FREQUENTLY ASKED QUESTIONS (FAQ S) REGARDING THE EPA COALBED METHANE (CBM) EXTRACTION SECT OR DETAILED QUESTIONNAIRE

This document is designed to supplement the instructions contained in the CBM detailed questionnaire, as well as the Instruction Guide for the Detailed Questionnaire. Sections 1 and 2 provide answers to frequently as ked questions related to the de tailed questionnaire. Section 3 provides a list of acronyms used in the CBM detailed questionnaire, and Section 4 provides definitions for selected key terms used in the CBM detailed questionnaire.

1. GENERAL QUESTIONS

Background Questions

What are ELGs?

Effluent limitation guidelines a nd standards (ELGs) are discharge limits for categories of dischargers of wastewater. Depending on the industrial category, the discharge limits may

cover process wastewater, stormw ater, and/or cooling water. Th e limits are incorporated into National Pollutant Discharge Elimination System (NPDES) permits.

Do I have to fill out the questionnaire?

Yes. The U.S. Environmental Protection Agen cy (EPA) is conducting this data collection under the authority of Section 308 of the Clean Water Act or CWA (Federal Water Pollution Control Act, 33 U.S.C. Section 1318). You must respond to this questionnaire within 60 days of receiving it. For more information, please see the instruction bookl et provided with the questionnaire.

Do I have to answer all the questions?

Yes. You must complete all the questions as in structed. If the information for a question is not available or unknown, provide a comment in the applicable Comments section as the response to the question.

Why do I have to fill out the questionnaire?

EPA is conducting this data collection under the authority of Sec tion 308 of the CWA (Federal Water Pollution Control Act, 33 U.S. C. Section 1318). You must respond to this questionnaire within 60 days of receiving it. For more information, please see the questionnaire General Instructions. EPA plan s to use the “Coalbed Methane Extraction Sector Survey” to collect information on ge ographical and geologic differences in the characteristics of CBM produced waters, enviro nmental data, current regulatory controls, and availability and affordability of treatment technology options.

1Why did I get a questionnaire?

Detailed questionnaire recipien ts were primarily selected from respondents to the CBM screener questionnaire. Note that EPA also se lected a small number of projects to receive detailed questionnaires based on publicly available information.

How long do I have to comp lete the questionnaire?

The questionnaire must be completed and return ed to EPA within 60 days, calculated from the date of receipt.

How long will it take to complete the questionnaire?

EPA estimates an average of approximately 80 hours per response to generate, maintain, retain, or provide information in the questionnaire.

What if I need more time to complete the questionnaire?

If you wish to request an extension, you must do so in writing within 30 days of receipt of this questionnaire. For more information, plea se see the questionnair e Introduction, When to Return Questionnaire subsection.

How many sites have recei ved this questionnaire?

The detailed questionnaire will collect fina ncial and technical da ta on approximately 250 CBM projects across the country.

I received more than one detailed questi onnaire; do I have to fil l out all of them?

Yes, some establishments received more th an one questionnaire since response to the screener survey indicated you operated projects in more than one basi n and/or state. If you have any questions about the ba sins and/or states that our records show you operating in, please contact the Help Line (1-800-864-9230 or cbmdetailed@pgenv.com ) for assistance.

How will the survey results be used?

EPA will use the information collected in the survey to determine whether to initiate a rulemaking to potentially revise the ELGs for the Oil and Gas Extraction Point Source Category (40 CFR Part 435) to include limits for pollutants discharged in CBM produced

water.

The technical data collected with this survey will be used to determine the characteristics of CBM produced water, potential environmental imp acts, existing management, beneficial use, and disposal practices for CBM produced water, a nd the related costs for this industry sector.

The financial and economic data collected in th is survey will be used to characterize the

2economic status of the industry sector and to estimate the possible economic impacts of potential technology and be neficial use options fo r CBM produced water.

Can I obtain results of the survey?

EPA is posting project status and supporting information at http://www.epa.gov/guide/cbm/. Please contact Carey Johnston, EPA at johnston.carey@epamail.epa.gov for additional

information.

Completing the Questionnaire

How can I get assistance to comple te responses to the questionnaire?

You can obtain assistance to complete the que stionnaire using EPA’s Coalbed Methane Help

Line. The email address is cbmdetailed@pgenv.com , and the phone number is 1-800-864- 9230. The EPA Coalbed Methane Help Line is operated by PG Environmental LLC and Eastern Research Group, In c., contractors to EPA.

Where do I send the completed questionnaire?

Keep a copy and mail the completed questionnaire (hard copy or electr onic file on CD) to:

U.S. Environmental Protection Agency CBM Industry Detailed Questionnaire c/o PG Environmental, LLC 570 Herndon Parkway

Suite 500 Herndon, VA 20170

Remember to enclose a hard-copy signed certification statement, even if all other files are being submitted electronically.

What exactly do I need to include in my submission package to EPA?

Part A (CBM Project Information), in cluding a signed certif ication statement Part B (Financial and Economic Information) Part C (Produced Water Management information Part C data attachments (note th at not all may be applicable) – Operations brochure, pam phlet, general description; – Produced water treatment flow diag rams or narrative descriptions; – Current surface water discharge NPDES permit or discharge agreement; – Discharge monitoring report (D MR) data for 2006 through 2008; – Water quality data collected from water monitoring locations; – Produced water treatment operation and maintenance logs; – Pollution prevention or management practices policies or data; and – Whole Effluent Toxicity Information.

3If available, EPA prefers that data be submitted in an electronic format (e.g., Microsoft© Access, Microsoft© Excel, non-scanned PDF).

Is there an electronic version of th e detailed questionnaire available?

Yes. EPA has made an electronic version of the detailed questionnaire available in Microsoft©Word format. If you would like an el ectronic version of the questionnaire, it is

available on the EPA Web site at: http://www.epa.gov/guide/cbm/

.

Can I fill out a hard-copy questionnaire rather than the electronic version?

Yes, however, EPA encourages you to use the electronic format. The electronic version is designed to reduce the burden associated with completion of the survey – for example, changing one of your responses requires significantly less effort in the electronic version than in a hard copy form.

Can I get another hard copy of the questionnaire?

Yes. A printable version and an electronic vers ion of a blank questionnaire are available on

the EPA website at http://www.epa.gov/guide/cbm/

You may also request a bla nk questionnaire by email to cbmdetailed@pgenv.com , by phone to 1-800-864-9230, or by writing to:

U.S. Environmental Protection Agency CBM Industry Detailed Questionnaire c/o PG Environmental, LLC 570 Herndon Parkway

Suite 500 Herndon, VA 20170

However, a request for additional blank copies does not change your due date for returning the questionnaire.

What if my response is larger than the space provided in the hard-copy survey?

To complete multiple copies of specific que stions, photocopy the question page(s) before writing on it and number the photocopied pages in the upper right hand corner “Copy _of_”. Insert copies in sequence behind the origin al. You may also write “see comments” and provide extended answers in the “Comments” section.

