CHAPTER 1

AUTHORITY AND DEFINITIONS

Section 1. Authority. Wyo. Stat. Ann. §§ 30-5-101 through 30-5-126.

Section 2. Definitions.

(a) Aquifer shall mean a geological formation, group of formations, or part of a formation that is capable of yielding a significant amount of water to a well or spring.

(b) Abandoned Oil Field Equipment means equipment and the contents thereof used in drilling or producing oil and gas wells and left on the lease where a dry hole or well is located as to which reports on the Form 2, Operator's Monthly Report of Wells, have not been filed with the Commission for the preceding twenty-four (24) months.

(c) Agent means the person who has been designated by the Owner or Operator to act on the Owner’s or Operator’s behalf. The “Agent” has authority to fulfill the obligations of the Owner as noted in Chapter 3, Section 4 of these rules, but is not required to have a performance bond in place.

(d) Authorized Agent shall mean a representative of the Supervisor as authorized by the Commission.

(e) Average Daily Production means the qualified maximum total production of domestic crude petroleum and petroleum condensates, including natural gas liquids produced from a property or lease during the preceding calendar year divided by the number of calendar days in that year times the number of wells which produced and wells which injected substances for the recovery of crude petroleum and petroleum condensates, including natural gas liquids from that property or lease in that year. To qualify as maximum total production, each well must have been maintained at the maximum feasible rate of production in accordance with recognized conservation practices and not significantly curtailed by reason of mechanical failure or other disruption in production.

(f) Barrel shall mean 42 (US) gallons of liquid at 60° Fahrenheit at atmospheric pressure.

(g) Casing Pressure shall mean the pressure within the casing or between the casing and tubing at the wellhead.

(h) Class II Well shall mean any non-commercial well used to dispose of water and/or fluids directly associated with the production of oil and/or gas, any well used to inject fluids or gas for enhanced oil recovery, or any well used for the storage of liquid hydrocarbons. Non-hazardous gas plant wastes may be disposed of in a Class II well pending Environmental Protection Agency co-approval.

(i) Client Company means the entity on whose behalf and for whose benefit the geophysical/seismic company does its work or the entity who hires the geophysical/seismic company.

(j) Closed System includes, but is not limited to, the use of a combination of solids control equipment (e.g., shale shakers, flowline cleaners, desanders, desilters, mud cleaners, centrifuges, agitators, and necessary pumps and piping) incorporated in a series on the rig's steel mud tanks, or a self-contained unit that eliminates the need for a reserve pit for the purpose of dumping and dilution of drilling fluids for the removal of entrained drilling solids. A closed system for the purpose of the Commission's rules does not automatically include the use of a small pit, even to receive cuttings.

(k) Collection Wells means reservoir access holes drilled from underground shafts or tunnels from which oil or gas is produced.

(l) Commercial Disposal Well or Commercial Water Retention Pit. A commercial disposal well or commercial water retention pit is one that is:

(i) Operated primarily for profit from the disposal of produced water and/or deleterious substances for a fee; or,

(ii) A disposal well or pit for which none of its Owners is an Owner or Operator in any of the oil and gas wells which produce the water and/or other deleterious substances which will be disposed into said disposal well or pit.

(m) Commission shall mean the Wyoming Oil and Gas Conservation Commission.

(n) Complete Application or Complaint means a document or documents which:

(i) Identifies the applicant or complainant;

(ii) Identifies the subject matter of the application or complaint and the statutory or regulatory provisions under which relief is requested;

(iii) Contains a brief statement of the circumstances supporting the application or complaint; and,

(iv) Contains a plat map which identifies at a minimum:

(A) The well or wells that are the subject of or may be affected by the application or complaint; and,

(B) The governmental sections or portions thereof that are the subject of or may be affected by the application or complaint; and,

(C) Adjacent or surrounding secondary recovery units, federal exploratory units, and existing drilling units if pertinent to the application or complaint.

(o) Completion. An oil well shall be considered completed when the first new oil is produced through wellhead equipment into lease tanks from the producing interval after the production string has been run. A gas well shall be considered completed when the well is capable of producing gas through wellhead equipment from the producing zone after the production string has been run. A dry hole shall be considered completed when all provisions of plugging are complied with as set out in these rules. A coalbed methane well shall be considered completed after the production casing has been run.

(p) Cubic Foot of gas shall mean the volume of gas contained in one cubic foot of space at a standard pressure base and a standard temperature base. The standard temperature base shall be 60° Fahrenheit.

(q) Day shall mean a period of twenty-four (24) consecutive hours.

(r) Directional Well means a wellbore that is intentionally deviated from vertical with an intentional azimuth.

(s) Fresh Water and Potable Water are defined as water currently being used as a drinking water source or having a total dissolved solids (TDS) concentration of less than 10,000 milligrams per liter (mg/l) and which:

(i) Can reasonably be expected to be used for domestic, agricultural, or livestock use; or,

(ii) Is suitable for fish or aquatic life.

(t) Gas shall mean all natural gases and all hydrocarbons not defined herein as oil.

(u) Gas Well shall mean a well the principal production of which, at the mouth of the well, is gas, as defined by the Wyoming Conservation Law.

(v) Geophysical/Seismic Company means an entity that performs any geophysical operation to explore for oil, gas, or associated hydrocarbons. These operations include, but are not limited to, drilling seismic shot holes for placing or detonating explosives, vibroseis, or surface shots.

(w) Groundwater, for purposes of these rules and consistent with Wyoming Department of Environmental Quality Chapter 8, as revised April 26, 2005, “Quality Standards for Wyoming Groundwaters”, means groundwater will be protected except for Class VI Groundwater of the State that is unusable or unsuitable for use:

(i) Due to excessive concentrations of total dissolved solids or specific constituents; or,

(ii) Is so contaminated that it would be economically or technologically impractical to make water useable; or,

(iii) Is located in such a way, including depth below the surface, so as to make use economically and technologically impractical.

(x) Hearing shall mean any matter heard before the Commission or its examiners.

(y) Horizontal Well shall mean a wellbore drilled laterally at an angle of at least eighty degrees (80°) to the vertical and with a horizontal projection exceeding one hundred feet (100') measured from the initial point of penetration into the productive formation through the terminus of the lateral in the same common source of hydrocarbon supply.

(z) Injection or Disposal Well shall mean any well used for the injection of air, gas, water or other substance into any underground stratum.

(aa) Legal Subdivision shall mean any regularly surveyed governmental quarter-quarter section or lot of approximately 40 acres.

(bb) Lien Holder means those who have liens, on file with the Secretary of State and County Clerk of the county where the property is located, on the property of the Owner or Operator of a well, as reflected by the Commission records.

(cc) Log or Well Log shall mean the written record progressively describing the strata, water, oil or gas encountered in drilling a well with such additional information as to give volumes, pressures, rate of fill-up, water depths, caving strata, casing record, etc., as is usually recorded in the normal procedure of drilling; also to include electrical, radioactive, or other similar logs run, a lithologic description of all cores, and all drill stem tests, including depth tested, cushion used, time tool open, flowing and shut-in pressures, and recoveries.

(dd) Mineral Owner means the owner of the mineral rights title under a piece of property, who will generally be the lessor who is able to convey a leasehold agreement (lease).

(i) Mineral Leasehold Interest Owner means the person or entity that holds a valid mineral lease as distinct from actual owner of the mineral rights title.

(ee) Multiple Zone Completion shall mean one in which two or more separate zones, mechanically segregated one from the other, are produced simultaneously from the same well.

(ff) Oil shall mean crude petroleum oil and any other hydrocarbons, regardless of gravities, which are produced at the well in liquid form by ordinary production methods, and which are not the result of condensation of gas before or after it leaves the reservoir.

(gg) Oil and Gas Operations means the surface disturbing activities associated with drilling, producing and transporting oil and gas, including the full range of development activity from exploration through production and reclamation of the disturbed surface.

(hh) Oil Mining shall mean operations associated with the production of oil or gas from reservoir access holes drilled from underground shafts or tunnels.

(ii) Oil Well shall mean a well the principal production of which, at the mouth of the well, is oil, as defined by the Wyoming Conservation Law.

(jj) Operator is duly authorized by the Owner as the person engaged in the business of drilling and producing wells for oil and gas.

(kk) Owner means the person who has the right to drill into and produce from a pool and to appropriate the oil or gas he produces therefrom either for himself or others.

(ll) Permanently Abandoned Well shall mean a well which is no longer considered active and has been permanently plugged and abandoned, as provided by these rules, in such a manner as to prevent migration of oil, gas, and water or other substances from the formation or horizon in which it originally occurred.

(mm) Person means and includes any natural person, corporation, association, partnership, receiver, trustee, executor, administrator, guardian, fiduciary or other representative of any kind, and includes any department, agency or instrumentality of the State or of any governmental subdivision thereof. The masculine gender, in referring to a person, includes the feminine and the neuter genders.

(nn) Pits in Critical Areas. Sites considered for the placement of all pits are critical areas if they meet any of the following criteria:

(i) Locations which are within one-quarter (1/4) mile of water supplies, residences, schools, hospitals, or other structures where people are known to congregate;

(ii) Areas when groundwater at the location is less than twenty feet (20') from the surface;

(iii) Locations which are within five hundred feet (500') of wetlands, ponds, lakes, perennial drainages or within a floodplain;

(iv) Areas where pit fluids are greater than ten thousand milligrams per liter (10,000 mg/l) total dissolved solids; or,

(v) Locations in pervious subsoils such as sands, scoria, river bottom gravel, loams, etc.

(oo) Pool shall mean an underground reservoir containing a common accumulation of oil or gas or both. Each zone of a general structure, which zone is completely separated from any other zone, is covered by the word "pool" as used herein.

(pp) Producer means the owner of a well or wells capable of producing oil or gas or both.

(qq) Recompletion means any downhole operation in an existing oil or gas well that is conducted to establish production of oil or gas from any geological interval not currently completed or producing in said existing oil or gas well.

(rr) Seismic Hole is one which will be used for geophysical purposes only.

(ss) Shut-In Well shall mean a well not currently considered active in which the completion interval has not been isolated from the wellbore above and where the wellbore condition is such that its utility may be restored by opening valves or by energizing equipment involved in operating the well.

(tt) Special Sodium Drilling Area – A (SSDA – A) shall mean the designated area where trona mining operations are or will occur where special drilling rules apply to protect the Trona Mineral Resources and ensure miner safety which location is described as containing:

Township 21 North, Range 108 West, 6th P.M.

Section 16: All

Section 17: All

Sections 19 – 22 (inclusive): All

Sections 27 – 34 (inclusive): All

Township 21 North, Range 109 West, 6th P.M.

Sections 24 – 27 (inclusive): All

Sections 34 – 36 (inclusive): All

Township 20 North, Range 108 West, 6th P.M.

Sections 6 – 8 (inclusive): All

Sections 17 – 20 (inclusive): All

Sections 29 – 32 (inclusive): All

Township 20 North, Range 109 West, 6th P.M.

Sections 1 – 36 (inclusive): All

Township 20 North, Range 110 West, 6th P.M.

Section 1: All

Section 8: All

Section 9: All

Section 12: All

Section 13: All

Sections 15 – 22 (inclusive): All

Sections 24 – 36 (inclusive): All

Township 20 North, Range 111 West, 6th P.M.

Section 13: All

Section 14: All

Section 21: E1/2

Sections 22 – 27 (inclusive): All

Section 28: E1/2

Sections 33 – 36 (inclusive): All

Township 19 North, Range 108 West, 6th P.M.

Section 5: All

Section 6: All

Township 19 North, Range 109 West, 6th P.M.

Sections 1 – 36 (inclusive): All

Township 19 North, Range 110 West, 6th P.M.

Sections 1 – 36 (inclusive): All

Township 19 North, Range 111 West, 6th P.M.

Sections 1 – 4 (inclusive): All

Sections 9 – 16 (inclusive): All

Sections 21 – 28 (inclusive): All

Sections 33 – 36 (inclusive): All

Township 18 North, Range 108 West, 6th P.M.

Section 6: All

Section 7: All

Sections 18 – 20 (inclusive): All

Sections 29 – 32 (inclusive): All

Township 18 North, Range 109 West, 6th P.M.

Sections 1 – 36 (inclusive): All

Township 18 North, Range 110 West, 6th P.M.

Sections 1 – 36 (inclusive): All

Township 18 North, Range 111 West, 6th P.M.

Sections 1 – 4 (inclusive): All

Section 5: E1/2

Section 8: E1/2

Sections 9 – 16 (inclusive): All

Section 17: E1/2

Section 20: E1/2

Sections 21 – 28 (inclusive): All

Section 29: E1/2

Section 32: E1/2

Sections 33 – 36 (inclusive): All

Township 17 North, Range 108 West, 6th P.M.

Sections 5 – 9 (inclusive): All

Sections 16 – 22 (inclusive): All

Sections 26 – 35 (inclusive): All

Township 17 North, Range 109 West, 6th P.M.

Sections 1 – 36 (inclusive): All

Township 17 North, Range 110 West, 6th P.M.

Sections 1 – 6 (inclusive): All

Sections 8 – 17 (inclusive): All

Sections 22 – 27 (inclusive): All

Section 35: All

Section 36: All

Township 17 North, Range 111 West, 6th P.M.

Sections 1 – 3 (inclusive): All

Township 16 North, Range 108 West, 6th P.M.

Sections 3 – 10 (inclusive): All

Sections 15 – 22 (inclusive): All

Sections 26 – 35 (inclusive): All

Township 16 North, Range 109 West, 6th P.M.

Sections 1 – 30 (inclusive): All

Section 35: All

Section 36: All

Township 16 North, Range 110 West, 6th P.M.

Section 1: All

Section 2: All

Sections 11 – 15 (inclusive): All

Sections 22 – 27 (inclusive): All

Township 15 North, Range 108 West, 6th P.M.

Sections 2 – 10 (inclusive): All

Sections 15 – 22 (inclusive): All

Sections 27 – 34 (inclusive): All

Township 15 North, Range 109 West, 6th P.M.

Section 1: All

Section 2: All

Sections 11 – 14 (inclusive): All

Sections 23 – 25 (inclusive): All

Section 36: All

Township 14 North, Range 108 West, 6th P.M.

Sections 4 – 7 (inclusive): All

Section 18: All

Township 14 North, Range 109 West, 6th P.M.

Section 1: All

Section 12: All

Section 13: All

(uu) Special Sodium Drilling Area – B (SSDA – B) shall mean the designated area where Trona Mining Resources exist outside the SSDA – A and special drilling rules apply to protect the resource which location is described as containing:

Township 21 North, Range 109 West, 6th P.M.

Sections 28 – 33 (inclusive): All

Township 21 North, Range 110 West, 6th P.M.

Section 25: All

Sections 34 – 36 (inclusive): All

Township 20 North, Range 110 West, 6th P.M.

Sections 2 – 7 (inclusive): All

Section 10: All

Section 11: All

Section 14: All

Section 23: All

Township 20 North, Range 111 West, 6th P.M.

Section 1: All

Section 11: All

Section 12: All

Section 15: All

Township 19 North, Range 108 West, 6th P.M.

Section 7: All

Section 18: All

Section 19: All

Section 30: All

Sections 31 – 35 (inclusive): All

Township 18 North, Range 108 West, 6th P.M.

Sections 1 – 5 (inclusive): All

Sections 8 – 17 (inclusive): All

Section 21: All

Section 22: All

Section 27: All

Section 28: All

Section 33: All

Section 34: All

Township 17 North, Range 107 West, 6th P.M.

Sections 30 – 32 (inclusive): All

Township 17 North, Range 108 West, 6th P.M.

Section 3: All

Section 4: All

Section 10: All

Section 11: All

Sections 13 – 15 (inclusive): All

Sections 23 – 25 (inclusive): All

Section 36: All

Township 17 North, Range 110 West, 6th P.M.

Section 7: All

Sections 18 – 21 (inclusive): All

Sections 28 – 34 (inclusive): All

Township 17 North, Range 111 West, 6th P.M.

Section 4: All

Section 5: All

Sections 8 – 36 (inclusive): All

Township 17 North, Range 112 West, 6th P.M.

Section 13: All

Section 14: All

Sections 22 – 28 (inclusive): All

Sections 33 – 36 (inclusive): All

Township 16 North, Range 107 West, 6th P.M.

Section 6: All

Section 7: All

Section 18: All

Section 19: All

Section 30: All

Section 31: All

Township 16 North, Range 108 West, 6th P.M.

Section 1: All

Section 2: All

Sections 11 – 14 (inclusive): All

Sections 23 – 25 (inclusive): All

Section 36: All

Township 16 North, Range 109 West, 6th P.M.

Sections 31 – 34 (inclusive): All

Township 16 North, Range 110 West, 6th P.M.

Sections 3 – 10 (inclusive): All

Sections 16 – 21 (inclusive): All

Sections 28 – 36 (inclusive): All

Township 16 North, Range 111 West, 6th P.M.

Sections 1 – 36 (inclusive): All

Township 16 North, Range 112 West, 6th P.M.

Sections 1 – 36 (inclusive): All

Township 15 North, Range 107 West, 6th P.M.

Section 6: All

Section 7: All

Section 18: All

Section 19: All

Section 30: All

Section 31: All

Township 15 North, Range 108 West, 6th P.M.

Section 1: All

Sections 11 – 14 (inclusive): All

Sections 23 – 26 (inclusive): All

Section 35: All

Section 36: All

Township 15 North, Range 109 West, 6th P.M.

Sections 3 – 10 (inclusive): All

Sections 15 – 22 (inclusive): All

Sections 26 – 35 (inclusive): All

Township 15 North, Range 110 West, 6th P.M.

Sections 1 – 36 (inclusive): All

Township 15 North, Range 111 West, 6th P.M.

Sections 1 – 36 (inclusive): All

Township 15 North, Range 112 West, 6^th P.M.

Sections 1 – 36 (inclusive): All

Township 14 North, Range 108 West, 6th P.M.

Sections 1 – 3 (inclusive): All

Sections 8 – 17 (inclusive): All

Sections 19 – 36 (inclusive): All

Township 14 North, Range 109 West, 6th P.M.

Sections 2 – 11 (inclusive): All

Sections 14 – 36 (inclusive): All

Township 14 North, Range 110 West, 6th P.M.

Sections 1 – 36 (inclusive): All

Township 14 North, Range 111 West, 6th P.M.

Sections 1 – 36 (inclusive): All

Township 14 North, Range 112 West, 6th P.M.

Sections 1 – 16 (inclusive): All

Sections 22 – 26 (inclusive): All

(vv) Spud means the commencement of operations for the first boring of a hole for the drilling of an oil, gas or injection well, or observation/monitor well, and/or the commencement of operations for the re-entry of a previously plugged and abandoned well, and/or observation/monitor well. This includes setting conductor.

(ww) Stratigraphic Test or Core Hole shall mean any hole drilled for the sole purpose of obtaining geological information.

(xx) Stripper Production means a property or lease whose average daily production of crude petroleum and petroleum condensate, including natural gas liquids, did not exceed ten (10) barrels per day per well during the preceding calendar year.

(yy) Sump is a buried, or partially buried, vessel constructed of man-made material including, but not limited to, steel, fiberglass, and/or concrete, which is used for the temporary collection of fluids. A sump can be closed top or open top.

(zz) Supervisor shall mean State Oil and Gas Supervisor.

(aaa) Surface Owner means any person holding any recorded interest in the legal or equitable title, or both, to the land surface on which oil and gas operations occur, as filed of record with the county clerk of the county in which the land is located. Surface Owner does not include any person or governmental entity that owns all of the
land surface and all of the underlying oil and gas estate, or any person or governmental entity that owns only an easement, right-of-way, license, mortgage, lien, mineral interest or nonpossessory interest in the land surface.

(bbb) Temporarily Abandoned Well shall mean a well in which the completion interval has been isolated from the wellbore above and the surface. The completion interval may be isolated by a retainer, bridge plug, cement plug, tubing and packer with tubing plug, or any combination thereof.

(ccc) Temporary Spacing Unit shall mean a specified area of land designated by the Commission for purposes of determining well density and location. A temporary spacing unit is not a drilling unit as provided for in Wyo. Stat. Ann. § 30-5-109, and does not provide a basis for pooling the interests therein as does a drilling unit.

(ddd) Tertiary Production means the crude oil recovered from a petroleum reservoir by means of a tertiary recovery project to which one (1) or more tertiary enhanced recovery techniques meeting the certification requirements of the Wyoming Oil and Gas Conservation Commission or the United States Government are being applied.

(eee) Trona Mineral Resource shall mean a concentration or occurrence of trona mineral in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a Trona Mineral Resource is known, estimated or interpreted from specific geological evidence and knowledge.

(fff) Trona Interval shall mean that stratigraphic interval contained within the Special Sodium Drilling Area – A or – B (SSDA – A or – B), as defined in Chapter 1, Section 2(tt) or (uu) of these rules that lies between the base of the Laney member of the Green River Formation and the top of the main body of the Wasatch Formation.

(ggg) Underground Source of Drinking Water (USDW) means an aquifer or its portion which:

(i) Supplies any public water system; or,

(ii) Contains a sufficient quantity of ground water to supply a public water system; and,

(A) Currently supplies drinking water for human consumption; or,

(B) Contains fewer than 10,000 mg/l total dissolved solids; and,

(iii) Is not an exempted aquifer.

(hhh) Well, when used alone in these rules and regulations, shall refer to an oil or gas well, injection or disposal well, or observation/monitor well, or to a hole drilled for the purpose of producing oil or gas or both. It shall not include seismic, stratigraphic test, core or other exploratory holes drilled for the purpose of obtaining geologic information only.

(iii) Wildcat Well means any oil or gas well designated as a wildcat well by the Wyoming Oil and Gas Conservation Commission. Wildcat wells are wells outside known fields or new wells which are determined by the Commission to have discovered oil or gas in a pool not previously proven productive.

(jjj) Workover means any downhole operation in an existing oil or gas well that is designed to sustain, restore or increase the production rate or ultimate recovery in a geologic interval currently completed or producing in said existing oil or gas well. Workover includes, but is not limited to, acidizing, reperforating, fracture treating, sand/paraffin removal, casing repair, squeeze cementing, or setting bridge plugs to isolate water productive zones from oil or gas productive zones, or any combination thereof. Workover does not mean the routine maintenance, repair, or replacement of downhole equipment such as rods, pumps, tubing, packers, or other mechanical devices.

(kkk) Wyoming Conservation Act shall mean Wyo. Stat. Ann. §§ 30-5-101 through 30-5-126.

(lll) Wyoming Split Estates Act shall mean Wyo. Stat. Ann. §§ 30-5-401 through 30-5-410.

CHAPTER 2

GENERAL RULES

Section 1. Effective Scope of Rules and Regulations.

(a) All rules and regulations of a general nature herein promulgated to prevent waste and to conserve oil and gas in the state of Wyoming shall be effective throughout the state of Wyoming and be in force in all pools except as may be amended, modified, altered or enlarged generally or in specific individual pools by orders hereafter issued by the Commission.

(b) These rules are intended to protect human health and the environment through the utilization of proven methods which are designed to avoid contamination of the soils, groundwater, and surface water at a drilling or producing location. Compliance with these rules does not relieve the owner or operator of the obligation to comply with applicable federal, local or other state permits or regulatory requirements.

(c) If any provision of these rules or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the rules which can be given effect without the invalid provision or application, and to this end the provisions of these rules are severable.

Section 2. Duties of Supervisor.

In addition to the duties prescribed by law, it shall also be the duty of the Supervisor to aid the Commission in the administration of the Wyoming Conservation Act, Wyo. Stat. Ann. § 30-5-101, et seq., and, under the direction of the Commission, aid in the enforcement of all the rules and regulations of the Commission relating to oil and gas.

Section 3. General Functions of Supervisor.

The Supervisor and his Authorized Agents shall have the right at all reasonable times to go upon and inspect any oil and gas properties and wells for the purpose of making any investigation or tests to ascertain whether the provisions of the Wyoming Conservation Act, Wyo. Stat. Ann. § 30-5-101, et seq., or these rules are being complied with and shall report any violation thereof to the Commission. The Supervisor and his Authorized Agents shall have access to all wells at all reasonable times for the purpose of plugging and abandonment and to well sites for the purpose of reclamation if the Supervisor determines that the wells and/or well sites should be added to his well plugging schedule as provided in Chapter 3, Section 16(f) of these rules.

Section 4. Access to Records.

The Supervisor and his Authorized Agents shall have access to all well records wherever located. All owners, drilling contractors, drillers, service companies, or other persons engaged in drilling or servicing wells, shall permit the Supervisor, or Authorized Agents, to come upon any lease, property or well operated or controlled by them, and to inspect the record and operation of such wells and to have access at all times to any and all records of wells. Information so obtained shall be kept confidential or may be released in accordance with the Wyoming Public Records Act, Wyo. Stat. Ann. § 16-4-201, et seq., and the Wyoming Conservation Act, Wyo. Stat. Ann. § 30-5-101, et seq., Owners/Operators who want to have information kept confidential by the Commission shall stamp the information confidential or otherwise indicate in writing to the Commission that the information is to be kept confidential.

Section 5. Reports, Forms, and Notices.

The Commission shall prescribe the manner in which records of all operations, reports, forms, and notices shall be made and which reports, forms, and notices shall be filed with the Supervisor. These forms, Forms 1 through 20 and OG-001, are attached to these rules and are hereby adopted and made a part of these rules for all purposes and shall be used in accordance with the rules and instructions printed thereon, which instructions are part of this rule. United States Bureau of Land Management forms, which contain substantially the same information, shall be substituted for wells drilled on federal or Indian lands. All such records, reports, forms and notices so filed are public records which may be released or kept confidential in accordance with the Wyoming Public Records Act, Wyo. Stat. Ann. § 16-4-201, et seq. Reports, well logs, and directional surveys on exploratory or wildcat wells marked confidential shall be kept confidential for six (6) months after the filing due date as required by Chapter 3, Section 21, unless the Owner gives written permission to release such logs at an earlier date; provided further, that in the event special experimental projects are authorized, then such authorization and all reports pertinent to the projects may be kept confidential for the time specified in the authorization. When an Application for Permit to Drill (APD, Form 1) is received marked “Confidential”, the Commission will release only the first page of the Commission’s Form 1 and the plat to the public and news media.

Section 6. Tests and Surveys.

(a) When deemed necessary or advisable, the Supervisor is authorized to require that tests or surveys be made to determine the presence of waste of oil, gas, water, or reservoir energy; the quantity of oil, gas, or water; the amount and direction of deviation of any well from the vertical; formation, casing, tubing, or other pressures; or any other test or survey deemed necessary to carry out the purposes of the Wyoming Conservation Act, Wyo. Stat. Ann. § 30-5-101, et seq. Directional, deviation, and/or measurement-while-drilling (MWD) surveys must be run on horizontal wells and submitted in accordance with Chapter 3, Section 21 and Chapter 3, Section 25 of these rules, for horizontal wells.

(b) The Supervisor is also authorized to require testing necessary for the regulation of oilfield pits and wastes. Sampling procedures and protocol are subject to review by the Supervisor.

(c) Owners/Operators are required to report the depth to fluid and the casing pressure to the Commission by Sundry Notice (Form 4) on all shut-in and/or temporarily abandoned wells at such times as specified by the Supervisor.

Section 7. Damage to Mineral Deposits.

(a) The Supervisor shall require correction, in a manner to be prescribed or approved by him, of any condition which is causing or is likely to cause damage to any formation containing oil, gas, or water, or which is wasteful of oil or gas, or reservoir energy; and require the repair or proper plugging and abandonment of any well or wells no longer used or useful in accordance with such reasonable plan as may be prescribed or approved by him.

(b) Notwithstanding any other provision of these rules, the Supervisor has discretion to require the Owner or Operator to repair or promptly plug and abandon any well that has been shut-in or temporarily abandoned for twenty-four (24) consecutive months, or that is causing waste or pollution.

Section 8. Naming of Pools.

All oil and gas pools in the state of Wyoming shall be named by the Commission upon recommendation of the Supervisor. The Supervisor shall cooperate with a Field Names Advisory Committee in the selection of names for all oil and gas pools. The Advisory Committee shall be composed of a representative of the United States Bureau of Land Management and representatives appointed by associations representing a cross section of the oil and gas industry in the State.

CHAPTER 4

ENVIRONMENTAL RULES, INCLUDING UNDERGROUND INJECTION CONTROL PROGRAM RULES FOR ENHANCED RECOVERY AND DISPOSAL PROJECTS

Section 1. Pollution and Surface Damage (Forms 14A and 14B).

(a) These rules are intended to protect human health and the environment by avoiding contamination of the soils and underground and surface waters at drilling or producing locations. Applications to construct pits, provided for in these rules, shall be approved if the pit will not cause the contamination of surface or underground water, and endanger human health or wildlife. Approval by the Commission of applications for permits for reserve or produced water pits does not relieve the Owner or Operator of the obligation to comply with the applicable federal, local, or other state permits or regulatory requirements.

(b) The Commission exercises its regulatory authority over the construction, location, operation, and reclamation of oilfield pits within a lease, unit or communitized area which is used solely for the storage, treatment, and disposal of drilling, production and treater unit wastes. The following pits are subject to this regulation:

(i) Reserve pits on the drilling location;

(ii) Reserve pits off the location within a lease, unit or communitized area permitted by Owner or unit Operator drilling the well;

(iii) Produced water retention pits, skim pits, and emergency production pits including the following:

(A) Pits associated with approved disposal wells which act as fluid storage, filtering or settling ponds prior to underground disposal in a Class II well;

(B) Pits constructed for disposal of produced fluids in connection with oil and gas exploration and production used as part of the filtering and/or settling process upstream of a National Pollutant Discharge Elimination System (NPDES) discharge point;

(C) Pits constructed in association with heater treaters or other dehydration equipment used in production, such as free water knockouts, or first, second and third stage separators;

(D) Pits constructed for blowdown or gas flaring purposes.

(iv) Pits constructed for the storage and treatment of heavy sludges, oils, or basic sediment and water (BS&W) in connection with production operations;

(v) Temporary pits constructed during well workovers, including spent acid and frac fluid pits;

(vi) Permanent or temporary emergency use pits;

(vii) Miscellaneous pits associated with oil and gas production not listed above.

(c) Permits. In addition to the permits required by the Commission and the Bureau of Land Management, the following agencies may also have authorities over the management of oil field wastes:

(i) The Wyoming Department of Environmental Quality administers the following regulatory programs:

(A) Commercial ponds and pits used for the retention and disposal of fluids;

(B) Class I hazardous waste and nonhazardous waste wells under the Underground Injection Control (UIC) Program;

(D) Regulations for releases of oil and hazardous substances into waters of the state and Wyoming Contingency Plan;

(E) Roadspreading, landspreading, and landfarming of exploration and production wastes;

(F) Solid waste disposal facilities operated by municipalities and privately by the oil and gas industry;

(G) Cathodic protection wells;

(H) Underground storage tanks;

(I) Sanitary waste treatment systems; and,

(J) Air quality standards;

(ii) The Bureau of Land Management administers surface operating standards for oil and gas exploration and development on federal lands, Tribal lands and/or leases in Wyoming;

(iii) The Office of the State Engineer regulates surface water appropriation, construction of water supply wells and appropriation of water from those wells, and the beneficial use of water produced in association with the recovery of hydrocarbons which includes water from coalbed methane wells. The State Engineer’s Office should be contacted for dam safety requirements;

(iv) The United States Fish and Wildlife Service administers the Migratory Bird Treaty Act in Wyoming. Oil and gas Owners or Operators have to be aware of the obligation to comply with this regulation as they permit, construct, and maintain all facilities that may contain hydrocarbons or produced waters. Appendix A of these rules includes information on that legislation.

(v) The Commission shall, to the maximum extent possible and consistent with its statutory obligations and authorities set forth in Wyo. Stat. Ann. §§ 30-5-101 through 30-5-126, adopt such policies and practices as may be required in compliance with Executive Order 2008-2, Greater Sage-Grouse Core Area Protection, Appendix J.

(d) Oil and Gas Commission Pit Permits. No retaining pit or below-grade structure used for the containment of fluids, as defined in this section, shall be constructed unless Form 14A (Application for Permit to Construct and Use Earthen Pit for Retention of Produced Water) or 14B (Application for Permit to Construct and Use Earthen Pit for Temporary Use, or Reserve Pit), has been submitted to and approved by the Supervisor. The Commission shall not approve any application, either Form 14A or 14B until the applicant has demonstrated compliance with the requirements of the Split Estates Act, if the application is subject to the Split Estates Act, as contained within Chapter 3, Section 8(d) of these rules.

