Miss. Admin. Code Title 26 — Oil and Gas

STATE OIL AND GAS BOARD STATE OIL AND GAS BOARD

Part 1 RULES OF ORDER AND PROCEDURE FOR HEARINGS BEFORE BOARD

26 Miss. Admin. Code Pt. 1 RULES OF ORDER AND PROCEDURE FOR HEARINGS BEFORE BOARD

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Title 26: OIL, GAS, AND OTHER MINERALS

Part 1: RULES OF ORDER AND PROCEDURE FOR HEARINGS BEFORE BOARD (Order No. 201-51 as amended by Order No. 95-98)

Part 1 Chapter 1

RULE 1.1 HEARINGS. Hearings before the Mississippi State Oil & Gas Board shall be called by the Board for the purpose of taking any action in respect to any matter within its jurisdiction upon its own motion or upon the request or application of any interested party.

Upon receipt of a proper written request or petition for hearing, the Board shall place the request or petition on the docket, call a hearing within thirty (30) days after proper notice of the hearing and after such hearing and with all convenient speed, and in any event within thirty (30) days after the conclusion of the hearing, shall take action with regard to the subject matter thereof. In extra-ordinary cases, the Board may take matters under advisement no longer than three regular Board meetings to gather additional evidence it may need in order to render its final decision.

Regular monthly meetings shall be held by the Board on the third Wednesday of each month at a time and place specified in the minutes of the Board. All hearings shall be open to the public and be held in Jackson, Mississippi, at a place designated by the Board by entry on its minutes unless otherwise ordered by the Board.

Where circumstances permit, the Board, after sounding the docket, shall first call up and dispose of all motions and non-contested matters.

Subject to other provisions of these Rules, interested parties shall have the right to be heard at all hearings and to present witnesses and other evidence whether or not represented by legal counsel or technical assistance.

Source: MCA Section 53-1-17(3) (1972)

RULE 1.2 PETITIONS OR REQUESTS FOR HEARING. Petitions or requests for hearing shall be written and may be in the form of a letter, shall be brief and concise, shall state in general terms the matter upon which action of the Board is desired, the interest of the applicant or person making the request, the relief sought, and the reasons therefor. An original and one copy of the request or petition shall be filed but failure to file a copy shall not be grounds to reject the request or petition.

Any such petition or request for hearing shall be accompanied by a filing fee in the amount of $100.00. The filing fee must be paid prior to the assignment of a docket number and therefore prior to placement on the Board’s docket. Said filing fee is nonrefundable. Payment of the filing fee can be made in any form currently allowed by the Board’s regulations concerning the cost of research and copying of Board records.

Source: MCA Section 53-1-17(3) (1972)

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RULE 1.3 DOCKETS AND FILE PROCEDURES. The State Oil and Gas Supervisor (Supervisor) shall maintain a Docket Book and all petitions, and requests for hearings called on the motion of the Board shall be docketed and given a docket number, and a file carrying such number shall be opened by the Supervisor. All petitions for hearing, a copy of the notice of hearing, together with proof(s) of its publication, the originals of all instruments, documents, plats and other data except exhibits pre-filed pursuant to Rule 17, filed with the Board in connection with the hearing or the subject matter thereof, a transcript (if any) of all evidence taken at the hearing and the originals or copies of all correspondence with the Board concerning such hearing on the subject matter thereof shall be marked with the docket number of the hearing and placed and kept in the file carrying such number. The Docket Book and all files pertaining to hearings shall be open to the public at all reasonable times but shall not be removed from the custody of the Board or its employees. Copies of all such instruments, documents, plats, other data, and correspondence shall be furnished to any interested party upon payment of the cost of making such copies. All notices of hearing shall refer to the docket number thereof. Copies of petitions for hearing shall be furnished by the Supervisor to any person upon request and upon payment of the cost of making such copies.

Source: MCA Section 53-1-17(3) (1972)

RULE 1.4. NOTICE OF HEARING. Notice of public hearing held by the Board shall be given in the following manner:

(A) NOTICE BY PUBLICATION. Unless otherwise provided or required by statute or rule of this Board, notice of all hearings of the Board shall be given by publishing notice thereof at least twenty (20) days before the date of hearing in a newspaper published daily in Jackson, Mississippi, of general circulation in the state, and in a newspaper of general circulation in the county or counties in which the lands and pools involved are located whether published in or out of the county; provided that notice of a hearing on a statewide rule or order affecting all pools in the state shall be published twice in a newspaper published daily in Jackson, Mississippi, of general circulation in the state, the first publication appearing at least twenty (20) days before the date of hearing, and the second publication appearing at least ten (10) days before the hearing, and no other publication shall be necessary for such hearing.

The Supervisor shall maintain a general mailing list and shall place thereon the names and addresses of all persons, firms or corporations who make request in writing to be included on such list. Each person, firm and corporation on such mailing list shall be mailed at the address listed a copy of the monthly docket, and other notices of general interest as determined by the Supervisor. The failure to mail a copy to any such persons, firm or corporation shall not affect the validity of any hearing held pursuant to the notice published in accordance with these rules or any rule, regulation or order issued pursuant to such hearing.

(B) PERSONAL NOTICE. In all the instances noted below, the petitioner shall also give personal notice which shall be written notice specified in Rule 4 (C) below.

(1) PETITIONS FOR EXCEPTION LOCATION AND INTENTIONAL DEVIATION. Notice of hearing a petition to authorize a well to be drilled for oil or gas at a

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location other than that authorized by rule or order of the Board (an exception location) or to approve the intentional deviation of a well shall be given by the petitioner to the operator of each adjoining or cornering unit toward which the well location is proposed to be moved or deviated.

(2) PETITIONS TO AMEND OR REFORM ESTABLISHED DRILLING OR DEVELOPED UNITS. Notice of hearing a petition to amend or reform an established drilling unit upon which a well has been spudded or reform a developed unit shall be given by the petitioner to (1) each Owner, (as defined in Statewide Rule 2[p]) in the established unit and (2) each Owner in the proposed amended or reformed unit. Determination of an Owner shall be from the public land records within 90 days prior to filing a Petition to reform or amend an established unit.

(3) PETITIONS TO ESTABLISH OR AMEND ALLOWABLES. Notice of hearing a petition to establish (by adoption of Special Field Rules or otherwise) or change the allowable for any developed unit shall be given by the petitioner to the Operator (as defined in Statewide Rule 2[r]) of each well completed in the same pool in the same field.

(4) PETITIONS FOR FORCED POOLING. (a) Notice of hearing a petition to require the owners in an established or proposed drilling or developed unit to integrate or pool and develop their tracts or interests with other tracts or interests as a drilling or developed unit pursuant to § 53-3-7 (1) (a and b), Miss. Code of 1972 (force integration), shall be given by the petitioner to each non-consenting Owner. For the purposes of this rule, a "non-consenting Owner" shall mean an owner of drilling rights which has not agreed, in writing, to be integrated in the unit. (b) Notice of hearing a petition to require the owners in an established or proposed drilling or developed unit to integrate or pool and to develop their tracts or interests with other tracts or interests as a drilling or developed unit, pursuant to § 53-3-7 (2), Miss Code of 1972 (force integration with alternate charges), shall be given in accordance with the provisions of said section.

(5) PETITIONS FOR VOLUNTARY AND COMPULSORY UNITIZATION. (a) Notice of hearing a petition to approve a voluntary plan for unitized operations shall be given by the petitioner to the Operator of each well in a unit adjoining or cornering the voluntary unit and, as to a voluntary unit which does not cover the entire pool in the same field, to the Operator of each well in the pool in the same field not included in the voluntary unit. (b) Notice of hearing a petition for a compulsory unit established pursuant to §§ 53-3-101 to 53-3-119, Miss. Code of 1972, shall be made in accordance with the provisions of said sections.

(6) PETITIONS TO ESTABLISH OR AMEND SPECIAL FIELD RULES. Notice of hearing a petition to establish or amend special field rules shall be given by the petitioner to the Operator of each well within the proposed or established field.

(7) PETITIONS TO DETERMINE THE REASONABLENESS OF WELL COSTS. Notice of hearing a petition pursuant to § 53-3-7 (4) Miss. Code of 1972, to determine the reasonableness of an Operator's costs for the drilling, completing and operating a well shall be

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given by the petitioner to (1) the Operator, if not the petitioner, and (2) the other Owners, if any, responsible for such costs whose names have been given to the petitioner by the Operator. Prior to filing the petition, the petitioner shall request in writing from the Operator, and the Operator shall furnish to the petitioner within thirty (30) days after receipt of the request, the names and mailing addresses known to the Operator of all parties responsible for well costs.

(8) PETITIONS REGARDING MULTIPLE WELLS ON A UNIT. Notice of hearing a petition to drill, produce or operate more than one well on the same unit perforated in or producing from the same pool shall be given by the petitioner to each Operator of each unit currently producing from the same pool in the same field.

(9) PETITIONS REGARDING DOWN HOLE COMMINGLING. Notice of hearing a petition to commingle down hole production of oil or gas from more than one pool in a single well in the same field shall be given by the petitioner to each Operator of each unit currently producing from any pool in the same field for which commingling is proposed.

(10) PETITIONS FOR INJECTION WELLS. Notice of hearing a petition to operate an Underground Injection Control Class II Well, pursuant to Statewide Rule 63, shall be given by the petitioner (applicant) in accordance with the provisions of Statewide Rule 63 and personal notice to all Operators of wells producing oil or gas (or having previously produced and not plugged and abandoned) from the pool or pools into which the injection will be made.

(11) PETITION FOR UNIT EXCEPTION. Notice of hearing a petition for an exception to unit size or configuration shall be given by the Petitioner to the Operator of each adjoining or cornering unit.

(C) MANNER AND TIME OF PERSONAL NOTICE. (1) Whenever personal notice is required to be given in writing, the form and content of such notice shall be sufficient if it is the same as the published notice or, if in a different form, the notice contains the same information.

(2) When, pursuant to the provisions of Rule 4(B) above, the petitioner is required to give personal notice to any person, such notice shall be given at least twenty-five (25) days prior to the date of the hearing unless a greater period of time is required by another rule.

(3) In those cases where notice is to be given by the petitioner, the petitioner shall make a reasonably diligent effort to determine the name and mailing address of each such person. If, after the exercise of reasonable diligence, the petitioner is unable to determine the name and mailing address of any person upon whom notice is to be served by the petitioner, the publication provided for in Rule 4(A) above, shall be effective as service upon such person.

(4) If the petitioner shall fail to give notice in conformity with the provisions in Rule 4(B) upon any person whom the petitioner is required to give notice, the Board, may, nevertheless, proceed to hear the petition if it is shown to the satisfaction of the Board that the person in question had actual knowledge of the hearing of the petition at least ten (10) days prior to the date of the hearing.

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(5) A copy of the petition shall be attached to the notice.

(6) Personal notice required to be given may be given in any manner used in written business communications including, but not limited to, ordinary first class mail, expedited delivery such as express mail and air express services, facsimile transmission, hand delivery, electronic mail and Western Union mailgram except as otherwise required by statute or statewide rule. (7) Notice shall be deemed given when sent.

(8) The time period and manner provided for herein for the giving of notice may be waived in writing by any person as to that person's interest only.

(9) Except where expressly required to the contrary by applicable statutes, where personal notice is provided for in these rules the name or names of the person or persons to whom notice is being given need not appear in the notice. It shall be sufficient for such person or persons to be referred to generally such as, for example, "owners", "persons" and "operators".

(10) Notice required to be given to an Operator shall mean the Operator as reflected by the Board's records for wells producing, drilling or permitted not more than forty-five (45) days prior to the filing of the petition.

(11) Failure to give notice as provided for in Rule 4(C) shall not affect the validity, effectiveness or legality of any order or action of the Board provided the Board determines the petitioner has made a reasonably diligent effort to give the personal notice required herein.

(D) FORM AND CONTENT OF NOTICE BY PUBLICATION AND PERSONAL NOTICE. The notice shall be substantially in the following form:

STATE OIL AND GAS BOARD OF MISSISSIPPI NOTICE To all owners and persons interested in the following described lands: (here describe lands by legal description and field, if any) Take notice (insert name of party or parties requesting hearing) has filed a petition (or application) with the State Oil and Gas Board of Mississippi under Docket No. requesting that (here relief requests). The petition will be heard by the Board at o'clock . m. on the day of , 19 , in Jackson, Mississippi, at which time and place you may appear and contest said matter. If you intend to contest the docket or request a continuance you must notify the Board and the petitioner's representative of your intention in writing not later than 5 p.m. on Tuesday, day of , 19 , (seven (7) days prior to the date stated above for the hearing). Failure to so notify the Board and the petitioner shall be a waiver of your right to contest or request continuance. You are advised the Board may adopt orders concerning a petition which may differ from the relief requested by the petitioner and Board will enter such order or orders as in its judgment may be appropriate in accordance with the evidence presented.

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Supervisor State Oil and Gas Board

(E) PROOF OF NOTICE BY PUBLICATION AND PERSONAL NOTICE. Proof of notice by publication shall be provided by (i) affidavit of the publisher or editor (or his duly authorized agent) of the newspaper in which publication is made or (ii) sworn affidavit of the petitioner or petitioner’s agent or counsel stating notice was given by publication in compliance with Rule 1.4 (A), together with a copy of the notice as published in the newspaper as evidence thereof. Proof of notice other than by publication shall be either by testimony or by affidavit of the Board's staff member or the petitioner or petitioner's agent or attorney. If, in the exercise of reasonable diligence as provided in Rule 4(C), above, the petitioner is unable to obtain the name and the mailing address of any person or person upon whom personal notice is to be given by the petitioner, the testimony presented or the affidavit filed by the petitioner shall so state.

Source: Miss. Code Ann. Section 53-1-17(3) (1972)

RULE 1.5 CONTINUANCE OF HEARINGS. (A) All motions for continuance of contested matters shall state the reason for continuance.

(B) Parties other than petitioner who desire to continue a matter must (1) notify by telephone the petitioner or the petitioner's representative set forth in the petition and the Board of the motion for continuance not later than 5 p.m. on Tuesday of the week which precedes the regular monthly Board Meeting; and (2) mail or deliver a copy of the motion for continuance to said petitioner's representative and the Board not later than 5 p.m. on Tuesday of the week which precedes the regular monthly Board Meeting.

(C) On any contested matter, Petitioner desiring a continuance must request a continuance not later than 5 p.m. on Thursday of the week which precedes the regular monthly Board Meeting by notifying the Board and anyone who has filed a notice of contest. This notice shall be by telephone, followed by written notice, mailed or delivered to the Board and any contesting party or his representative on the same day.

(D) On any non-contested matter, petitioner may move for a continuance at the docket call at the regular meeting for cause stated.

(E) Petitioner and any other interested party may waive the notice requirements of paragraphs 5(B) and 5(C), supra, and agree to a continuance.

(F) The time limit for argument on motions for continuance shall be set by the Board at the time the motion is heard. Movant shall present his argument first and may reserve part of his time for rebuttal.

(G) As a general rule no more than one continuance of a docket will be granted at the request of a person other than petitioner.

(H) The foregoing notwithstanding, the Board may grant continuances in exceptional circumstances even though there has not been compliance with paragraphs 5(a) through 5(e).

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(I) Once proper notice of a hearing has been given, additional notice shall not be required for any continuance of that hearing.

Source: MCA Section 53-1-17(3) (1972)

RULE 1.6 CONTESTED HEARINGS (A) NOTICE OF CONTEST. (1) If an interested person desires to contest a petition or docket, then not later than 5 p.m. on Tuesday of the week which precedes the regular monthly Board Meeting the contestant shall deliver to the petitioner's representative set forth in the petition and to the Board a written "notice of contest" setting forth that the petition or docket will be contested, the name and address of the contestant, and a brief statement of the known reason(s) for the contest but failure to state all reasons will not be a waiver of the right to contest. If the written notice of contest cannot be actually delivered by the said deadline, then the notice requirement may be satisfied if on or before the said deadline contestant (a) gives the said petitioner's representative and the Board verbal notice (by telephone or in person) of the contents of the written notice and (b) transmits the required written notice so that it is to be received by said petitioner's representative and by the Board by the close of business on the next working day.

(2) A notice of contest may be combined with a motion to continue and/or a motion to dismiss, or any other responsive pleading.

(3) Absent good cause shown, the failure to give the notice of contest as provided in 6(A)(1) above shall be deemed to be a waiver of the right to contest.

(4) For purposes of Rule 6(A), a statement or writing in opposition to a petition shall not be considered a contest unless the person in opposition intends to cross examine witnesses and/or introduce evidence.

(B) EXCHANGE OF WITNESS LISTS AND EXHIBITS. (1) Not later than Thursday of the week which precedes the regular monthly Board Meeting at which the petition is to be heard, the petitioner and contestant(s) shall exchange a copy of proposed exhibits, and a list of may call witnesses and their areas of expertise. At this time, the contestant shall file his exhibits with the Board.

(2) If it becomes necessary for a party to substitute a witness, the party shall promptly give the opposing party(ies) notice of the substitution by the most expeditious means, including telephone.

(3) The parties may agree in writing to shorten or lengthen the time(s) for the exchange of witness lists and exhibits, or even to dispense with the exchange. Additionally, the Board may enter a scheduling order which sets the time(s) for said exchange.

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(4) If a continuance of a petition or docket is agreed to, then the time periods for exchanging exhibits and witness lists shall apply to the hearing at which the petition or docket is scheduled to be heard.

(C) CONDUCT OF CONTESTED HEARING. (1) In general, a contested hearing shall follow this order: opening statements, petitioners' case, contestants' case, petitioners' rebuttal, closing statements.

(D) PREHEARING CONFERENCE. (1) The Supervisor or the Chairman of the Board may after exhibits have been exchanged between or among the parties, call for a prehearing conference with or between the parties to a contested docket. The prehearing conference may be noticed to be held before the Supervisor or the Board or one or more staff members or such other person(s) as the notice may designate. The parties to a contested docket shall be given reasonable advance notice of the prehearing conference by the most expeditious means, including by telephone. All prehearing conferences shall be held in Jackson, Mississippi unless the Supervisor or the Chairman of the Board, designates a place other than Jackson.

(2) The prehearing conference may be called for any purpose(s), including to identify and narrow the issues of fact and questions of law, if any, simplify the proof and, if possible, resolve the contest.

(3) Any party to a contested docket may request that the Supervisor or the Chairman of the Board call a prehearing conference, the actual calling of which shall be in the discretion of the Supervisor or the Chairman of the Board, as the case may be.

(E) SCHEDULING ORDER. (1) The Board may enter such scheduling order(s) in a contested docket as it deems necessary or advisable including orders setting prehearing conference(s), and providing for the exchange of exhibits, witness lists and the filing of briefs.

(2) Any party to a contested docket may request the entry of a scheduling order, the entry of which shall be at the discretion of the Board.

Source: MCA Section 53-1-17(3) (1972)

RULE 1.7 EMERGENCY HEARINGS. Emergency action may be taken by the Board without notice and hearing in the event the Board finds immediate action is necessary in order to prevent waste, to prevent irreparable injury or for some other cause, but each emergency rule, regulation and order shall provide that it will remain in force no longer than forty-five (45) days from its effective date. Immediately upon entering an emergency rule, regulation or order, the Board shall call a hearing on the subject matter thereof, and such hearing shall be held prior to the expiration of the emergency rule, regulation or order.

Source: MCA Section 53-1-17(3) (1972)

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RULE 1.8 EX PARTE COMMUNICATIONS. After the announcement of, or notice of intention to contest any petition or application for relief submitted to this Board, there shall be no ex parte contacts relating to the facts or merits of the petition between (a) any person acting on behalf of the petitioner or applicant for the relief desired or any person opposed to the application or petition and (b) any person with the State Oil and Gas Board of Mississippi who exercises any responsibility in relation to whether the application or petition is granted or denied. Source: MCA Section 53-1-17(3) (1972)

RULE 1.9 HEARING PROCEDURES. The hearings shall be opened with the call of the docket. The request for hearing, the notice or notices thereof and proof of the due publication of the notice or notices of the hearing shall be made a part of the record of the hearing. Opening and closing statements may be made by the party or parties involved in a hearing. Source: MCA Section 53-1-17(3) (1972)

RULE 1.10 ORDERS OF THE BOARD.

(A) The prevailing party in any hearing before the Board shall prepare a proposed Order for review and approval by the Board which shall specify findings of fact and conclusions of law. If an uncontested matter is denied the Board shall inform the party of the reasons for the denial so that the party can prepare the Order. Upon written request of any party to a contested docket, the Board shall include in its Order or separately render written findings of fact and conclusions of law setting forth the reasons for the Boards decision. The request may be made either before or after the hearing.

(B) For all uncontested matters that have been approved by the Board whether by affidavit or after a hearing, the petitioner shall prepare and mail or hand deliver a proposed order to the Board not later than 5 p.m. Monday following the regular Board Meeting if heard and decision made on Wednesday or 5 p.m. Tuesday if heard and/or decision made on the Thursday following the Wednesday of docket call after the hearing.

(C) For all contested matters before the Board, the prevailing party shall mail or hand deliver to the Board and all parties participating in the hearing a proposed order not later than 5 p.m. Wednesday following the regular Board Meeting if heard and decision made on Wednesday or 5 p.m. Thursday if heard and/or decision made on the Thursday following the Wednesday of docket call for the prevailing party to deliver a proposed order to other participating parties after the hearing on the matter concludes. The parties receiving the proposed order shall prepare and mail or hand deliver any objections in writing not later than 5 p.m. on Tuesday following the aforementioned Wednesday or 5 p.m. on Wednesday following the aforementioned Thursday to respond with objections to proposed order, if any, after receipt. If the parties cannot agree as to the form of the Order, the Board shall determine the proper form and inform the prevailing party who shall incorporate any necessary changes and submit the order for the Board.

(D) On all matters heard by the Board, the signed Order shall be filed with the Board with all deliberate speed but in no event more than thirty (30) days after the final decision.

Source: MCA Section 53-1-17(3) (1972)

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RULE 1.11 TRANSCRIPT OF HEARING. The Board shall, from time to time, by order entered on its minutes appoint a competent shorthand reporter. All hearings of the Board shall be recorded by a reporter appointed by the Board and sworn by the Board faithfully to discharge his/her duties in accordance with law and the direction of the Board.

Source: MCA Section 53-1-17(3) (1972)

RULE 1.12 SUBPOENAS. In any proceeding before the Board, the Board in its discretion, may issue subpoenas requiring the attendance of witnesses and the production of books, papers and records material to the matters lawfully before the Board at the designated place of hearing.

Source: MCA Section 53-1-17(3) (1972)

RULE 1.13 PROOF OF NOTICE AND SERVICE. The petition or request for the hearing, the notice or notices thereof and the proof of the due publication or service of notice or notices of the hearing shall automatically become a part of the record.

Source: MCA Section 53-1-17(3) (1972)

RULE 1.14 WITNESSES. All witnesses shall be required to testify under oath, administered by a member of the Board or the Supervisor, to tell the truth, the whole truth and nothing but the truth; all witnesses shall be subject to direct and cross-examination by any member of the Board, Board Staff or by any party or parties interested in the hearing or by their representatives.

Source: MCA Section 53-1-17(3) (1972)

RULE 1.15 AFFIDAVITS. (A) Where an application has been filed with the Board for authority to multiply complete or to tubingless complete an oil or gas well in connection with other surface or subsurface mechanical connections and installations and where legal notice of the hearing of said application has been given as required by law and the rules of the Board and where said application is not contested when called for hearing by the Board, then the Board may receive in evidence on said hearing affidavits, exhibits and duly executed Board forms as to the manner in which said multiple or tubingless completions are to be made, provided, however, that the Board has previously approved a similar completion for the field, pool or pools in question after a notice and hearing or witnesses in person.

(B) Where an application for an injection well and system has been filed with the Board and where legal notice has been given as required by law and the Board's rules and where said application is not contested when called for hearing, then affidavits, exhibits and Board forms may be received in evidence at the hearing as to the manner in which said injection well and system is to be completed and regardless of whether or not the Board has previously approved, after notice and hearing of witnesses, a similar application for the pool or field.

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(C) Where an application for force integration of a drilling unit has been filed with the Board and when legal notice has been given as required by law and when said application is not contested when called for hearing, then affidavits, exhibits and Board forms may be received in evidence at the hearing. The Board reserves the right to reject any and all such affidavits and exhibits and to require the affiant or affiants to appear in person and testify at the hearing.