What if my response is larger than the s pace provided in the electronic survey?

You should write “see comments” and provide ex tended answers in the applicable Comments sections of the questionnaire.

45 Confidential Business Information

What about submitting confidential business information (CBI)?

If you wish to protect the information from public disclosure, you may assert a claim of business confidentiality covering all or part of the information you submit. This should be

done at the time the information is submitted.

Regulations regarding data confidentiality and di rections for claiming data confidentiality are discussed in the general instructions, C onfidential Business Information subsection. Regulations governing the confid entiality of business informa tion are contained in 40 CFR Part 2, Subpart B.

You may claim all eligible data as CBI using a global check-off box, or you may claim specific response information as confidential using the question-sp ecific CBI check-off box. If a response is not marked as confidential (eith er by the global check box or through specific CBI identification of a question re sponse), EPA assumes that the re sponse is not confidential.

What assurances do I have that CBI will be protected?

Regulations governing the handling of confiden tial business information are contained in 40 CFR Part 2, Subpart B. Please refer to the questionnaire Introducti on, Confidential Business Information subsection, for a summary of these regulations.2. PART SPECIFIC QUESTIONS

2.1 Part A: CBM wells selected for questionnaire and certification

Question A1-2

What if I don’t have any proj ects listed in Table A-1?

If no projects are listed in Table A-1, you di d not respond to the scre ener questionnaire on CBM projects and should proceed to question A1-3.

What if I don’t recognize the pr oject identifier in Table A-1?

The identifier for the project is a name or number that was provided in the screener questionnaire as the project identifier. If no iden tifier existed, identifiers A, B, C, etc. were assigned. If you are still having problems figuring out the proj ect identifiers please contact the EPA Coalbed Methane Help Line (1-800-864-9230 or cbmdetailed@pgenv.com ).

I’m not sure we are the owner or opera tor of CBM wells. What does this mean?

The survey defines “owner or operator” as the entity listed with state oil and gas commissions, e.g., in well drilli ng or production databases. If you believe another firm might be the owner or operator of CBM wells (for example if you sold CBM wells to another firm in 2008), please contact the EPA Coalbed Methan e Help Line. For more information on what EPA means by owner or operator, se e Page B-2 of the questionnaire.

Question A1-3

What if I do not operate any CBM wells?

Please state that you do not opera te any CBM wells in the Comm ents section on Page A-4. If you did not operate CBM wells because you sold CBM wells prior to 20 08, please indicate in

the Comments section that CBM wells were sold, to whom the wells were sold, and when. Then sign the certification statement on Page A-5 and return the survey to EPA.

I’m not sure whether we should be considered to own or operate CBM wells; we sold/acquired wells so we have only a few weeks/months of data?

Even if you only owned or operated wells br iefly in 2008, please indicate the month bought or sold and to whom or from whom you bought or sold the wells in the Comments section to Part A on Page A-4. Please continue with the survey, providing the information over the months that you operated the wells.

6I’m not sure we are the owner or opera tor of CBM wells. What does this mean?

The survey defines “owner or operator” as the entity listed with state oil and gas commissions, e.g., in well drilli ng or production databases. If you believe another firm might be the owner or operator of CBM wells (for example if you sold CBM wells to another firm in 2007), please contact the EPA Coalbed Methan e Help Line. For more information on what EPA means by owner or operator, se e Page B-2 of the questionnaire.

If I only have a working interest and do not opera te CBM wells, does this mean I should provide information in Table A-2?

According to data collected by EPA, in 2007 you were listed by the State Agency that permits and collects production data for these wells (e.g., the state Oil & Gas Commission) as the operator or responsible party for CBM well permits. Generally, this should be the owner or operator of the well. If your st atus as the listed party has ch anged since that time, please contact the EPA Coalbed Methane Help Line for further assistance and instructions. Otherwise, please continue with the surve y. You might need to obtain some of the information from your operator if you own but do not operate the wells in question.

I am not sure what is meant by “project?”

If you are not certain, please contact the EPA Coalbed Methane Help Line at 1-800-864-9230

or cbmdetailed@pgenv.com for assistance.

I am a contract operator of CBM wells, and I do not own a working interest. Should I be providing the information in this survey?

Yes, if you are the listed opera tor according to the state agen cy (e.g., the state Oil & Gas Commission). If you if you have any concerns with answering the questions that follow, you can contact the EPA Coalbed Methane Help Li ne for further assistance and instructions.

I operate CBM wells but they did not produce CBM or water in 2008. Do I still need to complete the questionnaire?

Please provide a count of wells that have not been permanently abandoned and indicate that the wells did not produce either CBM or wate r in 2008 in the Comments section on Page A4. Then sign the certificati on statement on Page A-5 and return the survey to EPA.

I operate wells where a portion of the gas from these wells is considered conventional (or another unconventional gas), not CBM. Do I continue with filling out Table A-2?

If any of the wells are producing gas and/or water from coalbed strata, pl ease continue with completing the survey.

7In 2008, wells in my project(s) produced only water and no CBM. Do I continue with filling out

Table A-2?

If these wells are dewatering a coalbed stratum for the ultimate purpose of producing CBM, please continue with completing the survey.

In 2008, the wells in my project were drilled but were not yet producing either CBM or water. Do I continue with answering Table A-2?

If these wells are now producing or are expect ed to produce CBM gas, please indicate the number of such wells and provide an explan ation for why they were not producing in 2008 (e.g., no pipeline available) in the Comments sect ion on Page A-4. Then sign the certification statement on Page A-5 and return the survey to EPA.

Certification Statement

Who should certify the questionnaire?

The individual that directed or supervised que stionnaire preparation should read and sign the certification statement. The signa tory should be a corporate o fficial or their authorized representative.

I didn’t complete the questionnaire my self. How can I sign the certification?

Your signature means that to the best of your knowledge, employees under your supervision properly completed the questionnaire.

Because the electronic questionnaire was broken out into two parts fo r technical and financial information, does each section need to have the Certification Statem ent signed or will one Certification Statement for th e whole document be adequate?

One signed Certification Statement is adequate for the whole questionnaire.

2.2 Part B: Financial and Economic Information

Part B, Section 1

I am the contact for Part B, Section 2 (or Part B, Section 3). Do I fill out Question B1-1 or B1-2?

If you are the contact for Part B, Section 2 (fir m-level financial information), fill out Question B1-1. If you are the contact for Part B, Section 3 (project-level financial information), fill out Question B1-2.

89 Part B, Section 2

Questions B2-1 through B2-3

I don’t understand how to answer questions B2-1 through B2-3?

There may be some very complicated corporate structures, but EPA is only looking to identify the basic structure—the next corpor ate level above the respondent and the highest corporate level over all.

See figures 1 through 3 for some of the ownership structures EP A would expect in terms of the simple connections EPA is seeking.

Example 1: ( figure not shown) XYZ Corp. is indepe ndently owned and operated. No other company owns this firm as a subsidiary, either partially or wholly, although various individuals and companies might own publicly traded shares in this firm. No one company owns a majority share of stock, however. Such a firm checks “Independent owner/operator” and skips to Question B2-4.

