLE III

STATE RESPONSE

- DEFINITION OF SNC for MITs

Alabama Loss of MI threatens to contaminate or contaminates USDW

Alaska Threatens to contaminate USDW; failure to notify agency of failed pre

- test; failure to do

test on schedule; falsification o f records

Arkansas Loss of MI threatens to contaminate or contaminates USDW

California Loss of MI threatens to contaminate or contaminates USDW; also applies the six

definitions of SNC on EPA Form 7520

- 2B

Colorado Potential or actual threat to USDW

Ill inois Uses definition of SNC from EPA form 7520

- 2B

Indiana Uses definition on EPA Form 7520

- 2B

Kansas Potential or actual threat to USDW, also broad definition on E PA Form 7520

- 2B. Not

repaired in a timely manner

Louisiana All failures are SNC Violatio ns; only those that are threats to USDWs are serious

Montana Potential or actual contamination of USDW

Nebraska Formal enforcement due to failure to correct MIT failure in timely manner.

New Mexico Potential threat to USDW

North Dakota Loss of MI threa tens or contaminates aquifer

Ohio Uses definition on EPA Form 7520

- 2B

Oklahoma Uses same definition as Kansas and Texas

Texas Uses same definition as Kansas and Oklahoma and failure to repair well in six months

Utah If failure leads to a contaminated aquifer

West Virginia Not correcting an MIT failure

Wyoming Loss of MI resulting in USDW contamination threat

### 12 Scheduling of MITs and Pre

- Testing Policy

Question 5(a) How far prior to a state/EPA

- scheduled test is the operator notified of the upcom ing date?

Table IV presents responses from states regarding the amount of lead

- time given an operator for a state scheduled MIT. The advance notification serves two primary purposes: the operator is given a directive as to the amount of time available to set up the test and the state is able to plan its test

- witnessing workload. Most states give the operator advance notice ranging from a week to around 90 days. Colorado, Illinois, Montana, and Ohio (for Class II Annular Disposal wells only) notify operator s at the beginning of a year of MITs to be run during the year. California and Alaska put the onus on the operator to maintain a well’s MIT schedule and to notify the state agency when the test is to be run with enough time ahead to allow a state inspector opportunity to witness. Kansas gives their District Offices an annual schedule of MITs to be conducted during the year and the operators receive 30

- day notices from the District office.

Question 5(b) If an operator conducts an MIT prior to the scheduled test, is this an acceptable action or a violation of state regulations?

Question 5 (c) What is your agency policy?

Question 6 (a) Does a violation occur if the operator, in conducting the pretest under (5) above, finds an MIT failure, subsequently repa irs it so that no failure occurs during the official test, but doesn’t report the corrective work prior to the official

test?

Question 6(b) Does the state have a requirement, not necessarily related to UIC, which requires reporting of work done on a well?

Responses to Questions 5(b) through 6(b) are also summarized in Table IV. Most state regulations or policies do not prohibit an operator from conducting an MIT (pre

- test) before the official state scheduled test; however, several states consider a pre

- t est failure to be a reportable violation. Kansas, for example, considers a pre

- test MIT failure to be a reportable event and failure to report is the violation. Texas tries to discourage non

reporting of pre

- test MIT failures. Several states consider corre ctive action taken as a result of a MI pre

- test to be a form of workover and, therefore a required reported event. Most states allow pre

- test through unwritten agency policy; however, the procedure for an operator to follow once a failed is discovered is c learly defined in written policy or regulation. Arkansas requires any pre

- test to be witnessed; otherwise it does not qualify

as a valid test.

### 13 TABLE IV

PRIMACY STATE POLICIES ON MIT SCHEDULING AND PRETESTING

Alabama Two weeks ahead, one year for oper ators with many wells. Pre

- testing may be

acceptable if operator gives prior notice to agency. State/EPA Agreement (SEA) requires witnessing of Part I of all SWDs and 75% of EOR wells. Charting of unwitnessed tests may be required.