(e) Owners or Operators of produced water retaining pits in operation prior to June 1, 1984, may continue to use such pits as long as the operation conforms to the current requirements of new pits. Owners of existing pits shall be responsible for providing the information included on Form 14A upon request of the Supervisor.

(f) The Supervisor may administratively approve fieldwide or areawide applications covering the standardized construction and operation of earthen retaining pits.

(g) Optional Form 18 (Soil & Groundwater Information) is provided for the Owner’s/Operator's use, if they choose, to supplement Forms 14A and 14B to record and document shallow groundwater and subsoil types when they drill shallow holes such as the rat hole, mouse hole or conductor on the drill site. Form 18 can be used to demonstrate that a well is not in a critical area where groundwater is at a depth of less than twenty feet (20') or in an area that has permeable subsoil.

(h) Centralized Pits. Owners or Operators must obtain approval of the Supervisor for the location, construction and closure of noncommercial centralized pits located within a lease, unit, or communitized area used for field operations. Requirements may be more stringent than individual reserve or produced water pits depending on pit size, waste type, migratory bird protective measures, mosquito control with the county weed and pest control board guidance in the county where operations are located, and location. Applicants, upon request of the Supervisor, shall provide additional notice, plats and plan views, and information relative to the location of water supplies, residences, schools, hospitals, or other structures where people are known to congregate, site security, groundwater monitoring and leak detection. These permits will be issued for a term of five (5) years and may be renewed at the discretion of the Supervisor.

(i) Emergency Pits. Prior to construction, permanent emergency pits must be approved on Form 14B (Application For Permit To Construct and Use an Earthen Pit for Temporary Use, or Reserve Pit). Within twenty-four (24) hours of the first business day after construction of a temporary emergency pit or use of a permanent emergency pit, the Owners or Operators shall verbally advise the Supervisor of the existence of the pit and of the estimated time it will be in use.

(j) Reserve Pits. Form 14B must be submitted and approved in conjunction with an Application for Permit to Drill (Form 1). Approval of this permit must be obtained before drilling commences. The staff must be provided at least one (1) working day to evaluate the location (for distance from surface waters, depth to useable ground water, soils, distance from human habitation, etc.) and to evaluate the fluids which potentially will be retained in the pit (for types of drilling and completion fluids proposed for use, for presence of salt sections, and for the length of time the pit will be in use, etc.). The Commission may request additional information to complete its evaluation. Owners and Operators using closed systems who wish to use a pit to receive drill cuttings must apply for and receive permission to construct on Form 14B.

(k) Permits are valid for a term of one (1) year from the date of issuance unless an extension has been approved for the Application for Permit to Drill (Form 1) and for as long as the permit conditions are met. Falsification of information on the application or filing of an incomplete application will result in automatic denial of the request.

(l) Workover and Completion Pits in Critical Areas. Approval of workover and completion pits proposed to be constructed in locations meeting the definition of pits in critical areas must be applied for and obtained on Form 14B prior to their construction and use.

(m) Application May be Done in the Following Manner:

(i) Submitting Form 14B application for individual new (concurrent with filing an Application for Permit to Drill, (Form 1)) or existing wells;

(ii) Submitting Form 14B application for a field or unit wide permit, listing all wells meeting any of the above criteria.

(n) If the Owner or Operator complies with the approved Form 14B terms and conditions, no further approval to construct and use workover or completion pits will be required for those well sites. However, subsequent reporting, within thirty (30) days of completion of operations on Form 4 (Sundry Notice), is required each time a pit is constructed and used. Alternative reporting requirements such as annual reporting may be approved by the Supervisor.

(o) Workover and Completion Pits in Non-Critical Areas. Workover and completion pits proposed to be constructed in locations not meeting any of the criteria listed in the definition of Pits in Critical Areas, Chapter 1, Section 2(nn) of these rules, will require either:

(i) Submittal of a Form 14B application for a field or individual well basis to receive a one-time approval to construct and use workover and completion pits. As long as the Owner or Operator complies with the approved Form 14B terms and conditions, no further application/notice will be required for future construction and use of workover and completion pits.

(ii) Notification to the Supervisor via Sundry Notice (Form 4), subsequent to the construction and use of a workover or completion pit. This must be submitted within thirty (30) days of completion of operations and include the following information:

(A) Schematic diagram showing the location of the workover or completion pit in relation to existing production equipment;

(B) Length of time the pit was in use; and,

(p) General Information for Workover and Completion Pits. Upon review of Form 14B applications, the Commission staff will evaluate well locations to determine if their proposed siting is in a critical area (for distances from surface waters, depth to useable groundwater, soils, distances from human habitation, etc.). In the event construction is approved, special precautions or operational restrictions may be required by the Supervisor at these well facilities in order to avoid contamination of groundwater and surface water at the well location.

(q) Workover Pits should retain only Resources Conservation and Recovery Act (RCRA) exempt wastes. Other wastes should be managed in tanks for later recycling, reuse, or proper disposal. Owners or Operators should design workover or completion procedures so that additives will be expended while correcting the down-hole problems. Workover and completion pits shall be open only for the duration of operations and must be closed within thirty (30) days after the operation is complete.

(r) Produced Water Pits. Form 14A must be submitted and approved prior to use of a produced water pit. The Commission may request additional information to determine if the proposed pit location meets the definition of Pits in Critical Areas, Chapter 1, Section 2(nn).

(i) The information required for submittal includes a standard water

analysis (Form 17) to include oil and grease, maximum and average estimated inflow, size of pit, freeboard capacity, original of pit contents, method of disposal of pit contents, maximum fluid level above average ground level, distance to closest surface water, depth to groundwater, subsoil type and type of sealing material. A plan view map and topographic map of sufficient size and detail to determine surface drainage system and all natural waterways and irrigation systems, if applicable, must be attached. The Commission may request additional information.

(ii) Because of the potential for direct communication with shallow groundwater resources of the state, application for approval of construction of percolation pits for containment and discharge of water produced in association with coalbed methane gas in the Powder River Basin may be accompanied by a review of the groundwater issues by the Department of Environmental Quality as determined by the Supervisor. If the proposed construction meets with requirements of the Commission’s Rules, the application may be granted.

(s) Below Grade Structures (Tinhorns). For the purpose of its regulation, the Commission requires below grade structures (including tinhorns) used to receive oil, condensate, or produced water, to be applied for on Form 14A. Construction must be done in accordance with good engineering practice and the staff must be provided the opportunity to inspect prior to any use. A written monitoring program for all permitted below grade structures must be submitted and approved by the staff.

(t) Marking. The Owner/Operator shall mark each pit in a conspicuous place with his name and the legal description of the location of the pit and shall take all necessary means and precautions to preserve these markings. Exempted from this requirement are pits in close proximity to injection or producing wells marked in accordance with Chapter 3, Section 19.

(u) Location. When any retaining pit is located in an area with a high potential for communication between the pit contents and surface water or shallow ground water, or to provide additional protection to human beings when operations are conducted in close proximity to water supplies, residences, schools, hospitals, or other places where people are known to congregate, or to provide protection to livestock and wildlife, the Commission may require such modifications or changes in the Owner's/Operator’s plans as it deems necessary including, but not limited to, running a closed system, lining the pit, installing monitoring systems and providing additional reporting, or any other reasonable requirement that will insure the protection of fresh water. In areas where ground water is less than twenty feet (20') below the surface, a closed system must be utilized for well drilling operations.

(v) Unlined pits shall not be constructed in fill. Pits of any kind shall not be constructed in drainages, or in the floodplain of a flowing or intermittent stream, or in an area where there is standing water during any portion of the year. Ground and surface water maps are available for review or consultation at the Commission, the U.S. Geological Survey (USGS), or the State Engineer's Office.

(w) Construction. Lining of pits with reinforced oilfield grade material, compatible with the waste to be received, will be required by the Supervisor or Commission under certain circumstances including, but not limited to, pits proposed to be constructed in areas defined as critical as well as on sites with sandy soils, shallow groundwater, in groundwater recharge areas, or sites immediately adjacent to the Green River or the Colorado River drainage and other sensitive environments or circumstances identified by the Commission. Pits proposed to be constructed in the Powder River Basin for percolation of water produced in association with the recovery of coalbed methane gas into shallow sands or aquifers may be considered by the Commission if the applicant can demonstrate their operation will comply with water quality standards of the Department of Environmental Quality. When required by Supervisor, the Commission staff will provide applicable information to the Department of Environmental Quality for their co-review. Pits constructed in fill or those used to retain oil base drilling muds, high-density brines, and/or completion or treating fluids must be lined. Pits constructed to retain produced water with a total dissolved solids concentration in excess of ten thousand milligrams per liter (10,000 mg/l) must be lined. The Supervisor, on a case by case basis, will determine if pits retaining water with a total dissolved solids concentration less than ten thousand milligrams per liter (10,000 mg/l) will be required to be lined. The Commission staff must be provided at least twenty-four (24) hours notice of commencement of construction and/or of closure of pits so that an inspection can be made. Additionally, the following construction standards for pits are required to be met or exceeded:

(i) Soil mixture liners, recompacted clay liners, and manufactured liners must be compatible with the waste contained. On request of the Supervisor, the Operator must provide evidence of the chemical resistance of the liner selected for use.

(ii) Liners constructed of synthetic materials must meet the following specifications: a 9 to 12 mil thickness, greater than 20% elongation at failure, puncture strength of 60 pounds, tear strength of 50 pounds, and permeability less than 10^-7 cm/sec. Joints must be overlapped a minimum of 2 inches and seams sealed as recommended by the manufacturer. Blemishes, holes, or scars must be repaired per manufacturer's recommendation. Breaches in the liner for siphons or other equipment must be reinforced.

(iii) Slopes for soil mixture liners or recompacted liners shall not exceed 3:1. Slopes for manufactured liners shall not exceed 1:1.

(iv) Reasonable provisions for protection of liners during filling and emptying activities must be included in the construction plans.

(v) Manufactured liners must be installed over smooth fill subgrade which is free of pockets, loose rocks, or other materials which could damage the liner. Sand, sifted dirt or bentonite are suggested. At no time will straw or any other organic material except synthetic cushion fabric designed for that purpose be used for a liner cushion. Installation of synthetic or soil mixture liners must be in accordance with accepted engineering practice.

(vi) Liner edges must be secured. The Commission requires that liner edges be placed in a trench which is deep enough to receive approximately one foot (1') of compacted soil which will anchor the material.

(vii) Monitoring systems may be required for pits constructed in sensitive areas. Such pits must be operated in a manner that avoids damage to liner integrity. Periodic inspections, weekly at a minimum, of pits must be made by the Owner or Operator and documentation of such inspections may be required to be submitted to the Supervisor at his request.

(viii) Liquids must be kept at a level that takes into account extreme precipitation events and prevents overtopping and unpermitted discharges. Appendix B includes average annual precipitation rates for the state.

(x) Operation. Owners or Operators will take such reasonable measures to manage pits so that the pits are used solely for retention or disposal of fluids associated with the operation for which the pit was originally constructed and for which the permit was granted. Reserve pits cannot be used as production pits; separate pits must be constructed and permitted. Permits are granted taking into consideration the salinity, hydrocarbon content, pH, and other characteristics of the fluids which may be detrimental to the environment if they were to be directly applied to soils. Use of a pit by persons other than the Owner or Operator is prohibited unless approved by the Supervisor and by the Owner or Operator of the pit. Pits shall not receive, collect, store, or dispose of any wastes that are listed or defined as hazardous wastes and regulated under Subtitle C of RCRA, except in accordance with state and federal hazardous waste laws and regulations. The pit permit or approval is automatically canceled if these provisions are not met. See Appendix C of these rules for additional information.

(y) Unused commercial products shall not be disposed with exempt oilfield wastes. The commingling of any listed hazardous waste with the otherwise exempt pit contents may render the entire mixture a hazardous waste and results in closing the pit under the RCRA hazardous waste regulations. All reasonable efforts should be made to completely use commercial products. Products should be returned to the vendor if appropriate, or segregated from other wastes for management or disposal. Oil base muds must be segregated from water base drilling fluids because pit closure is complicated by their presence. Mixing and treating of oil based and water-based muds can be allowed with approval of the Supervisor. Rigwash may be routed to the reserve pit provided care is taken to avoid contamination of the pit contents by rig oil and other nonexempt wastes. See Appendix C of these rules for more information.

(z) Where feasible, Owners/Operators are encouraged to increase the use of solids removal equipment to minimize drilling fluid waste, where practical. The Commission encourages the recycling of drilling fluids and by administrative action approves the transfer of drilling fluids intended for recycling. When removed as a product for use in a drilling operation on another lease, drilling fluid is not classified as a waste. If federal leases are involved, the Owner or Operator must obtain the approval of the Bureau of Land Management (BLM). The Supervisor requires the following information be included on the Form 14B or on a Sundry Notice (Form 4) estimated volume, estimated date of transfer, mud recap, analyses which include at a minimum, pH, chlorides, and oil and grease. To protect shallow groundwater, drilling muds with chlorides testing in excess of 3,000 parts per million or those containing hydrocarbons cannot be used in drilling operations until after the surface casing has been set.

(aa) Trash and sanitary waste should be properly contained and hauled to approved disposal locations, not retained in or disposed of in pits on location or downhole. Owners/Operators should consult the county sanitarian and/or the Department of Environmental Quality regarding appropriate disposal of sanitary wastes.

(bb) All pits shall be fenced completely and for any produced water pit, workover, completions, or emergency pit found containing oil, sheens, condensate, other hydrocarbons or chemicals proven to be hazardous to public health, safety and welfare, or to wildlife, domestic animals, or migratory birds, the Owner or Operator shall have these fluids removed as soon as practical or in accordance with Chapter 4, Section 1(dd) of these rules. If timely fluid removal is not possible, the pit should be netted or otherwise secured in a manner that avoids the loss of wildlife, domestic animals, or migratory birds. Alternative methods of netting or securing pits may be authorized at the discretion of the Supervisor. See Appendix A for information relative to the Migratory Bird Treaty Act. Owners or Operators shall provide for devices on hydrogen sulfide flare stacks to discourage birds from perching. The Supervisor may make additional requests for security when operations are conducted in close proximity to residences, schools, hospitals, or other structures or locations where people are known to congregate. For reserve pits, see subsection (jj) of this section.

(cc) Blowdown, flare, and emergency pits cannot be used for long-term storage or disposal.

(dd) All retaining pits shall be kept reasonably free of surface accumulations of oil and other liquid hydrocarbon substances and shall be cleaned within ten (10) days after discovery of the accumulation by the Owner/Operator or notice from the Supervisor.

(ee) The Owner or Operator shall not pollute streams, underground water, or unreasonably damage or occupy the surface of the leased premises or other lands. At no time will the fluid contents of any pit be discharged or allowed to escape to the surface without prior approval through issuance of an NPDES permit by the Department of Environmental Quality (DEQ) and other required authorization. At no time will drilling fluids be discharged into live waters or into any drainages that lead to live waters of the state. If liquid products of wells cannot be treated or destroyed, or if the volume of such products is too great for disposal by the usual method of onsite natural evaporation and burial of solids, the Supervisor must be consulted and the liquids disposed of by an approved method.

(ff) Testing. For the purpose of its regulation of oilfield pits and wastes, the Commission recognizes and requires, when deemed appropriate, the following tests:

(i) Standard Water Analysis - Form 17

(ii) Toxicity Characteristic Leaching Procedures (TCLP), EPA Method 1311; July 1992.

(iii) Oil and Grease or Total Petroleum Hydrocarbon (TPH), EPA Method 418.1; 1978.

(iv) Total Petroleum Hydrocarbon, Condensate and High Gravity Crude, EPA, Method 8015, Gasoline and Diesel Range; July 1992.

(v) United States Department of Agriculture, Sodium Absorption Ratio (SAR), Exchangeable Sodium Percentage (ESP); 1984.

(vi) Wyoming Oil and Gas Commission Leachate Test Procedure; April 27, 1999.

(gg) Soil borings and soil testing must be performed by an independent engineering or geotechnical soil testing company or laboratory according to sound engineering practice in accordance with established industry standards. The logs of all borings, together with associated laboratory testing to classify soils and to measure soil strength, permeability, and other related parameters shall be submitted to the Supervisor.

(hh) Sampling procedures are subject to review by the Supervisor because variations in sampling protocol allow differentiation of waste fluid compositions due to normal distribution.

(ii) Closure. If the pit is proposed to be closed through the usual method of onsite natural evaporation and subsequent burial of solids, if pit treatment procedures are going to be applied, or if closure plans have changed from the original proposal approved on Form 14A or 14B, or any time wastes are disposed off-site, a Sundry Notice (Form 4) must be submitted and approved prior to closure. Information relative to approved commercial disposal facilities is available from the DEQ Water Quality Division. Information relative to companies whose methods to chemically and/or mechanically treat pits have been approved by the Commission may be obtained from the agency. The Commission staff must be provided the opportunity to witness closure operations. Verbal notice at least twenty-four (24) hours prior to closure is required. Closure must be conducted in accordance with lease and landowner obligations and with local, state, and federal regulations:

(i) Oil, water, and other fluids must be immediately removed from emergency pits and disposed in accordance with the Commission’s rules. In the case of temporary emergency pits, evaporation or percolation of fluids prior to closure is not an acceptable disposal method. Permitted permanent emergency pits will not require immediate closure after use and fluid removal;

(ii) Trenching or squeezing pits is expressly prohibited. Burial methods cannot compromise the integrity of manufactured, soil mixture, or recompacted clay liners without written approval by the Supervisor. One-time landspreading of reserve pit fluids on the drilling pad may be approved upon submittal of analyses, mud recaps and treating summaries, groundwater identification, and other information that is deemed appropriate. Prior approval must be obtained from the Supervisor if drilling fluid is disposed on the drill pad. A Sundry Notice (Form 4) with appropriate supporting detail must be submitted following the operation. Any offsite waste disposal is subject to DEQ regulations;

(iii) Closure standards and testing requirements for all pits will be determined by the Supervisor based upon site-specific conditions;

(iv) Pit solids showing high concentrations of salt (exchangeable sodium percentage above 15) must be removed from the location and disposed in a permitted facility, encapsulated, or chemically or mechanically treated;

(v) When drilling with oil-based muds, oil-based mud solids must be removed and disposed in a permitted facility; solidified using a Commission approved commercial pit treatment, roadspread, landspread, landfarmed; or, bioremediated in accordance with Commission or Wyoming Department of Environmental Quality rules. Burial after encapsulation or solidification will be approved if the stabilized mixture contains less than ten milligrams per liter (10 mg/l) leachable oil and less than five thousand milligrams per liter (5,000 mg/l) leachable dissolved solids using the Wyoming Leachate Test defined in Chapter 4, Section 1(ff), Testing.

(jj) For reserve pits containing oil, sheens, condensate, other hydrocarbons or chemicals proven to be hazardous to public health, safety and welfare, or to wildlife, domestic animals, or migratory birds, the Owner or Operator shall have these fluids removed as soon as practical. If fluid removal is not possible in a timely manner, the reserve pit shall be fenced completely and netted or otherwise secured at the time the rig substructure has been moved from the location in a manner that avoids the loss of wildlife, domestic animals, or migratory birds. Alternative methods of netting or securing pits may be authorized at the discretion of the Supervisor.

(kk) All trash, paper, and unused structures or equipment must be removed from the location upon completion of operations. With landowner consent, Owners/Operators may temporarily store equipment (such as drilling rigs) on a location while it awaits transfer. Reserve and produced water pits cannot be used for disposal of refuse, failed equipment parts, or unused chemicals. Proper closure of the pit is compromised by the inappropriate use of the pit for trash disposal and may result in revocation of the permit. Further, Owners/Operators are encouraged to choose chemical additives which are lower in toxicity or do not exhibit RCRA hazardous characteristics. See Appendix D for suggestions. Additionally, Owners/Operators are encouraged to refer to Material Safety Data Sheets provided by vendors as products are selected.

(ll) The Commission specifically prohibits the use of dispersants, wetting agents, surface reduction agents, surfactants, or other chemicals that destroy, remove, or reduce the fluid seal of a reserve pit and allow the fluids contained therein to seep, drain, or percolate into the soil underlying the pit.

(mm) Landfarming and landspreading must be approved by the DEQ. Jurisdiction over roadspreading or road application is shared by DEQ and the Commission. Roadspreading or road application is a process whereby wastes are incorporated into a roadbed, typically for beneficial use, with minimal environmental risk. The Commission is the agency responsible for permitting road applications of RCRA-exempt exploration and production wastes which include drilling fluids, produced water and produced water-contaminated soils, waste crude oil, sludges, and oil-contaminated soils inside the boundaries of a lease, unit, or communitized area. The roadspreading application shall include acceptable evidence of landowner consent and the information included on the Commission's Form 20. Landfarming, landspreading, and roadspreading shall be protective of human health and the environment and shall be performed in compliance with all other applicable State and Federal regulations and requirements.

(nn) The Commission may require testing of wastes and additional disposal requirements prior to closure of a pit if they have reason to believe exempt exploration and production wastes have been commingled with hazardous wastes, upon analysis of an Owner’s/Operator's mud program, or in previously identified sensitive environments.

(oo) Commercial Treatment of Pits. Any person, corporation, or company desiring to chemically and/or mechanically treat pits in Wyoming must apply for and receive permission to do so from the Commission after a public hearing. Types of approved treatments include enhanced evaporation, solidification, centrifuging, etc. The Commission will approve those methods that can successfully demonstrate a capability to accomplish some or all of the following criteria:

(i) Compressive strengths that are appropriate for post drilling or production activities;

(ii) Reductions in weight or volume of waste;

(iii) Removal or reduction of harmful properties of waste; and,

(iv) Reduction or elimination of mobility or leachability of constituents.

(pp) An Operator or Owner wishing to treat pits for closure must submit to the Commission on a Sundry Notice (Form 4) a plan outlining the objectives that the treatment is designed to achieve (e.g., waste volume reduction, toxicity reduction/removal, chemical fixation, etc.). The Commission's approval will be based upon the selected method's demonstrated capability to achieve the objectives described in the sundry notice. Consideration must be given to applicable federal, local, or state permits or regulatory requirements when performing mechanical or chemical treatment of pit wastes. A list of approved methods and vendors is available from the Commission.

(qq) Reclamation. Reclamation of unused production pits or any other temporary retaining pits, including reserve pits, shall be completed in as timely a manner as climatic conditions allow. Production pit areas and reserve pits will be reclaimed after they have dried sufficiently following the removal of any oil, sheens, or other hydrocarbons, or if they contain chemicals harmful to wildlife, domestic animals and migratory birds, or if proven to be hazardous to public health, safety and welfare, and no later than one (1) year after the date of last use, unless the Supervisor grants an administrative variance for just cause and after Oil and Gas Conservation Commission staff inspection. Because their construction may be a benefit to landowners, pits used solely for the retention of water produced in association with the recovery of coalbed methane gas in the Powder River Basin may be left open with the approval of the Supervisor and subject to Chapter 3, Section 4(h)(ii) of these rules. A statement of acceptance which clearly indicates the surveyed location, precise size of the pit, and willingness on the part of the landowner to accept all future responsibility for the structure and its contents, accompanied by a current written cost estimate for pit closure prepared by a Wyoming registered professional engineer with expertise in surface pit remediation, must be provided to and accepted by the Supervisor. The landowner’s signature on the statement of acceptance must be notarized.

(rr) Site rehabilitation should be in accordance with reasonable landowner's wishes, and/or resemble the original vegetation and contour of the adjoining lands. Where practical, topsoil must be stockpiled during construction for use in rehabilitation. All disturbed areas on state lands will be reseeded. Appendix F of these rules includes information on seeding. The Owner or Operator shall advise the Supervisor of the completion of reclamation of a production or reserve pit by submitting a Sundry Notice (Form 4).

(ss) One-Time Downhole Disposal. By formal order or by administrative action the Commission may approve of one-time disposal of a limited volume of fluid produced in the course of drilling operations from one specific well. This is not an operation designed for downhole disposal of drilling fluids from offsetting or additional wells. This application is not to be confused with the approval of a Class II well for underground disposal of water produced in association with the recovery of hydrocarbons under the Underground Injection Control Program. Disposal by injection shall not be initiated until such time as approval has been granted by the Commission.

(tt) An application for approval of reserve pit fluid injection shall demonstrate that water in the proposed disposal interval is in excess of ten thousand milligrams per liter (10,000 mg/l) total dissolved solids or has received an aquifer exemption under Chapter 4, Section 12 of these rules and that fresh water or Underground Sources of Drinking Waters (USDW) will not be influenced by the disposal operation. Data to support this finding shall include, but not be limited to, the following:

(i) Full detail of the casing, cementing, and completion of the well including cement logs;

(ii) Formation tops and depths to the deepest USDW;

(iii) Copies of the mud recaps, appropriate analyses of the fluid, and an estimate of the volume of the fluids to be disposed;

(iv) Abandonment procedure and demonstration that the disposal zone can be isolated;

(v) Maximum disposal pressure anticipated and information relative to fracture pressures of the confining zone. Pump pressure must be limited so that fractures will not extend to the base of a USDW and/or a groundwater aquifer;

(vi) The statement that the Owner or Operator will make arrangements to provide at least twenty-four (24) hours notice of disposal operation so that a Commission technician might be present as a witness; and,

(vii) Statement that on completion of the work a temperature survey or suitable alternative will be run to show fluid was placed in the proposed interval.

(uu) Upon completion of the work, the applicant must file a Sundry Notice (Form 4) summarizing the disposal operation.

(vv) The Commission or its staff may designate conditions other than those listed in this rule, as it deems necessary to ensure safe disposal of these fluids. The application shall be approved if the application for a permit is complete and if water in the proposed interval has total dissolved solids in excess of ten thousand milligrams per liter (10,000 mg/l) and fresh water or Underground Sources of Drinking Water will not be influenced by the disposal operation.

Section 2. Water Shut-Offs.

By approved reasonable methods, the Owner or Operator 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 3. Accidents, Spills, and Fires.

(a) 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.

(b) Uncontained spills or unauthorized releases of produced fluids, drilling muds, produced water, hydrocarbons, or chemicals which enter, or threaten 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. The Owner or Operator shall file a written report within fifteen (15) working days.

(c) Regardless of the type of surface containing the fluids, contained spills of crude oil, condensate, produced water, or a combination thereof, which occur on a lease, unit, or communitized area, except on state lands, and do not physically enter waters of the state and are immediately contained, removed, and disposed of properly,

(i) Contained spills of less than one (1) barrel (42 gallons) are not required to be verbally reported. The Owner or Operator shall maintain a record of such spills, the volume and actions taken to contain, remove and properly dispose and have the records available for review by the Commission upon request.

(ii) Contained spills of greater than one (1) barrel (42 gallons) and less than ten (10) barrels (420 gallons) are not required to be verbally reported. The Owner or Operator shall file a written report within fifteen (15) working days of the spill.

(iii) Contained spills equal to or greater than ten (10) barrels (420 gallons) shall be verbally reported to the Commission no later than the next business day following discovery of the incident. The Owner or Operator shall file a written report within fifteen (15) working days of the spill.

(iv) An example of the information normally required by the Commission for reporting spills is included in Appendix E. The Commission accepts copies of reports prepared to satisfy the requirements of the Department of Environmental Quality or the Bureau of Land Management.

Section 4. Workmanlike Operations.

(a) 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:

(i) Take reasonable steps to prevent accumulation and promptly remove any materials that may be deemed to be a fire hazard. Accumulations of oil or hydrocarbon-contaminated soil should be promptly removed from the vicinity of well locations, wellheads/stuffing boxes, lease tanks and inside bermed areas, and/or other production equipment and pits;

(ii) Maintain all materials and chemicals in an orderly and safe manner. Material and equipment stored on the lease and or well site shall be limited to serviceable equipment commonly associated with the operation of a lease or well. Refuse should be disposed of properly as provided elsewhere in these rules;

(iii) Provide for clear identification of ownership of the property at all times and comply with the requirements in Chapter 3, Section 19 of these rules for the marking of each drilling, producing, or injection well;

(iv) Locate all permanent ignition sources, such as heater treaters, no closer than one hundred feet (100') from the wellhead;

(v) On state and private surfaces, locate wellheads, pumping units, pits, production tanks and/or associated production equipment no less than three hundred fifty (350) feet from any residence, school, hospital, or other places as determined by the Supervisor. The Supervisor may impose greater distances for good cause and, likewise, grant exception to the 350-foot rule;

(vi) 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;

(vii) 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 that regulate the prevention and containment of crude oil spills. SPCC regulations and guidelines specify that applicable facilities construct appropriate containment or diversionary structures or equipment to prevent discharged oil from reaching waters of the United States. The use of crude oil tanks without tops is strictly prohibited. If an SPCC Plan is applicable, any oil spilled within the SPCC containment berms at a tank battery shall be promptly removed and any containment devices installed to contain drips and spills during hose hookup shall be emptied and/or cleaned as necessary to prevent access by wildlife, domestic animals, or migratory birds.

(viii) Where facilities are in close proximity to populated areas or where there is an imminent 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;

(ix) 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;

(x) 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 regulations.

(b) The Owner/Operator shall install and maintain all electrical equipment located in and around an oil or gas well to comply with the National Electrical Code in effect for the year electrical conductors were installed and energized, and the Department of Fire Prevention and Electrical Safety Act, Wyo. Stat. Ann. §§ 35-9-102(a)(viii) and 35-9-123(a)(ii). Operator shall provide the Oil and Gas Conservation Commission at least twenty-four (24) hours notice prior to installation of underground electrical conductors outside of its facilities, fenced enclosures, or posted areas. With routine maintenance, emergency or repair work, the Operator shall provide the Oil and Gas Conservation Commission notice within twenty-four (24) hours of completing the electrical work.

Section 5. Underground Disposal of Water.

(a) 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 Chapter 5, 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 seventy-five dollar ($75.00) annual fee on all new and old disposal wells.

(i) No later than January 1, 2005, disposal wells shall be equipped with operable pressure gauges, calibrated at all times to industry standards and manufacturer’s specifications for the instrument used, on the tubing and on the casing-tubing annulus, or set up in such a way that the company representative can connect gauges to the well to determine pressure on the tubing and casing-tubing annulus. Accurate gauges shall also be placed on any other annuluses as deemed necessary by the Supervisor. Variances may be administratively approved for good cause shown.

(b) Disposal Well Permits. The applicant shall demonstrate by compliance with Chapter 3, Section 22 of these rules 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.

(c) The application to dispose of salt water, brackish water, or other water unfit for domestic, livestock, irrigation, or other general uses shall include:

(i) A plat showing the location of the disposal well or wells, including abandoned and drilling wells and dry holes, and the names of all lease Operators or Owners and surface owners within a one-half (1/2) mile radius from the proposed disposal well or wells;

(ii) An affidavit showing that said lease Operators or Owners and surface owners within a one-half (1/2) mile radius have been provided a copy of the application for disposal;

(iii) 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;

(iv) 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;

(v) A statement specifying the source of water to be injected;

(vi) The estimated minimum and maximum amount of water to be injected daily;

(vii) The average and maximum disposal pressure;

(viii) 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;

(ix) Standard laboratory analysis of the water to be disposed and the water in the formation into which disposal is taking place. The method of water analysis is subject to review by the commission or Supervisor. Water Analysis Report (Form 17) illustrates the minimum parameters for which water must be analyzed. Other reporting formats which include this minimum information may be accepted;

(x) A reference to the Commission order exempting the aquifer that is to receive the injected fluid;

(xi) The applicant shall provide for a one-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 one-quarter (1/4) mile radius;

(xii) The depth and areal extent of all usable fresh and potable water (USDW) underlying the area proposed for exemption;

(xiii) 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.

(d) Disposal Well Integrity Demonstrations. For the purpose of this rule, a mechanical integrity test of an injection well is a test designed to determine: if there is a significant leak in the casing, tubing, or packer of the well, and if there is significant fluid movement into an underground source of drinking water through vertical channels adjacent to the wellbore.

(i) 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 feet (100') of perforations. A retrievable bridge plug may be utilized in casing to test tubingless completions. Owners/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; or

(B) As an alternative to the pressure test, the Owner or Operator may use any test or combination of tests approved by Environmental Protection Agency (EPA).