Example 2: (Figure 1) ABC Texas, LLC, is a joint venture operated by ABC, Inc. and Large O&G Texas Co. These companies are in turn owne d (with no to several intermediary firms) by Major Oil and Large O&G Corp., which are the highest level of the corporate structure, and thus the ultimate parent companies of the two owner-partner firms. ABC Texas checks “Joint Venture,” and answers Question B2-2 (whi ch asks for owner firm) with ABC, Inc. and Large O&G Texas Co. Such a firm also answers Question B2-3 (which asks for ultimate parent companies) with Major Oil Corp. a nd Large O&G Corp. (or however many ultimate parents might be involved—there may be no ul timate parent for one or more of the owner firms). If no ultimate parents are involved, th e answer to Question B2-3 is “none.” The respondent for a joint venture firm might not know the ultimate parent company of one or more of the owner-partners. As long as Question B2-2 is answ ered, answering “unknown” is acceptable.

Example 3: (Figure 2) ABC Powder River is not inco rporated but is a division of ABC, Inc. Such an operation should check “Division or pr ofit center.” Question B2-2 should list ABC, Inc., as the owner firm, and Question B2-3 should list the ultimate parent company (e.g., Major Oil Corp.). If no higher corporate level ex ists, then Question B2-3 should be answered

“none.”

Example 4: (Figure 3) CBM Production Co. is wholly or partly owned (majority interest) directly by Large O&G Corp., which is the high est level of corporate ownership. A minority portion of CBM Production Co. might also be publicly owned through publicly traded shares. Such a firm should check “Subsidiary firm,” and should answer Question B2-2 with Large O&G Corp. In this example, Large O&G Cor p. has no higher corporate level, so Question B2-3 should be answered “none.” However, Question B2-3 should be answered with the name of the ultimate parent if, for example, Large O&G Corp. were owned in turn by another

company.Major Oil Corp.ABC, Inc.ABC Powder RiverFigure 2. Division with Owner Firm and UltimateParentMajor Oil Corp.Large O&G Corp.ABC, Inc.Large O&G Texas,Co.ABC Texas, LLCUltimateParent(s)OwnerFirmsJoint Venture(Immediate Owner/Operator)Possible IntermediateOwnersFigure 1. Joint Venture with Owner Firms and Two Ultimate ParentsUltimateParentPossible IntermediateOwnersOwner FirmDivision(ImmediateOperator)Large O&G Corp.CBM ProductionCompanyOwner FirmSubsidiary(Immediate Owner/Operator)Figure 3. Owner Firm Where an Immediate Subisidiary is the Owner/Operator10Question B2-4

My firm is owned (in part or in whole) by another firm. Can my firm qualify as a small business?

Your firm might be able to qualify as a small business, but only if your firm has no affiliation with a large firm. If your owner firm owns a majority share and is a large business, your firm

is considered affiliated with a large firm and cannot claim to be a small business. In some instances, even if your firm is minority owned by a large firm, it can be considered affiliated if that minority share is the largest share he ld. Even if you have no owner above your firm, but the officer of a large firm holds an officer position in your firm, you are likely to be considered affiliated and might not be consider ed a small firm. The defining condition is the

extent of control the fi rm has on your operations.

My firm is foreign-owned. If we meet the size standards, are we classifie d as a small business?

Only in rare instances can a foreign-owned firm meet the conditions for being a small business, because that firm must (1) meet the size standards and also (2) provide a significant contribution to the U.S. economy. If you are fo reign-owned, check the box marked “no.”

Question B2-6

I am a contract operator for the surveyed project(s), but I own working interests in other CBM projects. Do I answer yes or no to the quest ion of whether I am a contract operator?

OR I own working interests in conventional oil and ga s projects, but not CBM projects. Do I answer yes or no to the question of whet her I am a contract operator?

If you own no CBM wells, either outright or with a working interest, you are a contract operator with respect to CBM operations, and should answer “yes” to Question B2-6. If you own even a small working interest in one CBM well (whether you operate it or not), please

answer “no.”

Question B2-9

I have part-timers at my operation. How do I account for them?

You can either use full time equivalents, in which total labor hour s over all personnel are divided by 2080, or you can provide fractional employees (for ex ample, if you employ 2 full time and 1 half time employee, you can indicate 2.5 employees.

11Question B2-10

I truck all my water, or a contractor hauls all of my water, from CBM production to a

commercial Class II well. Does this mean I c an skip the rest of Section B, Part 2?

Yes. Check the yes box in Question B-2-10 and continue with Section B, Part 3

I have projects in two basins, one where I di scharge all produced water and a second where I inject all produced water. You have asked me to respond only for my project in the basin where I inject all produced water. Does this mean I can skip the rest of Section B Part 2?

No. Section B Part 2 collects organization information while Part 3 collects project information. You can only skip the rest of Section B Part 2 if all of your produced water is injected at all CBM pr ojects that you operate.

Questions B2-11 to B2-14

I don’t make these types of decisions. These deci sions are made at cor porate headquarters. What

do I do?

You have a couple of choices:

1) You can contact your corporat e headquarters and obtain the information from them; or

2) You can check the boxes indicating that you don’t know; EPA will need to use the standard assumptions shown.

Please be aware that the more accurate EP A’s information is about your particular circumstances, the likelier it is that EPA woul d come to the same conclusions as your firm regarding the financial viability of your pr ojects under various produced water management

cost scenarios.

What if I don’t know at what level these types of decisions are made?

At a minimum, EPA would like you to at least make that de termination, even if you cannot get the specific information requested in Qu estions B2-12 through B2-14. If this is not possible, please check “other ” and write in “unknown” in Question B2-11. You can then check “Agree or Don’t Know” in Questions B2-12 through B2-14

Question B2-15

What if I don’t keep any information on what ar e CBM earnings vs. what are earnings from our conventional oil and gas operations?

EPA is looking only for a rough estimate if you do not keep separate accounting for your CBM project(s). For example, if you think cost s for your CBM wells are roughly the same as

12those for conventional wells on a per well ba sis, then perhaps you could estimate the percentage of earnings on the basis of the percentage of revenues you get from your CBM wells, that is, if revenues from your CBM we lls in the years requested make up about 40 percent of revenues from all of your oil and gas operations, you can use 40 percent. If they are less expensive or more expensive, you can tweak the percentage up or down. Because of your knowledge of your CBM business, EPA consid ers your estimate the best one to use in the analysis.

Questions B2-16 through B-19

My operation is a division, so I have no inform ation on taxes, interest and depreciation. Should I send this to my corporate headquarters?

If you have information on division revenues an d costs, please submit that information. Do not respond to those questions with informati on from higher up in your corporate hierarchy. For taxes, interest, or depreci ation, you can either estimate them for your operation, or you

can indicate “NA.” There are checkboxes to indicate that items are estimated.

My operation at this location is only an operational office, and we track revenues, but not costs, from this operation. Should I se nd this to my corporate headquar ters or obtain information from

them?