(D) Where an application for reformation of a regular drilling unit which complies in all respects with the existing Statewide Rules and Regulations into another unit which similarly complies, and where there is no change in ownership whereby any party would be adversely affected, and where no island acreage would be created thereby, when legal notice has been given as required by law and said application is not contested when called for hearing, then affidavits, exhibits and Board forms may be received in evidence at the hearing. The Board reserves the right to reject any and all such affidavits and exhibits and to require the affiant or affiants to appear in person and testify at the hearing.

(E) Where an application for the directional drilling of a well for topographic reason(s) which encounters the pay zone(s) at a regular location within a regular unit has been filed with the Board and when legal notice has been given as required by law and when said application is not contested when called for hearing, then affidavits, exhibits and Board forms may be received in evidence at the hearing. The Board reserves the right to reject any and all such affidavits and exhibits and to require the affiant or affiants to appear in person and testify at the hearing.

(F) Where an application for an exception location on a regular unit for reason(s) of topographic and/or surface obstructions has been filed with the Board and when legal notice has been given as required by law and when said application is not contested when called for hearing, then affidavits, exhibits and Board forms may be received in evidence at the hearing. The Board reserves the right to reject any and all such affidavits and exhibits and to require the affiant or affiants to appear in person and testify at the hearing.

(G) Where an application for the surface commingling where the ownership is the same for each well has been filed with the Board and when legal notice has been given as required by law and when said application is not contested when called for hearing, then affidavits, exhibits and Board forms may be received in evidence at the hearing. The Board reserves the right to reject any and all such affidavits and exhibits and to require the affiant or affiants to appear in person and testify at the hearing.

(H) In all other non-contested matters or in contested matters where those parties who appear in person at the hearing agree thereto, affidavits may be received in evidence. The Board reserves the right to reject any and all such affidavits and to require the affiant to appear in person.

(I) The following applies to the filing of affidavit in Rule 15. The party(ies) planning to submit a petition by affidavit shall file the original and three (3) copies of the affidavit with appropriate exhibits with the Board not later than 5 p.m. on Monday of the week which precedes the day of the Hearing. The original with the appropriate exhibits shall be filed with the Board Reporter upon the call of the docket for proper marking and entered into the record. All

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materials shall have the proper docket number upon each item. The original and three copies sent to the Board along with the proper exhibits shall not be held as confidential, unless such confidentiality is authorized under the provisions of the Miss. Public Records Act, Miss. Code Anno. Section 25-61-1, et seq. (1972), or other applicable statutes.

Source: MCA Section 53-1-17(3) (1972)

RULE 1.16 EVIDENCE. The materiality, relevancy and competency of any testimony shall be subject to challenge by any party to the hearing or by any member of the Board or Board staff. When so interposed, such objections shall be acted upon by the Chairman or by the Acting Chairman, his ruling thereon being subject to change by a majority vote of the board members then sitting.

Source: MCA Section 53-1-17(3) (1972)

RULE 1.17 EXHIBITS. One copy of all exhibits to be used by Petitioner in its direct presentation at the hearing before the Board shall be prefiled with the Supervisor not later than 5 p.m. on Monday of the week which precedes the day of the Hearing. This prefiled copy is for staff use only and will not be part of the public record nor be available for public inspection. At least nine (9) copies of said exhibit shall be presented at the time of the hearing.

Source: MCA Section 53-1-17(3) (1972)

RULE 1.18 IN CONFORMITY WITH STATUTES. These rules are in addition to and supplement those statutory provisions which may be applicable to hearings before the Board.

Source: MCA Section 53-1-17(3) (1972)

RULE 1.19 EFFECTIVE DATE. The foregoing Amended Rules of Order and Procedure shall be in full force and effect in all future proceedings before the Board commencing February 1, 1998. This Order supersedes former Rules of Order and Procedure for Hearing before the Board adopted in Order No. 201-51, as amended, Order No. 3-90, as amended by Order No. 430- 90. The Board may, from time to time, after notice and hearing, repeal, amend or supplement these Rules of Order and Procedure.

Source: MCA Section 53-1-17(3) (1972) RULE 1.20 RULES AFFECTING MEDIA COVERAGE. Television camera personnel and media photographers may not disturb the decorum of the Board hearing. Video cameras and photographers shall be positioned in the hearing room as directed by the Board or the Supervisor and may not move to another location until Board recesses or breaks. No artificial lighting or flash attachments may be used and no disruptive noise will be permitted.

Source: MCA Section 53-1-17(3) (1972)

Part 2 STATEWIDE RULES AND REGULATIONS

26 Miss. Admin. Code Pt. 2, R. 1.26 - Requirements for Hydraulic Fracture Stimulation –Report of Shooting or Treating

1. Definitions

For the purposes of this Rule, the following definitions shall apply:

a. “Board” means the Mississippi State Oil and Gas Board.

b. “Additive” means any substance or combination of substances, including proppants, having a specified purpose which is intentionally combined with the Base Fluid as hereinafter defined.

c. “Base Fluid” means the continuous phase fluid, such as water, which is used in a particular Hydraulic Fracturing Treatment.

d. “Chemical Abstract Service” or “CAS” means the chemical registry which is the authoritative collection of disclosed chemical substance information.

e. “Chemical Constituent” means a discrete chemical with its own specific name or identity (such as, but not necessarily, a CAS number) which is contained in an Additive.

f. “Chemical Family” means a group of elements in the Periodic Table or, more commonly, compounds which share certain physical and chemical characteristics and which have a common name.

g. “Hydraulic Fracturing Fluid” means the Base Fluid and Additives utilized in a particular Hydraulic Fracturing Treatment.

h. “Hydraulic Fracturing Treatment” means stimulating a well by the application of Hydraulic Fracturing Fluids with force in order to create artificial fractures in the formation for the purpose of improving the capacity of the well to produce hydrocarbons.

i. “Supervisor” means the State Oil and Gas Supervisor of the Mississippi State Oil and Gas Board.

2. The provisions of this Rule shall apply to oil and gas wells which are proposed to undergo a temporary or intermittent hydraulic fracturing procedure to improve the productive

capacity of such oil and gas wells utilizing Hydraulic Fracturing Treatment as hereinabove defined.

3. Before an operator shall commence the hydraulic fracturing of any oil and gas well, including the application of Hydraulic Fracturing Treatment ashereinabove defined, such operator shall file with the Mississippi State Oil and Gas Board a duly executed FORM 2 indicating in the narrative portion of such FORM 2 the nature of the hydraulic fracturing procedure proposed to be conducted. No such hydraulic fracturing procedure shall commence prior to the approval of such permit application. Operator shall provide the Mississippi State Oil and Gas Board Field Inspector with not less than forty-eight (48) hours notice in advance of the commencement of any Hydraulic Fracturing Treatment.

4. Operators applying for a permit to commence Hydraulic Fracturing Treatment of any oil or gas well shall state clearly such intent on the FORM 2 submitted to the Mississippi State Oil and Gas Board in accordance with Paragraph 5 below.

5. The permit application described in the preceding paragraphs shall, at a minimum, include:

(A.) The following information on the existing or proposed casing program, demonstrating that the well will have steel alloy casing designed to withstand the anticipated maximum injection pressures to which the casing will be subjected in the well:

(1) Whether the well is or will be a vertical well, a directional well or a horizontal well; and

(2) The estimated true vertical and measured production casing setting depths in the well; and

(3) The casing grade and minimum internal yield pressure for the existing or proposed production casing used in the well; and

(4) The surface casing shall be set at least 100.0 feet below the Base Underground Source of Drinking Water (“BUSDW”) and cemented to the surface or the intermediate or production string casing shall have cement to the surface starting 100.0 feet below the BUSDW or the operator shall use tubing and packer to perform the Hydraulic Fracturing Treatment.

(B.) The following information demonstrating that the well has or will have sufficient cement volume and integrity to prevent the movement of Base Fluids and Additives up-hole into the various casing or well bore annuli:

(1) The existing or proposed cement minimum compressive strength; and

(2) The known or estimated top of cement for the production casing string.

(C.) The anticipated surface treating pressure range for the proposed Hydraulic Fracturing Treatment. The production casing described in subparagraph 5.(A.) above shall be sufficient to contain the maximum anticipated treating pressure of the proposed Hydraulic Fracturing Treatment which shall not exceed the API minimum internal yield pressure for such production casing.

6. Within thirty (30) days following the completion of the Hydraulic Fracturing Treatment, the operator shall, for the purpose of disclosure, report the following information to the Supervisor regarding such procedure utilizing a duly executed 7. FORM 3 (“Completion Report”):

(A.) The maximum pump pressure measured at the surface during each stage of the Hydraulic Fracturing Treatment unless reasonable grounds for confidentiality exist in which event a request for confidentiality maybe submitted to the Supervisor who shall be authorized to waive the disclosure of such data for a period of six (6) months and for an additional six (6) months upon written request to the Supervisor at the Supervisor’s sole discretion; and

(B.) The types and volumes of the Base Fluids and Additives used for each stage of the Hydraulic Fracturing Treatment expressed in gallons or pounds; and

(C.) The calculated fracture height as designed to be achieved during the Hydraulic Fracturing Treatment and the estimated TVD to the top of the fracture; and

(D.) A list of all Additives used during the Hydraulic Fracturing Treatment specified by general type, such as acids, biocides, breakers, corrosion inhibitors, cross- linkers, demulsifiers, friction reducers, gels, iron controls, oxygen scavengers, pH adjusting agents, scale inhibitors, proppants and surfactants; and

(E.) For each additive type listed under subparagraph 6.(D.) above, the specific trade name and suppliers of all the Additives utilized during the Hydraulic Fracturing Treatment; and

(F.) If the operator causes any Additives to be used during the Hydraulic Fracturing Treatment not otherwise disclosed by the person performing such treatment, the operator shall disclose a list of all Chemical Constituents and associated CAS numbers contained in such Additives that are subject to the requirements of 29 CFR 1910.1200(g)(2); and

(G.) A list of Chemical Constituents intentionally added to the Base Fluids which are subject to the requirements of 29 CFR Section 1910.1200(g)(2) and their associated CAS numbers; and

(H.) The maximum ingredient concentrations within the Additive expressed as a percent by mass for each chemical ingredient listed under subparagraph 6.(G.) above; and

(I.) The maximum concentration of each chemical ingredient listed under subparagraph 6.(G.) above expressed as a percent by mass of the total volume of Hydraulic Fracturing Fluids utilized.

8. Notwithstanding subparagraph 6.(G.) above, if the specific identity of a Chemical Constituent and the Chemical Constituent’s associated CAS number are claimed to be a trade secret, or have been finally determined to be entitled to protection as a trade secret under 29 CFR Section 1910.1200(i), the entity entitled to make such a claim may withhold the specific identity of the Chemical Constituent and the Chemical Constituent’s associated CAS number from the list required to be reported by subparagraph 6.(G.) above. If the entity entitled to make such a claim elects to withhold the information, the report must:

(A.) Disclose the Chemical Family associated with the ingredient; and

(B.) Include a statement that a claim of trade secret protection has been made by the entity entitled to make such a claim.

9. An operator will not be responsible for reporting information that is not provided to them due to a claim of trade secret protection by the entity entitled to make such a claim.

10. Nothing contained in Paragraph 7 above shall authorize any person to withhold information which is required by state or federal law to be provided to a health care professional, a doctor or a nurse for the purpose of diagnosis or treatment of a medical condition and it is further stated that any health care professional, a doctor or a nurse receiving such information is required to maintain it as confidential.

11. In lieu of submitting to the Supervisor on the FORM 3 (Completion Report) the information regarding the Hydraulic Fracturing Treatment prescribed in Paragraph 6 of this Rule, the operator of an oil and gas well may furnish to the Supervisor a FORM 3 containing a statement signifying that the required information has been submitted to the Ground Water Protection Council Hydraulic Fracturing Chemical Registry (http://fracfocus.org) or any other similar registry, in accordance with their requirements. In any event, the operator shall submit to the Supervisor on a FORM 3 a list of the chemicals used in the Hydraulic Fracturing Treatment.

Authority: MCA Section 53-1-17(3) (1972) Approved: January 16, 2013 Effective Date: March 4, 2013

RULE 1.27 APPLICATION TO PLUG. Any drilling well completed as a dry hole, from which the rig is to be moved away, shall be mudded and cemented, provided, however, that authorization to the contrary has not been given by the Board.

Before any work is commenced to abandon any well drilled for the discovery of oil or gas, the owner or operator thereof shall give written notice to the Board of his intent to abandon such well on Form No. 6, along with a proposed procedure for plugging said well, prior to beginning operations of plugging said well. Upon receipt of such notice, the Board may issue plugging permit and may send a duly authorized representative to the location specified to be present at the time indicated in such notice, to witness the plugging of such well. In the case of an emergency, the application may be made orally or by telegraph, and the Supervisor may orally or by telegraph authorize the work; however, written application must be filed within five (5) days after emergency authorization is given even though the work has already been commenced or completed and a written permit shall be issued which shall contain the emergency authorization.

Plugging operations shall begin within 120 days of approval of the Form 6 and shall proceed with due diligence until completed, however, an extension of time may be granted by the Board for good cause shown upon public notice and hearing.

No surface or production casing shall be pulled from any abandoned well without first filing Form No. 6 and upon completion of said work, report on Form No. 7 the manner in which the well was plugged and the amount of pipe pulled.

RULE 1.28. PLUGGING AND ABANDONMENT. Each abandoned hole or well shall be plugged by or on behalf of the owner, operator or producer who is in charge of the well and responsible therefore.

A. Schedule of Abandonment and Reporting on Form No. OGB 9-12-15-Z and Form No. 9-A.

1. Dry Holes All wells drilled for oil or gas and found to be dry prior to or after the effective date of this order shall be plugged within one hundred twenty (120) days after operations have been completed thereon or one hundred twenty (120) days after the effective date of this order, whichever is later, unless an extension of time is granted by the Mississippi State Oil and Gas Board following notice and hearing. A petition for inactive well status for a dry hole shall be accompanied by a duly executed “Inactive Well Status Report” (Form No. 9-A) requesting that the inactive well status of such well be extended for an additional period of time not to exceed twelve (12) months. Any such extension of inactive well status for a dry hole may only be approved by the Board for such additional period as the Board, in its discretion, may deem appropriate but in no event for longer than twelve (12) months. Any petition filed by an operator with the Board to extend a dry hole’s inactive status must state the grounds for such extension (e.g., proof of the well’s future utility.)

2. All Other Wells a. All wells wherein production operations or use as a service well have ceased on or after the effective date of this order shall continue to be reported on Form No. OGB 9-12-15-Z with the appropriate notation that the well is off production or no longer in use as a service well along with the date of last production or date the service well ceased to be used. After twelve (12) months, if such a well has not been restored to production or use as a service well, the operator shall either: (i) properly plug and abandon the well in accordance with all applicable rules and regulations concerning same; or, (ii) return the well to production operations or use as a service well; or, (iii) file a petition with the Mississippi State Oil and Gas Board, accompanied by a duly executed “Inactive Well Status Report” (Form No. 9-A) requesting that the inactive status of such well be extended for an additional period of time not to exceed twelve (12) months. Any such extension of inactive well status for a well may only be approved by the Board, following notice and hearing, for such additional period as the Board, in its discretion, may deem appropriated but in no event for longer than twelve (12) months. Any petition filed by an operator with the Board to extend a well’s inactive status must state the grounds for such extension (e. g., proof of the well’s future utility). Any well granted “Inactive Well” status must continue to be reported on Form No. OGB 9-12-15-Z showing the date of last production or the date the well ceased to be used as a service well, together with a notation showing the well is carried on Form No. 9-A, “Inactive Well Status Report” until the well is plugged and abandoned. The extension of Inactive Well status shall not affect the extension or dissolution of the unit as provided in Rule 7 and Rule 8 hereof.

b. The "Inactive Well Status Report" shall list the field, well name, well number and other pertinent data and provide an appropriate column to classify such well as having either (1) future utility, or (2) no future utility. If the well is classified as having future utility, the operator shall specify such utility by completing the appropriate column on the form. Wells so classified shall be reviewed periodically by the Supervisor who, at his or her discretion, may require an operator to supply additional information to justify the classification.

c. All such wells classified on the "Inactive Well Status Report" (Form No. 9-A) by either the operator or the Supervisor as having no future utility shall be plugged within one hundred twenty (120) days from the date of such classification unless an extension of time is otherwise granted by the Mississippi State Oil and Gas Board, following notice and hearing.

d. Notwithstanding anything above to the contrary, all such wells within designated secondary and tertiary recovery projects do not have to be reported on the "Inactive Well Status Report" if the designated secondary or tertiary recovery project is listed on the Form No. OGB 9- 12-15-Z beside each inactive well reported therein.

3. Administrative Interpretation

For purposes of administering the heretofore mentioned paragraphs, it is understood that:

a. A wellbore which is completed in more than one common source of supply (multiple completions) shall not be considered as ceasing to produce and shall not be reported on the

"Inactive Well Status Report" as long as there is production from or operations in any completion in the wellbore.

b. Failure to file the "Inactive Well Status Report" and to indicate the date the well was last produced or utilized may subject the well to immediate plugging.

c. Any interested party at any time shall have the right to review by the Board upon notice and hearing with respect to the administration of any provision hereof.

d. A designated secondary or tertiary recovery project shall be considered to be a fieldwide unit approved by the Board for operation pursuant to Mississippi Code Annotated Section 53-3-101, et seq., and which is currently being operated under Special Field Rules which provide for secondary recovery, pressure maintenance, cycling operations, water flood, tertiary recovery, or any combination thereof.

B. Procedure For Plugging

Plugging shall be in accordance with the permit issued as provided for in the preceding rule and unless the permit or Form No. 6 sets forth the method and procedure of plugging the well, the following shall be applicable:

1. With reference to the following, mud shall mean a mud fluid or weighted salt water fluid of sufficient weight to offset the hydrostatic pressure of any of the formations penetrated and cement shall mean cement or a proper cement-admix recognized by and of accepted use in industry.

2. All holes in which no casing was run shall be plugged as follows:

a. The hole shall be filled with mud, and cement plugs of not less than one hundred (100) feet in length shall be placed to protect each producible pool and a cement plug of not less than one hundred (100) feet must be place approximately fifty (50) feet below all freshwater- bearing strata, together with additional cement plugs to properly protect all uncased freshwater- bearing sands. Further, a cement plug of not less than one hundred (100) feet shall be placed at the bottom of the surface pipe (50 feet in and 50 feet out). A cement plug of at least twenty-five (25) feet shall be placed inside the casing near the surface of the ground, the casing cut off in such a manner so as not to interfere with soil cultivation, and a steel plate welded to the top of the casing stub.

b. Such other plugs as are deemed necessary by the Board to properly plug the well.

c. Placement of all plugs shall be verified by tagging in a manner acceptable to the Board. In lieu of tagging the placement of plugs, the operator may double the size of the plug set forth in Paragraph (a) above.

d. The operator shall notify the Board’s representative 48 hours prior to setting the plugs to afford him the opportunity to witness the placement, tagging (if applicable) and testing (if applicable) of all plugs.

3. All wells, excluding those classified as Class II injection wells, in which production casing has been set shall be plugged as follows:

a. If the production casing is not to be immediately pulled, a cement plug of not less than one hundred (100) feet or bridging plug with cement on top shall be placed near the bottom of the casing string at a depth equal to at least 0.9 times the top open perforation and in such position as to protect any producible pool. A cement plug of not less than one hundred (100) feet in length shall be placed inside the production casing at approximately fifty (50) feet below all freshwater-bearing strata. A cement plug of at least twenty-five (25) feet shall be placed inside the smallest string of casing and in all annular spaces near the surface of the ground, the casing(s) cut off in such a manner so as not to interfere with soil cultivation, and a steel plate welded to the top of the casing stub(s).

b. Where the production casing is to be pulled, a cement plug of not less than one hundred (100) feet or bridge plug with cement on top shall be placed near the bottom of the production string at a depth equal to at least 0.9 times the top open perforation so as to properly protect any producible pool and the hole filled with mud up to the point where the production casing is severed. The hole shall be filled with mud and a cement plug of not less than one hundred (100) feet in length shall be placed at approximately fifty (50) feet below all freshwater- bearing strata, together with additional cement plugs to properly protect all uncased freshwater- bearing sands. Further, if the base of surface casing is exposed by pulling the production casing a cement plug of not less than one hundred (100) feet shall be placed at the bottom of the surface pipe (50 feet in and 50 feet out). A cement plug of at least twenty-five (25) feet shall be placed inside the casing near the surface of the ground, the casing cut off in such a manner so as not to interfere with soil cultivation, and a steel plate welded to the top of the casing stub.

c. Such other cement plugs and testing of plugs as is deemed necessary by the Board to properly plug the well.

d. The placement, tagging and testing, if any, of all cement plugs shall be witnessed by a representative of the Board. If the option of a bridge plug is chosen for plugging, or if a cement retainer is used for cementing, tagging of the plug will not be required. Also, in lieu of tagging the cement plugs, the operator may double the size of any cement plug set forth in Paragraphs (a) and (b) above.

e. The operator shall notify the Board’s representative 48 hours prior to setting the plugs to afford him the opportunity to witness the placement, tagging (if applicable) and testing (if applicable) of all plugs.

4. All wells classified as Class II injection wells shall be plugged under the procedure included in Rule 63.

5. After the well is plugged and abandoned and prior to releasing the well to the landowner for unrestricted use, a NORM survey shall be run pursuant to Rule 69 and a Form 21 must be filed with the Board within sixty (60) days after plugging.

6. The operator shall have the option as to the method of placing cement or cement-admix in the hole by (1) dump bailer, (2) pumping through tubing, casing, or drill pipe, (3) pump and plug, or (4) other method approved by the Board.

7. Within thirty (30) days after the plugging of any well, the owner, operator, or producer responsible therefore who plugged, or caused to be plugged, the well shall file an affidavit on Form No. 7 with the Board, setting forth in detail the method used in plugging the well and a record of any casing removed.

C. Restoration of Location

1. Whenever a well location is abandoned, for whatever reason (including the plugging of the well), all materials, debris, equipment and machinery, including, but not limited to, drill pipe, casing, tubing, treaters, separators, tanks, concrete bases and all other drilling production, processing, injection, and plant equipment and above-ground pipelines and related facilities, shall be removed from such location, as well as from any associated oil and gas exploration, production, processing and/or storage sites or locations which have likewise been abandoned. All wastes and other materials, including petroleum-contaminated soil, shall be removed from the location and associated sites and disposed of in accordance with appropriate permit(s) or regulation(s); provided, however, that petroleum-contaminated soil may be approved by the Supervisor for ON-SITE REMEDIATION. In conjunction with the restoration and clean-up of such location(s) and associated site(s), all underground or buried lines shall be flushed and capped at both ends. The removal and disposal of all materials, debris, equipment, etc. from such locations and associated sites shall be conducted in compliance with all applicable Statewide Rules and Regulations, including but not limited to Statewide Rule 68 and Statewide Rule 69 relating to NORM-contaminated wastes.

2. Any excavations shall be filled and the overall location graded or contoured to prevent erosion.

3. All water source wells drilled in connection with the operation shall be properly plugged and abandoned unless future utilization of such well(s) is desired by the landowner, in which event the operator must obtain the written consent of the landowner to leave the water source well(s) open. A copy of such written request by the landowner must be filed with the Supervisor.

4. In any event, the location must be restored within ninety (90) days of the date of plugging and/or abandonment in a manner to be approved by the Supervisor.

EXHIBIT “A”

RULE 1.29 PLUGGING SEISMIC SHOT HOLES, CORE DRILLED HOLES, AND STRATIGRAPHIC TESTS. Before any hole is abandoned which was drilled for seismic, core, and other exploratory purposes, and which penetrated below all freshwater strata, it shall be the duty of the owner or driller of any such hole to plug it in such manner as to protect properly all freshwater-bearing strata and to file with the Board within sixty (60) days after the plugging well, on Form No. 7, a record of the manner in which the well was plugged to protect the freshwater-bearing strata.

RULE 1.30 PLUGGING TO PERMIT USE OF FRESHWATER. When any well to be plugged may safely be used as a freshwater well and such utilization is desired by the landowner, the well need not be filled above the required sealing plug set below freshwater; provided that written authority for such use is secured from the landowner and filed with the Board.