(ii) The initial mechanical integrity test for all disposal wells shall include one of the following tests to determine whether there are significant fluid movements in vertical channels adjacent to the well bore:

(A) Cementing records which shall only be valid for disposal wells in existence prior to present date;

(B) Tracer surveys;

(D) Temperature surveys; or,

(E) In lieu of (A) through (D), any other test or combination of tests approved by EPA.

(iii) As provided in Chapter 2, Section 6, if normal testing, surveys, or monitoring schedules provide inconclusive proof of mechanical reliability, the Commission shall require that other appropriate logs or additional well tests be performed.

(iv) 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 a disposal 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 disposal 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.

(e) 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 3, Section 14 of these rules.

(f) Modifications or variations of existing or pending disposal operations may be approved by the Supervisor under Chapter 3, Section 10 of these rules, 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.

(g) The Commission shall publish notice of the disposal application fifteen (15) days before approval in a newspaper in general circulation in Natrona County, and a newspaper of general circulation in the county in which the disposal well is located.

(h) 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 6. Geophysical/Seismic Operations.

(a) General. Before a geophysical/seismic company conducts operations, the representative shall give notice to an occupant of every inhabited dwelling within a one-mile (1) 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 activity.

(b) A representative of the client company and the geophysical/seismic company shall meet with the staff of the Commission at the office of the State Oil and Gas Supervisor to file an application for a permit to conduct seismic operations before beginning seismic operations in the State of Wyoming. No seismic operation shall be conducted without such a permit and no permit shall be issued until the applicant has demonstrated compliance with the requirements of the Split Estates Act, if the application is subject to the Split Estates Act, as contained within Chapter 3, Section 8(d) of these rules. The Supervisor has discretion to waive the requirement of the pre-permit meeting. 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 geophysical/seismic company 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 geophysical/seismic company, any independent hole pluggers, or client company from properly plugging existing seismic holes, but does prohibit them from drilling any more.

(c) Prior to commencement of drilling, a meeting shall be held between the Commission staff and field representatives from the geophysical/seismic company, every driller, every designated hole plugger, and a representative of the client company. Time and location of the meeting shall be at the discretion of the Commission's staff. The Supervisor has discretion to waive the requirement for the pre-drilling meeting.

(d) Seismic holes shall be re-entered only in compliance with the regulations of the Wyoming Occupational Health and Safety Commission and other applicable law.

(e) Unnecessary surface disturbance created by movement of equipment on water saturated or wet soils is prohibited. Once equipment tracks become on average four (4) to six (6) inches or greater in depth in wet or muddy conditions, operations must cease in the wet or muddy area(s). Operations may continue in dry areas of the project area. For just cause, the Supervisor or his duly appointed agent may waive this requirement.

(f) Permitting. Before beginning geophysical operations, the geophysical/seismic company shall file an application for a permit for seismic operation (Form 15) with the Commission. This application shall also contain a verified statement (Form 1A) that said company has complied with the requirements of the Split Estates Act, if applicable.

(g) The application for a permit for seismic operations (Form 15) must include the following information, as appropriate:

(i) The approximate number, depth, and location of the seismic holes and the size of the explosive charges;

(ii) The name, 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;

(iii) The name, permanent address, and phone number of the geophysical/seismic company and its local representative whom the Commission can contact about the seismic activity;

(iv) The name, phone number, and permanent address of the hole-plugging contractor, if different from the geophysical/seismic company;

(v) A detailed description of the hole plugging procedures;

(vi) The anticipated starting date of seismic and plugging operations;

(vii) The anticipated completion date of seismic and plugging operations;

(viii) A description of the identifying mark that will be on the non-metallic plug to be used in the plugging of the seismic hole;

(ix) The application shall be accompanied by a Bureau of Land Management Surface-Minerals Management 7.5 Minute Quad map with a scale of one inch (1”) to twenty-four thousand feet (24,000’) that shows the proposed location of the lines or grid.

(h) Bonding. Before conducting geophysical/seismic operations, either directly or indirectly under contract, the client company must file and have approved by the Commission a surety bond in the amount of fifty thousand dollars ($50,000.00) except where a client company has filed an approved bond in accordance with Chapter 3, Section 4 of these rules. The condition of such bond shall comply with the Wyoming Conservation Act, 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 client company has complied with the Wyoming Conservation Act, the Commission's rules, and the orders of the Commission and Supervisor and/or his duly authorized representatives. Upon verified application, or for just cause, the Supervisor may waive, modify, or increase this bonding requirement for the client company.

(i) Before beginning geophysical operations, the geophysical/seismic company must file and have approved by the Commission a bond in the amount of fifty thousand dollars ($50,000.00). The condition of such bond shall comply with the Wyoming Conservation Act, 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/seismic company has complied with the Wyoming Conservation Act, the Commission's rules, and the orders of the Commission and Supervisor and/or his duly authorized representatives. Upon verified application, or for just cause, the Supervisor may waive, modify, or increase this bonding requirement for geophysical/seismic companies.

(j) Persons or other entities that are contracted to plug seismic holes and are not employees of the geophysical/seismic company 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 ten thousand dollars ($10,000.00). The condition of such bond shall comply with the Wyoming Conservation Act, the regulations of this Commission, the orders of this Commission, the State Oil and Gas Supervisor, and/or his duly authorized representatives. The obligation of the bond shall not be discharged until the independent hole pluggers have complied with the Wyoming Conservation Act, the Commission's rules, and the orders of the Commission and Supervisor and/or his duly authorized representatives. Upon verified application, or for just cause, the Supervisor may waive, modify, or increase this bonding requirement for the independent hole pluggers.

(k) The client company shall be held responsible along with the geophysical/ seismic company and any independent hole pluggers for conducting the operation in compliance with the Commission's rules and orders, the Supervisor's orders, and the Wyoming Conservation Act, and are subject to the penalties provided by the Wyoming Conservation Act for the failure to comply with such rules, statutes, and orders. Bonds will be attached in the following order:

(i) For failure to comply with the Wyoming Conservation Act, the Commission's rules, and the orders of the Commission and Supervisor and/or his duly authorized representative governing the proper plugging of holes or other resource damage directly resulting from that activity, the independent hole plugger;

(ii) For failure to comply with the Wyoming Conservation Act, the Commission's rules, and the orders of the Commission and Supervisor and/or his duly authorized representative governing all geophysical/seismic operations, the geophysical/seismic company; and,

(iii) For failure to comply with the Wyoming Conservation Act, the Commission's rules, and the orders of the Commission and Supervisor and/or his duly authorized representative governing all geophysical/seismic operations, the client company.

(l) Client companies will be notified, in writing, when geophysical/seismic companies' and independent hole pluggers' activities have been determined to be in compliance and bonding liability discharged. The client company's bond will be discharged simultaneously with discharge of the geophysical/seismic company's bond.

(m) Reports. Upon completion of seismic shot hole activity or at thirty (30) day intervals after the work has commenced, whichever occurs first, the geophysical/seismic company shall file with the Commission a report of the completion or progress of the seismic project. The final completion report must include a statement that all work has been performed in compliance with the application for a permit to perform seismic activity and permit provisions and specific conditions of approval, if any. Said report shall be in affidavit form as provided on Form 15A. This final filing shall include a 7.5-minute United States Geological Survey topographic quadrangle map and the location of each shot hole so that the shot holes can be easily located. Upon completion of geophysical activity other than shot hole operations, the geophysical/seismic company shall provide the Commission with verbal or written notice of such completion of the permitted project.

(n) 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 Wyoming Conservation Act, and the orders of the Commission or Supervisor. The Commission staff may advise the affected surface owner of seismic lines and the exploration method used.

(o) 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.

(p) Geophysical/seismic companies 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.

(q) Plugging. Bentonite materials used in seismic hole plugging shall be derived from naturally occurring untreated, high swelling sodium bentonite which consists principally of the mineral montmorillonite. Numerical values for physical requirements, a list of equipment and material for testing, testing procedures and recommended guidelines are all found in Appendix H of the Commission's Rules and Regulations. Care shall be taken by the seismic company to ensure bentonite chip placement avoids bridging during placement. The Supervisor may require drill-out, use of alternative materials, or hole abandonment.

(i) The non-metallic plug used in the plugging of seismic holes shall be imprinted with the name of the geophysical/seismic company responsible for the plugging of the hole. Initials or other identifying marks may be imprinted on the plug with the Supervisor's approval.

(ii) Unless the geophysical/seismic company can prove to the satisfaction of the Supervisor that another method will provide better protection to groundwater and long-term land stability, seismic shot hole operations shall be conducted in the following manner:

(A) Seismic shot hole operations will not be conducted within one-quarter (1/4) mile of any building or water well designated for use as a domestic, stock watering, irrigation or municipal well. The provisions of this subsection may be modified by a written agreement between the geophysical/seismic company and the surface owner.

(B) Vibroseis seismic operations will not be conducted within three hundred (300) feet of any building or water well designated for use as a domestic, stock water, irrigation or municipal well. The provisions of this subsection may be modified by a written agreement between the geophysical/seismic company and the surface owner. The Supervisor may approve a different setback distance for vibroseis only, if Peak Particle Velocity (PPV) studies are conducted simultaneously to establish the safety of a nearer offset distance.

(iii) Except as provided in subsection (xi), when water is used in conjunction with the drilling of seismic shot 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 guideline, Appendix H. Cuttings not added to the hole are to be disposed of in accordance with subsection (r)(iii), Reclamation, of this section. Any other suitable plugging material commonly used in the industry may be substituted, as long as it meets the criteria in Appendix H to these rules, upon approval of the State Oil and Gas Supervisor.

(iv) The hole will be filled with the coarse ground bentonite from the top of the explosive charge up to a depth above the final water level except where the final water level will be within three feet (3') of the surface. No bentonite shall be placed within three feet (3') of the surface. Cuttings shall be added from the top of the bentonite to the surface. A non-metallic plug of appropriate size will be set at a depth of three feet (3') below surface. Cuttings added above the non-metallic plug shall be tamped.

(v) When drilling with air only, and in completely dry holes, plugging may be accomplished by returning the cuttings to the hole, tamping the returned cuttings to the above-referenced depth of three feet (3'), and setting the non-metallic plug topped with more cuttings and soil as per subsection (v). Digging a second hole to fill the shot hole above the non-metallic plug, and scraping the surface top soil to fill the shot hole are prohibited. Scraping the surface to acquire cuttings to fill the shot hole is allowed. A small mound will be left over the hole for settling allowance.

(vi) All shot holes must be plugged on the same day they are drilled and loaded. No shot holes may be left unplugged overnight.

(vii) The hole shall not be plugged until cap leads have been tested. In the case of bad caps or lead wires, no more than one-half (1/2) charge shall be lowered and tested. The hole shall be plugged in accordance with this section and then detonation shall occur before or during recording stages. Holes that fail to detonate shall be marked as per subsection (r)(vi) of this section.

(viii) If the number of seismic drilling units proposed for a project exceed the Commission's capacity to provide appropriate inspection oversight, the Commission staff reserves the right to limit the number of drilling units to six (6), unless at the Supervisor’s discretion, the seismic contractor provides additional independent supervision.

(ix) There should be a hole plugger for every drill, so that the holes can be plugged immediately after the explosive charge is loaded. Variances to this rule may be approved on a case-by-case basis by the Supervisor.

(x) If artesian flow (water flowing at the surface) is encountered in the drilling of any seismic hole, coarse ground bentonite certified in accordance with the Commission's guidelines, as found in Appendix H of these rules, 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 plugged immediately. Cement may be substituted for bentonite with the permission of the Supervisor. No bentonite capsules/tubes shall be used for flowing holes; use a reverse auger to push chips down or other Supervisor-approved method. No flowing shot hole shall ever be loaded with explosive charges.

(xi) 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.

(r) Seismic Reclamation.

(i) Site reclamation must be initiated within one (1) year of completion of record or bond forfeiture will be initiated as provided under Chapter 3, Section 7 of these rules. For just cause, additional time may be granted on application to the Supervisor.

(ii) The existing cap leads will be cut off below ground level.

(iii) 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 growth of the natural grasses or foliage will not be impaired.

(iv) All trash, including lathes, flagging, magnets, drilling and plugging materials must be picked up during or following recording.

(v) All blowouts, rifled out, or surface-damaged shot holes must be repaired immediately during or following the recording state.

(vi) Any hole that has been loaded and plugged with a charge that has bad caps or leads must be dug down to the non-metallic plug at three feet (3’). One inch (1”) rebar material approximately three feet (3’) in length must be placed in the hole. The Supervisor may require alternative methods to the rebar to ensure whipstock out of the original hole if seismic hole was ever to be re-entered. The hole must be filled with cement dyed orange in order that it might be recognized as having an undetonated charge in it. The Commission, Bureau of Land Management, landowner/grazing lessee and One Call of Wyoming must be notified and provided the GPS coordinates and the latitude and longitude of the hole.

Section 7. Waterflooding and Other Recovery Operations.

(a) Waterflooding and other recovery operations involving the introduction of extraneous forms of energy into any pool, repressuring, cycling or recycling operations, including the extraction and separation of liquid hydrocarbons from natural gas in connection therewith, is permitted only upon order of the Commission, or upon approval of the Supervisor, obtained pursuant to an application therefore filed in accordance with Chapter 5, Rules of Practice and Procedure. This provision is applicable to wells which are proposed to be converted to injection; as well as new wells drilled solely for the purpose of underground injection. Orders authorizing existing injection wells shall remain valid unless revoked by the Commission for just cause. In addition, there is assessed an annual fee of seventy-five dollars ($75.00) on all enhanced recovery wells.

(b) Injection Well Permits. The applicant shall have the burden of demonstrating that the proposed injection operation will not endanger fresh water sources. Injection 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.

(i) A plat showing the area involved together with the well(s) which includes drilling well(s) and dry and abandoned well(s) located thereon, all properly designated;

(ii) A list of all lease Operators or Owners and surface owners within a one-half (1/2) mile radius of the proposed injection well(s);

(iii) An affidavit showing that said lease Operators or Owners and surface owners within a one-half (1/2) mile radius have been provided a copy of the application for injection;

(iv) A full description of the particular operations for which approval is requested;

(v) The pools from which wells are producing or have produced;

(vi) The name, description, and depth of the pool or pools to be affected;

(vii) The log of the injection well(s), or such information with respect thereto as is available;

(viii) A description of the casing of the injection well, or the proposed casing program, and the proposed method for testing casing before use of the injection wells;

(ix) A statement as to the type of fluid to be used for injection, its sources, and the estimated amounts to be injected daily. The Commission’s Form 17 (Water Analyses Report) illustrates the minimum parameters for which water must be analyzed. Other reporting formats which include this minimum information may be accepted;

(x) The average and maximum injection pressure;

(xi) Evidence and data to support a Commission finding that the proposed injection 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;

(xii) Standard laboratory analyses of the water to be injected and the water in the formation into which fluid is being injected. The method of water analysis is subject to review by the Commission or the Supervisor;

(xiii) The name and address of the Owner/Operator;

(xiv) A reference to the Commission order exempting the aquifer that is to receive the fluid;

(xv) The applicant shall provide for a one-quarter (1/4) mile radius of investigation for mechanical conditions of all wells which have penetrated the injection zone surrounding a proposed injection well. Specifically known and documented geological features may limit the need to review all wells within a one-quarter (1/4) mile radius; and,

(xvi) The depth and areal extent of all usable fresh and potable water (USDW) underlying the area proposed for exemption.

(d) Injection Well Integrity Demonstration. For the purpose of this rule, a mechanical integrity test of an injection well is a test designed to determine:

(i) If there is a significant leak in the casing, tubing, or packer of the well; and,

(ii) If there is significant fluid movement into an underground source of drinking water through vertical channels adjacent to the wellbore.

(e) 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:

(i) The Owner or Operator may test the casing-tubing annulus above the packer at the greater of a minimum pressure of three hundred (300) psi or a pressure equivalent to the maximum injection pressure, but no higher than one thousand (1,000) psi. For the purpose of pressure testing, packers or bridge plugs must be set within one hundred feet (100') of perforations. A retrievable bridge plug may be utilized in casing to test tubingless completions. Owners/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; or,

(ii) As an alternative to the pressure test, the Owner or Operator may use any test or combination of tests approved by EPA.

(f) The initial mechanical integrity test for all injection wells shall include one of the following tests to determine whether there are significant fluid movements in vertical channels adjacent to the wellbore:

(i) Cementing records which shall only be valid for injection wells in existence prior to present date;

(ii) Tracer surveys;

(iii) Cementing records with a cement bond log or other acceptable cement evaluation log;

(iv) Temperature surveys;

(v) In lieu of (i) through (iv), any other test or combination of tests approved by EPA.

(g) As provided in Chapter 2, Section 6 of these rules, if normal testing, surveys, or monitoring schedules provide inconclusive proof of mechanical reliability, the Commission shall require that other appropriate logs, or additional well tests be performed.

(h) All injection 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, within ninety (90) days of the failure or determination, 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 the wells, Owners or Operators may request variances. To be approved, these requests must demonstrate that the leaks do not pose a threat to any underground sources of drinking water.

(i) 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 3, Section 14 of these rules.

(j) Modifications or variances of existing or pending injection operations may be approved by the Supervisor under Chapter 3, Section 10 of these rules 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 the Operator's 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.

(k) The Commission shall publish notice of the injection application fifteen (15) days before approval in a newspaper of general circulation in Natrona County, and in a newspaper of general circulation in the county in which the injection well is located.

(l) Injection operations must commence within one (1) year of the approval date of the injection application or the approval shall be null and void.

(m) No later than January 1, 2005, injection wells shall be equipped with operable pressure gauges, calibrated at all times to industry standards and manufacturer’s specifications for the instrument used, on the tubing and on the casing-tubing annulus, or set up in such a way that the company representative can connect gauges to the well to determine pressure on the tubing and casing-tubing annulus. Accurate gauges shall also be placed on any other annuluses as deemed necessary by the Supervisor. Variances may be administratively approved for good cause shown.

Section 8. Casing and Cementing of Injection Wells.

(a) Wells used for injection of gas, air, water, or other extraneous fluid into the producing formation shall be cased with safe and adequate casing or tubing so as to prevent leakage, and shall be so set or cemented that damage will not be caused to oil, gas, or fresh water sources.

(b) The provisions of Chapter 3, Section 22 of these rules, shall apply to all injection wells.

(c) Before a new well drilled for injection or disposal is operated, the casing outside the tubing shall be tested at the greater of a minimum pressure of three hundred (300) psi or a pressure equivalent to the maximum injection pressure, but no higher than one thousand (1,000) psi. For the purpose of pressure testing, packers must be set within one hundred feet (100') of perforations. The same rules apply to testing existing wells newly converted to injection or disposal. 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 Operator is required to provide documentation of the test to the Commission. A retrievable bridge plug will be utilized in casing to test tubingless completions.

Section 9. Notice of Commencement/Discontinuance of Injection Operations.

(a) The following provisions shall apply to all injection operations:

(i) Immediately upon the commencement of injection operations, the Owner/Operator shall notify the Supervisor of the injection date;

(ii) Within ten (10) days after the discontinuance of injection operations, the Operator shall notify the Supervisor of the date of such discontinuance and the reasons therefore; and

(iii) Before any injection well shall be plugged, notice shall be given the Supervisor by the Owner/Operator of said well.

Section 10. Report of Subsurface Injections (Forms 2, 16A & 16B).

Whenever any Owner/Operator shall inject water, air, gas, or any substance into a pool for any purpose (excluding fracturing, acidizing, or other similar treatment elsewhere required to be reported on Form 4), he shall report to the Supervisor the type and source of the injected substance, the total amount injected, and the injected pressures and casing-tubing annulus pressure during injection if the Owner/Operator elects the monitoring test requirements of Section 7 of this chapter on a monthly basis. Computerized forms submitted in lieu of Form 2 or Forms 16A and/or 16B must contain the same information as that required on the forms and must be approved for format by the Commission staff. Enhanced recovery projects shall be reported on Form 2 and disposal well operations shall be reported on Form 16A or Form 16B.

Section 11. UIC Variances.

The Supervisor shall have the latitude to grant variances to the regulations for standard fresh water protection for good cause and to provide that unnecessary hardship not be imposed. No such variance shall be approved unless the applicant proves to the Supervisor, if no hearing is necessary, or to the Commission, if a hearing is necessary, that the variance will in no way endanger fresh water.

Section 12. Aquifer Exemption.

(a) An aquifer which contains fresh and potable water may be exempt from the definition in Chapter 1, Section 2 (a), if the Commission by order, after due and legal notice and public hearing, determines any of the following criteria exists:

(i) It is mineral, hydrocarbon, or geothermal energy producing;

(ii) It is situated at a depth or location which makes recovery of fresh and potable water economically or technologically impractical;

(iii) It is so contaminated that it would be economically or technologically impractical to render the water fit for use as fresh and potable water;

(iv) It is located over a mining area subject to subsidence or catastrophic collapse; or,

(v) It has a total dissolved solids (TDS) of more than five thousand (5,000) and less than ten thousand milligrams per liter (10,000 mg/l) and is not reasonably expected to be used as fresh or potable water.

(b) Interested parties wishing to have an aquifer exempted must submit to the Commission an application which includes sufficient data to justify the proposal. At a minimum a structure or isopach map, geologic description, and legal description of the area to be exempt needs to be filed. The Commission will provide thirty (30) days legal notice prior to a public hearing on the matter.

Section 13. Natural Gas Processing Facilities and Pits.

(a) Any person, corporation, or company desiring to construct, close and reclaim a pit or tinhorn used for the storage and disposal of waste associated with infield gas processing and gas gathering in Wyoming must apply for and receive permission to do so from the Commission before construction and/or closure activities commence.

(b) Any person, corporation, or company desiring to abandon a gas processing facility associated with infield gas processing and gas gathering in Wyoming must apply for and receive permission to do so from the Commission before closure activities commence.

Section 14. Open Pit Storage of Oil.

The Owner/Operator shall not, except during an emergency, 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 15. Production Facilities and Natural Gas Facility Equipment and Flowline Abandonment.

(a) An Owner/Operator of a well or wells shall notify the Supervisor of all above and below ground flowlines and vessels, including tanks, if the flowlines or vessels are not used for a period of two (2) years. After consideration of the relevant circumstances, the Supervisor on a case-by-case basis, may require the flowline or facilities to be purged with fresh water or inert gases, drained and depressured. The Owner/Operator shall provide notification of the purging operation to the Supervisor or Authorized Agent.

(b) The Supervisor may require the Owner or Operator to abandon and/or remove all above ground piping. If flowlines or facility piping are removed, the removal shall be done in a manner that prevents the escape of fluids, that is:

(i) Purge with fresh water or inert gases, drain and depressure; then,

(ii) Seal the line or cap at both ends. If not removed, the Owner or Operator will be required to mark remaining piping to identify as purged piping.

(c) If underground flowlines or facility piping are abandoned in place, the Owner or Operator shall meet the following requirements:

(i) Purge with fresh water or inert gases, drain and depressure the flowline and piping;

(ii) Seal the line or cap at both ends; and,

(iii) Bury at least twenty-four inches (24”) below the surface and restore the surface contour, unless the Supervisor or the surface land owner agrees otherwise in writing.

CHAPTER 1

AUTHORITY AND DEFINITIONS

Section 1. Authority. Wyo. Stat. Ann. §§ 30-5-101 through 30-5-126.

Section 2. Definitions.

(a) Aquifer shall mean a geological formation, group of formations, or part of a formation that is capable of yielding a significant amount of water to a well or spring.

(cd) Authorized Agent shall mean a representative of the Supervisor as authorized by the Commission.

(de) Average Daily Production means the qualified maximum total production of domestic crude petroleum and petroleum condensates including natural gas liquids produced from a property or lease during the preceding calendar year divided by the number of calendar days in that year times the number of wells which produced and wells which injected substances for the recovery of crude petroleum and petroleum condensates including natural gas liquids from that property or lease in that year. To qualify as maximum total production, each well must have been maintained at the maximum feasible rate of production in accordance with recognized conservation practices and not significantly curtailed by reason of mechanical failure or other disruption in production.

(ef) Barrel shall mean 42 (US) gallons of liquid at 60° Fahrenheit at atmospheric pressure.

(fg) Casing Pressure shall mean the pressure within the casing or between the casing and tubing at the wellhead.

(gh) Class II Well shall mean any non-commercial well used to dispose of water and/or fluids directly associated with the production of oil and/or gas, any well used to inject fluids or gas for enhanced oil recovery, or any well used for the storage of liquid hydrocarbons. Non-hazardous gas plant wastes may be disposed of in a Class II well pending Environmental Protection Agency co-approval.

(hi) Client Company means the entity on whose behalf and for whose benefit the geophysical/seismic company does its work or the entity who hires the geophysical/seismic company.

(ij) Closed System includes, but is not limited to, the use of a combination of solids control equipment (e.g., shale shakers, flowline cleaners, desanders, desilters, mud cleaners, centrifuges, agitators, and necessary pumps and piping) incorporated in a series on the rig's steel mud tanks, or a self-contained unit that eliminates the need for a reserve pit for the purpose of dumping and dilution of drilling fluids for the removal of entrained drilling solids. A closed system for the purpose of the Commission's rules does not automatically include the use of a small pit, even to receive cuttings.

(jk) Collection Wells means reservoir access holes drilled from underground shafts or tunnels from which oil or gas is produced.

(kl) Commercial Disposal Well or Commercial Water Retention Pit. A commercial disposal well or commercial water retention pit is one that:

(i) is operated primarily for profit from the disposal of produced water and/or deleterious substances for a fee; or

(ii) is a disposal well or pit for which none of its ~~owners~~ Owners is an Owner or Operator in any of the oil and gas wells which produce the water and/or other deleterious substances which will be disposed into said disposal well or pit.

(lm) Commission shall mean the Wyoming Oil and Gas Conservation Commission.

(mn) Complete Application or Complaint means a document or documents which:

(i) identifies the applicant or complainant;

(ii) identifies the subject matter of the application or complaint and the statutory or regulatory provisions under which relief is requested;

(iii) contains a brief statement of the circumstances supporting the application or complaint; and

(iv) contains a plat map which identifies at a minimum:

(A) the well or wells that are the subject of or may be affected by the application or complaint; and

(B) the governmental sections or portions thereof that are the subject of or may be affected by the application or complaint; and

(C) adjacent or surrounding secondary recovery units, federal exploratory units, and existing drilling units if pertinent to the application or complaint.

(no) Completion. An oil well shall be considered completed when the first new oil is produced through wellhead equipment into lease tanks from the producing interval after the production string has been run. A gas well shall be considered completed when the well is capable of producing gas through wellhead equipment from the producing zone after the production string has been run. A dry hole shall be considered completed when all provisions of plugging are complied with as set out in these rules. A coalbed methane well shall be considered completed after the production casing has been run.

(op) Cubic Foot of gas shall mean the volume of gas contained in one cubic foot of space at a standard pressure base and a standard temperature base. The standard temperature base shall be 60° Fahrenheit.

(pq) Day shall mean a period of twenty-four (24) consecutive hours.

(r) Directional Well means a wellbore that is intentionally deviated from vertical with an intentional azimuth.

~~(q) Designated Agent or Operator shall mean the designated local representative of the lessee or of the owner.~~

(r) Dormant Well shall mean a well which is no longer actively producing, monitoring or injecting; or which does not qualify as permanently abandoned, shut-in, or temporarily abandoned.

(i) can reasonably be expected to be used for domestic, agricultural, or livestock use; or

(ii) is suitable for fish or aquatic life.

(t) Gas shall mean all natural gases and all hydrocarbons not defined herein as oil.

(u) Gas Well shall mean a well the principal production of which, at the mouth of the well, is gas, as defined by the Wyoming Conservation Law.

(w) Groundwater, for purposes of these rules and consistent with Wyoming Department of Environmental Quality Chapter 8, as revised April 26, 2005, “Quality Standards for Wyoming Groundwaters”, means groundwater will be protected except for Class VI Groundwater of the State that is unusable or unsuitable for use:

(i) Due to excessive concentrations of total dissolved solids or specific constituents; or

(ii) Is so contaminated that it would be economically or technologically impractical to make water useable; or

(iii) Is located in such a way, including depth below the surface, so as to make use economically and technologically impractical.

(wx) Hearing shall mean any matter heard before the Commission or its examiners.

(xy) Horizontal Well shall mean a wellbore drilled laterally at an angle of at least eighty degrees (80°) to the vertical and with a horizontal projection exceeding one hundred feet (100') measured from the initial point of penetration into the productive formation through the terminus of the lateral in the same common source of hydrocarbon supply.

(yz) Injection or Disposal Well shall mean any well used for the injection of air, gas, water or other substance into any underground stratum.

(zaa) Legal Subdivision shall mean any regularly surveyed governmental quarter-quarter section or lot of approximately 40 acres.

(aabb) Lien Holder means those who have liens, on file with the Secretary of State and County Clerk of the county where the property is located, on the property of the ~~owner~~ Owner or Operator of a well ~~or operator~~, as reflected by the Commission records.

(bbcc) Log or Well Log shall mean the written record progressively describing the strata, water, oil or gas encountered in drilling a well with such additional information as to give volumes, pressures, rate of fill-up, water depths, caving strata, casing record, etc., as is usually recorded in the normal procedure of drilling; also to include electrical, radioactive, or other similar logs run, a lithologic description of all cores, and all drill stem tests, including depth tested, cushion used, time tool open, flowing and shut-in pressures, and recoveries.

(dd) Mineral Owner means the owner of the mineral rights title under a piece of property, who will generally be the lessor who is able to convey a leasehold agreement (lease).

(i) Mineral Leasehold Interest Owner means the person or entity that holds a valid mineral lease as distinct from actual owner of the mineral rights title.

(ccee) Multiple Zone Completion shall mean one in which two or more separate zones, mechanically segregated one from the other, are produced simultaneously from the same well.

(ddff) Oil shall mean crude petroleum oil and any other hydrocarbons, regardless of gravities, which are produced at the well in liquid form by ordinary production methods, and which are not the result of condensation of gas before or after it leaves the reservoir.

(eegg) Oil and Gas Operations means the surface disturbing activities associated with drilling, producing and transporting oil and gas, including the full range of development activity from exploration through production and reclamation of the disturbed surface.

(ffhh) Oil Mining shall mean operations associated with the production of oil or gas from reservoir access holes drilled from underground shafts or tunnels.

(ggii) Oil Well shall mean a well the principal production of which, at the mouth of the well, is oil, as defined by the Wyoming Conservation Law.

(jj) Operator is duly authorized by the Owner as the person engaged in the business of drilling and producing wells for oil and gas.

(hhkk) Owner means the person who has the right to drill into and produce from a pool and to appropriate the oil or gas he produces therefrom either for himself or others.

(iill) Permanently Abandoned Well shall mean a well which is no longer considered active and has been permanently plugged and abandoned, as provided by these rules, in such a manner as to prevent migration of oil, gas, and water or other substances from the formation or horizon in which it originally occurred.

(jjmm) Person means and includes any natural person, corporation, association, partnership, receiver, trustee, executor, administrator, guardian, fiduciary or other representative of any kind, and includes any department, agency or instrumentality of the State or of any governmental subdivision thereof. The masculine gender, in referring to a person, includes the feminine and the neuter genders.

(kknn) Pits in Critical Areas. Sites considered for the placement of all pits are critical areas if they meet any of the following criteria:

(i) locations which are within one-quarter (1/4) mile of water supplies, residences, schools, hospitals, or other structures where people are known to congregate;

(ii) areas when groundwater at the location is less than twenty feet (20') from the surface;

(iii) locations which are within five hundred feet (500') of wetlands, ponds, lakes, perennial drainages or within a floodplain;

(iv) areas where pit fluids are greater than ten thousand milligrams per liter (10,000 mg/l) total dissolved solids; or

(v) locations in pervious subsoils such as sands, scoria, river bottom gravel, loams, etc.

(lloo) Pool shall mean an underground reservoir containing a common accumulation of oil or gas or both. Each zone of a general structure, which zone is completely separated from any other zone, is covered by the word "pool" as used herein.

(mmpp) Producer means the owner of a well or wells capable of producing oil or gas or both.

