Wyo. Code R. 055-0001-3
General Agency, Board or Commission Rules
Chapter 3: Operational Rules, Drilling Rules
Effective Date: 06/03/1996 to 09/03/1996
Rule Type: Superceded Rules & Regulations
Reference Number: 055.0001.3.06031996
Section 1. Notices-General and Emergency. Any written notice of intention to do work or to change plans previously approved must be filed with the Supervisor in triplicate, unless otherwise directed, and must reach the Supervisor and receive his approval before the work is begun.
In case of emergency, or a situation where operations might be unduly delayed, any written notice required by these rules and regulations to be given to the Supervisor may be given orally or by wire and, if approval is obtained, the transaction shall be confirmed in writing, as a matter of record.
Section V of this volume provides rules of practice and procedures for matters which are set to be heard before the Commission and also for actions which can be taken by the Supervisor as he administers Wyoming Conservation Law and the rules which have been adopted. The Supervisor, at his discretion, may set for hearing before the Commission any request for administrative approval of operations covered by the rules. The manner and time for giving notice is provided by the Wyoming Conservation Law and by the regulations. Further, W.S. §30-5-111(f) provides that in addition to the notice prescribed by the rules, such additional notice as is deemed necessary and proper may be required. The Commission maintains a mailing list for persons interested in receiving notice of the matters scheduled to be considered at its monthly meetings.
Section 2. Location of Wells (All Lands Except Indian). In the absence of special orders of the Commission establishing drilling units or authorizing different well density or location patterns for particular pools or parts thereof, each oil and gas well shall be located in the center of a forty (40) acre governmental quarter section or lot or tract or combination of lots or tracts substantially equivalent thereto as shown by the most recent governmental survey, with a tolerance of 200 feet in any direction from the center location (a 'window' 400 feet square); provided, that no oil or gas well shall be drilled less than 920 feet from any other well drilling to or capable of producing oil or gas from the same pool, and no oil or gas well shall be completed in a known pool unless it is located more than 920 feet from any other well completed in and capable of producing oil or gas from the same pool.
Any gas wells drilled in the area described as Township 12 North through Township 28 North and Range 89 through Range 121 West shall be located in the center of a one hundred-sixty (160) acre subdivision, or lot or tract or combination of lots or tracts substantially equivalent thereto, not closer than one thousand one hundred-twenty feet (1,120') to the exterior boundaries of the quarter section. All areas subject to existing orders for drilling and spacing units in the above described area shall be exempt from the aforesaid gas well location requirements. Further, Rule 302 is vacated for all federal exploratory units in the above described area provided that no gas well will be drilled closer than one thousand one hundred-twenty feet (1,120') to the exterior boundaries of the unit nor to any uncommitted acreage within the unit. Upon unit contraction, lands deleted from the unit shall thereafter be subject to Rule 302.
Any proposed exploratory wells in the Powder River Basin projected to test the Frontier, Muddy, and/or Dakota Formations in excess of 11,000 feet total depth shall be granted a temporary spacing unit of 640 acres consisting of the governmental section in which the well is proposed. The temporary spacing unit shall be for the purpose of providing for the orderly development of the anticipated pool and not for the establishment of property rights. The granting of a temporary spacing unit shall be deemed as a decision by the Commission to call a hearing for the establishment of drilling units and upon completion of the well, the Commission shall call such hearing or in the alternative shall vacate the temporary spacing unit, depending upon the data obtained from the completed well. Said well may be located anywhere within the 160 acre 'window' (i.e. SE¼NW¼, SW¼NE¼, NE¼SW¼, NW¼SE¼) but not less than 1,320 feet from the section line. Exceptions may be granted by the Commission for good cause.
In the absence of special spacing orders, all paragraphs of this Rule 302 apply to horizontal wells from the surface location through the terminus of the lateral portion of the wellbore. Exceptions to this well location requirement or to special spacing orders may be granted in accordance with Rules 303, 502, and 516. If granting permission to drill a horizontal well is contested by those entitled to notice, permission shall be granted if doing so will prevent waste or protect correlative rights.
The Supervisor shall have the discretion to determine the pattern location of wells adjacent to an area spaced by the Commission, or under application for spacing, where there is sufficient evidence to indicate that the pool or reservoir spaced or about to be spaced may extend beyond the boundary of the spacing order or application and the uniformity of spacing patterns is necessary to insure orderly development of the reservoir or pool.
Operators who apply for a permit to drill a gas well in the area described in Paragraphs 2 and 3 may contemporaneously or subsequently file an application to establish spacing for an area not to exceed nine (9) sections, which application will be held in abeyance until the permitted well is completed. Notice of such application must be given to all owners within the area applied for. Upon completion of the permitted well, the application to establish spacing will either be heard by the Commission or dismissed, depending upon the data obtained from the completed well. During the pendency of the application to establish spacing, all permits to drill gas wells will be held in abeyance pursuant to the provisions of Rule 305, provided that permits to drill will be approved for additional gas wells in the area subject to the application on not less than a six hundred-forty (640) acre pattern at a location consistent with the initial well. The area to be spaced may be increased in size prior to the hearing upon a proper showing of need to the Supervisor and after notice to all owners in the area to be added.
The following conditions apply to any horizontal well as defined in Chapter I, Section 2, (oo):
(a) The surface location may be anywhere on the leased premises.
(b) In the absence of a special spacing order, no portion of the horizontal interval within the potentially productive formation shall be closer than six hundred-sixty feet (660') to a drilling or spacing unit boundary, federal unit boundary, uncommitted tract within a unit, or boundary line of a lease not committed to the drilling of such horizontal well. The horizontal interval of wells drilled in the Powder River Basin below 11,000 feet to test the Frontier, Muddy, and/or Dakota Formations shall not be closer than one thousand three hundred-twenty feet (1,320') to the exterior governmental section line or federal unit boundary.
(c) Any horizontal interval to be completed closer than 1,320 feet to such boundaries, tracts or lines must be oriented in such that an azimuth of at least eighteen degrees (18°) is created between the well path and such boundaries, tracts or lines, allowing up to three degrees (3°) of azimuth tolerance for unintended drift.
(d) Any horizontal interval shall be not closer than 1,320 feet to any vertical well completed in and producing from the same formation. Vertical wells drilled to and completed in the same formation as is a horizontal well are subject to applicable drilling or spacing unit orders of the Commission or the other paragraphs of Rule 302 which do not specifically pertain to horizontal wells and may be drilled and produced as provided therein.
(e) A temporary six hundred-forty (640) acre spacing unit, consisting of the governmental section in which the horizontal well is located, is established for the orderly development of the anticipated pool.
(f) In addition to any other notice required by the statute or these rules, notice of the Application for Permit to Drill a horizontal well shall be given by certified mail to all owners within the boundaries of the designated temporary spacing unit.
(g) Horizontal wells in federally supervised units or in API units are exempt from the above referenced conditions d, e, and f.
(h) Exceptions to any of the above referenced conditions A through F may be approved upon proper application and notice for such exception(s) in accordance with Commission Rules 303, 502, 503, and 516. Additional horizontal wells may be approved by Commission order after hearing brought upon application filed in accordance with Wyoming Statute §30-5-109(a) and (d).
Section 3. Exceptions to Location of Wells and Well Spacing Order. Upon proper application therefor, the Supervisor may approve, as an administrative matter, an exception to Section 2, or any Order of the Commission establishing well spacing for a pool. If for any reason the Supervisor shall fail or refuse to approve such an exception, the Commission may, after notice and hearing, grant the exception.
The application for an exception shall state fully the reasons why such an exception is necessary or desirable, and shall be accompanied by a plat showing:
(a) The location at which an oil or gas well could be drilled in compliance with Chapter III, Section 2, or the applicable order;
(b) The location at which the applicant requests permission to drill; and
(c) The locations at which oil or gas wells have been drilled or could be drilled, in accordance with Chapter III, Section 2, of the applicable order, directly or diagonally offsetting the proposed exception.
No exception shall prevent any owner from drilling an oil or gas well on adjacent lands, directly or diagonally offsetting the exception, at locations permitted by Section 2, or any applicable order of the Commission establishing oil or gas well spacing units for the pool involved.
Section 4. Bonding Requirements (Forms 8 and 8A). Except where a bond in satisfactory form has been filed by the owner/operator in accordance with State, Federal or Indian lease requirements, and evidence that such bond had been filed with and approved by the appropriate agency has been furnished the Supervisor, the Commission shall require from the owner/operator a good and sufficient bond running to the State of Wyoming conditioned that each well shall be operated and maintained in such a manner as not to cause waste or damage the environment. Upon permanent abandonment each well shall be plugged in accordance with the Rules and Regulations of the Commission. The minimum amount of bond or bonds required to be furnished shall be as follows:
(a) For wells of less than 2,000 feet in depth an individual bond in the amount of $5,000 for each such well,
(b) For wells of 2,000 feet or more in depth an individual bond in the amount of $10,000 for each such well,
(c) Or in the alternative a blanket bond in the amount of $25,000 covering all wells including wells less than 2,000 feet in depth.
The bond or bonds required by these rules shall remain in full force and effect until the permanent plugging and abandonment of the well or wells has been approved by the Supervisor, the well has been properly converted to a water well in a manner approved by the Supervisor, in conjunction with the State Engineer, or until the bond has been released by the Commission. Nothing in this rule shall be construed to prevent the Commission, upon notice and hearing and for good cause shown, from requiring bonds in special cases in amounts greater than set out in this rule. (As amended April 16, 1981).
In the event an owner/operator has a $25,000 blanket bond covering wells on fee or patented lands, the Commission will normally not ask for additional coverage if the wells are producing, monitoring, injecting, permanently abandoned, shut-in or temporarily abandoned. Wells which are not producing, monitoring, injecting, permanently abandoned, shut-in, or temporarily abandoned as defined by these rules are deemed to be dormant. The Supervisor may require an increased bonding level of $2.00 per foot for each dormant well. The additional bonding may be required as soon as the operator's total footage of dormant wells exceeds 12,500 feet. As wells are removed from dormant status, any additional $2.00 per foot bonding requirements will be reduced accordingly.
For wells on which the additional bonding is required, the Supervisor may allow the operator to post at least 5.55% of the new bond each month for eighteen months or until the total amount of the bond has been posted.
In lieu of additional bonding, an owner/operator may file a detailed plan of operation which includes a time schedule to permanently plug and abandon those wells which are deemed to be dormant or take such action as may be necessary to remove the well from dormant status. This time schedule is subject to approval by the Supervisor, and shall not exceed two (2) years from the date of filing. Plans filed by the first operator go with the property in the event of a sale. The purchaser or next operator or owner of a property is responsible for completing the plans of the previous owner.
