WEBVTT

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<v Molly>Good morning everyone.</v>

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Thank you for your
patience while we work

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through these technical difficulties.

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Thank you for attending
this webinar this morning.

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You can submit questions
throughout the presentation

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by clicking the Q&amp;A button

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in the center of the
bottom of your window.

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You will see both the
questions and responses

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after they have been answered.

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Some questions may be held for answer

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until the end of the presentation.

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Presentations and webinar
recordings are all available

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by navigating to the
RRC regulatory webinars

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from the Oil and Gas
Workshops and Seminars page

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on the Railroad
Commission of Texas website.

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Okay, let's go ahead and get started.

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Our presenter this
morning is Sean Avitt,

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the manager of the Injection
Storage Permits Department

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in the technical permitting section

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of the oil and gas division.

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Sean, we're ready when you are.

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<v Sean>Hello.</v>

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As Molly said,

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I'm the Injection Storage
Departments Unit Manager,

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Sean Avitt,

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and I have been I'm working
for the Railroad Commission

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about eight years.

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I've been in this particular
role for two years,

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and I'm a geoscientist.

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And we're going to talk about

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oil storage in the state of Texas today.

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Here's a broad outline
for the talk today.

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I'm going to discuss

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the state of hydrocarbon
storage generally.

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Then we'll discuss
how to apply for a permit

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to store oil in salt,

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and how to apply for
a permit to store oil

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in a non-salt formation
pursuant to the Commission's

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May 5th, 2020 Order.

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One last thing before we get started.

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This presentation is about
underground storage of oil,

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but it is also generally applicable

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to storage of any liquid hydrocarbon

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under the Commission's jurisdiction.

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Over the next couple slides,

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we'll discuss why we're
talking about storage.

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This is the first storage
only presentation

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that we've given in recent
history and possibly ever.

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I'll talk briefly about
the history of oil storage

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and its regulation,

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then I'll show you the
distribution of storage facilities

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in Texas.

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And lastly, by now I would
normally have told you

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where you can find all this
information on our website,

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but currently there is no
storage manual on the web sadly.

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I plan to rectify that
situation however,

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and update our online UIC manual

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and add more detailed
storage information to it

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in the coming year.

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If you attended the
presentation prior to this one

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with Rob Castillo,

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he probably showed you all
of our UIC manual information

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on our website.

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So, why are we here?

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Well, it starts with the Texas miracle.

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Up at the top, you can see
Texas oil production has gone

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from a million barrels a day in 2010,

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1.1 million barrels around January 2010,

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to over three and a half
million barrels a day in 2015

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to nearly five and a half
million barrels each day today.

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There's much more capacity
to produce oil in Texas

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than there has ever been before.

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And as you have undoubtedly heard,

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oil prices have slumped
since the beginning of this year,

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from nearly $150 oil in 2008,

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to $50 oil over the last couple years,

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to nearly having gone
to a negative price

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which is dramatically shown
in the graph on the bottom left.

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Now, that last financial phenomenon

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is just sort of sensational,
but the overall trend is real.

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And it correlates with an
increase in oil supply and storage

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that you can see in the
bottom right hand graph.

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I don't claim to fully understand

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these complex economic systems.

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And that's not necessarily
what we're here to talk about,

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but that's why the
Commission has taken action,

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and why we need to
talk about oil storage.

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So this is not the first time
that Texas in the country

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has seen an economic or energy crisis.

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In 1973, the Oil Embargo
decreased U.S. oil supply

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and hiked oil and fuel prices.

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As a result, there were
long lines of gas stations,

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gas rationing, oil price control,

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and the search for energy independence.

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Shortly thereafter,

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the Energy Policy and
Conservation Act was passed

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which authorized among other things,

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the creation of the Strategic
Petroleum Reserve or SPR.

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The SPR is the largest
reserves of crude oil in the world.

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It's a system of pipelines
and underground storage

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for crude oil, including Bryan
Mound and Big Hill domes

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in Texas, and two other
salt domes in Louisiana.

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The SPR currently has a
797 million barrel capacity

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with a current inventory of
635 million as of April 17th,

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at an average price paid
of about $28 per barrel.

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During my career, short as it is,

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I'd normally say $28 a
barrel is a pretty good deal

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unless of course it's April 2020.

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Now under federal regulations.

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In our earlier presentation

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on Injection Disposal Well Permitting,

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you would have heard about
the Safe Drinking Water Act,

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and specifically about
Underground Injection Control

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part of that act.

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Well, UIC covers underground
and storage of liquids,

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but does not cover the
underground storage of gas.

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And the Commission does not have

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Federal Delegation of Authority

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for underground storage of gas

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from the federal
agency that handles that,

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the Pipeline and Hazardous
Materials Safety Administration

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or PHMSA.

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However, we still have
state authority for gas storage.

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So we still permit storage of gas,

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but you may have to
talk to PHMSA as well.

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We're considering applying
for federal delegation

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to simple regulation
of gas storage in Texas.

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Here, we have a map
of all the injection wells

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in the state of Texas.

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The black and gray dots
are injection disposal wells,

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the red or light red are storage wells,

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and the blue are brine mining wells.

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I put this together so that you can get

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a sense of the distribution
of injection wells in the state,

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the oil and gas basins and
the proportion of those wells

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that are for storage.

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You can tell there aren't very many

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storage wells proportionally.

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On the next slide, we'll show
you just the storage wells

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so you can actually see them.

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So again, we can see
there aren't a whole lot

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of storage facilities in the state

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compared to the total
number of injection wells.

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The storage in the Permian and Panhandle

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is in bedded salt
formations like the Castillo,

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Clearfork and Salado formations.

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The Gulf Coast and East Texas storage

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is mostly in salt domes.

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Then we can see in Central Texas

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where there are not
substantial salt formations,

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the wells are bright red,

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which represents depleted gas storage.

