STATE AND LOCAL ISSUES AFFECTING THE FIRST CLASS IID UIC WELL IN VIRGINIA

• Jurisdiction: United States

Coalbed Gas Development
(Apr 1992)
CHAPTER 8B
STATE AND LOCAL ISSUES AFFECTING THE FIRST CLASS IID UIC WELL IN VIRGINIA
A. George Mason, Jr.
Equitable Resources Exploration
Kingsport, Tennessee
SYNOPSIS

Page

Introduction

Conventional Natural Gas Development in Virginia

Coalbed Methane Development in Virginia

EREX's Class IID UIC Well Permit

EREX's Virginia UIC Permit

The Dickenson County Solid Waste Ordinance

Attempts Of Dickenson County To Obtain An Attorney General's Opinion

Dickenson County Sues EREX Over The Class IID UIC Well

HJR 310—Virginia General Assembly Study Of The Regulation Of Underground Injection Wells

Agreement Between EREX and Dickenson County

Summary

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Introduction

The purpose of this paper is to provide an overview of the state and local issues that Equitable Resources Exploration ("EREX") faced in permitting the first Class IID Underground Injection Control ("UIC") well in Virginia in support of its coalbed methane development program.

EREX is a division of Equitable Resources Energy Company which is located in Pittsburgh, Pennsylvania and is the exploration and production subsidiary of Equitable Resources, Inc. EREX owns and operates over 3,700 oil and gas wells in Kentucky and over 700 gas wells in Virginia. It is the largest producer of oil and natural gas in Kentucky and the largest producer of natural gas in Virginia. EREX has been drilling conventional natural gas wells (Berea and Devonian Shale) in southwest Virginia since 1973. The majority of these wells are located in Dickenson County with a few in the adjoining counties of Buchanan, Scott, Russell and Wise.

Conventional Natural Gas Development in Virginia

We have had a large developmental drilling program of conventional gas wells in the Nora Gas Field of Dickenson County during the past six years, in which production is from sandstone formations at about 4,500 feet, so we have excellent geological information on the area. Additionally, we have an extensive pipeline gathering system and our gas purchaser also has its compressor station and transmission facilities in place in the field.

In drilling conventional gas wells, we are going through as many as 25 different coal seams that occur from close to the surface down to about 2,500 feet or 3,000 feet. These Virginia coal formations have thicknesses of a few inches to several feet and are similar in geological age to those of the Black Warrior Basin.

Coalbed Methane Development in Virginia

As early as 1987 a team of our people from both the Pittsburgh, Pennsylvania and Kingsport, Tennessee offices initiated an experimental project in Virginia to assess the

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economic feasibility of producing coalbed methane gas from Pennsylvanian age coal seams within what is now identified as the Nora Coalbed Gas Field.¹ These coal seams lay, on an average, at a depth of 1,000 feet to 3,000 feet below the surface. Due to the depth and thickness of these coal seams, none have been commercially mined nor is it anticipated that these coal seams will be mined in the foreseeable future.

In 1988, EREX investigated possible drilling locations in Virginia for coalbed methane ("CBM") wells and drilled its first CBM wells that year. By the end of 1989, EREX had successfully drilled over 10 producing CBM wells.

Based on geological data, we are now drilling in many different "pods" or groups of wells. We start by drilling one well in the center and then step out to new locations, which is typically the way you develop any new gas production area.

We have stimulated over 15 different coal seams with the average CBM well having between 6-12 coal seams completed and producing. To date we have drilled, completed and have over 100 producing CBM wells in Virginia. Presently EREX is continuing to develop and produce additional CBM wells in the Nora Coalbed Gas Field in Virginia.

During the development of these wells, as expected, formation water was associated with this coalbed methane gas. The formation water has been tested by a commercial laboratory and it was found to have characteristic fluids encountered in conventional gas wells and contained no hazardous constituents. However, since the liquids have a high salt and mineral content, we have not used surface disposal procedures.

Dealing with water in a production operation adds to investment costs since you must install pumping equipment to remove water from the CBM wells. And then, of course, there is the operating expense of disposing of this water.

The formation water and coalbed methane gas are removed from the coal seams together. As these two components are brought to the surface they are separated with the coalbed methane gas being placed in the EREX gathering pipeline system and the formation water being placed in tanks at each well site for proper disposal. (Incidentally, this coalbed methane gas is of pipeline quality.)

EREX's CBM development program is not directly related to any current mining operation. In the Black Warrior Basin of Alabama

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methane gas extraction was specifically started for mine safety, to draw out as much gas as possible in advance of the mining operation.

Another important point is that most of the coal mining in our area of Virginia is comparatively shallow, less than 500 feet in depth. Our CBM wells are going into much deeper and thinner coal seams, and the coal industry in this region does not expect to mine these deep, thin coal seams for many years to come, probably not in our life time.

EREX's Class IID UIC Well Permit

On February 26, 1990 EREX applied to Region III of the United States Environmental Protection Agency ("EPA") in Philadelphia, Pennsylvania for a Class IID UIC well permit authorizing it to convert an existing active natural gas well (P-143) into a Class IID injection well. The natural gas well was centrally located to EREX's CBM wells in the Nora Coalbed Gas Field and had been operated as a natural gas well since August, 1982.

In its application, EREX proposed that the associated water produced from the CBM wells would be transported to the injection well for treatment and disposal by injecting the treated formation water into the Weir geological formation. The Weir geological formation which receives this treated water is located at a depth of approximately 4,746 feet beneath the surface.

On May 17, 1990, EPA Region III issued EREX a draft permit to operate its UIC well. Representatives of EPA's Region III conducted a public hearing on EREX's proposed UIC well on June 26, 1990. Due to the outcry by some citizens at this public hearing that they were unaware of EREX's application until a few days before the public hearing and did not have an opportunity to review the draft permit, EPA Region III extended the public comment period one month to July 31, 1990.

On September 17, 1990, EPA Region III issued EREX a final permit,² with an effective date of October 17, 1990, authorizing it to operate a Class IID injection well in Dickenson County, Virginia.³

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In the cover letter enclosing the 13-page permit was a cautionary statement which, though innocuous on its face, became the banner behind which a vocal minority of Dickenson County citizens rallied. The letter stated, "[d]ue to the local ordinance in place in Dickenson County, which may prohibit the operation of injection wells, particular attention must be paid to Part I. A. of your permit which prohibits infringement of State or local law or regulation."⁴ (emphasis added.)

EREX's...