Alaska Operators set te st schedule and notify AOGCC 24 hours prior to test. Pre

- testing is

acceptable and is encouraged. Pre

- testing allowed by policy.

Arkansas Minimum of 10 days before; allowance made for testing well in same area. By policy,

agency staff must witness all MI Ts; consequently a pre

- test by the operator would not be accepted if unwitnessed.

California Operators maintain frequency of tests and agency send delinquency notice if a test is 30

-

days overdue. Pre

- testing acceptable, however all MIT results have to b e submitted to agency. Pre

- testing is not a common practice

Colorado Operator received ten

- day notice of MIT. COGC does not accept pre

- tests and considers

any MIT official. Operators of unwitnessed tests must submit pressure chart.

Illinois Operators n otified at beginning of each year of MITs to be conducted. Pre

- testing

acceptable, however, the next 5

- year clock starts from the test. Operator required to file a new Completion Report for a workover. Pre

- test failure not a violation.

Kansas Variable sch edule but operator usually notified 30 days prior to test by District Office.

D.O receives an annually list of wells to be tested. No violation to pre

- test, however, by regulation any MIT failure on pre

- test is considered a violation if not reported.

Loui siana 30

- 90 days prior to test. Operators encouraged to pre

- test by agency policy.

Montana Operators notified at beginning of year of all wells to be MITed. Acceptable for operators

to pre

- test by agency policy.

Nebraska Approximately 30 days. Pre

- testin g acceptable but agency policy required test to be

witnessed to be valid.

New Mexico Notification of operator 14

- 30 days prior to scheduled MIT. Pre

- tests generally

acceptable but generally occurs on well workovers where retests are required prior to

rei njection.

North Dakota Notification generally a few days in advance but can require “surprise” MITs. Pre

- tests

are acceptable and failure not a violation. Test reported as workover activity

Ohio Operators of annular disposal wells are notified of impend ing test in October of the year

previous to when the five

- year MIT is due. Pre

- tests are acceptable, but failure to conduct

an MIT is reported as violation. If operators do not conduct an MIT, the AD authorization

is revoked and the wells revert back to a normal producing w ell. They are, however, considered “temporarily abandoned” AD wells and can re

- test and pass MI and get authorized. Workover reports are required. All MITS are witnessed by Division representatives.

### 14

Oklahoma Notification of operators don e quarterly for MITs to be done during that quarter. Pre

- test

is acceptable if OCC District Office received prior notification. OCC rules allow MITs done out of schedule. No workover reports are required.

Texas Operators of wells on annual MITs are notifi ed 90 days in advance and wells on a five

year clock are notified 6 months prior to test. Pre

- tests are acceptable, but TRRC staff Tries to “discourage” non

- reporting of failures. Such unscheduled MITs are entered as a failure. Workover reports are requir ed.

Utah Notification of operator two weeks prior to MIT. Pre

- test acceptable but witnessing still

required. Pre

- test failure may count as a violation. Workover reports required.

West Virginia Sixty days, but operators want up to 6 months if they agency inspectors will be

witnessing. Pre

- test acceptable but no policy. Failure could be a violation unless the operator shuts down well. Workover report required by regulation.

Wyoming Notification of MIT at least three weeks before test. Pre

- tests are accepta ble by policy,

and failures not counted as a violation. Workover reports required by regulation.

### 15 Allowable Pressure Decline During State Scheduled MI Tests

 Question 7 (a): What percentage of pressure loss on a Class II well MIT is acceptable to the State/EPA?

Table V shows the reported permissible loss for each surveyed state and other states where recent information was available. The percentage of permissible loss varies widely across states; however, those state s that received primacy in the 1982

- 1984 period generally allowed a larger percentage loss per unit time. Texas and Utah allow no pressure loss once the well is stabilized.

Question 7 (b): Is this percentage determined by state statute; regulation, or agency policy?