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It's important for me to note
two things about this map.

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One, that at this scale,

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you're not really
seeing individual wells

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so much as very small blobs

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typically representing many wells,

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and two, that these
wells may not be active.

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They might just be storage permits,

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not drilled or completed,

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or they could have been plugged already.

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We'll get to specific
numbers after the next slide.

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Give everybody a moment just to

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take in the image.

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And now to zoom in a little closer,

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here we can see the
counties in the Houston area,

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and we can start to see
individual storage wells.

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You may notice too that
there can be many caverns

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and storage wells
associated with one salt dome

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or storage facility.

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The cluster of bright
red wells in the center,

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just north of the Harris County label,

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here,

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is not actually a salt dome
but the Bammel gas reservoir.

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Then, I'll point out the
dark red blob to the right

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or east of the map under the
Chambers County label, here,

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which are the storage wells
in the Barbers Hill salt dome

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underneath the City of Bellevue.

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This is one of the most active
storage salt domes in Texas,

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and has the most or highest
density of storage vaults

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in the state.

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To save you from counting
all those dots like I promised,

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here are a few basic
counts for oil and gas storage

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in Texas.

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We have nearly 100 storage facilities.

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Of those there are
751 liquid storage wells

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permitted in salt,

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331 of which are active.

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We have 113 gas storage
wells permitted in salt

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with about half of those active.

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And lastly, we have
453 gas storage wells

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in a depleted reservoir,

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and over /4 of those are active.

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First, we're gonna discuss
storage permitting in salt

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since that is the norm
for Statewide Rule 95.

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This presentation assumes

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that you have a basic understanding

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of injection while permitting
and build on that knowledge.

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So we're going to draw contrast

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to the typical injection disposal
permit application process

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and draw contrast to
what you would have heard

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in the presentation this
morning if you attended it.

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We'll discuss the standard
for permit issuance,

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some typical salt storage terms,

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what salt storage and
storage wells look like,

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have notice and hearing, area of review,

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and freshwater protection
could be different

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from the usual process,

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usual application permitting process,

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and we will discuss the
structure and geology,

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cavern integrity, and
Rule 95 safety section.

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Underground storage
of oil must do four things.

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It must not waste oil or
otherwise allowed to escape,

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it must not pollute freshwater,

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and it must not
endanger lives or property.

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This is the standard
that we will look for

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when we decide whether or
not an application for permit

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should be approved.

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We have some common terms we use

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when referring to the
process of removing salt

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by dissolution from a salt structure.

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Some terms are generally understood,

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and don't need to be
defined by a statute or rule.

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The term "solution mining"
and "leaching a cavern"

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are like this.

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When we tend to say
leaching for storage and mining

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for brine mining to try to distinguish

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between the two different
purposes and rules,

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but they're both solution mining.

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The term brine mining injection well

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does have a specific
rule definition however,

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and it's important to understand

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how that impacts our regulation.

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This Venn diagram
illustrates the relationship

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between different
purposes of solution mining

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and how they're regulated.

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To grow a storage cavern,
you have to solution mine

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to make the void space.

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This is the physical operation
and solution mining of salt

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is just one kind of solution mining.

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We have a couple Commission
rules for solution mining.

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So which rule do we fill under?

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Is it brine mining under
Statewide Rule 81?

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Or is it leaching for
storage under Rule 95.

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We're solution mining under both rules

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doing basically the
same physical operation.

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So then it's about the
purpose for the solution mining.

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If the applicant states
that the solution mining

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is for the purpose of
making a void space

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for storage or disposal,

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then it is not brine
mining by definition.

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Otherwise, we say that
the operation is brine mining.

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The applicant is responsible of course

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for applying for the correct permit

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for their solution mining purpose.

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If the business purpose of
the solution mining changes,

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for example, you begin for
the purposes of brine mining

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but didn't want to use the
cavern for storage or disposal,

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then the applicable rule changes

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and you have to apply for a new permit

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under the applicable rule.

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This illustration shows
the salt dome in light blue,

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which is a salt structure
that has pushed its way up

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through more dense geologic strata,

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and stopped at some depth
when it reached buoyancy.

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Salt domes often have
a shape like a lava lamp,

00:13:37.260 --> 00:13:40.750
lava lamp makes, where they
have a bulbous head at the top

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and a slightly narrower stalk.

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There's cap rock immediately
above that is often altered

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and very porous.

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Salt is essentially impermeable,

00:13:50.350 --> 00:13:52.983
but can be easily dissolved
with unsaturated water.

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We can hollow out a void
in salt with injected water.

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Then we can use that
void to store other fluids,

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and we use storage
wells to transmit fluids

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in and out of the cavern.

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Finally, I think it's always important

00:14:10.750 --> 00:14:13.330
to get a sense of scale
when we talk about storage

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because storage caverns and salt domes

00:14:16.440 --> 00:14:18.730
are just unbelievably big.

00:14:18.730 --> 00:14:21.870
So here we can see that
this particular salt cavern

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is about 1000 feet tall,

00:14:24.100 --> 00:14:26.570
which is big enough
to fit the Eiffel Tower.

00:14:26.570 --> 00:14:29.240
Of course, the salt dome
is even bigger than that.

00:14:29.240 --> 00:14:32.230
So we may have many
Eiffel Tower sized caverns

00:14:32.230 --> 00:14:33.437
inside one dome,

00:14:33.437 --> 00:14:36.020
and 1000 feet tall
wouldn't even be the tallest

00:14:36.020 --> 00:14:37.170
of our storage caverns.

00:14:37.170 --> 00:14:38.520
They're really, really big.

00:14:58.650 --> 00:15:00.640
Storage wells are
typically more complicated

00:15:00.640 --> 00:15:02.470
than your standard
injection disposal well,

00:15:02.470 --> 00:15:04.380
or oil or gas well.

