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E&P STORM WATER OVERVIEW Domestic Onshore Energy

E&P STORM WATER OVERVIEW Domestic Onshore Energy. May 10, 2005. Road to Domestic Energy. Road to Domestic Energy: Geological & Geophysical. 1 st look at subsurface Define geologic target using surface geophysical equipment Subsurface driven. The Road to Domestic Energy: Land Leasing.

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E&P STORM WATER OVERVIEW Domestic Onshore Energy

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  1. E&P STORM WATER OVERVIEW Domestic Onshore Energy May 10, 2005

  2. Road to Domestic Energy

  3. Road to Domestic Energy: Geological & Geophysical • 1st look at subsurface • Define geologic target using surface geophysical equipment • Subsurface driven

  4. The Road to Domestic Energy: Land Leasing • Leases have terms, penalties, deadlines and a expiration date that drives a project timeline • Leases have multiple surface and subsurface owners • Split Estates; surface and mineral ownership different • Multiple mineral lease agreements and requirements • Competitive situation • The lease situation drives our clock

  5. The Road to Domestic Energy: Permitting • There are numerous permit considerations • Private • State • Federal • Oil & Gas Agency • Drilling • Construction • Pipeline ROW • Environmental Protection • Air • Water • Waste • Historical & Cultural • Vegetation & Wetlands • Wildlife

  6. The Road to Domestic Energy: Construction • Exploration or development well • lease road • well pad • Access Right of Ways have to accommodate environmental and surface conditions • Allow for: • Surface sensitivities • Landowner requests • Surface structures • Balance surface conditions to reach subsurface target

  7. The Road to Domestic Energy: Production If Successful • Well finalized • Rig moves off • Production equipment installed • O&G to sales and water to disposal • Drill site reduced and reseeded • “Foot Print” reduced If Unsuccessful • Plug & Abandon • Restore location

  8. Storm Water Comparison: Real Estate vs. Oil & Gas = Real Estate Development Oil & Gas Development • Static Plan • Blueprint Designed Upfront • Construction Follows Blueprint • Real Estate is All Surface • Dynamic Plan • Design As We Go • Each Well Tells a Geologic Story • Oil & Gas is Sub-Surface Dependent

  9. Real Estate Surface Use Driven Land Owned Timeline more Flexible Planning Certainty Metropolitan/Centralized Single Site SW Administration Oil & Gas Subsurface Driven Land Leased Timeline Is Critical Uncertainty Remote/Decentralized Scattered Multi Site SW Administration Storm Water Comparison: Real Estate vs. Oil & Gas Because of differences E&P needs regulatory flexibility “One Rule Does Not Fit All Industries”

  10. Cost Current State Future State • US Drilling Wells: 30,000 per year • SWPPP Implementation: $5,000 to $15,000 per well • Well Construction Size: 2 to 10 acres • Government • Recordkeeping – Inspection – Monitoring • Permit approvals timeline increases • Staff • Administrative burden • Industry • Increased “notice of intent” filing • Delayed NOI approval • Annual cost burden $150-$450 million* • Limited qualities resources • Lease expiration risks are real $ $ $ *Refer to Department of Energy 2005 Cost Impact Study

  11. Summary – Take Away • Intent of Storm water regulations are to protect surface waters from sediment and erosion runoff created by construction activities • Covered Oil & Gas Process • Comparisons/Differences between Oil & Gas and Real Estate • Stormwater Regulations Are Not Manageable For Oil & Gas

  12. Conclusion – Take Away There is a better alternative than the proposed stormwater rule change: • No Storm water permit • Implementation of RAPPS for all Oil & Gas construction will control sediment and erosion runoff • Implementation of RAPPS for all Oil & Gas construction

  13. E&P STORM WATER OVERVIEW May 10, 2005

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