1. Bonding ACT 223 - Sec. 215 Bonding (a)(1)…upon filing an application for a well permit and before continuing to operate any oil or gas well, the owner or operator thereof shall file with the department a bond… conditioned that the operator shall faithfully perform all of the drilling, water supply replacement, restoration and plugging requirements (4 pages) Chapter 78.301 Scope In addition to the requirements of section 215 of the act (58 P. S. § 601.215), this subchapter specifies certain requirements for surety bonds, collateral bonds, replacement of existing bonds, maintaining adequate bond and bond forfeiture.(9 pages)

2. More Bonding Guidelines for Submitting Oil and Gas Well Bonds- (64 pages) 77 pages of… single well bond $2,500…multiple bonded…blanket bond $25,000…acceptable bond -- surety or collateral… attorney-in-fact…Collateral…cash…certified check…bank check…treasurers check…money order…payable to the Commonwealth…letter of credit…certificate of deposit…negotiable securities…does not pay interest on cash held as collateral...collateral bond requirements…phased deposits of collateral…individuals…not to corporations, companies, or partnerships. Plan on 2 weeks to 3 months for Bond approvals A well will be released from bond coverage one year after it has been properly plugged and the site satisfactorily restored.

3. Permit Application For Drilling Or Altering A Well Act 223 - Sec.201 (a) No person shall drill a well or alter any existing well…without having first obtained a well permit. § 78.11. Permit requirements. (a) No person may drill or alter a well unless that person has first obtained a permit from the Department. (b) No person may operate a well unless one of the following conditions has been met: (1) The person has obtained a permit under the act. (2) The person has registered the well under the act (3) The well was in operation on April 18, 1985, under a permit that was obtained under the Gas Operations Well-Drilling Petroleum and Coal Mining Act

5. Permits A permit will expire in 1year… …at which time the applicant can submit an affidavit, requesting renewal of the permit, attesting that all applicable parties have been notified and that all aspects of the original application are the same.

6. Lots of Applications Total applications for New, Drill Deeper and Re-drill Permits for 2010. Northwest2345 East Region2299 Southwest1926 Statewide:6570

7. Staff to handle paperwork- NWRO 7 Clerical for administration -logging, tracking, issuing 7+ Technical staff for technical review -plats, deviation surveys, environmental issues, notifications 1 Program Manager to sign every permit

8. The hardest part is finding it in the office (EFACTS) Date Stamp Admin review Log/track Screen Tech Chief Re-review Technical Review Log/Track Permit Issuance Log/Track Program Manager Sign Copy/ Scan/ Send

9. How do we keep track By adding Numbers to the application– To each application we add the following numbers: OGO number Bond number API number Authorization number Site number Client number APS number Account number Primary Facility number Sub-facility number Sometimes more numbers

10. Most important part of the application * Show me the money * After the date stamp… …send the money to Harrisburg… …now the review can begin

11. Form 5500-PM-OG0001 § 78.15. Application requirements (a) An application for a well permit shall be submitted on forms furnished by the Department and contain the information required by the Department to evaluate the application. (b) The permit application will not be considered complete until the applicant submits a complete and accurate plat, an approvable bond or other security, the fee, proof of notification, necessary requests for variance or waivers or other documents required to be furnished by law or the Department. The person named in the permit shall be the same person named in the bond or other security.

21. Completing the Drilling Application Form Administration stuff Name Address Phone Fax Well Name & Number County Muni Was location ever permitted before? ###-##### Is this re-working an existing well not registered or permitted? Please provide all known information about the unregistered/ un-permitted well. Pennsylvania Natural Diversity Inventory… any hits must be addressed and mitigation standards might be included as a Special Condition on the Permit.

22. Permit Types Drill a new well Deepen a well Re-drill a well Alter a well Other

23. Drill a New Well A location where a well has never been drilled location may have been permitted before

24. Deepen a Well To drill an existing well to lengthen the well bore

25. Re-drill a Well Drill through a well plug to put well in production Plugged Well Drill through

26. Alter a Well Changes the well bore or drills out well bore Drill out well bore Original well bore Drilled out larger well bore

27. …Alter a well…casing In coal areas…any work that effects the coal protective casing…requires a permit Work or replacement of casing that changes casing depth or diameter…requires a permit Work or replacement of casing of the same diameter to the same depth does not, by itself, require a permit.

28. Other type ? If not a new, deepen, re-drill or alteration…it is an other well…and must be specified Change use from production to storage Rehabilitate an Orphan well for production Replacement of casing. No re-drill of borehole. DEP is no longer able to register wells

29. Type of well Gas Oil Comb.(gas & oil) Injection, recovery Injection, disposal Coalbed methane Gas storage Other (specify)

30. Application Fee The fee is an application processing charge for expenses incurred by the Bureau of Oil & Gas… … and a surcharge for Abandoned & Orphan Well Plugging Funds.