In addition, the Supervisor must be advised by the owner on Commission Form 7 of all transfers of well(s) at least thirty (30) days before the closing date of the transfer. The purpose of the notice is to provide the Supervisor with an opportunity to evaluate the status and number of wells that may be involved in the transfer and determine the need for additional bonding by the new operator. In the event the Supervisor determines the new owner needs additional bonding, he shall notify the new owner of this no later than fifteen (15) days before the closing. The previous owner shall remain liable for plugging the wells until the new owner provides the additional requested bonding.
Section 5. Application for Permit to Drill or Deepen a Well (Form 1). Before any person shall spud in and begin the drilling of any well on Fee, Patented, State, or Federal lands, or deepen any such wells by drilling to a lower formation, such person shall file an Application for Permit to Drill or Deepen with the Commission and pay a fee of fifty dollars ($50.00), effective May 1, 1996. No drilling activity shall commence until such application is approved and a permit to drill is issued by the Commission.
For wells drilled on fee, patented and state land, prior to construction of the drilling location, approval of Form 14-B - Application to Construct a Reserve Pit - must be obtained. The Application for Permit to Drill will not be processed until this requirement is met. A federal Application for Permit to Drill will be accepted in lieu of Form 1 and Form 14-B for wells drilled on federal leases.
The application for Permit to Drill or Deepen shall be accompanied by an accurate plat showing the location of the proposed well with reference to the nearest lines of an established public survey. Information to be included in such notice shall be the type of tools to be used, proposed depth to which the well will be drilled, estimated depth to the top of the important markers, estimated depth to the top of objective horizons, the proposed casing program, including size and weight thereof, the depth at which each casing string is to be set, and the amount of cement to be used. Information shall also be given relative to the drilling plan, together with any other information which may be required by the Supervisor. Where multiple Applications for Permit to Drill will be sought for several wells proposed to be drilled to the same zone within an area of geologic similarity, approval may be sought from the Supervisor to file a comprehensive drilling plan containing the information required above which will then be referenced on each Application for Permit to Drill.
In addition to any other required form or attachment to the Application for Permit to Drill, the following shall be submitted: (a) For directional wells a diagram clearly showing the proposed direction of the deviation and the proposed horizontal distance between the bottom of the hole and the surface location. (b) For horizontal wells a diagram shall be submitted clearly showing the wellbore path from the surface through the terminus of the lateral.
A horizontal well's number shall be appended with an "H" suffix, denoting horizontal, in Block 8 of Form 1. If more than one lateral borehole extends from the same vertical wellbore, each such lateral must be permitted as an individual horizontal well with an "H" suffix. Under "AT PROPOSED PROD. ZONE" in Block 4, the proposed footage locations of both the initial penetration into the productive formation and the terminus of the lateral shall be entered. The well's surface location shall be entered in both Blocks 4 and 11. If the application is for a permit to drill a horizontal well, notice of the application shall be given by certified mail to all owners within one-half mile of any point on the entire length of the horizontal wellbore, from the surface location through the terminus of the lateral.
After receipt by the Commission at the office of the Supervisor of a proper application from an interested party requesting the establishment of drilling units or the revision of existing drilling units for the spacing of wells within a certain designated area, or upon a decision by the Supervisor or the Commission to call a hearing for the establishment of drilling units or the revision of existing drilling units within a certain designated area, any application for permit to drill within any such designated area will be held in abeyance by the Commission until such time as the matter has been fully heard and determined; except, however, a permit shall be issued by the Supervisor if an owner files a sworn application and demonstrates thereto to the Supervisor's satisfaction that on the date the application requesting such drilling units was filed:
(a) He has the right or obligation under the terms of an existing contract to drill said well; and
(b) He has a leasehold estate or right to acquire a leasehold estate under said contract which will be terminated unless he is permitted to commence the drilling of said well before the matter of spacing can be fully heard and determined by the Commission.
If drilling is not commenced, no such permit to drill shall be valid after the expiration of a period of one year (1) from the date of the issuance thereof by the Commission or its authorized agents.
All plats shall contain the following information:
(a) Township, range and section that the well is to be located within;
(b) North arrow;
(c) Scale of drawing. This should include a bar graph and a ratio showing the scale of the map;
(d) A description of all monuments found, set, reset or replaced and notation of all distances measured between the corners used in establishing the section boundary in which the well is located;
(e) Distances from the nearest established section boundary lines to the proposed well;
(f) Ungraded ground elevation of the well;
(g) Basis of elevations;
(h) Basis of bearings;
(i) Signed Wyoming Registered Land Surveyor Certificate or statement indicating that the well was actually staked by the surveyor or others under his direct supervision as exhibited on the plat. (As amended).
Section 6: Application for Permit to Drill Stratigraphic Test or Core Hole (Form 1). A twenty-five dollar ($25.00) filing fee shall be required for the drilling of a stratigraphic test or core hole, but an Application for Permit to Drill shall be filed with the Supervisor and approved by him prior to the drilling of such test or hole.
Section 7. Notice of Intention to Change Plans (Form 4). Where unexpected conditions necessitate any material change in the plans of proposed work already approved, complete details of the changes must be submitted to the Supervisor and approval thereof obtained before the work is undertaken.
Section 8. Notice of Intention to Recomplete Well (Form 4). Before commencing operations to recomplete a well in any pool other than the pool from which such well is then producing, a detailed written statement of the plan of work must be filed with the Supervisor and approval obtained before the work is started.
Section 9. Well Completion or Recompletion Report and Log (Form 3). Upon completion or recompletion of a well, stratigraphic test or core hole, or the completion of any remedial work such as plugging back or drilling deeper, acidizing, shooting, formation fracturing, squeezing operations, setting a liner, gun perforating or other similar operations not specifically covered herein, a report on the operation shall be filed with the Supervisor. Such report shall present a detailed account of the work done and the manner in which such work was performed; the daily production of oil, gas, and water both prior to and after the operation; the size and depth of perforations, the quantity of sand, crude, chemical or other materials employed in the operation and any other pertinent information of operations which affect the original status of the well and are not specifically covered herein.
Section 10. Operator's Monthly Report of Wells (Form 2 and Form 16). A report of all oil, water and gas production, injection for enhanced recovery purposes, and sales shall be filed in duplicate with the State Oil and Gas Supervisor at Casper, Wyoming, on or before the last calendar day of the month succeeding the month covered by the report. Reports shall be submitted on Wyoming Oil and Gas Conservation Form 2 (Revised 1-1-82) for all wells located on fee or patented, State, Federal, or Indian lands regardless of status. Production and injection data shall be reported on an individual well basis, whereas sales data may be reported as lease totals.
Operators of disposal wells shall file a monthly report on Form 16A unless the Supervisor has waived that requirement and approved their reporting on Form 2. Form 16B is an annual application for exclusion from filing the Operator's Monthly Disposal Well Report - Form 16A.
Section 11. Notice of Change of Owner (Form 7). Any owner or part owner, as defined herein, who shall be bound under a performance bond and who shall convey his interest to another, shall file a Notice of Change of Owner (Form 7) with the Supervisor thirty (30) days prior to the conveyance.
Section 12. Notice of Intention to Abandon Well (Form 4). Before beginning abandonment work on any well, stratigraphic test, core hole, dry hole, or other exploratory hole, a Notice of Intention to Abandon shall be filed with the Supervisor an approval obtained as to method of abandonment before the work is started. The notice must show the reason for abandonment, and must give a detailed statement of proposed work including such information as kind, location, and length of plugs (by depths), and plans for mudding, cementing, shooting, testing, and removing casing, as well as any other pertinent information.
When the well or other exploratory hole to be plugged may safely be used as a fresh water well, and such utilization is desired by the landowner, the well need not be filled above the required sealing plug set below fresh water; provided that written request for such use is secured from the landowner, and in such written request, the landowner assumes the responsibility to plug the well upon its abandonment as a water well in accordance with applicable rules. Such written request and assumption of responsibility shall be filed with the Supervisor.
Section 13. Temporarily Abandoned, Shut-In, or Dormant Wells (Form 4 and Form 2). A well may be maintained as temporarily abandoned or shut-in provided any change in the status of the well is reported to the Supervisor on Form 4 and every month subsequent to the reported change, the well is listed on Form 2.
A well may not be maintained as temporarily abandoned or shut-in for more than twenty-four (24) consecutive months from the date the well was first reported as temporarily abandoned or shut-in on Form 4 unless the operator of the well applies for and receives approval for an extension from the Supervisor. The Supervisor may prescribe forms or other information to be submitted with the extension request. Extensions may be granted for periods up to two (2) years.
Prior to approving a request for extension, the Supervisor may, upon a finding of good cause, require mechanical integrity testing or other surveillance of the temporarily abandoned or shut-in well. A temporarily abandoned or shut-in well which successfully passes a mechanical integrity or surveillance test shall not be required to undergo another test for five (5) years unless the Supervisor finds upon good cause that circumstances have substantially changed to alter the condition of the well.
The Supervisor may require any well which has been temporarily abandoned or shut-in for more than twenty-four (24) consecutive months or any temporarily abandoned, shut-in, or dormant well which has not been mechanically integrity tested within the preceding five (5) year period to undergo a mechanical integrity or other surveillance test prior to change in operator. Mechanical integrity testing must be performed in a manner consistent with UIC program pressure testing rules.
The manner in which the well is to be maintained must be reported to the Supervisor on Form 4 and approved by him. Bonding requirements, as provided in Rule 304 will be kept in force until such time as the well is permanently plugged and abandoned.
Section 14. Subsequent Report of Abandonment (Form 4). If a well, stratigraphic test or core hole is plugged and abandoned, a subsequent record of work done must be filed with the Supervisor within thirty (30) days of the date of the plugging. This report shall give a detailed account of the manner in which the abandonment or plugging work was carried out, including the weight of mud and nature and quantities of materials used in plugging and the location and extent (by depths) of the plugs of different materials. The operator or owner should make reference to verbally approved plugging and abandoning procedures. Records of any test or measurement made, and records of the amount, size and location (by depths) of casing must be included. Cementing records, including the well cementing ticket or invoice from the party furnishing the cement, shall be preserved for one (1) year and a copy transmitted to the Supervisor upon request.
When rehabilitation of the surface is complete and the well is ready for inspection and bond release, the operator or owner shall so advise the Supervisor by providing a sundry notice. Inspections for the purpose of bond release will not be made by the Commission staff until that request is provided by the operator.
The Commission accepts copies of reports prepared to satisfy the requirements of the Bureau of Land Management when that agency has jurisdiction over the subject well.
Section 15. Plugging of Wells, Stratigraphic Tests, Core, or Other Exploratory Holes (Form 4). It shall be the duty of any owner or person who assumes ownership, operator, or contractor drilling any well, seismic, stratigraphic test, core or other exploratory hole, whether cased or uncased, regardless of diameter, to plug said hole in accordance with the requirements of the Supervisor or as set forth hereinafter and in a manner sufficient to properly protect all fresh water bearing formations and possible or probable oil or gas bearing formations.