(nnqq) Recompletion ~~for the purpose of Wyo. Stat. Ann. § 39-14-205(g), and Commission Rule Chapter 3, Section 42,~~ means any downhole operation in an existing oil or gas well that is conducted to establish production of oil or gas from any geological interval not currently completed or producing in said existing oil or gas well.

(oorr) Seismic Hole is one which will be used for geophysical purposes only.

(ppss) Shut-In Well shall mean a well not currently considered active in which the completion interval has not been isolated from the wellbore above and where the wellbore condition is such that its utility may be restored by opening valves or by energizing equipment involved in operating the well.

(qqtt) Special Sodium Drilling Area – A (SSDA – A) shall mean the designated area where trona mining operations are or will occur where special drilling rules apply to protect the Trona Mineral Resources and insure miner safety which location is described as containing:

Township 21 North, Range 108 West, 6th P.M.

Section 16: All

Section 17: All

Sections 19 – 22 (inclusive): All

Sections 27 – 34 (inclusive): All

Township 21 North, Range 109 West, 6th P.M.

Sections 24 – 27 (inclusive): All

Sections 34 – 36 (inclusive): All

Township 20 North, Range 108 West, 6th P.M.

Sections 6 – 8 (inclusive): All

Sections 17 – 20 (inclusive): All

Sections 29 – 32 (inclusive): All

Township 20 North, Range 109 West, 6th P.M.

Sections 1 – 36 (inclusive): All

Township 20 North, Range 110 West, 6th P.M.

Section 1: All

Section 8: All

Section 9: All

Section 12: All

Section 13: All

Sections 15 – 22 (inclusive): All

Sections 24 – 36 (inclusive): All

Township 20 North, Range 111 West, 6th P.M.

Section 13: All

Section 14: All

Section 21: E1/2

Sections 22 – 27 (inclusive): All

Section 28: E1/2

Sections 33 – 36 (inclusive): All

Township 19 North, Range 108 West, 6th P.M.

Section 5: All

Section 6: All

Township 19 North, Range 109 West, 6th P.M.

Sections 1 – 36 (inclusive): All

Township 19 North, Range 110 West, 6th P.M.

Sections 1 – 36 (inclusive): All

Township 19 North, Range 111 West, 6th P.M.

Sections 1 – 4 (inclusive): All

Sections 9 – 16 (inclusive): All

Sections 21 – 28 (inclusive): All

Sections 33 – 36 (inclusive): All

Township 18 North, Range 108 West, 6th P.M.

Section 6: All

Section 7: All

Sections 18 – 20 (inclusive): All

Sections 29 – 32 (inclusive): All

Township 18 North, Range 109 West, 6th P.M.

Sections 1 – 36 (inclusive): All

Township 18 North, Range 110 West, 6th P.M.

Sections 1 – 36 (inclusive): All

Township 18 North, Range 111 West, 6th P.M.

Sections 1 – 4 (inclusive): All

Section 5: E1/2

Section 8: E1/2

Sections 9 – 16 (inclusive): All

Section 17: E1/2

Section 20: E1/2

Sections 21 – 28 (inclusive): All

Section 29: E1/2

Section 32: E1/2

Sections 33 – 36 (inclusive): All

Township 17 North, Range 108 West, 6th P.M.

Sections 5 – 9 (inclusive): All

Sections 16 – 22 (inclusive): All

Sections 26 – 35 (inclusive): All

Township 17 North, Range 109 West, 6th P.M.

Sections 1 – 36 (inclusive): All

Township 17 North, Range 110 West, 6th P.M.

Sections 1 – 6 (inclusive): All

Sections 8 – 17 (inclusive): All

Sections 22 – 27 (inclusive): All

Section 35: All

Section 36: All

Township 17 North, Range 111 West, 6th P.M.

Sections 1 – 3 (inclusive): All

Township 16 North, Range 108 West, 6th P.M.

Sections 3 – 10 (inclusive): All

Sections 15 – 22 (inclusive): All

Sections 26 – 35 (inclusive): All

Township 16 North, Range 109 West, 6th P.M.

Sections 1 – 30 (inclusive): All

Section 35: All

Section 36: All

Township 16 North, Range 110 West, 6th P.M.

Section 1: All

Section 2: All

Sections 11 – 15 (inclusive): All

Sections 22 – 27 (inclusive): All

Township 15 North, Range 108 West, 6th P.M.

Sections 2 – 10 (inclusive): All

Sections 15 – 22 (inclusive): All

Sections 27 – 34 (inclusive): All

Township 15 North, Range 109 West, 6th P.M.

Section 1: All

Section 2: All

Sections 11 – 14 (inclusive): All

Sections 23 – 25 (inclusive): All

Section 36: All

Township 14 North, Range 108 West, 6th P.M.

Sections 4 – 7 (inclusive): All

Section 18: All

Township 14 North, Range 109 West, 6th P.M.

Section 1: All

Section 12: All

Section 13: All

(rruu) Special Sodium Drilling Area – B (SSDA – B) shall mean the designated area where Trona Mining Resources exist outside the SSDA – A and special drilling rules apply to protect the resource which location is described as containing:

Township 21 North, Range 109 West, 6th P.M.

Sections 28 – 33 (inclusive): All

Township 21 North, Range 110 West, 6th P.M.

Section 25: All

Sections 34 – 36 (inclusive): All

Township 20 North, Range 110 West, 6th P.M.

Sections 2 – 7 (inclusive): All

Section 10: All

Section 11: All

Section 14: All

Section 23: All

Township 20 North, Range 111 West, 6th P.M.

Section 1: All

Section 11: All

Section 12: All

Section 15: All

Township 19 North, Range 108 West, 6th P.M.

Section 7: All

Section 18: All

Section 19: All

Section 30: All

Sections 31 – 35 (inclusive): All

Township 18 North, Range 108 West, 6th P.M.

Sections 1 – 5 (inclusive): All

Sections 8 – 17 (inclusive): All

Section 21: All

Section 22: All

Section 27: All

Section 28: All

Section 33: All

Section 34: All

Township 17 North, Range 107 West, 6th P.M.

Sections 30 – 32 (inclusive): All

Township 17 North, Range 108 West, 6th P.M.

Section 3: All

Section 4: All

Section 10: All

Section 11: All

Sections 13 – 15 (inclusive): All

Sections 23 – 25 (inclusive): All

Section 36: All

Township 17 North, Range 110 West, 6th P.M.

Section 7: All

Sections 18 – 21 (inclusive): All

Sections 28 – 34 (inclusive): All

Township 17 North, Range 111 West, 6th P.M.

Section 4: All

Section 5: All

Sections 8 – 36 (inclusive): All

Township 17 North, Range 112 West, 6th P.M.

Section 13: All

Section 14: All

Sections 22 – 28 (inclusive): All

Sections 33 – 36 (inclusive): All

Township 16 North, Range 107 West, 6th P.M.

Section 6: All

Section 7: All

Section 18: All

Section 19: All

Section 30: All

Section 31: All

Township 16 North, Range 108 West, 6th P.M.

Section 1: All

Section 2: All

Sections 11 – 14 (inclusive): All

Sections 23 – 25 (inclusive): All

Section 36: All

Township 16 North, Range 109 West, 6th P.M.

Sections 31 – 34 (inclusive): All

Township 16 North, Range 110 West, 6th P.M.

Sections 3 – 10 (inclusive): All

Sections 16 – 21 (inclusive): All

Sections 28 – 36 (inclusive): All

Township 16 North, Range 111 West, 6th P.M.

Sections 1 – 36 (inclusive): All

Township 16 North, Range 112 West, 6th P.M.

Sections 1 – 36 (inclusive): All

Township 15 North, Range 107 West, 6th P.M.

Section 6: All

Section 7: All

Section 18: All

Section 19: All

Section 30: All

Section 31: All

Township 15 North, Range 108 West, 6th P.M.

Section 1: All

Sections 11 – 14 (inclusive): All

Sections 23 – 26 (inclusive): All

Section 35: All

Section 36: All

Township 15 North, Range 109 West, 6th P.M.

Sections 3 – 10 (inclusive): All

Sections 15 – 22 (inclusive): All

Sections 26 – 35 (inclusive): All

Township 15 North, Range 110 West, 6th P.M.

Sections 1 – 36 (inclusive): All

Township 15 North, Range 111 West, 6th P.M.

Sections 1 – 36 (inclusive): All

Township 15 North, Range 112 West, 6^th P.M.

Sections 1 – 36 (inclusive): All

Township 14 North, Range 108 West, 6th P.M.

Sections 1 – 3 (inclusive): All

Sections 8 – 17 (inclusive): All

Sections 19 – 36 (inclusive): All

Township 14 North, Range 109 West, 6th P.M.

Sections 2 – 11 (inclusive): All

Sections 14 – 36 (inclusive): All

Township 14 North, Range 110 West, 6th P.M.

Sections 1 – 36 (inclusive): All

Township 14 North, Range 111 West, 6th P.M.

Sections 1 – 36 (inclusive): All

Township 14 North, Range 112 West, 6th P.M.

Sections 1 – 16 (inclusive): All

Sections 22 – 26 (inclusive): All

(ssvv) Spud means the commencement of operations for the first boring of a hole for the drilling of an oil, gas or injection well, or observation/monitor well, and/or the commencement of operations for the re-entry of a previously plugged and abandoned well, and/or observation/monitor well. This includes setting conductor.

(ttww) Stratigraphic Test or Core Hole shall mean any hole drilled for the sole purpose of obtaining geological information.

(uuxx) Stripper Production means a property or lease whose average daily production of crude petroleum and petroleum condensate including natural gas liquids did not exceed ten (10) barrels per day per well during the preceding calendar year.

(vvyy) Sump is a buried, or partially buried, vessel constructed of man-made material including, but not limited to, steel, fiberglass, and/or concrete, which is used for the temporary collection of fluids. A sump can be closed top or open top.

(wwzz) Supervisor shall mean State Oil and Gas Supervisor.

(xxaaa) Surface Owner means any person holding any recorded interest in the legal or equitable title, or both, to the land surface on which oil and gas operations occur, as filed of record with the county clerk of the county in which the land is located. Surface Owner does not include any person or governmental entity that owns all of the land surface and all of the underlying oil and gas estate, or any person or governmental entity that owns only an easement, right-of-way, license, mortgage, lien, mineral interest or nonpossessory interest in the land surface.

(yybbb) Temporarily Abandoned Well shall mean a well in which the completion interval has been isolated from the wellbore above and the surface. The completion interval may be isolated by a retainer, bridge plug, cement plug, tubing and packer with tubing plug, or any combination thereof.

(zzccc) Temporary Spacing Unit shall mean a specified area of land designated by the Commission for purposes of determining well density and location. A temporary spacing unit is not a drilling unit as provided for in Wyo. Stat. Ann. § 30-5-109, and does not provide a basis for pooling the interests therein as does a drilling unit.

(~~aaa~~ddd) Tertiary Production means the crude oil recovered from a petroleum reservoir by means of a tertiary recovery project to which one (1) or more tertiary enhanced recovery techniques meeting the certification requirements of the Wyoming Oil and Gas Conservation Commission or the United States Government are being applied.

(~~bbb~~eee) Trona Mineral Resource shall mean a concentration or occurrence of trona mineral in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a Trona Mineral Resource is known, estimated or interpreted from specific geological evidence and knowledge.

(~~ccc~~fff) Trona Interval shall mean that stratigraphic interval contained within the Special Sodium Drilling Area – A or – B (SSDA – A or – B), as defined in Chapter 1, Section 2(qqrr) or (rrss) of these rules that lies between the base of the Laney member of the Green River Formation and the top of the main body of the Wasatch Formation.

(~~ddd~~ggg) Underground Source of Drinking Water (USDW) means an aquifer or its portion:

(i) which supplies any public water system; or

(ii) which contains a sufficient quantity of ground water to supply a public water system; and

(A) currently supplies drinking water for human consumption; or

(B) contains fewer than 10,000 mg/l total dissolved solids; and

(iii) which is not an exempted aquifer.

(~~eee~~hhh) Well, when used alone in these rules and regulations, shall refer to an oil or gas well, injection or disposal well, or observation/monitor well, or to a hole drilled for the purpose of producing oil or gas or both. It shall not include seismic, stratigraphic test, core or other exploratory holes drilled for the purpose of obtaining geologic information only.

(~~fff~~iii) Wildcat Well ~~for the purposes of Wyo. Stat. Ann. § 39-14-205(e),~~ means any oil or gas well designated as a wildcat well by the Wyoming Oil and Gas Conservation Commission. Wildcat wells are wells outside known fields or new wells which are determined by the Commission to have discovered oil or gas in a pool not previously proven productive.

(~~ggg~~jjj) Workover, ~~for the purposes of Wyo. Stat. Ann. § 39-14-205(g), and Commission Rule Chapter 3, Section 42,~~ means any downhole operation in an existing oil or gas well that is designed to sustain, restore or increase the production rate or ultimate recovery in a geologic interval currently completed or producing in said existing oil or gas well. Workover includes, but is not limited to, acidizing, reperforating, fracture treating, sand/paraffin removal, casing repair, squeeze cementing, or setting bridge plugs to isolate water productive zones from oil or gas productive zones, or any combination thereof. Workover does not mean the routine maintenance, repair, or replacement of downhole equipment such as rods, pumps, tubing, packers, or other mechanical devices.

(~~hhh~~kkk) Wyoming Conservation ~~Law~~ Act shall mean Wyo. Stat. Ann. §§ 30-5-101 through 30-5-126.

(~~iii~~lll) Wyoming Split Estates Act shall mean Wyo. Stat. Ann. §§ 30-5-401 through 30-5-410.

CHAPTER 3

OPERATIONAL RULES, DRILLING RULES

Section 1. Notices: General and Emergency.

(a) A written notice of intent to do work Application for Permit to Drill (APD) (Form 1) and a drilling and completion plan (Chapter 3, Section 8(c)), or to change plans previously approved on the original Form 1 on Sundry Notice (Form 4), must be filed with the Supervisor, unless otherwise directed, and must reach the Supervisor and receive his approval before the work is begun. Approval must be sought to acidize, cleanout, flush, fracture, or stimulate a well. The sundry notice must include depth to perforations or the openhole interval, the source of water and/or trade name of fluids, type of proppants, as well as estimated pump pressures. Routine activities that do not affect the integrity of the wellbore or the reservoir, such as pump replacements, do not require a sundry notice. The Supervisor may require additional information.

(b) 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.

(c) Chapter 5 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 Rules and Regulations. Further, Wyo. Stat. Ann. § 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 hearings.

Section 2. Location of Wells/Drilling and Spacing Units (All Lands Except Indian).

(a) 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-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 two hundred feet (200’) in any direction from the center location (a "window" 400 feet square) provided:

(i) no oil or gas well shall be drilled less than nine hundred twenty feet (920’) from any other well drilling to or capable of producing oil or gas from the same pool; and

(ii) no oil or gas well shall be completed in a known pool unless it is located more than nine hundred twenty feet (920’) from any other well completed in and capable of producing oil or gas from the same pool.

(b) Any gas wells drilled in the area described as Township 12 North through Township 28 North and Range 89 West 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 and 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, this rule 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 or to any uncommitted acreage within the unit. Upon unit contraction, lands deleted from the unit shall thereafter be subject to this rule.

(i) The following areas shall be exempt from this subsection (b):

Township 13 North, Ranges 91 through 94 West

Township 14 North, Ranges 91 through 94 West

Township 15 North, Ranges 91 through 99 West

Township 16 North, Ranges 91 through 99 West

Township 17 North, Ranges 91 through 98 West

Township 18 North, Ranges 91 through 96 West

Township 18 North, Range 97 West

Sections 1 through 3

Sections 10 through 15

Sections 19 through 36

Township 19 North, Ranges 91 through 96 West

Township 20 North, Ranges 91 through 96 West

Township 21 North, Ranges 91 through 96 West

Township 22 North, Ranges 91 through 96 West

Township 23 North, Ranges 91 through 95 West

Any gas well proposed to be drilled within the above described lands shall be located within a governmental quarter section of land, or a lot or tract, or combination of lots or tracts substantially equivalent thereto, not closer than four hundred sixty feet (460') to the exterior boundary of such quarter section, providing that a maximum of two gas wells from the same pool shall be permitted in any one such quarter section, or lot or tract, or combination of lots or tracts substantially equivalent thereto, but exempting from these provisions all areas within these lands subject to existing orders from the Commission establishing drilling and spacing units for a particular pool or reservoir, as to the pool or reservoir involved in such orders, and further exempting from these provisions all federal exploratory units within the described lands, provided that no gas well shall be drilled closer than four hundred sixty feet (460') to the exterior boundaries of such a federal unit or to any uncommitted tract within such federal unit and, providing further that upon unit contractions, lands deleted from the unit shall again become subject to provisions of this rule.

(c) Any proposed exploratory wells in the Powder River Basin projected to test the Frontier, Muddy, and/or Dakota Formations in excess of eleven thousand feet (11,000’) total depth shall be granted a temporary spacing unit of six hundred forty (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 one hundred sixty (160) acre "window" (i.e., SE1/4 NW1/4, SW1/4 NE1/4, NE1/4 SW1/4, NW1/4 SE1/4) but not less than one thousand three hundred twenty feet (1,320') from the section line. Exceptions may be granted by the Commission for good cause.

(d) Any proposed well in the Powder River Basin projected to test the gas potential of any coal member or pool within the Fort Union and/or Wasatch Formations shall be granted a vertical (“standup”) drilling and spacing unit of eighty (80) acres consisting of one-half of a governmental one hundred sixty (160) acre quarter section, or lot or tract, or combination of lots or tracts substantially equivalent thereto, and the authorized wells in such drilling and spacing units shall be located in the center of the northeast quarter and the center of the southwest quarter of the governmental 160-acre quarter section, or lot or tract, or combination of lots and tracts substantially equivalent thereto, with a two hundred foot (200') tolerance in any direction from such center locations. All areas subject to existing orders for drilling and spacing units for the Fort Union and/or Wasatch Formations in the Powder River Basin shall be exempt from the requirements of this subsection (d), as will all wells previously drilled or permitted; in addition, the unspaced areas as to the coals in the Wasatch and Fort Union Formations in the following lands shall be exempt from this subsection (d):

Township 45 North, Ranges 71 and 72 West;

Township 46 North, Ranges 71 and 72 West;

Township 47 North, Ranges 71, 72 and 73 West;

Township 48 North, Ranges 71, 72 and 73 West;

Township 49 North, Ranges 71, 72, and 73 West;

Township 50 North, Ranges 72 and 73 West;

Township 51 North, Ranges 72 and 73 West;

Township 52 North, Ranges 72 and 73 West.

Further, this rule is vacated for all federal exploratory units in the Powder River Basin for the Fort Union and/or Wasatch Formations provided that no well will be drilled closer than four hundred sixty feet (460') from the exterior boundaries of a federal exploratory unit or any uncommitted tract within a federal exploratory unit. Upon contraction of a federal exploratory unit, lands deleted from the unit shall thereafter be subject to the requirements of this subsection (d).

(e) To the extent not previously herein exempted, this rule is vacated for all federal exploratory units in Wyoming, provided that no oil or gas wells shall be drilled closer than four hundred sixty feet (460') from the exterior boundaries of a federal exploratory unit or any uncommitted tract within a federal exploratory unit. Upon contraction of a federal exploratory unit, lands deleted from the unit shall thereafter be subject to the requirements of this rule.

(f) The following conditions apply to any horizontal well as defined in Chapter 1, Section 2(w):

(i) The surface location may be anywhere on the leased premises;

(ii) 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 eleven thousand feet (11,000’) 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;

(iii) Any horizontal interval to be completed closer than one thousand, three hundred twenty feet (1,320') to such boundaries, tracts or lines must be oriented 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;

(iv) Any horizontal interval shall be no closer than one thousand, three hundred twenty feet (1,320') 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 this rule which do not specifically pertain to horizontal wells and may be drilled and produced as provided therein;

(v) 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; and

(vi) In addition to any other notice required by the statute or these Rules, notice of the Application for Permit to Drill (APD) a horizontal well shall be given by certified mail to all Owners within the boundaries of the designated temporary spacing unit.

(vii) Horizontal wells in federally supervised units or in API units are exempt from the above-referenced conditions (iv), (v), and (vi).

(viii) Exceptions to any of the above referenced conditions (i) through (vi) may be approved upon proper application and notice for such exception(s) in accordance with Commission Rules. Additional horizontal wells brought upon application may be approved by Commission order after a hearing held in accordance with Wyo. Stat. Ann. § 30-5-109(a) and (d).

(g) 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.

(h) 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:

(i) 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

(ii) the uniformity of spacing patterns is necessary to insure orderly development of the reservoir or pool.

(i) Owners/Operators who apply for a permit to drill a gas well in the area described in subsections (b) and (c) 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 Section 8 of this chapter, 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.

Section 3. Exceptions to Locations of Wells and Well Spacing Orders.

(a) Upon proper application therefore, the Supervisor may approve, as an administrative matter, an exception to Section 2 of this chapter, 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. If the Supervisor or the Commission approves the exception application, the approval will be valid for one year from the date it was granted.

(b) 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:

(i) the location at which an oil or gas well could be drilled in compliance with Section 2 of this chapter or the applicable order;

(ii) the location at which the applicant requests permission to drill; and

(iii) the locations at which oil or gas wells have been drilled or could be drilled, in accordance with Section 2 of this chapter, or the applicable order, directly or diagonally offsetting the proposed exception.

(c) 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 of this chapter, or any applicable order of the Commission establishing oil or gas well spacing units for the pool involved.

Section 4. Bonding Requirements (Forms 8, 8A, 8E, and 8F).

(a) 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 and 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:

(i) for wells of less than two thousand feet (2,000’) in depth, an individual bond in the amount of ten thousand dollars ($10,000.00) for each such well;

(ii) for wells of two thousand feet (2,000’) or more in depth, an individual bond in the amount of twenty thousand dollars ($20,000.00) for each such well;

(iii) or in the alternative, a blanket bond in the amount of seventy-five thousand dollars ($75,000.00) covering all wells, including wells less than two thousand feet (2,000’) in depth. If the Commission has an acceptable blanket bond in the amount of twenty-five thousand dollars ($25,000.00) from an Owner/Operator prior to July 1, 2000, such Owner/Operator is not required to post the additional coverage under this subsection (iii).

(b) The bond or bonds required by these Rules shall remain in full force and effect until:

(i) the permanent plugging and abandonment of the well or wells has been approved by the Supervisor;

(ii) the well has been properly converted to a water well in a manner approved by the Supervisor, in conjunction with the State Engineer;

(iii) the successive Owner/Operator or purchaser of the well or wells and/or the site(s) has provided a bond or other surety in an amount and form acceptable to the Commission; or

(iv) the bond has been released by the Commission.

(c) In the event an Owner/Operator has a 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, or disposing. Wells which are not producing, injecting, or disposing are deemed to be idle. The Supervisor may require an increased bonding level up to ten dollars ($10.00) per foot for each idle well as soon as the Operator’s total footage of idle wells exceeds two thousand, five hundred feet (2,500’) or seven thousand, five hundred feet (7,500’) depending upon which level of blanket bond is in place. As wells are removed from idle status, up to ten dollars ($10.00) per foot bonding requirements will be reduced accordingly. The bond amount will be increased every three (3) years by the percentage change in the Wyoming consumer price index. An Owner/Operator may request the Supervisor to set a different bonding level based on an evaluation of the specific well conditions and circumstances. The Operator shall submit a written cost estimate to provide plugging, abandonment and site remediation, prepared by a Wyoming contractor with expertise in well plugging, abandonment and site remediation.

(d) 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 (18) months or until the total amount of the bond has been posted.

(e) In lieu of additional bonding, the Supervisor may accept a detailed plan of operation which includes a time schedule to permanently plug and abandon idle wells or take such action as may be necessary to remove the well from idle status. This plan and time schedule is subject to approval by the Supervisor, and shall not exceed one (1) year from the date of filing. Plans filed by the first Owner/Operator go with the property in the event of a sale. The next Owner/Operator is responsible for completing the plans of the previous Owner/Operator unless the Supervisor accepts an alternate plan.

(f) In addition, the Supervisor must be advised by the Owner on the Commission’s Form 7 (Notice of Change of Owner) of all transfers of wells 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.

(g) 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.

(h) The Commission may require from the Owner/Operator a good and sufficient bond running to the state of Wyoming conditioned for or securing the performance that pits constructed to receive water produced in association with hydrocarbons, or noncommercial, centralized pits located within a lease, unit, or communitized area used for field operations shall be operated and maintained in such a manner as to not damage the environment or to not cause undue harm to health and safety of employees and people residing in close proximity to the pit and that upon permanent abandonment of the project or last use of the pit, the pit shall be closed and the adjacent areas reclaimed in accordance with the Rules and Regulations of the Commission.

(i) Separate bonding amounts for these pits, if required by the Commission, shall be set by the Supervisor following evaluation of site-specific conditions and circumstances. The Owner/Operator shall, within a reasonable time after a request by the Supervisor or his duly authorized agents, provide a written cost estimate prepared by a Wyoming registered professional engineer with expertise in surface pit remediation for closure of the pit and remediation of the surface and access areas closely adjacent to the pit. The surface landowner shall receive a copy of said cost estimate from the Owner/Operator prior to construction.

(ii) Because the construction of pits for the retention of water produced in association with the recovery of coalbed methane gas in the Powder River Basin may be of benefit to the landowner, the Supervisor, in his sole discretion, may waive the bonding for such pits otherwise provided for by this subsection (h) and allow such pits to remain open after the cessation of production operations if a notarized statement of acceptance signed by the landowner, sufficient to meet the satisfaction of the Supervisor and including, at a minimum, the following items, accompanies the Form 14 when it is provided to the Commission:

(A) the surveyed location including latitude and longitude;

(B) the exact size and depth of the pit; and

Prior to the waiving of bonding for pit closure and prior to acceptance by the surface landowner, the Owner/Operator shall provide the surface landowner a current written cost estimate for pit closure prepared by a Wyoming registered professional engineer with expertise in surface pit remediation.

(i) In the event that an Owner/Operator is required to post a bond or other surety with the Commission as required by Wyo. Stat. Ann. § 30-5-402, said surety bond must comply with the formatting requirements of the Commission. An Owner/Operator may post a cashier’s check, certificate of deposit or letter of credit if it complies with Chapter 3, Sections 5 and 6, as applicable. The minimum amount of bond shall be two thousand dollars ($2,000.00) per well site. Upon approval of the Supervisor, after attempted good faith negotiations with the surface owner, the Owner/Operator may submit a bond or other guaranty to cover all oil and gas operations on the surface owner’s land as identified by an oil and gas operator in the written notice required under Wyo. Stat. Ann. § 30-5-402(e), in an amount determined by the Supervisor.

(j) Within seven (7) days of receipt of a per well site surety bond or other guaranty, or blanket bond or other guaranty, the Commission shall give written notice of receipt to the surface owner, to be sent certified mail, return receipt requested. This notice shall be sent to the address provided to the Commission by the Owner/Operator and shall contain the following information:

(i) a description of the amount and type of bond or guaranty received;

(ii) a copy of the statement filed by the Owner/Operator with its Application for Permit to Drill (APD) pursuant to Wyo. Stat. Ann. § 30-5-403(a); and

(iii) a statement that the surface owner has thirty (30) days from receipt of this notice to file an objection with the Commission.

(k) In determining the amount of bond to be posted, whether a single well site bond or blanket bond, the Supervisor shall consider the proposed plan of work and operations submitted by the Owner/Operator in its notice to the surface owner and may consider any other factors which would materially impact the bond amount needed to secure payment of damages including, but not limited to, the following:

(i) loss of production and income;

(ii) loss of land value;

(iii) and loss of value of improvements caused by oil and gas operations.

(l) If the surface owner files a written objection to the bond or guaranty amount within thirty (30) days of receipt of the notice required in subsection (j) of this chapter, the matter shall be set before the Commission at its next regularly scheduled meeting. Each interested party will have an opportunity, subject to the applicable procedural Rules of the Commission, to present evidence in support of or in opposition to the bond amount. The Commission, in determining the accepted amount and type of surety bond or other guaranty shall consider the following:

(i) the surety bond or guaranty objected to;

(ii) any supporting evidence submitted by the oil and gas Owner/Operator; and

(iii) the surface owner’s objections and supporting documents.

The Commission may consider any other relevant evidence and shall notify the parties of its decision in writing. Proof of the required surety shall be submitted within thirty (30) days of the Commission’s final order.

Section 5. Deposit of Cashier’s Check or Certificate of Deposit Instead of Bond.

(a) Generally. Any person who is required to post a surety bond pursuant to Section 4 of this chapter, or Chapter 4, Section 6(h) of the Commission’s Rules, may instead deposit with the Commission a cashier’s check or a certificate of deposit. Such a deposit will be accepted in lieu of a surety bond only if it satisfies all of the requirements of this Section.

(b) Deposit of a Cashier’s Check. A deposit of a cashier’s check in lieu of a surety bond must satisfy all of the following conditions:

(i) The check must be drawn for an amount equal to or greater than the amount required by Section 4 of this chapter and Chapter 4, Section 6 for a surety bond;

(ii) The check must be drawn on a bank with its main office or any branch located in Wyoming or on any other bank that is acceptable to the Supervisor in his sole discretion;

(iii) The check must be payable to the order of “Wyoming Oil and Gas Conservation Commission”;

(iv) The date on which the check is issued must be within ten (10) days before the date on which the deposit is received by the Commission;

(v) The Owner/Operator must execute a valid, binding, first-priority pledge agreement as to the proceeds of the collected cashier’s check, which agreement shall be on the current form approved by the Commission from time to time;

(vi) The cashier’s check and the original of the fully-executed pledge agreement must be delivered to the Commission at the same time;

(vii) By submitting a deposit under this subsection, the Operator authorizes and directs the Commission to deposit and collect the same upon receipt.

(c) Deposit of a Certificate of Deposit (“CD”). Deposit of a CD in lieu of a surety bond must satisfy all of the following conditions:

(i) The CD must be drawn for an amount equal to or greater than the amount required by Section 4 of this chapter and Chapter 4, Section 6(h) of the Commission’s Rules, for a surety bond;

(ii) The CD must be issued by an FDIC-insured bank with its main office or any branch located in Wyoming or on any other bank that is acceptable to the Supervisor in his sole discretion;

(iii) The CD must be payable in current funds or such other manner as the Commission may determine at a bank located within the state of Wyoming;

(iv) The CD must be on the current form of certificate of deposit approved by the Commission from time to time;

(v) The CD must be issued for an initial term of not less than one (1) year and automatically renewable from year to year;

(vi) The Owner/Operator must execute a valid, binding, first-priority pledge agreement as to the certificate of deposit, which agreement shall be on the current form approved by the Commission from time to time;

(vii) The originals of both the CD and the fully-executed pledge agreement must be delivered to the Commission at the same time.

(d) Maturity of CD without Replacement. If a CD is accepted and retained by the Commission under this section, and if the Owner/Operator has not deposited an acceptable replacement surety bond or other guaranty within thirty (30) days before the CD’s maturity date, then the Owner/Operator will be deemed to have authorized and directed the Commission to demand immediate payment on the CD and, upon receipt of the proceeds, retain the same as a deposit of the proceeds of a collected cashier’s check under Section 5(b) of this chapter.

(e) No Interest on Deposits; Retention of Deposit. Interest shall not accrue, nor be payable by the Commission, on any deposit received by the Commission under this section. Interest that is payable under a CD must be paid by the bank directly to the Operator. The Commission will retain the deposit or CD until:

(i) The Owner/Operator delivers a satisfactory surety bond or other guaranty to replace it; or

(ii) The Commission demands payment of the CD, if applicable; or

(iii) The Owner/Operator satisfies the requirements of Section 5(g) of this chapter.

(f) Replacement. The Owner/Operator may deliver at any time to the Commission an acceptable surety bond or other guaranty to replace a deposit retained by the Commission under this section. Upon its receipt and acceptance of such replacement, the Commission will deliver to the Owner/Operator:

(i) in the case of a CD, the original CD suitably endorsed; or

(ii) in the case of a cashier’s check, funds in an amount equal to the original deposit.

(g) Return Upon Successful Completion. If an Owner/Operator has deposited proceeds of a collected cashier’s check or a CD, in lieu of a surety bond, and it is determined by the Commission that the Owner/Operator has complied with the Wyoming Conservation Act, the rules and orders of the Commission and 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, the Commission shall deliver to the Owner/Operator:

(i) funds in an amount equal to the original deposit; or

(ii) the original CD suitably endorsed to the Owner/Operator.

