Ohio’s Draft Rules for Oil and Gas Waste Facilities

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Background

Significant changes are on the way for oil and gas waste management facilities in Ohio with the upcoming Oil and Gas Waste Facilities Rules (Draft Rules, OAC 1501:9-X, revised 12/9/16). Oil and gas waste facilities, as currently defined in the Draft Rules, are operations that store, recycle, treat, or process brine and other waste substances associated with oil and gas exploration and production operations but are not part of well operations that are otherwise permitted by Ohio Department of Natural Resources’ (ODNR’s) Division of Oil and Gas Resources Management (such as a production well or Class II brine disposal well). The purpose of these Draft Rules will be to prevent injury or damage to public health, safety, and the environment and to ensure that brine and other waste substances are properly managed and disposed. The Draft Rules include definitions for oil and gas waste substances, treatment, recycling, storage, repurposing, stabilization, and processing. While the statutory definition of Technologically Enhanced Naturally Occurring Radioactive Material (TENORM) is retained, the Draft Rules appear to expand TENORM materials to include seven (7) specific waste types. The Draft Rules also require that the permit applicant shall be responsible for all utility connections of the facility. ODNR issued the Draft Rules asking that written comments from the industry be submitted by January 20, 2017, and held an industry meeting on January 30, 2017.

Until the Draft Rules are finalized, such facilities have been granted temporary authorization via a Chief’s Order from ODNR. At this point, it is not known as to when these Draft Rules will be final and effective; however, oil and gas waste facilities that currently have a Chief’s Order will be required to re-submit a permit to construct and/or a permit to operate once the Oil and Gas Waste Facilities Rules are promulgated. Constructed/operating facilities will be required to meet the location restrictions and construction specifications in the final rules.

Are the Draft Rules Requirements Similar to the Ohio Horizontal Well Site Construction Rule?

The Draft Rules are very similar to the Ohio Horizontal Well Site Construction Rule with respect to surface location and siting criteria, permit application/form and supporting documents, review procedures, construction activities, permit modifications, and certification. A significant difference is the definition of secondary containment, including tanks, vessels, berms, dikes, pipes, liners, vaults, curbing, drip pans, sumps, etc. The definition of material modification is equivalent to the definition in the Ohio Horizontal Well Site Construction Rule with the exception of substituting the name “Oil and Gas Waste Facility” for “Horizontal Well Site” and “Oil and Gas Waste Facility Boundary” with “Well Site Boundary.” The Draft Rules outline processes for permit modifications, requirements during construction activities, and construction certification, all of which are similar to requirements in the Ohio Horizontal Well Site Construction Rule.

The following exhibits will be required with the applications:

  • Design and construction drawings,
  • Containment integrity document,
  • Emergency release conveyance map,
  • Stormwater hydraulic report,
  • Sediment and erosion control plan,
  • Geotechnical report/plan,
  • Oil and gas waste facility boundary GIS files, and
  • Dust control plan.

These exhibit requirements are very similar to the requirements stipulated under the Ohio Horizontal Well Site Construction Rule, with the exception of the Containment Integrity requirement in the Draft Rules.

What Does the Oil and Gas Waste Facility Permitting Process Look Like Under the Draft Rules?

The permit application process will require the completion of a Permit to Construct (PTC) and a Permit to Operate (PTO). The Draft Rules state that the permits are not transferable and are issued only for a specific location. Thus, mobile facilities cannot be permitted in the current version of the Draft Rules. Application forms, prescribed by ODNR, will require specific facility and/or owner/industry information. Completeness and pre-construction site review time frames are also outlined, and those may take between fifty (50) and seventy (70) business days under normal circumstances.

One of the most contentious components of the Draft Rules is the public notice requirement once the permit application is deemed complete. Written objections to the permit application, if deemed relevant by ODNR, will require a public hearing. The Draft Rules stipulate that ODNR’s Division of Oil and Gas Resources Management provide public notice of the application by posting the application on the division’s website. The question regarding this public notice requirement has to do with its timing and/or its order with respect to the Technical Review Procedure (i.e., whether it is appropriate for the public notice to happen before Technical Review is completed).

A pre-construction site review will be completed by ODNR within fifteen (15) days of notification of a complete PTC application. ODNR is required to complete its technical review of the PTC application within 60 days following the completion of the public notice process. The PTO application will be reviewed within 60 days following the pre-construction site review.

The permittee shall notify ODNR at least forty-eight (48) hours prior to commencement of construction, following permit issuance. Red-line drawings must be kept on site to document deviations from the approved plans, and inspection and maintenance activities must be performed to demonstrate compliance.

The Draft Rules outline processes for addressing permit modifications, requirements during construction activities, and requirements for certification of the constructed site to be operated, similar to what are included in the Ohio Horizontal Well Site Construction Rule.

No later than two (2) years after the effective date of the PTC, the permittee is required to submit a signed and sealed certification from the Ohio-registered professional engineer to ODNR, certifying that the oil and gas waste facility was constructed in reasonably close conformity with the approved application and documented modifications.

What are the Impacts and Implications?

Obviously, finalization and implementation of the Draft Rules will result in higher costs for permitting, construction, and operation of oil and gas waste facilities in Ohio due to increased regulatory requirements.

Oil and gas waste facility owners/operators will need to plan longer lead-times for site selection, plan development, field investigations, and compliance with the permitting, construction, and operation requirements. Increased costs for oil and gas waste facility permits, construction, and operations will likely trickle down through the Exploration and Production industry.

Clear and timely communication and clarifications to ODNR inquiries, along with well-structured and assembled plan sets and application materials will all be critical to navigating the permitting and review process and in securing permits to construct and operate oil and gas waste facilities.

Implementation of an effective construction quality assurance and quality control (QA/QC) program will be critical for facility construction in accordance with the permit conditions, site design plans, and specifications. The Draft Rules also require that all modifications (material or application) are well documented and communicated with ODNR.

Critical Items Requiring Further Consideration:

  • The baseline environmental assessment, containment integrity, dust control plan, and geotechnical investigation requirements are more prescriptive than requirements in West Virginia and Pennsylvania rules for similar facilities.
  • There is no distinction in the factors of safety requirements for slope stability between cut slope and fill slope. The Draft Rules require the same factor of safety of 1.5 for both types of slopes and a factor of safety for bearing capacity of not less than 3.0. These restrictive factors of safety and bearing capacity requirements are likely to increase the effort and costs for site selection, limiting the options for site development.
  • The application and technical review procedures will extend the time frame for permitting, design, construction, and operation of oil and gas waste facilities. The overall permitting process could range from ten (10) weeks to as many as nineteen (19) weeks, depending on relevant objections during the public notification process.

Summary

Promulgation and execution of Oil and Gas Waste Facilities Rules will result in additional procedures and requirements for the Oil and Gas industry. The rules will not address all site-specific design, construction, and operational issues; thus, anticipation of permitting issues and optional solutions must be effectively communicated to the owner for a complete and compliant permit application. The planning and permitting process will require assembling effective and well-coordinated environmental, ecological, civil/geotechnical engineering, and land surveying teams. During the ODNR rule-making process, CEC will continue to be actively involved, representing industry and stakeholder concerns.

If you have any questions or concerns regarding how these Draft Rules may affect your business, please contact Ababu Gelaye at agelaye@cecinc.com or (614) 310-2079, or Roy Stanley at rstanley@cecinc.com or (614) 425-6324.

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