RULE 1.31 PERMITS-CASING PULLERS AND BONDS, TANK CLEANERS. (a) Before any person shall hereafter engage in the business of pulling casing from any oil or gas well in this state for compensation, or shall hereafter engage in the business of purchasing abandoned wells, with intention of salvaging casing therefrom, such person shall apply for and obtain from the Board a permit to engage in such business. Before the Board shall issue any such permit, such person shall be required to file with the Board a bond executed by such person, as principal, and some surety company satisfactory to the Board as surety in the principal sum of $10,000.00 conditioned that such sum shall be paid the State of Mississippi for the use and benefit of the Board, in the event the principal shall fail to plug an oil or gas well from which the principal pulls casing in the state without complying with the rules of the Board.

The Board shall issue said permits for a term not less than one (1) year, nor more than three (3) years, and the bond shall be for a term co-extensive with the term of the permit. No permit shall be transferable.

The Board shall revoke the permit of any person if, after notice and hearing, it is ascertained by the Board that such person has failed to comply with the statutes of the state, or the rules and regulations of the Board.

RULE 1.32 REGULATION OF PRODUCTION. As soon as practicable, the production of oil and gas in all common sources of supply will be controlled or regulated as the facts may warrant, as provided for in Chapter 256 of Laws of 1948. The Board on its own motion may, or at the request of any interested party shall, call hearings to determine the maximum efficient rate at which the several pools in the state can produce oil and gas without waste.

RULE 1.33 ALLOWABLE HEARINGS. Except in those fields where special rules provide otherwise, hearings to establish or change the allowable production of oil in any field shall be held whenever called by order of this Board and also whenever any interested party may petition the Board for such a hearing; provided, however, that no such hearing for such purpose shall be held until at least thirty (30) days' notice.

Hearings to establish allowable production of gas shall be held semi-annually.

RULE 1.34 RATE OF OIL AND GAS PRODUCTION. A. Oil: The daily oil allowable per drilling unit, as determined by the Board, must be produced on a monthly basis from the well to which said allowable is allocated, and in the event the well does not have the capacity to produce its total allowable, then it may produce such amount of oil less than its allowable that it is able to produce. No oil well shall produce during any 24-hour period more than twice its daily allowable except during prescribed testing periods. In recognition of the difficulty of producing the allowable to the exact number of barrels, the allowable production may be exceeded for any month by an amount equal to not more than three (3) days' allowable production, provided that the cumulative amount of such excess production shall not exceed three (3) days' current allowable production at the end of any month.

B. Gas: The Mississippi State Oil and Gas Board shall set the maximum allowable gas withdrawal rates from each gas-producing pool. The allocation of allowables to all wells in a non-associated gas pool will be determined from the maximum efficient rate of production from such pool as established by the State Oil and Gas Board, after notice and hearing, whether called by order of this Board or upon petition filed by any interested party. It is the intent and purpose of this rule to permit each and every gas pool in the state to be produced up to its maximum efficient rate of production, subject to the prohibition of waste and the protection of the co-equal and correlative rights of the owners of a common source of supply.

Semi-annual gas deliverability tests will be made by the operator of each gas well as required by Statewide Rule 41. Opportunity to witness the deliverability tests must be given to the State Oil and Gas Board by filing written notice with the Board at least five (5) days in advance of the testing. The results of these tests shall be furnished the Board on Form No. 4-A on or before February 20 and on or before August 20 of each year. Semi-annual gas allowables will be established for each gas well each March and September taking into consideration (1) the rate at which each gas pool can be efficiently produced as determined from deliverability tests, and (2) all other facts that are pertinent for the purpose of preventing waste and protecting correlative rights of owners. No well shall produce at a rate higher than its maximum efficient rate. Allowables less than the maximum deliverability may be assigned by the State Oil and Gas Board.

An operator completing a new gas well or placing an old well on production after recompletion, rework, or stimulation shall test the well and file the results of such test with the Board on Form No. 4-A and obtain a temporary allowable prior to producing said well for any

purpose other than the well test. The well will be assigned a new allowable on the next gas allowable schedule.

The daily gas allowable allocated to a gas producing unit may not be transferred to another gas producing unit. In the event the well does not have the capacity to produce its total allowable, then it may produce such amount of gas less than its allowable that it is able to produce.

In addition to the allowable assigned each gas well in each pool in the field, it shall be permitted to produce that quantity of gas necessary for use as fuel and light in lease operations in the field.

Any gas well whose cumulative production status is below the cumulative allowable for such well in any pool on the last day of March of any year, as shown by the Production Status Report prepared during the month of May covering production through the month of March of each year, shall have the next ensuing six (6) months, beginning April 1 of each year, in which to produce such cumulated underproduction in addition to its regular monthly allowables. At the end of such six (6) months' makeup period, any cumulative underproduction which has not been made up shall be cancelled.

In making up such underproduction, no well shall be produced at a rate in excess of the amount shown on the latest deliverability test filed with the Board for said well, or produced in such manner that waste is occasioned thereby or that may be detrimental to the well or the pool or field as a whole.

In like manner, any gas well whose cumulative production status is in excess of the cumulative allowables for such well on the last day of March of any year, as shown by the Production Status Report prepared during the month of May covering production through the month of March of each year, shall cut its production for the next ensuing six (6) months, beginning April 1 of each year, below the regular monthly allowables so as to bring its production in balance with its allowables at the end of such makeup period. If, however, such overproduction is not made up by the end of such makeup period, effective December 1 of each year, the well shall be closed in until all overproduction is in balance with the allowed production.

When a well's overproduction or underproduction equals three (3) times its current monthly allowable, the Board may, after notice and hearing, take such action as it deems necessary and proper to protect the co-equal and correlative rights of producers and owners in the field.

Upon proper showing of emergency contemplated in and provided by Section 53-1-23, Mississippi Code of 1972, the Board may, without notice and hearing, by entry of appropriate emergency order, increase, decrease, suspend, or eliminate the allowable assigned to a well or pool, taking such action in connection therewith as it deems necessary and proper to protect the co-equal and correlative rights of producers and owners in the field and to prevent waste.

RULE 1.35 ADJUSTED OIL WELL ALLOWABLE. (a) If a newly completed oil well comes into production during any allowable period, or if any oil well is placed back into production after having been removed from the allowable schedule, such well may produce, during the remainder of such allowable period, only an allowable equivalent to that assigned, for the remainder of such allowable period, to any regular allowable unit in the field; provided, however, if such well is located on a unit smaller than the regular drilling unit prescribed by the Board for the field, such well shall be permitted to produce during the remainder of such allowable period, only that proportion of the allowable assigned, for the remainder of such allowable period, to such a regular allowable unit as the acreage in the smaller unit bears to the acreage in a regular allowable unit. The Board reserves the right to adjust such allowable, and, if such allowable is reduced, to charge the overproduction against the future production of such well.

(b) Pending the fixing of the maximum efficient rate of production for an oil well completed in a non-allocated pool, unless the Board, after notice and hearing, either heretofore or hereafter, expressly finds that allowables shall not be imposed on a particular pool, the allowable shall be based upon the depth of the completion zone and shall be as follows:

Depth Maximum Allowable

0 - 7,000 feet 150 BOPD 7,000 - 8,000 feet 200 BOPD 8,000 - 9,000 feet 250 BOPD 9,000 - 10,000 feet 300 BOPD 10,000 - 12,000 feet 350 BOPD 12,000 - 14,000 feet 400 BOPD Below - 14,000 feet 500 BOPD

However, in order to prevent waste and protect co-equal and correlative rights of all parties, the depth of the zone in which the discovery well of a pool is completed shall be used in determining the depth allowable of additional wells in that pool until an MER is established by the Board after notice and hearing.

RULE 1.36 CANCELLATION OF OIL ALLOWABLE. When any oil well shall go off production for any reason and as a result thereof becomes incapable of producing its allowable for any monthly period, or when any oil well becomes incapable of producing its full daily allowable on a monthly basis, same shall be reported to the Board within ten (10) days and a letter of cancellation or adjustment of allowable for that well shall be issued to the operator, a copy thereof to be mailed to the transporter.

RULE 1.37 CERTIFICATE OF COMPLIANCE.

(a) Each producer or operator of any well shall execute under oath, in triplicate, and file with the Board a "Producer's Certificate of Compliance and Authorization to Transport," Form No. 8, for each well.

(b) Whenever there shall occur a change in operating ownership of any drilling unit within the state, or whenever there shall occur a change of transporter from any drilling unit within the state, or there shall occur a change in the producing pool, a new Form No. 8 shall be executed and filed in accordance with the instruction appearing on such form, except that in the case of temporary change in transporter involving less than the production of one (1) month, the producer may, in lieu of filing a new certificate, notify the Board and the transporter then authorized by certificate on file with the Board, by letter, of the estimated amount to be moved by the temporary transporter and the name of such temporary transporter, and a copy of such notice shall also be furnished such temporary transporter.

(c) In no instance shall the temporary transporter move any greater quantity than the estimated amount shown in said notice.

(d) The certificate, when properly executed and approved by the Board, shall constitute authorization to the pipeline or other transporter to transport from the drilling unit named therein; provided this section shall not prevent the production or transportation in order to prevent waste, pending execution and approval of said certificate. Permission for the transportation of such production shall be granted in writing to the producer and transporter at the discretion of the Board.

(e) The certificate shall remain in force and effect until:

1. The operating ownership of the drilling unit changes, or

2. The transporter is changed, or

3. The producing pool is changed, or

4. The permit is cancelled by the Board.

RULE 1.38 BOTTOM HOLE PRESSURE TESTS. The Board may require bottom hole pressure surveys of the pools within the state at such times as it may designate, and such surveys shall be reported to the Board.

RULE 1.39 REPORT OF WELL STATUS. Each producer or operator of an oil or gas well shall furnish for each month a "Monthly Individual Well Status Report," setting forth complete information and data indicated thereon. Such report for each month shall be prepared and filed,

according to the instructions on Form No. OGB 9-12-15-Z, on or before the first day of the second month following the month during which the production was made.

RULE 1.40 GAS-OIL RATIOS. Any oil well producing with a gas-oil ratio in excess of two thousand (2000) cubic feet of gas per barrel of oil produced shall be allowed to produce daily only that volume of gas obtained by multiplying the normal unpenalized daily oil allowable by two thousand (2000) cubic feet. The gas volume thus obtained shall be known as the daily gas limit of such well. The daily oil allowable of such well shall then be determined by dividing its daily gas limit, obtained as herein provided, by its producing gas-oil ratio in cubic feet per barrel of oil produced.

RULE 1.41 DELIVERABILITY AND ROUTINE PRODUCTION TESTS. (a) A deliverability test of each producing gas well shall be made in conformity with schedules issued by the Board. Such test shall be an actual test to determine whether or not the well is capable of producing efficiently any allowable that may reasonably be expected to be assigned to it, and, if the well is not found to be capable, then the test shall determine the maximum rate at which the well may efficiently be produced. The method of testing used shall be one acceptable to the Board. A report of each test so required shall be furnished to the Board upon Form No. 4-A within fifteen (15) days after the test is completed. Any operator may make such additional deliverability tests at any time and report such tests to the Board in the same manner as required tests are reported. Deliverability shall be determined by the latest test information furnished to the Board.

(b) Each oil well and each oil completion of a multiply- completed well shall be tested by the operator once during each calendar month during each calendar year in a calibrated stock tank.

RULE 1.42 PRODUCER'S MONTHLY REPORT. Each operator or producer of oil or gas shall furnish for each month a "Producer's Monthly Report," setting forth complete information and data indicated thereon. Such report for each month shall be prepared and filed with the Board on Form No. OGB 9-12-15-Z, according to the instructions on said form, on or before the first day of the second month following the month during which the production was made.

RULE 1.43 TAKER'S REPORT OF GAS. All gas produced from gas wells within the state which is taken into a fuel system, transmission system or other system (except gas taken into a gasoline cycling or other extraction plant gathering system which is required to be represented on the "Gasoline or Other Extraction Plant Monthly Report," Form No. 11) shall be reported monthly on Form No. 12, "Monthly Gas Report," by the person taking such gas from the well.

Such report shall be filed on or before the first day of the second month following the month during which the production was made. Casinghead gas taken from the lease shall be reported by the taker on said Form No. 12.

RULE 1.44 PLANT PROJECTS, CYCLING PLANTS, ETC. No pressure maintenance plant, cycling plant, gas-return plant, salt water disposal system, or similar plant or project shall operate until authorized by the Board after notice and hearing.

RULE 1.45. POLLUTION OF AIR, FRESH WATERS AND SOILS PROHIBITED. I. Scope and Policy:

Pursuant to Chapter 301, General Laws of 1970, these rules and regulations are hereby promulgated to prevent waste by pollution of air, fresh waters and soils from oil field exploration and production wastes. These rules shall be effective throughout the State of Mississippi for the purpose of prevention of pollution of air, fresh waters and soils. Nothing in these rules shall be interpreted to apply to “commercial oil field exploration and production waste disposal” as defined in Miss. Code Ann. § 17-17-3(g) over which the Mississippi Commission on Environmental Quality has exclusive authority or to change, alter or modify in any way the exclusive authority of the State Oil and Gas Board (Board) to regulate commercial and noncommercial Class II underground injection wells.

II. Definitions:

A. “Deleterious substance” shall mean any chemical, salt water, oil field brine, waste oil, waste emulsified oil, basic sediment, and injurious substances produced or used in the drilling, development, producing, refining, and processing of oil, gas, sulphur, and other minerals.

B. “Fresh waters” for the purpose of administering of these rules and regulations shall mean surface or subsurface water in its natural state useful for domestic, livestock, irrigation, industrial, municipal, and recreational purposes.

C. “Fresh water stratum” shall mean a stratum from which fresh water may be produced in known sufficient quantities and at a cost making its use feasible as fresh water.

D. “Noncommercial disposal of oil field exploration and production wastes” shall have the same meaning as that term is defined in Miss. Code Ann. § 53-1-3(u).

E. “Oil field exploration and production wastes” shall have the same meaning as that term is defined in Miss. Code Ann. § 53-1-3(t)(i) and shall include any liquid, gaseous, solid, naturally occurring radioactive or other substance(s), including but not limited to, any chemical, produced water, sludge, oil-water emulsion, oil field brine, waste oil, sediment, scale or other waste substance(s).

F. “Produced water” shall mean the water (brine) brought up from the hydrocarbon bearing strata during the extraction of oil and gas, and can include formation water, injection water and any chemicals added downhole or during the oil/water separation process.

G. “Soils” shall mean any substance on which trees, grass, crops, or other vegetation may grow, down to not less than the depth of the water table.

H. “Underground source of drinking water” (USDW) shall mean an aquifer or its portion: (1) which supplies any public water system; or (2) which contains a sufficient quantity of ground water to supply a public water system; and (i) currently supplies drinking water for human consumption; or (ii) contains fewer than 10,000 mg/l total dissolved solids; and which is not an exempted aquifer.

III. Prevention and Elimination of Pollution

A. Pollution of air, fresh waters, and soils is prohibited as hereinafter set out.

B. Each owner, operator and/or producer of a well shall be responsible for the proper management of oil field exploration and production wastes in accordance with the applicable rules and regulations of all state and federal authorities. All noncommercial disposal of oil field exploration and production wastes shall be conducted in accordance with the applicable provisions of Miss. Code Ann. §§ 53-1-1, et seq. and 53-3-1, et seq. and such rules and regulations promulgated by the Board.

C. All produced gas recovered at separators, heater-treaters, storage tanks, or similar separation vessels not sold, used as fuel, or serving any other useful purpose, that is being vented and the emissions exceed applicable standards, shall be flared through a flare stack, with a permanent pilot, if necessary, to ensure continuous burning, or processed in a manner so that emissions do not exceed applicable standards. Flare stacks shall be located no less than one hundred (100) feet from all well locations, vessels handling or storing crude oil, or other combustible substances, or any other potential fire hazard. Installation and use of flares and venting activities shall be conducted in accordance with the applicable requirements in the rules and regulations promulgated by the Mississippi Commission on Environmental Quality (Commission) through the Mississippi Air and Water Pollution Control Law (Miss. Code Ann. §§ 49-17-1, et seq.) and such rules and regulations promulgated by the Commission. The Mississippi Department of Environmental Quality serves as staff of the Commission and should be contacted related to any questions concerning these regulatory requirements.

D. All produced non-combustible gas recovered at separators, heater-treaters, storage tanks, or similar separation vessels, such as carbon dioxide (CO2), etc., which is not being used for a useful purpose, in lieu of flaring shall be returned to the subsurface stratum from which it

was originally produced or to a stratum approved by the Supervisor if emissions to the atmosphere would exceed applicable standards.

E. Earthen Pits:

1. The use of earthen pits shall be phased out and discontinued except as hereinafter provided. All earthen pits abandoned during the three (3) years prior to the adoption of this Rule shall be emptied of fluids, in a manner that will not violate water quality standards, backfilled, leveled and compacted. All other earthen pits upon abandonment or at the time of the expiration of a valid permit or extension thereof covering same, shall immediately be emptied of all fluids, backfilled, leveled and compacted. These provisions do not apply to any earthen pit which has been abandoned and not in use for more than three (3) years prior to the adoption of this Rule.

2. Penalties as provided for in Miss. Code Ann. § 53-1-47 may be assessed for using any earthen pit without a valid permit issued by the Supervisor being currently in effect.

3. All permits existing on the date of adoption of this Rule for the use of earthen pits shall expire two (2) years from said date unless so provided otherwise.

4. Notwithstanding, any other provision contained herein, the Supervisor may issue permits for the construction of the following categories of earthen pits:

(a) Temporary Storage Pits for Produced Water:

Temporary storage pits for produced water may be permitted by the Supervisor only for temporary, emergency storage to accommodate disposal of produced water. No person shall use a temporary storage pit for produced water without a permit for such pit issued by the Supervisor. All temporary storage pits for produced water shall be closed within thirty (30) days following completion of the operations that resulted in the production of the produced water.

(b) Drilling Reserve Pits (Mud Pits)

An approved Form No. 2 (Permit to Drill) constitutes the permit for drilling reserve pits; thus, a special permit is not required for said pits. Drilling reserve pits are subject to strict stipulations as to backfilling when drilling is completed. (See Section 6 below).

5. Conditions Governing Temporary Storage Pits for Produced Water

(a) The pit shall be lined with an industry grade material designed to prevent the leakage, seepage, and release of mud and fluids of any kind to the surface and subsurface strata which shall be used and so constructed so that produced water stored will not cause pollution of fresh waters or contamination of soils beyond the confines of the pit. The pit shall be

constructed to protect surface waters using dikes and by drainage ditches, where needed. No siphons or openings shall be placed in the walls or dikes.

(b) A representative of the Board must be given an opportunity to inspect a pit prior to its use.

(c) The fluid level shall never rise to within two (2) feet of the top of the pit walls or dikes and shall be kept below this level by properly disposing of fluids in a manner which prevents pollution as described herein.

(d) Only produced water shall be intentionally placed in the pit. Such water shall contain no more than the traces of oil remaining after separation with normal field facilities.

(e) The pit shall be identified with a sign (minimum of one (1) foot square) placed conspicuously near the pit containing the name of the operator, the location of the pit (section, township, range, and county), and the permit number issued by the Supervisor.

(f) When the use of the pit is to be discontinued, the Supervisor or field representative shall be notified in writing and be given an opportunity to witness all activities performed by the operator pursuant hereto. When abandoned, the pit shall be emptied of fluids, backfilled, leveled and compacted. Representative samples of the contents of the pit shall be collected before backfilling, for chloride and pH analysis and shall not exceed the analytical criteria as described herein in Section III.6.(f).

6. Conditions Governing Reserve Pits for Drilling Operations

(a) Mud Pits used in connection with drilling operations shall be sited and constructed so as to prevent the escape of any of the pit contents.

(b) The pit shall be protected from surface waters by dikes and drainage ditches.

(c) No siphons or openings shall be placed in the walls or dikes that would permit the discharge of the pit contents.

(d) The fluid level shall never rise to within two (2) feet of the top of the pit walls or dikes.

(e) Upon completion of drilling operations, mud pits shall be emptied of fluids and muds, backfilled, leveled and compacted within ninety (90) days. Extensions may be granted by the Supervisor or the Board’s Field Director where warranted.

(f) Pit fluids and mud may be spread on to the land surface after notifying the Board or field representative, if mud contents meet the criteria below:

Chlorides 3000 mg/l or less pH Between 6.0 and 9.0

(g) In cases where oil-based mud is used, representative samples shall be collected and analyzed for oil and grease content. In no case shall oil-based mud be spread on to the land surface where the oil and grease content of the mud is greater than one per cent (1%) by weight.

7. Revocation of Pit Permits

(a) Should the Supervisor determine that the continued operation of a pit or pits would result in pollution of fresh water or fresh water sources, or contamination of soils outside the confines thereof, he may prohibit further use of the pit or pits until the conditions causing or likely to cause such pollution have been corrected. If corrective measures are not satisfactorily completed within thirty (30) days, the Supervisor may revoke the pit permit. The Supervisor reserves the right to immediately revoke a permit where a pit is determined to present an immediate source of pollution to fresh waters that cannot be readily corrected. Penalties as provided for in Miss. Code Ann. § 53-1-47 may be assessed.

(b) When a pit permit is revoked, the pit shall be emptied of fluids within two (2) weeks and backfilled, leveled, and compacted within thirty (30) days or additional penalties may be assessed.

8. Disposal During Drilling and Production Operations

Oil field exploration and production wastes and other deleterious substances used in conjunction with drilling and production operations may be disposed of by injection, including annular injection, into sub-surface strata containing a dissolved solids content greater than 10,000 ppm, and is void of oil and gas. Noncommercial disposal of oil field exploration and production wastes and other deleterious substances, during or following drilling and production operations is subject to authorization by the Supervisor on a case by case basis. In no instance shall the injection pressure needed for disposal exceed the calculated formation fracture pressure as provided for in Board Rule 63

9. Waiver of Pit Backfilling Requirements

In those instances wherein the owner of the surface lands and the operator of a producing well, an abandoned well, or a drilled well have reached agreement for payment in lieu of restoration of the premises, and when in such cases it is established that all potential contaminants and deleterious substances have been removed, leaving only the earthen pit, then after examination by a representative of the Board, the Supervisor is authorized to waive requirements for backfilling and compacting upon confirmation of removal and proper disposal of oil field exploration and production wastes and receipt by the Supervisor of an agreement executed by the surface owner(s) assuming all responsibility and liability for the pit.

10. Impervious Containers

Impervious containers shall be used in lieu of pits in areas where it is impossible or impractical to construct a pit, or to protect waters used for public water supply, shellfish harvesting, recreation, or fish and wildlife. Where impervious containers are used, the contents shall be removed and properly disposed of within ninety (90) days following usage.

11. Penalty

Any operator failing to comply with the provisions of this rule shall be subject to the penalty provided for violation of the rules of the Board.

12. Suspension of Operations

Should the Supervisor determine that the continued operation of a well, wells or associated treating, handling or storage facilities would cause waste, pollution or contamination of air, surface water, a USDW or soils, he will immediately prohibit further operation of the well, wells or associated facilities and may suspend the operator's Certificate of Compliance (Form 8) to transport oil, gas or other products until such time as it is determined by the Supervisor that the operator is in compliance with all rules and regulations of the Board.

13. Validity

Should any section, subsection or other provision of this rule be declared by a court of competent jurisdiction to be invalid, that decision shall not affect the validity of the rule as a whole or any part thereof, other than the part so declared to be invalid, this Board hereby declaring that it would have adopted those parts of this rule which are valid and omitted any parts which may be invalid, if it had known that such part or parts were invalid at the time of the adoption of this rule.

RULE 1.46 EXTRACTION PLANT REPORTS. Each operator of a gasoline plant, cycling plant or any other plant at which gasoline, butane, propane, condensate, kerosene, oil or other liquid products are extracted from gas within the state shall furnish for each calendar month a "Gasoline or Other Extraction Plant Monthly Report," Form No. 11, containing the information indicated by such form respecting gas and products involved in the operation of each plant during each month.

Such reports for each month shall be prepared and filed, according to instructions on the form, on or before the first day of the second month following the month during which the production was made.

RULE 1.47 FLUID INJECTION REPORTS. Every person injecting gas or fluid into the earth shall make a monthly report to the Board on Form No. 14, provided by the Board, showing the quantities of all oil, gas and water injected during the month covered by the report, the injection pressure and injection rate for each injection well, and identifying the underground reservoir or reservoirs into which the injection is made.

In addition, those injection wells operating pursuant to Subsection 63(7)(B) shall also report the tubing-casing annulus pressure.

Such reports for each month shall be prepared and filed according to instructions on the form on or before the first day of the second month following the month for which the report is being filed.