Please send this section to or request informa tion from the lowest level of the corporate hierarchy at which information on earnings are recorded. If a regional office, for example, tracks earnings (costs and revenues) then send the section there. If costs and revenues are recorded only by your corporate headquarters, then send th is section to or request information from your corporate headquarters.

Where should I put expensed non- operating costs such as expl oration costs? What about expensed intangible drilling costs (IDCs)?

Please put expensed exploration costs in “other costs” in Question B2-18(h). Expensed IDCs can be included in operating costs in Question B2-18, a, b, and c.

I have an item for deferred taxes. Do I include these in Federal and state income taxes?

Please do not include deferred taxes or any non- cash outlays or income in Questions B2-17 through B2-19, but you can include these item s in the Comments section on Page B-35.

Questions B2-20 through B2-23

We do not have information on assets, liabilities, etc. at th is location. Do I send this section to or obtain information from my corporate headquarters even though I responded to the previous questions on revenues and costs at the immediate owne r/operator level?

13If you can estimate any such information at your location, please provide the information and

indicate that these data are estimates. If th is is not possible, please obtain the information from the lowest level in your corporate hierar chy where such information is recorded. If you are a portion of a subsidiary and the subsidiary records assets and liabilities at that level of the corporate hierarchy, then request the information from the subsidiary. If this information is only recorded at your corporat e headquarters, then request the information at that level. Please do not mix information from two levels (e .g., by reporting assets of the subsidiary and liabilities of the corporate parent). It is acceptable, however, to report income statement information at your level, and a sset and liability information at a higher level, as long as you clearly indicate this in the answ ers to Questions B2-16 and B2-20.

Question B2-23

How do I calculate payments to principal?

You should be able to calculate payments to principal by adding up all payments made on debt over the fiscal years reque sted and subtracting interest payments. If you had credit lines, the payments to principal can be calculated as the difference be tween the line balance at the end of the previous fiscal year and the balanc e at the end of the fiscal year requested, for 2006, 2007, and 2008.

Part B, Section 3

Table B-1

Question B3-4

There are conventional wells that are served by the same gas gathering system as the CBM wells in this project, but the water management system is separate. Do I consider this project as commingling conventional and unconventional gas?

It depends.

• If you included conventional and CBM wells in your project in the screener survey, which is replicated in the well counts as s hown in Table A-1, and/ or in Table A-2, you should consider this a commingling project, unless you believe you need to reconsider your answers to the screener and/or Table A-2 (see next bullet). Please answer the questions that follow. You will also need to provide information from the water treatment systems for the entire project in Part C of this questionnaire, but please note in your diagram or narrative in Part C that th e wells discussed for the produced water management system in question are conventional, as requested in the instructions to that

section.

• If you consider CBM and conventional gas production separately (e.g., revenues and costs are tracked separately for CBM), this is not a commingled project. You may want to reconsider your list of wells in Table A-2 that you assigne d to this project. If you reduce

14the number of wells in your project from t hose counted in your screener survey (if applicable), please do not forget to indicate the reason for this in the Comments section on Page A-4.

My project produces both from coalbeds and tight sands/oil shale/deep gas. Do I answer the commingled questions and include the production from all these sources?

Yes. EPA considers this a commingled projec t, since not all of the gas produced is from coalbeds. If you would like, you can indicate from what other unconventional sources you produce in the Comments section on Page B-35.

Table B-1, Questions B3-15 and B3-16

I don’t understand these questions. Why is it impo rtant whether my project began before 2004 or was acquired from another operator?

EPA wants historic cost information only fo r more recently constructed projects. If you began investing in the project before 2004 or if you bought all or part of a project from another operator the costs requested in Table B- 2 are likely to be outda ted and/or incomplete. To reduce your burden in trying to answer questi ons with incomplete data or old data that might be difficult to locate, you are directed to skip Table B-2 if your project was begun prior to 2004 or acquired from another operator.

I acquired only one well of this project, do I still say yes to “acquired project”?

Yes. Even if you acquired only one well and develope d all of the other asp ects of this project, you need to indicate the year you acquired that one well.

One or more item listed cost le ss than $1,000. How can I answer?

Cross out the 000s provided and write in your answer.

I don’t understand why costs of workovers or other su ch activities might go either in O&M costs or in a separate category. Whic h place should I put such costs?

How you answer the questions on workovers or other major maintenance tasks depends on how you consider the costs. Some operator s with large projects do many workovers, stimulations, and/or recompletions in a year and consider this a part of O&M costs. Operators with very small projects or one-well projects mi ght consider such activities as one-time or intermittent and not a part of the usual O& M costs. If you do not incur costs for these activities every year, provide these costs in Qu estion B3-52, otherwise, if you consider them a part of normal O&M, provide these costs in Question B3-50.

15I don’t understand what is meant by unusual expenditures.

The instructions to Tables B-2 through B-4 contain information on what EPA believes might be considered unusual expenditures. The instructions read as follows:

One term that EPA uses in this table is unusual expenditures . There might be two types of unusual expenditures—those that are amortized (i.e., capitalized) and thos e that are expensed (i.e., generally considered a pa rt of O&M but the expenditure does not occur in every year and is a relatively large percentage of O&M) . For the purposes of this survey, an unusual expenditure is defined as:

1) An expenditure that does not occur every ye ar and that is more than 10 percent of O&M (e.g., major storm damage causes la rge outlay for repairs); or

2) A capitalized one-time or capital cost not considered a lease acquisition or development cost (e.g. construction of a septic system or a building not direc tly associated with production) and is not a cost covered in Part C.

If you have a question on a specific outlay and whet her it fits into this classification, please

call or email the EPA Coalbed Meth ane Help Line at 1-800-864-9230 or cbmdetailed@pgenv.com

.

My records for gas production are in Mcf. C an I use Mcf instead of MMBtus to respond to questions on production?

Yes, but EPA will use the conversion factor of 1 Mcf = 1 MMBtu unless you indicate

another conversion factor in the Co mments section in Question B3-103.

Table B-3, Questions B3-71 and B3-72

I do not have a current estimate of recoverable reserves. Should I complete a new estimate?

EPA is not requiring anyone who does not have this information currently available to compute the information just for this surve y. If, however, it is something that you were planning to do anyway, EPA w ould appreciate the information. If you have a previous estimate from within the past 3 years, you can submit this information instead. Please indicate the estimate year in the Co mments section in Question B3-103.

Questions for Individual Projects (Page B-26)

Is it okay if we fill out some lines in Table B- 4 and not others if we answer all of the questions B3-76 through B3-86?

Yes, you may do this; please check the first box in Question B3-75.

162.3 Part C: Produced Water Management Information

General

I don’t have a Produced Water Management Sy stem, do I need to fill out Part C?

Management may include treatment, but, for the purposes of this questionnaire, may simply involve the transfer of produced water to disp osal locations. Many of the detailed questions are only applicable to discha rge of produced water to surf ace waters, a publicly owned treatment works (POTW), or third party; plea se follow the skip patterns noted throughout

Part C.