Most states reported that the permissible loss was guided by agency policy. One state, Kansas, uses historical experience to partially guide the policy. Only one state (Ohio) had the test limits established by state statute and five (Alabam a, Alaska, Montana, Indiana and Oklahoma) by regulation. Alabama additionally uses Oil and Gas Board field orders to address certain sensitive areas where less permissible losses of pressure should be allowed. States within EPA Region V (Illinois, Indiana, and Ohio) tolerate only losses of 5% or less (3% in the case of Indiana). EPA Regions did not respond to the questionnaire with numerical answers, however, past information indicates that EPA Regions require no greater MI loss than 5 30 minutes in some D I states and 3% in others.

Question 7 (c): What tests (i.e.) temperature, sonar, etc.) are used, other than a one

time inspection of cement records, to determine continual external MI?

Most states surveyed (12 of 17) allow the operator to use the Radio active Tracer Surveys (RATS) to demonstrate external MI. A slightly lesser number (10) allow the use of temperature logs. A few states allow the use of spinner surveys, noise logs, oxygen

activation (OA) logs, casing inspection logs and cement bond logs. Only California indicated that the operator had to run RATS or other approved test on Class II disposal wells every year and on EOR water injectors every two years. The primacy states of Region V (Illinois, Indiana and Ohio) indicated that cement records w ere the only test of external MI used. West Virginia uses an open annular valve to determine MI.

### 16 TABLE V

Permissible Pressure Loss During State Required MIT

State Permitted Loss Basis for Requirement

Alabama 10%/30min@ 1500 psi max State regulation

10%/30min@ 300 psi (Pollard Field) O&G Board Field Order 0%/ 30min@ 500psi (Citronelle Field ER wells) O&G Board Field Order

Alaska 10%/30 min after pressure stabilized Regulation 20 AAC 25.412 (c)

Arkansas 10%/30 min Policy

California 10%/10min@ 200psi ( both water &gas inj.) Policy

Colorado 10 %/15 min Policy & Primacy Program

Illinois 5%/30min@ 300psi State regulation

Indiana 3%/30 min State regulation

Kansas 15%/30 min (less for annula r MITs) Policy, Historical Experience

Louisiana 5%/30 min Policy

Mississippi 3%/30min State/EPA Primacy agreement

Montana 5%/15 min Regulation

Nebraska 10%/30 min Policy

New Mexico 10%/30 min Policy

North Dakota 10% /30 min Policy

Oklahoma 10%/30 min OCC Regulations

Ohio 5%/ 15 min; Annular Disp 1%/ hour State Statute

Texas 0%/30 min after stabilization Policy

Utah 0%/30 min Policy

West Virginia 5%/20 min Policy

Wyoming 10%/ 15 m in Policy

### 17 Number and Nature of Contamination Cases

Question 10: How many contamination instances have been discovered through MI testing during the FFY 2003

- 5 period and what was the nature of the failure(s)?

Out of seventeen reporting states, only Louisiana reported contamination from a hole in the casing of an annular injection well. Recent peer or STRONGER reviews of three other states reported no pollution incidents involving injection wells. One state, Texas, does not break out failures i n terms of “contamination cases” or method of

contamination causation.

Criteria: Escalation of Violations From Compliance to Formal Enforcement

Question 8 When or under what circumstances does a MI failure occurrence go

from an instance of non

- compli ance to a subject of formal enforcement action? Please provide examples of formal enforcement actions (Orders) that have actually been used to get a Class II well back into compliance.

Question 11: What criteria are used by the state to determine whether an MIT violation escalates from a matter of compliance to one of formal enforcement?

Table VI contains responses from primacy states regarding the normal evolutionary processes available when a MIT failure (non

- compliance event) cannot be resolved

withou t invoking some type of formal enforcement measure. Most responding states did not provide actual examples of formal enforcement actions that had been issued for MIT violations. Table VI also shows that states allow anywhere from 30 days to 270 days (avera ge about 90 days) for the operator to satisfactorily resolve an MIT failure. Small additional amounts of time are permitted if the operator has encountered “unexpected circumstances” and the agency has not determined the delay to be a stall tactic. Ohio do es issue Administrative Orders if the failure is not corrected within 48 hours. Utah gives the operator fifteen days to resolve the failure or submit a remediation plan. Ten states give the operator up to 90 days to repair or plug a well and abandon it und er state regulations. This is coincidentally the time allotted for non

- compliance without entering the matter on a 7520 form as a SNC. Some states use fines and penalties to “encourage” the operator back into compliance. Some states do not specify a lengt h of time for a return to compliance, but correspondence with the operator would generally contain a deadline for the expected return to compliance.