The proceeds of a collected cashier’s check or CD deposited with the Commission pursuant to the Wyoming Split Estates Act, as defined in Chapter 1, Section 2(jjj) of these rules, shall be released in accordance with the procedures in Section 7(d) of this chapter.

Section 6. Letter of Credit Instead of Bond.

(a) Generally. Any person who is required to post a surety bond pursuant to Section 4 of this chapter, or Chapter 4, Section 6(h) of the Commission’s Rules, may instead deposit with the Commission a letter of credit (“LOC”). Such a deposit will be accepted in lieu of a surety bond only if the letter of credit satisfies all of the requirements of this Section.

(i) The LOC must have a face amount equal to or greater than the amount required by Section 4 of this chapter and Chapter 4, Section 6(h) for a surety bond;

(ii) The LOC must be issued by an FDIC-insured bank with its main office or any branch located in Wyoming or on any other bank that is acceptable to the Supervisor in his sole discretion;

(iii) The LOC must be payable in current funds or such other manner as the Commission may determine at sight at the counters of an FDIC-insured bank located within the state of Wyoming;

(iv) The LOC must be on the current form of letter of credit approved by the Commission from time to time;

(v) The LOC shall be issued with an initial expiration date of not less than one (1) year from the date of its issuance and automatically extended from year to year.

(vi) The LOC must be received by the Commission within ten (10) days of its issue date.

(vii) The original LOC must be delivered to the Commission.

(b) Expiration of LOC without Replacement. If a LOC is accepted and retained by the Commission under this section, and if the Owner/Operator has not deposited any acceptable replacement surety bond or other guaranty within thirty (30) days before the LOC’s expiration date, then the Owner/Operator will be deemed to have authorized and directed the Commission to draw the entire face amount of the LOC and, upon receipt of the proceeds, retain the same as a deposit of the proceeds of a collected cashier’s check under Section 5(b) of this chapter

(c) No Interest; Retention of LOC. Interest shall not accrue, nor be payable by the Commission, on any LOC received by the Commission under this section. The Commission will retain the LOC until the sooner to occur of the following:

(i) the Owner/Operator delivers a satisfactory surety bond or other guaranty to replace it;

(ii) the Commission demands payment under the LOC; or

(iii) the Owner/Operator satisfies the requirements of Section 6(f) of this chapter.

(d) Maturity without Replacement. If, within thirty (30) days before the LOC’s expiration date, the Owner/Operator has not deposited a replacement for any LOC accepted and retained by the Commission under this section, then the Owner/Operator will be deemed to have authorized and directed the Commission to demand immediate payment of the entire face amount of the LOC and, upon receipt of the proceeds, retain the same as a deposit of the proceeds of a collected cashier’s check under Section 5(b) of this chapter.

(e) Replacement. The Owner/Operator may deliver at any time to the Commission an acceptable surety bond or other guaranty to replace a LOC retained by the Commission under this section. Upon its receipt and acceptance of such replacement, the Commission will deliver to the Owner/Operator the original LOC.

(f) Return Upon Successful Completion. If the Commission determines that the Operator that has deposited a LOC under this section in lieu of a surety bond 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, then the Commission shall deliver to the Operator the original LOC. A LOC deposited with the Commission pursuant to the Wyoming Split Estates Act shall be released in accordance with the procedures in Section 7(d) of this chapter.

Section 7. Forfeiture, Release, or Return of Surety Bond or Other Guaranty.

(a) The purpose of a surety bond or other guaranty posted as security pursuant to the Commission's Rules is to insure that the principal or person posting same complies with the Wyoming Conservation Act, the Commission's Rules, and the orders of the Commission, the State Oil and Gas Supervisor, or his Authorized Agent, including, but not limited to, proper plugging of wells and seismic holes and reclamation of the area affected by same. Site reclamation must be initiated within one (1) year of permanent abandonment of a well or last use of a pit and shall be completed in as timely a manner as climatic conditions allow. For just cause, the Supervisor may grant an administrative variance providing for additional time. Reclamation must be completed in accordance with the landowner’s reasonable requests, and/or resemble the original vegetation and contour of adjoining lands. Where practical, topsoil must be stockpiled during construction for use in reclamation. All disturbed areas on state lands will be recontoured and reseeded unless the Office of State Lands and Investments approves otherwise. Appendix F includes information on reseeding.

(b) The proceeds of a surety bond or other guaranty become the property of the Commission and 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 a default by the party.

(c) If the Commission determines the principal on the bond delivered pursuant to Sections 4(a) through (e) of this chapter 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, production facility removal, produced water pit closure, proper plugging of wells and seismic holes and reclamation of the surrounding affected area, with respect to all operations secured thereby, then the Commission shall release the obligation of the bond.

(d) Any oil and gas operator may request that its bond or other guaranty posted with the Commission pursuant to Wyo. Stat. Ann. § 30-5-402(c) to secure the payment of damages to a surface owner be released upon the submission of a written request and a certified statement of the following:

(i) that compensation for damages has occurred;

(ii) an agreement for release has been reached by all parties;

(iii) final resolution of the judicial appeal process for any action for damages has occurred and all damages have been paid;

(iv) that the surface owner has failed to give written notice required under Wyo. Stat. Ann. § 30-5-406(a); or,

(v) has failed to bring an action for damages within the required time period.

(e) Upon receipt of a request for release, the Commission shall notify the surface owner in writing, by certified mail, of the request. The Commission shall include a copy of the release request and supporting statement to the surface owner. The surface owner shall have fifteen (15) days from receipt of said notice to dispute the release request. If no dispute is received by the Commission, or it is satisfied that the oil and gas operator has complied with the above requirements, the bond may be released. If the original request contains a verified statement from the surface owner that he is in accord with the request to release, the Commission may dispense with the waiting period and proceed to release the bond or other guaranty forthwith. The Supervisor may release any bond or other surety for just cause.

Section 8. Application for Permit to Drill or Deepen a Well (Form 1).

(a) Before any persons 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 persons shall file an Application for Permit to Drill or Deepen (Form 1) with the Commission and pay a fee of fifty dollars ($50.00) for a permit. No drilling activity shall commence until such application is approved and a permit to drill is issued by the Commission.

(b) For wells drilled on fee, patented and state land, prior to construction of the drilling location, approval of Form 14B (Application to Construct a Reserve Pit) must be obtained. The Application for Permit to Drill will not be processed until this requirement is met.

(c) The Application for Permit to Drill or Deepen (Form 1) 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 application and its addendums shall include:

(i) Proposed depth to which the well will be drilled,

(ii) Type of drilling tools to be used,

(iii) Identification of all water supply wells permitted by the Wyoming Office of the State Engineer located within one-quarter mile of the drilling and spacing unit or the Commission approved drilling unit, whichever is less, and the depth from which water is being appropriated,

(iv) Formation depth, geological and hydrological detail from public records, published or otherwise known information of useable groundwater underlying the drilling and spacing unit or the Commission approved drilling unit. Consistent with Wyoming Department of Environmental Quality Chapter 8, as revised April 26, 2005, “Quality Standards for Wyoming Groundwaters,” and for purposes of these rules, groundwater will be protected, except for Class VI Groundwater of the State that is unusable or unsuitable for use:

(A) Due to excessive concentrations of total dissolved solids or specific constituents; or

(B) Is so contaminated that it would be economically or technologically impractical to make water useable; or

(C) Is located in such a way, including depth below the surface, so as to make use economically and technologically impractical.

(v) Estimated depth to the top of important geologic markers, including the estimated depth to the top of objective horizons,

(vi) Proposed casing program, including size, anticipated setting depths, API grade, weight per foot, burst pressure, tensile strength for both body and joint, yield pressure, if new or used casing is planned for the well, and other information required by the Supervisor. Note that prior approval of the Supervisor is required for use of non-API tubular.

(vii) Description, type and setting depths of isolation techniques if used in openhole and uncemented liner stimulations in high angle and horizontal wells,

(viii) Description of the cementing program, including API class of cement, additives to be used, slurry density to be mixed, estimated volumes to be used, including percent of excess volume. For openhole completions, similar information is required for the cement program above the completed interval. The Supervisor must be notified of the intent and give prior approval for the use of non-API class cement and additives.

(ix) Description of the anticipated completion and stimulation program, including the base stimulation fluid and its source, the main chemical additives and proposed concentrations to be mixed, identified by additive type as identified in Chapter 3, Section 45 of these rules. If this data is not available at the time of submission of Form 1, then it must be submitted on a Sundry Notice (Form 4) and no stimulation of the well can occur without approval of the Supervisor.

(x) The Owner or Operator shall provide to the Supervisor, as an addendum to Application for Permit to Drill (Form 1), or as part of a comprehensive drilling/completion/recompletion plan, or on a Sundry Notice (Form 4), additional representative well drilling detail, if available, from adjacent or offset drilled wells that would inform and possibly influence drilling and cementing practices on the proposed well. If available, all known information regarding hole integrity, such as lost circulation zones by depth and barrels of fluid lost, zones of over or under pressure conditions, hole drift, key seats or tight hole if encountered, stuck pipe and depths experienced, water flows or kicks requiring an increase in mud weight beyond a predetermined amount to control, and depths experienced and as reported on Well Completion Report (Form 3). If any of this information or detail has already been presented to the Supervisor, identifying the wells is sufficient on subsequent wells for compliance with this subsection.

(xi) Where multiple Applications for Permit to Drill (Form 1) 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 (Form 1). No Application for Permit to Drill (Form 1) shall contain the exact well name as another permitted well in the same quarter quarter, section, township and range.

(d) The Application for Permit to Drill or Deepen (Form 1) shall also be accompanied by a statement of compliance with Wyo. Stat. Ann. § 30-5-403 (Form 1A), if the application is not exempted from the Split Estates Act. Included in this statement shall be the surface owner’s name, contact address, telephone number and any other relevant and necessary contact information. The statement shall certify that the oil and gas operator has done the following:

(i) provided notice of proposed oil and gas operations to the surface owner;

(ii) engaged in good faith negotiations to reach a surface use agreement with the surface owner, and

(iii) satisfied the conditions of Wyo. Stat. Ann. § 30-5-402(c) and how they were satisfied.

The oil and gas operator shall not file a copy of any surface use agreement, nor will the terms of any such agreement be disclosed.

(e) The Commission has authority under Wyo. State. Ann. § 30-5-104(d)(v)(B) to require that each Application for Permit to Drill or Deepen (Form 1) shall be accompanied by a sworn statement from the Owner/Operator, on a form approved by the Commission, that all underground electrical conductors outside of its facilities, fenced enclosures or posted areas, well site or facilities under control of the Owner or Operator will comply with:

(i) the National Electrical Code in effect for the year electrical conductors were installed and energized; and,

(ii) the Wyoming Department of Fire Prevention and Electrical Safety Act, Wyo. Stat. Ann. §§ 35-9-102(a)(viii) and 35-9-123(a)(ii);

(iii) Owner or Operator shall provide the Commission at least twenty-four (24) hours notice prior to installation of underground electrical conductors outside of its facilities, fenced enclosures, or posted areas. With routine maintenance, emergency or repair work, the Operator shall provide the Commission notice within twenty-four (24) hours of completing the electrical work

(f) In addition to any other required form or attachment to the Application for Permit to Drill, the following shall be submitted:

(i) 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;

(ii) 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. The surface location and the proposed footage locations of both the initial penetration into the productive formation and the terminus of the lateral shall be entered under “Location”. 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 (½) mile of any point on the entire length of the horizontal wellbore, from the surface location through the terminus of the lateral. In the absence of any special Commission order, notice is not required for horizontal wells in federally supervised units or in API units provided that no portion of the horizontal interval is closer than six hundred sixty feet (660') from a drilling or spacing unit boundary or any uncommitted tract.

(g) 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 therein to the Supervisor's satisfaction that on the date the application requesting such drilling units was filed:

(i) he has the right or obligation under the terms of an existing contract to drill said well; and

(ii) 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.

(h) If drilling is not commenced, the permit to drill shall not be valid after the expiration of a period of one (1) year from the date of the issuance thereof by the Commission or its authorized agents. A new application shall be submitted prior to the expiration date of the permit to drill, along with a $50.00 extension fee, in order to request a one (1) year extension from such expiration date.

(i) All plats shall contain the following information:

(i) section, township, range and county that the well is to be located within;

(ii) north arrow;

(iii) scale of drawing. This should include a bar graph and a ratio showing the scale of the map;

(iv) 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;

(v) distances from the nearest established section boundary lines to the proposed well;

(vi) ungraded ground elevation of the well;

(vii) basis of elevations;

(viii) basis of bearings;

(ix) 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.

(j) Latitude and longitude in degrees, with five (5) decimal places and the datum used, if not contained on the plat, is to be furnished within thirty (30) days of the completion of the well. Latitude and longitude values shall be accurate to within one hundred fifty feet (150').

(k) Within the Special Sodium Drilling Area –A or –B (SSDA –A or –B) as defined in Chapter 1, Section 2(rr) or (ss), a notice of the Application for Permit to Drill shall be given by certified mail to all trona producers holding current valid DEQ permits to mine trona.

Section 9. Application for Permit to Drill Stratigraphic Test or Core Hole (Form 1).

A fifty dollar ($50.00) filing fee shall be required for the drilling of a stratigraphic test or core hole, and 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 10. Notice of Intent 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. If the change in the nature and scope of plans previously disclosed is material, verbal notice to the Supervisor or Authorized Agent is required. Notice of Intent (Form 4) shall be submitted as soon as practical thereafter. Circumstances requiring verbal notice may be limited to those unforeseen material changes in previously approved activities, such as a change in the well stimulation service company, a change in fluid type or chemistry, or a major change in the drilling/completion/recompletion plan.

Section 11. Notice of Intent 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. The Owner or Operator shall provide all information required under Chapter 3 Sections 8(c) and 45(d) of these rules.

Section 12. Well Completion or Recompletion Report and Log (Form 3).

Unless approved by the Supervisor, a report on the operation will be submitted on Form 3 within thirty (30) days of ceasing drilling operations, or within thirty (30) days of completion or recompletion (as defined by Chapter 1, Section 2(o) and (qq), respectively) of a well, stratigraphic test or core hole, or within thirty (30) days of 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. If the producing interval(s) is not perforated or fully perforated within the above mentioned thirty (30) days, a Sundry Notice (Form 4) shall be filed within that thirty (30) days of completion, indicating the formation(s) perforated or to be perforated and estimated date of completion. A Completion Report (Form 3) shall be filed within thirty (30) days of the producing interval(s) being fully perforated. Data requirements of this Section include data included in Section 45(d), Section 45(h) and Section 45(i) of this Chapter.

Section 13. Operator's Monthly Report of Wells (Form 2 and Form 16).

(a) A report of all oil, water, and gas production, injection for enhanced recovery purposes, and sales shall be filed 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 or electronic media as prescribed by the Commission for all wells located on fee or patented, state, federal, or Indian lands regardless of status. Production, sales and injection volumes and pressure data shall be reported on an individual well-by-well basis and by reservoir if the well produces from multiple reservoirs.

(b) 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 14. 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 at least thirty (30) days prior to the conveyance. Prior to approval of the transfer, the transferee must submit proof of compliance with the Split Estates Act. Do not use Form 6, Designation of Agent or Operator, for this procedure.

Section 15. Notice of Intent to Abandon Well (Form 4).

(a) Before beginning abandonment work on any well, stratigraphic test, core hole, dry hole, or other exploratory hole, a Notice of Intent to Abandon (Form 4) shall be filed with the Supervisor and 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. This approval shall be valid for a period of one (1) year. After that time, a new Notice of Intent to Abandon the well shall be submitted.

(b) 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 the Owner/Operator submits a written, notarized request for such use executed by the landowner which assumes the responsibility to plug the well upon its abandonment as a water well in accordance with applicable Rules and a copy of the Application for Permit to Appropriate Ground Water form for the well which has been approved by the Office of the State Engineer. Such written request, assumption of responsibility, and a copy of the State Engineer's approved form attached to a sundry notice shall be filed with the Supervisor requesting that the well be released from the Owner/Operator's bond.

Section 16. Temporarily Abandoned or Shut-In Wells (Form 4 and Form 2).

(a) 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.

(b) 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.

(c) Prior to approving a request for extension, the Supervisor may, upon a finding of good cause, require mechanical integrity testing in accordance with provisions of Chapter 4, Section 5(d) of these rules, or other surveillance method approved by the Supervisor, be performed on a 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.

(d) 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 or shut-in 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 Underground Injection Control (UIC) Program pressure testing rules.

(e) 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 Sections 4, 5, and 6 of this chapter will be kept in force until such time as the well is permanently abandoned.

(f) The Commission may, in its sole discretion, approve the Supervisor’s use of conservation funds collected in accordance with Wyo. Stat. Ann. § 30-5-116(b), to plug wells and seismic holes and reclaim the surrounding area affected by them if the Commission is unable to enforce its Rules and Regulations and laws, up to and including legal action when appropriate, requiring the Owner, Operator, geophysical/seismic company, client company, or hole plugger to plug and reclaim and if there exists neither a plugging bond nor other security adequate to properly plug and abandon and rehabilitate the surface. The Supervisor shall establish and maintain a well plugging schedule which prioritizes wells for plugging through an assessment of the well’s potential to adversely impact public health, public safety, surface or ground waters, surface use or other mineral resources.

Section 17. Subsequent Report of Abandonment (Form 4).

(a) If a well, stratigraphic test or core hole is plugged and abandoned, a notarized Subsequent Report of Abandonment (Form 4, Sundry Notice) must be filed with the Supervisor within thirty (30) days of the date of the plugging. The reverse side of the Subsequent Report of Abandonment (Form 4, Affidavit of Plugging) must be notarized and signed by both the notary and the person appearing before the notary. The Subsequent Report of Abandonment (SRA) 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 and accompanied by a job log or cement verification report from the plugging contractor specifying the type of fluid used to fill the wellbore, type of slurry volume of API Class cement used, date of work, and the depth of plugs placed. Records of any test or measurement made, and records of the amount, size and location (by depths) of casing must be included.

(b) Site reclamation must be initiated within one (1) year of permanent abandonment of a well or last use of a pit and shall be completed in as timely a manner as climatic conditions allow. For just cause, the Supervisor may grant an administrative variance providing for additional time. Reclamation must be completed in accordance with the landowner’s reasonable requests, and/or resemble the original vegetation and contour of adjoining lands. Where practical, topsoil must be stockpiled during construction for use in reclamation. All disturbed areas on state lands will be recontoured and reseeded unless the Wyoming Office of State Lands and Investments approves otherwise. Appendix F of these rules includes information on reseeding.

(c) 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 submitting a Sundry Notice (Form 4) marking the area on the form advising such. Inspections for the purpose of bond release will not be made by the Commission staff until that request is provided by the Operator or Owner. The SRA will be approved only after the site has been inspected and recommended for bond release by a Commission staff member.

(d) 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 18. Plugging of Wells, Stratigraphic Tests, Core, or Other Exploratory Holes (Form 4).

(a) It shall be the duty of any Owner, Operator, or person who assumes ownership, 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.

(b) For wells as defined in Chapter 1, Section 2(fff) of these Rules and Regulations, and all stratigraphic test wells being abandoned, plugging must be accomplished by the following:

(i) All cement and additives shall consist of API class cement and additives, unless use of non-API cement and additives has prior approval from the Supervisor.

(ii) Wells without production casing must be plugged by placing cement plugs of at least one hundred feet (100') length consisting of approved cement and additives, mixed at a density approved by the Supervisor or his authorized agent over the following:

(A) open hole porous and permeable formations;

(B) at least every two thousand five hundred feet (2,500') if porous and permeable formations are not encountered;

(C) in the base of the surface casing and at least one hundred feet (100’) inside the casing at the surface. If multiple casing strings are present, a minimum one hundred foot (100’) plug will be placed in the annulus between each casing string at the outside casing shoe and a minimum one hundred foot (100’) plug in each annulus at the surface;

(D) at any other depth as required by the Supervisor;

(E) the spacer between all cement plugs must be a fluid consistent with that which was used to drill the well or as approved by the Supervisor.

(iii) Wells with production casing must be plugged by placing cement plugs of at least one hundred feet (100’) length consisting of approved cement and additives, mixed at a density approved by the Supervisor or his authorized agent at least every two thousand five hundred feet (2,500’), in the base of the surface casing, and at least one hundred feet (100’) inside the casing at the surface. If multiple casing strings are present, a minimum one-hundred foot (100’) plug must be placed in the annulus between each casing string at the outside casing shoe, and a minimum one-hundred foot (100’) plug in each annulus at the surface.

(A) Prior to commencing plugging operations, all produced fluids must be circulated from the well using fresh water or other fluid as required to maintain an overbalance of the producing formation.

(B) All perforations must be isolated by squeeze cementing utilizing a mechanical cement retainer set no more than fifty feet (50’) above the uppermost perforation, or by a method approved by the Supervisor. The volume of cement will be no less than the volume between the retainer and the deepest perforation plus fifty percent (50%) excess. A minimum one-hundred foot (100’) plug must also be placed on top of the cement retainer. If access to the perforated areas of the wellbore has been lost, alternative procedures may be proposed by the Owner/Operator. The Supervisor shall determine or approve which method and the quantity of cement that shall be used or the alternative method of plugging, if access to perforations is lost;

(C) The Owner/Operator may leave the production casing in place, provided that the Owner/Operator demonstrates that the casing exhibits mechanical integrity in a manner prescribed or approved by the Supervisor. If casing fails a mechanical integrity test, the casing leaks must be isolated and squeeze cemented utilizing a mechanical cement retainer, or by a method approved by the Supervisor.

(D) If it is determined that any formation containing fresh water and potable water, as defined under Chapter 1, Section 2(s), of these Rules and Regulations, was not sealed or separated when production casing was cemented, the casing must be perforated at the base of the fresh water and potable water zone and squeeze cemented utilizing a mechanical cement retainer, or by a method approved by the Supervisor, with a volume of cement sufficient to cover the formation. The Supervisor may also require the production casing to be perforated at a depth of the shoe of the surface casing and that cement be squeezed or circulated through the perforations through the uncemented zone; and;

(E) If an attempt is made to recover production casing after the retrievable part of the production casing has been removed, cement must be circulated to fill at least a one-hundred foot (100') interval, of which fifty feet (50') must be inside the casing stub. The remainder of the hole shall be plugged in the manner prescribed under subsection (b)(i) of this Section.

(iv) Powder River Basin coalbed methane wells.

(A) The minimum density requirement for cement slurry shall be 13.5 ppg with no less than twenty-five percent (25%) of cement by weight with a yield not greater than 1.29 cu. ft/sk. The Supervisor may approve alternate cement blends submitted by the Operator.

(B) Each completed section of the well shall be isolated by filling the underreamed or perforated section of the hole with bentonite hole plug extending a minimum of twenty feet (20’) above the completed section, or isolating the underreamed or perforated section with a mechanical bridge plug set no higher than thirty feet (30’) above the underreamed or perforated section. The Supervisor may approve other material for the openhole portion in lieu of the bentonite hole plug.

(C) The bentonite plugs and/or mechanical bridge plugs shall be topped with a one-hundred foot (100’) cement plug, and one-hundred foot (100’) plugs will also be set every seven hundred fifty feet (750’) along with a one-hundred foot (100’) plug at the surface.

(c) 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.

(d) No substance 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.

(e) Verbal approval to plug and abandon or approval of a Notice of Intent to Abandon (Form 4) must be obtained prior to commencing actual plugging operations. Under Chapter 4, Section 11 of these rules, special plugging orders or variances from normal practice may be obtained or set forth when conditions dictate to protect fresh water bearing formations.

(f) When the well has been plugged, a notarized Subsequent Report of Abandonment (Form 4) accompanied by a job log or cement verification report from the plugging contractor specifying the type of fluid used to fill the wellbore, type of slurry volume of API Class cement used, date of work, and depth of plugs placed must be submitted to the Supervisor. 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 is current.

(g) In addition to the requirements under subsection (b) of this Section, all wells within the Special Sodium Drilling Area – A, as defined in Chapter 1, Section 2(rr), shall have a directional survey run from the base of the Trona Interval to surface if not previously run. A cement bond log or other appropriate log shall be run from the base of the Trona Interval to top of cement to determine the integrity of the cement in casing annuluses.

(h) In addition to the requirements under subsection (b) of this Section, all wells in the SSDA – A or – B shall be plugged by placing a continuous cement plug, at a minimum, through the Trona Interval in all open zones, open casing zones, and all open or inadequately cemented casing annuluses. Perforation and squeeze cementing shall be used where required by the Supervisor.

Section 19. Well Designations and Markers.

(a) The Owner/Operator shall mark each drilling, producing, or injection well in a conspicuous place with his name, name of lease, well number, and legal description of the location of the well. All signs shall be maintained in a legible condition. Signs for wells in multi-well pad locations shall be located near the multi-well pad or may be placed near the pad entrance and provisions shall be made on or near each wellhead to enable positive identification of each well.

(b) Plugged and abandoned wells shall be marked with a permanent monument on which shall be shown the operator, the lease, the well number, and location of the well. The monument 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.

(c) In order to lessen visual impact of a large number of dry hole markers, or for other reasonable cause, the Supervisor may waive the requirement to erect a dry hole marker. Petitions for approval of this procedure shall be submitted on the Notice of Intent to Abandon or on a separate Sundry Notice (Form 4). If that option is desired, the well casing must be cut off at least three feet (3') below the recontoured surface and a plate with well designation as provided in part (b) permanently welded onto the top of the casing stub. In the event a marker is not erected, the Owner/Operator must 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 20. Well Records and Reports.

The Owner/Operator 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 21. Filing of Well Logs.

(a) 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/Operator shall submit to the Supervisor one (1) copy of the well log on the Commission’s Form 3 as well as one (1) copy of the electrical, radioactive, or other similar conventional logs run, which must be submitted on continuous paper. If requested by the Owner/Operator, the Supervisor may grant an extension to the thirty (30) day reporting period for any well. The Owner/Operator shall submit logs in digital form or disc in addition to those mentioned above. The format shall be LAS, Log ASCII standard or any other format approved by the Supervisor.

(b) In addition, Operators shall file one (1) copy of drill stem test charts, directional deviation surveys that portray the bottomhole location, formation water analyses, porosity, permeability or fluid saturations, core analyses, and lithologic log or sample descriptions and bottomhole pressure data subsequent to initial completion within thirty (30) days of being run or compiled by the Operator.

(c) As prescribed under Chapter 2, Section 6 of these rules 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 hereinafter for other logs.

(d) The making and filing of reports, well logs, and directional surveys on exploratory or "wildcat" wells marked confidential shall be kept confidential for six (6) months after the filing due date as required by subsection (a) of this Section unless the Owner gives written permission to release such information at an earlier date. When an Application for Permit to Drill is received marked “Confidential”, the Commission will release the first page of the Commission’s Form 1 or the Bureau of Land Management’s Form No. 3160-3 and the surveyor’s plat to the public and news media. Permission to extend the confidential status for periods longer than the original six (6) month period must be obtained from the Supervisor, however, if a well has been completed and/or production is being reported on it, subsequent requests to keep it confidential shall be denied.

Section 22. General Drilling Rules.

(a) The following shall apply to the drilling of all wells unless altered, modified, or changed for a particular well, pool, unit, area or lands upon hearing before the Commission:

(i) Surface casing shall be run to reach a depth below all known or reasonably estimated utilizable groundwater (as defined in Chapter 3 Section 8(c)(iv) to protect the Use Class category and to prevent blowouts or uncontrolled flows. Unless otherwise approved by the Supervisor, surface casing shall be set at a minimum of three (3) joints or approximately one hundred (100) to one hundred twenty (120) feet below the depth of any Wyoming Office of State Engineer permitted water supply wells designated for domestic, stock water, irrigation or municipal use, within a minimum of one-quarter (1/4) mile radius and shall be cemented to surface. Any coalbed methane well receiving a Ground Water Appropriate Permit (Form UW 5) from the State Engineer’s Office is exempt from this specific subsection. Fresh water flows detected during drilling including seismic, core, or other exploratory holes shall be recorded on Form 19 (Report of Fresh Water Flows) 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. 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. The Supervisor may require the Owner or Operator to pump a specified quantity of excess cement above the design volume if severe washed out hole conditions are known to exist on the surface hole portion of wells in the immediate vicinity of the well to be drilled. If cement is not circulated to the surface during the primary operation, the Owner/Operator shall perform supplemental cementing operations to assure that the annular space from the casing shoe to the surface is filled with cement. The Supervisor may require the Owner or Operator to provide cased hole bond logs to be run for casing strings to demonstrate isolation from the placement of cement across and above the productive intervals or above the last casing shoe in the well, if there is a demonstrated reason to believe an inadequate cement job was performed.

(ii) 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 at the shoe has reached a compressive strength of five hundred pounds per square inch (500 lbs. /sq. in.). In addition, the API free-water separation for all cement slurries used shall average no more than four (4) milliliters per two hundred fifty (250) milliliters of cement. All cements used shall achieve a minimum compressive strength of one hundred (100) psi in twenty-four (24) hours measured at eighty degrees Fahrenheit (80˚ F.). Testing for these properties shall be in accordance with accepted industry standards. The term "under pressure" as used herein shall be complied with if one float valve is used or if pressure is otherwise held;

(iii) There shall be installed and maintained on all wells blowout preventers and related equipment in accordance with Chapter 3, Section 23(i) of these rules;

(iv) 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;

(v) 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;

(vi) 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, 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.

(b) 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 Chapter 4, Section 1 of these rules. 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, wellheads, pumping units, tanks, and treaters shall be located no closer than three hundred fifty feet (350') from any of the aforementioned items. The Supervisor may impose greater distances for good cause and likewise grant exceptions to the 350-foot rule.

(c) Before drilling commences, the Owner/Operator shall notify the Commission of his intent to spud the well and an approximate time the BOP test will be run.

(d) For each well drilled within the Special Sodium Drilling Area – A or – B (SSDA – A or – B), as defined in Chapter 1, Section 2(rr) and (ss) of these rules, a complete proposed casing and cementing program shall be submitted on the Application for Permit to Drill (Form 1). For the life of the well each drilling and casing program, unless altered, modified, or changed for a particular well, pool, unit, area or lands upon hearing before the Commission, shall be designed to:

(i) provide suitable and safe operating conditions for the total measured depth proposed;

(ii) confine fluids to the wellbore;

(iii) prevent migration of fluids from one stratum to another;

(iv) assure control of well pressures encountered;

(v) prevent contamination of freshwater;

(vi) prevent significant damage to Trona Mineral Resources; and

(vii) provide well control until the next casing is set;

All pertinent factors for well control should be considered, including formation fracture gradients, formation pressures, casing setting depths, proposed total depth, and projected mining.

(e) In addition, the following requirements apply to all wells drilled within the Special Sodium Drilling Area – A (SSDA – A), as defined in Chapter 1, Section 2(rr) of these rules, unless altered, modified, or changed for a particular well, pool, unit, area or lands upon hearing before the Commission:

(i) Any oil or gas wells that will be drilled within the area of influence of underground trona mining shall be:

(A) designed and installed to withstand the forces and potentially damaging influences from mining as certified by a Registered Professional Engineer registered in the state of Wyoming or

(B) demonstrated to be located outside the mining influence area. Mining influence includes surface subsidence and underground formation collapse, faulting fracturing and related stresses that may provide avenues for communication with active or inactive underground mine works, open mine voids, and corrosive mine fluids that may cause well casing corrosion or failure as a result of mining.

(ii) Conductor casing must be set to a depth of at least forty feet (40'), or into a competent stratum whichever is greater. The casing must be cemented with a quantity of cement to fill the annular space up to the surface and topped off if not at the surface. Cement fill must be verified by observation of cement returns.

(iii) Centralized surface casing shall be set below the Trona Interval from the surface. Centralizers shall be spaced to insure enough casing annulus is maintained on all sides of the casing to allow cement fill space throughout the cased interval. The casing shall be set into a competent stratum and cemented with sufficient cement in the annulus to circulate to the surface. If cement does not circulate to the surface, the open annulus must be cemented to the surface before drilling ahead. A cement bond log or cement evaluation tool must be run to verify adequate cement around surface casing. Remedial cementing may be required if it is determined that insufficient bonding occurred.