RULE 1.48 RATABLE TAKE. Each person now or hereafter engaged in the business of purchasing oil or gas from owners, operators, or producers shall purchase without discrimination in favor of one owner, operator, or producer against another in the same common source of supply.

RULE 1.49 LEGAL STOCK. Each producer or operator is prohibited from delivering illegal oil to any transporter, and each transporter is prohibited from removing any illegal oil. Each transporter shall maintain necessary records of lease allowables and quantities of oil removed from the leases to which he is connected, whereby he can determine the calculated quantity of legal oil on hand at the close of each calendar month with respect to such leases. The calculated quantity of legal oil on hand with respect to any lease shall be determined for each succeeding month by adding to the quantity of legally produced oil on hand at the first of the month, the scheduled allowable quantity of oil for the respective lease for the current month, as established by the Board, less the quantity of oil removed from the respective lease tanks during the current month. If the calculated balance so determined is less than the actual gauged quantity on hand as reported in "Producer's Monthly Report," Form No. OGB 9-12-15-Z, the transporter shall not

remove during the month any oil in excess of the calculated legal balance so established plus the allowable for the month. If the actual quantity of oil on hand with respect to a particular lease equals or is less than the quantity of legal oil established by the above method, the transporter may remove any part of all of such quantity of oil during the current month. Where the actual quantity of oil on hand with respect to a particular lease is less than the calculated quantity of legal oil established by the above method, the transporter, in determining the quantity of legal oil for the next succeeding month, shall substitute the actual quantity on hand for the calculated quantity on hand.

Where there is more than one transporter moving oil from the same lease, the producer or operator and transporters are required to furnish to each other information as to the quantity of oil on hand, the quantity transported from lease tanks and any additional information necessary to establish to the satisfaction of each person involved the legal status of the oil produced. Where transporter disconnects from a particular lease or ceases to remove oil therefrom and another transporter connects to such lease or begins to take oil therefrom, during a month, the transporter who ceases to take oil shall furnish the connecting transporter a certified statement, under oath, showing the legal quantity of oil on hand 7:00 A.M. the first day of such month, the scheduled allowable to the date disconnected, and the quantity of oil moved from the particular lease during the current month. In such case, the producer or operator shall furnish to the connecting transporter a certified statement, under oath, showing the lease stock on hand 7:00 A.M. the date of new connection. No connecting transporter shall move oil from any such lease until after it shall have received such statements, except with the written permission of the Board.

In cases where crude oil is transported from lease to final destination by a combination haul, that is, truck and pipeline, the responsibility of securing the certificate of compliance and authorization to transport oil from lease shall be determined by which of the two carriers takes custody of the oil at the lease tankage. Custody of the oil shall have been accomplished when the transporter issues a receipt ticket for the oil at the lease tankage. The carrier issuing the receipt ticket at the lease tank shall be the carrier named in the certificate of compliance.

RULE 1.50 TRANSPORTER'S & STORER'S REPORT. Each transporter of oil within the state shall furnish for each calendar month a "Transporter's and Storer's Monthly Report," Form No. 10, containing complete information and data indicated by such form respecting stocks of oil on hand and all movements of oil by pipe line, within the state, and all movements of oil by watercraft or by trucks or other conveyances except railroads, from leases to storers or refiners; between transporters within the state; between storers within the state; between refiners within the state; and between storers and refiners within the state. Each storer of oil within the state shall furnish for each calendar month a "Transporter's and Storer's Monthly Report," Form No. 10, containing complete information and data indicated by such form, respecting the storage of oil within the state. The Transporter's and Storer's Reports shall be filed on or before the first day of the second month following the month for which the report is being filed.

RULE 1.51 REFINER'S REPORT. Each refiner of oil within the state shall furnish for each calendar month a "Refiner's Monthly Report," Form No. 13, containing the information and data indicated by such form respecting oil and products involved in such refiner's operations. Such report shall be filed on or before the first day of the second month following the month for which the report is being filed.

RULE 1.52 NOTICE TO TRANSPORTER OF VIOLATIONS. The Board shall notify in writing any transporter of oil, gas or condensate of the failure of any producer or operator to comply with any Statewide or Special Field Rule and such transporter so notified shall refrain thereafter from transporting oil, gas or condensate from the property in question until notified in writing by the Board of such producer's or operator's compliance.

RULE 1.53 SERVICE COMPANY REPORT. When a service company, other than the drilling contractor, cements, perforates, or acidizes, either before or after completion of a well, the service company shall furnish the Board with legible exact copies of reports furnished the owner of the well. The Board may require that it be furnished with copies of reports of other services performed.

RULE 1.54 ORGANIZATION REPORT. Every person acting as principal or as agent for another or who is independently engaged in the production, storage, transportation (except by railroads), refining, reclaiming, treating, marketing, processing of, or scientific exploration for crude oil or natural gas shall immediately file on Form No. 1 under oath with the Board a statement giving the following information: The name under which such business is being operated or conducted; the name and post office address of such person and the business or businesses in which he is engaged; the plan or organization and, in case of a corporation, the law under which it is chartered; and the names, titles and post office addresses of the principal officers thereof, including the manager or agent, and the names and the post office addresses of all directors thereof; of a partnership, the names, titles and post office addresses of the partners.

Immediately after any change occurs as to facts stated in the report filed, a supplementary report, under oath, shall be filed with the Board with respect to such change. In any event, from and after the effective date of this rule, every person identified above shall file a Form 1 with current and accurate information on an annual basis and no less than one year from the date of the last Form 1 filed by such person. After the initial Form 1 is filed with the Board, annual filings thereafter may be made by indicating that the information on the previously filed form has not changed or by indicating only such information as has changed since the last form was filed. All such persons identified above who have previously filed a Form 1 shall file a new Form 1 within one year of the effective date of this rule and shall make annual filings thereafter in accordance with the provisions set forth above.

RULE 1.55 IDENTIFICATION OF FACILITIES. Every person owning, operating or controlling any refinery, tank farm, cycling plant, re-pressuring or pressure maintenance facilities, extraction plant or pipeline pumping station shall, at all times, during the operation thereof, maintain on the premises near each such facility a sign, in reasonably large and clear lettering, showing the name of the person owning and operating such facility.

RULE 1.56 RECORDS. All producers, transporters, storers, refiners, gasoline or other extraction plant operators and initial takers of gas within the state shall make and keep appropriate books and records covering their operations in the state from which they may be able to make and substantiate the reports required by the Board. Such books, records and copies of said reports and notices required by the Board shall be kept on file and available for inspection by the Board for a period of at least two (2) years.

RULE 1.57 ADOPTION OF FORMS. The forms hereinafter listed and attached to these rules as exhibits 1 to 19 and Form Z, inclusive, are hereby adopted and made a part of these rules for all purposes and the same shall be used and the information required thereby shall be furnished as directed by the Board's rules in the giving of notice and in making of reports and requests to the Board, said amended forms being numbered and entitled as follows:

Form No. Title 1 Organization Report 2 Application for Permit to Drill, Workover or Change Operator 3 Well Completion or Recompletion Report and Well Log 4-A Gas Well Deliverability Test 6 Notice of Intention to Plug and Abandon 6-a Application for Multiple Completion 6-b Packer Setting Report 6-c Packer Leakage Test 7 Plugging Record 8 Operator's Certificate of Compliance and Authorization to Transport Oil or Gas from Drilling Unit 9-12- 15-Z Producer's Monthly Report for Oil & Gas Wells 10 Transporter's and Storer's Monthly Report 11 Gasoline Plant or Pressure Maintenance Plant Monthly Report 12 Gas Purchaser's Monthly Report 13 Refiner's Monthly Report 14 Monthly Report on Fluids Injected

History

• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: Miss. Code Ann. § 53-1-17 (3).
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)

26 Miss. Admin. Code Pt. 2, R. 16 Rule 16

Permit to Clean Tank 17 Well Test Report 18 Application for Earthen Pit 19 Certificate of Compliance for Hydrogen Sulfide Operations

Copies of printed forms will be supplied upon request.

RULE 1.58 SPECIAL FIELD RULES NOT REVOKED. The adoption of these rules shall not revoke any special field rules now in force and which are applicable to particular fields or pools.

RULE 1.59 REVOCATION OF PRIOR RULES. Upon the effective date of these rules, all statewide rules now in force shall be revoked and these rules shall govern; provided, however, such revocation of rules heretofore in force shall not validate any prior violation.

The Board may, after notice and hearing, repeal, amend or supplement these statewide rules.

RULE 1.60 EFFECTIVE DATE. These rules and regulations shall be in full force and effect on and after January 1, 1952.

ORDERED this the 19th day of November, 1951.

STATE OIL AND GAS BOARD /s/ James McClure, Chairman

RULE 1.61. FIREWALLS.

(a) Each permanent oil and/or saltwater tank or battery of oil and/or saltwater tanks now or hereafter located in the State of Mississippi shall be surrounded by a dike (or firewall) or retaining wall of sufficient height and size so that the volume enclosed shall be equal to one hundred fifty percent (150%) of the capacity of the largest tank in said battery OR the total volume of fluids produced into the said battery during any twenty-four (24) hour period, whichever is the greater. The dike (or firewall) or retaining wall shall be constructed of impermeable material approved in advance by the Field Inspector or Energy Resource Director. If there is more than 150% of the volume of the largest vessel in the tank battery produced into the battery in a twenty-four (24) hour period, the Operator may, in lieu of extending the size of the firewall to accommodate the excess of the 150% of the volume of the largest vessel in the

tank battery, install a high level shutdown device or system inside the firewall that would, in the event of a spill, shut down all production coming to the tank battery at a level that would not allow the fluid level to reach within six (6) inches of the top of the firewall.

(1) Each permanent oil tank or battery of oil tanks, or any vessel or tank which is protected by a dike (or firewall) or retaining wall and which has installed a drain line for the purpose of discharging rainwater, must have in the drain line a valve on the outside of the firewall and a bull plug installed downstream of the valve.

(2) Firewall drain valves may be open and bull plugs removed only when the operator or his representative is present to observe the discharge. Discharges may consist of rainwater only.

(3) Firewall drain valves being open or bull plugs being removed from firewall drain lines when no operator personnel are on the location shall be deemed a violation of Statewide Rule 61.

(4) The discharge of any fluids or other materials other than rainwater through a firewall drain may constitute a violation of Statewide Rule 16, Statewide Rule 17, Statewide Rule 45 or Statewide Rule 61.

(b) In water, swamp or marsh areas where the building of firewalls is impractical or impossible, and the requirement thereof has been waived by the Supervisor upon proper written application, permanent tanks shall be placed on an impervious base and surrounded by an impervious gutter to catch all of the oil and other waste products which, upon escape, may cause a fire hazard or pollution. A sump shall be provided to catch the runoff from the gutters.

(c) Tanks for the accumulation of liquid hydrocarbons not falling into the above categories (A and B above) and all facilities for the loading and transportation of liquid hydrocarbons by truck must be surrounded by a retaining wall or must be suitably ditched to a collecting sump, either to be of sufficient capacity to contain the potential spillage to prevent the possibility of pollution of surrounding areas.

(d) The Mississippi State Oil and Gas Board may, following notice and public hearing, grant appropriate exceptions to any of the provisions of this rule upon a finding by the Board that alternative construction or operating procedures proposed by the operator will provide an equivalent level of protection to the public and the environment.

(e) With respect to oil and/or saltwater tanks, tank batteries and loading facilities in existence on June 17, 2015, the date of approval of amendments to this rule to impose new construction and operating requirements on such facilities, the operator shall have six (6) months from that date in which to comply with said new requirements.

Effective Date: December 17, 2015

RULE 1.62 STORAGE TANKS, SOUR CRUDE OIL. On all storage tanks or batteries of storage tanks where there is stored, either permanently or temporarily, crude oil, distillate or condensate produced from an oil well or a gas well where any hydrogen sulphide (H2S) is produced in conjunction with the fluid such that the vapor or fumes from such liquid, when measured in the free gas space inside the tank, has a hydrogen sulphide (H2S) concentration in excess of twenty (20) ppm, as measured using a hydrogen sulphide (H2S) detection device of a type capable of measuring hydrogen sulphide concentrations ranging from zero (0) to fifty (50) ppm, the following safety provisions shall pertain, in addition to all other applicable statewide or special field rules:

A. All access hatches to the tanks capable of being readily operable shall be kept closed securely at all times except when necessary for such hatches to be open for inspection and gauging.

B. All stairways or ladders leading from ground level to the top of each of such tank or tanks shall have installed thereon a gateway or doorway permanently affixed in such a manner as to impede further ascent of such ladder or gangway to the top of such tank or tanks except through the open gate or door. The gateways or doorways shall be kept securely locked except when necessary to gauge or inspect such tanks.

C. All fumes and vapor in such tank or tanks shall be suitably recovered in a vapor recovery unit or flared to the atmosphere. If flared to the atmosphere, fumes and vapor shall be flared through a flare stack with a permanent pilot attached thereon so that the emissions do not exceed applicable air quality standards.

D. Vapor recovery units shall be suitably provided with standby facilities for flaring of fumes and vapors to the atmosphere in the event of an upset. Such standby venting and flaring facilities shall be the same as those provided for in Paragraph C above.

E. A self-contained breathing apparatus shall be worn and used by all personnel passing through the gateway or doorway provided in Paragraph B above at all times while on the ladder or on top of the tank or tanks.

F. All such storage tanks and the nearby surrounding area shall be conspicuously marked and posted in a manner advising of the presence of potentially lethal fumes and vapors.

G. This rule shall take effect on and after July 1, 1971; provided, however, that owners and operators of existing installations shall have sixty (60) days from said date in which to comply with these rules without incurring any penalty.

H. Penalty: Any person, firm or corporation willfully violating any of these rules and regulations shall be punished as provided by law.

I. Provided, however, that storage tank or tanks within the boundaries of a petroleum refinery or petrochemical plant shall be exempt from the provisions of this rule.

RULE 1.63 UNDERGROUND INJECTION CONTROL. Definitions

Unless the context otherwise requires, the words hereinafter defined shall have the following meaning when found in this rule, to wit:

(a) "Area of review" means the area surrounding an injection well described according to the criteria set forth in EPA Underground Injection Control program regulations, 40 C.F.R. Section 146.06 (1984) or in the case of an area permit, the project area plus a circumscribing area the width of which is either 1/4 of a mile or a number calculated according to the criteria set forth in EPA Underground Injection Control program regulations, 40 C.F.R. Section 146.06 (1984).

(b) "Confining zone" means a geological formation, group of formations, or part of a formation that is capable of limiting fluid movement above an injection zone.

(c) "Exempted aquifer" means an aquifer or its portion that meets the criteria in the definition of "underground source of drinking water" but which has been exempted according to the procedures set forth in EPA Underground Injection Control program regulations, 40 C.F.R. Section 144.7(b) (1983).

(d) "Fluid" means material or substance which flows or moves whether in a semisolid, liquid sludge, gas, or any other form or state.

1. Prohibition of Unauthorized Injection A. Any underground injection, except as authorized by permit or rule issued under this Class II Program is prohibited. The construction or conversion of any well required to have a permit is prohibited until the permit is issued. Injection fluids authorized for injection under this Class II Program include those:

1. which are brought to the surface in connection with conventional oil and natural gas drilling and production and may be commingled with waste waters from gas processing plants which are an integral part of production operations, unless those fluids are classified as hazardous waste at the time of injection; 2) for enhanced recovery of oil and natural gas; and 3) for storage of hydrocarbons which are liquid at standard temperature and pressure. B. Underground injection permits shall be issued only when the operator shows that there will be no endangerment of an underground source of drinking water.

2. Underground injection endangers drinking water sources if such injection may result in the presence of any contaminant in underground water, which supplies or can

reasonably be expected to supply any public water system, and if the presence of such contaminant may result in such system's not complying with any National Primary Drinking Water Regulation or may otherwise adversely affect the health of persons.

2. "Underground Source of Drinking Water (USDW)" shall mean an aquifer or its portion: a) which currently supplies any public water system(s); or b) which contains a sufficient quantity of ground water to supply a public water system; and i) currently supplies drinking water for human consumption; or ii) contains fewer than 10,000 mg/l total dissolved solids (10,000 ppm); and c) which is not an exempted aquifer.

C. Existing enhanced recovery injection, produced fluid disposal or liquid hydrocarbon storage wells operating under permits issued by the State Oil and Gas Board (Board) are authorized by rule and not required to reapply for a new permit. However, these wells are subject to the mechanical integrity, confinement of fluids, operating, monitoring and reporting, pressure limitation, casing, cementing, plugging and abandonment, and financial responsibility requirements of this rule (63) or Rule 64 as applicable. The State Oil and Gas Board can require that individual wells be permitted on a case by case basis.

D. The provisions and requirements of this rule shall apply to underground injection by Federal Agencies, State Agencies, or any other party, whether or not occurring on property owned or leased by the United States.

E. Financial Responsibility

1. New Permits Upon the effective date of this rule, no new permit for an enhanced recovery injection well, produced fluid disposal well or liquid hydrocarbon storage well shall be issued to an operator until the requirements of this Sub-Part E (Financial Responsibility) are met.

2. Existing Permits All existing holders of permits issued by the Board for operation of enhanced recovery injection wells, produced fluid disposal wells or liquid hydrocarbon storage wells shall be required to show cause why the permit should not be revoked by the Board after notice and hearing, unless the holder of the permit meets the requirements of this Sub-Part E (Financial Responsibility) by May 31, 1989.

3. Proof of Financial Responsibility All applicants for enhanced recovery injection wells, produced fluid disposal wells or liquid hydrocarbon storage wells must submit evidence to assure that the resources necessary to close, plug and abandon the injection wells are available. This surety must be in a form approved by the Supervisor, and must provide assurance of financial responsibility in the amount of the total estimated plugging costs. If the surety is in the form of a Letter of Credit or Surety Bond, it shall

be issued by a financial institution approved by the Supervisor. Evidence of financial responsibility accepted by the Board must be maintained by the operator on an annual basis.

2. Notice and Hearing

A. The applicant shall give notice to all parties in interest and the surface owner, without having to name such parties or surface owner, (applicant shall identify and submit on a list with the Permit application, the names and addresses of all owners of record of land within the AOR), by publishing notice of the application in a newspaper of general circulation in this state and also in a newspaper of general circulation in the county where the well will be located and in the manner and form approved by the Board. If the application is for the initial application for fluid injection into a producing reservoir (pool), such notice by publication shall also be given to all operators of wells in the producing reservoir (pool) without having to name such operators. The applicant shall file proof of publication prior to the hearing or administrative approval. See Rules of Order and Procedure for Hearings Before Board.

B. A hearing shall be held on all applications provided, however, that where said application is not contested when called for hearing, then sworn affidavits, exhibits and Board forms may be received in evidence at the hearing as to the manner in which the injection well, or wells, which are the subject of the application, are to be completed and regardless of whether or not the Board has previously approved, after notice and hearing of witnesses, a similar application for the pool or field.

Applications requesting exceptions to this rule (63) shall require testimony before the Board to justify such exceptions. Any exception(s) granted and allowed by the Board after notice and hearing shall provide that the operator must show that such exception(s) shall not endanger any USDW. 3. Duration of Permits

A. Permits authorizing injection into enhanced recovery injection, produced fluid disposal and liquid hydrocarbon storage wells shall remain valid for the life of the well unless revoked by the Board for cause, after notice and hearing, or unless mechanical integrity is lost as prescribed in Part 7 of this rule (63). Loss of mechanical integrity will automatically suspend permit authorization. If mechanical integrity is not restored and a concurrent or subsequent mechanical integrity test passed within ninety (90) days, after written notice from the Supervisor, the operator shall be required to show cause at a hearing before the Board why the permit should not be cancelled and the well be plugged and abandoned in accordance with Part 10 of this rule (63).

B. A permit authorizing underground injection may be modified, revoked and re-issued after modifications, or cancelled during its term for cause after notice and hearing. This may be at the request of any interested person or at the Board's initiative. All requests shall be in writing and shall contain facts or reasons supporting the request.

C. A permit may be modified, revoked and re-issued, or terminated after notice and hearing, if:

1. there is a substantial change of conditions in the enhanced recovery injection, produced fluid disposal or liquid hydrocarbon storage operations, or there are substantial changes in the information originally furnished; or

2. information as to the permitted operation indicates that the cumulative effects on the environment are detrimental, such as endangerment of USDW's; or

3. there are violations of the terms and provisions of the permit; or

4. the operator has misrepresented any material facts during the permit issuance process.

4. Transfer of Permits

Permits authorizing enhanced recovery injection, produced fluid disposal or liquid hydrocarbon storage wells may be transferred from one operator to another, without notice and hearing, upon the filing of the Oil and Gas Board Form No. 2, Change of Operator, with the appropriate fee, proof of financial responsibility of new operator as stated in Part 1 (E)(3) of this rule (63), and approval by the Supervisor. All permit conditions shall apply to the new operator including financial responsibility as stated in Part 1(E) of this rule (63), and approval by the Supervisor. All permit conditions shall apply to the new operator.

5. Application Requirements (Individual Well or Project) for New Enhanced Recovery Injection or Produced Fluid Disposal Wells (Note: liquid hydrocarbon storage well requirements are detailed in Rule 64). [A new injection well is any well not presently permitted as a Class II Well, regardless of whether it has ever been permitted as such.]

A. The application for a new enhanced recovery injection or produced fluid disposal well shall be made on Oil and Gas Board Form No. 2 and the proposed plan of work attached, and which shall contain the following information:

1. name of operator, field name and well name and number, section, township and range; 2) geologic name, depth interval and lithologic description of the injection zone;

2. geologic name and lithologic description of the confining zone or zones and depth interval(s); 4) size, grade and length of all casing strings and amount, type and grade of cement used to cement each string in place and hole size;

3. size, grade and length of tubing and packer setting depth;

4. estimated average and maximum injection pressure;

5. estimated average and maximum injection rate;

6. source of the injected fluid, and an analysis of the injected fluid;

7. depth and geologic name of the deepest underground source of drinking water in the field and all other underground sources of drinking water;

8. depth and geologic name of shallowest zone in the field commercially productive of hydrocarbons; 11) a schematic drawing depicting surface and down-hole equipment and construction features; 12) area of review

a) calculations shall be made and filed with the Board showing calculated radius of pressure influence for the well's expected injection parameters, using the methods proposed in the U. S. Department of Commerce National Technical Information Service, P. 680-100498 titled Radius of Pressure Influence of Injection Wells. A map shall be submitted with the individual well or project permit application for which the permit is sought which shows the applicable area of review within the calculated radius (for individual wells - calculated radius from the well; for an area permit for enhanced recovery projects - the project area plus a circumscribing area the width of which is the calculated radius); or

b) a map shall be submitted with the individual well or project permit application for which the permit is sought which shows the applicable area of review (for individual wells - one-quarter (1/4) mile radius; for an area permit for enhanced recovery projects - the project area plus a circumscribing area the width of which is one-quarter (1/4) mile). c) a topographic map (or other map if a topographic map is unavailable) extending one mile beyond the property boundaries of the source depicting the facility and each of its intake and discharge structures; each of its hazardous waste treatment, storage, or disposal facilities; each well where fluids from the facility are injected underground; and those wells, springs, and other surface water bodies, and drinking water wells listed in public records or otherwise known to the applicant within a quarter mile of the facility property boundary."

d) the application for the approval of an enhanced recovery injection or disposal well shall include the following information:

i) within the area of review, the map must show location, well name and number of any existing producing wells, injection wells, abandoned wells and dry holes; ii) identification of each operator of a producing well within the area of review; iii) only information of public record is required to be included on the map. iv) corrective action for wells which are improperly sealed, completed, or abandoned, the applicant shall also submit a plan consisting of such steps or modifications as are necessary to prevent movement

of fluid into underground sources of drinking water ("corrective action").

13. for produced fluid disposal wells, a certification from the applicant that the proposed injection zone is non-productive of oil or gas and is not an underground source of drinking water; a sample of formation fluid shall be obtained and an analysis of such fluid sample supplied to the Board upon completion of the well;

14. whether the system is open or closed;

15. information submitted with the application showing that injection into the proposed zone will not initiate fracturing in the confining zone or cause any movement of fluids into any USDW; the proper demonstration by the applicant that the pressure in the well at the depth of injection will not exceed seventy-five per cent (75%) of the calculated fracture pressure of the formation or upon proper demonstration and submission of evidence, that a sufficient thickness of overlying strata exists between the injection zone and the lowermost USDW to prevent fracturing into the USDW. Calculations shall accompany this submission of evidence that demonstrate that the maximum injection pressure will not initiate fracturing in the designated confining zone of a Class II Well.