For wells as defined in Definition 118 of the Commission Rules and Regulations, plugging must be accomplished by placing cement plugs of at least one hundred feet (100') in length over the following:
(1) Open hole porous and permeable formations;
(2) At least every twenty-five hundred feet (2,500') if porous and permeable formations are not encountered;
(3) Over the "stub" of casing left in the wellbore;
(4) In the base of the surface casing;
(5) And at any other depth as required by the Supervisor.
Cast iron bridge plugs set inside casing will be capped with at least two (2) sacks of cement. Open perforations must be squeeze cemented. Verbal approval to plug and abandon or approval of Notice of Intention to Abandon (NIA-Form 4) must be obtained prior to commencing actual plugging operations. Under Chapter IV, Section 6, special plugging orders or variances from normal practice may be obtained or set forth when conditions dictate to protect fresh water bearing formations.
In plugging horizontal wells, a continuous cement plug shall be placed from at least one hundred feet (100') into the lateral back to one hundred feet (100') into the vertical portion of the wellbore, unless an alternate plugging program is approved by the Supervisor. The remaining portion of the vertical wellbore shall then be plugged in accordance with the preceding requirements.
When the well has been plugged and the site has been rehabilitated, a notarized Subsequent Report of Abandonment (SRA-Form 4) must be submitted to the Supervisor requesting inspection of the site for bond release. The SRA will be approved only after the site has been inspected and recommended for bond release by a Commission staff member. Copies of plugging reports or other pertinent information for wells drilled on Federal lands must be filed with the Commission in a timely manner in order that field information for UIC area reviews be current.
No substances of any nature or description other than those normally used in plugging operations shall be placed in any well at any time during plugging operations.
Section 16. Well Designation and Markers. The owner shall mark each drilling, producing or injection well in a conspicuous place with his name, name of lease, number of well and legal description of the location of the well. All signs shall be maintained in a legible condition.
All abandoned wells shall be marked with a permanent monument on which shall be shown the operator, the lease, the number and location of the well, or, at the request of the landowner, a plug or seal shall be placed at the surface of the ground or the bottom of the cellar in the hole in such a manner as not to interfere with soil cultivation or other surface use. The monument, if erected, shall consist of a piece of pipe not less than four inches (4') in diameter and not less than ten feet (10') in length of which four feet (4') shall be above the ground level, the remainder being securely imbedded in cement. The top of the pipe must be permanently sealed.
In the event a marker is not erected, the operator is requested to leave a temporary steel fence post marked with the well number and location adjacent to the well bore so the field inspectors can easily find the location.
Section 17. Well Records and Reports. The owner shall keep on the leased premises, or at his headquarters in the field, or otherwise conveniently available to the Supervisor, accurate and complete records of the drilling, redrilling, deepening, repairing, plugging or abandoning of all wells, and of all other well operations, and of all alterations to casing. These records shall show all the formations penetrated, the content and quality of oil, gas or water in each formation tested, and the kinds, weight, size and landed depth of casing used in drilling each well on the leased premises, and any other information obtained in the course of the well operation.
Section 18. Filing of Well Logs. Within thirty (30) days after logs are run on any well or within thirty (30) days after the completion of any further operation on it, if such operations involve drilling deeper or redrilling any formation, the owner shall submit to the Supervisor two (2) copies of the well log on the form prescribed by the Commission as well as two (2) copies of the electrical, radioactive, or other similar conventional logs run. If requested by the owner, the Supervisor may grant an extension to the thirty (30) day reporting period for any well. The Commission would appreciate receiving logs, if available, in digital form or disc in addition to those mentioned above.
In addition, operators shall file two (2) copies of drillstem test charts, formation water analyses, porosity, permeability or fluid saturations, core analyses, and lithologic log or sample descriptions if compiled by the operator.
As prescribed under Rule 207 as amended for horizontal wells, the directional, deviation and/or measurement - while - drilling (MWD) survey shall be filed within thirty (30) days of being run. Further, said directional, deviation and/or MWD survey shall not be held confidential as provided hereafter for other logs.
All information furnished to the Supervisor hereunder with respect to exploratory or 'wildcat' wells marked confidential shall be kept confidential for six (6) months after the date said information is required to be filed hereunder, unless the owner gives written permission to release such information at an earlier date. (As amended
December 28, 1984).
Section 19. General Drilling Rules. Unless altered, modified or changed, for a particular pool or pools, upon hearing before the Commission, the following shall apply to the drilling of all wells:
(a) Surface casing shall be run to reach a depth below all known or reasonably estimated utilizable domestic fresh water levels and to prevent blowouts or uncontrolled flows. Fresh water flows detected during drilling including seismic, core, or other exploratory holes shall be recorded on Form 19 and reported to the Commission on the next business day. Information contained on the form shall described the depth at which the sand was encountered, the thickness and the rate of water flow, if known. In areas where pressures and formations are unknown, surface casing shall be of sufficient size to permit the use of an intermediate string or strings of casing. Surface casing shall be set in or through an impervious formation and shall be cemented by the pump and plug or displacement or other approved method with sufficient cement to fill the annulus to the top of the hole, all in accordance with reasonable requirements of the Supervisor. If cement is not circulated to the surface during the primary operation, the operator shall perform supplemental cemented operations to assure that the annular space from the casing shoe to the surface is filled with cement. (b) Unless otherwise provided by specific order of the Commission for a particular well or wells or for a particular pool or parts thereof, cemented casing string shall stand under pressure until the cement has reached a compressive strength of 300 pounds per square inch; providing, however, that no further operation shall be commenced until the cement has been in place for at least eight (8) hours. The term "under pressure" as used herein shall be complied with if one float valve is used or if pressure is otherwise held. (c) There shall be installed and maintained on all wells blowout preventers and related equipment in accordance with Chapter III, Section 20-A. (d) Setting depths of all casing strings shall be determined by taking into account formation fracture gradients and the maximum anticipated pressure to be maintained within the wellbore. (e) If and when it becomes necessary to run a production string, such string shall be cemented by the pump and plug method and shall be properly tested by the pressure method before cement plugs are drilled. (f) Before drilling commences, approval to construct proper and adequate reserve pits for the reception and confinement of mud and cuttings and to facilitate the drilling operation shall be applied for and received in accordance with Rule 401. Special precautions, including but not limited to, an impermeable liner and/or membrane, monitoring systems, or closed systems, shall be taken, if necessary, to prevent contamination of streams and potable water and to provide additional protection to human health and safety in instances where drilling operations are conducted in close proximity to water supplies, residences, schools, hospitals, or other structures where people are known to congregate. Pits shall be located no closer than three hundred fifty (350) feet from any of the aforementioned items. The Supervisor may impose greater distances for good cause and likewise grant exceptions to the 350 foot rule. (g) Natural gas which may be encountered in a substantial quantity in any section of cable tool drilled hole above the ultimate objective shall be shut off with reasonable diligence either by mudding or by casing, or other approved method, and confined to its original source to the satisfaction of the Supervisor. Any gas escaping from the well during drilling operations shall be, so far as practicable, conducted to a safe distance from the well site and burned. (As amended December 28, 1985).
Section 20. Blowout Preventers. Unless altered, modified or changed, for a particular pool or pools, upon Hearing before the Commission, blowout preventers and related equipment shall be installed and maintained during the drilling of all wells in accordance with the following rules:
(a) BOP equipment installed on wells in which formation pressures to be encountered are abnormal or unknown shall consist of a double-gate, hydraulically operated preventer with pipe and blind rams or two single-ram type preventers, one equipped with pipe rams, the other with blind rams and an annular type preventer. In addition, upper and lower kelly cocks, pit level indicators with alarms and/or flow sensors with alarms, and surface facilities to handle pressure kicks shall be installed prior to drilling any formation with known abnormal pressure. Accumulators shall maintain a pressure capacity reserve at all times to provide for operation of the hydraulic preventers and valves with no outside source. Areas in which abnormal pressures are likely to be encountered will be defined by the Commission's staff and posted on a map to be available in the State Oil and Gas Supervisor's office. This map, to be updated as information becomes available, will also segregate, vertically, formations where abnormal pressures are likely to be encountered.
In all other drilling operations, BOP equipment shall consist of at least one double-gate preventer with pipe and blind rams or two single-ram type preventers, one equipped with pipe rams, the other with blind rams, and sufficient valving to permit fluid circulation at the surface.
(b) All blowout preventers, choke line and manifold shall be installed above ground level. Casing heads and optional spools may be installed below ground level provided they are visible and accessible.
(c) Blowout preventer equipment and related casing heads and spools shall have a vertical bore no smaller than the inside diameter of the casing to which they are attached.
(d) The working pressure rating of all blowout preventers and related equipment shall equal or exceed the maximum anticipated pressure to be contained at the surface.
(e) All ram type blowout preventers and related equipment, including casing, shall be tested to the full working pressure rating of said equipment upon installation, providing that components need not be tested to levels higher than the lowest working pressure rated component. Annular type blowout preventers are to be tested in conformance with the manufacturers published recommendations. If, for any reason, a pressure seal in the assembly is disassembled, a test to a full working pressure rating of that seal shall be conducted prior to the resumption of any drilling operation. In addition to the initial pressure tests, ram type preventers shall be checked for physical operation each trip and all components, again with the exception of the annular type blowout preventer, tested monthly to at least fifty percent (50%) of the rated pressure of the BOP equipment and/or to the maximum anticipated pressure to be contained at the surface, whichever is greater.
(f) The Supervisor may require an affidavit covering the initial pressure tests after the installation signed by the operator or contractor attesting to the satisfactory pressure tests. The Supervisor is to be advised at least twenty-four (24) hours in advance of all tests.
(g) A Schematic diagram of the BOP and well head assembly shall be submitted to the Supervisor upon application for a permit to drill. The schematic diagram should indicate the minimum size and pressure rating of all components of the well head and BOP assembly.
(h) Studs on all well head and BOP flanges should be checked for tightness each week. Hand wheels for locking screws shall be installed and operational and the entire BOP and well head assembly shall be kept clean of mud and ice.
(i) A drill stem safety valve shall be available on the rig floor at all times.
(j) Blowout prevention equipment used in possible or probable hydrogen sulfide or sour gas formations shall be suitable for use in such areas. (New Rule May 21, 1974).
Section 21. Vertical Drilling. Unless otherwise ordered by the Commission upon hearing, all wells shall be so drilled that the horizontal distance between the bottom of the hole and the location at the top of the hole shall be at all times a practical minimum. Horizontal wells are exempt from this rule.