(iv) Prior to well completion, a directional survey shall be run from the base of the Trona Interval to surface to verify wellbore location relative to surface location. Results of the survey shall be submitted to the Supervisor pursuant to Chapter 3, Section 21 of these rules.

(v) Intermediate and/or production casings, if required to be cemented, shall be cemented with a sufficient quantity of cement to provide annular fill up from the surface casing shoe to two hundred feet (200') above the Trona Interval. All casing annuluses reaching the production zones shall be cemented for two hundred feet (200’) or more above the highest producing zone. All casings shall be centralized throughout their cemented annulus intervals. Before drilling ahead, all casings shall be tested in accordance with subsection (e)(vii) of this Section.

(vi) Liners may be set and cemented as an extension of casings provided that the cemented liner has a minimum of two hundred feet (200') of cemented lap within the next larger casing. Before drilling ahead, a cemented liner and lap must test in accordance with subsection (e)(vii) of this Section, to determine that a seal between the liner top and next larger casing has been achieved.

(vii) Before drilling out the liner after cementing, all casing, liners, and liner laps must be tested to a surface pressure of one thousand five hundred (1,500) psig, or 0.25 psi/ft multiplied by the true vertical depth of the casing shoe, whichever is greater; however, surface pressure must not subject the casing to a hoop stress that will exceed seventy percent (70%) of the minimum yield strength of the casing. Sufficient notice of pressure test must be given, so that a representative of the Commission may witness the test. A cement bond log or other appropriate log shall be obtained to evaluate cement integrity in each cemented zone for each cemented casing annulus and the results submitted to the Supervisor for approval, pursuant to Chapter 3, Section 21 of these rules. If there are indications of improper cementing, or the pressure declines more than ten percent (10%) in 30 minutes, corrective measures shall be taken.

(viii) Casing annuluses not cemented through the Trona Interval that extend to the surface shall be continually monitored for leaks by equipping the surface termination with a rupture disk (fail open) pressure relief valve with tattle-tale (or similar device) to detect, alarm, and relieve excess annular pressure buildup. The device shall be set to fail open at one hundred (100) psi. Blocking of this pressure relief valve in an open position shall be prohibited. In the event the monitored casing pressure exceeds one hundred (100) psi, the Supervisor and the trona producers holding valid Wyoming DEQ permits to mine trona shall be notified as soon as possible and remedial actions shall be implemented with the Supervisor’s approval. The pressure relief device shall be tested every two (2) years to insure it is functioning properly. Tattle-tale monitoring units that cease to monitor or communicate shall be promptly repaired. Pressure devices shall be repaired or replaced immediately upon failing a pressure test or following a rupture.

If a well has not been tested for mechanical integrity within five (5) years and is shut-in for an extended period the casing strings capable of being tested shall be evaluated for mechanical integrity during the shut-in period.

(ix) Cathodic protection or other equivalent corrosion prevention shall be applied to all casing strings.

(f) Within the Special Sodium Drilling Area – A or – B, as defined in Chapter 1, Section 2(rr) or (ss) of these rules, or all wells defined in Chapter 1, Section 2 of these rules unless altered, modified, or changed upon hearing before the Commission, or shown to contain no Trona Mineral Resources, shall only use stimulation methods that do not significantly damage the Trona Mineral Resources. A plan of work for any stimulation operation shall be submitted to the Supervisor and approved before the work is undertaken.

(i) Well stimulation operations within the Trona Interval shall include a post stimulation survey that identifies the extent of induced fractures. Results of the survey shall be submitted to the Supervisor for evaluation to determine if induced fractures have significantly intersected the Trona Mineral Resources and if corrective action is required.

(ii) Stimulation fluids shall be designed to prevent significant dissolution to the Trona Mineral Resources. The Supervisor shall require corrective action if it is determined that significant damage to the Trona Mineral Resources has, or is likely to occur.

(g) Within the boundaries of the Special Sodium Drilling Area – A or – B, as defined in Chapter 1, Section 2(rr) or (ss) of these rules, all wells defined in Chapter 1, Section 2 of these rules unless altered, modified, or changed upon hearing before the Commission, shall use drilling fluids that will not significantly dissolve the Trona Mineral Resource.

Section 23. Blowout Preventers.

(a) Blowout preventers (BOPs) and related equipment shall be installed and maintained during the drilling of all wells in accordance with the following rules unless altered, modified, or changed, for a particular pool or pools, upon hearing before the Commission:

(i) General Rules.

(A) The required working pressure rating of all blowout preventers and related equipment shall be based on known or anticipated subsurface pressure, geologic conditions, or accepted engineering practices, and shall equal or exceed the maximum anticipated pressure to be contained at the surface. In the absence of better data, the maximum anticipated surface pressure shall be determined by using a normal pressure gradient of 0.22 psi per foot and assuming a partially evacuated hole. A schematic diagram of the BOP and wellhead assembly shall be submitted to the Supervisor with the Application for Permit to Drill (APD; Form 1). The schematic diagram should indicate the minimum size and pressure rating of all components of the wellhead and blowout preventer assembly.

(B) The Supervisor, on a site specific basis, may require the use of blowout preventers or other methods of controlling shallow coalbed methane wells, at which time all current BOP rules shall be applicable.

(C) All blowout preventers, choke lines, and choke manifolds shall be installed above ground level. Casing heads and optional spools may be installed below ground level provided they are visible and accessible.

(D) 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.

(E) Pressure tests on blowout preventers and related equipment shall be tested as outlined in this section, at least:

(I) prior to spud or upon installation;

(II) after the disconnection or repair of any pressure containing seal in the BOP stack, choke and kill lines, or choke manifold, but limited to the affected component; and

(III) every 30 days after initial installation, or as determined by the Supervisor.

(F) The Supervisor may require an affidavit covering the initial pressure tests after installation signed by the Owner/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) Blowout prevention equipment used when reasonable expectations of encountering hydrogen sulfide or sour gas formations that could potentially result in the partial pressure of the hydrogen sulfide or sour gas exceeding 0.05 psia (00034 MPa) in the gas phase at the maximum anticipated pressure, shall be suitable for use in such areas.

(H) All ram BOPs shall be equipped with hydraulic locking devices or manual locking devices with hand wheels extending outside of the rig’s substructure.

(I) Blowout prevention equipment installed on the well shall have a rated working pressure equal to, or higher than, the working pressure specified in the approved APD.

(J) In addition to the minimum BOP requirements outlined in this section, wells drilled while using tapered drill strings shall require either a variable bore pipe ram preventer or additional ram type blowout preventers to provide a minimum of one set of pipe rams for each size of drill pipe in use, and one set of blind rams.

(ii) Minimum requirements for 2,000 psi system:

(A) 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, and the other with blind rams. Ram preventers or a drilling spool must have side outlets with a minimum inside diameter of two inches to accommodate choke and kill lines. Outlets on the casing head may not be used to attach choke or kill lines. One annular BOP may be substituted for ram type BOPs, providing the annular BOP is pressure tested in the CSO (complete shut off) configuration.

(B) Additional BOP equipment shall include one upper kelly cock, and one drill pipe safety valve with subs to fit all drill string connections in use.

(C) Choke manifold and related equipment shall consist of one kill line valve, one choke line valve, choke line, two manual adjustable chokes each with one valve located upstream of the choke, one bleed line valve and one mud service pressure gauge with a valve upstream of the gauge. The arrangement of the valves shall be a functional equivalent of the arrangement outlined in Appendix G, Figure 3-1 or 3-1A, of these rules.

(D) All choke manifold valves, choke and kill line valves and the choke line shall be full bore. Choke line valves, choke line and bleed line valves shall have an inside diameter equal to or greater than the minimum requirement for the BOP or drilling spool outlet.

(E) The choke line should be as straight as possible, and any required turns shall be made with flow targets at bends and on block tees. Choke hoses with flanged connections designed for that purpose will be accepted in lieu of a steel choke line.

(F) The accumulator shall have sufficient capacity to operate the BOP equipment as outlined in this section, and have one independently powered pump system. BOP controls may be located at the accumulator or on the rig floor.

(iii) Minimum requirements for 3,000 psi system:

(A) BOP equipment shall consist of at least one annular BOP and one double-gate preventer with pipe and blind rams or two single-ram type preventers; one equipped with pipe rams and the other with blind rams. Ram preventers or a drilling spool must have side outlets with a minimum inside diameter of two inches on the kill side, and three inches on the choke side to accommodate choke and kill lines. Outlets on the casing head may not be used to attach choke or kill lines.

(B) Additional BOP equipment shall include one upper kelly cock, and one drill pipe safety valve with subs to fit all drill string connections in use.

(C) Choke manifold and related equipment shall consist of one kill line valve, one check valve, two choke line valves, choke line, two manual adjustable chokes each with one valve located upstream of the choke, one bleed line valve and one mud service pressure gauge with a valve upstream of the gauge. The arrangement of the valves shall be a functional equivalent of the arrangement outlined in Appendix G, Figure 3-2, of these rules.

(E) The choke line should be as straight as possible, and any required turns shall be made with flow targets at all bends and on block tees. All connections exposed to well bore pressure shall be welded, flanged or clamped. Choke hoses with flanged connections designed for that purpose will be accepted in lieu of a steel choke line.

(F) The accumulator shall have sufficient capacity to operate the BOP equipment as outlined in this section, and have two independently powered pump systems connected to start automatically after a 200 psi drop in accumulator pressure, or one independently powered pump system connected to start automatically after a 200 psi drop in accumulator pressure and an emergency nitrogen back-up system connected to the accumulator manifold. BOP controls may be located at the accumulator or on the rig floor.

(iv) Minimum requirements for 5,000 psi system:

(B) Additional BOP equipment shall include one upper kelly cock, lower kelly cock, one drill pipe safety valve and one inside BOP with subs to fit all drill string connections in use.

(C) Choke manifold and related equipment shall consist of two kill line valves, one check valve, one choke line valve, one remote controlled choke line valve, choke line, one manual adjustable choke and one remote controlled adjustable choke each with two valves located upstream of the choke, two bleed line valves and one mud service pressure gauge with a valve upstream of the gauge. The arrangement of the valves shall be a functional equivalent of the arrangement outlined in Appendix G, Figure 3-3, of these rules.

(F) The accumulator shall have sufficient capacity to operate the BOP equipment as outlined in this section, and have two independently powered pump systems connected to start automatically after a 200 psi drop in accumulator pressure, plus an emergency nitrogen back-up system connected to the accumulator manifold. BOP controls shall be located on the accumulator with additional remote controls located on the rig floor.

(v) Minimum requirements for 10,000-15,000-20,000 psi systems:

(A) BOP equipment shall consist of at least one annular BOP and one double-gate preventer with pipe and blind rams or two single-ram type preventers; one equipped with pipe rams and the other with blind rams located above a drilling spool. One drilling spool with side outlets with a minimum inside diameter of two inches on the kill side, and three inches on the choke side. One ram-type preventer with pipe rams, located below the drilling spool. Outlets on the casing head may not be used to attach choke or kill lines.

(B) Additional BOP equipment shall include an upper kelly cock, lower kelly cock, one drill pipe safety valve and one inside BOP with subs to fit all drill string connections in use.

(C) Choke manifold and related equipment shall consist of two kill line valves, one check valve, one choke line valve, one remote controlled choke line valve, choke line, two manual adjustable chokes and one remote controlled adjustable choke each with two valves located upstream of the choke, two bleed line valves and one mud service pressure gauge with a valve upstream of the gauge. The arrangement of the valves shall be a functional equivalent of the arrangement outlined in Appendix G, Figure 3-4, of these rules.

(E) The choke line shall be a steel line and be as straight as possible, and any required turns shall be made with flow targets at all bends and on block tees. All connections exposed to well bore pressure shall be welded, flanged, or clamped.

(F) The accumulator shall have sufficient capacity to operate the BOP equipment as outlined in this section, and have two independently powered pump systems connected to start automatically after a 200 psi drop in accumulator pressure, plus an emergency nitrogen back-up system connected to the accumulator manifold. BOP controls shall be located on the accumulator with additional remote controls located on the rig floor.

(vi) Minimum requirements for diverter systems:

(A) The diverter system shall consist of a low-pressure diverter or an annular blowout preventer with large diameter vent lines installed below the diverter and extending to a flare pit a safe distance from the well.

(B) The valves on the vent lines shall be full bore and full opening, and be hydraulically controlled in a manner to insure that at least one vent line valve is opened before the diverter packer closes.

(vii) Minimum requirements for BOP equipment testing:

(A) All blowout preventers and related equipment that may be exposed to well pressure shall be tested first to a low pressure and then to a high pressure.

(I) A stable low of 200-300 psi shall be maintained for at least five (5) minutes prior to initiating the high-pressure test.

(II) When performing the low-pressure test, it is not acceptable to apply a higher pressure and bleed down to the low-test pressure. The higher pressure could initiate a seal that may continue to seal after the pressure is lowered and therefore misrepresent a low-pressure condition.

(III) The high-pressure test shall be to the rated working pressure of the ram type BOPs and related equipment, or to the rated working pressure of the wellhead on which the stack is installed, whichever is lower. A stable high-pressure test shall be maintained for ten (10) minutes.

(IV) Annular BOP shall be high pressure tested to fifty percent (50%) of the rated working pressure, and maintain a stable pressure for ten (10) minutes.

(V) Manual adjustable chokes not designed for complete shut off (CSO) shall be pressure tested only to the extent of determining the integrity of the internal seating components to maintain back pressure. Hydraulic chokes designed for CSO shall be pressure tested to fifty percent (50%) of the rated working pressure.

(B) All casing below the conductor pipe shall be pressure tested to 0.22 psi per foot or one thousand, five hundred (1,500) psi, whichever is greater, but not to exceed seventy percent (70%) of the minimum internal yield strength of the casing. A stable pressure shall be maintained for thirty (30) minutes.

(C) During BOP pressure testing the casing shall be isolated with a test plug set in the wellhead, and the appropriate valve opened below the test plug to detect any leakage that may occur due to failure of the test plug.

(D) The choke and kill line valves, choke manifold valves, upper and lower kelly cocks, drill pipe safety valves and inside BOP shall be tested with pressure applied from the wellbore side. All valves, including check valves, located downstream of the valve being pressure tested, will be in the open position.

(E) All manually operated valves and chokes on the BOP stack, choke and kill lines, or choke manifold shall be equipped with a handle provided by the manufacturer, or a functionally equivalent fabricated handle, and be lubricated and maintained to permit operation of the valves without the use of additional wrenches or levers.

(F) Operators may install BOP equipment of a higher pressure rating than that specified in the approved APD. In that event the BOP equipment shall be pressure tested at the working pressure specified in the approved APD.

(G) All operational components of the BOP equipment shall be functioned at least once a week to verify the components’ intended operations.

(H) The results of all BOP equipment pressure tests and function tests shall be recorded on the tour sheet and shall include the type of test, testing sequence, low and high pressures, duration of each test, and results of each test.

(viii) Minimum requirements for accumulator system testing:

(A) The precharge pressure on each accumulator bottle shall be checked prior to each BOP pressure test, and adjusted if necessary. The minimum precharge pressure for a 3,000-psi working pressure accumulator unit should be one thousand (1,000) psi. The minimum precharge pressure for a 2,000-psi working pressure accumulator unit should be one thousand (1,000) psi. The minimum precharge pressure for a 1,500-psi working pressure accumulator unit should be seven hundred fifty (750) psi. Only nitrogen gas shall be used for accumulator precharge. The precharge should be adjusted to within one hundred (100) psi of the selected pressure.

(B) Accumulator response time is the elapsed time between activation and the complete operation of a function. The accumulator system shall be capable of closing each ram BOP within thirty (30) seconds. Closing time shall not exceed thirty (30) seconds for annular BOPs smaller than eighteen and three-quarter inches (18-3/4”) nominal bore, and forty-five (45) seconds for annular BOPs of eighteen and three-quarter inches (18-3/4”) nominal bore and larger, when closed on the smallest diameter drill string component in use.

(C) BOP accumulator systems shall have sufficient usable hydraulic fluid volume (with pumps inoperative) to close one annular BOP, two ram BOPs from a full open position, open one hydraulic valve against zero wellbore pressure, and retain two hundred (200) psi or more above the minimum recommended precharge pressure.

(D) The accumulator pump system shall have sufficient quantity and sizes of pumps to satisfactorily perform the following: with the accumulator bottles isolated from service, the accumulator pump system shall be capable of closing the annular BOP on the minimum size drill pipe being used, or one ram-type BOP if the stack does not include an annular BOP, and open the hydraulic choke line valve within two (2) minutes.

Section 24. 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 25. Directional Drilling.

(a) 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. The approval will be valid for one year from the date it was granted. Such notice shall state clearly:

(i) the depth;

(ii) exact surface location of the wellbore;

(iii) proposed direction of deviation; and

(iv) proposed horizontal distance between the bottom of the hole and surface location.

(b) If approval is obtained, the Owner/Operator shall file with the Supervisor within thirty (30) days after the completion of the work an accurate and complete copy of the survey made.

(c) Additional notice to directional drill shall not be required if the proposed bottomhole location will be drilled to an authorized location pursuant to Section 2 of this chapter, a drilling and spacing order, or any other special order of the Commission.

(d) Specification for Certification of Directional Surveys pursuant to Wyoming Oil and Gas Conservation Commission rules and regulations, Chapter 2 Section 6(b), Chapter 3, Sections 21(c), 25(b) and 25(c). The Commission provides additional requirements for a complete Certified Directional Survey as follows:

(i) The accepted standard for directional survey calculation shall be the minimum curvature method, with straight line extrapolation acceptable from last data point in survey to Total Measured Depth. If other methods are to be used they must be identified on the Application for Permit to Drill, Form 1, when submitted for approval. If the Application for Permit to Drill is approved with another method, the other method must be duly noted by the Operator on the Operators Certification Form and by the directional drilling contractor on the Directional Survey Certification Form.

(ii) Directional drilling contractor shall provide the Final Survey in electronic (ASCII) file format directly submitted to the Wyoming Oil and Gas Conservation Commission. Final Survey file must also include a Plan versus Actual plot with all dimensions and directions clearly marked. A pdf copy of the Directional Survey Certification Form with the Plan versus Actual plot is acceptable but must be complete and signed.

(iii) The directional survey or MWD contractor is responsible for ensuring that all MWD tools are calibrated in accordance to their standard calibration procedures.

(iv) The Operator shall provide on the drilling well location a copy of the approved APD and provide the directional survey contractor(s) with a legible and reproducible copy of the certified surface location plat.

(A) BHL shall be tied back to the well surface location utilizing the most recent governmental survey as required by Commission rules, NAD 83.

(v) A change out of the directional survey tools is required if the Operator has to trip out of the hole during the build section or while steering the well in the event of failure of MWD itself or failure of direction survey tool; however, the Operator will be allowed to proceed as long as the surveys are replaced with MWD check shots or gyro survey.

(vi) For a Commission approved permitted Directional Well:

(A) In the vertical hole the Operator shall provide directional surveys at no greater than two hundred (200) foot intervals and at the terminus of the vertical section, or at the discretion of the Supervisor, to document the deviation of the upper hole.

(vii) A proper magnetic spacing must be maintained in order to insure azimuth accuracy.

(viii) When deviation is less than 5 degrees dogleg rate, directional survey shall be taken at intervals no greater than three hundred (300) feet.

(ix) When deviation is 5 degrees dogleg rate or greater, a directional survey shall be taken at intervals no greater than one hundred (100) feet.

(x) Regardless of the directional survey tools in use, the Commission requires in the build section that directional surveys shall be taken at intervals no greater than one hundred (100) feet in the lateral portion of the wellbore while rotating. Should a survey be missed, the Owner or Operator must take a survey at the next possible opportunity and an explanation of the reason for the missing survey shall be included on the Directional Survey Report.

(xi) The Operator shall provide on their Certification Form the method of Bottom Hole Location, BHL, projection used from the last surveyed point to Total Measured Depth. The Operator Certification Form must be completed and signed. This form must be attached to the Completion Report (Form 3). The Operator must include with the Completion Report (Form 3) a printed copy of the Final well directional survey.

(A) Please note: paper forms are to be attached to the Completion Report (Form 3) until the Commission goes live with electronic completion report submittal at which time a pdf of the Certification Form and the Final directional survey will be accepted.

(xii) At the Supervisor’s discretion and if the Commission well survey analysis compels the need, the Supervisor may require additional directional surveys, accuracy requirements and reported data.

(xiii) All wells must be depicted exactly as drilled. The original laterals and any sidetrack shall be kept separately, appropriately labeled as to what they depict (Leg 1, Leg Sidetrack 1, etc.) and filed in their entirety from the tie-in point to a projection to total measured depth of each leg or sidetrack.

(xiv) When additional laterals and/or sidetracks are surveyed, the tie-in point should be listed as the first survey. Do not include any surveys prior to the tie-in as they are required to be filed with the pervious lateral or sidetrack. The survey point used for the tie-in should be the last survey run immediately above the sidetrack depth.

(xv) All surveys must be submitted and no portion of any survey should be deleted at any time. All surveys must be corrected to True North. In the event that a gyro survey is run after the well has been drilled with an MWD tool, all surveys must be submitted and the “master survey” will be considered the gyro survey.

(xvi) Additional requirements:

(A) On highly deviated and/or horizontal wells, the Commission may require check shot surveys at various depths, not repeats of mandatory survey shot depths as required in Sections 3(e)(viii), (x), (xi) and (xii). This requirement will be a stipulation on the approved Application for Permit to Drill, Form 1, on a case-by-case basis.

(e) Commission required Certification Forms:

(i) Directional Survey Certification Form shall be attached to the Final Report as a separate cover sheet, on the contractor’s letterhead, and must contain, as a minimum the following information:

(A) MWD/Directional Survey Company Name

(B) MWD/Directional Survey Job # & Job Type

(D) Operator/Client Name

(E) Well Surface Location by Footage & Lat/Long & Datum 1/4 1/4 Sec T & R & County

(F) Final Report Date

(G) MWD/Directional Survey Run Date

(H) Surveyed from MD of A feet to B feet

(I) Survey Tool Type and Relation to the Bit

(J) Drilling Rig Contractor Name, Rig Number & Rig Kelley Bushing Height, feet

(K) MWD/Directional Surveyor’s Name

(L) The following certification statement:

“The data and calculations for this survey have been checked by me and conform to the calibration standards and operational procedures set forth by MWD/Directional Survey Company Name. I am authorized and qualified to review the data, calculations and this report, and that the report represents a true and correct Directional Survey of this well based on the original data corrected to True North and obtained at the well site. Wellbore coordinates are calculated using minimum curvature or other method.”

(M) Well Planner Printed Name and Signature

(N) Date Signed

(O) Optional: Notarization of Signature

(ii) Operator Certification Form shall be attached to the Completion Report, Form 3, with a copy of the Final Directional Survey, as a separate cover sheet on the Operator’s letterhead, and must provide, as a minimum, the following information:

(A) Operator Company Name and Company Representative’s Office Address

(B) Well Name and API Number

(D) Producing Interval Top Location by Footage & Lat/Long & Datum 1/4 1/4 Sec T & R & County

(E) Producing Interval Bottom Location by Footage & Lat/Long & Datum 1/4 1/4 Sec T & R & County (if different that Bottom Hole Location)

(F) Well Bottom Hole Location by Footage & Lat/Long & Datum 1/4 1/4 Sec T & R & County

(G) The following certification statement:

“I am authorized and qualified to review the Final Directional Survey data for this well and by my signature certify that the above Bottom Hole Location represents a true and correct Bottom Hole Location of this well based on the Final Directional Survey Report corrected to True North as provided by MWD/Directional Survey Company Name; and that the Bottom Hole Location is in compliance with Wyoming Oil and Gas Conservation Commission rules and orders. The method of projection from the last directionally surveyed point to the Total Measured Depth as represented as the Bottom Hole Location is the straight line or other method.”

(H) Operator Representative Printed Name and Signature

(I) Date Signed

(J) Optional: Notarization of Signature

(f) The following definitions are provided:

(i) Azimuth means the deviation in the horizontal plane of a wellbore expressed in terms of compass degrees.

(ii) Certified directional survey means a survey conducted and reported pursuant with the WOGCC rules under Chapter 2 Section 6(b), Chapter 3 Sections 21(c) and 25 (b) and (c).

(iii) Directional drilling methods include industry standard tools, including gyro and electronic single shot, as used separately or in combination with Measurement While Drilling, MWD, or Logging While Drilling, LWD.

(iv) Directional drilling survey means the compiled report of the survey, providing as a minimum the following, represented as report columns: Survey Measured Depth, MD, as feet; Inclination as degrees; Azimuth as degrees; Course Length as feet; True Vertical Depth, TVD, as feet; Borehole Bearing Coordinates as degrees N/S and E/W; Closure as Distance in feet and as Azimuth in degrees; Dog Leg Severity as degrees; and Horizontal Coordinates as feet N/S and E/W.

(v) Directional well means a wellbore that is intentionally deviated from vertical with an intentional azimuth.

(vi) Dog leg severity means a significant rate of change in azimuth as well as inclination in a short distance along the path of the well resulting in a crooked well profile and expressed as degrees per 100 feet.

(vii) Drilling and Spacing Unit, DSU, means Commission approved boundary based upon rules and orders appropriate for the area and pools, within the lease boundary, property lines, unit lines, communitized area boundary, or participating areas boundary.

(viii) Drill pipe stand means drill pipe in triples, approximately 94-96 feet for each stand. If the drilling rig drill pipe is doubles (approximately 60-64 feet) or singles (approximately 30-32 feet) then the footage requirements must be used for survey frequency.

(ix) Horizontal Well means a wellbore drilled laterally at an angle of at least eighty degrees (80°) to the vertical and with a horizontal projection exceeding one hundred feet (100') measured from the initial point of penetration into the productive formation through the terminus of the lateral in the same common source of hydrocarbon supply.

(x) Inclination means the deviation angle away from the vertical plane expressed as degrees.

(xi) Kick-off Point (KOP) means the point at which a directional well is intentionally deviated from vertical.

(xii) Lateral hold section, or tangent section, means a portion of the directional well past the point where the wellbore has been intentionally departed from the vertical with no intentional inclination or azimuth changes.

(xiii) Penetration point means the point where a directional well penetrates the top of the pool from which it is intended to produce.

(xiv) Producing interval means that portion of a directional well drilled inside a pool’s vertical limits between its penetration point and to pool’s terminus.

(xv) Producing area means the area in which the operator has an approved Drilling and Spacing Unit (DSU) from the Commission and in conformance with the setback requirements from the outer boundary of the approved DSU, or as per requirements set out in Chapter 3, Section 2 of these rules, for the applicable pool.

(xvi) Vertical well means a well that does not have an intentional departure or course deviation from vertical. A wellbore meeting this definition does not require submittal of the Operators Bottom Hole Location Certification Form.

Section 26. Protection of Productive Strata.

The Owner/Operator shall not drill, deepen, complete, or recomplete an oil or gas well for the purpose of producing oil or gas from a lower or upper stratum until all productive strata are protected to the satisfaction of the Supervisor.

Section 27. Open Flows and Control of “Wild” Wells.

The Owner/Operator shall take reasonable precaution to prevent any oil, 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. Within the boundaries of the Special Sodium Drilling Area – A, as defined in Chapter 1, Section 2(rr) of these rules, the Supervisor and adjacent trona mine operators shall be notified as soon as possible upon detecting a leak at or below the surface. All leaks shall be corrected as quickly as possible or plugged by cementing methods outlined in Chapter 3, Section 18 of these rules.

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 Wyo. Stat. Ann. § 30-5-102, 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 Wyo. Stat. Ann. § 30-5-101, and as an oil well under Wyo. Stat. Ann. § 30-5-101(vii), 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.

(a) 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 one-quarter inch (1/4") of one hundred-percent-capacity tables, subject to the following corrections:

(i) 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;

(ii) Temperature Correction: The observed volume of oil corrected for impurities shall be further corrected to the standard volume of sixty degrees (60°) 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; and

(iii) Gravity Determination: The gravity of oil at sixty degrees (60°) 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.

(a) 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 sixty degrees (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.

(b) Conversion from some common measurement bases is accomplished as follows:

Measured Volume At		Factor		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

Section 32. Report for Gasoline or Other Extraction Plants (Form 9, Sheets 1 and 2).

All Owners/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 33. 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 an 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 34. Surface Commingling of Production or Multiple Zone Completion or Commingling in One Wellbore.

(a) Except as provided in subsection (c) of this Section, 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, Chapter 5.

(b) The application shall set forth:

(i) the manner and method of completion proposed, including a diagrammatic sketch of the mechanical installation for a multiple zone completion;

(ii) 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

(iii) 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.

(c) Except as indicated below, the multiple zone completions and recompletions within wells producing gas and associated hydrocarbons from coal zones of the Fort Union Formation in the Powder River Basin shall be permitted at the discretion of the Supervisor without order of the Commission, upon the filing and approval of a sundry notice of intent after the well has been drilled, completed, or recompleted. Such sundry notice shall indicate the coal zones in which production is to be commingled. This subsection (c) shall not apply:

(i) when the coal zones to be commingled do not have common ownership both as to working interests and royalty interests;

(ii) when the well is not located on an eighty (80) acre drilling and spacing unit established by order or rule for the production of gas and associated hydrocarbons from the Fort Union Formation coal zones or on a federal exploratory unit in which Fort Union Formation coal zones are unitized.

The sundry notice shall identify the eighty (80) acre drilling and spacing unit, including the order or rule under which it was established or shall identify the federal exploratory unit, as applicable.

(d) 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.

(e) The production from each well must be measured by meters, gauge or by some other method the Commission has approved after notice and opportunity for hearing. An Owner/Operator may not, prior to metering or measurement as required under Chapter 3, Section 13(a), 30(a) or 31(a), commingle production from two or more oil or gas wells with diverse working interest or royalty interest ownership, specifically excluding overriding royalty interests, without prior approval of the Commission after notice and opportunity for hearing. Notice must be provided to working interest and royalty interest owners.

(f) If commingled wells have common working interest and royalty interest ownership, specifically excluding overriding royalty interests, the production from each well need not be measured at the wellhead if the Owner/Operator of the wells demonstrates to the Supervisor that the production from each well can be accurately determined at reasonable intervals by other means.

Section 35. Production Test and Gas-Oil Ratio Report. (Forms 10 through 13).

(a) Gas-oil ratio reports can be required by the Supervisor on certain wells if it is deemed necessary to obtain information of this nature.

(b) An initial gas well test can be required by the Supervisor when such test is deemed necessary; 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 Supervisor on acceptable forms. The methods prescribed in the Interstate Oil and Gas Compact Commission’s “Manual of Gas Well Testing” or an alternate method approved by the Supervisor shall be used.

(c) As a guideline for multipoint tests, each flow rate duration 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.

(d) 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.

(e) Gas-oil ratio reports for horizontal wells shall be filed upon initial completion and annually thereafter on Form 10.

Section 36. Remedy in Case of Rule or Order Violations.

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 37. Designation of Agent or Operator (Form 6).

A Designation of Agent or Operator (Form 6) shall be submitted to the Supervisor prior to the commencement of operations. A Designation of Agent or Operator will be accepted as authority of the Agent or Operator to fulfill the obligations of the Owner and to sign any papers or reports required under these oil and gas operating regulations, and all authorized orders or notices given by the Supervisor when given in the manner hereinafter provided shall be deemed service of such orders or notices upon the Owner and the lessee. All changes of address and any termination of the Agent’s or Operator’s authority shall be immediately reported in writing to the Supervisor and in the latter case the designation of a new Agent or Operator shall be immediately made. If the designated Agent or Operator shall at any time be incapacitated for duty or absent from his or their address, the Owner shall designate in writing a substitute to serve in his or their stead and in the absence of such Owner or of notice of appointment of a substitute then in such case notices may be given by the Supervisor by delivering a registered letter to the United States Post Office at Casper, Wyoming, directed to the Agent or Operator at the address shown on the current Designation of Agent or Operator on file in the Supervisor’s office, and such notice will be deemed service upon the Owner and lessee.

Section 38. Oil Mining Requirements.

Before beginning oil mining operations, the Owner/Operator 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 the 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 conditions of the bond or other security shall be in compliance with the Wyoming Conservation Act, the Commission's Rules and orders. The bond or other security may be forfeited or released under the procedure specified under Section 7 of this chapter. 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 (Form 4). Oil mining operations shall comply with the Commission's Rules and Regulations, 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.