00:15:04.380 --> 00:15:06.230
There are two basic reasons for this.

00:15:07.180 --> 00:15:08.240
They're bigger,

00:15:08.240 --> 00:15:11.670
and they're designed
to get fluids in and out.

00:15:11.670 --> 00:15:13.660
The wells have to be
bigger to address demand

00:15:13.660 --> 00:15:14.823
and operate safely.

00:15:15.870 --> 00:15:18.210
Therefore, the diameter
of a storage well

00:15:18.210 --> 00:15:20.340
maybe 36 inches wide

00:15:20.340 --> 00:15:22.460
compared to a typical
injection disposal well

00:15:22.460 --> 00:15:24.000
or an oil gas well,

00:15:24.000 --> 00:15:26.540
which are more often
around nine or 13 inches wide

00:15:27.440 --> 00:15:29.633
at its largest casing.

00:15:31.330 --> 00:15:33.730
Storage wells typically
have a casing string

00:15:33.730 --> 00:15:35.130
and a hanging string,

00:15:35.130 --> 00:15:38.170
so that they can inject brine
through the hanging string

00:15:38.170 --> 00:15:40.610
and produce oil from the casing string.

00:15:40.610 --> 00:15:43.390
This diagram to the right is
even a little more complicated

00:15:43.390 --> 00:15:44.240
than that.

00:15:44.240 --> 00:15:47.073
It has a casing string
that is open to the oil pad,

00:15:48.080 --> 00:15:49.750
you can see that in black,

00:15:49.750 --> 00:15:51.803
and then it has to hanging strings.

00:15:52.680 --> 00:15:55.430
Unfortunately, you can't see
the bottom of the casing string

00:15:55.430 --> 00:15:58.740
on this diagram since the
oil pad is also colored black,

00:15:58.740 --> 00:16:02.513
but it's about even with the
oil pad label on the diagram.

00:16:04.390 --> 00:16:06.700
The strings for injection and production

00:16:06.700 --> 00:16:08.380
are reversed in this case.

00:16:08.380 --> 00:16:10.900
The injection is occurring
above the production

00:16:10.900 --> 00:16:12.950
because the well is leaching the cavern,

00:16:12.950 --> 00:16:14.750
not storing hydrocarbons.

00:16:14.750 --> 00:16:16.370
You can see the second hanging string

00:16:16.370 --> 00:16:21.181
extends down into the brine
and the brine shown in green

00:16:21.181 --> 00:16:25.020
to produce the brine, while
freshwater shown in blue

00:16:26.020 --> 00:16:28.710
is injected above the
second hanging string

00:16:28.710 --> 00:16:32.073
through the first hanging
string to solution mine the salt.

00:16:34.370 --> 00:16:39.170
Some caverns may not have a
single well performing injection

00:16:39.170 --> 00:16:42.380
and production, but instead
use two wells to perform

00:16:43.300 --> 00:16:45.380
both operations.

00:16:45.380 --> 00:16:47.780
It's important to be able
to inject and produce

00:16:47.780 --> 00:16:52.010
at the same time so that the
operator can displace fluids

00:16:52.010 --> 00:16:53.500
in the storage cavern.

00:16:53.500 --> 00:16:58.160
This way, the operator won't
under pressure as the cavern

00:16:58.160 --> 00:16:59.680
is keeping a balance

00:17:17.143 --> 00:17:19.220
Notice and hearing
requirements for storage

00:17:19.220 --> 00:17:20.420
are a bit more rigorous

00:17:20.420 --> 00:17:23.260
than for a typical
injection disposal well.

00:17:23.260 --> 00:17:26.320
You must notify a surface
and adjacent tract owners

00:17:26.320 --> 00:17:28.450
like you would with a
commercial disposal well,

00:17:28.450 --> 00:17:32.820
but also all oil, gas, and salt
leaseholders on the surface

00:17:32.820 --> 00:17:34.320
and adjacent tracks.

00:17:34.320 --> 00:17:36.840
Then, instead of one publication,

00:17:36.840 --> 00:17:38.820
you have to run the
published notice once a week

00:17:38.820 --> 00:17:41.110
for three consecutive weeks.

00:17:41.110 --> 00:17:43.460
Finally, all new storage facilities

00:17:43.460 --> 00:17:45.430
are required to have a hearing by rule.

00:17:45.430 --> 00:17:48.230
However, the May 5th, 2020 Order

00:17:48.230 --> 00:17:50.890
suspended that hearing
requirement for one year

00:18:01.560 --> 00:18:04.280
How is the area of
review or AOR different

00:18:04.280 --> 00:18:08.122
from a typical injection
disposal well application?

00:18:08.122 --> 00:18:11.220
Well, it's based on the
extent of the storage

00:18:11.220 --> 00:18:14.200
instead of treating the
well like a point location.

00:18:14.200 --> 00:18:17.040
And in addition to
the typical well list,

00:18:17.040 --> 00:18:19.540
you have to identify
all storage facilities

00:18:20.718 --> 00:18:22.413
within a quarter mile also.

00:18:23.890 --> 00:18:25.910
Buffering a quarter mile
from the storage limits

00:18:25.910 --> 00:18:27.830
can be a little bit of
a complicated task,

00:18:27.830 --> 00:18:31.790
so often the AOR we
get is like this image here.

00:18:31.790 --> 00:18:36.130
Facility is outlined in a
dusty highlighter, yellow,

00:18:36.130 --> 00:18:39.310
and they've shown every storage facility

00:18:39.310 --> 00:18:41.010
and well in the vicinity,

00:18:41.010 --> 00:18:43.740
and the boundaries of all
the storage on the salt dome

00:18:43.740 --> 00:18:44.663
for good measure.

00:18:58.490 --> 00:19:00.320
Just like injection disposal wells

00:19:00.320 --> 00:19:03.550
and all oil and gas
operations generally,

00:19:03.550 --> 00:19:05.470
you must protect fresh water.