Section 22. Directional Drilling. Before beginning controlled directional drilling, other than whipstocking because of hole conditions, when the intent is to direct the bottom of the hole away from the vertical, notice of intention to do so shall be filed with the Supervisor and his approval obtained. Such notice shall state clearly the depth, exact surface location of the wellbore, proposed direction of deviation, and proposed horizontal distance between the bottom of the hole and surface location. If approval is obtained, the owner shall file with the Supervisor within thirty (30) days after the completion of the work an accurate and complete copy of the survey made. Additional notice to directional drill shall not be required if the proposed bottom hole location will be drilled to an authorized location pursuant to Rule 302, a drilling and spacing order, or any other special order of the Commission.
This rule also applies to horizontal wells, and the horizontal well diagram submitted with the Application for Permit to Drill shall serve as the above required notice to the Supervisor.
Section 23. Water Shut-offs. By approved reasonable methods, the owner shall shut off and exclude all alien water from any oil or gas-bearing stratum to the satisfaction of the Supervisor, and to determine the effectiveness of such operations, the owner shall, unless otherwise requested by the Supervisor, make a casing and water shut-off test before suspending drilling operations or completing the well.
Section 24. Protection of Upper Productive Strata. The owner shall not deepen an oil or gas well for the purpose of producing oil or gas from a lower stratum until all upper productive strata are protected to the satisfaction of the Supervisor.
Section 25. Open Flows and Control of "Wild Wells". The owner shall take reasonable precaution to prevent any oil, or gas or water well from blowing open or "wild", and shall take immediate steps and exercise due diligence to bring under control any such well or burning oil or gas well.
Section 26. Accidents, Spills, and Fires. The owner or operator shall take all reasonable precautions to prevent accidents and fires, shall notify the Supervisor within twenty-four (24) hours of all accidents (other than personal injuries and deaths) or fires of major consequence and shall submit a full report thereon within fifteen (15) days.
Uncontained spills or unauthorized releases of produced fluids, drilling muds, produced water, hydrocarbons, or chemicals which enters, or threatens to enter, waters of the state must be verbally reported to the Commission no later than the next business day following discovery of the incident. Spills of less than ten (10) barrels (420 gallons) of crude oil, petroleum condensate, produced water, or a combination thereof which occur on a lease, unit or communitized area and do not physically enter waters of the state and are immediately contained, removed, and disposed of properly are not required to be reported. The owner or operator shall file a written report within fifteen (15) working days. An example of the information normally required by the Commission for reporting spills is included in Appendix A. The Commission accepts copies of reports prepared to satisfy the requirements of the Department of Environmental Quality or the Bureau of Land Management.
Section 27. Workmanlike Operations. The owner or operator shall carry on all operations and maintain the property at all times in a safe and workmanlike manner, having due regard for the preservation and conservation of the property and for the health and safety of employees and people residing in close proximity to those operations or those who routinely are in close proximity to those operations. At a minimum, the owner or operator must unless otherwise approved by the Supervisor:
(a) Take reasonable steps to prevent and promptly remove accumulations of oil or other materials deemed to be fire hazards from the vicinity of well locations, lease tanks, and pits.
(b) All materials and chemicals should be maintained in an orderly and safe manner. Refuse should be disposed of properly as provided elsewhere in these rules.
(c) Provide for clear identification of ownership of the property at all times and comply with the requirements in Rule 319 for the marking of each drilling, producing, or injection well.
(d) Locate all permanent ignition sources, such as heater treaters no closer than one hundred (100) feet from the wellhead.
(e) Locate production tanks and/or associated production equipment no less than three hundred fifty (350) feet from any residences, schools, hospitals, or other places where people are known to congregate. (f) Provide fencing or other reasonable means to prevent access to all pumps, pits, wellheads, production facilities which is reasonably adequate to secure the site in such a manner as to protect public health and safety concerns, wildlife and livestock at the well location. (g) Maintain tanks in a workmanlike manner which will preclude seepage from their confines and provide for all applicable safety measures. Owners or operators should be aware of their responsibility to comply with spill prevention control and countermeasures plan (SPCC 40 CFR 112) requirements. The use of crude oil tanks without tops is strictly prohibited. (h) Where facilities are in close proximity to populated areas or where there is an eminent and present danger to the public health and safety, the Supervisor may request survey plats and/or plan views of all improvements on a lease or facility and require evidence that the facility has been constructed in accordance with good engineering practices and with consideration of safety measures. (i) Install a valve on all treaters and/or production facilities so that produced water sampling required by the Commission's rules can be performed in a reasonable and easy manner. (j) Dispose of produced water, tank bottoms, and other miscellaneous solid waste in a manner which is in compliance with the Commission's rules and other state, federal, or local regulation.
Section 28. Use of Gas for Artificial Lifting. Gas may be used for artificial lifting of oil where all such gas returned to the surface with the oil is used without waste. Where the returned gas is not to be so used, the use of gas for artificial lifting of oil is prohibited unless otherwise specifically authorized by the Supervisor.
Section 29. Classification of Gas Production. Whenever in any pool the Commission after due notice and hearing limits the total amount of gas which may be produced to an amount less than that which the pool could produce if no restriction was imposed, then, for the purpose of allocating and distributing the allowable production of such gas as required by Section 30-217, each well in said pool the principal production of which at the mouth of the well is oil, which also unavoidably produces with said oil gas in excess of the amount required for lease fuel or other lease purposes, and in quantities found by the Commission after due notice and hearing to be sufficient to make it economically feasible for the producer to save or use all or any part of such gas shall be classified as a gas well under Section 30-234.2 and as an oil well under Section 30-234.1, as applicable, so that each producing property will have the opportunity to produce or to receive its just and equitable share of both oil and gas.
Section 30. Measurement of Oil. The volume of production of oil shall be computed in terms of barrels of clean oil on the basis of meter measurements or tank measurements of oil-level difference, made and recorded to the nearest quarter-inch of 100-percent-capacity tables, subject to the following corrections;
(a) Correction for Impurities - The percentage of impurities (water, sand, and other foreign substances, not constituting a natural component part of the oil) shall be determined to the satisfaction of the Supervisor, and the observed gross volume of oil shall be corrected to exclude the entire volume of such impurities. (b) Temperature Correction - The observed volume of oil corrected for impurities shall be further corrected to the standard volume of (60\circ) Fahrenheit in accordance with A.S.T.M. D-1250, Table 6 or Table 7, or any revisions thereof and any supplements thereto or any close approximation thereof approved by the Supervisor. (As amended August 3, 1974). (c) Gravity Determination - The gravity of oil at (60\circ) Fahrenheit shall be determined in accordance with A.S.T.M. D-1250, Table 5, or any revisions thereof and any supplements thereto approved by the Supervisor.
Section 31. Measurement of Gas. Gas of all kinds shall be measured by meter unless otherwise authorized by the Supervisor. For computing the volume of gas to be reported to the Supervisor, the standard pressure base shall be 14.73 pounds per square inch absolute (psia), regardless of the atmospheric pressure at the point of measurement, and the standard temperature base shall be 60° Fahrenheit. All volumes of gas to be reported to the Supervisor shall be adjusted by computation to these standards, regardless of pressures and temperatures at which the gas was actually measured, unless otherwise authorized by the Supervisor.
Conversion from some common measurement bases is accomplished as follows:
| Measured Volume At | Times | Equals Volume At | ||
|---|---|---|---|---|
| 14.4 psia | x | .9776 = | 14.73 psia | |
| 14.65 psia | x | .9945 = | 14.73 psia | |
| 14.73 psia | x | 1.0000 = | 14.73 psia | |
| 16.4 psia | x | 1.1134 = | 14.73 psia |
(As amended June 2, 1977).
Section 32. Open Pit Storage of Oil. The owner shall not, except during an emergency or except by special permission of the Supervisor, permit oil to be temporarily stored or retained in earthen reservoirs or in any receptacle in which there may be undue waste of oil.
Section 33. Report for Gasoline or Other Extraction Plants (Form 9). All operators of gasoline or other extraction plants shall make monthly reports to the Commission on Form 9, Sheets 1 and 2. Such forms shall contain all information required therein and shall be filed with the Supervisor by the 20th of the succeeding month.
Section 34. Vacuum Pumps. The installation of vacuum pumps or other devices for the purpose of imposing a vacuum at the well head on any oil or gas well or any oil or gas bearing reservoir is permitted only upon order of the Commission, or upon approval of the Supervisor, obtained pursuant to an application therefore filed in accordance with the Rules of Practice and Procedure. The application shall set forth the names of all owners within one-half (1/2) mile of the affected well or wells and shall be accompanied by a plat showing the location of all wells on applicant's lease and all offset wells of interested parties which have been or may be capable of being completed in the same pool or pools.
Section 35. Underground Disposal of Water. The underground disposal of fresh water or of salt water, brackish water, or other water unfit for domestic, livestock, irrigation, or other general uses, is permitted only upon order of the Commission or approval of the Supervisor, obtained pursuant to an application therefore filed in accordance with the Rules of Practice and Procedure, as amended herein. Orders authorizing disposal wells shall remain valid unless revoked by the Commission for just cause. In addition, there is assessed a twenty-five dollar ($25.00) annual fee on all new and old disposal wells, effective July 1, 1996.
The applicant shall have the burden of demonstrating that the proposed disposal operation will not endanger fresh water sources. Disposal wells shall be cased and the casing cemented in such a manner that damage will not be caused to oil, gas, or fresh water sources.
The application to dispose of salt water, brackish water, or other water unfit for domestic, livestock, irrigation, or other general uses shall include:
(c) The names, description, and depth of the formation into which water is to be injected, including a mechanical log of the proposed disposal well or wells if one is available.
(d) A description of the casing in the disposal well or wells, or the proposed casing program and the proposed method for testing casing before use of the disposal well or wells.
(e) A statement specifying the source of water to be injected.
(f) The estimated minimum and maximum amount of water to be injected daily.
(g) The average and maximum disposal pressure.
(h) Evidence and data to support a Commission finding that the proposed disposal well will not initiate fractures through the overlying strata or confining zone which could enable the injection fluid or formation fluid to enter the fresh water strata.
(i) Standard laboratory analysis of the (1) water to be disposed and (2) the water in the formation into which disposal is taking place. Form 17 - Water Analysis Report found in the back of the book - illustrates the minimum parameters for which water must be analyzed. Other reporting formats which include this minimum information may be accepted.
(j) A reference to the Commission order exempting the aquifer that is to receive the injected fluid.
(k) The applicant shall provide for a quarter (1/4) mile radius of investigation for mechanical conditions of all wells which have penetrated the disposal zone surrounding a proposed disposal well. Specifically known and documented geological features may limit the need to review all wells within the quarter (1/4) mile radius.
(l) The depth and areal extent of all usable fresh and potable water (USDW) underlying the area proposed for exemption.