31. Surcharges & fees at a glance Permit fees can range from None, for rehabbing an Orphan Well… …to $3850 for a 15,000 Marcellus Well…& more if deeper!

32. Fee calculator website http://www.dep.state.pa.us/dep/deputate/minres /oilgas/2011Permitcalculator.htmhttp://www.dep.state.pa.us/dep/deputate/minres /oilgas/2011Permitcalculator.htm

33. $ Payment $ Pay to the order of… …Commonwealth of PA We accept Money Orders, personal checks & business checks.

34. Coordination with regulations & other permits The Oil & Gas Act Oil & Gas Conservation Law Coal & Gas Resource Coordination Act Waste Management Act Clean Streams Law PACode Chapters 93, 102 & 105 Among others

35. Oil & Gas Conservation Law If well is 3800 or deeper & penetrates the Onondaga…then Conservation Well. Depth Onondaga 5000 - 6000- Depth 3000- 4000- 3800- Onondaga

36. What about these? DEP policy: Proposed vertical wells with a non-vertical lateral, where the vertical portion penetrates the Onondaga by 200 or less, and the intent of that portion is only for logging purposes, can be considered non-conservation wells. Onondaga6000- 6200 <200 >200 For production purposes

37. In areas with no spacing application or order, the borehole, at Conservation depth, must be at least 330 from outside lease boundary. Onondaga6000- 6100 330

38. Coal and Gas Resource Coordination Act Applies to all proposed locations that penetrate coal seams, deemed workable by underground methods. Except Conservation wells and certain other wells as defined in the Act. Requires coordination of coal mine and gas well operators in areas where applicable proposed well locations are near active or permitted coal mines.

39. Workable Coal Seams by underground methods Coal 28 thick with sufficient quality At least 100 overburden …………………………….for at least 1 sq mi aerial extent 28 Surface 100 28 sufficient quality 100 overburden Aerial extent at least 1 mile

40. If determined a workable coal seam and well is not exempted from the Act and not a Conservation Well Distance restrictions: At least 1000 from any other well that -penetrates a workable coal seam -has not been plugged -is non-producing wells abandoned after 11/30/55 1000 Proposed location workable coal seam Plugged well Non producers abandoned After 11/30/55Before 11/30/55 Conservation well Non-Conservation well

41. House Bill 265 House Bill 265 looks to amend the Coal and Gas Resource Coordination Act. Allowing Non-Conservation well clusters, on the same pad, to be located less than 1000 feet from each other…among other things.

42. Permitted Coal Mines whose boundaries are within 1000 of proposed location Required to notify coal owners/operators Proposed location Permitted coal mine boundary 1000

43. Notified coal owners/ operators have the right to object Act 223 if the well will, in the opinion of the coal owner or operator, unduly interfere with or endanger such mine, then the coal owner or operator affected shall have the right to file objections DEP will mediate a conference between the 2 parties to work out an agreement

44. Coordination with gas storage operations Proposing to drill within 2000 of a gas storage reservoir. Storage operator must be notified with the casing and cementing plan. The storage operator can object DEP will mediate a conference between the 2 parties to work out an agreement

45. Within perimeter of a landfill Whether a landfill is permitted, active or abandoned… …if the proposed location falls within its perimeter… …label the landfill location on plat and identify the owner

46. Distance restrictions The proposed site must be > 100 from any stream, spring, body of water, or a wetland > 1 acre, unless approved through a waiver. Well pad/site 100

47. Waiver request – Form 5500-FM-OG0057 Requesting to waive the 100 distance restriction from any wetland > 1 acre, spring, stream or body of water Describe the waiver request in detail… …water bodies, classifications, distances, etc.. …addressing all of the following: (1) Fluid containment measures (drilling, stimulation, formation & production) (2) Handling large volume of top-hole water (3) Site chemical storage & handling…spill clean-up (4) Disposal methods for wastes and waste fluids (cuttings & muds) (5) When polluting substances will be removed from site after well completion (6) Waste removal during inclement weather (7) Submittal of an E & S Control Plan per Chapter 102

48. Waiver request – Form 5500-FM-OG0057 Waiver request form goes out to the field representative for approval or disapproval… …who might meet out in the field with operator… …then make an educated decision Approved waivers can have special conditions that are incorporated into the permit