00:19:05.470 --> 00:19:07.560
Statewide Rule 13, which sets standards

00:19:07.560 --> 00:19:09.870
for well construction
applies to storage wells

00:19:09.870 --> 00:19:13.410
just like all other wells
under our jurisdiction.

00:19:13.410 --> 00:19:17.040
Additionally, Rule 95
requires all outer casing strings

00:19:17.040 --> 00:19:18.660
to be submitted to surface.

00:19:18.660 --> 00:19:21.450
This adds an additional layer
of protection for freshwater

00:19:21.450 --> 00:19:23.620
for many fluids that
could potentially come up

00:19:23.620 --> 00:19:24.833
or around the wellbore.

00:19:25.760 --> 00:19:28.270
Finally, geologic isolation

00:19:28.270 --> 00:19:30.830
is not a common permit
application deficiency

00:19:30.830 --> 00:19:32.890
since the storage is occurring in salt,

00:19:32.890 --> 00:19:34.690
and salt as essentially impermeable.

00:19:35.720 --> 00:19:38.710
Plus adequate storage you
can find fluids in all directions,

00:19:38.710 --> 00:19:41.250
so there is substantial
financial incentive

00:19:41.250 --> 00:19:43.500
to ensure no loss of product.

00:19:43.500 --> 00:19:46.500
However, there are
substantial geologic concerns

00:19:46.500 --> 00:19:48.163
for cavern storage in salt.

00:19:56.030 --> 00:20:00.010
A cavern is of course at
its most basic definition,

00:20:00.010 --> 00:20:01.370
just a hole.

00:20:01.370 --> 00:20:03.090
It can serve as storage

00:20:03.090 --> 00:20:05.340
if its boundaries aren't compromised,

00:20:05.340 --> 00:20:08.370
or unfortunately, it can
serve as a conveyance

00:20:08.370 --> 00:20:10.340
if it loses integrity.

00:20:10.340 --> 00:20:13.160
Therefore, you must submit information

00:20:13.160 --> 00:20:15.680
to demonstrate the
thickness, continuity,

00:20:15.680 --> 00:20:17.890
and structure of the salt to ensure that

00:20:17.890 --> 00:20:21.283
the cavern can be safely
created without operated,

00:20:24.310 --> 00:20:26.290
can be safely created and operated

00:20:26.290 --> 00:20:28.910
without intersecting
the edge of the salt,

00:20:28.910 --> 00:20:31.860
and to demonstrate that
there are no faults, fractures,

00:20:31.860 --> 00:20:34.410
or other features that could
compromise the cavern.

00:20:48.620 --> 00:20:50.890
This leads us to the
concept of cavern integrity

00:20:50.890 --> 00:20:51.730
or stability.

00:20:51.730 --> 00:20:54.480
Caverns can be compromised several ways.

00:20:54.480 --> 00:20:57.280
The cavern can close up
through precipitation of the brine

00:20:57.280 --> 00:20:58.683
back into solid salt.

00:20:59.860 --> 00:21:02.240
The cavern can be compromised

00:21:02.240 --> 00:21:04.993
so that it can no longer
hold fluids and pressure.

00:21:06.470 --> 00:21:08.980
Two caverns that are too
close together can coalesce

00:21:08.980 --> 00:21:10.463
to become one large cavern.

00:21:11.560 --> 00:21:13.550
The roof can become
structurally unstable

00:21:13.550 --> 00:21:15.260
and cause collapse,

00:21:15.260 --> 00:21:17.873
the casing shoe bond
could become compromised.

00:21:19.010 --> 00:21:21.380
And lastly, we can use surface collapse

00:21:21.380 --> 00:21:22.833
and the example on the right.

00:21:24.390 --> 00:21:27.210
And lastly, we can
cause surface collapse.

00:21:27.210 --> 00:21:28.540
Excuse me.

00:21:28.540 --> 00:21:31.640
In the example on the
right, we see a storage well

00:21:31.640 --> 00:21:33.770
that might have seemed
to be a safe distance

00:21:33.770 --> 00:21:35.870
from the edge of the
salt dome at the top.

00:21:37.200 --> 00:21:40.860
But at depth, the salt dome is narrower,

00:21:40.860 --> 00:21:44.630
and the cavern intersected
the salt dome's edge

00:21:44.630 --> 00:21:46.470
while it was leaching.

00:21:46.470 --> 00:21:49.170
This obviously compromised the cavern,

00:21:49.170 --> 00:21:51.850
but it also allowed sediments
to enter the void space

00:21:51.850 --> 00:21:55.363
causing a geologic collapse
and sinkhole at the surface.

00:21:58.370 --> 00:22:00.830
This is why rigorous review
and testing of cavern walls

00:22:00.830 --> 00:22:01.910
is needed.

00:22:01.910 --> 00:22:03.690
Mechanical integrity testing

00:22:03.690 --> 00:22:06.103
that is performed every
five years on storage wells

00:22:06.103 --> 00:22:08.870
is a nitrogen-brine interface test.

00:22:08.870 --> 00:22:10.760
Although the test is very different

00:22:10.760 --> 00:22:12.230
from a standard well pressure test,

00:22:12.230 --> 00:22:14.170
the concept is very similar.

00:22:14.170 --> 00:22:16.820
Instead of pressuring up
the tubing casing annulus

00:22:16.820 --> 00:22:18.660
to ensure the well has integrity,

00:22:18.660 --> 00:22:21.160
you have to pressure up
the entire storage cavern.

00:22:25.010 --> 00:22:28.270
Casing shoe bond test is
required as part of the MIT

00:22:28.270 --> 00:22:31.210
and sonar surveys are
performed to ensure that

00:22:31.210 --> 00:22:33.610
the shape of the cavern
is understood over time.