(m) An operator or owner who files an application for approval of a disposal well which is within a one-half (1/2) mile radius of a well producing from the proposed disposal zone shall give notice of the application to the royalty and overriding royalty interest owners within said radius unless the wells are located within a unit.
For the purpose of this rule, a mechanical integrity test of an injection well is a test designed to determine; 1) if there is a significant leak in the casing, tubing, or packer of the well, and 2) if there is significant fluid movement into an underground source of drinking water through vertical channels adjacent to the well bore.
Mechanical integrity must be established by the owner or operator no less than once every five (5) years. A mechanical integrity test shall include one of the following tests to determine whether significant leaks are present in the casing, tubing, or packer:
(a) The owner or operator may test the casing-tubing annulus above the packer at the greater of a minimum pressure of 300 psi or a pressure equivalent to the maximum injection pressure, but no higher than 1,000 psi. For the purpose of pressure testing, packers or bridge plugs must be set within one hundred (100) feet of perforations. A retrievable bridge plug may be utilized in casing to test tubingless completions. Operators must provide the Commission staff the opportunity to witness all integrity tests. In the event a representative of the Commission is unable to witness the test, the owner or operator is required to provide documentation of the test to the Commission.
(b) As an alternative to the pressure test, the owner or operator may use any test or combination of tests approved by EPA.
(c) The initial mechanical integrity test for all disposal wells approved after February 1, 1993, shall include one of the following tests to determine whether there are significant fluid movements in vertical channels adjacent to the well bore:
(d) As provided by Rule 207, if normal testing, surveys, or monitoring schedules are inconclusive proof of mechanical reliability, the Commission shall require that other appropriate logs, or additional well test, be performed.
(e) All disposal wells are required to maintain mechanical integrity as defined by these rules. Any well which fails a mechanical integrity test, or which has been determined through other means to not have mechanical integrity, is required to be shut-in immediately. Once an injection well is determined to lack mechanical integrity, within ninety (90) days of the determination, it must be repaired and retested or plugged and abandoned. For just cause, in order to continue injection operations or to extend the deadlines for repairing or plugging wells, owners or operators may request variances. These requests must demonstrate that the leaks do not pose a threat to any underground sources of drinking water.
New owners are obligated to carry out previously approved programs in the manner originally approved. Change of ownership must be filed in accordance with Chapter III, Section 11.
Modifications or variations of existing or pending disposal operations may be approved by the Supervisor under Chapter III, Section 7, upon application containing sufficient detail for the Supervisor to evaluate the proposed modification. Permits for remedial work under this section are only valid for ninety (90) days but can be extended on request by filing a Sundry Notice (Form 4) with the Supervisor assuming there has been no change in geologic, regulatory, or environmental situations. No such variance shall be approved unless the applicant proves to the Supervisor or the Commission that the variance will not endanger fresh water.
The Commission shall publish notice of the disposal application fifteen (15) days before approval in (1) a newspaper in general circulation in Natrona County, and (2) a newspaper of general circulation in the county in which the disposal well is located.
Disposal operations must commence within one (1) year of the approval date of the disposal application or the approval shall be null and void.
Section 36. Multiple Zone Completion or Commingling in One Well Bore. The multiple zone completion of a well and the production of oil or gas from more than one pool from one well without segregation of such production are permitted only upon order of the Commission, or approval of the Supervisor, pursuant to an application filed in accordance with the Rules of Practice and Procedure.
The applicant shall set forth the manner and method of completion proposed, including a diagrammatic sketch of the mechanical installation for a multiple zone completion; the names of all owners within one-half (1/2) mile of the well or wells in which the multiple zone completion is to be attempted or in which the production is to be commingled; and shall be accompanied by a plat showing the location of all wells on the applicant's lease and all offset wells on direct and diagonally offsetting leases which have been or may be capable of being completed in the same pool or pools.
The Supervisor may require such tests as he deems necessary to determine the effectiveness of the segregation of the different productive zones in a multiple zone completion.
Section 37. Production Test and Gas-Oil Ratio Report. (Forms 10 through 13). Gas-oil ratio reports can be required by the Supervisor with the concurrence of the Commission on certain wells if it is deemed necessary to obtain information of this nature.
All gas wells, shall be tested initially unless waived by the State Oil and Gas Supervisor on the APD or other administrative approval or by order of the Commission. The initial tests shall be multipoint back-pressure tests (stabilized multipoint or constant time multipoint or isochronal multipoint) or acceptable one-point back-pressure tests. The results shall be furnished to the State Oil and Gas Supervisor on prescribed or other acceptable forms. The methods prescribed in the Interstate Oil Compact Commission's "Manual of Gas Well Testing" or an alternate method approved by the Supervisor shall be used.
As a guideline for multipoint tests, each flow rate durations shall be set at a minimum of thirty (30) minutes and a maximum of two (2) hours depending on stabilization. The shut-in period shall be a minimum of seventy-two (72) hours.
On one-point tests, the flow rate shall be a minimum of twenty-four (24) hours, and the shut-in period shall be a minimum of seventy-two (72) hours. (As amended May 6, 1976).
Gas-oil ratio reports for horizontal wells shall be filed upon initial completion and annually thereafter on Form 10.
Section 38. Seismic Operations, Geophysical Operations. Before a geophysical contractor conducts surface shooting operations he shall give notice to an occupant of every inhabited dwelling within a one mile radius of each shot point. Such notice shall be given in writing or by in-person contact. The notice shall tell the occupant of the nature and approximate time period of the seismic surface shooting activity.
Before beginning seismic shot hole operations in the State of Wyoming, a representative of the client company and the seismic contractor shall meet with the staff of the Commission and file an application for a permit to conduct seismic operations. No seismic operations shall be conducted without such a permit. The Supervisor has discretion to waive the requirement of the pre-permit meeting for the client company. The permit for seismic operations may be revoked, suspended, or the application for the permit denied by the Commission or Supervisor for failure to comply with the Commission's rules, statutes, and orders of the Supervisor or Commission. The Supervisor may revoke, suspend or deny the application for a seismic permit without a hearing, provided that the seismic contractor shall be given an opportunity for a hearing at the next regularly scheduled Commission meeting. The fact a permit is revoked or suspended does not excuse the seismic contractor or client company from properly plugging existing seismic holes, but does prohibit him from drilling any more.
The application for a permit for seismic operations must include the following information:
(a) The approximate number, depth, and location of the seismic holes and the size of the explosive charges. The application shall be accompanied by a Bureau of Land Management Surface-Minerals Management Quad Map with a scale of one inch to two miles that shows the depth and location of the shot holes. (b) The name and permanent address of the client company and a phone number and name of a local representative of the client company the Commission may contact about the seismic operation. (c) The name, permanent address, and phone number of the seismic contractor and his local representative whom the Commission can contact about the seismic activity. (d) The name, phone number, and permanent address of the hole plugging contractor, if different from the seismic contractor.
(e) A detailed description of the hole plugging procedures and plugging material to be used. (f) The anticipated starting date of seismic and plugging operations. (g) The anticipated completion date of seismic and plugging operations. (h) A description of the identifying mark that will be on the hat or non-metallic plug to be used in the plugging of the seismic hole.
Before beginning geophysical operations, the geophysical contractor must file and have approved by the Commission a bond in the amount of $50,000. The condition of such bond shall be in compliance with the Oil and Gas Conservation Law, the rules and orders of the Commission, and orders of the Supervisor and/or his duly authorized representatives. The obligation of the bond shall not be discharged until the geophysical contractor has complied with the Oil and Gas Conservation Law, the Commission's rules, and the orders of the Commission and Supervisor and their agents. Provided, however, upon verified application the Supervisor may waive or modify this bonding requirement for geophysical contractors, based on the amount of potential damage from the contemplated operation.
Persons or other entities who engage in the plugging of seismic holes and are not a regular full time employee of the seismic company or operator shall have posted with the Commission a surety bond in favor of the Commission. Said bond shall be on a form prescribed by the Commission and in the amount of $10,000. The condition of the bond shall be in compliance with the Oil and Gas Conservation Law, the regulations of this Commission, the orders of this Commission, the State Oil and Gas Supervisor, and their duly authorized agents and employees.
Upon completion of the seismic activity or at thirty (30) day intervals after the work has commenced, whichever occurs first, the seismic contractor shall file with the Commission a report of the completion or progress of the seismic project. The final completion report shall be in affidavit form and shall include a 4½ or 15 minute United States Geological Survey topographic, quadrangle map (at a scale of one inch equals two thousand feet or one inch equals four thousand feet that shows section, township, and range) and the location of each shot hole so that the shot holes can be easily located. The final completion report shall also include a statement that all work has been performed in compliance with the application for a permit to perform seismic activity, Commission Rule 339, and permit provisions. Said maps, applications, and reports shall be kept confidential by the Commission for a period of five (5) years from the date of receipt, subject to the needs of the Commission to use them to enforce these regulations, the Oil and Gas Conservation Law, and the orders of the Commission or Supervisor. Also, the owner of the surface of the land may be advised of the location of the seismic lines or seismic holes on his land and of the exploration method used.
Fresh water flows detected during drilling including seismic, core, or other exploratory holes shall be recorded on Form 19 and reported to the Commission on the next business day. Information contained on the form shall describe the depth at which the sand was encountered, the thickness and the rate of water flow, if known.
Seismic contractors shall give the Commission at least twenty-four (24) hours advance notice of shot hole plugging operations, provided that notice of plugging operations planned for Sunday or Monday may be given on the previous Friday.
Before beginning geophysical operations other than seismic operations, the geophysical contractor shall file a notice of intention to do so with the Commission. Said notice shall describe the geophysical method to be used and be accompanied by a Bureau of Land Management map of a scale of one inch equals two miles showing the location of the project.
The client company may be held responsible along with the seismic contractor for conducting the operation in compliance with the Commission's rules and orders, the Supervisor's orders, and the Wyoming Oil and Gas
Conservation Law, and are subject to the penalties provided by the Oil and Gas Conservation Law for the seismic contractor's failure to comply with such rules, statutes, and orders.
The hats used in the plugging of seismic holes shall be imprinted with the name of the operator responsible for the plugging of the hole. Initials or other identifying marks may be imprinted on the hats with the Supervisor's approval.
Unless the seismic contractor can prove to the satisfaction of the Supervisor that another method will provide better protection to ground water and long term land stability, seismic shot holes operations shall be conducted in the following manner:
(a) Except as provided in paragraph 8, when water is used in conjunction with the drilling of seismic holes or when water is encountered in the hole, seismic holes are to be filled with coarse ground bentonite which meets the specifications of the Commission's Paragraph 11 of this rule. Cuttings not added to the hole are to be disposed of in accordance with guideline number six of this rule. Any other suitable plugging material commonly used in the industry may be substituted, as long as it meets the criteria in Paragraph 11 of this rule, upon approval of the State Oil and Gas Supervisor.