Discussion: Most states have an Administrative Procedures Act that governs the protocol for an agency t o follow once the need for an enforcement action has been determined. This would include the content of enforcement orders; hearing and appeal opportunity afforded the operator and the determination of standing of various parties. All Class II primacy stat es have entered into an Enforcement Agreement with EPA, which covers the content of any Administrative Procedures Act and any interagency and

intra

- agency policies that exist. When any UIC compliance matter is not resolved in a

### 18

prescribed amount of time or when contamination of water and/or environmental resources is sufficient to require corrective action on the part of the operator, each state agency selects the enforcement tool most effective to correct the situation. The primacy states, as this study sh ows, use a wide range of enforcement measures to effect correction of a failed MIT when the operator either chooses to or cannot comply with the initial directives of the agency.

SUMMARY AND CONCLUSIONS

1) This survey represents only a three

- year snaps hot of MI testing in a majority of the primacy states. MIT testing in many of these primacy states is in the fifth cycle of the five

- year testing program. Were a different period, or a longer period selected, the failure rates may have been about the same or could have varied somewhat depending upon the population of wells being tested. Historical comparison of past cycles with the same groups of wells may provide a clearer picture of what the MIT failure percentages represent. However, care should be

take n when making abstract comparisons for each year. Depressions in the oil industry during the period 1986 through 2003 caused many injection wells to be placed on an idle well or temporary abandonment program and as economic fortunes improved many of these wells were MITed and returned to a cycle. In some cases, perhaps frequently, these wells ended up in a different testing group than the original scheduled group. The abstract number of MIT failure versus

the number of wells tested may indicate program perf ormance, but may also lead a reviewer of the information to visualize a positive or negative program performance trend when none exists.

2) Most primacy states have regulations, policies or other methods to resolve MIT

failures within a reasonable amount of time (generally 90 days or less). This study had no vehicle of indicating or judging whether or not Class II primacy states judicially and effectively resolve MIT failures in accordance within the times established by policy, however, EPA Regional UIC staf f probably do have this information since they perform annual audits on each state program and prepare a report documenting their findings. Any deficiencies in how a state resolves MIT failures should be noted in an audit report with any expectations for c orrection. This study indicated the percentage of MIT failures over any given period of time and in a given state setting, which may have a potential to affect ground water reserves, is very small.

3) Most of the states surveyed use definition of a SNC on th e back of the EPA 7520

- 2B form. Only one of the six

- part definition of a SNC relates directly to the conduct of MITs, however, a few states assume that if the operator fails to obtain a permit for an injection well or falsifies any information submitted t o the state, including data from the MIT, that action is tantamount to a non

- demonstration of well integrity.

### 19

4) Most states believe that a failed MIT is automatically a violation, a few states believe the actual violation occurs when the operator discover sa failure either through pre

- test or official state ordered test and does not take corrective action and in the case of a pre

- test, fails to notify the state agency of the work done to repair the problem. In many cases, neither the operator nor the state knows the extent of MIT failure until the well is tested, because the day

- to

- day performance may not indicate a failure has occurred. The term “violation” may range from academic to practical definitions, depending upon the viewpoint of the state, or perha ps by the terms of the primacy agreement with EPA.

5) The information gained through this study demonstrates the dangers, which may exist if EPA or any UIC Class II regulatory state furnishes abstract MIT failure data to the public, stakeholder groups or to federal and state policy makers. EPA is currently building a National Data Base that will be accessible to those outside the program and mechanical integrity of the injection wells is the crucial element of demonstrating protection of USDWs. A true picture of ground water protection may not occur if all MIT failure are viewed with equal seriousness; i.e., a gross comparison of the number of failures to the number of tests.