I didn’t discharge produced water. Do I still need to complete Part C of the questionnaire?

Yes, if you produced CBM produced water or gas, you must complete Part C of the questionnaire. If you store produced water, please consider evapor ation and/or infiltration in Question C3-1. Many of the detailed questions ar e only applicable to discharge of produced water to surface waters, a POTW, or third pa rty; please follow the skip patterns noted throughout Part C.

I commingle CBM produced water with water from conventional gas extraction. Should I include information for commingled water or try to se gregate the CBM produced water component when providing responses?

Please indicate on the process flow diagram or in the narrative descri ption (Question C2-1),

the volumes or flow rates of the conventiona l oil and gas extraction produced water as well as the point at which these waters are comm ingled. You may report commingled values or CBM segregated values in answering the questions , as long as the basis is clearly stated in the flow diagram or narrative and/or in the Comments section (Question C4-3).

I commingle CBM produced water from multiple projec ts. Do I need to repeat Part C for each project?

You only need to repeat Part C, Sections 2 and 3 for each produced water management system that you operated in 2008 to manage wate r from the wells listed in Part A of the questionnaire. Please indicate on the process flow diagram or in the narrative description (Question C2-1), the name of the projects f eeding each produced water management system (or identify if the produced water is from another operator’s proj ect). Please also indicate on the diagram or in your narrative description, the volumes or fl ow rates of the CBM produced waters from each CBM project, as well as th e point where these waters are commingled.

17Part C, Section 1

Question C1-1

Who should be the primary cont act for the produced water m anagement system information?

The primary contact should be the person that completes the technical information and can clarify the responses in Part C if follow-up is needed.

Part C Section 2

Question C2-1

What if I do not have a block diagram readily available.

If you do not have a block diagram available, EPA is requesting that operators generate a simplified schematic diagram or a narrative desc ription. Refer to the example block diagrams in Part C, Section 2, that illustrate simplif ied schematics for produced water management

systems.

My collection and management practices change dur ing the year, what should my block diagram reflect?

Your block diagram should reflect these differe nces. See Example 6 in Part C, Section 2. You will need to complete Part C, Sections 2 and 3 for each distinct management practice.

I use the same treatment set up year round, but the discharge varies seasonal (e.g., direct discharge when not using the produced water for land application). Do I need fill out Part C, Sections 2 and 3, two times?

If the produced water collec tion and management practices are the same, except for a variable discharge destination, you may complete Part C, Sections 2 and 3 one time. You will list all destinations for managed water in Ques tion C3-1. You will still need to complete Question C3-2 for each destination (twice in this example – direct discharge to surface water and land application). Note that as necessary, you will also need to complete Question C3-3 for each residual generated.

If the produced water co llection and management practices vary (e.g., differing flows and/or treatment methods in addition to varying discha rge locations), then you should fill out Part C, Sections 2 and 3, multiple times. See Part C, Section 2, Example 6.

18Question C2-2

We began operations in 2008. How shoul d we complete the questionnaire?

The questionnaire should be completed usi ng the 2008 data. If opera tions began during 2008, please note that in the Comments section (Q uestion C4-3) that the management operations

were initiated and that the data are provided for only a portion of 2008.

Our produced water management system operated during the 2008 season, but it operates differently now. How should we complete the questionnaire?

The questionnaire should be completed base d on the operation in 2008. Please note your process changes in the Commen ts section (Question C4-3).

Question C2-3

What if flow rates are not available?

You are not required to perform non-routine tests or measurements solely for the purpose of responding to this questionnaire. Therefore EP A will accept estimated flow values. If the flow rates are estimated using a calculati on method, please describe the method in the Comments section (Question C4-3).

Question C2-5c

What if I don’t have exact cost s for hiring a contractor or th ird party to manage my produced

water?

Please provide a reasonable estimate and provi de the basis in the Comments section (Question C4-3).

Questions C2-6 and C2-8b

We built the produced water manageme nt system or gathering system over multiple years, what year should we use?

You should provide the years that the system was built (e.g., 1995 and 1996).

Question C2-8

What if I trucked water to my produced wate r management system for part of 2008, but also implemented a piped gathering system in 2008?

For the part of the year that produced wate r was piped to the produced water management system, Questions C2-8a through C2-8c should be completed. For the part of the year that

19produced water was trucked to the produced water management system, Question C2-8d should be completed.

Question C2-9

What does undeveloped area mean?

For purposes of this questionnaire, an undevelope d area includes areas wi thin the project site that would be suitable for constructing new or additional wastewater treatment systems.

Part C, Section 3

Question C3-1

A third party contracts to haul my produced wate r for treatment. I don’t know their treatment method/disposal methods. Should I enter discharge to a POTW or third party or enter hauled off

site?

You should enter hauled off-site.

A third party or POTW treats my produced wate r for treatment. I don’t know specifics of their treatment method/disposal methods. Do I need to fill out de tailed information on treatment/discharge in Part, C Section 3?

Unless you provide any treatment prior to sendi ng the produced water to a third party or POTW, you do not need to respond to Questions C3-9 through C3-13. If you do treat the produced water prior to sending the produced wate r to a third party or POTW, then you must complete lease complete Questions C3-9 thr ough C3-13 as it relates to the treatment you do provide.

I don’t think my produced water management method is reflected in the list of options. How should I respond?

If you do not think your management method is reflected, you can contact the EPA Coalbed Methane Help Line (1-800-864-9230 or cbmdetailed@pgenv.com ) for assistance. You may

also use the Comments section at the end of Part C of the questionnaire to describe your management method in detail.

2021 Question C3-3

What if I have different types of residuals ge nerated by the same produced water management system?

Please copy the page and complete Question C3-3 for each type of residual. Make sure that you indicate the Operator ID for the produced water management system and the copy number in the top right hand corner of the page.

Question C3-4b

I intermittently discharge, but also had an emergency discharge. Should I enter intermittent discharge, emergency discharge, or both?

You should enter intermittent a nd enter a comment (Question C3 -4) with information on the emergency discharge(s).

Questions C3-7 and C3-8

I discharge to impoundments / ponds/lagoons/tanks before discharge, is the storage considered

treatment?

Note that storage ponds/lagoons/tanks that ho ld produced water prior to discharge are considered to be treatment units (because they provide equalization of the produced water). You should include this type of treatment in response to Question C3-8, Table C-2 under Other (Specify).

Questions C3-9 through C3-13

Should my 2008 operating and maintenance costs incl ude residuals transportation and disposal?

Yes, any costs associated with residual st reams from the treatment operation should be included in the operating and maintenance costs (e.g., the cost to transport and dispose of regenerant brine at an underground injection site).

Part C, Section 4

Question C4-1

What if I don’t have paired influent and effluent data, but I do have effluent data?