(b) The hole will be filled with the coarse ground bentonite from the bottom up to a depth above the final water level except where the final water level will be within three (3) feet of the surface. No bentonite shall be placed within three (3) feet of the surface. Cuttings shall be added from the top of the bentonite to the surface. A non-metallic plug will be set at a depth of three (3) feet below surface. Cuttings added above the non-metallic plug shall be tamped.
(c) When drilling with air only, and in completely dry holes, a plugging may be accomplished by returning the cuttings to the hole, tamping the returned cuttings to the above referenced depth of three (3) feet, and setting the permaplug topped with more cuttings and soil as per item (b) above. A small mound will be left over the hole for settling allowance.
(d) When the seismic operator uses a method whereby he drills the hole, loads a charge, shoots the charge, and plugs the hole, in that order, the seismic hole shall be properly plugged and abandoned as soon as practical, based on weather conditions after the shot has been fired. In no event shall the hole be left unplugged for over ten (10) days after the hole is drilled without the approval of the Supervisor. When open, the hole shall be covered, at all times, by a metal cap so that animals cannot step in it. When the seismic operator uses a method whereby he drills the hole, loads a charge, plugs the hole, and shoots the charge, in that order, he shall proceed as follows. He shall load and plug the hole as soon as practical, based on weather conditions, after drilling the hole. In no event shall the hole be left unplugged for over forty-eight (48) hours after drilling it without the Supervisor's approval.
(e) Any drilling fluid or cuttings which are deposited on the surface around the seismic hole will be raked or otherwise spread out to at least within one inch (1') of the surface, such that the growth of the natural grasses or foliage will not be impaired.
(f) Seismic shot-hole operations will not be conducted within one quarter (1/4) mile of any building or water well, flowing spring, or stock water pipeline.
(g) Guidelines (a) through (f) above may be modified by any reasonable written agreement between the seismic company and the surface owner.
(h) If artesian flow (water flowing at the surface) is encountered in the drilling of any seismic hole, cement will be used to seal off the water flow thereby preventing cross-flow, erosion, and/or contamination of fresh water supplies. Said holes shall be cemented immediately, subject to severe weather conditions preventing access. Coarse ground bentonite certified by the Commission as meeting the criteria of Paragraph 11 may be substituted for cement with the permission of the Supervisor. Landowners may assume liability for seismic holes that are capable of conversion to water wells by sending a letter assuming such liability to the Wyoming Oil and Gas Conservation
Commission and filing an application for appropriation of underground water with the State Engineer's office.
(i) Seismic holes shall be re-entered only in compliance with the regulations of the Wyoming Occupational Health and Safety Commission and other applicable law. (j) The existing cap leads will be cut off below ground level. (k) Bentonite materials used in seismic hole plugging shall be derived from naturally occurring untreated, high swelling sodium bentonite which consist principally of the mineral montmorillonite and meets the following physical requirements:
| Requirement | Numerical Values |
|---|---|
| Moisture content, as shipped from point of manufacture | 13% Minimum 13% Maximum |
| Free Swell | 18 cu.cm., Minimum |
| Wet Screen Analysis, Residue on U.S. Sieve No. 200 | 15% Maximum |
Dry Sieve Analysis
Retained on 7/8" screen 3%
Retained on 3/8" screen 92%
Ph
Permeability (K)
6-11
1x10⁻⁸cm/Sec., Maximum
EQUIPMENT AND MATERIAL. The following equipment and material are required for testing bentonite for Commission certification:
500 gram representative sample of bentonite product placed in an airtight container for transport to the laboratory and storage.
10% (wt/v.) solution of sodium hexameta phosphate in high purity deionized water.
Laboratory balance: Sensitivity 0.01 gram (g).
Oven: 220° ± 5°F (105° ± 3°C).
Sieves: U.S. Standard No. 200 sieve having a diameter of three inches (3) and a depth of two point five inches (2.5) from the top of the frame to wire cloth. Also, U.S. Standard sieves 3/4, 3/8/ 1/4, and 10 mesh having a diameter of 9 inches or greater.
Graduate Cylinder: 100 cm³ capacity.
Dessicator Jar and Indicator Dessicant.
Mixer: 11,000 + 300 RPM under load, with single corrugated impeller approximately one inch (1) in diameter (eg. Multimixer Model 9B with 9B29X impeller or equivalent as shown in API specification 13A, Section 2).
Shaker: Ro-tap or similar laboratory shaker. (For dry sieve analysis).
Spray Nozzle: Capable of 10 PSI. (eg. No. TG6S, tip with 1/4 TT body).
Ph Meter: Glass Electrode type.
Mortar and Pestle.
API Filter press (preferred Bariod, laboratory type).
Three (3) way stopcock.
One-fourth (1/4) inch Tygon tubing.
Two (2) ml pipette (graduated to 1/100 ml units).
TESTING PROCEDURES. The following procedure shall be used to test bentonite for moisture content:
The following procedure shall be used to test bentonite for moisture content:
Weight approximately a sample (50 to 100 grams) of bentonite to +0.01 gram.
Dry to a constant weight at a temperature of 200°F ± 5°F. (Minimum drying time, two (2) hours).
Cool the sample in a dessicator to room temperature and weight.
Percent Moisture = (Weight Original Sample) / (Weight Original Sample)
The following procedure shall be used to test bentonite for free swell:
Grind bentonite sample to 80% passing a 200 mesh sieve.
Dry approximately ten grams bentonite in a suitable container for 1½ hours at 220°F ± 5°F.
Remove bentonite from oven and cool to room temperature in dessicator.
After cooling, remove sample and weigh 2 grams, ±0.01 gram, bentonite.
Fill graduated cylinder to 100 ml. with deionized water or distilled water.
Add small amounts (±0.1 gram) of the 2 gram sample to the graduated cylinder with weighing spatula, taking care not to allow any sample to contact the cylinder walls during addition.
Let each addition absorb water and drop to the bottom of the cylinder before making the next addition. (Do not hurry the process by tapping the cylinder or otherwise hastening the process of absorption).
Continue with steps 6 and 7 until all of the 2 gram sample has been used.
Allow the cylinder to set for 2 hours before taking reading of swell volume, which is the level, in cubic centimeters, to which the surface of the swollen bentonite has risen, or its average if the surface is irregular.
Register final reading as cm³ volumetric swell.
The following procedure shall be used to determine the wet screen analysis of bentonite:
Weigh approximately 25 grams of unsized bentonite dried to a uniform weight at a temperature of 220°F ± 5°F. (Minimum drying time 2 hours). Add weighted sample to 350 cm³ of water containing 5 ml of 18% sodium hexameta phosphate solution. Fully disperse the sample by, at a minimum, allowing it to hydrate for 3 hours, stirring on the mixer for 30 minutes, re-aging a minimum of 2 hours, and restir on the mixer for 5 minutes. No lumps of undispersed clay should be present in the solution when this process is completed.
Transfer the sample to the U.S. Standard No. 200 sieve taking care to rinse all residue in the mixing cup onto the sieve. Wash the material on the screen with water at 20 psig from a spray nozzle for 2 minutes. While washing, allow the elbow bend of the nozzle to rest on the rim of the sieve and move the spray of water repeatedly over the surface of the screen. Carefully backwash all the residue from the screen to a tared evaporating dish.
Dry the residue in an oven to a uniform weight at a temperature of 220°F ± 5°F and weight + 0.01 gram.
Percent Residue - ( Weight of Residue ) x 100 (Total Weight of Sample)
The following is the procedure for dry screen analysis of bentonite:
Weigh approximately 500 grams of bentonite as received from the manufacturer, DO NOT DRY.
Place the 500 gram sample in the appropriate nest of sieves (see paragraph 11) relating to the size of product to be tested.
Place lid in sieve nest and shake material on appropriate shaker for a period of 1 minute.
Remove sieve nest from shaker and weigh the sample report retained on each sieve and report the results as % retained on that sieve.
Percent retained ( Weight Retained ) x 100 (Total Weight of Sample)
The following procedure shall be used to test the Ph of bentonite:
Weigh 22.5 grams of ground bentonite (approximately 80% - 200 mesh).
Sift the bentonite into 350 cm³ of distilled water while stirring on the mixer. After 5 minutes, remove container from mixer and scrape down sides to dislodge any bentonite from adhering to the container. Replace on mixer and stir for an additional 10 minutes (total mixing time 15 minutes).
Immerse Ph electrodes into solution after completion of mixing. Record Ph after meter reading becomes constant.
The Ph meter should be calibrated regularly with buffer solutions close to the range of the estimated Ph of the test solutions, typically either Ph 7 or Ph 10 buffer.
The following procedure shall be used to test the permeability of bentonite:
Partially crush a sample of bentonite chips in mortar and pestle. Screen the crushed sample through a 1/4 inch and 10 mesh U.S. Standard sieve and retain the fraction retained on the 10 mesh sieve.
Assemble filter press cell using one sheet of Whatman 50 filer paper.
Weigh 50 grams of the retained -1/4 inch + 10 mesh bentonite sample and pour into the filter press cell. Jiggle the press chamber until the bentonite is evenly distributed in the cell. Fill the press cell with distilled water and place in the filter press test rack.
Complete assembly of the test cell and allow the bentonite to hydrate for 36 hours. It may be necessary to plug the cell outlet nozzle initially to prevent water from draining out prior to the hydration of the bentonite.
Attach a 2 milliliter pipette (graduated to 1/100 ml) to a three-way stopcock using 1/4 inch Tygon tubing. Attach the three-way stopcock to the filter press cell nozzle, also using a 1/4 inch Tygon tubing. After the initial hydration period, apply 50 PSI of air pressure to the test cell for 24 hours. After 24 hours increase the pressure to 100 PSI. Allow a minimum of one hour after increasing pressure to 100 PSI for water flow through the test cell to stabilize before beginning testing. Measure the effluent water flow from the test cell over a known period of time at 100 PSI. The minimum effluent volume for any one test shall be no less than one milliliter. Ensure that no leaks are present in any portion of the effluent collection tubing or stopcock. Any leak can have a significant impact on the test results.
After obtaining the effluent flow over a known period reduce the pressure in the test cell to zero and remove the top of the test cell from the cell body. Immediately measure the freeboard remaining in the test cell (distance from cell body top to top of hydrated membrane) at four points around the inside cell perimeter and average results. Subtract this number from the cell body height to obtain the membrane thickness. NOTE: Delays in measurement of membrane thickness may allow high pressure gas dissolved in the membrane during testing to bubble out causing the membrane to disintegrate.