Section 39. Authorization for Flaring and Venting of Gas.

(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;

(iv) The Commission encourages the Owner or Operator to employ technologies that minimize or prevent the venting and flaring of gas during drilling and completion operations.

(b) Low rate casing head gas. Unless it is determined by the Supervisor or the Commission that waste is occurring, up to sixty (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 subsection (a) or (b) of this Section, an Owner/Operator must apply for retroactive or prospective venting or flaring authorization under subsection (c) or (d) of this Section. 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, MCFs, 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); and

(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 subsection (c) of this Section above within fifteen (15) days of the initial request.

(e) All operations shall be conducted in a safe and workmanlike manner. If the gas stream is sour or venting would present a safety hazard, a constant flare igniter system or other Commission approved method to safely manage sour gas may be required.

(f) Venting of gas containing a hydrogen sulfide content in excess of 50 PPM is not allowed. Venting does not include emissions associated with fugitive losses from valves, fittings, surface piping, pneumatic devices, and other production equipment, including the wellhead. Supervisor approval is required for venting of gas containing a hydrogen sulfide content in excess of 50 PPM for specific job tasks in controlled environments, such as well repairs, pipeline purging, well failures, decommissioning of facilities, etc., or where necessary as a safety measure where flaring would be dangerous due to the introduction of an ignition source at the work site or when the operation is conducted under the authority and regulations of the Department of Environmental Quality.

Section 40. Tertiary Certification.

(a) Certification of tertiary projects and determination of base level production for projects qualifying for the tertiary oil tax exemption shall be accomplished in the following manner:

(i) In order for tertiary production to qualify for the severance tax exemption provided under Wyo. Stat. Ann. § 39-14-205(c), 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.

(ii) For tertiary projects certified by the Commission after March 31, 2003, and before March 31, 2008:

(A) As part of the process of certifying tertiary projects which qualify for the severance tax exemption under Wyo. Stat. Ann. § 39-14-205(c), 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

(B) 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 Owner/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.

Section 41. Payment of Conservation Tax (Form OG-001).

(a) Purchasers and producers of oil and gas who are responsible for payment of conservation tax shall notify the Commission in order to receive reporting forms from the Commission's staff. Reporting forms will be available on the Commission’s website. Forms will be mailed to the Owner/Operator only upon written request of the producer or purchaser. Producers whose tax liability is thirty dollars ($30.00) or less per month may make semi-annual reports with payments due the periods ending June 30th and December 31st of each year.

(b) 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 Owner/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 Wyo. Stat. Ann. § 39-14-201, et seq.

(c) Payments and corresponding forms must be submitted on or before the 25th day of the second month following the month in which the production occurs. 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 tax, together with the interest, is a lien upon the oil or gas against which it is levied and assessed. A tax due of less than one dollar ($1.00) does not need to be remitted.

(i) Checks submitted for payment of taxes should include and identify the taxpayer's name, address, and phone number. Cash or coin is not an acceptable method of payment of the tax.

(ii) Tax returns must be signed prior to submission to the Commission.

(d) Purchasers have the option of paying the tax for producers, but doing so does not reduce the producer's liability for full payment of the tax. Purchasers and producers shall make arrangements between themselves to ensure that there will be no duplication of taxes paid. If the purchaser pays the tax, the producer shall still submit a return showing volumes, values, and name of the company paying the tax.

(e) Operators are responsible for making settlements with the non-operators in leases or units according to their customary joint interest accounting.

Section 42. Unit Operations.

Any person desiring to obtain the benefits of Wyo. Stat. Ann. § 30-5-110, insofar as the same relates to any method of unit or cooperative development or operation of a field or pool or a part of either, shall file an application with the Supervisor for approval of such agreement which shall have attached a copy of such agreement.

Section 43. Carbon Sequestration Unitization Process.

(a) The purpose of Wyo. Stat. Ann. §§ 35-11-314 through 35-11-317 is the protection of corresponding rights, compliance with environmental requirements and to facilitate the use and production of Wyoming energy resources.

(i) “Corresponding rights” is defined as the right of all pore space owners in a unit area who will be affected by the unit operations, either now or in the future, to concurrently share in the economic benefits generated by using the pore space in the unit area.

(b) Any interested person may file an application with the Wyoming Oil and Gas Conservation Commission Supervisor requesting an order providing for the operation and organization of a unit of one (1) or more parts as a geologic sequestration site and for the pooling of interests in pore space in the proposed unit area for the purpose of conducting the unit operation. The application shall contain those items set out in Wyo. Stat. Ann. § 35-11-315(a). Commission staff will develop an application checklist to ensure all requirements for a complete application have been provided.

(c) Upon receipt of an application, the Wyoming Oil and Gas Conservation Commission shall promptly set the matter for hearing. In addition to any notice otherwise required by law or the Commission's Rules, the applicant shall give notice of the hearing, specifying the time and place of hearing, and describing briefly its purpose and the land and pore space affected, to be mailed by certified mail at least thirty (30) days prior to the hearing to all persons whose names and addresses are required to be listed in the application. A copy of the notice and mailing matrix shall be filed with the Commission.

(d) After considering the application and hearing the evidence offered in connection therewith, the Wyoming Oil and Gas Conservation Commission shall enter an order setting forth the following findings as set out in Wyo. Stat. Ann. § 35-11-316(d) and approving the proposed plan of unitization and proposed operating plan, if any, if the commission finds that:

(i) The material allegations of the application are substantially true;

(ii) The purposes specified in Wyo. Stat. Ann. § 35‑11‑314 will be served by granting the application;

(iii) The application outlines operations that will comply with environmental requirements;

(iv) Granting the application will facilitate the use and production of Wyoming energy resources;

(v) The applicant must provide the method used to determine the quantity of pore space storage capacity to be allocated to each separately owned tract within the permit area. This allocation represents, so far as can be practically determined, each tract's actual share of the pore space to be used in the sequestration permit area;

(A) Ratification of pore space storage capacity within the unit area shall address the following possible pore space use scenarios:

(I) Carbon dioxide injected into the pore space for permanent carbon storage and sequestration only and excluding carbon dioxide injected for enhanced recovery purposes;

(II) Water withdrawal from the pore space for permanent carbon storage and sequestration only and excluding water withdrawal associated with the production of hydrocarbons; and

(III) A combination of carbon dioxide injected into the pore space and excluding carbon dioxide injected for enhanced recovery purposes or water withdrawal associated with the production of hydrocarbons.

(vi) The method by which the allocation of economic benefits generated from use of pore space within the unit area between pore space owners; and between pore space owners and the unit operator or others is fair and reasonable, taking into consideration the costs required to capture, transport and sequester the carbon dioxide;

(vii) The method of generating economic benefits from the use of pore space in the unit area is fair and equitable and is reasonably designed to maximize the value of such use. (Economics related to the sequestration of carbon are currently unknown. However, economic drivers will be in place in the future to value the carbon being sequestered; generation of electricity, methane from coal gasification, cap and trade credits, as examples.)

(e) No order of the Wyoming Oil and Gas Conservation Commission authorizing the commencement of unit operations shall become effective until the plan of unitization has been signed or in writing ratified or approved by those persons who own at least eighty percent (80%) of the pore space storage capacity within the unit area.

(f) The Commission may hold supplemental hearings and make findings as may be required to determine when and if the consent will be obtained. Notice shall be given as required by statute.

(g) If the required percentages of consent have not been obtained within a period of six (6) months from and after the date on which the order of approval is made, the order shall be ineffective and revoked by the commission, unless, for good cause shown, the commission extends that time.

(h) Any interested person may file an application with the Wyoming Oil and Gas Conservation Commission requesting an order applicable only to the proposed unit area described in the application which shall provide for the percentage of approval or ratification to be reduced from eighty percent (80%) to seventy-five percent (75%). The application shall contain the information required by Wyo. Stat. Ann. § 35‑11‑315 (a) and any order of the commission entered pursuant to the application shall comply with Wyo. Stat. Ann. § 35‑11‑315 (b). Notice of the hearing on the application shall be given in the same manner and to the same persons as required by Wyo. Stat. Ann. § 35‑11‑315 (a).

(i) An order entered by the Wyoming Oil and Gas Conservation Commission under this section may be amended as provided by Wyo. Stat. Ann. § 35-11-316 (e).

(j) The Wyoming Oil and Gas Conservation Commission, upon its own motion or upon application, and with notice and hearing, may modify its order regarding the operation, size or other characteristic of the unit area in order to prevent or assist in preventing a substantial inequity resulting from operation of the unit, provided that no such modification may amend any permit issued under Wyo. Stat. Ann. §§ 35‑11‑313 and 35-11-316 (d).

(k) Any owner of pore space within a geologic sequestration site who has not been included within a unitization application or order authorizing a unit under this section, may petition for inclusion in the unit area, as provided by Wyo. Stat. Ann. § 35-11-316 (g).

Section 44. Change of Address.

Any Owner/Operator of a well shall, at all times, keep the Commission apprised of their current mailing and physical address. This may be done on a Sundry Notice (Form 4) or in the form of a letter.

Section 45. Well Stimulation.

(a) An approved Application for Permit to Drill (Form 1) or an approved Sundry Notice (Form 4) is required prior to the initiation of any well stimulation activity. Additional stimulation fluid information shall be provided to the Commission as an addendum to Form 1, or as part of a comprehensive drilling/completion/recompletion plan, or on a Sundry Notice (Form 4). A federal fieldwide development document or similar document may be accepted by the Supervisor. The Supervisor may require, prior to the well stimulation, the Owner or Operator to perform a suitable mechanical integrity test of the casing or of the casing-tubing annulus or other mechanical integrity test methods using procedures set forth in Chapter 2, Section 6 and Chapter 4, Section 7(e)(i).

(b) Where multiple stimulation activities will be undertaken for several wells proposed to be drilled to the same zone(s) within an area of geologic similarity, approval may be sought from the Supervisor to accept a comprehensive master drilling/completion/recompletion plan containing the information required. The approved master drilling/completion/recompletion plan will then be referenced on each individual well Application for Permit to Drill (Form 1).

(c) The Owner or Operator shall provide geological names, geological description and depth of the formation into which well stimulation fluids are to be injected.

(d) The Owner or Operator shall provide detailed information to the Supervisor as to the base stimulation fluid source. The Owner or Operator or service company shall provide to the Supervisor, for each stage of the well stimulation program, the chemical additives, compounds and concentrations or rates proposed to be mixed and injected, including:

(i) Stimulation fluid identified by additive type (such as but not limited to acid, biocide, breaker, brine, corrosion inhibitor, crosslinker, demulsifier, friction reducer, gel, iron control, oxygen scavenger, pH adjusting agent, proppant, scale inhibitor, surfactant);

(ii) The chemical compound name and Chemical Abstracts Service (CAS) number shall be identified (such as the additive biocide is glutaraldehyde, or the additive breaker is aluminum persulfate, or the proppant is silica or quartz sand, and so on for each additive used);

(iii) The proposed rate or concentration for each additive shall be provided (such as gel as pounds per thousand gallons, or biocide at gallons per thousand gallons, or proppant at pounds per gallon, or expressed as percent by weight or percent by volume, or parts per million, or parts per billion);

(iv) The Owner or Operator or service company may also provide a copy of the contractor’s proposed well stimulation program design including the above detail;

(v) The Supervisor may request additional information under this subsection prior to the approval of the Application for Permit to Drill (Form 1) or of the Sundry Notice (Form 4);

(vi) The Supervisor retains discretion to request from the Owner or Operator and/or the service company, the formulary disclosure for the chemical compounds used in the well stimulation(s).

(e) The Owner or Operator shall provide a detailed description of the proposed well stimulation design, which shall include:

(i) the anticipated surface treating pressure range;

(ii) the maximum injection treating pressure;

(iii) the estimated or calculated fracture length and fracture height.

(f) Upon prior request via Application for Permit to Drill (Form 1), and/or a comprehensive drilling/completion/recompletion plan, or by Well Completion Report (Form 3), or by Sundry Notice (Form 4), and/or by written letter to the Supervisor justifying and documenting the nature and extent of the proprietary information, the protection shall be provided consistent with Wyo. Stat. Ann. § 16-4-203(d) (v) of the Wyoming Public Records Act for the following records: “trade secrets, privileged information and confidential commercial, financial, geological or geophysical data furnished by or obtained from any person.”

(g) The injection of volatile organic compounds, such as benzene, toluene, ethylbenzene and xylene, also known as BTEX compounds or any petroleum distillates, into groundwater is prohibited. The proposed use of volatile organic compounds, such as benzene, toluene, ethylbenzene and xylene, also known as BTEX compounds or any petroleum distillates for well stimulation into hydrocarbon bearing zones is authorized with prior approval of the Supervisor. It is accepted practice to use produced water that may contain small amounts of naturally occurring petroleum distillates as well stimulation fluid in hydrocarbon bearing zones.

(h) The Owner or Operator or service company shall provide the Supervisor, on a Well Completion or Recompletion Log (Form 3), or on a Sundry Notice (Form 4) for an existing well, the following post well stimulation detail:

(i) The actual total well stimulation treatment volume pumped;

(ii) Detail as to each fluid stage pumped, including actual volume by fluid stage, proppant rate or concentration, actual chemical additive name, type, concentration or rate, and amounts;

(iii) The actual surface pressure and rate at the end of each fluid stage and the actual flush volume, rate and final pump pressure;

(iv) The instantaneous shut-in pressure, and the actual 15-minute and 30-minute shut-in pressures when these pressure measurements are available;

(v) In lieu of (i) through (iv) above, Owner or Operator shall submit the actual well stimulation service contractor’s job log, without any cost/pricing data from the field ticket, or an Owner or Operator representative’s well treatment job log or any report providing the above required information. If information on the actual field ticket describes the Owner’s or Operator’s proprietary completion design and/or well stimulation design, confidentiality may be afforded per subsection (f) above.

(i) During the well stimulation operation, the Owner or Operator shall monitor and record the annulus pressure at the bradenhead. If intermediate casing has been set on the well being stimulated, the pressure in the annulus between the intermediate casing and the production casing shall also be monitored and recorded. A continuous record of the annulus pressure during the well stimulation shall be submitted on Well Completion or Recompletion Log (Form 3) or on a Sundry Notice (Form 4).

(i) If during the stimulation, the annulus pressure increases by more than five-hundred (500) pounds per square inch gauge (psig) as compared to the pressure immediately preceding the stimulation, the Owner or Operator shall verbally notify the Supervisor as soon as practicable but no later than twenty-four (24) hours following the incident. The Owner or Operator shall include a report containing all details pertaining to the incident, including corrective actions taken, as an attachment to the Well Completion report (Form 3).

(j) The Owner or Operator shall provide information to the Supervisor on Well Completion Report (Form 3) or on Sundry Notice (Form 4) as to the amounts, handling, and if necessary, disposal at an identified appropriate disposal facility, or reuse of the well stimulation fluid load recovered during flow back, swabbing, and/or recovery from production facility vessels. Storage of such fluid shall be protective of groundwater as demonstrated by the use of either tanks or lined pits. If lined pits are utilized to store fluid for use in well stimulation, or for reconditioning, for reuse, or to hold for appropriate disposal, then the requirements of Chapter 4 Section 1 of these rules shall be met to protect wildlife and migratory birds.

CHAPTER 4

ENVIRONMENTAL RULES, INCLUDING UNDERGROUND INJECTION CONTROL PROGRAM RULES FOR ENHANCED RECOVERY AND DISPOSAL PROJECTS

Section 1. Pollution and Surface Damage (Forms 14A and 14B).

(i) reserve pits on the drilling location;

(ii) reserve pits off the location within a lease, unit or communitized area permitted by Owner or unit Operator drilling the well;

(iii) produced water retention pits, skim pits, and emergency production pits including the following:

(A) pits associated with approved disposal wells which act as fluid storage, filtering or settling ponds prior to underground disposal in a Class II well;

(B) pits constructed for disposal of produced fluids in connection with oil and gas exploration and production used as part of the filtering and/or settling process upstream of an National Pollutant Discharge Elimination System (NPDES) discharge point;

(C) pits constructed in association with heater treaters or other dehydration equipment used in production, such as free water knockouts, or first, second and third stage separators;

(D) pits constructed for blowdown or gas flaring purposes.

(iv) pits constructed for the storage and treatment of heavy sludges, oils, or basic sediment and water (BS&W) in connection with production operations;

(v) temporary pits constructed during well workovers, including spent acid and frac fluid pits;

(vi) permanent or temporary emergency use pits;

(vii) miscellaneous pits associated with oil and gas production not listed above.

(c) Permits. In addition to the permits required by the Commission and the Bureau of Land Management, the following agencies may also have authorities over the management of oil field wastes:

(i) The Wyoming Department of Environmental Quality administers the following regulatory programs:

(A) commercial ponds and pits used for the retention and disposal of fluids;

(B) Class I hazardous waste and nonhazardous waste wells under the Underground Injection Control Program;

(D) regulations for releases of oil and hazardous substances into waters of the state and Wyoming Contingency Plan;

(E) roadspreading, landspreading, and landfarming of exploration and production wastes;

(F) solid waste disposal facilities operated by municipalities and privately by the oil and gas industry;

(G) cathodic protection wells;

(H) underground storage tanks;

(I) sanitary waste treatment systems; and

(J) air quality standards.

(ii) The Bureau of Land Management administers surface operating standards for oil and gas exploration and development on federal lands, Indian lands and/or leases in Wyoming;

(f) The Supervisor may administratively approve fieldwide or areawide applications covering the standardized construction and operation of earthen retaining pits.

(g) Optional Form 18 (Soil & Groundwater Information), is provided for the Owner’s/Operator's use, if they choose, to supplement Forms 14A and 14B to record and document shallow groundwater and subsoil types when they drill shallow holes such as the rat hole, mouse hole or conductor on the drill site. ~~This~~ Form 18 can be used to demonstrate that a well is not in a critical area where groundwater is at a depth of less than twenty feet (20') or in an area that has permeable subsoil.

(m) Application May be Done in the Following Manner:

(i) submitting Form 14B application for individual new (concurrent with filing an Application for Permit to Drill, (Form 1)) or existing wells;

(ii) submitting Form 14B application for a field or unit wide permit, listing all wells meeting any of the above criteria.

(i) submittal of a Form 14B application for a field or individual well basis to receive a one-time approval to construct and use workover and completion pits. As long as the Owner or Operator complies with the approved Form 14B terms and conditions, no further application/notice will be required for future construction and use of workover and completion pits.

(ii) notification to the Supervisor via Sundry Notice (Form 4), subsequent to the construction and use of a workover or completion pit. This must be submitted within thirty (30) days of completion of operations and include the following information:

(A) schematic diagram showing the location of the workover or completion pit in relation to existing production equipment;

(B) length of time the pit was in use; and

(i) The information required for submittal includes a standard water

(w) Construction. Lining of pits with reinforced oilfield grade material, compatible with the waste to be received, will be required by the Supervisor or Commission under certain circumstances including, but not limited to, pits proposed to be constructed in areas defined as critical as well as on sites with sandy soils, shallow groundwater, in groundwater recharge areas, or sites immediately adjacent to the Green River or the Colorado River drainage and other sensitive environments or circumstances identified by the Commission. Pits proposed to be constructed in the Powder River Basin for percolation of water produced in association with the recovery of coalbed methane gas into shallow sands or aquifers may be considered by the Commission if the applicant can demonstrate their operation will comply with water quality standards of the Department of Environmental Quality. When required by Supervisor, the Commission staff will provide applicable information to the Department of Environmental Quality for their co-review. Pits constructed in fill or those used to retain oil base drilling muds, high-density brines, and/or completion or treating fluids must be lined. Pits constructed to retain produced water with a total dissolved solids concentration in excess of ~~10,000~~ten thousand milligrams per liter (10,000 mg/l) must be lined. The Supervisor, on a case by case basis, will determine if pits retaining water with a total dissolved solids concentration less than ~~10,000~~ten thousand milligrams per liter (10,000 mg/l) will be required to be lined. The Commission staff must be provided at least twenty-four (24) hours notice of commencement of construction and/or of closure of pits so that an inspection can be made. Additionally, the following construction standards for pits are required to be met or exceeded:

(iii) Slopes for soil mixture liners or recompacted liners shall not exceed 3:1. Slopes for manufactured liners shall not exceed 1:1.

(iv) Reasonable provisions for protection of liners during filling and emptying activities must be included in the construction plans.

(vi) Liner edges must be secured. The Commission ~~prefers~~ requires that liner edges be placed in a trench which is deep enough to receive approximately one foot (1') of compacted soil which will anchor the material.

(x) Operation. Owners or Operators will take such reasonable measures to manage pits so that ~~they~~ the pits are used solely for retention or disposal of fluids associated with the operation for which the pit was originally constructed and for which the permit was granted. Reserve pits cannot be used as production pits; separate pits must be constructed and permitted. Permits are granted taking into consideration the salinity, hydrocarbon content, pH, and other characteristics of the fluids which may be detrimental to the environment if they were to be directly applied to soils. Use of a pit by persons other than the Owner or Operator is prohibited unless approved by the Supervisor and by the Owner or Operator of the pit. Pits shall not receive, collect, store, or dispose of any wastes that are listed or defined as hazardous wastes and regulated under Subtitle C of RCRA, except in accordance with state and federal hazardous waste laws and regulations. The pit permit or approval is automatically canceled if these provisions are not met. See Appendix C of these rules for additional information.

(z) Where feasible, Owners/Operators are encouraged to increase the use of solids removal equipment to minimize drilling fluid waste, where practical. The Commission encourages the recycling of drilling fluids and by administrative action approves the transfer of drilling fluids intended for recycling. When removed as a product for use in a drilling operation on another lease, drilling fluid is not classified as a waste. If federal leases are involved, the Owner or Operator must obtain the approval of the BLM. The Supervisor requires the following information be included on the Form 14B or on a Sundry Notice (Form 4) estimated volume, estimated date of transfer, mud recap, analyses which include at a minimum, pH, chlorides, and oil and grease. To protect shallow groundwater, drilling muds with chlorides testing in excess of 3,000 parts per million or those containing hydrocarbons cannot be used in drilling operations until after the surface casing has been set.

(bb) Reserve pits shall be completely fenced and, if oil or other harmful substances are present, netted or otherwise secured at the time the rig substructure has been moved from the location in a manner that avoids the loss of wildlife, domestic animals, or migratory birds. Because of the same concerns, produced water pits must be fenced and, if oil or other harmful substances are present, netted or secured in such a manner as to provide protection to wildlife, domestic animals, or migratory birds. The Commission recommends netting as the preferred means of securing pits.All pits shall be fenced completely and for any produced water pit, workover, completions, or emergency pit found containing oil, sheens, condensate, other hydrocarbons or chemicals proven to be hazardous to public health, safety and welfare, or to wildlife, domestic animals, or migratory birds, the Owner or Operator shall have these fluids removed as soon as practical or in accordance with Chapter 3, Section 1(dd) of these rules. If timely fluid removal is not possible, the pit should be netted or otherwise secured in a manner that avoids the loss of wildlife, domestic animals, or migratory birds. Alternative methods of netting or securing pits may be authorized at the discretion of the Supervisor. See Appendix A for information relative to the Migratory Bird Treaty Act. Owners or Operators shall provide for devices on hydrogen sulfide flare stacks to discourage birds from perching. The Supervisor may make additional requests for security when operations are conducted in close proximity to residences, schools, hospitals, or other structures or locations where people are known to congregate. For reserve pits, see subsection (jj) of this Section.

(cc) Blowdown, flare, and emergency pits cannot be used for long-term storage or disposal.

(ff) Testing. For the purpose of its regulation of oilfield pits and wastes, the Commission recognizes, and requires when it deems appropriate, the following tests:

(i) Standard Water Analysis - Form 17

(ii) Toxicity Characteristic Leaching Procedures (TCLP), EPA Method 1311; July 1992.

(iii) Oil and Grease or Total Petroleum Hydrocarbon (TPH), EPA Method 418.1; 1978.

(iv) Total Petroleum Hydrocarbon, Condensate and High Gravity Crude, EPA, Method 8015, Gasoline and Diesel Range; July 1992.

(v) United States Department of Agriculture, Sodium Absorption Ratio (SAR), Exchangeable Sodium Percentage (ESP); 1984.

(vi) Wyoming Oil and Gas Commission Leachate Test Procedure; April 27, 1999.

(hh) Sampling procedures are subject to review by the Supervisor because variations in sampling protocol allow differentiation of waste fluid compositions due to normal distribution.

(iii) Closure standards and testing requirements for all pits will be determined by the Supervisor based upon site-specific conditions;

(v) When drilling with oil-based muds, ~~Oil~~ oil-based mud solids must be removed and disposed in a permitted facility, ~~or mixed with soil to less than one percent (1%) oil and grease content by weight at burial,~~ solidified using a Commission approved commercial pit treatment, or roadspread, or landspread, or landfarmed or bioremediated in accordance with Commission or Wyoming Department of Environmental Quality~~DEQ~~ rules. Burial after encapsulation or solidification will be approved if the stabilized mixture contains less than ten milligrams per liter (10 mg/l) leachable oil and less than five thousand milligrams per liter (5,000 mg/l) leachable dissolved solids using the Wyoming Leachate Test defined in Chapter 4, Section 1(ff), Testing.

(jj) ~~Reserve~~ pits shall be completely fenced and, those which contain oil or other harmful substances, netted or otherwise secured in a manner that prevents the loss of wildlife, domestic animals, or migratory birds at the time the rig substructure has been moved from the location.For reserve pits containing oil, sheens, condensate, other hydrocarbons or chemicals proven to be hazardous to public health, safety and welfare, or to wildlife, domestic animals, or migratory birds, the Owner or Operator shall have these fluids removed as soon as practical. If fluid removal is not possible in a timely manner, the reserve pit shall be fenced completely and netted or otherwise secured at the time the rig substructure has been moved from the location in a manner that avoids the loss of wildlife, domestic animals, or migratory birds. Alternative methods of netting or securing pits may be authorized at the discretion of the Supervisor.

(oo) Commercial Treatment for Pits. Any person, corporation, or company desiring to chemically and/or mechanically treat pits in Wyoming must apply for and receive permission to do so from the Commission after a public hearing. Types of approved treatments include enhanced evaporation, solidification, centrifuging, etc. The Commission will approve those methods that can successfully demonstrate a capability to accomplish some or all of the following criteria:

(i) compressive strengths that are appropriate for post drilling or production activities;

(ii) reductions in weight or volume of waste;

(iii) removal or reduction of harmful properties of waste; and

(iv) reduction or elimination of mobility or leachability of constituents.

(pp) An Operator or Owner wishing to treat pits for closure must submit, to the Commission on a Sundry Notice (Form 4), a plan outlining the objectives (e.g. waste volume reduction, toxicity reduction/removal, chemical fixation, etc.) that the treatment is designed to achieve. The Commission's approval will be based upon the selected method's demonstrated capability to achieve the objectives described in the sundry notice. Consideration must be given to applicable federal, local, or state permits or regulatory requirements when performing mechanical or chemical treatment of pit wastes. A list of approved methods and vendors is available from the Commission.

(qq) Reclamation. Reclamation of unused production pits or any other temporary retaining pits, including reserve pits, shall be completed in as timely a manner as climatic conditions allow. Production pit areas and reserve pits will be reclaimed after they have dried sufficiently after the removal of any oil, sheens, or other hydrocarbons, or if they contain chemicals harmful to wildlife, domestic animals and migratory birds, or if proven to be hazardous to public health, safety and welfare, and no later than one (1) year after the date of last use, unless the Supervisor grants an administrative variance for just cause and after Oil & Gas Conservation Commission staff inspection. Because their construction may be a benefit to landowners, pits used solely for the retention of water produced in association with the recovery of coalbed methane gas in the Powder River Basin may be left open with the approval of the Supervisor and subject to Chapter 3, Section 4(h)(ii) of these rules. A statement of acceptance which clearly indicates the surveyed location, precise size of the pit, and willingness on the part of the landowner to accept all future responsibility for the structure and its contents, accompanied by a current written cost estimate for pit closure prepared by a Wyoming registered professional engineer with expertise in surface pit remediation, must be provided to and accepted by the Supervisor. The landowner’s signature on the statement of acceptance must be notarized.

(ss) One-~~time~~ Time Downhole Disposal. By formal order or by administrative action the Commission may approve of one-time disposal of a limited volume of fluid produced in the course of drilling operations from one specific well. This is not an operation designed for downhole disposal of drilling fluids from offsetting or additional wells. This application is not to be confused with the approval of a Class II well for underground disposal of water produced in association with the recovery of hydrocarbons under the Underground Injection Control Program. Disposal by injection shall not be initiated until such time as approval has been granted by the Commission.

(tt) An application for approval of reserve pit fluid injection shall demonstrate that water in the proposed disposal interval is in excess of ~~10,000~~ten thousand milligrams per liter (10,000 mg/l) total dissolved solids or has received an aquifer exemption under Chapter 4, Section 12 of these rules and that fresh water or Underground Sources of Drinking Waters (USDW) will not be influenced by the disposal operation. Data to support this finding shall include, but not be limited to, the following:

(i) full detail of the casing, cementing, and completion of the well including cement logs;

(ii) formation tops and depths to the deepest USDW;

(iii) copies of the mud recaps, appropriate analyses of the fluid, and an estimate of the volume of the fluids to be disposed;

(iv) abandonment procedure and demonstration that the disposal zone can be isolated;

(v) maximum disposal pressure anticipated and information relative to fracture pressures of the confining zone. Pump pressure must be limited so that fractures will not extend to the base of a USDW and/or a groundwater aquifer;

(vi) the statement that the Owner or Operator will make arrangements to provide at least twenty-four (24) hours notice of disposal operation so that a Commission technician might be present as a witness; and

(vii) statement that on completion of the work a temperature survey or suitable alternative will be run to show fluid was placed in the proposed interval.

(uu) On completion of the work, the applicant must file a Sundry Notice (Form 4), summarizing the disposal operation.

(vv) The Commission or its staff may designate conditions other than those listed in this rule, as it deems necessary to ensure safe disposal of these fluids. The application shall be approved if the application for a permit is complete and if water in the proposed interval has total dissolved solids in excess of ~~10,000~~ten thousand milligrams per liter (10,000 mg/l) and fresh water or Underground Sources of Drinking Water will not be influenced by the disposal operation.

Section 2. Water Shut-offs.

Section 3. Accidents, Spills, and Fires.

(i) contained spills of less than one (1) barrel (42 gallons) are not required to be verbally reported. The Owner or Operator shall maintain a record of such spills, the volume and actions taken to contain, remove and properly dispose and have the records available for review by the Commission upon request.

(ii) contained spills of greater than one (1) barrel (42 gallons) and less than ten (10) barrels (420 gallons) are not required to be verbally reported. The Owner or Operator shall file a written report within fifteen (15) working days of the spill.

(iii) contained spills equal to or greater than ten (10) barrels (420 gallons) shall be verbally reported to the Commission no later than the next business day following discovery of the incident. The Owner or Operator shall file a written report within fifteen (15) working days of the spill.

Section 4. Workmanlike Operations.

(i) Take reasonable steps to prevent accumulation and promptly remove any materials that may be deemed to be a fire hazard., ~~accumulations~~ Accumulations of oil, or hydrocarbon-contaminated soil should be promptly removed from the vicinity of well locations, wellheads/stuffing boxes, lease tanks and inside bermed areas, and/or other production equipment and pits;

(iv) Locate all permanent ignition sources, such as heater treaters, no closer than one hundred feet (100') from the wellhead;

(v) Locate wellheads, pumping units, pits, production tanks and/or associated production equipment no less than three hundred fifty feet (350') from any residences, schools, hospitals, or other places where people are known to congregate. On state and private surfaces, locate wellheads, pumping units, pits, production tanks and/or associated production equipment no less than three hundred fifty (350) feet from any residence, school, hospital, or other places as determined by the Supervisor. The Supervisor may impose greater distances for good cause and, likewise, grant exception to the 350-foot rule;

(ix) 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;

(x) 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 regulations.