Any produced water quality data that you can provide will aid EPA in characterizing produced water.22 3. LIST OF ACRONYMS AND ABBREVIATIONS

% Percent

API American Petroleum Institute

bbl Barrel (42 gallons) bbl/d Barrels per day

bcf Billion cubic feet

BPJ Best Professional Judgment

BTU British thermal unit

CBM Coal bed methane

CFR Code of Federal Regulations

CFS Cubic feet per second

Cl- Chloride

CWA Clean Water Act DOE U.S. Department of Energy dpy Days per year

EA Environmental Assessment

EC Electrical Conductivity EDR Electrodialysis Reversal ELG Effluent limitations guideline

EPA U.S. Environmental Protection Agency

ft Foot

ft 2 Square foot

ft 3 Cubic foot gal Gallon gpd Gallons per day gpm Gallons per minute hrs/day Hours per day

in Inch

kWh Kilowatt-hour

lb Pound

lb/hr Pounds per hour

mcf Thousand cubic feet

MCL Maximum contaminant level mg/L Milligrams per liter MGD Million gallons per day MMBTU/hr Million BTUs per hour

mmcf Million cubic feet MW Megawatt

NA Not applicable NPDES National Pollutant Discharge Elimination System POTW Publicly Owned Treatment Works ppm Parts per million PrOTW Privately Owned Treatment Works psi pounds per square inch

RO Reverse osmosis

s Second SAR Sodium Adsorption Ratio

SIC Standard Industrial Classification

tcf Trillion cubic feet

TDS Total dissolved solids

ton English ton, wet weight TMDL Total maximum daily load tpy Ton per year TSS Total suspended solids yr Year4. DEFINITIONS OF SELECTED KEY TERMS

Aeration

— Process that mixes air and water, normally by inj ecting air into water, spraying water into the air, or allowing water to pass over an irregular surface, to release compounds from the water through oxidation, precipitation, or evaporation.

Balance Sheet

— A quantitative summary of a company's financial condition at a specific point in time, including assets, liabilities and net worth. The first pa rt of a balance sheet shows all the productive assets a company owns, and the second part shows all the financing methods (such as liabilities and shareholders' equity); also called statement of condition.

Batch (Intermittent) Discharge or Application

— A discreet volume or mass of liquid or solid that is collected and discharged periodically.

C Corporation

— A business that is a completely separate en tity from its owners, unlike a partnership.

Capital Cost

— The costs associated with the purchase, development or construction of fixed assets such as land, stations, buildings, and water treatment equipment.

Capital Cost of Project Development

— As defined for Question B3-13. this includes all capital and onetime costs of project development beyond the im mediate tophole equipment (e.g., Christmas tree), including any exploratory costs, planning costs, geolog ical and geophysical costs, site development costs, such as pads and roads or other land preparati on activities, production pumps, gas/water separation equipment, other onsite gas gathering or treatment equipment, and gas pipelines to offsite location and/or point of sale. It does not include any capital costs of water management (see definition).

Clarification

— Separation and concentration of solids from li quid/solid mixtures that are mostly liquid.

Clean Water Act

— Federal legislation enacted by Congress to “restore and maintain the chemical, physical, and biological integrity of the Nation’s wa ters” (Federal Water Pollution Control Act of 1972, as amended, 33 U.S.C. 1251 et seq.).

Coalbed Methane (CBM)

— Natural gas found in coal seam reservoirs.

Coalbed Methane (CBM) Project

—A CBM project comprises a well, group of wells, lease, group of leases, or recognized unit which you operate as an economic unit when making production decisions. The well or wells may be associated with one or more wa ter management practices (that is, the project should be defined on the basis of gas production economics, not necessarily on the basis of a water management system). If a project operates as a unit in which you are not the sole operator, please include information only for that portion of a unit for which you activel y operate. EPA understands that the concept of a project is variable over time, so the well or wells incl uded as a part of a project should be those that best defined the project as it existed in 2008.

Coalbed Methane (CBM) Unit

— A unit is a group of leases that are managed together with the intention of maximizing production (and/or minimizing cost s), where operating these leases independently might result in more wells drilled, less production realized, or both. Units can be formal, legal entities that are written into lease agreements, pooling agreements, and/or state permits; or informal, particularly where minerals rights on several leases are owned by the same entity.

Continuous Flow

— A flow regime characterized by persistent flow, as opposed to intermittent flow or

batch processes.

23Contract Haul

— The removal of any waste stream (includi ng produced water) from a facility by a company authorized to transport and dispose of th e waste, excluding discharges to sewers or surface

waters.

Cost-Depletion Method

— Recovery of the tax basis in a minera l deposit by deducting it proportionately over the productive life of the deposit. This is in c ontrast to the percentage depletion method, which permits a taxpayer with an economic interest in a mineral deposit to deduct a specified percentage of the gross income from the deposit instead of using the cost depletion method. Percentage depletion is generally restricted to independent producers, roya lty owners, and some other narrow categories of oil and gas owners.

Cost of Capital

— The opportunity cost of an investment; that is , the rate of return that a company would

otherwise be able to earn at the same risk level as the investment that has b een selected. For example, when an investor purchases stock in a company, he/she expects to see a return on that investment. Since the individual expects to get back more than his/her initial investment, the cost of capital is equal to this return that the investor receives, or the money that the company misses out on by selling its stock.

Cumulative Depreciation

— The total charges against the fixed asset s of a company for wear and tear, obsolescence, or the depletion of a natural resource—o il in the ground, for instance—as it is used up.

Current Assets

— Any asset that can reasonably be expected to be used up or converted to cash or sold within a year or less, e.g., cash, accounts receivable, prepaid expenses.

Current Liabilities

— Debts that are payable within 1 year, including accounts payable, notes payable within one year, accrued expenses and taxes, and the po rtion of long-term debt that are paid this year.

Depreciation, Depletion, and Amortization

— The allocation of the cost of an asset over a period of time for accounting and tax purposes. Depletion, which reflect s the declining value of a natural resource asset as it is produced, may be calculated either using th e cost-depletion or percentage depletion method, depending on type of firm (see cost-depletion method).

Design Capacity Flow Rate

— Maximum flow rate a treatment unit is designed to handle.

Direct Discharge

— The discernible, confined, and discrete conveyance of pollutants to United States surface waters such as rivers, lak es, and oceans. See 40 CFR 122.2.

Discharge

— The discernible, confined, and discrete conveya nce of pollutants to: (1) United States surface waters such as rivers, lakes, and oceans (“direct di scharge”), or (2) a publicly owned, privately owned, federally owned, combined, or other treatment works (“indirect discharge”). See 40 CFR 122.2.

24Drilling Cost —Includes tangible and intangible costs of drilling and completing a well (if completed), as defined in API’s Joint Association Survey of Drilling Costs, which includes “expenditures for drilling dry holes and productive wells and equipping new pr oductive wells through the Christmas tree” installation...these cost elements are the costs of labor, materials, supplies, water, fuels, power, and direct overhead (i.e., field, district, and regional), for such operations as site preparation, road building, erecting and dismantling derricks and drilling rigs, drilling hole, running and cementing casing, hauling materials, etc. Include the total cost of water, if purchased, or co st of water well, if drilled and chargeable to oil or gas well drilling operations. Well costs also include machinery and tool charges and rentals, and depreciation charges, where appropriate, for rigs and other equipment and facilities which will be used in drilling more than one well. Deduct the condition value of materials salvaged after use where appropriate. Do not report the cost of lease equipment such as ar tificial lift equipment and downhole lift equipment, flow lines, flow tans, separators, etc. that are required for production. Do not reduce the costs by test well, bottom hole, or dry hole contributions.