6) A group of Class II representatives within GWPC should continue to work with

EPA to determine whether or not past state

- federal data transfer management problems have originated through the wrong selection of data elements to properly describe the UIC Class II program performance or from lack of consistent management of the data after sub mission by the state. The Class II UIC program is over twenty years old and EPA is still struggling with developing a database that articulates the true picture of long

- term program success.

### 20 TABLE VI

CRITERIA FOR ESCALATION

- COMP LIANCE TO ENFORCEMENT

Alabama Failure to shut in well when MI was lost, failure to restore MI within 90 days as required

by State/EPA UIC Enforcement Agreement; reactivation prior to reauthorization

.

Alaska Deterrent to similar behavior and protect MI; past compliance history, seriousness of the

incident, potential for significant harm, benefit derived by the operator. Failure to repair, retest or plug well, contamination of USDW.

Arkansas If well is not successfully repaired and retested within 90 day s, “Authority” to inject is

cancelled and a NOV is issued. The same 90

- day criteria apply to a well that wasn’t tested according to state schedule.

California A formal enforcement action if health, life, property or natural resources are threatened.

Fail ure to comply with Division of Oil, Gas, and Geothermal Resources (DOGGR) requirements, permit revocation and civil penalties for unauthorized injection. Formal orders are rarely issued.

Colorado Failure to comply with Colorado Oil and Gas Conservation Co mmission (COGGC)

requirements and deadlines. NOV s are issued giving 6 months to repair, If no action, an Administrative Order of Consent is issued with fines, compliance schedules and possibly

bond claim.

Illinois If well is not repaired or plugged with in 90 days of failure discovery

Indiana Formal Notice of Violation (NOV) giving sixty days to repair and retest the well or plug

it. Repeat violators can be issued an order banning them from producing in the state.

Kansas If well not repaired or plugged within time period prescribed by KCC, monetary fines up

to $10,000 per day can issued or loss of operator license. Generally, 90 days are given to repair, retest and /or plug the well. The state can plug the well with its own funds and

seek reimbursement f

rom the operator.

Louisiana NOV at time of failure; 90 days to repair or plug; operator could receive a compliance

order that includes civil penalties or an revocation of authority to transport oil or gas.

Mississippi Has 90 days to repair or plug well with MIT failure. Permit is suspended until action is

taken. Show Cause hearing before Board is taken if operator fails to comply with 90 days. Board may revoke permit.

Montana If too much time has elapsed and the well have not returned to compliance. T he MBOGC

gives the operator 180 days to repair or plug. Failure to comply will result in the Board giving one month to comply plus fines.

Nebraska No action taken by operator at the end of required time (90 days). Failure to respond to

agency request.

N ew Mexico Any SNC or failed MIT not repaired within 90 days. Failure to comply results in Shut

- In

Order.

North Dakota Seriousness of violation; Threat to USDW, not correcting problem within 270 days.

### 21

Ohio All failed MITs are issued Administrative Orders unless repair and retest is immediate

(usually within 48 hours) Further enforcement action is taken if the operator fails to repair and retest the well.

Oklahoma No response by operator to written notice from OCC; then agency proceeds with formal

enforc ement action. OCC policy is to allow 30

- 90 days for compliance.

Texas If operator is out of compliance for 6 months; i.e. fails to repair or plug the well; a 30

- day

severance letter is enforcement action.

Utah Fifteen days to remediate fail well or sub mit a remediation plan. If not corrected, formal

action by Board or informal meeting with operator.

West Virginia Gives 180 days to repair or plug; if operator fails to comply with Board requests, they are

fined and given a 30 days extension to correct p roblem.

Wyoming If operator does not repair and retest well or plug within 90 days or fails to perform MIT.

Can levy fines up to $5,000 per day, invoke civil penalties and order the operator to

submit a schedule for remedial work.