(b) The Owner/Operator shall install and maintain all electrical equipment located in and around an oil or gas well to comply with the ~~2005~~ National Electrical Code in effect for the year electrical conductors were installed and energized, and ~~as adopted by~~ the Department of Fire Prevention and Electrical Safety Act, Wyo. Stat. Ann. §§ 35-9-102(a)(viii) and 35-9-123(a)(ii). Operator shall provide ~~WOGCC~~ the Oil and Gas Conservation Commission at least twenty-four (24) hours notice prior to installation of underground electrical conductors outside of its facilities, fenced enclosures, or posted areas. With routine maintenance, emergency or repair work, the Operator shall provide the ~~WOGCC~~ Oil and Gas Conservation Commission notice within twenty-four (24) hours of completing the electrical work.

Section 5. Underground Disposal of Water.

(a) 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 Chapter 5, ~~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 seventy-five dollar ($75.00) annual fee on all new and old disposal wells.

(b) Disposal Well Permits. The applicant shall ~~have the burden of demonstrating~~demonstrate by compliance with Chapter 3, Section 22 of these rules 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.

(c) The application to dispose of salt water, brackish water, or other water unfit for domestic, livestock, irrigation, or other general uses shall include:

(i) a plat showing the location of the disposal well or wells, including abandoned and drilling wells and dry holes, and the names of all lease Operators or Owners and surface owners within a one-half (1/2) mile radius from the proposed disposal well or wells;

(ii) an affidavit showing that said lease Operators or Owners and surface owners within a one-half (1/2) mile radius have been provided a copy of the application for disposal;

(iii) 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;

(iv) 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;

(v) a statement specifying the source of water to be injected;

(vi) the estimated minimum and maximum amount of water to be injected daily;

(vii) the average and maximum disposal pressure;

(viii) 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;

(ix) standard laboratory analysis of the water to be disposed and the water in the formation into which disposal is taking place. The method of water analysis is subject to review by the commission or Supervisor. Water Analysis Report (Form 17) illustrates the minimum parameters for which water must be analyzed. Other reporting formats which include this minimum information may be accepted;

(x) a reference to the Commission order exempting the aquifer that is to receive the injected fluid;

(xi) the applicant shall provide for a one-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 one-quarter (1/4) mile radius;

(xii) the depth and areal extent of all usable fresh and potable water (USDW) underlying the area proposed for exemption;

(xiii) 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.

(B) As an alternative to the pressure test, the Owner or Operator may use any test or combination of tests approved by EPA.

(A) cementing records which shall only be valid for disposal wells in existence prior to present date;

(B) tracer surveys;

(D) temperature surveys; or

(E) in lieu of (A) through (D), any other test or combination of tests approved by EPA.

(e) 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 3, Section 14 of these rules.

(h) 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 6. Geophysical/Seismic Operations.

(a) General. Before a geophysical/seismic company conducts ~~surface shooting~~ operations, he the representative shall give notice to an occupant of every inhabited dwelling within a one-mile (1) 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.

(b) A representative of the client company and the geophysical/seismic company shall meet with the staff of the Commission at the office of the State Oil and Gas Supervisor to file an application for a permit to conduct seismic operations before beginning seismic ~~shot hole~~ operations in the State of Wyoming. No seismic operation shall be conducted without such a permit and no permit shall be issued until the applicant has demonstrated compliance with the requirements of the Split Estates Act, if the application is subject to the Split Estates Act, as contained within Chapter 3, Section 8(d) of these rules. The Supervisor has discretion to waive the requirement of the pre-permit meeting. 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 geophysical/seismic company 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 geophysical/seismic company, any independent hole pluggers, or client company from properly plugging existing seismic holes, but does prohibit them from drilling any more.

(d) Seismic holes shall be re-entered only in compliance with the regulations of the Wyoming Occupational Health and Safety Commission and other applicable law.

(ef) Permitting. Before beginning geophysical operations ~~other than seismic shot hole operations~~, the geophysical/seismic company shall file ~~a notice of intention to do so~~ an application for a permit for seismic operation (Form 15) with the Commission. This ~~notice~~ application shall also contain a verified statement (Form 1A) that said company has complied with the requirements of the Split Estates Act, if applicable. the application is subject to the Split Estates Act, contained within Chapter 3, Section 8(d). 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 (1”) equals two (2) miles showing the location of the project.

(fg) The application for a permit for seismic ~~shot hole~~ operations (Form 15) must include the following information, as appropriate:

(i) 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 (1”) to two (2) miles that shows the proposed location of the lines or grid;

(ii) the name, 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;

(iii) the name, permanent address, and phone number of the geophysical/seismic company and ~~his~~ its local representative whom the Commission can contact about the seismic activity;

(iv) the name, phone number, and permanent address of the hole-plugging contractor, if different from the geophysical/seismic company;

(v) a detailed description of the hole plugging procedures;

(vi) the anticipated starting date of seismic and plugging operations;

(vii) the anticipated completion date of seismic and plugging operations;

(viii) a description of the identifying mark that will be on the non-metallic plug to be used in the plugging of the seismic hole.

(ix) The application shall be accompanied by a Bureau of Land Management Surface-Minerals Management 7.5 Minute Quad map with a scale of one inch (1” to twenty-four thousand feet (24,000’) that shows the proposed location of the lines or grid.

(gh) Bonding. Before conducting geophysical/seismic operations, either directly or indirectly under contract, the client company must file and have approved by the Commission a surety bond in the amount of fifty thousand dollars ($50,000.00) except where a client company has filed an approved bond in accordance with Chapter 3, Section 4 of these rules. The condition of such bond shall comply with the ~~Oil and Gas~~Wyoming Conservation ~~Law~~Act, 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 client company has complied with the ~~Oil and Gas~~Wyoming Conservation ~~Law~~Act, the Commission's rules, and the orders of the Commission and Supervisor and/or his duly authorized representatives. Upon verified application, or for just cause, the Supervisor may waive, modify, or increase this bonding requirement for the client company.

(hi) Before beginning geophysical operations, the geophysical/seismic company must file and have approved by the Commission a bond in the amount of fifty thousand dollars ($50,000.00). The condition of such bond shall comply with the ~~Oil and Gas~~Wyoming Conservation ~~Law~~Act, 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/seismic company has complied with the ~~Oil and Gas~~Wyoming Conservation ~~Law~~Act, the Commission's rules, and the orders of the Commission and Supervisor and/or his duly authorized representatives. Upon verified application, or for just cause, the Supervisor may waive, modify, or increase this bonding requirement for geophysical/seismic companies.

(ij) Persons or other entities who are contracted to plug seismic holes and are not employees of the geophysical/seismic company 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 ten thousand dollars ($10,000.00). The condition of such bond shall comply with the Wyoming Conservation Act, the regulations of this Commission, the orders of this Commission, the State Oil and Gas Supervisor, and/or his duly authorized representatives. The obligation of the bond shall not be discharged until the independent hole pluggers have complied with the ~~Oil and Gas~~Wyoming Conservation ~~Law~~Act, the Commission's rules, and the orders of the Commission and Supervisor and/or his duly authorized representatives. Upon verified application, or for just cause, the Supervisor may waive, modify, or increase this bonding requirement for the independent hole pluggers.

(jk) The client company shall be held responsible along with the geophysical/ seismic company and any independent hole pluggers for conducting the operation in compliance with the Commission's rules and orders, the Supervisor's orders, and the Wyoming Conservation Act, and are subject to the penalties provided by the Wyoming Conservation Act for the failure to comply with such rules, statutes, and orders. Bonds will be attached in the following order:

(i) for failure to comply with the ~~Oil and Gas Conservation Law~~Wyoming Conservation Act, the Commission's rules, and the orders of the Commission and Supervisor and/or his duly authorized representative governing the proper plugging of holes or other resource damage directly resulting from that activity, the independent hole plugger;

(ii) for failure to comply with the ~~Oil and Gas Conservation Law~~Wyoming Conservation Act, the Commission's rules, and the orders of the Commission and Supervisor and/or his duly authorized representative governing all geophysical/seismic operations, the geophysical/seismic company; and

(iii) for failure to comply with the ~~Oil and Gas Conservation Law~~Wyoming Conservation Act, the Commission's rules, and the orders of the Commission and Supervisor and/or his duly authorized representative governing all geophysical/seismic operations, the client company.

(kl) Client companies will be notified, in writing, when geophysical/seismic companies' and independent hole pluggers' activities have been determined to be in compliance and bonding liability discharged. The client company's bond will be discharged simultaneously with discharge of the geophysical/seismic company's bond.

(lm) Reports. Upon completion of seismic shot hole activity or at thirty (30) day intervals after the work has commenced, whichever occurs first, the geophysical/seismic company shall file with the Commission a report of the completion or progress of the seismic project. The final completion report must include a statement that all work has been performed in compliance with the application for a permit to perform seismic activity and permit provisions and specific conditions of approval, if any. Said report shall be in affidavit form as provided on Form 15A. This final filing shall include a ~~71/2 or 15~~7.5-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. Upon completion of geophysical activity other than shot hole operations, the geophysical/seismic company shall provide the Commission with verbal or written notice of such completion of the permitted project.

(mn) 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 Wyoming Conservation Act, and the orders of the Commission or Supervisor. The Commission staff may advise the affected surface owner of seismic lines and the exploration method used.

(no) 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.

(op) Geophysical/seismic companies 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.

(pq) Plugging. Bentonite materials used in seismic hole plugging shall be derived from naturally occurring untreated, high swelling sodium bentonite which consists principally of the mineral montmorillonite. Numerical values for physical requirements, a list of equipment and material for testing, testing procedures and recommended guidelines are all found in Appendix H of the Commission's Rules and Regulations ~~Manual~~. Care shall be taken by the seismic company to ensure bentonite chip placement avoids bridging during placement. The Supervisor may require drill-out, use of alternative materials, or hole abandonment.

(qi) The non-metallic plug used in the plugging of seismic holes shall be imprinted with the name of the geophysical/seismic company responsible for the plugging of the hole. Initials or other identifying marks may be imprinted on the plug with the Supervisor's approval.

(rii) Unless the geophysical/seismic company can prove to the satisfaction of the Supervisor that another method will provide better protection to groundwater and long-term land stability, seismic shot hole operations shall be conducted in the following manner:

(i~~) 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. The provisions of this subsection may be modified by any reasonable written agreement between the geophysical/seismic company and the surface owner.~~

(iii) Except as provided in subsection (xi), when water is used in conjunction with the drilling of seismic shot 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 guideline, Appendix H. Cuttings not added to the hole are to be disposed of in accordance with subsection (r)(~~vii~~iii), Reclamation, of this section. Any other suitable plugging material commonly used in the industry may be substituted, as long as it meets the criteria in Appendix H to these rules, upon approval of the State Oil and Gas Supervisor.

(~~iii~~iv) The hole will be filled with the coarse ground bentonite from the top of the explosive charge up to a depth above the final water level except where the final water level will be within three feet (3') of the surface. No bentonite shall be placed within three feet (3') of the surface. Cuttings shall be added from the top of the bentonite to the surface. A non-metallic plug of appropriate size will be set at a depth of three feet (3') below surface. Cuttings added above the non-metallic plug shall be tamped.

(iv) 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 feet (3'), and setting the non-metallic plug topped with more cuttings and soil as per subsection (~~iii~~v). Digging a second hole to fill the shot hole above the non-metallic plug, and scraping the surface to acquire cuttings to fill the shot hole are prohibited. A small mound will be left over the hole for settling allowance.

(vi) All shot holes must be plugged on the same day they are drilled and loaded. No shot holes may be left unplugged overnight.

(vii) The existing cap leads will be cut off below ground level. The hole shall not be plugged until cap leads have been tested. In the case of bad caps or lead wires, no more than one-half (1/2) charge shall be lowered and tested. The hole shall be plugged in accordance with this section and then detonation shall occur before or during recording stages. Holes that fail to detonate shall be marked as per subsection (r)(vi) of this section.

(vii) 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.

(r) Seismic Reclamation.

(i) Site reclamation must be initiated within one (1) year of completion of record or bond forfeiture will be initiated as provided under Chapter 3, Section 7 of these rules. For just cause, additional time may be granted on application to the Supervisor.

(ii) The existing cap leads will be cut off below ground level.

(iv) All trash, including lathes, flagging, magnets, drilling and plugging materials must be picked up during or following recording.

(v) All blowouts, rifled out, or surface-damaged shot holes must be repaired immediately during or following the recording state.

Section 7. Waterflooding and Other Recovery Operations.

(a) Waterflooding and other recovery operations involving the introduction of extraneous forms of energy into any pool, repressuring, cycling or recycling operations, including the extraction and separation of liquid hydrocarbons from natural gas in connection therewith, is permitted only upon order of the Commission, or upon approval of the Supervisor, obtained pursuant to an application therefore filed in accordance with Chapter 5, ~~the~~ Rules of Practice and Procedure. This provision is applicable to wells which are proposed to be converted to injection; as well as new wells drilled solely for the purpose of underground injection. Orders authorizing existing injection wells shall remain valid unless revoked by the Commission for just cause. In addition, there is assessed an annual fee of seventy-five dollars ($75.00) on all enhanced recovery wells.

(i) a plat showing the area involved together with the well(s) which includes drilling well(s) and dry and abandoned well(s) located thereon, all properly designated;

(ii) a list of all lease Operators or Owners and surface owners within a one-half (1/2) mile radius of the proposed injection well(s);

(iii) an affidavit showing that said lease Operators or Owners and surface owners within a one-half (1/2) mile radius have been provided a copy of the application for injection;

(iv) a full description of the particular operations for which approval is requested;

(v) the pools from which wells are producing or have produced;

(vi) the name, description, and depth of the pool or pools to be affected;

(vii) the log of the injection well(s), or such information with respect thereto as is available;

(viii) a description of the casing of the injection well, or the proposed casing program, and the proposed method for testing casing before use of the injection wells;

(ix) a statement as to the type of fluid to be used for injection, its sources, and the estimated amounts to be injected daily. The Commission’s Form 17 (Water Analyses Report) illustrates the minimum parameters for which water must be analyzed. Other reporting formats which include this minimum information may be accepted;

(x) the average and maximum injection pressure;

(xi) evidence and data to support a Commission finding that the proposed injection 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;

(xii) standard laboratory analyses of the water to be injected and the water in the formation into which fluid is being injected. The method of water analysis is subject to review by the Commission or the Supervisor;

(xiii) the name and address of the Owner/Operator ~~or the names and addresses of the Operators of the project~~;

(xiv) a reference to the Commission order exempting the aquifer that is to receive the fluid;

(xv) the applicant shall provide for a one-quarter (1/4) mile radius of investigation for mechanical conditions of all wells which have penetrated the injection zone surrounding a proposed injection well. Specifically known and documented geological features may limit the need to review all wells within a one-quarter (1/4) mile radius; and

(xvi) the depth and areal extent of all usable fresh and potable water (USDW) underlying the area proposed for exemption.

(d) Injection Well Integrity Demonstration. For the purpose of this rule, a mechanical integrity test of an injection well is a test designed to determine:

(i) if there is a significant leak in the casing, tubing, or packer of the well, and

(ii) if there is significant fluid movement into an underground source of drinking water through vertical channels adjacent to the wellbore.

(ii) As an alternative to the pressure test, the Owner or Operator may use any test or combination of tests approved by EPA.

(i) cementing records which shall only be valid for injection wells in existence prior to present date;

(ii) tracer surveys;

(iii) cementing records with a cement bond log or other acceptable cement evaluation log;

(iv) temperature surveys;

(v) In lieu of (i) through (iv), any other test or combination of tests approved by EPA.

(i) 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 3, Section 14 of these rules.

(l) Injection operations must commence within one (1) year of the approval date of the injection application or the approval shall be null and void.

Section 8. Casing and Cementing of Injection Wells.

(b) The provisions of Chapter 3, Section 22 of these rules, shall apply to all injection wells.

Section 9. Notice of Commencement and Discontinuance of Injection Operations.

(a) The following provisions shall apply to all injection operations:

(i) Immediately upon the commencement of injection operations, the Owner/Operator shall notify the Supervisor of the injection date;

(ii) Within ten (10) days after the discontinuance of injection operations, the Operator shall notify the Supervisor of the date of such discontinuance and the reasons therefore; and

(iii) Before any injection well shall be plugged, notice shall be given the Supervisor by the Owner/Operator of said well.

Section 10. Report of Subsurface Injections (Forms 2, ~~and Form~~ 16A & 16B).

Whenever any Owner/Operator shall inject water, air, gas, or any substance into a pool for any purpose (excluding fracturing, acidizing, or other similar treatment elsewhere required to be reported on Form 4), he shall report to the Supervisor the type and source of the injected substance, the total amount injected, and the injected pressures and casing-tubing annulus pressure during injection if the Owner/Operator elects the monitoring test requirements of Section 7 of this chapter on a monthly basis. Computerized forms submitted in lieu of Form 2 or Forms 16A and/or 16B must contain the same information as that required on the forms and must be approved for format by the Commission staff. Enhanced recovery projects shall be reported on ~~the~~ Form 2 and disposal well operations shall be reported on Form 16A or Form 16B.

Section 11. UIC Variances.

Section 12. Aquifer Exemption.

(i) it is mineral, hydrocarbon, or geothermal energy producing;

(ii) it is situated at a depth or location which makes recovery of fresh and potable water economically or technologically impractical;

(iii) it is so contaminated that it would be economically or technologically impractical to render the water fit for use as fresh and potable water;

(iv) it is located over a mining area subject to subsidence or catastrophic collapse; or

(v) it has a total dissolved solids (TDS) of more than five thousand (5,000) and less than ~~10,000~~ten thousand milligrams per liter (10,000 mg/l) and is not reasonably expected to be used as fresh or potable water.

Section 13. Natural Gas Processing Facilities and Pits.

Section 14. Open Pit Storage of Oil.

The Owner/Operator shall not, except during an emergency, 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 15. Production Facilities and Natural Gas Facility Equipment and Flowline Abandonment.

(i) purge with fresh water or inert gases, drain and depressure, then,

(ii) seal the line or cap at both ends. If not removed, the Owner or Operator will be required to mark remaining piping to identify as purged piping.

(c) If underground flowlines or facility piping are abandoned in place, the Owner or Operator shall meet the following requirements:

(i) purge with fresh water or inert gases, drain and depressure the flowline and piping; and

(ii) seal the line or cap at both ends; and

(iii) bury at least twenty-four inches (24”) below the surface and restore the surface contour, unless the Supervisor or the surface land owner agrees otherwise in writing.

CHAPTER 5

RULES OF PRACTICE AND PROCEDURE BEFORE

THE WYOMING OIL AND GAS CONSERVATION COMMISSION

Section 1. Adoption of Rules.

(a) Sections 1 through 19 of this chapter shall be known and designated as the "Rules of Practice and Procedure" before the Wyoming Oil and Gas Conservation Commission and shall apply in all proceedings before the Commission or its examiners relating to the conservation of oil and gas, and in the administration by the Commission of the Wyoming Conservation ~~Law~~ Act and the rules adopted by this Commission thereunder.

(b) Notice of a proposed change and/or addition to these rules and regulations requires forty-five (45) days advance notice prior to the hearing. In compliance with the Administrative Procedures Act, such notice shall include a statement of the proposed change and/or addition to the rules, the time, and place of the hearing.

Section 2. Commencement of Proceedings.

Proceedings may only be commenced by the filing of ~~six (6)~~an original and seven (7) copies of a verified and complete application or complaint as defined in Chapter 1, Section 2 (mn), complete with a map or plat showing the area affected by the application, with the State Oil and Gas Supervisor, and the payment to the Secretary of the Commission of a filing fee of seventy-five dollars ($75.00). An applicant who contemplates a continuance must notify the Commission and affected parties of the continuance three (3) working days prior to the hearings. In the event the three-day notice is not given, the Commission may dismiss the application without prejudice. An application may be continued two (2) times after the initial filing. Thereafter, a continuance may be requested only upon written motion to the Commission. If an application is continued at the request or by motion of the applicant, an additional seventy-five dollar ($75.00) fee will be assessed for each and every continuation.

Section 3. Docket and Copies.

When a proceeding is instituted, the Secretary of the Commission shall assign it a number and enter the proceeding, with the date of its filing, on a separate page of a docket provided for such purpose. Thereafter, ~~six (6)~~an original and seven (7) copies of all pleadings offered in the same proceeding shall be filed and shall bear the docket number so assigned and be noted with the date of filing upon such docket page or a continuation thereof.

Section 4. Additional Copies.

The Secretary of the Commission may at any time require a party to furnish such additional copies of any pleading filed by it as may be deemed necessary.

Section 5. Notice of Complaints and Applications.

(a) The manner and time for giving notice of complaints and applications and the time and place for hearings shall be in accordance with the provisions of the Wyoming Conservation Act; provided that the Commission may in any proceeding give such additional notice or notices as it deems necessary or proper under the circumstances.

(b) In addition to any other notice required by law, or these rules, any person who believes that he may be an interested party in any hearing before the Commission and who has filed a request for notice of public hearings with the Supervisor, shall be entitled to receive notice by mail of all hearings before the Commission. The notice provided for in this rule shall be mailed by the Supervisor to all parties so requesting it no later than ten (10) days before the date of hearing.

Section 6. Attorneys.

Any person appearing before the Commission or its examiners in a representative capacity shall be precluded from examining or cross-examining any witness in any hearing unless such person shall be an attorney licensed to practice law in the State of Wyoming, or a non-resident attorney associated with a Wyoming attorney.

Section 7. Subpoenas.

The Secretary of the Commission shall have the power to and shall issue subpoenas requiring attendance of witnesses and the production of books, papers, and other instruments to the same extent and in the same manner and in accordance with the procedure provided in the Rules of Civil Procedure of the State of Wyoming, which authorize the issuance of subpoenas by Clerks of the District Courts.

Section 8. Depositions.

Depositions may be taken by parties to a proceeding and used in hearings before the Commission or its examiners in the same manner and under the same conditions prescribed in the Rules of Civil Procedure of the State of Wyoming relating to the taking and use of depositions in the courts of this State.

Section 9. Petition to Promulgate, Amend or Repeal Rules.

Any interested person may petition the Commission for the promulgation, amendment, or repeal of any rules by filing a written petition with the Supervisor setting forth such facts and arguments as support the petition. Upon receiving such a petition, the Supervisor shall submit it to the Commission for consideration. The Commission, as soon as practicable, shall either deny the petition in writing, stating its reasons for denial, or initiate rule making proceedings pursuant to the appropriate provisions of the laws of the State of Wyoming.

Section 10. Appointment of Examiners.

The Commission may appoint one or more examiners, in accordance with the laws of the State of Wyoming, to conduct hearings in accordance therewith.

Section 11. Hearings before the Commission.

(a) Hearings in the following matters and proceedings shall in all cases be heard by the Commission:

(i) matters which the Commission or the Supervisor in its or his discretion believes should be heard by the Commission;

(ii) matters in which the application or motion pursuant to which the hearing is held specifically requests that the hearing be held before the Commission;

(iii) proceedings initiated on the motion of the Commission for the enforcement of any rule, regulation, order, or statutory provision;

(iv) proceedings held for the purpose of considering the amending, removing or adding of a statewide rule;

(v) matters or proceedings in which a party who may be affected by an order of the Commission in the matter or proceeding files a written objection to such matter being heard before an examiner more than ten (10) days prior to the date set for the hearing on the matter or proceeding. No action shall be taken on an objection or protest that is not timely filed. The written protest must state the grounds of the protest and include information and evidence to demonstrate that:

(A) The protestant is a party entitled to notice or relief under Wyo. Stat. Ann. §§ 30-5-101 through 30-5-410.

(B) The protestant seeks a remedy that is within the jurisdiction and authority of the Commission.

(b) Any decision by the Supervisor may be appealed to the Commission.

Section 12. Hearings before an Examiner.

(a) Except as provided in Section 12 11 above, all matters and proceedings for which a hearing is required may initially be set for public hearing before an examiner. If, after a matter or proceeding has been set for hearing before an examiner, a party who may be affected by an order of the Commission in the matter or proceeding shall file with the Commission more than three (3) days prior to the date set for the hearing on the matter or proceeding, a written objection to hearing of such matter or proceeding before an examiner and a request for a hearing before the Commission, the examiner shall, at the time and place specified in the notice of such hearing, enter an order continuing the hearing to a day certain, and setting the matter or proceeding for hearing before the Commission. If notice of the hearing to be held before the examiner has been given as required by law, no new notice shall be necessary, but the Commission may give an additional notice of the continuance of the hearing that it deems necessary or proper under the circumstances.

(b) Hearings before examiners shall be conducted informally. Oral statements may be made, and questions may be asked by any interested party, or by the examiner, but no transcripts must be made unless they involve aquifer exemptions. Unless transcribed, the record of such a hearing shall consist solely of the appearances of interested parties, the verified application, and any exhibits, pleadings, written statements, or other documentary evidence submitted by the interested parties.

(c) Upon conclusion of a hearing before an examiner, the examiner shall advise the interested parties of the action which will be recommended to the Commission. Such recommendation may be for the granting of the application, in whole or in part, for the denial thereof, or for an order setting the matter for rehearing before the full Commission by filing a written request therefore within three (3) days after the conclusion of the hearing.

Section 13. Record of Hearings before an Examiner.

Promptly after the conclusion of any hearing conducted by an examiner, the examiner shall certify the record of the hearing to the Commission and make his report and recommendations for the disposition of the matter of proceeding by the Commission. The Commission shall consider the report and recommendations of the examiner, and the record of the hearing, and shall enter its order within thirty (30) days after the conclusion of the hearing.

Section 14. Rehearing before the Commission.

If a request for rehearing has been filed by any interested party within thirty (30) days from the date the matter was heard by the Commission or an examiner, or if rehearing is recommended by an examiner, or if the Commission is of the opinion that an order should not be entered as recommended by the examiner, the Commission may order a rehearing of the matter. Such rehearing shall be conducted as a de novo proceeding in the same manner as other hearings before the Commission.

Section 15. Operations Which May be Approved Administratively; Notice.

(a) In ~~all~~ cases in which the applicant requests approval of an operation, which under the statutes or the rules of the Commission may be approved by the Supervisor as an administrative matter, the applicant shall file ~~his~~ one (1) copy of the application. ~~therefore as~~If the matter is protested, the applicant will be notified and shall submit the additional copies immediately as provided in Chapter 5, Section 2. ~~The~~ ~~application~~ Applications shall set forth all material facts involved including any specific information required by the rule or statute authorizing administrative approval of the operation. In addition to any other notice required by the statute or these rules, the applicant shall notify those owners, as defined by the Wyoming Conservation ~~Law~~Act, of lands within one-half (1/2) mile from the well or wells in which such operation is to be undertaken. In the event the application is for an exception to the well location requirements of a Commission order establishing drilling and spacing units, then the applicant shall, in addition to any other notice required by statute, give the notice required by Wyo. Stat Ann. § 30-5-109(c)(ii). The notice to be given by applicant shall be by mail (which mailing shall be by registered or certified mail where so required by statute or these rules) and shall set forth the nature of the application and the lands thereby affected. Proof of the mailing of such notice shall be by affidavit, which shall contain a list of names and addresses of all parties given notice by the applicant, and such affidavit must be filed with the Supervisor before any action is taken on the application.

(b) The operation proposed in the application shall be approved by the Supervisor administratively and without hearing unless:

(i) the applicant requests a hearing; or

(ii) a written objection to the application by a person entitled under these rules or by statute to receive notice by mail of the filing of the application, is filed with the Supervisor within fifteen (15) days after the required mailing is shown to have been made. Provided, that if there are filed with the Supervisor written consents to the application from all such persons otherwise entitled to notice by mail of the filing thereof, said Supervisor may immediately approve the application without awaiting the expiration of said fifteen (15) day period if none of the contingencies specified in subsections (b)(i), (b)(iii), and (b)(iv) of this section have occurred; or

(iii) the Supervisor in his discretion is of the opinion that a hearing is necessary or desirable; or

(iv) the Supervisor determines that the application should be disapproved.

(c) If the application is not approved, the Supervisor shall promptly advise the applicant and state the reasons therefore.

(d) If any such written objections to such application are properly filed, as provided above, or if the Supervisor determines that a hearing is necessary or desirable or, if the applicant requests a hearing, the application shall be set for hearing and notice of the time, place and purpose of the hearing shall be given by the applicant to all owners to whom the applicant gave notice of the filing of the application at least ten (10) days before the date of such hearing. Such notice shall be by registered or certified mail with return receipt requested.

Section 16. Conservation Tax Disputes.

(a) An oil or gas producer may apply to the staff of the Wyoming Oil and Gas Conservation Commission or to the Commission for a refund or adjustment of the mill levy conservation tax he has paid. Except as otherwise provided in this rule, said application must be made within one (1) year of the date the tax was due or paid, must be in writing, and state the grounds for the refund and the amount. The Commission and the staff may disregard any application for refund or grounds for refund not complying with this. If the staff does not consent to a refund, it shall so notify the producer. The producer shall have thirty (30) days from the date such notice is mailed to file a petition for review by the Commission. If he does so, the Commission shall set the matter for hearing and make a determination.

(b) If the producer and the staff do not agree on the amount of the tax due, the producer may pay the amount claimed by the staff under protest. Such protest shall be in writing and state the amount of the tax that is being protested and the grounds. The Commission may disregard any protest of taxes or grounds of protest not complying with this; otherwise, the Commission will set the matter for hearing and make a decision.

(c) In the case of unitized operations, an application for a refund or adjustment of the mill levy conservation tax must be made within one (1) year of the determination of the adjustment resulting under the applicable unitization agreement.

(d) Notwithstanding any provision in this rule, any refund claim filed after one (1) year of the date the tax was due or paid and approved by the Commission may be allowed as a credit on the producer's current year's or subsequent year's mill levy conservation tax obligation.

(e) If the Commission agrees with a protest or a request for a refund, it shall refund the amount overpaid by the producer without interest. The Commission may refuse to make a refund in an amount less than ten dollars ($10.00).

(f) Natural Gas which is vented or flared under authority of the Wyoming Oil and Gas Conservation Commission and natural gas which is reinjected or consumed prior to sale for the purpose of maintaining, stimulating, treating, transporting, or producing crude oil or natural gas on the same lease or unit from which it was produced is exempt from the mill levy conservation tax of Wyo. Stat. Ann. § 30-5-116.

Section 17. Removal of Abandoned Oil Field Equipment.

(a) When oil field equipment has been abandoned, as defined in Chapter 1, Section 2 (b), the Commission may deem the equipment abandoned and transfer title of the equipment to the person who plugs the well, reclaims the drill site, or who will remove the equipment. In doing so, the Commission shall proceed as follows:

(i) give notice to the owner of the well or any person who has assumed ownership of the well, the operator (as reflected by the Commission's records), and to lien holders as reflected by the lien filing records of the Wyoming Secretary of State and the County Clerk of the county in which the equipment is located;

(ii) check the lien filings with the Secretary of State and County Clerk within ten (10) days prior to giving this notice:

(A) Notice to lien holders as provided in this rule shall be given to those who are lien holders as reflected by the Secretary of State's and County Clerk's records at the time of the records check.

(B) Notice shall be given by certified mail to the owner's and operator's address of record with the Commission and to the lien holder's address of record as reflected by the lien document.

(C) The notice shall advise the parties of the general description and location of the equipment and that, if the equipment is not removed within thirty (30) days of the mailing of notice, the Commission will deem it abandoned, and will give possession and ownership of the equipment to the person who plugs the well, reclaims the drill site, or who will remove the equipment.

(b) If the equipment is not removed within the thirty (30) days, the Commission may set the matter for hearing. Notice of the hearing shall be mailed, at least fourteen (14) days prior to the hearing to the owner and lien holders as determined above by certified mail.

(c) After a hearing, and upon proof of compliance with the above procedures, the Commission may find the equipment has been abandoned and issue an order which transfers ownership of the equipment, free and clear, to the person who reclaims the drill site, plugs the well, or removes the equipment.

Section 18. Abandoned Equipment; Notice to Others.

(a) If a person desires to receive notice of future proceedings to declare equipment abandoned under Section 18 above, he shall proceed as follows:

(i) file a written request to that effect with the Commission;

(A) The request shall specify the specific types of equipment and its location:

(I) by section;

(II) township; and

(III) range about which he wishes to receive notice and the address to which he wants the Commission to send the notice.

(b) If the abandonment proceeding involves those specific types of equipment at the location stated in the notice, the Commission shall notify the person who requested to receive such notice in the manner and at the times provided in section 18 above, for notice to the owner of the well.