Earnings Before Interest and Taxes (EBIT)

— A measure of a company’s earning power from ongoing operations, equal to earnings before deduction of interest payments and income taxes; also called operating profit or operating income.

Emergency Discharge

— A volume or mass of liquid or solid residuals are discharged only during extenuating circumstances (i.e., a treatment process malfunction).

Equalization

— The process of storing produced water for la ter treatment or discharge. This process can also provide some removal of some suspended solids.

Evaporation

— The process by which water or other liquid becomes a gas. Water from land areas, bodies of water, and all other moist surfaces is absorbed into the atmosphere as a vapor.

Filtration

— This treatment technology relies on the difference in size between the pore and the particle to be removed. Low-Pressure Filtration typical involves using low pressure and can include direct media filtration using one or more layers of granular media such as sand and/or anthracite with coagulation. High-Pressure Filtration typically uses a driving force to transport wastewater through a membrane, which separates the wastewater into two flows: perm eate and retentate (e.g., nanofiltration and reverse osmosis).

Fiscal Year

— A 12-month period over which a company budge ts its spending. A fiscal year does not always begin in January and end in Decemb er; it may run over any period of 12 months.

Hurdle Rate

— The required rate of return in a discounted cash flow analysis, above which an investment makes sense and below which it does not. Often, this is based on the firm's cost of capital or weighted average cost of capital, plus or minus a risk premium to reflect the project's specific risk characteristics; also called required rate of return.

Income Statement

— An accounting report showing various cate gories of revenues, expenses, interest payments, taxes, and net income.

Indirect Discharge

— The discernible, confined, and discrete conveyance of pollutants to a publicly owned, privately owned, federally owned, combined, or other treatment works.

Infiltration

— The process by which water penetrates into soil from the ground surface

25Injection Well (Deep or Shallow Well Injection)

— Any bored, drilled, or driven shaft or a dug hole, improved sinkhole, or a subsurface fluid distribution sy stem where the depth is greater than the largest surface dimension that is used to dispose of fluids underground. See underground injection.

Interest Expense

— An expense for interest on a loan.

Intermittent Flow

— A flow regime characterized by flows that occur sporadically, seasonally, or for only a portion of time during normal operations.

Ion Exchange (IX)

— Treatment process using a resin formulated to adsorb cationic or anionic species to remove pollutants from an influent stream.

Landfill

— A natural or man-made formation in the earth into which solid waste, sludges, or other process residuals are placed for permanent disposal.

Lease Bid

— Amount (generally a lump sum at time of lease acquisition) paid to the mineral rights owner to hold the property for a period of time, whether or not the lease is developed. This does not include rental payments, which may be charged over time, nor does it include royalties, which are paid only once production begins.

Limited Liability Corporation or Company

— A type of company, authorized only in certain states, whose owners and managers receive the lim ited liability and (usually) tax benefits of an S Corporation without having to conform to the S corporation restrictions.

Long-term Debt

— Liabilities that are paid off over periods greater than 1 year, including mortgages, notes, bonds, debentures, long-term leases, bank debt, and deferred income taxes.

NAICS

— NAICS is an economic classification system. Ec onomic units that use like processes to produce goods or services are grouped together. These units are assigned a code for identification purposes. US Census Bureau (http://www.census.gov/epcd/www/na ics.html). Common 6-digit NAICS in the CBM extraction industry include 211111, Crude Petroleum & Natural Gas Extraction; 213111, Drilling Oil and Gas Wells; 213112, Support Activities for Oil and Gas; 212111, Bituminous Coal & Lignite Surface Mining; 212112, Bituminous Coal Underground Mi ning; 221210, Natural Gas Distribution; 221112, Fossil Fuel Electric Power Generation; and 324110 Petroleum Refineries.

NPDES Permit Program

— The National Pollutant Discharge El imination System (NPDES) program authorized by Sections 307, 318, 40 2, and 405 of the Clean Water Act that applies to facilities that discharge wastewater directly to United States su rface waters. For the CBM industry, operators are required to obtain NPDES permits for th eir direct discharges to surface waters.

Operating and Maintenance Cost

— The ongoing, repetitive costs of operating a water system; for example, employee wages and costs for treatment chemicals and periodic equipment maintenance.

Operating Costs (income statement)

— These are the recurring expenses which are related to the operation

of a business.

Operator

— The person responsible for the management a nd day-to-day operation of one or more CBM wells. The operator is generally a working interest owner or a company under contract to the working interest owner(s).

26Other Assets (net of depreciation)

— Any non-current assets (assets that cannot be easily converted to cash) other than property, plant and equipment.

Owner Firm

— The next level up in the corporate hierarchy from the owner/operator. This firm owns the owner/operator firm or division, regardless of whethe r the owner/operator is a contract operator or a working interest operator.

Owner/Operator

— The entity (firm or division, if a profit center) responsible for the management and day-to-day operation of a well. The owner/operator is generally a working interest owner or a company under contract to the working interest owner(s). Ma nagement decisions might include whether well(s) should be shut-in, worked over or abandoned, whethe r additional or replacement wells should be drilled, whether additional or different production equipment should be installed, and any other decision factor used by DOE in the General In structions to Form EIA-23.

Payback Period

— The amount of time taken to break even on an investment. Since this method ignores the time value of money and cash flows after the paybackperiod, it can provide only a partial picture of

whether the investment is worthwhile.

Payments to Principal

— Payments made on the principal portion of a loan or other borrowing mechanism classified as long-term debt (excludes the interest payments on these loans).

Pollutant

— Under the Clean Water Act, a dredged spoil, solid waste, incinerator residue, filter backwash, sewage sludge, munitions, chemical waste, biological material, certain radioactiv e material, heat, wrecked or discarded equipment, rock sand, cellar dirt, and in dustrial, municipal, and agricultural waste (40 CFR 122.2).

Pollution Prevention

— The use of materials, processes, or practices that reduce or eliminate the creation of pollutants or wastes. It includes practices that reduce the use of hazardous and non-hazardous materials, energy, water, or other resources, as well as those practices that protect natural resources through conservation or more efficient use. Pollution prevention includes but is not limited to source reduction, in-process recycle and reuse, and water conservation practices.

Primary Collection Point

— The first point in the Produced Wate r Management System where produced water from all wells flowing to one final d estination are combined. In example 4, the sedimentation/equalization pond would be the primary collection point.

Privately Owned or Held

— A company whose shares are not traded on the open market.