00:22:52.170 --> 00:22:53.580
This is a picture of the sinkhole

00:22:53.580 --> 00:22:55.410
that resulted from that diagram.

00:22:55.410 --> 00:22:57.890
From this far away, it
kind of looks like a mud pit

00:22:57.890 --> 00:23:01.450
or land farm, or maybe just barren land,

00:23:01.450 --> 00:23:04.530
but actually all the trees and
anything else that were there

00:23:04.530 --> 00:23:06.600
were essentially swallowed
up by this sinkhole.

00:23:06.600 --> 00:23:09.890
The sinkhole at this stage
covered about an acre.

00:23:09.890 --> 00:23:12.550
So it was about 100 feet across,

00:23:12.550 --> 00:23:15.913
but it grew to encompass 37 acres.

00:23:35.250 --> 00:23:36.910
I'm not gonna discuss each and every one

00:23:36.910 --> 00:23:37.950
of these bullet points.

00:23:37.950 --> 00:23:40.450
Each one is a subtitle and subsection

00:23:40.450 --> 00:23:44.970
under Statewide Rule 95H,
which is all about safety.

00:23:44.970 --> 00:23:46.940
These facilities can be dangerous

00:23:47.920 --> 00:23:51.210
if not regulated, and properly operated.

00:23:51.210 --> 00:23:53.660
They're storing flammable
liquids at pressure

00:23:53.660 --> 00:23:55.240
and are huge engineering feats

00:23:55.240 --> 00:23:57.610
with serious consequences
if something goes wrong.

00:23:57.610 --> 00:24:00.630
So the rule takes safety very seriously.

00:24:00.630 --> 00:24:02.810
I encourage you to read
the rule to make sure that

00:24:02.810 --> 00:24:05.510
each one of these safety
subsections is addressed.

00:24:05.510 --> 00:24:07.380
It's also important to note that

00:24:07.380 --> 00:24:09.940
most of these safety
features must be in place

00:24:09.940 --> 00:24:12.383
before storage operations can begin.

00:24:26.260 --> 00:24:29.100
We don't have published
amendment guidance

00:24:29.100 --> 00:24:31.620
to reduce application
requirements like we do

00:24:31.620 --> 00:24:34.163
for injection disposal
permit applications.

00:24:36.600 --> 00:24:38.870
For injection disposal
permit applications,

00:24:38.870 --> 00:24:40.617
we have a web page that says,

00:24:40.617 --> 00:24:42.387
"Under this sort of amendment,

00:24:42.387 --> 00:24:44.017
"you only need to submit these things

00:24:44.017 --> 00:24:45.967
"or these things are really important."

00:24:47.224 --> 00:24:49.770
We will be working on
broad storage guidance

00:24:49.770 --> 00:24:52.260
in the next year and
publishing that to the web.

00:24:52.260 --> 00:24:54.810
Typically, we get permit
amendment applications

00:24:54.810 --> 00:24:57.693
that are essentially a full
new application for storage.

00:24:59.000 --> 00:25:01.900
The two main reasons people
Want to amend their permits

00:25:01.900 --> 00:25:05.960
is to add a new cavern,
increase carrying capacity,

00:25:05.960 --> 00:25:08.710
or change the injection pressure rate.

00:25:08.710 --> 00:25:11.400
Additionally, you can expect that

00:25:11.400 --> 00:25:12.740
we will do a compliance check

00:25:12.740 --> 00:25:15.283
just like we do for
injection disposal permits.

00:25:16.480 --> 00:25:19.550
Unlike injection disposal
permits, you are not as restricted

00:25:19.550 --> 00:25:21.880
to what you can inject by the permit.

00:25:21.880 --> 00:25:23.960
You can inject any liquid hydrocarbon

00:25:23.960 --> 00:25:27.140
under the Commission's jurisdiction.

00:25:27.140 --> 00:25:29.570
So, if you have a storage well

00:25:29.570 --> 00:25:31.690
storing other liquid hydrocarbons,

00:25:31.690 --> 00:25:34.046
you can enter your
cavern and start storing oil

00:25:34.046 --> 00:25:35.290
as soon as you're ready.

00:25:35.290 --> 00:25:38.820
That being said, you should
of course make sure that

00:25:38.820 --> 00:25:41.040
you don't have any outstanding
regulatory requirements

00:25:41.040 --> 00:25:43.000
like reports, testing
or safety equipment

00:25:43.000 --> 00:25:45.450
before commencing or
changing storage operations.

00:26:00.280 --> 00:26:02.367
Now we're going to begin
discussing oil storage

00:26:02.367 --> 00:26:04.763
and geologic formations other than salt.

00:26:05.890 --> 00:26:08.740
First things, the May 5th, 2020 Order

00:26:08.740 --> 00:26:12.810
allowed applications to be
submitted for this purpose

00:26:12.810 --> 00:26:16.440
for one year, and that
permitted facility can store oil

00:26:16.440 --> 00:26:17.840
for up to five years.

00:26:17.840 --> 00:26:20.450
The order also suspended
the requirement for hearing

00:26:20.450 --> 00:26:21.833
on new storage permits.

00:26:23.360 --> 00:26:26.430
Storage of liquids, including crude oil

00:26:26.430 --> 00:26:30.070
into formations other
than salt is not common.

00:26:30.070 --> 00:26:33.440
We do not have rules in
Texas that explicitly allow for it.

00:26:33.440 --> 00:26:35.780
That's why the May 5th order was issued.

00:26:35.780 --> 00:26:39.290
The good news is, our
existing rules especially Rule 95

00:26:39.290 --> 00:26:40.900
gives us a good start on how to think

00:26:40.900 --> 00:26:43.120
about permitting this kind of storage.

00:26:43.120 --> 00:26:45.790
We created a web page
with application guidelines

00:26:45.790 --> 00:26:49.760
for oil storage not into
salt to fill in the gaps.