16. a copy of an electric log or radioactive log of the well, if available; in the case of an undrilled well, submit a geologic description of the zone to be used for injection, the approximate depth of the proposed zone and an electric log or radioactive log of the nearest well available.

B. A plan for plugging and abandoning the well in compliance with Part 10 of this rule (63) and the estimated cost of such plugging and abandoning operation shall be submitted along with the proof of financial responsibility required in Part 1:E of this rule (63).

6. Construction Requirements for New or Converted Enhanced Recovery Injection and Produced Fluid Disposal Wells

A. Each new enhanced recovery injection or produced fluid disposal well shall be completed, equipped, operated and maintained in a manner designed to assure confinement of fluids to the interval(s) approved.

B. All new enhanced recovery injection or produced fluid disposal wells shall be sited in such fashion that they inject into a formation which is separated from any USDW by a confining zone that is free of known open faults or fractures within the area of review that are potential flow conduits.

C. All newly drilled enhanced recovery injection or produced fluid disposal wells shall be cased with surface or intermediate casing and cemented to a point at least one hundred feet (100') into the first confining unit immediately below the lowermost USDW, or through the entire thickness of the confining unit, whichever is less, unless long-string casing has cement circulated to the surface, to prevent the movement of fluids into or between underground sources

of drinking water. The surface or intermediate casing shall have cement circulated to the surface with uncontaminated returns. If cement is not circulated to the surface, a cement evaluation log acceptable to the Board shall be run to evaluate cement adequacy. If the cement is not adequate after setting, additional cement shall be block-squeezed or added to top off the casing to surface. The circulation of cement or cement evaluation log must be witnessed and attested to by the operator and the cementing company. The operator shall file Oil and Gas Board Form 3 (Well Completion Report) documenting the circulation of uncontaminated cement or adequacy of cement. The long-string casing shall also have cement behind it through a confining zone for at least one hundred feet (100') in an interval between the lowermost USDW and the injection zone. The casing and cement used in the construction of each newly drilled well shall be designed to comply with all requirements of this rule for the life expectancy of the well.

D. The requirements of Part 6:C shall not apply to existing or newly converted wells if: 1) the wells were cased and cemented in compliance with existing rules of the Oil and Gas Board in existence at the time the well was originally drilled; and

2. injection will not result in the movement of fluids into an underground source of drinking water as defined in this rule (63) Part 1(B)(2).

E. Each new or converted enhanced recovery injection or produced fluid disposal well shall be equipped with tubing set on a mechanical packer. The packer shall be set below the lowermost USDW and at least 100 feet below the top of competent cement behind the long string casing. In addition, the packer shall be set no more than 150 feet above the top perforations. F. The wellhead shall be equipped so that tubing and annulus pressures can be recorded for monthly monitoring reports (obtained from monitored pressure data) by having above-ground pressure observation valves on the tubing and for each annulus of the well; said valves shall be equipped with operable one-half inch (1/2") female fittings.

G. The operator shall not proceed with any down-hole work on a new enhanced recovery injection or produced fluid disposal well until the operator has notified the State Oil and Gas Board and has received written permission from the Supervisor. No work shall commence until the Oil and Gas Board Field Inspector has been given adequate notification in order to be able to witness the work.

H. Logging Requirements

1. For new wells drilled as enhanced recovery injection or produced fluid disposal wells, a) if open-hole logs of a nearby well that would reasonably be expected to depict the same lithology were not run through the lowermost USDW, the new well shall be logged from the surface to total depth before casing is set; or

b) if logs exist from a nearby well that would reasonably be expected to depict the same lithology, the new well need only be logged below the surface casing before long string casing is run; and c) appropriate logs as approved by the Board and other tests shall be conducted during the drilling and construction of new enhanced recovery injection or produced fluid disposal wells and shall be submitted to the Supervisor along with a descriptive report interpreting the results of that portion of those logs and tests which specifically relate to (1) a USDW and the confining zone adjacent to it, and (2) the injection formation and adjacent formations prepared by a knowledgeable log analyst.

2. For existing wells or dry holes converted to enhanced recovery injection or produced fluid disposal wells,

a) copies of all logs not on file with the State Oil and Gas Board shall be submitted with the permit application, where available;

b) copies of Gamma Ray Correlation Logs and Cement Bond Logs shall be submitted, including Gamma Ray Correlation and Cement Bond Log for intervals squeeze cemented, where required.

3. For all enhanced recovery injection wells and produced fluid disposal wells,

a) other logs such as Temperature Logs, Porosity Logs, Fracture Finder Logs or Density Logs shall be submitted, if available or required by the Board;

b) a portion of the Dual Induction Log shall be annotated to show:

i) the base of the lowermost USDW; ii) the top and bottom of the injection zone; iii) the perforated interval; iv) the upper and lower confining zones; v) the top of cement behind the injection casing (verified by appropriate log(s) or calculations); and vi) the location of the packer.

I. Testing Requirements:

Before operating any new or converted enhanced recovery injection or produced fluid disposal well, the tubing/casing annulus or the long string casing shall be tested under the supervision of the Oil and Gas Board at a pressure of 500 psig or the maximum authorized injection pressure, whichever is less, provided no testing pressure shall be less than 300 psig. The well shall have passed the Mechanical Integrity Test if there is a pressure loss of no greater than three per cent (3%) for a duration one-half (1/2) hour. Any leaks in excess of three per cent (3%) pressure loss over one-half (1/2) hour shall be considered a significant leak. 7. Mechanical Integrity

A. An injection well has mechanical integrity if:

1. there is no significant leak in the casing, tubing or packer as defined in Part 6:I of this rule (63); 2) there is no significant fluid movement into an underground source of drinking water through vertical channels adjacent to the well bore.

B. One of the following methods must be used to evaluate the absence of significant leaks as defined in Part 6:I under Part 7:A(1) above:

1. pressure test with liquid; 2) Monitoring of annulus pressure.

C. Unless cement was circulated to the surface with uncontaminated returns and documented by a Form No. 3, Well Completion Report, filed with the Mississippi State Oil & Gas Board, one of the following methods must be used to demonstrate the absence of significant fluid movement under Part 7:A.(2) above:

1. cementing records, including cement squeezes acceptable to the Board, demonstrating the presence of adequate cement to prevent such migration; and a Cement Bond Log demonstrating the presence of adequate cement and adequate bonding to prevent such migration; or

2. the results of a Radioactive Tracer Survey (RTS) witnessed, after adequate notification, by a representative of the Board will be accepted in conjunction with cementing records which demonstrate the presence of adequate cement to prevent migration.

D. Each enhanced oil recovery injection or produced fluid disposal well shall demonstrate mechanical integrity at least once every five (5) years. The Supervisor shall prescribe a schedule and mail notification to the operator to allow for orderly and timely compliance with this requirement.

E. The operator shall notify the Supervisor at least forty-eight (48) hours prior to any testing. Testing shall not commence before the end of the forty-eight (48) hour period unless authorized by the Supervisor.

F. A complete record of all Mechanical Integrity Tests shall be made out, verified and placed on file with the Oil and Gas Board within thirty (30) days after testing.

8. Operating Requirements

A. Injection shall not commence in any Class II Well until all permit requirements have been reviewed and approved by the Supervisor of the State Oil and Gas Board or his designee.

B. Injection pressure at the well head shall not exceed the maximum pressure allowed by the permit. All wells shall not exceed calculated fracture pressure (enhanced recovery wells can be excepted after notice and hearing).

C. Injection between the outermost string of casing protecting underground sources of drinking water and the well bore (borehole) is prohibited.

D. If the operator or the Supervisor determines that operation may cause fluid to enter an unauthorized stratum or escape to the land surface, the operator shall shut in the well immediately. The operator shall notify the Supervisor by telephone within twenty-four (24) hours of such occurrence. Injection into the well shall not be resumed until the Supervisor has determined that the well is in compliance with all material permit conditions. If such compliance is not achieved within ninety (90) days, after written notice by the Supervisor, the operator shall be required to show cause at a hearing before the Board why the permit should not be cancelled and the well be plugged and abandoned in accordance with Part 10 of this rule (63).

E. After the completion or recompletion of any well as an enhanced recovery injection or produced fluid disposal well, the operator shall file Form No. 3 (Well Completion Report) setting forth all pertinent information. Actual information shall be submitted for those items that were estimated or approximated in the permit application.

9. Monitoring and Reporting Requirements

A. The operator shall monitor the nature of the injected fluids at time intervals sufficiently frequent to yield data representative of their characteristics and observe injected pressure, flow rate, and cumulative volume at least with the following frequencies:

i) weekly for produced fluid disposal operations; ii) monthly for enhanced recovery operations; with the results of (i) and (ii) being reported monthly on Oil and Gas Board Form 14.

B. All reports submitted to the Oil and Gas Board shall be signed by a duly authorized representative of the operator and notarized when indicated on the form.

C. The operator of a new enhanced recovery injection or produced fluid disposal well shall give written notification to the Supervisor within thirty (30) days after injection or disposal is commenced.

D. The operator shall notify the Supervisor of permanent cessation of injection if an injection well or project is to be removed from service for a period of six (6) months or more and give reasons or justification for such cessation of injection. Said permission shall not exceed one (1) year. After one (1) year, the well, or wells in a project, shall be plugged and abandoned as outlined in Part 10 of this rule (63). The operator may request a hearing for an extension exceeding one (1) year. Wells required for standby service, provided they pass a mechanical integrity test and meet all requirements for wells in active service, are exempt from the plugging requirements of this paragraph.

E. The operator shall, within thirty (30) days, notify the Supervisor of the date injection into an enhanced recovery injection or produced fluid disposal well or project is permanently terminated and the reason therefor. The permit authorizing the well or project shall expire at this time. Notification of project termination must be accompanied by an individual well status report for all project injection wells.

F. Mechanical failures or down-hole problems which indicate an enhanced recovery injection or produced fluid disposal well is not directing fluids into the authorized injection zone may be cause to shut in the well. If this condition may endanger a USDW, the operator shall orally notify the Supervisor within twenty-four (24) hours.

Written notice of this failure shall be submitted to the Supervisor within five (5) days of the occurrence, additionally a plan for testing and/or repairing the well shall be submitted within thirty (30) days of the occurrence. Any mechanical down-hole well work performed on the well shall be witnessed by an oil and gas inspector unless such witnessing is waived by the Supervisor. Mechanical failures will be treated as loss of mechanical integrity, and provisions of Part 3:A of this rule (63) will apply.

G. The operator shall retain records of all monitoring information for a period of three (3) years.

H. The operator shall monitor the nature of the injected fluids to obtain data representative of their characteristics at least once within the first year of the authorization and, thereafter, when changes in the fluid occur.

10. Plugging and Abandoning

A. Prior to abandoning an enhanced recovery injection or produced fluid disposal well, the well shall be plugged in a manner which will not allow the movement of fluids either into or between underground sources of drinking water by:

1. isolating the injection zone from the well bore by the use of cement plugs; and 2) such other cement plugs as are deemed necessary by the Board to properly plug the well.

B. Placement of the cement plugs shall be accomplished by one of the following: 1) the Balance-Plug Method; 2) the Dump Bailer Method; 3) the Two-Plug Method; or 4) an alternative method, approved by the Supervisor, which will reliably provide a comparable level of protection to underground sources of drinking water.

C. The well to be abandoned shall be in a state of static equilibrium with the mud weight equalized top to bottom, either by circulating the mud in the well at least once or by a comparable method prescribed by the Supervisor, prior to the placement of the cement plug(s).

11. Notification of Down-hole Work

When any produced fluid disposal well permit has been issued by the Board, the operator shall not proceed with any down-hole work on such well or the reworking of any existing produced fluid disposal well, including, but not limited to, any cementing, setting of packer, the running or pulling of tubing or any work involving subsurface equipment, until the operator has notified the Supervisor of the State Oil and Gas Board and has received from the Supervisor written permission to proceed with any such work. The Supervisor may, in his discretion and in lieu of such written permission, have his representative present to observe and inspect any such work, in which event the representative shall file a written report thereof. Notification as to the time, date and place of the work must be given at least forty-eight (48) hours prior to commencing the work, unless waived by the Supervisor.

12. Annular Disposal

The Board may approve annular disposal of produced fluids for a period of not more than one (1) year, after notice and hearing provided that the outermost casing is properly cemented through the lowermost USDW. The applicant shall provide the Board a Radioactive Tracer Survey (accompanied by an interpretation of the survey by the company which performed the test) to prove that the injected fluid is entering the permitted zone and there are no leaks in the casing. The applicant shall furnish the Board an economic study of the well and the economics of alternative methods of disposal of the produced fluids. No permit for annular injection will be granted where a viable economic alternative is found to exist.

13. Exemption of Aquifers

After notice and opportunity for public hearing, the Board may identify (by narrative description, illustrations, maps or other means) and describe in geographic and/or geometric terms (such as vertical and lateral limits and gradient) which are clear and definite, all aquifers, or parts thereof, which the Board proposes to designate as exempted aquifers for purpose of Class II Underground Injection. In order to be designated as an exempted aquifer, the following criteria must be met:

A. The aquifer does not currently serve as a source of drinking water; and

B. The aquifer cannot now, and will not in the future, serve as a source of drinking water because:

1. It is mineral producing, hydrocarbon producing or geothermal energy producing or can be demonstrated by a permit applicant, as part of a permit application for a Class II operation, to contain minerals or hydrocarbons that, considering their quantity and location, are expected to be commercially producible; or

2. It is situated at a depth or location which makes recovery of water for drinking water purposes economically or technologically impractical; or

3. It is so contaminated that it would be economically or technologically impractical to render that water fit for human consumption; or

4. It is located over a Class III Well mining area subject to subsidence or catastrophic collapse; or

C. The total dissolved solids content of the ground water is more that 3000 and less that 10,000 mg/l and it is not reasonably expected to supply a public water system;

D. the aquifer exemption is approved with the concurrence of the Mississippi Department of Natural Resources and the Mississippi State Board of Health.

14. Suspension of Operations

Should the Supervisor of the State Oil and Gas Board determine that the continued operation of a well, wells or associated treating, handling or storage facilities would cause waste, pollution or contamination of air, surface water, a USDW or soils, he will immediately prohibit further operation of the well, wells or associated facilities and may suspend the operator's Certificate of Compliance (Form 8) to transport oil, gas or other products until such time as it is determined by the Supervisor that the operator is in compliance with all rules and regulations of the Board.

15. Penalty

Any person, firm or corporation violating any of these rules and regulations shall be punished as provided by Section 53-1-47 of the Mississippi Code Annotated, 1972.

16. Exceptions

The Board, after notice and hearing, may grant an exception to any construction or operating provision of this rule upon proof of good cause. The operator must clearly demonstrate that this exception will not endanger a USDW. No exception shall be granted by the Board which would be a violation of any Federal Regulation and/or State of Mississippi Statute.

17. Effective Date

This order supersedes Order No. 395-87 of the State Oil and Gas Board, dated September 17, 1987, and these rules and regulations shall take effect and be in force from and after April 20, 1989, except where otherwise provided.

18. Validity

Should any section, subsection or other provision of this rule be declared by a court of competent jurisdiction to be invalid, that decision shall not affect the validity of the rule as a whole or any part thereof, other than the part so declared to be invalid, this Board hereby declaring that it would have adopted those parts of this rule which are valid and omitted any parts which may be invalid, if it had known that such part or parts were invalid at the time of the adoption of this rule.

History

• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)

26 Miss. Admin. Code Pt. 2, R. 1.64 Rule 1.64

UNDERGROUND STORAGE WELLS OF LIQUEFIED COMPRESSED GASES, CRUDE OILS, REFINED HYDROCARBONS, COMPRESSED AIR AND NATURAL GASES IN RESERVOIRS DISSOLVED IN SALT BEDS. Permits 1. The permit for the drilling, development and continued operation of artificially formed underground liquefied compressed gas, crude oils, refined hydrocarbons, compressed air or natural gas storage space, where such cavity is dissolved in salt beds, may be issued only after notice and hearing by the State Oil and Gas Board, in the form and manner required by statutes and rules of this Board. Storage of lubricating oils, hazardous materials, nuclear, and/or radioactive materials shall not be permitted. Oil and Gas Board Form 2 and 2A shall accompany each permit application.

General Design and Construction of Underground Storage Cavern 2. Prior to the design and construction of an underground storage cavern, an engineer and/or geologist experienced in the development and/or operation of a salt cavern storage facility shall perform an investigation to determine the feasibility of such a storage system at a particular site. The data obtained during the feasibility investigation shall be considered in the design of a solution mined underground storage system and such data filed with the Board.

3. Design shall be performed by or under the supervision of an engineer or geologist, as defined in paragraph 2, and shall include such factors, among others, as: type of storage use, location of the cavern(s), number of caverns, cavern capacity, and maximum development diameter of the cavern(s). The design shall assure that project development can be conducted in a reasonable, prudent and systematic manner; and shall stress physical and environmental safety and the prevention of waste. The design and solutioning shall be continually reviewed throughout the construction phase to take into consideration pertinent additional detailed subsurface information, and shall include provisions for protection from damage caused by hydraulic shock. The Board shall be advised of any test or surveys conducted during the construction phase and copies made available to the Board as soon as practicable.

4. Each solution mined storage cavern developed after the adoption of these rules shall be washed with a blanket material in place in order to prevent uncontrolled leaching of the cavern roof. Blanket material is defined as any non-corrosive material which is immiscible with water, and lighter than water, e.g. propane, diesel oil.

5. Storage operations utilizing fresh water to displace product shall be conducted in such a manner that the washing of the cavern will not result in uncontrolled increase of the cavern diameter or capacity, or washing the cavern roof.

Cavern Operating Pressures 6. The maximum and minimum operating pressure of a storage cavern shall be determined by an engineer, as defined in paragraph 2, after considering the geological characteristics of the dome. The maximum allowable operating pressure (gauge) at the production casing seat or cavern roof, whichever is the shallowest, shall not exceed 0.9 psi per foot of overburden.

7. The storage cavern shall not be subjected to pressures in excess of this maximum operating pressure even for short periods of time (including pressure pulsation peaks, abnormal operating condition, etc.).

Volume Verification 8. Each salt dome solution mined cavern developed after the adoption of these rules shall be washed to its initial design capacity, as approved by the Board. Such capacity shall be verified by a method approved by the Board, and such information shall be filed with the Board prior to the utilization of the cavern for storage of product. The cavern may be enlarged to a capacity equal to the maximum size approved by the Board and verified by a method approved by the Board and such information shall be filed with the Board within 30 days for continued operation.

9. All solution mined storage caverns in use at the time these rules are adopted shall have the capacity verified within one year from the effective date of these rules. In any event, each solution cavern shall have the capacity verified at least once every five (5) years. A copy of any and all surveys or tests run to verify capacity shall be filed with the Board within 30 days.

Location of Underground Storage Cavern 10. Each solution mined cavern developed after the adoption of these rules shall be located as follows: (a) The wellhead and borehole shall be located so that the walls of the storage cavern at maximum development diameter shall be no less than 100 feet from the property boundary of the lands included in the storage project on which the caverns are located, and no less than 300 feet in any direction from the edge of the salt mass.

(b) The minimum separation of adjacent walls of storage caverns as measured in any direction shall be established by an engineer, as defined in paragraph 2, considering

(1) the salt properties, (2) the elevation of the top and bottom of the adjacent caverns, (3) their maximum development diameter relative to the spacing of the caverns, and (4) other considerations deemed appropriate for the specific site; but, in no case shall such separation at any time be less than 200 feet.

In the event the separation of the adjacent walls of storage caverns becomes less than 200 feet, the Board will be advised and a variance requested. Proof that the caverns can be safely operated with less than a 200-foot minimum separation between caverns must be presented to justify the variance.

11. Storage caverns in use at the time these rules are adopted are subject to the following:

(a) The surface location measured from the wellhead of a solution cavern well shall be no less than 100 feet from the nearest property line.

(b) Caverns' extremities shall be no less than 50 feet from the property of others who have not consented to subsurface storage under their land nor from the side wall of any other cavern.

Casing Program 12. All casing strings shall be centralized throughout the interval to be cemented. Casing and cementing programs shall comply with appropriate provisions of Statewide Rules 10, 11 and 12, except as specifically provided below.

(a) Each new storage well shall be completed with a double string of casing into the salt, one casing string being an intermediate string, the other being the final (production) cemented string.

(b) The intermediate cemented casing string shall have adequate tensile and collapse strengths for the setting depth. This string shall be cemented from casing seat (bottom of casing) set into the salt, to ground surface or 150% of calculated cement volume to fill the annular space; however, in every case it shall be cemented a sufficient distance to prevent migration of the stored products into zones of porosity or permeability in the overburden. Cement slurries shall be compatible with the salt formation and cementing shall be placed by the plug and displacement method. The casing cement job shall be documented by an affidavit from the cementing company showing the amount and type of cementing materials and the method of placement. If the casing string is to be installed by welding, it shall be of a weldable grade such as API 5L Grade B or an ASTM weldable grade.

(c) The final (production) cemented casing string shall have adequate tensile and collapse strengths for the setting depth. This string shall be cemented from casing seat (bottom of string) to ground surface and shall be set a minimum of 300 feet into the salt. A variance may be requested on cementing, but in every case sufficient cement shall be used to bring cement up into the intermediate casing. Cement slurries shall be compatible with the salt formation and cementing shall be placed by the plug and displacement method. The casing cement job shall be documented by an affidavit from the cementing company showing the amount and type of cementing materials and method of placement. All cementing and service reports shall be filed with the Board within 30 days. If the casing string is to be installed by welding, it shall be of a weldable grade such as API 5 L Grade B or an ASTM weldable grade. Casing string welders

shall be qualified under either Section 3 of API 1104 specification or Section IX of the ASTM Boiler and Pressure Vessel Code for the thickness to be welded. In addition to a visual inspection of the completed weld a x-ray or ultrasonic inspection shall be run on at least 10% of the string. The record of the inspection shall be available for review by the State Oil and Gas Board. Defective welds shall be ground, re-welded and re-inspected.

(d) The final (production) cemented casing string shall be hydrostatically pressure tested before drilling out the plug (shoe). The test pressure applied at the surface shall be a minimum of 200 psi. However, the test pressure when measured at the surface shall not cause pressure at the casing seat to exceed 0.9 psi per foot of depth. The test pressure shall be maintained for a minimum of one hour to verify casing integrity and absence of leaks.

(e) The casing seat and cement of final cemented casing string shall be hydrostatically tested after drilling out. At least 10 feet of salt below the casing shall be penetrated prior to this test. The test pressure calculated at the casing seat shall equal the maximum operating pressure at that point. However, the test pressure shall not exceed 0.9 psi per foot of depth. The test pressure shall be maintained for a minimum of one hour.

(f) All tests required by this section shall be prepared and supervised by an engineer, as defined in paragraph 2, and a report of these test results attested to and filed with the Board within 30 days.

Cavern Mechanical Integrity Test 13. Storage Caverns in use at the time these rules are adopted shall be tested for mechanical integrity within one year from the effective date of these rules, and at least every five years thereafter. Each new storage cavern shall be tested for mechanical integrity prior to storing product and at least every five (5) years thereafter.

14. Liquified Compressed Gas, Crude Oils or Refined Hydrocarbons Storage Cavern –

(a) prior to the test the cavern must approach stability with regard to cavern temperature and salt dissolution. For test purposes, the cavern can be considered stable and the test commenced when the shut-in brine pressure changes less than 10 psig in 24 hours.

(b) A natural gas or compressed air storage cavern shall be considered stable when the well head pressure variations can reasonably be shown to closely correlate to ambient temperature changes. Recording temperature gauges shall be used for both wellhead and ambient temperatures and shall be calibrated prior to use.

15. Prior to testing a cavern a detailed testing procedure shall be submitted to the Board for approval. The testing procedure used must be at least as stringent as the following: The wellhead, cased borehole, and storage cavern shall be pressure tested as a unit using product, or a material with equivalent or lesser viscosity and density injected to a depth below the production casing seat. Test pressure at the wellhead shall be equal to:

(a) such pressure as will produce the expected maximum operating pressure at the production casing seat. Calculation of the expected maximum operating pressure shall consider the maximum depth to the product-brine interface and maximum flowing conditions; or,

(b) caverns used for storage of natural gas or compressed air under pressure shall demonstrate mechanical integrity of the cavern and casing by monitoring shut-in pressure at the surface for a minimum period of 24 hours after stabilization. Beginning and ending pressures shall vary no more than three (3%) percent, with adjustment made for temperature changes.