Privately Owned Treatment Works (PrOTW)

— Any device or system owned and operated by a private entity and used for storage, treatment, recyclin g, or reclamation of liquid industrial wastes.

Produced Water

— Water drawn from any hydrologic unit for the purpose of producing hydrocarbons.

27Produced Water Management System

— For the purposes of this questionnaire, Produced Water Management System is defined as a system that is managed by the operator as a single unit for produced water management. Produced water ma nagement may include different treatment, transfer to disposal locations, and/or reuse practices. The Produced Water Management System may treat water from a lease, field, project, or plan of development (POD). Wa ter discharge permits, land application permits, and applications for permits to drill (APD) typically use one of these terms to define the well grouping. Note that the Produced Water Management System can have multiple disposal options but it is managed as a single unit. For example, an operator may use a combination of stock tanks, irrigation, and storage ponds on a single Produced Water Management System. Also note that the Produced Water Management System may serve the same or different wells from th e CBM project defined in Part A. Finally, for the purposes of this questionnaire, the PWMS does not in clude the produced water gathering system (e.g., piping or trucking) that is used to transport the produced water between the CBM wellhead and a centralized location (e.g., treatment unit, land applica tion site). For example, produced water gathering pipes are typically installed underground at the same time as the gas gathering pipes.

Produced Water Treatment or Treatment

— The treatment of water with physical, chemical, biological, or other processes to remove specific pollutants from the wate r stream or to alter the physical or chemical state of specific pollutants in the water stream. Pr oduced water treatment is performed to allow for discharge, disposal or beneficial use of the water.

Profit Center

— A business unit or department which is treat ed as a distinct entity enabling revenues and expenses to be determined so that profitability can be measured. For the purposes of this questionnaire a profit center is defined as an entity that tracks finances at least through earnings before interest and taxes.

Publicly Owned or Held

— A company which has issued securities through an offering, and which are now traded on the open market.

Publicly Owned Treatment Works (POTW)

— Any device or system owned by a state or municipality that is used to recycle, reclaim, or treat liquid municipal sewage and/or liquid industrial wastes.

Receiving Waters

— A stream, river, or other surface water body to which wastewater or other pollutants are discharged.

Retained Earnings

— Earnings not paid out as dividends but instead reinvested in the core business or used to pay off debt; also called earned surplus or accumulated earnings or unappropriated profit.

Royalty Payments

— Payments made to the mineral rights owner. These payments may be based on a percentage of the gas produced or as a percentage of the revenues received. A royalty is not a working interest share (see working interest).

S Corporation

— A form of corporation, allowed by the IRS for most companies with 75 or fewer shareholders, which enables the company to enjoy the be nefits of incorporation but be taxed as if it were a partnership. Also called S ubchapter S Corporation.

SEC Proved Reserves

— Proved oil and gas reserves are the estimated quantities of crude oil, natural gas, and natural gas liquids which geological and engineeri ng data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions, i.e., prices and costs as of the date the estimate is made. Prices include consideration of changes in existing prices provided only by contractual arrangements, but not on escalations based upon future conditions. See SEC SX Reg. 210.4-10 (November 18, 1981).

28Sedimentation Pond

— An impoundment constructed at the produ ced water treatment site to remove suspended solids from the produced water. These imp oundments can also provide equalization of the produced water prior to treatment or discharge.

Selling, General and Administrative Costs

— Income statement item which combines salaries, commissions, and travel expenses for executives and salesp eople, advertising costs, and payroll expenses.

Severance Tax Payments

— Payments made to a state for the right to remove a natural resource, usually applied to gas for use in another state.

Sludge

— The accumulated solids and solid residues separated from liquids by settling or treatment.

Storage Pond

— An impound for liquid wastes.

Sum of Liabilities and Owner Equity

— Current Liabilities + Long-Term Debt + Retained Earnings + Other Owner Equity.

Surface Owner

— Party owning land that has been or will be used for the purposes of producing minerals or hydrocarbons. Party may or may not own mineral rights beneath that land.

Surface Use Plan

— Agreement between a landowner and a coalbed methane producer describing the conditions of land use for coalbed methane production including existing and proposed facilities (e.g. wells, roads, pipelines, and treatment systems), comp ensation for property damages, and considerations

for land reclamation.

Surface Waters

—Waters of the United States. See 40 CFR 122.2. ( http://ecfr.gpoaccess.gov/cgi/t/text/textidx?c=ecfr&sid=8a3bce0135f51c1 1befeff39ba51e426&rgn=div5&view=t ext&node=40:21.0.1.1.12&idno =40#40:21.0.1.1.12.1.6.2.)

Technically Recoverable Reserves

— Reserves recoverable given current technologies and industry practices and assuming no limitations on production due to market conditions.

Total Assets

— Total Current Assets + Total Non-current Assets (including Property, Plant, and Equipment and Other Assets Net of Depreciation).

Treatment Unit

— A unit operation used to remove polluta nts from produced water. Treatment units include, but are not limited to sedimentation p onds, ion exchange systems, and filters.

Ultimate Parent

— The firm at the highest level of the corporate hierarchy. If the owner firm is not owned by another firm, the owner firm is the ultimate pa rent. If the owner/operator is not owned by any other firm, there is no ultimate parent.

Underground Injection

— The technology of placing fluids underground, in porous formations of rocks, through wells or other similar conveyance systems. See injection well.

Unusual Expenditure

— An expenditure that does not occur every ye ar and that is more than 10 percent of O&M (e.g., major storm damage causes large outlay for repairs); or a capitalized one-time or capital cost not considered a lease acquisition or development cost (e.g., construction of a septic system or a building not directly associated with production) and is not a cost covered in Part C.

2930 Water Reuse

— Beneficial use of coalbed methane produced wa ter (e.g., livestock watering, irrigation, or dust control) in lieu of discharge/disposal.

Wellhead Price of Gas

— The price of gas at the wellhead, which is different from the price at natural gas hubs, reflecting the implicit cost to transport the gas to buyer, including the cost of gathering, compression, dehydration, etc.

Working Interest

— Percentage of ownership in an oil and gas lease granting its owner the right to explore, drill and produce oil and gas from a tract of property. Working interest owners are obligated to pay a corresponding percentage of the cost of leasing, drilling, producing and operating a well or unit. After royalties are paid, the working interest also entitles its owner to share in production revenues with other working interest owners, based on the percentage of working interest owned. Working interest is not royalty; mineral rights owners who do not have working interests do not contribute to the costs of production.

Workover, Stimulation, or Recompletion

— Major, intermittent tasks. Workovers are major maintenance or remedial treatments on a well. Well stimulation includes fracturing, for example, either performed initially or later in the productive life of the well. Recompletion is a process undertaken to restore the productivity of a well, including to comple te a well in a new stratum or strata.

Zero Discharge

— Disposal of produced water other than by direct discharge to surface water or by indirect discharge to a POTW. Zero discharge do es not allow for periodic or infrequent discharges attributed to activities such as maintenance, blowdown, or system purges. Examples include evaporation, underground injection, contract hauling, and/or water reuse.