49. …more distance restrictions A new well may not be drilled within 200 of existing buildings (where someone normally works or lives), or a water well… >200 …without prior written consent from the owner… …or an approved request for variance Form 5500-FM-OG0058

50. Request for Variance From Distance Restriction From Existing Building or Water Supply (5500-FM-OG0058) Explain the variance request: -distances from the proposed well location to buildings and / or water supply; -uses of buildings and water supplies, and frequency of use; -proof of notification -type of insurance coverage for the project -explain how adherance to the 200-ft requirement would deprive the oil and gas owner of the opportunity to produce or share in the production of oil and gas underlying the surface tract -evidence that no location more than 200 feet from all buildings or water supplies is available where the well could be drilled. Plan Description. Describe measures, facilities, or practices to be employed during well site construction, drilling, and well operation to insure safety and protect persons and property, and to protect waters of the Commonwealth. Use additional blank sheets for narrative or sketches as needed Define: Insurance coverage How youre deprived Project Safety measures

51. Coordination with Public Resources Section 205(c) of the Oil and Gas Act requires the Department to consider the impact of the proposed well on public resources, including: publicly owned parks, forest, gamelands and wildlife areas; national or state scenic rivers; national natural landmarks; habitats of rare and endangered flora and fauna and other critical communities; historical and archaeological sites listed on the federal or state list of historic places Parks Gamelands Forests Wildlife Areas We treat different public resources differently… Endangered species The operator must fill out form 5500-PM-OG0076 if on or near public resources.

52. Coordination of a well Location with Public Resources - form 5500-PM-OG0076 Is proposed location in or within 200 of a publicly owned park/forest/etc., Natural National Landmarks or historical/archaeological sites? Within a corridor of a scenic river? Has a PA Natural Diversity Inventory search been run & issues resolved? What addl measures to be taken to protect public resource.

53. Public Resources common issues… Allegheny National Forest (ANF) and DCNR. DEPs consideration is elevated when the ANF or DCNR objects to a drilling application. DEP will hold the application until a site visit by DEP field personnel. DEP will consider the objections raised by the agency and make a determination. ANF/DCNR objection DEP holds Application until… objection consideration, through field personnel, make a determination DEP continues Application review

54. …more other Public Resource common issues… Policy for Pennsylvania Natural Diversity Index (PNDI) coordination during permit review & Evaluation: Form 400-0200-001 The application needs to include the PNDI Project Environmental Review Receipt, obtained from www.naturalheritage.state.pa.us, with the application. There are 4 types of results: No Impact Potential Impact Avoidance Measures Conservation Measures

55. PNDI – Potential Impacts If there is a potential impact a clearance letter is required from the jurisdictional agency, which may include measures the applicant must take to minimize impacts, DEP will include them in the permit as a Special Condition. Measures to take Included in permit

56. PNDI- Avoidance Measures If avoidance measures are generated the applicant needs to initial that they will abide by the measures during the project. DEP will include these measures as Special Conditions. Avoidance measures Initials adherence to… …avoidance measures Included in permit

57. PNDI- Conservation Measures If Conservation Measures are generated, DEP will might include them in the permit as a Special Condition Conservation Measures May be included in permit The world is happy

58. Special Protection Watersheds Applicant identifies if proposed application is in a HQ or EV watershed. DEP will stamp permits and plats accordingly, if applicant does not identify watershed appropriately. Listings for specific stream identification can be found in PA Code Chapter 93

59. Coordination with ESCGP-1 If the proposed location is part of a larger development, disturbing >5 acres, list the ESCGP-1 approval date and number, if applicable.

60. Page 2 - Notifications The applicant shall notify…: -The surface landowner -Surface landowners whose water supplies are within 1000 of the proposed location -Water purveyors whose water supplies are within 1000 of the proposed location -Gas storage operations, with storage fields, within 2000 -Coal owner and lessee, of all underlying seams, in workable coal areas -Underground coal mine operators with mine operations within 1000 …of their intentions to drill a well…and list them on page 2. surface landowner l 20001000 Proposed Gas well Workable coal (owner/lessee) Gas storage Water supply

61. Notification details The applicant shall notify appropriate parties by certified mail, with proof of notification or, show proof of notification with appropriate signature on page 2. The notification shall include the complete application and form 5500-FM-OG0052 Landowner Notification Of A Well Drilling Or Alterations, if applicable Rights under the law Certified mail Signature on page 2 Signature also waives the 15 day objection period

62. Notification- Water Supply Protection Form OG0052 Landowner Notification Of Well Drilling Or Alterations informs the water supply of their rights under Section 208 of the Act. Operators who pollute or diminish a water supply shall restore or replace the supply, adequate in quality/quantity for purposes served. Operators are presumed responsible for polluting or diminishing affected water supplies within 1000 of the drilling, if the supply became affected during drilling or within 6 months of completion of the drilling or alteration. < 6 months < 1000 Bad Water

63. Operator is presumed guilty, unless… He rebuts the presumption by proving either: –1) Pollution was pre-existing (pre-drilling survey) –2) The water supply refused access for pre-drilling survey –3) The water supply is > 1000 from the drilling –4) The water supply became affect >6 months after well completion –5) The water supply became affected by some other cause

64. Objections The right to object to an application is afforded to surface landowners and coal owner or operators in the Act and to gas storage operators in Chapter 79.