00:26:49.760 --> 00:26:52.990
So the rest of the slides
today will be clarifications

00:26:52.990 --> 00:26:56.000
to our standard salt
storage permitting process

00:26:56.000 --> 00:26:57.740
for oil storage not in salt

00:27:10.010 --> 00:27:12.410
Here's a screenshot of
the top of the web page

00:27:12.410 --> 00:27:15.740
that we created where
you can find this guidance.

00:27:15.740 --> 00:27:19.960
At the top of the PowerPoint
slide, there is the URL

00:27:19.960 --> 00:27:22.870
in case this presentation
gets distributed in a format

00:27:22.870 --> 00:27:25.370
where you're not able to click the link.

00:27:25.370 --> 00:27:28.060
On the Application Guidelines
page in the first sentence,

00:27:28.060 --> 00:27:29.700
there's also a link to the May 5th Order

00:27:29.700 --> 00:27:31.653
if you want to read that text yourself.

00:27:43.670 --> 00:27:45.420
This is the basic outline

00:27:45.420 --> 00:27:48.500
of the Application Guidelines webpage.

00:27:48.500 --> 00:27:50.500
You can see the items
that we're gonna discuss

00:27:50.500 --> 00:27:52.690
over the next slides in bold.

00:27:52.690 --> 00:27:54.980
We're discussing these specifically

00:27:54.980 --> 00:27:56.830
because they may be
substantially different

00:27:56.830 --> 00:28:00.660
from the typical injection
permit or storage permit process.

00:28:00.660 --> 00:28:03.490
The first thing we're going to
do is address inconsistencies

00:28:03.490 --> 00:28:05.130
in the form H-4,

00:28:05.130 --> 00:28:08.633
which assumes that the
storage medium is salt.

00:28:14.170 --> 00:28:17.110
First you need to submit
a form H-4 to store oil

00:28:17.110 --> 00:28:21.070
regardless of what geologic
formations it's in salt or not.

00:28:21.070 --> 00:28:25.403
However, the terms on the
H-4 assume a salt cavern.

00:28:26.260 --> 00:28:28.390
We can successfully use the form H-4

00:28:28.390 --> 00:28:30.970
for storage and
formations other than salt

00:28:30.970 --> 00:28:33.110
with a few tweaks in our understanding

00:28:33.110 --> 00:28:36.093
of what the terms mean
for storage, not in salt.

00:28:37.430 --> 00:28:39.780
You don't need to fill
out Item 12 on the form.

00:28:40.840 --> 00:28:43.563
For Items 13 through 16,

00:28:44.540 --> 00:28:46.582
you need to identify
the storage reservoir

00:28:46.582 --> 00:28:48.400
or geologic formation,

00:28:48.400 --> 00:28:51.040
and provide the top and
bottom of the storage reservoir

00:28:51.040 --> 00:28:52.293
or geologic formation.

00:28:53.800 --> 00:28:57.680
For Items 17 and 18, you
can assume that "Cavity"

00:28:57.680 --> 00:28:59.703
instead means storage well.

00:29:00.550 --> 00:29:03.010
Please submit a well
table as an attachment

00:29:03.010 --> 00:29:05.510
if you're applying for
more than one storage well.

00:29:07.820 --> 00:29:10.801
For Item 19, assume that "Cavity" means

00:29:10.801 --> 00:29:14.000
the top and bottom
of the injection interval

00:29:14.000 --> 00:29:16.373
and capacity is not applicable.

00:29:28.140 --> 00:29:28.973
Feasibility.

00:29:29.810 --> 00:29:32.993
Can you put the oil in
and can you get it back?

00:29:33.910 --> 00:29:36.790
Some of these items are
already clearly required

00:29:36.790 --> 00:29:40.060
by Statewide Rule 95 or the form H-4.

00:29:40.060 --> 00:29:42.030
However, at the risk of duplication,

00:29:42.030 --> 00:29:44.670
we need to highlight
or clarify a few items

00:29:44.670 --> 00:29:48.380
for storage of oil and geologic
formations other than salt.

00:29:48.380 --> 00:29:52.140
Then, there are some items
here that must be addressed

00:29:52.140 --> 00:29:53.743
because Rule 95 or the form H-4

00:29:53.743 --> 00:29:56.333
assumes that the
storage will be in salt.

00:30:01.190 --> 00:30:04.700
Generally, these items are highlighted

00:30:04.700 --> 00:30:08.330
because we anticipate that
the responsive information

00:30:08.330 --> 00:30:10.310
could be substantially different

00:30:10.310 --> 00:30:13.673
than from typical storage
permit applications.

00:30:14.950 --> 00:30:15.883
Fluid data.

00:30:17.070 --> 00:30:20.470
Storing and injecting
fluid into a salt void

00:30:20.470 --> 00:30:23.920
versus storing these
fluids in geologic pore space

00:30:23.920 --> 00:30:25.300
is very different.

00:30:25.300 --> 00:30:28.620
So we need to know how the
fluids will act in the pore space

00:30:28.620 --> 00:30:30.183
you're proposing for storage.

00:30:45.570 --> 00:30:50.500
Engineering, this is not my
specialty since I'm geologists.

00:30:50.500 --> 00:30:53.820
However, our storage lead
an engineer Scott Rosenquist

00:30:53.820 --> 00:30:55.700
has put this list together

00:30:55.700 --> 00:30:58.390
to ensure that injection
into geologic pore space

00:30:58.390 --> 00:31:01.383
and retrieval from it
is feasible and safe.

00:31:02.370 --> 00:31:04.970
Also, that we understand how much oil

00:31:04.970 --> 00:31:07.080
this reservoir is capable of storing,

00:31:07.080 --> 00:31:10.080
and how much oil will
ultimately be lost to the reservoir

00:31:10.080 --> 00:31:13.460
since physical forces keep
some oil ultimately trapped

00:31:13.460 --> 00:31:15.593
on grains of sediment forever.