In no case shall the test pressure cause the pressure at the production casing seat to exceed the maximum allowable pressure of 0.9 psi/foot of overburden.

16. All cavern mechanical integrity tests shall be prepared and supervised by an engineer, as defined in paragraph 2, and reports filed with the Board within 30 days.

17. The operator shall give sufficient notice prior to conducting cavern integrity tests so that a Board representative may be present.

Wellhead and Flowlines 18. All wellhead components (casinghead, tubinghead, etc.), valves, and fittings shall be of steel having primary service pressure ratings sufficient to exceed maximum operating pressure conditions computed at the wellhead. Wellhead, flowlines, valves, and all related connections shall have a test pressure rating at least equivalent to 150% of the maximum operating pressure. All valves shall be periodically inspected and maintained in good working order.

19. Each flowline connected to the wellhead shall be equipped with a manually operated positive shut-off valve located on the wellhead. The water and brine side of the wellhead shall have the same pressure rating as the product side.

20. Each flowline connected to the wellhead shall be equipped with an automatic shut-in safety valve located within ten (10) feet of the positive shut-off manual wellhead valve. These automatic valves shall be configured for Fail-Safe Closed operation, i.e. valve will close automatically upon any of the following conditions:

(1) loss of control signal, (2) loss of valve operator supply pressure, (3) thermal (fire) activation (when fusible elements are used they should have a melting point not exceeding 250F), (4) signal from safety control sensing device, or (5) manual activation of emergency shutdown system.

21. (a) Liquified Compressed Gas, Crude oils and Refined Hydrocarbons - One or more safety control sensing device(s) shall be installed in the product flowline to prevent exceeding the maximum cavern operating pressure, and to prevent the escape of product due to flowline rupture. One or more safety control sensing devices(s) shall be installed in the brine flowline to prevent exceeding the maximum cavern operating pressure, and to prevent the escape of product.

(b) Natural Gas and Compressed Air - One or more safety control sensing device(s) shall be installed in the product flowline to prevent exceeding the maximum cavern operating pressure, and to prevent the escape of product.

22. Flowlines connected to the wellhead which are used exclusively for water or brine injection for product displacement may be equipped with a check valve of adequate pressure rating in lieu of the automatic shut-in safety valve.

23. An alarm shall be installed to alert on-sight personnel whenever an automatic shut-in on any well occurs. Such a system shall be maintained in operable condition at all times.

24. For a liquified compressed gas or refined hydrocarbons storage cavern, a product/brine separation system and a continuous flare system shall be installed at or near each brine pit or any other location on the brine system where the uncontrollable escape of product may occur.

25. The safety control system, separation system, and flare system utilized shall be approved by the Supervisor of the State Oil and Gas Board (hereinafter referred to as the "Supervisor").

Metal Tanks and Impervious Containers 26. Metal tanks and impervious containers other than earthen pits used for storage or holding of brine water solutions shall be completely surrounded by a dike (or firewall) or retaining wall of sufficient height and size so that the volume enclosed shall be equal to 150% of the capacity of the largest tank or container inside the firewall; provided, however, that in areas where such dikes (or firewalls) or retaining walls would be impractical or impossible to construct and the operator has devised a plan which serves the same purposes, the Supervisor may, upon proper written application, waive in whole or in part the requirement of the construction of such walls.

Rework (Well Work) 27. An Application to Rework, Form No. 2, stating thereon the exact workover procedure, shall be filed with and approved by the Supervisor prior to the commencement of such work. A Completion Report, Form No. 3, shall be filed within thirty (30) days following completion of the well work.

28. No downhole or wellhead work shall be done prior to notifying the Board. Such notification shall allow sufficient time for the Supervisor, at his discretion, to have his representative present to observe the work. Verbal authorization from the Field Inspector of the area, Field Director, UIC Coordinator or the Supervisor, may be issued for work conducted under atmospheric or controlled pressure conditions. Safety Practices 29. Personnel experienced and/or trained in the operation of salt cavern storage shall be present at the facility or other control site to monitor the operation when product is being injected or withdrawn from the storage cavern.

In the event that crude oil, containing in excess of 5 ppm of Hydrogen Sulfide, is stored in underground storage caverns, the site location will be adequately marked denoting the presence of Hydrogen Sulfide. Directional wind socks will be installed at all locations where the product has access to the atmosphere.

When injecting crude oil containing more than 5 ppm Hydrogen Sulfide into the underground storage cavern all applicable portions of Statewide Rule 66 shall apply, and the brine displaced will be discharged to brine storage through a flare system.

30. Appropriate safety precaution signs shall be displayed and unauthorized personnel kept out of the storage area. Each storage wellhead shall be visibly marked with an appropriate identifying sign.

31. The wellhead shall be protected from trespassers and accidental physical damage by a method approved by the Supervisor.

32. Each company operating a solution cavern storage well shall conduct a semi-annual safety inspection of such facility and file with the Board a written report consisting of the inspection procedure and results within thirty (30) days following the inspection. Such inspections shall be conducted during the months of January and July of each year. The operator shall notify the Board at least five (5) days prior to such inspections so that a representative of the Supervisor may be present to witness the inspections. Inspections shall include, but not be limited to, the following:

(a) Operation of all manual valves (b) Operation of all automatic shut-in safety valves including sounding or alarm devices (c) Flare system installation (liquified compressed gas, crude oils, and refined hydrocarbons) (d) Earthen brine pits, tanks, firewalls, and related equipment (e) Flowlines, manifolds, and related equipment (f) Warning signs, safety fences, etc.

33. Additional inspections may be made by the Supervisor or his representatives. All local operators' logs called for by this rule shall be subject to inspection at this time.

Financial Responsibility, Plugging and Abandonment. 34. Prior to commencement of plugging operations a Notice of Intention to Plug and Abandon, Form No. 6, shall be filed with and approved by the Supervisor. The Notice of Intention to Plug and Abandon shall state the exact method proposed to plug the well, and shall also provide the depth to the top of the cavern. If the proposed method to plug does not meet requirements at the discretion of the Supervisor, then the Supervisor shall specify the method in which the well shall be plugged. After properly plugging and securing the well the Plugging Record, Form 7, shall be filed with the Board within 30 days.

35. In addition to the requirements of Statewide Rule 28B the plugging procedure shall include the following:

(a) Cavern shall be filled with water to remove product from the cavern. (b) All suspended casing shall be removed from the well. (c) Place a plug in the cemented casing string so that it is within the salt section near the cavern roof isolating the well from the cavern. (d) Cement from the plug to a distance of fifty (50) feet above the top of the caprock. Allow the cement to set. Tag the top of the cement to determine the location of the top of the cement. Test casing to 1000 PSI (minimum) for a period of 30 minutes. Any leaks detected shall be repaired prior to continuing plugging operation. The Supervisor may grant an exception to the testing of the casing and allow the entire casing string to be cemented to the surface with the appropriate grade of cement. (e) Cement from fifty (50) feet below the lowermost USDW to the surface. (f) Cut all casing strings off at least three (3) feet below ground level. Weld a steel plate of at least three eighths (3/8) inch thickness over the top of the casing strings. (g) Cover casing with soil and restore the location. (h) The operator shall demonstrate Financial Responsibility acceptable to the Board in the amount of one hundred thousand dollars ($100,000) for each storage cavern. Refer to Oil and Gas Board, Rule 63 1E 3 for proofs of Financial Responsibility acceptable to the Board. This Financial Responsibility shall be provided to the Board at the time of permit application and/or change of operator. (i) The operator shall within ninety (90) days of the adoption of this rule by the Board demonstrate Financial Responsibility acceptable to the Board in the amount of four hundred thousand dollars ($400,000) for each pit (brine or other) associated in any way with the operations of their storage cavern facilities. Refer to Oil and Gas Board Rule 63 1E 3 for Proof of Financial Responsibility acceptable to the Board. Any pit not properly permitted and/or used in the operation of the facility shall be properly closed within one hundred eighty (180) days of adoption of this rule by the Board.

36. All operators shall immediately notify the Supervisor by telephone and follow up with a letter giving full details concerning fires, leaks and blowouts that are directly related to the storage cavern.

37. In addition to the above, the following Statewide Rules with amendments or special requirements noted shall be in force and effect:

(a) Statewide Rule 4 Application to Drill (b) Statewide Rule 5 Transfer of Permit (c) Statewide Rule 6 Identification of Well (d) Statewide Rule 24 Well logs (e) Statewide Rule 45 Waste by Pollution of Air, Fresh Waters and Soils Prohibited.

(f) Statewide Rule 47 Fluid Injection Reports. Form No. 14A shall be filed each month stating thereon the following information for each individual well:

1. Saltwater Disposal Wells: a. Amount of saltwater (brine) injected during the month. b. Injection pressure, reservoir and depth data.

2. Liquefied Compressed Gas, Crude Oils, Refined Hydrocarbons, Compressed Air and Natural Gas Storage Cavern: a. Kind or type of product stored. b. Amount (barrels or MCF) of product injected into the well during the month. c. Amount (barrels or MCF) of product removed from the well during the month. d. Total amount (barrels or MCF) of product stored in the well at the end of the month. e. The estimated cavern capacity (barrels or cubic feet).

(g) Statewide Rule 54. Organization Report (h) Statewide Rule 55. Identification of Facilities (i) Statewide Rule 56. Records (j) Statewide Rule 63. Underground Injection Control (k) Statewide Rule 66. Operations Involving Hydrogen Sulfide

Suspension of Operations 38. Should the Supervisor of the State Oil and Gas Board determine that the continued operation of liquefied compressed gas, crude oils, refined hydrocarbons, compressed air or natural gas storage caverns or associated wellhead facilities (wellhead, valves, brine tanks or pits and flares) would cause unsafe operating conditions, waste, pollution or contamination to air, fresh water or soil, he may immediately prohibit further operation of the well or associated wellhead facilities until such time as it is determined by the Supervisor that the operator is in compliance with all rules and regulations of the Board.

Board Filings 39. All tests, surveys, and reports required by these rules shall be filed with the Board within 30 days after such tests and surveys are conducted.

Penalty 40. Any person, firm or corporation violating any of these rules and regulations shall be punished as provided by law.

Exceptions 41. The Board expressly reserves the right, after notice and hearing, to alter, amend, repeal, or grant exceptions to any or all of the foregoing rules and regulations.

Annual Facility Fees 42. For each facility an annual fee will be assessed in the amount of one hundred ($100) dollars plus fifty ($50) dollars per unplugged storage cavern and fifty ($50) dollars per unplugged bringing well associated with storage caverns. These fees shall be due each January beginning January 1991.

Validity 43. Should any section, subsection or other provision of this rule be declared by a court of competent jurisdiction to be invalid, that decision shall not affect the validity of the rule as a whole or any part thereof, other than the part so declared to be invalid, this Board hereby declaring that it would have adopted those parts of this rule which are valid and omitted any parts which may be invalid, if it had known that such part or parts were invalid at the time of the adoption of this rule.

Effective Date 44. These rules and regulations shall take effect and be in force from and after February 19, 1992, except where otherwise provided.

The Board expressly reserves the right, after notice and hearing, to alter, amend, or repeal said Rule 64 - Underground Storage Wells of Liquefied Compressed Gases, Crude Oils, Refined Hydrocarbons, Compressed Air, or Natural Gases in Reservoirs Dissolved in Salt Beds - of the Statewide Rules and Regulations as amended.

History

• Source: MCA Section 53-1-17(3) (1972)

26 Miss. Admin. Code Pt. 2, R. 1.65 TRANSPORTATION OF CRUDE OIL OR ANY SUBSTANCE CONTAINING ANY QUANTITY OF CRUDE OIL

Any corporation, association, partnership or person in possession of crude petroleum oil or any substance containing any quantity of crude oil or any sediment, water or brine produced in association with the exploration and/or production of oil or gas, or both, being transported or for transporting from or to any storage, disposal, processing or refining facility shall possess specific documentation which substantiates the right to be in possession of such substance. Such documentation shall include the following:

(a) The identity of the operator and the location of the lease from which originated the crude petroleum oil or any sub- stance, including any sediment, water or brine produced in association with the exploration or production of oil or gas, or both, if it is purportedly being or to be transported from a lease;

(b) The identity of the operator and the location of the storage facility from which or to which the crude petroleum oil or any substance, including any sediment, water or brine produced in association with the exploration or production of oil or gas, or both, is being or is to be transported.

(c) The identity of the operator and the location of the disposal processing or refining facility to which the crude petroleum oil or any substance, including any sediment, water or brine

produced in association with the exploration and production of oil or gas, or both, is being or is to be transported.

(d) The estimated percentage of crude petroleum oil in the substance, sediment, water or brine produced in association with the exploration or production of oil or gas, or both, which is being or is to be transported.

(e) The volume of crude petroleum oil being or to be transported; and

(f) Any additional information the Supervisor of the State Oil and Gas Board finds necessary or appropriate.

Any law enforcement officer or the Supervisor of the State Oil and Gas Board or his designated employees may at any time inspect and for probable cause impound oil or any substance containing any quantity of crude oil or any sediment, water or brine produced in association with the exploration and/or production of oil or gas, or both, and the vehicle transporting it, pending being furnished with the documentation as required above or other proof of ownership or right to possession, whenever

(a) he has reasonable cause to examine the documentation, (b) the transporter lacks such documentation or the documentation is substantially at variance with the face, or (c) the lawful severance and maintenance taxes have not been paid on any part of such product.

Any transporter who does not possess the proper documentation, on proof thereof, shall be assessed a penalty as provided by law.

RULE 1.66 OPERATIONS INVOLVING HYDROGEN SULFIDE. Preventative measures shall be taken to control the effects of hydrogen sulfide (H

S) at all operations where H

S concentrations in the gas stream are equal to 100 ppm or more. Such operations shall include, but may not be limited to drilling, working over, testing, producing, gathering, metering, processing, storing, transporting, and injecting.

(1) Definitions. In addition to the definitions set forth in State Oil and Gas Board Order No. 201-51, Rule 2, unless the context otherwise requires, the following words shall have the meanings indicated when used within this rule.

(a) Radius of exposure: That radius constructed with the point of escape as its starting point and its length calculated as provided for in Paragraph (10)(b). (b) Area of exposure: The area within a circle constructed with the point of escape as its center and the radius of exposure as its radius.

(c) Public area: Shall include but not be limited to a dwelling, place of business, church, school, hospital, school bus stop, government building, a public road, all or any portion of a park, city, town, village, or other similar area that can expect to be populated. (d) Public road: Any federal, state, county, or municipal street or road owned or maintained for public access or use. (e) Sulfide stress cracking: The cracking phenomenon which is the result of corrosive action of hydrogen sulfide on susceptible metals under stress. (f) Facility modification: Any change in the operation, such as an increase in throughput, in excess of the currently permitted capacity; or any change that would increase the radius of exposure. (g) Public infringement: A public area and/or a public road has been established within an area of exposure to the degree that such infringement would change the applicable requirements of this rule to those operations responsible for creating the area of exposure. (h) Contingency plan: A written document that shall provide an organized plan of action for alerting and protecting the public within an area of exposure following the accidental release of a potentially hazardous volume of hydrogen sulfide. (i) Civil authorities shall include but not be limited to the following agencies:

Governor, Assistant to Governor, local Government Emergency Management/Civil Defense agency, Mississippi Adjutant General, Mississippi National Guard, Mississippi Emergency Management Agency, Bureau of Pollution Control, Red Cross, Mississippi State Department of Health, Department of Public Safety, and such other agencies as in the discretion of the Supervisor of Oil and Gas deems advisable.

(2) Operator Responsibility.

(a) It shall be the responsibility of each operator to conduct operations in accordance with Paragraph (3) through (8) below. Paragraph (9) requires each operator to file a Certificate Of Compliance For Hydrogen Sulfide Operations (Certificate) for each operation that handles or could reasonably be expected to encounter sour oil and/or gas.

(b) Exemptions to Paragraph (3) through (8) may be obtained by filing a Certificate with the Supervisor as directed under Paragraph (10) below.

(c) Variances to or waivers from the specifications of this rule may be granted by the Supervisor upon showing a good cause by the operator.

(3) Safety Program. A safety program shall be established and maintained to promote safety procedures. All personnel that are assigned, contracted, or employed shall be instructed as to hazards of H

S, including physiological responses and the application of first aid to victims of H

S exposure.

(4) Equipment and Materials.

All equipment and materials that will be exposed, or can reasonably be expected to be exposed to H

S, shall be designed and maintained in accordance with specifications evolved through technology of the latest state-of-the-art to resist damage caused by hydrogen sulfide stress cracking, embrittlement, or corrosion.

(5) Warning Systems. (a) Warning signs. 1. For above-ground and fixed surface facilities, the operator shall post, where permitted by law, clearly visible warning signs on public streets or roads which provide direct access to facilities. 2. On offshore facilities, the operator shall display clearly visible warning signs on at least two sides of the rig and at points of access to the rig or platform. 3. In populated areas such as townsites and cities where the use of signs is not considered to be acceptable, an alternate warning plan may be approved upon written request to the Supervisor.

(b) Monitors and Alarms. 1. Unless otherwise approved by the Supervisor, each drilling, workover, test, or plant facility shall have an H

S monitoring system which activates visible alarms when the concentration of H

S exceeds 10 parts per million (ppm) in air and audible alarms when the concentration of H

S exceeds 20 parts per million (ppm) in the air. This system shall be capable of sensing a minimum of 5 ppm in the air.

(i) As a minimum, H

S sensors for onshore drilling and workover rigs shall be located at the rig floor, bell nipple, shale shaker, and mud pits; for offshore drilling and workover rigs, the sensors shall be located at the rig floor, bell nipple, shale shaker, mud pits, and living quarters.

(ii) For drilling operations, this monitor and alarm system shall be on site and operational prior to penetrating the H

S bearing zone in accordance with the time specified in the contingency plan and approved by the Supervisor. Said equipment shall be on site and operational prior to commencing all other operations involving H

S.

2. As approved by the Supervisor, the operator of each gathering system, production well, and injection well shall install and maintain in operable condition safety devices to include automatic shut-down devices designed to prevent the undetected continuing escape of hydrogen sulfide.

3. The operator of each unplugged inactive well shall establish safety procedures, as approved by the Supervisor, which are designed to prevent the undetected continuing escape of hydrogen sulfide.

(c) Wind Direction Equipment. Wind direction equipment shall be installed at prominent locations on or near the drilling, workover, test, or plant facility to indicate the wind direction at all times and the safe upwind areas in the event H

S becomes present in the atmosphere.

(d) Danger Signals. 1. Danger signals consisting of signs and flags shall be displayed in a manner visible to all traffic approaching the facility. All signals shall be illuminated under conditions of limited visibility when in use. If illumination is not feasible, signals must be constructed of reflective material or covered with reflective paint so they will be readily visible from other light sources such as automobiles. Danger signals shall be displayed to indicate the following operational conditions and requirements:

(i) Possible danger - green - When the concentration of H

S is less than 10 ppm in air;

(ii) Moderate danger - yellow - When the concentration of H

S reaches 10 ppm in air. If the concentration of H

S reaches 20 ppm in air, breathing apparatus shall be worn by all personnel and all nonessential personnel shall proceed to the safe briefing areas;

(iii) Extreme danger - red - When the concentration of H

S reaches 50 ppm in air. All nonessential personnel shall be evacuated, immediate notification shall be given to local civil authorities, and traffic in the immediate vicinity of the facility shall be diverted. The State Oil and Gas Board and other appropriate governmental agencies shall be notified as soon as possible when conditions of extreme danger exist.

(6) Training Requirements. (a) Each operator whose operations are subject to this rule shall provide training of personnel responsible for his operations. An attendance list of these training sessions shall be maintained by the operator.

(b) The training of personnel shall include the following elements:

1. Safety precautions; 2. Operation of safety equipment and life support systems; 3. Corrective action and shutdown procedures; 4. Effect on metal components of the system.

(7) Personnel Safety Equipment. (a) Breathing apparatus shall be provided and be readily accessible. A minimum requirement shall be to provide self-contained breathing equipment for all personnel that could be exposed to H

S concentrations in excess of 10 parts per million (ppm) in air. (b) Where H

S concentrations reach 20 ppm in air, a system of breathing air manifolds, hoses, and masks shall be provided. A rechargeable cascade air bottle system shall be provided to refill individual bottles of breathing air. Additional equipment such as a first aid kit, nose cups, ear plugs, spectacle kits, portable H

S detectors, retrieval ropes and harnesses, chalk boards, note pads, bull horns, flashing lights, resuscitators, and a litter shall also be available.

(c) For drilling operations, the equipment specified in Paragraphs (7)(a) and (7)(b) shall be on site and operational prior to penetrating the H

S bearing zone in accordance with the

time specified in the contingency plan and approved by the Supervisor. Said equipment shall be on site and operational prior to commencing all other operations involving H

S.

(d) Explosion-proof ventilation devices shall be provided in critical work areas of the drilling, workover, test, or plant facility and be multidirectional and capable of dispersing H

S vapors.

(e) If H

S is detected, frequent inspections of all areas of poor ventilation shall be made with an H

S detector instrument, and personal H

S detectors shall be made available to personnel.

(8) Contingency Plan. (a) Operations that handle gas containing 100 ppm H

S or more in the gas stream must formulate a contingency plan unless exempted under Paragraph (10). Unless otherwise approved, a contingency plan should be filed (in triplicate) with the Supervisor within 30 days of the approval of the drilling permit application.

The contingency plan must be approved by the Supervisor prior to commencing the following operations;

1. Penetrating the H

S bearing zone during drilling operations. 2. Working over or recompleting a well in an H

S bearing zone; 3. Testing or putting on permanent production a well that is completed in an H

S bearing zone; 4. Producing hydrocarbons bearing H

S into a pipeline or gathering system; 5. Starting up a plant or facility that will remove H

S from production; 6. Implementing any modification to an existing operation or facility which increases the radius of exposure in a public area or results in a change of the applicable requirements of this rule.

. (b) A contingency plan shall include a plat or aerial photograph covering the area of exposure or an area having a radius of one mile, whichever is greater. The plat shall include the location of the well, plant, or corridor showing all good roads, residences, public areas and places, areas of low elevation where H

S might accumulate, the direction of prevailing winds, oil and gas wells, separators, heaters, corridors of gathering or pipeline systems, pumping stations, plants, refineries, transformer stations, and other manmade structures or features that may be of importance. An index list of houses and places of business with telephone numbers and names and numbers of residents and employees as well as the identification of residents needing assistance in evacuation shall accompany the plan. This index list shall be limited to those houses and places of business located within a radius of one mile. The radius about the well, plant, or corridor may be extended beyond one mile if deemed necessary by the operator, or at the request of the Supervisor. The plan shall also include:

1. Information about the safety program established in Paragraph (3), the training requirements in Paragraph (6), the personnel safety equipment required in Paragraph (7), the

location of briefing areas, and responsibilities of personnel during different operational conditions; 2. A description of the warning systems required in Paragraph (5) to include number, location, and detection limits of all monitors as well as the schedules for calibrating and testing said systems; 3. For drilling operations, a specification of the time at which the warning systems required in Paragraph (5) and the personnel safety equipment required in Paragraph (7) will be on site and operational; 4. Procedures to evacuate residences, businesses, and public places;

5. Procedures to divert traffic in the immediate vicinity and to notify the local civil authorities, the State Oil and Gas Board, and other appropriate governmental agencies;

6. Procedures to evacuate non-essential personnel from the well and/or facility in the event attempts to control the well and/or facility are unsuccessful;

7. A list including names, addresses, and telephone numbers of the closest hospitals, ambulance services, medical personnel, and other individuals or facilities that could assist in the event of an emergency;

8. The name, address, and telephone number of the individual in charge of administering the plan;

9. Any other information that the operator deems appropriate;

10. Other information deemed necessary by the Supervisor.

(c) A new or amended contingency plan shall be filed with the Supervisor when any significant change in public exposure caused by public infringement of an existing radius of exposure requires such changes to be made. Otherwise, the contingency plan for each facility shall be reviewed and updated on an annual basis. Any updates, revisions, and/or amendments to a contingency plan shall be submitted to the Supervisor within 30 days of the plan's anniversary date or within 30 days of the date an operator becomes aware of the public infringement, as applicable. If there are no changes, an annual statement of review shall be filed with the Supervisor.

(d) The filing requirement may be waived if a current plan has previously been submitted and is in compliance with the requirements set forth herein. Plans filed prior to the effective date of this rule must be reviewed and modified, if necessary, to obtain compliance with this Paragraph within 180 days of said effective date.