Calculate the permeability-coefficient as follow: (K) =
effluent volume (ml) x thickness of hydrated bentonite (cm) cross sectional area of test cell (cm² x pressure (cm) x time (sec)
*References: Wet sieve analysis, moisture, mixing device: API 13A 12th Edition, October 1988. Filter press: API 13B. Dry Sieve Analysis: ASTM E11, Sieves for testing purposes.
CERTIFICATION: The Commission staff shall certify hole plugging materials and their manufacturers. Such certification shall be based upon the following criteria:
Ability of the hole plugging material to meet or exceed the quality criteria as set forth in paragraph (k) of this rule.
The manufacturer has or intends to put in place quality control procedures sufficient to reasonably ensure continued adherence of the product to the quality criteria in paragraph (k) of this rule.
insert diagram page 41
The manufacture has or intends to put in place and adequate procedure for tracking of production lots from the point of manufacture to the point of use. Any manufacturer wishing to be certified for the purpose of manufacturing seismic hole plugging material for use in the State of Wyoming shall notify the Commission staff and arrange a time and date when the staff may inspect the manufacturing facilities. During the inspection the staff will review the manufacturer's production lot tracking and quality control procedures, and obtain representative sample of product for initial certification testing. Within thirty (30) days following the on-site visit, the Commission staff shall notify the manufacturer by certified mail of their decision concerning issuance of certification including their analysis of the adequacy of the manufacturer's quality control and tracking procedures and the sample test results. If the manufacturer is dissatisfied with the decision, he is entitled to a hearing before the Commission on the question of whether his plugging material meets the above criteria and the adequacy of his quality control and tracking procedure. The request for hearing must be filed within thirty (30) days of the manufacturer's receipt of the decision of the Commission staff. Otherwise, the staff's determination is final. If the manufacturer requests a hearing within sixty (60) days following receipt of the request and notify the manufacturer of the time and place where he may appear and introduce evidence to substantiate his claim for certification. If the Commission finds the manufacturer is in compliance with the requirements of paragraph K of this rule, and with the quality control and production lot tracking requirements of this rule, then it shall certify the product. If not, the Commission shall issue an order so stating.
After certification has been issued for both the product and manufacturer, the Commission staff may, at any time, continue to obtain product samples, at any point of manufacture, at retail outlets, points of delivery, or any other location for testing to determine if the product continues to meet the criteria in paragraph K of this rule. The staff may also, at any time, review the quality control and lot tracking procedures and data of the manufacturer to ensure continued compliance with the provisions of this section. When samples are found which do not meet the required test criteria or where quality control or lot tracking procedures are found to be inadequate, the Commission staff shall notify the manufacturer and give the manufacturer a reasonable opportunity to correct the problem. If the manufacturer fails to correct the problem or continues to produce products which fail to meet the criteria in paragraph K of this rule, then the staff may file an application to decertify the material and the manufacturer with the Commission. The Commission shall schedule a hearing for decertification and shall give the manufacturer notice of same. At the hearing, the manufacturer and the staff will have the opportunity to introduce evidence as to whether a problem exists and if it has been corrected. If the Commission finds that no problem exists, or where one existed, that it has been corrected and that the product meets the criteria, it shall issue an order so stating. If the Commission finds that a problem exists and has not or cannot be corrected or that the product fails to meet the criteria, the Commission shall issue an order so stating and shall decertify the manufacturer. Any manufacturer so decertified may reapply for certification at any time and shall be certified if he can demonstrate compliance with these regulations.
Section 39. Procedure in Case of Default. The Supervisor or the authorized agent with the approval and order of the Commission #has authority to shut down any operation and place under seal any property or equipment for failure to comply with these oil and gas operating regulations or orders issued hereunder.
Section 40. Deposit of Cash or Certificate of Deposit Instead of Bond.
Any person who is required to post a surety bond pursuant to Commission Rules 304 or 339 may instead post cash or a certificate of deposit in the amount required by Rules 304 and 339, subject to the following conditions:
(a) If a person posts cash, he may do so by a cashier's check or legal tender of the United States of America, delivered to the Commission.
(b) If a person posts a certificate of deposit, it shall comply with the following:
(i) The certificate of deposit shall be in the name of the Wyoming Oil and Gas Conservation Commission only, and only the signature of the Commission's authorized representative shall be on the withdrawal card as the authorized signature to withdraw the deposit.
(ii) The certificate of deposit shall be in a bank insured by the Federal Deposit Insurance Corporation and located in the State of Wyoming.
(iii) The Commission may reject any certificate of deposit which, when combined with other certificates of deposit in that bank, exceeds the limits of Federal Deposit Insurance Corporation insurance coverage.
(iv) The certificate of deposit shall be in the custody of the Commission.
(v) The certificate of deposit shall be for a term of three, six, or twelve months, and shall be automatically renewable.
(vi) Interest earned on the certificate of deposit is the property of the person who provided the money for it. The certificate of deposit and money it represents is the property of the Commission.
(vii) This list is not exclusive. The Commission may reject a certificate of deposit if it concludes the security of the certificate of deposit is impaired for some other reason.
The purpose of a surety bond, cash, or certificate of deposit posted as security pursuant to the Commission's rules is to insure that the principal or person posting same complies with the Oil and Gas Conservation Law, the Commission's rules, and the orders of the Commission, the State Oil and Gas Supervisor, or their agents, including, but not limited to, proper plugging of wells and seismic holes and reclamation of the area affected by same.
The proceeds of a surety bond become the property of the Commission or the cash or certificate of deposit posted in lieu thereof shall not be returned to the person posting same if the principal or person posting same fails to comply with the Oil and Gas Conservation Law, the Commission's rules, or the orders of the Commission, the State Oil and Gas Supervisor, or their agents. This shall be determined by the Commission after notice and hearing in accordance with these rules and the Oil and Gas Conservation Law. Notice of the hearing shall be given to the principal and surety on the bond or to the person posting the cash or certificate of deposit by mailing a copy of the notice of hearing and a copy of a complaint, stating the grounds for forfeiture or non-return to them, filed by the Commission staff. This shall be done by certified mail, return receipt requested, and addressed to their last known address listed with the Commission. If the principal or surety or person posting the cash or certificate of deposit has a defense to, or otherwise wishes to, contest the complaint of the Commission staff, he must file a written statement or answer setting forth same with the Commission at least three (3) working days prior to the Commission hearing. Any defense or reason for contesting the complaint is waived if he fails to do so. The Commission may treat the failure to file such a defense or reason to contest the complaint or the failure to appear at the hearing on same as default by the party.
If the Commission determines the principal on the bond or the person posting the cash or certificate of deposit as security has complied with the Oil and Gas Conservation Law, the rules of the Commission, and the orders of the Commission, the State Oil and Gas Supervisor, or their agents, including but not limited to proper plugging of wells and seismic holes and reclamation of the surrounding affected area, with respect to all operations secured thereby, it shall release the obligation of the bond or return the cash or certificate of deposit upon its next maturity date.
Section 42. Letter of Credit in Lieu of Bond. The Commission may, in its sole discretion, accept a letter of credit in place of a surety bond, certificate of deposit, or cash. A letter of credit must meet the following conditions to be accepted:
(a) It must be issued by a Wyoming bank. (b) It must be in an amount equal to the amount of the bond or other security otherwise required. (c) It must be for a term of unlimited duration, and, irrevocable. (d) The letter of credit shall remain in the custody of the Commission.
(e) The terms of the letter of credit shall be that it is immediately payable to the Commission in the event the person on whose behalf the letter is issued fails to comply with the Oil and Gas Conservation Law, the rules of the Commission, the orders of the Commission, the State Oil and Gas Supervisor, and their agents.
(f) The Commission may make a claim under the letter of credit or release the bank from its obligation under the letter of credit under the procedure outlined in Chapter III, Section 41, of these rules for making a claim or releasing a surety bond or cash or certificate of deposit in lieu of a bond.
(g) Any bank issuing a letter of credit which refuses to pay pursuant to the letter of credit and these rules and the Oil and Gas Conservation Law is in violation of same, and any bank official who aids and abets said violation, is subject to civil and criminal penalties for violation of the Commission's rules and the Oil and Gas Conservation Law.
This list of conditions is not exclusive. The Commission may reject a letter of credit or may demand other security such as a certificate of deposit, cash, or surety bond instead of the letter of credit, after accepting same, if it has reason to doubt the solvency of the bank issuing the letter of credit, or to believe the obligation of the letter of credit is or may become impaired for some other reason. In addition, the Commission has the right to require proof of solvency of the bank issuing the letter of credit before or after accepting the letter of credit.
Section 43. Wildcat Wells Criteria. For the purpose of qualifying under W.S. §39-6-301(a)(vii), and §39-6-302(p), operators may file an application for designation of wildcat well with the Commission. The application may be filed prior to or following drilling but must be filed within twelve (12) months of the date of first production from the well. The application shall contain, where applicable, the following information:
(a) A plat map showing the location of the well in relation to producing wells within a one mile radius of the well site. (b) A statement concerning the production formation or formations in the wildcat well and also the producing formation or formations of the producing wells in the designated area, including completion reports and other appropriate data. (c) Stratigraphic cross sections through the producing wells in the designated area and the wildcat well. (d) Whether the well is in a known geological structure. However, whether the well is in a known geological structure shall not be the sole basis of determining whether the well is a wildcat. (e) Bottomhole pressures in a wildcat well compared to the wells producing in the designated area from the same zone. (f) Any other information deemed relevant by the applicant.
The Supervisor shall review the material within fifteen (15) days after receipt of the application and advise the applicant of his decision. Information submitted by the applicant may be held confidential for six (6) months, if requested. If the operator disagrees with the Supervisor's decision, he may request a hearing before the full Commission. The Supervisor, on his own motion, may also refer the matter to the Commission if he is in doubt as to the proper decision.
Section 44. Oil Mining Requirements. Before beginning oil mining operations, the owner shall first apply for and obtain a permit to do so from the Commission or Supervisor, and shall furnish the Commission with a bond or other security approved under the Commission's rules. The application for a permit may be denied or the permit revoked by the Supervisor if he finds the oil mining operation will violate or has violated the rules and orders of the Commission, the orders of the Supervisor, or the Commission or their agents, or the Oil and Gas Conservation Law. If denied or revoked, the oil mining owner has a right to a hearing before the Commission, which may deny or revoke the permit on the same grounds as noted above for denial or revocation by the Supervisor. The condition of the bond or other security shall be compliance with the Oil and Gas Conservation Law, the Commission's rules and orders, and the orders of the Supervisor, the Commission, or their agents. The bond or other security may be forfeited or released under the procedure specified under Chapter III, Section 41 of these rules. Before changing an oil mining operation as approved by the Commission or Supervisor under the permit, the oil mining owner shall notify the Commission by sundry notice. Oil mining operations shall comply with the Commission's rules, except where compliance is waived in writing by the Supervisor. The Commission shall regulate oil mining for the purpose of conservation of oil, gas, and environmental resources and to protect correlative rights.