00:31:46.290 --> 00:31:48.500
Confinement, a storage reservoir

00:31:48.500 --> 00:31:50.453
must be bounded on all sides.

00:31:51.680 --> 00:31:54.320
Geology, this is really no different

00:31:54.320 --> 00:31:56.370
than the requirement for salt storage,

00:31:56.370 --> 00:31:58.570
but because the storage reservoir

00:31:58.570 --> 00:32:00.690
is not a void space being created

00:32:00.690 --> 00:32:04.600
in an essentially impermeable
geologic formation,

00:32:04.600 --> 00:32:07.440
the geologic analysis to demonstrate

00:32:07.440 --> 00:32:09.590
that the reservoir is
bounded on all sides

00:32:09.590 --> 00:32:10.763
will be very different.

00:32:11.770 --> 00:32:14.800
For example, reservoir gas
storage has been permitted

00:32:14.800 --> 00:32:16.540
in depleted reservoirs

00:32:18.308 --> 00:32:23.308
and in an igneous intrusion
creating a geologic boundary

00:32:23.530 --> 00:32:27.550
between the reservoir and
adjacent sedimentary formations

00:32:27.550 --> 00:32:30.500
similar in some ways to a salt dome,

00:32:30.500 --> 00:32:33.470
and it has been permitted
into depleted reservoirs

00:32:33.470 --> 00:32:34.940
bounded by faults.

00:32:34.940 --> 00:32:36.870
The reservoir traps were sufficient

00:32:36.870 --> 00:32:39.610
to collect gas over geologic time.

00:32:39.610 --> 00:32:40.600
And so the assumption is

00:32:40.600 --> 00:32:42.890
that they can also store injected gas.

00:32:42.890 --> 00:32:45.690
However, conditions for storage

00:32:45.690 --> 00:32:48.616
of hydrocarbon injecting under pressure

00:32:48.616 --> 00:32:53.510
a natural phenomenon
that occur over geologic time

00:32:53.510 --> 00:32:55.620
can be very different.

00:32:55.620 --> 00:32:58.373
Therefore, confinement
must be demonstrated.

00:33:11.370 --> 00:33:15.010
Operations, again the
engineering of storage

00:33:15.010 --> 00:33:17.730
could compromise the
storage reservoir itself.

00:33:17.730 --> 00:33:21.590
If injection of the fluid
exceeds the fracture gradient,

00:33:21.590 --> 00:33:23.790
fractures will be created
that could compromise

00:33:23.790 --> 00:33:25.980
the confining boundaries
of the storage reservoir

00:33:25.980 --> 00:33:27.750
or the fluid itself,

00:33:27.750 --> 00:33:29.520
which may not be native to the formation

00:33:29.520 --> 00:33:31.820
could have physical
interactions with the reservoir

00:33:31.820 --> 00:33:34.993
like dissolution that could
compromise confinement.

00:33:36.370 --> 00:33:39.250
So, we need to know the
physical parameters of the operation

00:33:39.250 --> 00:33:40.860
to ensure confinement will continue

00:33:40.860 --> 00:33:42.763
under the proposed storage operations.

00:33:43.970 --> 00:33:47.510
Testing, if there are
going to be multiple wells

00:33:47.510 --> 00:33:49.460
and some will be
designated for injection

00:33:49.460 --> 00:33:50.910
and some for production,

00:33:50.910 --> 00:33:52.850
then it's likely that a
standard pressure test

00:33:52.850 --> 00:33:53.723
would suffice.

00:33:54.640 --> 00:33:56.800
However, we will need to understand

00:33:56.800 --> 00:33:59.690
exactly how MITs will be performed

00:33:59.690 --> 00:34:01.990
if the wells are going
to be more complicated.

00:34:03.710 --> 00:34:05.640
Finally, we wanna make it clear that

00:34:05.640 --> 00:34:07.800
review of a permit
application for oil storage

00:34:07.800 --> 00:34:10.160
into non salt formations is new

00:34:10.160 --> 00:34:12.280
and may require additional information

00:34:12.280 --> 00:34:14.823
and further review
following initial application.

00:34:16.040 --> 00:34:18.440
We like to pretend but
we don't know everything.

00:34:29.810 --> 00:34:33.570
The area of review or
AOR for non-salt formations

00:34:34.660 --> 00:34:36.300
is likely to be more complicated

00:34:36.300 --> 00:34:39.750
than four an injection disposal well

00:34:39.750 --> 00:34:41.370
or even for salt storage

00:34:42.330 --> 00:34:44.770
although the standard is really the same

00:34:44.770 --> 00:34:46.740
as it is for salt storage.

00:34:46.740 --> 00:34:48.070
Since the boundaries of the storage

00:34:48.070 --> 00:34:50.270
may be determined by
sedimentary boundaries

00:34:50.270 --> 00:34:53.820
or structural elements like faulting,

00:34:53.820 --> 00:34:57.050
the area of the AOR is
likely to be more complex.

00:34:57.050 --> 00:34:58.500
In this particular example,

00:34:58.500 --> 00:35:00.490
you can see that the
boundary of the reservoir

00:35:00.490 --> 00:35:02.340
is defined by ISO pack,

00:35:02.340 --> 00:35:05.670
showing zero feet of thickness
of reservoir at the boundary,

00:35:05.670 --> 00:35:06.913
essentially a pinch out.

00:35:08.270 --> 00:35:10.820
So this very odd and unique shape

00:35:10.820 --> 00:35:13.230
would then have to be
buffered by a quarter mile.

00:35:13.230 --> 00:35:16.580
And all wells within that shape
would have to be identified

00:35:16.580 --> 00:35:18.190
and analyzed to ensure that

00:35:18.190 --> 00:35:19.983
they don't compromise the storage.