(e) Unless previously provided, copies of the approved contingency plan shall be provided to local civil authorities prior to commencing any one of the operations set forth in Paragraph (8)(a) and be readily available at the drilling, workover, test, or plant facility. (9) Certificate Of Compliance For Hydrogen Sulfide Operations.

(a) A Certificate shall be filed in triplicate with the Supervisor for each facility or operation subject to any requirement of this rule.

(b) The Certificate shall certify that the operator has complied, or will comply, with the applicable requirements of this rule.

(c) For drilling operations, the Certificate shall be filed with the Supervisor as a part of the application to drill. For facilities involving other types of H

S operation, as set forth in Paragraph (8)(a), the Certificate shall be filed with and approval granted by the Supervisor prior to commencing those operations.

(d) A Certificate shall be filed for existing facilities or operations within 180 days of the effective date of this rule.

(e) A new or amended Certificate shall be required if there is a change in public exposure caused by public infringement of an existing radius of exposure resulting in a change in the applicable provisions of this rule, not described by the existing Certificate. The operator shall file the new or amended certificate within 30 days after an operator becomes aware of such infringement.

(f) A new or amended Certificate shall be required if there is a modification of an existing operation or facility which increases the radius of exposure in a public area or results in a change in the applicable provisions of this rule not described by the existing Certificate. The operator shall file the new or amended Certificate at least 10 days prior to initiating the operation or construction. Approval of the Certificate must be granted by the Supervisor prior to commencing that operation or construction.

(g) Each facility or operation for which a Certificate has been approved shall be recertified by the operator on an annual basis. The recertification shall be filed with the Supervisor within 30 days of the anniversary date of the most recently approved Certificate for that facility or operation.

(10) Rule Exemptions. Exemptions from Paragraphs (3) through (8) may be obtained by filing the Certificate as directed below:

(a) Each operator must determine the hydrogen sulfide concentration in the gaseous mixture in an operation or system.

1. Tests shall be made in accordance with standards as set by American Society for Testing and Methods (ASTM) Standard D-2385-66, or Gas Processors Association (GPA) Plant Operation Test Manual C-1, GPA Publication 2265-68, as revised, or other methods approved by the Supervisor.

2. Tests of vapor accumulation in storage tanks may be made with National Institute of Occupational Safety and Health (NIOSH) approved colormetric tubes.

(b) To obtain an exemption from this rule, the radius of exposure must be determined, except in the cases of storage tanks, using the following Pasquill-Gifford equation, or by other methods satisfactory to the Supervisor:

For determining the radius of exposure:

X={(1.589) (mole fraction H

S) (Q)} (.6258) Where: X=radius of exposure in feet for 100 ppm H

S concentration Q = maximum volume determined to be available for escape in standard cubic feet per day H

S = mole fraction of hydrogen sulfide in the gaseous mixture available for escape (i.e. for 1% H

S (volume basis), mole fraction is .01)

(c) The volume used as the escape rate in determining the radius of exposure shall be that specified below, as applicable:

1. The maximum daily volume rate of gas containing hydrogen sulfide handled by that system for which the radius of exposure is calculated.

2. For existing gas wells, the estimated maximum open flow potential shall be used.

3. For new wells drilled in developed areas, the escape rate shall be determined by using the estimated maximum flow potential of adjacent wells in the field.

4. The escape rate used in determining the radius of exposure shall be corrected to standard conditions of 15.025 psia and 60 o F.

(d) For drilling of a well in an area where insufficient data exist to calculate a radius of exposure but where hydrogen sulfide may be expected, then a radius of exposure equal to one-half mile shall be assumed. A lesser-assumed radius may be considered upon written request setting out the justification for same.

(e) Storage tanks which are utilized as part of a production operation and which are operated at or near atmospheric pressure are exempt from Paragraphs (3) and (5) through (8); however, where the vapor accumulation has a hydrogen sulfide concentration in excess of 500 ppm, the storage tanks shall be subject to the following:

1. Storage tanks are exempt from Paragraphs (5), 7b,c,d, and e), and (8) only;

2. A warning sign shall be posted on or within 50 feet of the facility to alert the general public of the potential danger;

3. Fencing, as a security measure, is required when storage tanks are located inside the limits of a townsite or city or where conditions cause the storage tanks to be exposed to the public.

(f) Operations with a radius of exposure less than 50 feet are exempt from Paragraphs (3) through (8) upon filing the Certificate.

(g) Provided no public area is included, operations with a radius of exposure greater than 50 feet and less than one-half mile are exempt from Paragraphs (5)(b) through (8) upon filing the Certificate.

(h) Operations with a radius of exposure that either is greater than 50 feet and includes a public area or is equal to or greater than one-half mile are not eligible for an exemption under this Paragraph.

RULE 1.67 UNDERGROUND STORAGE OF NATURAL GAS AND AIR IN RESERVOIRS. 1. Definitions As used herein, unless the context clearly indicates otherwise:

A."Underground Storage" shall mean storage in an underground reservoir, stratum or formation of the earth;

B. "Reservoir" shall mean a porous stratum of the earth or porous zone of a general structure which is completely separated from any other porous zone and is capable of being used for underground storage of natural gas and/or air;

C. "Natural Gas" shall mean gas of a sufficient purity to be capable of use for residential purposes;

D."Native Gas" shall mean gas which has not been withdrawn from the earth, or which, having been withdrawn, is injected into a reservoir for purposes other than underground storage;

E. "Air" shall mean any non-hydrocarbon gas;

F. "Underground Storage Facility" or "Facility" shall mean the underground storage reservoir, the well bore tubular goods and the wellhead and related equipment to the last positive shut-off valve before the gathering line or flowline;

G. "Gathering Line" or "Flowline" shall mean the line between the last positive shut- off valve at the wellhead to the pipeline or header where two or more such lines converge;

H. "State Oil and Gas Board" or "Board" shall mean the State Oil and Gas Board of Mississippi;

I. "Supervisor" shall mean the duly appointed State Oil and Gas Supervisor;

J. "Cushion Gas" shall mean the volume of gas required as permanent storage inventory to maintain adequate reservoir pressure for meeting minimum gas deliverability demands throughout the withdrawal season (also called "base gas");

K. "Storage Area" shall mean the total surface area of the storage reservoir plus any buffer zone approved by the board as necessary to insure reservoir integrity; and

L. "Working gas" shall mean the portion of the storage volume that can be removed from a storage reservoir for deliveries and still maintain pressure sufficient to meet design deliverability.

2. Permits A. The permit for the drilling, development and continued operation of a facility for underground storage of natural gas or air may be issued only after notice and hearing by the State Oil and Gas Board, in the form and manner required by the statutes and rules of this Board. Storage of hazardous, nuclear and/or radioactive materials shall not be permitted. Oil and Gas Board Form 2 shall accompany each permit application.

3. General Design and Construction of Underground Storage Facility. A. Prior to the design and construction of an underground storage facility, an engineer and/or geologist experienced in the development and/or operation of an underground storage facility shall perform an investigation to determine the feasibility of such a facility at a particular site and in a particular reservoir. The data obtained during the feasibility investigation shall be considered in the design of the storage facility and such data filed with the Board as a part of the permit application.

B. Design shall be performed by or under the supervision of an engineer or geologist as defined in paragraph A, above and shall include such factors, among others, as: Type of storage use, location of storage wells, number of storage wells, number and location of observation wells, if any, number and location of plugged and abandoned wells penetrating the storage reservoir, capacity of the storage reservoir, and the geological name of the storage reservoir. The design shall assure that project development can be conducted in a reasonable, prudent and systematic manner; and shall stress physical and environmental safety and the prevention of waste. The design and construction shall be continually reviewed throughout the construction phase to take into consideration pertinent additional subsurface data. The Board shall be advised of any tests or surveys conducted during the construction phase and copies made available to the Board as soon as practicable.

4. Underground Storage Operating Pressures A.The maximum and minimum operating pressures of an underground storage facility shall be determined by an engineer as defined in Paragraph 3-A, after consideration of the geologic characteristics of the formation. The maximum allowable stabilized reservoir pressure (gauge) shall be no greater than 75% of the fracture pressure of the formation as determined by a step rate test or as calculated by a qualified engineer, by a method acceptable to the Board.

B. The storage reservoir shall not be subjected to pressures in excess of the calculated fracture pressure even for short periods of time.

5. Volume Verification A. Each underground storage facility developed after adoption of this rule shall have the storage volume calculated using acceptable reservoir engineering methods and such information shall be filed with the Board as a part of the permit application. Storage volume shall include working gas, native gas, cushion gas and/or air.

B. Refinement of actual reservoir volumes determined after continued operation shall be filed with the Board.

6. Casing Program A. All wells drilled for the purpose of storage after the adoption of this rule shall comply with the following casing program:

1. All casing strings shall be centralized throughout the interval to be cemented. Casing and cementing programs shall comply with appropriate provisions of Statewide Rules 10, 11 and 12, except as specifically provided below:

a) Surface casing shall be cemented with 150% of the calculated volume to circulate cement to the surface;

b) If the surface casing setting depth is below the lowermost Underground Source of Drinking Water, the final (production) casing shall be cemented with sufficient volume to fill the annular space to a point 500 feet above the top of the storage reservoir, otherwise the casing string shall be cemented to the surface;

c) All casing used in storage wells shall be casing of appropriate API Standards for the pressures to be encountered and shall be new casing or reconditioned casing of new quality; and

d) Emplacement of cement in the production casing shall be verified by Cement Bond Log, Cement Evaluation Log or other logs approved by the Supervisor.

2. All casing strings shall be tested, after sufficient cement setting time (usually 24 hours) to a pressure equal to 1 psi per foot of casing set with a maximum test pressure of 1000 psi gauge measured at the surface. 3) All tests and logs required by this section shall be prepared and supervised by a qualified Engineer and a report of test results and copies of logs filed with the Board within thirty (30) days of date the log is run or the test conducted.

B. The requirements of Paragraph 6A shall not apply to existing or newly converted wells if: 1) The wells were cased and cemented in compliance with existing rules of the Oil and Gas Board in existence at the time the well was originally drilled; and

2. Injection will not result in the movement of fluids into an Underground Source of Drinking Water as defined in Rule 63, Part 1(B)(2).

C. Storage Well Mechanical Integrity Test:

1. Storage wells existing at the time this rule is adopted shall have mechanical integrity verified by a method approved by the Supervisor within two (2) years from the effective date of this rule and at least every five (5) years thereafter. Each new storage well shall be tested for mechanical integrity prior to storing gas or air and verified at least every five (5) years thereafter.

2. All storage well mechanical integrity tests and/or verifications shall be prepared and supervised by a qualified Engineer and reports filed with the Board within thirty (30) days.

3. The operator shall give sufficient notice prior to conducting a mechanical integrity test so a Board representative may be present.

D. All wells drilled through the storage reservoir within a storage area for any purpose other than storage after the adoption of this rule shall comply with the following casing program:

1. All surface and intermediate casing strings shall be centralized through the interval to be cemented. Casing and cementing programs shall comply with appropriate provisions of Statewide Rules 10, 11, and 12 except as specifically provided below or otherwise approved by the Supervisor.

a) Surface casing shall be cemented with 150% excess over calculated volume needed to circulate cement to the surface.

b) If the surface casing setting depth is below the lowermost Underground Source of Drinking Water, an intermediate casing string shall be set approximately 100 feet below the base of the storage reservoir and cemented with sufficient volume of cement to fill the annular space to a point 500 feet above the top of the storage reservoir, otherwise the casing string shall be cemented to the surface.

c) All surface and intermediate casing shall be of appropriate API Standards for the pressures to be encountered and shall be new casing or reconditioned casing of new quality.

d) Emplacement of cement in the intermediate string shall be verified by Cement Bond Log, Cement Evaluation Log or other logs approved by the Supervisor.

2. All surface and intermediate casing strings shall be tested, after sufficient cement setting time (usually 24 hours), to a pressure equal to 1 psi per foot of casing set with a maximum test pressure of 1000 psi gauge measured at the surface.

3. All tests and logs required by this section shall be prepared and supervised by a qualified Engineer and a report of test results and copies of logs shall be filed with the Board within thirty (30) days of date of test or log.

4. No well shall be drilled through a storage reservoir or its stratigraphic equivalent within a storage area except upon notice and hearing before the Oil and Gas Board.

7. Wellhead and Flowlines A. All wellhead components (casing head, tubing head, etc.) valves and fittings shall be of steel having primary service pressure ratings sufficient to exceed the maximum operating pressures computed at the wellhead. Wellhead, valves and all related connections shall have a test pressure rating at least equivalent to 150% of the maximum operating pressure. All valves shall be periodically inspected and maintained in good working order.

B. Each flowline connected to the wellhead shall be equipped with a manually operated positive shut-off valve located on the wellhead.

C. Each flowline or gathering line shall be constructed in conformance with the provisions of CFR Title 49, part 192 - Transportation of Natural and Other Gas by Pipeline.

8. Rework (Well Work) A. An application for workover, Form No. 2, stating thereon the exact workover procedure for any down-hole work on tubular goods or the reservoir, shall be filed and approved by the Supervisor prior to the commencement of such work. A Completion Report, Form No. 3, shall be filed within thirty (30) days following completion of the well work.

B. No downhole work shall be done prior to notifying the Board. Such notification shall allow sufficient time for the Supervisor, at his discretion, to have his representative present to observe the work. Verbal authorization from the Field Inspector of the area, Field Director, UIC Coordinator or the Supervisor may be issued for work conducted under atmospheric or controlled pressure conditions.

9. Safety Practices A. Personnel experienced and/or trained in the operation of Underground Storage Facilities shall monitor the facility or control site when natural gas or air is being injected or withdrawn from any storage well.

B. The wellheads and related equipment and controls shall be protected from trespassers and accidental physical damage by a method approved by the Supervisor.

C. Each company operating an underground storage facility shall conduct a semi- annual safety inspection of such facility and file with the Board a written report consisting of the inspection procedure and results within thirty (30) days following the inspection. Such inspections shall be conducted during the months of January and July of each year. The operator shall notify the Board at least five (5) days prior to such inspections so that a representative of

the Supervisor may be present to witness the inspections. Inspections shall include, but not be limited to, the following:

1. operation of all manual valves, 2) operation of all automatic shut-in safety valves, if applicable, 3) wellheads and related equipment, and 4) warning signs, safety fences, etc., if applicable.

D. Additional inspections may be made by the Supervisor or his representatives. All operators logs called for by this rule shall be subject to inspection at this time.

E. All operators shall immediately notify the Supervisor by telephone and follow-up with a letter giving full details concerning fires, leaks and blowouts directly related to the storage facility.

10. In addition to the above, the following Statewide Rules, with amendments or special requirements noted, shall be in force and effect:

A. Statewide Rule 4 - Application to Drill, Workover, or Change Operator. B. Statewide Rule 5 - Transfer of Permit. C. Statewide Rule 6 - Identification of Well. D. Statewide Rule 24 - Well Logs. E. Statewide Rule 45 - Waste by Pollution of Air, Fresh Waters and Soils Prohibited. F. Statewide Rule 47 - Fluid Injection Reports, Form No. 14B shall be filed each month stating thereon the following information for each facility:

1. Monthly maximum injection pressure. 2) Amount (MMCF at 15.025 psia & 60 o F) of gas or air injected during the month. 3) Amount (MMCF at 15.025 psia & 60 o F) of gas or air withdrawn during the month. 4) Total amount (MMCF at 15.025 psia & 60 o F) of gas or air in storage at end of month. 5) Estimated maximum reservoir storage capacity (MMCF at 15.025 psia and

o F).

G. Statewide Rule 54 - Organization Report H. Statewide Rule 55 - Identification of Facilities I. Statewide Rule 56 - Records J. Statewide Rule 63 - Underground Injection Control if facility contains a Saltwater Disposal Well.

11. Suspension of Operations

Should the Supervisor of the State Oil and Gas Board determine that the continued operation of an Underground Storage Facility would cause unsafe operating conditions, waste or pollution of air, fresh water or soil, he may immediately prohibit further operation of a well or associated facilities until such time as it is determined by the Supervisor that the operator is in compliance with all rules and regulations of the Board.

12. Board Filings All tests, surveys and reports required by these rules shall be filed with the Board within thirty (30) days after such tests and surveys are conducted.

13. Proof of Financial Responsibility Proof of Financial Responsibility for each well in a storage facility shall be provided in the form and manner prescribed in Statewide rule 63, E, (3). Financial Responsibility for Storage Wells existing at the time this rule is adopted shall be provided to the Board within one hundred eighty (180) days of adoption of this rule.

14. Penalty Any person, firm or corporation violating any of these rules and regulations shall be punished as provided by law.

15. Exceptions The Board expressly reserves the right, after notice and hearing, to alter, amend, repeal or grant exceptions to any or all of the foregoing rules and regulations.

16. Annual Facility Fees For each facility an annual fee will be assessed in the amount of one hundred ($100) dollars plus fifty ($50) dollars per unplugged storage well and fifty ($50) dollars for each unplugged salt water disposal well. These fees shall be due each July beginning July 1993.

17. Validity Should any section, sub-section or other provision of this rule be declared by a court of competent jurisdiction to be invalid, that decision will not affect the validity of the rule as a whole or any part thereof, other than the part so declared to be invalid, this Board hereby declaring that it would have adopted those parts of the rule which are valid and omitted any parts which may be invalid, if it had known such part or parts were invalid at the time of adoption of this rule.

18. Effective Date These rules and regulations shall take effect and be in force from and after March 17, 1993, except where otherwise provided.

The Board expressly reserves the right, after notice and hearing, to alter, amend or repeal said Rule 67 - Underground Storage of Natural Gas and Air in Reservoirs - of the Statewide Rules and Regulations, as amended.

RULE 1.68. DISPOSAL OF NATURALLY OCCURRING RADIOACTIVE MATERIALS (NORM) ASSOCIATED WITH THE EXPLORATION AND PRODUCTION OF OIL AND GAS

I. Definitions

For the purposes of this Rule

1. “Ambient Exposure Rate” shall mean an indication of the potential for a human to incur a radiation dose. Ambient exposure rates are measured in units of “millirem per hour” or “microroentgen per hour” at a height of one meter (three feet) above a horizontal land surface and 0.3 meter (one foot) from the midpoint of a horizontal or vertical equipment surface. A microR meter with an internal or external probe is generally used for this measurement.

2. “Board” shall mean the State Oil and Gas Board.

3. “Clean fill” shall mean soil with radiological characteristics that cannot be distinguished from background.

4. “Commercial oil field exploration and production waste disposal” shall mean storage, treatment recovery, processing, disposal or acceptance of oil field exploration and production wastes from more than one (1) generator or for a fee.

5. “Equipment” shall mean tanks, valves, tubing, rods, pumps, tools and other equipment commonly used at oilfield exploration/production sites.

6. “Landspreading” shall mean an action that involves blending of soil with NORM impacted scale or NORM impacted soil to achieve NORM concentrations that are at or below the release criteria. Landspreading does not include blending of soil with NORM impacted sludge, tank bottoms, drilling muds, drill cuttings or other materials. (See “Surface Landspreading” and “Subsurface Landspreading”).

7. “Naturally occurring radioactive material” (hereinafter “NORM”) shall mean any nuclide which is radioactive in its natural physical state (i. e., not man-made), but does not include byproduct, source or special nuclear material nor does it include radioactive materials continuously contained within the closed system of exploration and production of oil and gas, including but not limited to produced saltwater.

8. “Surface Landspreading” shall mean the raking or tilling of non-homogeneous surface NORM deposits within a discrete land area in order to achieve a homogeneous distribution of NORM over the top six (6) inches of soil within that land area.

9. “Subsurface Landspreading” shall mean the blending of NORM with clean fill prior to its placement in an impacted area in order to achieve a homogeneous distribution of

NORM throughout the blended volume. The impacted area is then covered with soil or other materials after placement of the blended volume.

10. “Personal Notice” shall mean the written notice of a proposed landspreading disposal activity sent by certified mail by a permit applicant to the affected surface land owner. Personal Notice shall include a statement of intent to apply for a permit for the landspreading of NORM including a description of the approximate amount of NORM material to be disposed, the general area of disposal and contact information where the landowner can obtain additional information. Personal Notice shall be deemed complete when the certified mail is received or attempted delivery is unclaimed by the affected surface landowner. The Personal Notice shall be sent in advance of the filing of an application for a permit for landspreading with the Board such that the applicant is able to provide copies of certified mail receipts, documentation of unclaimed notices, or other appropriate confirmation of notice delivery with the permit application submittal.The mailing address to be used in making the notice shall be the address shown in the appropriate county’s most current ad valorem tax receipt records for the surface owner of the disposal site.

11. “Site of Origin” means the well location at which the NORM was generated from exploration and production activities.

12. Additional relevant definitions are as given in Rule 69.

II. General Provisions

1. Disposal of NORM will be handled in accordance with this Rule, Rule 28, Rule 69 and/or Rule 63 of the Statewide Rules and Regulations.

2. All necessary forms and any requested schematics shall be executed to show placement of NORM in the well bore of plugged back wells and abandoned wells and during surface/subsurface landspreading, also in accordance with other Statewide Rules and Regulations as they may apply.

3. Proper permitting for Radioactive Waste Transportation shall be obtained through the Mississippi Emergency Management Agency in accordance with its rules and regulations concerning the same.

4. Personal Notice to the land owner is required for all landspreading permits.

III. Information

1. Any property subject to a valid oil and gas lease, any surface property owned by operator or its joint operating participants, and/or any dry, abandoned or plugged back oil and/or gas well may be considered as a potential disposal site for NORM, subject to the further provisions contained herein.

2. Each owner, operator and/or producer of a well shall be responsible for the proper disposal of NORM in accordance with all applicable rules and regulations of all appropriate state or federal authorities.

3. In order to qualify for disposal pursuant to this Rule, the NORM must have been derived from the exploration and production of oil and gas within the territorial limits of the State of Mississippi.

IV. Acceptable Methods of Disposal

1. Placement between cement plugs; or

2. Encapsulation in pipe then placed between cement plugs; or

3. Mixed with gel or mud (slurried) and placed between cement plugs; or

4. Slurried then placed into a formation; or

5. Surface landspreading; or

6. Subsurface landspreading; or

7. Disposal offsite at a licensed, low level radioactive waste or NORM disposal facility; or

8. Any options other than those listed above will be evaluated for possible approval by the State Oil & Gas Board Technical staff

V. Limitations and Conditions

1. General

2. The NORM to be disposed of in accordance with this Rule shall only be from oil and/or gas exploration and production activities carried out within the territorial limits of the State of Mississippi.

3. No person may dispose of oil and gas NORM waste without a permit. A NORM disposal permit shall be issued for a period of time that is reasonably necessary to complete the disposal activity not to exceed five (5) years.

4. No person may commercially dispose of NORM under this Rule from more than one (1) generator or for a fee. Any person seeking to operate a commercial oil field exploration and production NORM waste disposal facility must comply with the requirements of the Mississippi Department of Environmental Quality.

5. Disposal of NORM through landspreading shall only occur in areas where published literature or site-specific determinations indicate that the groundwater table is equal to or greater than five (5) feet below the bottom of the disposal area.

6. Locations utilized for NORM disposal through landspreading shall not be situated in 25-year flood plains as defined by published literature or determined through site-specific topographic surveys.

7. Locations utilized for NORM disposal through surface and subsurface landspreading shall not be situated within 300 feet of an inhabited dwelling.

8. The operator shall notify the Supervisor at least forty-eight (48) hours prior to beginning disposal operations, unless waived by the Supervisor, in order that his representative may be present to observe and inspect any such work, in which event the representative shall file a report thereof.

9. Downhole Disposal

10. Any NORM not continuously contained within the closed system of exploration and production of oil and gas shall be injected or placed into cased holes which have at least one hundred (100) feet of casing set below the base of the Underground Source of Drinking Water (“USDW”) and properly cemented to protect the USDW and have at least two (2) sand sections behind the casing below the USDW. Any well in which the NORM is not encapsulated must meet all the criteria of Rule 63 of the Statewide Rules and Regulations and be properly permitted as a Class II UIC well before injection begins.

11. A minimum of a 100-foot plug shall be placed immediately below the USDW. Unless there is proof of adequate cement behind the casing, the casing shall be perforated 100 feet below the USDW and shall be squeezed with a sufficient amount of cement calculated to provide 100 feet of cement in the annulus and leave a 100-foot plug in the casing.