(a) Venting or flaring under the following circumstances has not and does not constitute waste and is authorized by the Commission.
(i) Emergencies or upset conditions. During temporary emergency situations, such as compressor or other equipment failures, relief of abnormal system pressures, or other conditions which result in the unavoidable short-term venting or flaring of gas at a lease, gas plant or other facility.
(ii) Well purging and evaluation tests. During the unloading or cleaning up of a well during routine purging or drill stem, producing, or evaluation tests.
(iii) Production tests. During initial or recompletion evaluation tests not exceeding a period of fifteen (15) days, unless a longer test period is authorized by the Supervisor.
(b) Low rate casinghead gas. Unless it is determined by the Supervisor or the Commission that waste is occurring, up to 60 MCF of gas per day is authorized to be vented or flared from individual oil wells. Venting or flaring is authorized either at the well or at a lease facility which serves several wells.
(c) Unless flaring or venting is authorized under paragraph (a) or (b) of this rule, an owner must apply for retroactive or prospective venting or flaring authorization under (c) or (d) of this rule. Authorization may be granted upon review of an application, provided that the venting or flaring does not constitute waste. An application to vent or flare shall contain the following items as a minimum:
(i) A statement of reason for venting or flaring.
(ii) The estimated duration of venting or flaring.
(iii) The estimated daily volume of gas in thousands of standard cubic feet per day (MCFD).
(iv) The estimated daily volume and type of associated produced fluids, gas or plant products in barrels, MCF's, gallons or tons per day, as applicable.
(v) A compositional analysis of the gas if hydrogen sulfide is present or if the gas stream has a low BTU content.
(vi) A legal description of the well(s), plant or facility and distance to the nearest potential sales point or pipeline(s).
(vii) A discussion of applicable safety factors and plans such as use of a constant flare igniter, facility pressure release, or emergency protection practices.
(d) The Supervisor may grant temporary authorization of verbal requests, including plant start-up/shut down. Follow-up documentation of the request may be requested of the applicant containing, at a minimum, the items set forth in c. above within fifteen (15) days of the initial request.
All operations shall be conducted in a safe and workmanlike manner. If the gas is sour and venting would present a safety hazard, a constant flare igniter system may be required.
Certification of tertiary projects and determination of base level production for projects qualifying for the Tertiary Oil Tax Exemption.
(a) In order for tertiary production to qualify for the severance tax exemption provided under W.S. §39-6-302(j), the applicant shall present evidence demonstrating that the recovery technique or techniques utilized in the project area qualify for a tertiary determination and the Commission must certify the project as a tertiary project.
(b) For tertiary projects certified by the Commission after December 31, 1991:
(i) As part of the process of certifying tertiary projects which qualify for the severance tax exemption under W.S. §39-6-302(j), the applicant shall furnish the Commission an extrapolation of expected non-tertiary oil production from the project. The extrapolation shall be for not less than seventy-two (72) months commencing with the first month after the month in which the application for tertiary certification is made. The extrapolation shall be based on production history, reservoir and production characteristics and the application of generally accepted petroleum engineering practices. The extrapolated production volumes approved by the Commission shall serve as the base level production for purposes of determining the tertiary oil production which qualifies for the tax exemption, and
(ii) The applicant shall provide a statement as to all assumptions made in preparing the extrapolation and any other information concerning the project that the Commission may reasonably require in order to evaluate the applicant's extrapolation.
(iii) An application for Tertiary Certification may be approved administratively by the Supervisor. The Supervisor shall review the material within fifteen (15) days after receipt of the application and advise the applicant of the decision. If the operator disagrees with the Supervisor's decision, they may request a hearing before the full Commission. The Supervisor, on his own motion, may also refer the matter to the Commission if the proper decision is in doubt.
Certification of recompletions and workovers and determination of base level production for qualifying wells is the duty of the Wyoming Oil and Gas Conservation Commission and shall be accomplished in the following manner:
(a) In order to qualify for the excise tax exemption provided by W.S. 39-6-302(t), the applicant shall submit an application with evidence demonstrating that the technique(s) utilized in the well qualify as a recompletion or workover. The Commission or Supervisor has the authority to certify the operation as a recompletion or workover.
(b) Only recompletions and workovers commenced between July 1, 1993 and December 31, 1996, qualify for the excise tax exemption provided by W.S. §39-6-302(t), provided further that:
(i) Prior to or no later than thirty days (30) after the recompletion or workover, the applicant must furnish the Commission an extrapolation and tabulation of the well's monthly production which would have occurred without the benefit of the recompletion or workover. The extrapolation and tabulation shall not be for less than thirty-six (36) months commencing with the first month after the month in which the recompletion or workover is expected to be completed. The projection and tabulation shall be based on: production history for the twelve (12) months period immediately preceding the last month of reported production; reservoir and production characteristics; and the application of generally accepted petroleum engineering practices. The extrapolated and tabulated monthly production volumes, as approved by the Commission or Supervisor, shall serve as the base level production for purposes of determining the incremental production which qualifies for the tax exemption and;
(ii) The applicant shall provide information about: all assumptions made in preparing the extrapolation and tabulation; the date on which the workover or recompletion is expected to start; a schematic borehole diagram of the recompletion or workover; and any other information concerning the operation that the Commission may reasonably require in order to evaluate the application. After the recompletion or workover is completed, the applicant shall submit a Sundry Notice, Form 4, listing the actual dates of commencing and completing the operations, the actual costs of the recompletion or workover, and the initial daily production rate following the operations.
(iii) Qualifying recompletions and workovers may be administratively approved by the Supervisor. The Supervisor shall review the material within fifteen (15) days after receipt of the application and advise the applicant of the decision. If the applicant disagrees with the Supervisor's decision, he may request a hearing before the Commission. The Supervisor, on his own motion, may also refer the matter to the Commission. Upon approval of the application, the Supervisor shall forward a copy of the certification to the Department of Revenue, Mineral Tax Division.
(iv) Applicants or taxpayers claiming the excise tax exemption under W.S. §39-6-302(t), are prohibited from simultaneously claiming the tax exemption provided by W.S. §39-6-302(j) for tertiary projects or W.S. §39-6-302(p) for wildcat wells.
Oil and gas produced from wells drilled between July 1, 1993, and December 31, 1993, except the production from horizontal wells and collection wells, is exempt from the excise taxes imposed by W.S. §39-6-302(b) and (g) for the first twenty-four (24) months of production. Production qualifying for the tax exemption shall be limited to: (1) the first forty barrels of oil per day (40 BOPD); or (2) the first two hundred-forty thousand cubic feet of gas per day.
The excise tax exemption shall not apply in the event the price received by the producer for the new production is equal to or exceeds twenty-five dollars ($25.00) per barrel of oil or two dollars and seventy-five cents ($2.75) per MCF of natural gas for the preceding six (6) months period of time.
Applicants or taxpayers claiming a tax exemption under W.S. §39-6-302(s) are prohibited from simultaneously claiming the tax exemption provided by W.S. §39-6-302(j) for tertiary projects or W.S §39-6-302(p) for wildcat wells.
In order to qualify for the excise tax exemption provided by W.S. §39-6-302(s), the applicant must provide evidence that the new well was drilled between July 1, 1993 and December 31, 1996. The Supervisor shall forward documentation that the new well qualifies for the tax exemption to the Department of Revenue, Mineral Tax Division.
Purchasers have the option of paying the tax for producers. This does not reduce the producer's liability for full payment of the tax. The producer is always held liable because they are the only entity bonded by this agency. The purchaser and producer should make arrangements between themselves as are necessary to ensure that there will be no duplication of taxes paid. If the purchaser pays the tax, the producer must submit a return showing volumes, values and name of the company paying the tax.
Reporting forms will be mailed about the tenth (10th) of each month to producers and purchasers. If a company files semi-annual returns, the forms will be mailed about January 10th for the period from July through December of the previous year and on July 10th for the period from January through June of the same year. Purchasers and producers of oil and gas who are responsible for payment should notify the Commission. Forms will be furnished to them by the Commission staff.
A statutory interpretation made by the Attorney General in April 1971 allowed producers whose payments are $30.00 or less per month to make semi-annual reports with payments due the periods ending June 30 and December 31.
Payments and corresponding forms must be submitted on or before the 25th day of the month following receipt of the form. Any tax not paid within the time herein specified shall bear interest at a rate of one percent (1%) per month from the date of delinquency until paid. This charge together with the interest is a lien upon the oil or gas against which it is levied and assessed.
An optional, alternative procedure to monthly or semi-annual payments of the conservation mill levy tax and the filing of returns reporting the data necessary for calculation of that tax was adopted, by order of the Commission, after due and legal notice and a hearing held on August 24, 1979. This option provides for filing an annual tax return. Operators whose yearly tax due is $500.00 or less may file in this manner.
The method of calculation of this annual option: On or before the 15th day of February, the operator of a lease or unit may pay to the Commission, as an estimated tax for that entire ensuing calendar year, the amount of money equal to the actual tax attributable to that lease or unit for the previous calendar year up to and including $500.00 (including taxes previously paid by purchaser). Each operator who has elected to pay the annual estimated tax shall, on or before the 1st day of March, file a tax return setting forth: (1) The total amount of all oil and gas sold or transported from each lease or unit being reported less the volumes exempted from taxation by §30-5-116,
Wyoming Statutes, 1977, (2) The value at the well of the reported oil and gas, and (3) A calculation of the amount of tax computed by applying the mill levy tax applicable during the calendar year being reported. If the amount of actual tax computed is greater than the amount of estimates tax previously paid, the operator shall pay with the filing of the return an additional amount of tax to cover such deficiency. If the amount of actual tax is less than the amount of estimated tax previously paid, the operator shall be entitled to a credit and deduction from the amount of estimated tax due on or before the 15th day of February of the following year or the operator shall be paid, after a final audit, a refund by the Commission.
The form of the tax return shall be prescribed by the Commission. The gross amount of sales of oil and gas shall be the total of the monthly amounts reported on the Commission's Form 2 (Operator's Monthly Report of Wells). The fair cash market value of sales for conservation mill tax calculations shall be the same as used by an operator in making its calculation for severance tax purposes to the Wyoming Department of Revenue and Taxation for return for tax assessment to the State Board of Equalization of Wyoming, Ad Valorem Tax Division, pursuant to §38-2-201, et seq., Wyoming Statutes, 1977, as amended 1981.
A tax due of less than one dollar $1.00) does not need to be remitted. Please do not send cash or coin. Checks submitted for payment of taxes should include the company name, address, phone number, etc. Sign the tax return before submission.
It will be the responsibility of an operator to make settlement with the non-operators in a lease or unit according to their customary joint interest accounting.