00:35:21.350 --> 00:35:25.110
As a geologist, I could just
stare at this map forever,

00:35:25.110 --> 00:35:27.093
but alas, we must move on.

00:35:36.640 --> 00:35:39.780
The notice and hearing
requirements for non-salt storage

00:35:41.700 --> 00:35:45.500
of oil are generally the
same as those for salt storage.

00:35:45.500 --> 00:35:47.520
However, we wanted to make it clear

00:35:47.520 --> 00:35:50.180
that if for some reason the
extend to the storage reservoir

00:35:50.180 --> 00:35:52.150
goes beyond the surface track

00:35:52.150 --> 00:35:54.473
that you notify all applicable persons.

00:35:55.370 --> 00:35:57.920
We've included this
in our online guidance.

00:35:57.920 --> 00:36:00.270
Also included in our online guidance

00:36:00.270 --> 00:36:03.110
is a section called Publication Guides.

00:36:03.110 --> 00:36:04.893
This walks you through the,

00:36:05.910 --> 00:36:08.010
it walks you through how
to prepare your publication

00:36:08.010 --> 00:36:11.380
to make sure it meets
our standards for review.

00:36:11.380 --> 00:36:16.380
Finally, well, the de facto
hearing requirement for storage

00:36:16.460 --> 00:36:18.710
was suspended by the May 5th Order,

00:36:18.710 --> 00:36:20.920
it is important to
remember that a hearing

00:36:20.920 --> 00:36:24.030
still may be required if
the application is protested

00:36:24.030 --> 00:36:25.530
or is administratively denied.

00:36:40.640 --> 00:36:42.060
Thanks for participating today.

00:36:42.060 --> 00:36:44.290
I'd like to thank
Scott, our storage lead

00:36:44.290 --> 00:36:47.480
and Rick Rosso, who is
my permit tech manager.

00:36:47.480 --> 00:36:49.930
If you have any permitting
questions after today,

00:36:51.160 --> 00:36:52.223
I know we always,

00:36:54.260 --> 00:36:55.620
maybe our minds are kind of blank

00:36:55.620 --> 00:36:58.640
as things are kind of being spoken to us

00:36:58.640 --> 00:37:01.100
but oftentimes I'm the other person

00:37:01.100 --> 00:37:03.910
you know 15 minutes
after I lose the opportunity,

00:37:03.910 --> 00:37:05.500
I've got a question.

00:37:05.500 --> 00:37:06.780
You can send those to

00:37:08.800 --> 00:37:11.750
our UIC email inbox.

00:37:11.750 --> 00:37:14.603
It's uic@rrc.texas.gov.

00:37:16.970 --> 00:37:20.850
And we've actually
got a new email address

00:37:20.850 --> 00:37:25.410
specific for permit information.

00:37:25.410 --> 00:37:28.160
We're accepting electronic applications

00:37:28.160 --> 00:37:33.160
in the UIC_Permits@rrc.texas.gov
email address.

00:37:35.620 --> 00:37:38.190
And if you've got read letters

00:37:38.190 --> 00:37:41.310
or deficiency letters,
any correspondence,

00:37:41.310 --> 00:37:42.970
you wanna protest an application,

00:37:42.970 --> 00:37:46.630
all of that can be sent to
UIC_Permits@rrc.texas.gov.

00:37:51.130 --> 00:37:56.130
And I'm happy to answer any
more questions in the Q&amp;A chat.

00:37:57.460 --> 00:37:59.910
There haven't been any

00:38:01.130 --> 00:38:03.350
unanswered questions yet.

00:38:03.350 --> 00:38:05.820
I will add two things,

00:38:05.820 --> 00:38:08.873
questions that you
may have on your mind.

00:38:11.890 --> 00:38:15.200
The permitting
timeframe for storage wells

00:38:15.200 --> 00:38:18.663
is longer than it is for typical
injection disposal wells.

00:38:19.620 --> 00:38:22.113
It's 90 days total.

00:38:25.705 --> 00:38:27.250
And so,

00:38:27.250 --> 00:38:29.880
storage operations being
a little more complicated,

00:38:29.880 --> 00:38:32.630
it is expected that the
review may take longer

00:38:32.630 --> 00:38:35.633
and so the rule allows
us a total of 90 days.

00:38:36.630 --> 00:38:39.400
And the other thing I
neglected to mention

00:38:39.400 --> 00:38:43.593
in the presentation is the
cost although currently,

00:38:45.100 --> 00:38:47.390
all storage wells

00:38:49.980 --> 00:38:53.633
fees are suspended by the May 5th Order.

00:38:56.835 --> 00:38:57.668
The

00:38:58.810 --> 00:39:01.540
cost normally is $200 per well,

00:39:01.540 --> 00:39:06.540
or 500 if you include the
130% surcharge that we add on.

00:39:09.860 --> 00:39:11.680
And so basically the same

00:39:11.680 --> 00:39:15.763
as a H-1 Rule 46 well.

00:39:17.240 --> 00:39:19.830
And we have a question
about whether or not

00:39:19.830 --> 00:39:24.580
we can use the UIC permits
email for H-1s and W14s,

00:39:24.580 --> 00:39:25.923
and the answer is yes.

00:39:26.920 --> 00:39:31.920
So any permit information for
injection disposal or storage,

00:39:32.830 --> 00:39:36.450
you can send to that email applications,

00:39:36.450 --> 00:39:38.720
correspondence, protests, like I said,

00:39:38.720 --> 00:39:39.763
all of that works.

00:39:44.920 --> 00:39:47.237
<v Molly>Okay, so since there
are no other questions,</v>

00:39:47.237 --> 00:39:49.190
and that concludes our webinar.

00:39:49.190 --> 00:39:50.023
Thank you, Sean,

00:39:50.023 --> 00:39:52.593
and thank you everyone
so much for participating.

00:39:54.410 --> 00:39:55.360
<v Sean>Thank you.</v>