65. DEP responds to objections from surface landowners whose water supplies are within 1000- even if it is not afforded to them in law or regulation. DEP responds to written objections with a letter stating receipt of the objection and that DEP will contact them, during the review, if the application comes in. DEP sends acknowledgement letter Application arrives DEP calls objecting party

66. DEPs objection response Most objections are from water supplies that are not the surface landowner of where the well is being drilled. DEP re-informs the objecting party that there are casing standards in regulation for groundwater protection, as well as remedies afforded water supplies that are affected by drilling. DEP will inform the objecting party of the applicants rights to a permit within 45 days as long as: 1) The well site is not in violation, or be in violation when permit is issued 2) The application is complete and accurate 3) There are no unresolved objections by coal mine owner/operator 4) Bonding requirements have been met 5) The applicant is not under a legal document from DEP which restricts its issuance

67. The Application Plat The plat is reviewed for consistency with the rest of the application, accuracy & completeness..

68. Plat requirements Prepared by registered professional Engineer or Surveyor with seal (4 copies) Show: Municipality & County Surface Landowner Surface landowner water supplies of water supplies within 1000 of proposed location. Owner of workable coal seams Tract Acreage Proposed location surveyed from at least 2 permanent points on tract boundary Proposed well angle and direction Well number Workable coal seams cased off Latitude and longitude of surface location-10 meter accuracy (NAD 83) All buildings and water supplies within 200 of proposed location Water supplies within 1000 of proposed location Wetlands within 100 of proposed location Every spring, stream or body of water within 100 of disturbed area USGS topographic map name & section number with topographic mark and offsets Applicable metadata- 10 meter accuracy Target formation Well name, number, type, permit number & project number if applicable Well Deviations and distances with total vertical depth and total measured depth Well graphic display from plan view

69. Typical plat – top half

70. Typical plat Typical Plat- bottom half

71. Deviation Survey

72. The Department shall issue a permit within 45 days

73. Chapter 78 update. 78.52(d) requires the submittal of all predrill data to be used by an Operator to preserve their defense under section 208(d)(1) within 10 business days of receipt of such data. DEP is requesting your assistance and cooperation. We ask that you please submit your pre-drill data in the following method and format to: Please submit all data electronically on a CD with a cover letter to the appropriate regional office: Predrill Data, Oil and Gas Management Program Northwest Regional Office 230 Chestnut St. Meadville, PA 16335 or NCRO Predrill Data Oil and Gas Management Program Northcentral Regional Office 208 West Third Street, Suite 101 Williamsport, PA 17701 or Predrill Data, Oil and Gas Management Program Southwest Regional Office 400 Waterfront Drive Pittsburgh, PA 15222-4024

74. 2.)All data should be submitted in.pdf form. 3.)The CD cover should clearly list the following: Company Name Well Farm Name (Pad) and Permit Number(s) (if available) County of Well Pad(s), Municipality of Well Pad(s) 4.)Folders should be created within the CD using the following file structure: Well Farm Name/Pad ID County of Sampling Location, Municipality of Sampling Location Sample ID Example (each line is a separate folder) Smith Well Pad Clairon County Knox Township John Smith Residence please include latitude/longitude of water sample location somewhere on the data sheet

75. Permit denials Operators will be notified of inaccurate/ insufficient/incomplete applications and have 60 days to rectify the situation, or DEP may deny the application. Insufficient application After 60 days Application denied

76. Special Condition on Permit For shale formations with a significant horizontal well bore through the formation… The permittee shall not withdraw or use water from water sources within the Commonwealth of Pennsylvania, for well fracing activities, unless the permittee does so in accordance with a Water Management plan approved by the Department.

77. Water Management Plan An Oil & Gas operators plans to withdraw from a source. The plan includes calculations and analysis of the environmental impacts associated with the withdrawal. DEP will review the plans analysis of the environmental impact and, if in agreement, send an approval letter stating concurrence with the conclusions determined by the operator.