CMM Regulatory Compliance & Environmental Issues 4 — Questions and Answers
Question 1: What is 'produced water' and what is the primary federal regulatory concern for its disposal onshore?
- Freshwater injected during hydraulic fracturing; regulated under SDWA Class II UIC wells
- Water co-produced with oil and gas from the reservoir; regulated primarily under SDWA Class II UIC disposal well rules and state programs (Correct answer)
- Municipal wastewater generated at remote field camps; regulated under NPDES permits
- Rainwater collected in reserve pits; exempt from all federal regulation
Correct answer: Water co-produced with oil and gas from the reservoir; regulated primarily under SDWA Class II UIC disposal well rules and state programs
Produced water is naturally occurring formation water that comes up with hydrocarbons; its underground disposal is regulated under SDWA Class II injection well rules.
Question 2: Under OSHA's Process Safety Management (PSM) standard (29 CFR 1910.119), what threshold quantity of flammable liquids in a process triggers PSM requirements?
- 1,000 lbs at or above the normal boiling point
- 10,000 lbs at or above the normal boiling point (Correct answer)
- 500 gallons in any single storage vessel
- Any quantity of HVLs handled under pressure
Correct answer: 10,000 lbs at or above the normal boiling point
OSHA's PSM standard applies when a process contains 10,000 lbs or more of a flammable liquid or gas at or above its normal boiling point.
Question 3: Which BLM regulation governs the measurement, reporting, and royalty valuation of oil and gas produced from federal and Indian leases?
- Onshore Oil and Gas Order No. 4 (Production Measurement)
- 43 CFR Part 3162 (Onshore Oil and Gas Operations)
- 30 CFR Parts 1202 and 1206 (ONRR Royalty Valuation) (Correct answer)
- 40 CFR Part 60 (NSPS for Oil and Gas Facilities)
Correct answer: 30 CFR Parts 1202 and 1206 (ONRR Royalty Valuation)
The Office of Natural Resources Revenue (ONRR) administers 30 CFR Parts 1202 and 1206, which govern royalty reporting and valuation for federal and Indian mineral production.
Question 4: A 'completion report' submitted to BLM after drilling a well on federal land must include:
- Only the wellbore trajectory and total depth reached
- Geologic, engineering, and production test data, including casing details, perforations, and initial production rates (Correct answer)
- A revised NEPA environmental assessment for the completed well
- Proof of financial assurance for future plugging and abandonment
Correct answer: Geologic, engineering, and production test data, including casing details, perforations, and initial production rates
BLM's Well Completion or Recompletion Report (Form 3160-4) requires comprehensive technical data including geology, casing program, completion interval, and initial production test results.
Question 5: Under CERCLA, what is the legal significance of being designated a 'Potentially Responsible Party' (PRP)?
- The PRP must immediately cease all operations at the contaminated site
- PRPs may be held jointly and severally liable for all cleanup costs at a Superfund site regardless of fault percentage (Correct answer)
- PRP status triggers automatic criminal prosecution under RCRA
- PRPs receive preferential access to federal cleanup funds before private parties
Correct answer: PRPs may be held jointly and severally liable for all cleanup costs at a Superfund site regardless of fault percentage
CERCLA imposes strict, joint and several liability on PRPs, meaning any one party can be held responsible for 100% of cleanup costs regardless of their proportionate contribution.
Question 6: The 'Royalty-In-Kind' (RIK) program, historically used by ONRR, allowed the federal government to:
- Accept oil or gas production instead of cash royalty payments from lessees (Correct answer)
- Grant royalty-free development rights in exchange for environmental mitigation
- Defer royalty payments for marginal wells producing below economic thresholds
- Transfer royalty obligations from the operator to the mineral owner directly
Correct answer: Accept oil or gas production instead of cash royalty payments from lessees
Under the RIK program, the federal government took its royalty share in the form of actual production rather than cash, which it then marketed independently.
Question 7: Which federal regulation requires oil and gas operators to submit an 'Application for Permit to Drill' (APD) and what agency reviews it?
- 30 CFR Part 250; BSEE reviews APDs for offshore federal leases only
- 43 CFR Part 3162; BLM reviews APDs for onshore federal and Indian oil and gas leases (Correct answer)
- 40 CFR Part 52; EPA reviews APDs as part of state implementation plan approval
- 29 CFR 1910; OSHA reviews APDs for all oil and gas drilling operations
Correct answer: 43 CFR Part 3162; BLM reviews APDs for onshore federal and Indian oil and gas leases
BLM's regulations at 43 CFR Part 3162 require operators to file an APD and receive BLM approval before drilling on federal or Indian lands.
CMM Regulatory Compliance & Environmental Issues 4
What is 'produced water' and what is the primary federal regulatory concern for its disposal onshore?