12. The cement plug immediately above and below the NORM shall be a minimum of 100 feet in length. A cast iron bridge plug may be utilized with a minimum of 20 feet of cement placed on top of the bridge plug. All abandoned wells which contain disposed NORM shall be permanently marked by a steel plate at the top of the casing. This marker shall contain the well name, API number, date of plugging and the fact that NORM waste exists in the well. All cement used in the well bore above NORM placement shall be standard color-dyed red with iron oxide.

13. The interval of well casing above the packer in which NORM is to be injected shall be pressure tested to a minimum of 500 psig for 30 minutes for integrity. More than 3% pressure loss in 30 minutes constitutes loss of integrity. Loss of integrity shall be treated as set forth in Rule 63, Part 3A. The injection tubing string shall be pressure tested to a minimum pressure of 1 ½ times (150%) the intended surface injection pressure. A test chart of the injection string testing shall be maintained by the operator. All tests shall be conducted under the supervision of the State Oil and Gas Supervisor or his representative.

14. NORM shall not be used as admixtures in cements used for well plugs.

15. The Plugging Report shall show the size, grade, weight per foot, outside diameter of impacted tubing, and the depth of the top and bottom of the tubing, the diameter of the coupling, and whether the tubing is free or secured in cement, a bridge plug or a retainer.

16. Landspreading

17. Shall not be performed with materials that exhibit ambient exposure rates in excess of 600 microR per hour above background.

18. Shall not be performed in areas where the general area exposure rate is significantly elevated above background due to the presence of equipment.

19. Is permitted only at the Site of Origin. The landspreading shall be limited to that portion of the surface of the land reasonably necessary, excluding lease roads, used for the conduct of producing operations of a well.

20. Shall require the performance of a pre- and post-landspreading survey of the impacted land area as described in Rule 69, with the results thereof submitted to the State Oil and Gas Board on Board Form 21 (or equivalent).

VI. Procedures

1. Downhole Disposal

2. Request for downhole disposal of NORM must be submitted by petition to the State Oil and Gas Board and shall include the following:

i. Source(s) of NORM identified by operator, field, well name(s) and, if known, the producing formation.

ii. Type(s) of NORM (pipe scale, contaminated soil, basic sediments, etc.).

iii. Volume of NORM to be disposed of reported in cubic feet, barrels, or length and diameter of tubing.

iv. Radiation level(s) in microroentgens per hour (uR/hr.).

v. Disposal methodology.

2. Accompanying the petition shall be a proposed well schematic showing the proposed work upon completion, along with a completed Form 6 and an affidavit concerning the proposed NORM disposal and its compliance with all applicable rules and regulations. This proposal should be a reflection of what will be submitted in the final plugging report. The petitioner must give public notice of the hearing on the petition and such notice shall state that the well will be utilized for the disposal of NORM produced with exploration and production waste.

3. If tubing is to be placed between plugs, but not secured in cement, then the top joint of the tubing string that contains NORM shall be left with a top coupling. All tubing shall be placed in the well and not dropped into the well.

4. The plug immediately above the NORM shall be tagged unless a bridge plug or cement liner is used.

5. Landspreading

6. In accordance with Rule 1.68.V.1.2, permits for landspreading may be issued upon filing of a Form 2 application with a plat of the proposed disposal area and a written plan for landspreading attached that complies in all respects with this rule. Personal Notice to the surface land owner is required for all landspreading permits in advance of the filing the Form 2 application with the Board. Certified mail receipts, documentation of unclaimed notices or other appropriate confirmation of notice delivery shall be provided by the applicant with the Form 2 application to the Board.

7. Surface Landspreading

a. Surface landspreading shall be performed by raking or tilling deposits of NORM within the top six (6) inches of soil.

b. The operator shall ensure that upon completion of the landspreading activity, the ambient exposure rate at any given point in the impacted area does not exceed eight (8) microR per hour above background and that the concentration of Radium 226

or Radium 228 does not exceed 5 pCi/g above background. The ambient exposure rate of eight (8) microR per hour above background is equivalent to a uniform concentration of 5 pCi/g of Radium 226 or Radium 228 (NORM) above background in a 100 square meter area. If at the completion of the landspreading activity the ambient exposure rate is demonstrated to exceed the prescribed limit, the operator shall take appropriate remedial or corrective action.

c. No disposal site shall exceed 3.0 acres in size, and a survey of the impacted land area shall be performed to demonstrate that the ambient exposure rate at any given point in the impacted area does not exceed the eight (8) microR per hour above background.

d. The completed Board Form 21 shall document conformance with Section V.1.4. and 5. (“Limitations and Conditions”), as well as with the requirements of Section VI.2.2.a., b. and c. (“Surface Landspreading”).

3. Subsurface Landspreading

a. Subsurface landspreading shall be performed by blending NORM with clean fill prior to placing the blended volume into the area of interest or creating an area of subsequent layers.

b. The blended volume shall be placed in the area of interest in layers of not greater than six (6) inches, not to exceed three (3) feet of total blended volume thickness.

c. The operator shall ensure that upon completion of the landspreading activity, the ambient exposure rate at any given point in the impacted area does not exceed eight (8) microR per hour above background and that the concentration of Radium 226 or Radium 228 does not exceed 5 pCi/g above background. The ambient exposure rate of eight (8) microR per hour above background is equivalent to a uniform concentration of 5 pCi/g of Radium 226 or Radium 228 (NORM) above background in a 100 square meter area. If at the completion of the landspreading activity, the ambient exposure rate is demonstrated to exceed the prescribed limit, the operator shall take appropriate remedial or corrective action.

d. No disposal site shall exceed 3.0 acres in size, and a survey of the impacted land area shall be performed to demonstrate that the ambient exposure rate at any given point in the impacted area does not exceed the eight (8) microR per hour above background.

e. The impacted area shall be surveyed prior to the application of a final soil cover over the subsurface landspreading disposal area.

f. The completed Board Form 21 shall document conformance with Section V.1.4. and 5. (“Limitations and Conditions”), as well as with the requirements of Section VI.2.3.a.b.c. d.and e. (“Subsurface Landspreading”).

4. The Board may require soil sample analysis at any given point in the impacted area to confirm that the concentration of Radium 226 or Radium 228 does not exceed 5 pCi/g above background.

5. The work duration for landspreading, using the operational methodology described above, shall not exceed 100 hours per calendar year for a single individual. If it is anticipated that extended stay times might occur, the operator shall complete one of the following:

a. Take actions to reduce the dose rate to which personnel are exposed (i. e., increase distance, shielding and/or dust controls); or

b. Establish a radiation protection program pursuant to Mississippi Department of Health Regulations.

VII. Exceptions

Exceptions to any of the above listed limitations, conditions and criteria may be allowed after consultation with the State Oil and Gas Board staff and upon proper Notice and Hearing of a petition filed with the Board requesting same.

VIII. Penalty for Violation

In accordance with State Statute 53-1-47, any person who violates any provision of this rule shall be subject to a penalty of not to exceed Ten Thousand Dollars ($10,000.00) per day for each day of such violation to be assessed by the Board.

IX. Effective Date

This Statewide Rule 68, Board Order Number 253-99, shall take effect and be in force from and after sixty days from being filed with the Secretary of State’s Office.

X. Validity

Should any section, subsection or other provision of this rule be declared by a court of competent jurisdiction to be invalid, the decision shall not affect the validity of the rule as a

whole, or any part thereof, other than the part so declared to be invalid, this Board hereby declaring that it would have adopted those parts of this rule which are valid and omitted any parts which may be invalid, if it had known that such part or parts were invalid at the time of the adoption of this rule.

Effective: January 16, 2016

RULE 1.69 CONTROL OF OIL FIELD NATURALLY OCCURRING RADIOACTIVE MATERIALS (NORM). 1. Purpose and Scope

a. This rule provides regulations for control of oil field NORM to ensure that radiation exposures of workers and members of the general public resulting from oil field NORM are prevented, eliminated or reduced to acceptable levels in order to protect the public health, safety and environment.

b. No person shall receive, possess, use, transfer, own or acquire NORM as defined herein except as authorized in this section or as otherwise provided by State and Federal Regulations.

c. This rule applies to NORM that has been derived from the exploration and production activities of oil and gas operations within the territorial area of the State of Mississippi at oil and gas production facilities which, on or after July 1, 1995, were properly permitted by the Oil & Gas Board and which, on or after July 1, 1995, were active or properly reported as inactive on Oil & Gas Board Form 9-A.

d. It is the understanding of the Oil & Gas Board that the intent of the legislature is that location sites surrounding oil and gas production facilities which were abandoned prior to July 1, 1995 and/or not permitted by the Oil & Gas Board will continue to be regulated in the manner in which such sites were regulated prior to July 1, 1995.

2. Definitions

a. 29 CFR 1910 - Department of Labor, Title 29, Code of Federal Regulations, Section 1910.96, "Ionizing Radiation".

b. 49 CFR - Department of Transportation, Title 49, Code of Federal Regulations, Subchapter C, "Hazardous Materials Regulations".

c. Accessible Locations - Locations and areas at an exploration/production facility that can be readily occupied by a human.

d. Activity - Disintegration rate of a radioactive material stated in dps, becquerels, μCi, nCi, pCi, or other acceptable units.

e. ANSI-N323 - American National Standards Institute, ANSI-N323-1978, "Radiation Instrumentation Test and Calibration", 1978.

f. Approval - An act of endorsing or adding positive authorization or both.

g. Background - the ambient radiation field to which we are exposed daily, originating from cosmic rays, naturally-occurring radionuclides (

K, etc.) and human endeavors (fallout, fuel cycle, etc.). This radiation field is variable and causes a survey meter to respond in the absence of NORM.

h. Board - The State Oil and Gas Board.

i. Caution Sign - Caution signs shall have the words "Caution - N.O.R.M. - Potential Health Risk" on the upper panel in three (3) inch upper-case yellow letters on a black background, and the words "No Trespassing - Authorized Personnel Only" on the lower panel in two (2) inch upper-case black letters on a yellow background.

j. Detector - A material or device that is sensitive to radiation and can produce a response signal suitable for measurement or analysis. A detector coupled to a ratemeter forms a radiation detection instrument.

k. Exploration/Production Site or Facility - A location where oil and/or gas production activities occur. l. Exposure Rate - An indication of the potential for a human to incur a radiation dose. Exposure rates are measured in units of "microroentgen per hour" at a height of one meter (three feet) above a horizontal land surface and 0.3 meter (one foot) from the midpoint of a horizontal or vertical equipment surface. A microR meter with an internal or external probe is generally used for this measurement. For unrestricted release of equipment, the rates shall be measured at a distance of 2.5 centimeters (one inch) from the equipment surface.

m. Equipment - Tanks, valves, tubing, rods, pumps, tools, and other equipment commonly used at oil field exploration/production sites.

n. Gas - All natural gas, whether hydrocarbon or non-hydrocarbon or any combination or mixture thereof, including hydrocarbons, hydrogen sulfide, helium, carbon dioxide, nitrogen, hydrogen, casing-head gas, occluded natural gas from coal seams, compressed air and all other hydrocarbons not defined as "oil".

o. Location Site or Sites - The surface of a property in close proximity to production wells, production equipment, or the location of known releases of production scale or sludge containing NORM.

p. May - The word may is used to denote permission.

q. MEMA - Mississippi Emergency Management Agency Form RAD 5-2, Form RAD 5-3 and RAD 5-4.

r. Milliroentgen per hour (mR/hr) - A unit of gamma exposure rate. In the oil field, one mR/hr shall be equivalent to 1,000 microR per hour (μR/hr).

s. Millirem (mrem) - A unit of radiation dose. In the oil field, one mrem shall be equivalent to 1,000 microrem (μrem).

t. Mississippi Department of Health Regulations - Regulations for Control of Radiation in Mississippi, Part 801.

u. NORM - Technologically-enhanced naturally-occurring radioactive materials consisting, primarily, or

Ra (and daughter radiations) and

Ra (and daughter radiations) that are derived from the exploration and production activities of oil and gas operations within the territorial area of the State of Mississippi.

v. Oil - Crude petroleum oil and all other hydrocarbons which are produced at a well in liquid form by ordinary production methods and which are not the result of condensation of gas.

w. Operator - Any person who, duly authorized, is in charge of the development of a lease or the operation of a producing well.

x. Producer - An owner of drilling rights in property subject to this rule who has acquired its rights in said property for the purposes of developing, producing or otherwise utilizing the natural resources of oil and gas.

y. Property - Lands lying within an area recognized by the Oil and Gas Board as being within a "Field" as defined in Miss. Code. Ann. 53-1-3(f).

z. Radiation Detection Instrument - A device, consisting of a detector and a ratemeter, that detects and records the characteristics of ionizing radiation.

aa. Radiation Surveyor - An individual who has training and experience in the following: Radioactivity measurements, monitoring techniques, and the use of instruments; conducting radiological surveys and evaluating results; evaluating exploration/production facilities for proper operations from a radiological safety standpoint; and familiarity with Board rules and regulations.

bb. Ratemeter - A read-out device that, when used with a detector forms a radiation detection instrument.

cc. Radioactive Material - Any solid, liquid or gaseous substance which emits radiation spontaneously.

dd. Radioactive Material Storage Area - An area where radioactive materials are stored or handled and where working conditions in the general area normally include consideration of radiological constituents as described in 29 CFR 1910.96 and Mississippi Department of Health Regulations.

ee. Release criterion (criteria) - A level of exposure rate or surface count rate, below which an item, device or property may be released for unrestricted use.

ff. Restricted Use - Equipment, components, materials, land areas (property), and other items that, by virtue of their levels of fixed and/or removable NORM are maintained under the control of the operator or transferred to another producer for similar use.

gg. Rule 68 - Oil and Gas Board Statewide Rule 68, "Disposal of Naturally Occurring Radioactive Materials (NORM) Associated with the Exploration and Production of Oil and Gas".

hh. Shall - The word shall is to be understood as a requirement.

ii. Should - The word should is to be understood as a recommendation.

jj. Surface Disintegration Rate - An indication of the amount of radioactivity deposited on the surface of equipment. Surface disintegration rates are measured in units of "disintegrations per minute per 100 cm

area," with the window entrance of a Geiger counter radiation detector positioned approximately one (1) centimeter from the surface of interest. The surface disintegration rate is obtained by multiplying the count rate of the detector by the following correction factor:

where "eff" is the detector counting efficiency, determined from instrument calibration, and "Area" is the active area of the detector in units of "square centimeter."

kk. Survey - Evaluation of the radiological conditions at location sites incident to the production, use, release or presence of NORM.

ll. Total Effective Dose Equivalent (TEDE) - The sum of the deep dose equivalent (for external exposures) and the committed effective dose equivalent (for internal exposures). The TEDE is generally expressed in units of "millirem".

mm. Unrestricted Use - Equipment, components, materials, land areas (property), and other items that may be used, transferred, sold, or disposed of without regard for their radiological constituents.

3. Standard

, Area

(eff)

=

CF

a. Oil field exploration and production sites shall be operated and released in a fashion that ensures a TEDE of less than 100 millirem per calendar year due to exploration/production activities for workers and members of the general public.

b. Operations or operating site conditions that may cause workers or members of the general public to exceed 100 millirem TEDE in a calendar year due to exploration/production activities shall be controlled pursuant to Mississippi Department of Health regulations.

4. Surveys a. Operators shall perform surveys of location sites, as necessary, to evaluate:

i. The magnitude of exposure rates in the vicinity of equipment; ii. The magnitude of exposure rates above ground surfaces; and iii. Radiological conditions in the event of non-routine circumstances including, but not limited to, equipment repairs, equipment maintenance, site maintenance, accidents and spills any of which result in release of production scales or sludges onto the surface.

b. All surveys shall be performed by a radiation surveyor.

c. Ground surface surveys shall be performed in accordance with generally accepted survey practices and, at a minimum, shall report the maximum readings for each 1 meter x 1 meter grid area over the well head, tank battery site, heater treater site, all surface pipe areas and other areas of the location site where contamination is likely to occur. Elsewhere on the location site, the maximum readings for each 10 meter x 10 meter grid area shall be reported.

d. All surveys shall be documented on Board Form No. 21 or on a form that contains equivalent information to Board Form No. 21.

e. Surveys shall be performed with a radiation detection instrument in accordance with the following requirements:

i. Radiation detection instruments shall be of sufficient sensitivity and accuracy to assess the radiation exposure rates from NORM found at exploration/production sites.

ii. Instruments shall be calibrated according to the guidelines of ANSI-N323 at least once every 12 months and following any repairs to the ratemeter and/or detector, with a radiation source traceable to the National Institute of Standards and Technology.

iii. The battery status and the response of the instrument to radiation from a check source shall be checked and recorded prior to the day's use.

f. If a survey documented on Board Form No. 21 (or equivalent) has not been performed at a location site, an initial survey shall be performed within one (1) year of the effective date of this Rule for wells permitted on or before the effective date of this Rule. For wells which are permitted after the effective date of this Rule, the initial survey shall be

performed prior to the start of exploration/production operations and again two (2) years after the start of exploration/production operations.

g. After the initial survey of location sites, routine surveys shall be performed every five (5) years during exploration/production activities if the maximum exposure rate recorded in the last survey exceeds 50 microR per hour above background. Otherwise, they shall be performed every ten (10) years.

h. Surveys shall also be performed as necessary to evaluate radiological conditions in the event of non-routine circumstances as described in Section 4.a.iii. above.

5. Criteria for Site Operations

a. Personnel performing work at an exploration/production facility shall be trained in the hazards of the workplace pursuant to 29 CFR 1910.96(i).

b. Site access shall be controlled as follows:

i. Access to an exploration/production site with exposure rates in excess of 250 microR per hour above background in accessible locations shall be controlled by posting Caution Signs at the perimeter of the property which shall be visible from any and all accessible locations.

ii. Access to an exploration/production site with exposure rates in excess of 700 microR per hour above background in accessible locations shall be controlled by fencing the immediate area with a five foot high field fence or chain-link fence and by posting Caution Signs on the fence. The fence shall be located to restrict maximum exposure rates to 250 microR per hour above background.

iii. Access to an exploration/production site with exposure rates in excess of 5,000 microR per hour above background in accessible locations shall be controlled by fencing the immediate area with a five foot high field fence or chain-link fence, posting Caution Signs on the fence, and posting signs as required in 801.D.903(c) of the Mississippi Department of Health Regulations and 29 CFR 1910.96 at the location(s) where 5,000 microR per hour is exceeded.

iv. The limits contained in subsections (i) through (ii) are based on limited stay times. If it is anticipated that extended stay times might occur, the operator shall complete one of the following:

(1) Take actions to reduce the dose rate to which personnel are exposed (e.g., time, distance, shielding); or

(2) Establish a radiation protection program pursuant to Mississippi Department of Health regulations.

v. Operators shall be responsible for notifying all contractor personnel of the dose rates present at the facility(ies) where work will be performed. Once notified, the contractor shall be responsible for compliance with this rule.

vi. An operator may request an exception to the fencing requirements set forth above. Any such request shall be in writing to the Supervisor. Upon good cause shown, the Supervisor, in his or her discretion, may grant such an exception. Such written request and any response thereto shall be made a part of the applicable well file(s).

c. Site maintenance shall be controlled as follows:

i. Maintenance activities at sites with a maximum exposure rate of less than 50 microR per hour above background shall require no controls.

ii. Maintenance activities at sites with a maximum exposure rate in excess of 50 microR per hour above background shall require the prudent use of dust masks, or water sprays or other dust control methods as appropriate.

iii. Land maintenance and equipment maintenance/repair that may cause workers or contract personnel to exceed 100 millirem TEDE in a calendar year shall require control/licensing pursuant to Mississippi Department of Health Regulations.

6. Release of Property

a. Transfer to another producer.

i. Property may be transferred to another producer without regard for its radiological constituents. ii. Copies of the most recent radiation survey documents shall be transmitted by the operator to the new producer prior to the property transfer.

b. Release for unrestricted use.

i. A production site may be released for unrestricted use after:

(1) All equipment contaminated to levels above the release criteria in 7.b.i. and 7.b.ii. has been removed from the property;

(2) A survey of the location site surface demonstrating that the property does not exhibit an exposure rate at any discrete point in excess of 50 microR per hour above background has been completed, documented, and furnished to the site owner; and

(3) A survey on the location site of exposure rates in at least five (5) boreholes per acre, with a minimum of three (3) boreholes per site, showing a maximum exposure rate less than 200 microR per hour including background. At least one (1) borehole shall be drilled at the location of the maximum surface exposure rate measurement. All boreholes shall be at least one meter deep, and shall be measured at 0.15 meter intervals.

ii. Land area remediation may be performed by the following methodologies in order to achieve the release criteria listed in 6.b.i.(2):

(1) No action; (2) Excavating and transferring discrete areas of soil to a radioactive material storage area or for disposal under Rule 68; or (3) Other remedial actions as approved, in advance, by the Board.

7. Criteria for Release of Equipment

a. Equipment may be transferred to another producer without regard for its radiological constituents.

b. Equipment that is released for unrestricted use shall:

i. Exhibit a surface disintegration rate on accessible internal and external surfaces of no greater than an equivalent of 2,000 dpm per 100 cm

above background; and

ii. Exhibit an exposure rate at a distance of 2.5 centimeters (1 inch) from the equipment surface of no greater than 25 microR per hour above background.

8. Records

a. The following records shall be maintained by the operator at the local operations office for the duration of operations at the site:

i. Site survey records; ii. Instrument calibration records; iii. Material transfer records; and iv. Records setting forth the qualifications of the radiation surveyor.

b. The form of records may be paper copy or film copy of an original paper form.

c. Electronic records shall have an associated paper copy.

d. All such records shall be maintained by the operator for a minimum of ten (10) years after a property has been released for unrestricted use.

9. Exceptions

Except where otherwise stated, exceptions to any part of the above rule may be allowed upon good cause shown and upon proper Notice and Hearing of a petition filed with the Board requesting same.

10. Effective Date

This Statewide Rule (Rule 69), Board Order Number 73-96 shall take effect and be in force from and after June 1, 1996.

11. Validity

Should any section, subsection or other provision of this rule be declared by a court of competent jurisdiction to be invalid, that decision shall not affect the validity of the rule as a whole or any part thereof, other than the part so declared to be invalid, this Board hereby declaring that it would have adopted those parts of this rule which are valid and omitted any parts which may be invalid, if it had known that such part of parts were invalid at the time of the adoption of this rule.

History

• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)
• Source: MCA Section 53-1-17(3) (1972)

Part 3 RULES AND REGULATIONS GOVERNING OIL AND GAS DRILLING, PRODUCING AND PIPELINE OPERATIONS IN SUBMERGED OFFSHORE LAND OF THE STATE OF MISSISSIPPI.

26 Miss. Admin. Code Pt. 3 RULES AND REGULATIONS GOVERNING OIL AND GAS DRILLING, PRODUCING AND PIPELINE OPERATIONS IN SUBMERGED OFFSHORE LAND OF THE STATE OF MISSISSIPPI.

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Title 26: Oil & Gas

Part 3: RULES AND REGULATIONS GOVERNING OIL AND GAS DRILLING, PRODUCING AND PIPELINE OPERATIONS IN SUBMERGED OFFSHORE LAND OF THE STATE OF MISSISSIPPI.

Part 3 Chapter 1

RULE OS-1.1 SCOPE OF RULES. The rules and regulations hereby adopted and hereinafter set out are general rules of statewide application and shall apply to all fields; provided, however, special rules, applicable to particular areas or subject matter shall prevail over these general rules only to the extent that they are in conflict therewith.

Source: MCA Section 53-1-17(3) (1972)

RULE OS-1.2 Definitions In addition to the definitions set forth in State Oil and Gas Board Order No. 201-51, Rule 2, unless the context otherwise requires, the following words shall have the meanings indicated when found in these Offshore (OS) Rules:

(a) "Board" shall mean the State Oil and Gas Board created by Chapter 256 of the Laws of 1948.

(b) "Supervisor" shall mean the State Oil and Gas Board Supervisor of Mississippi.

(c) "Submerged Offshore Lands" shall mean all lands overlain by the waters of the Gulf of Mexico, Mississippi Sound, bays and other waters connected thereto which are directly affected by the tides in the Gulf of Mexico to the extent that such lands and waters lie within the territorial jurisdiction of the State of Mississippi. For the purpose of implementation of these rules and regulations, the State Oil and Gas Board reserves the authority to classify lands as "Submerged" or "Nonsubmerged".

(d) "Waters" shall mean the water superjacent to Submerged Offshore Lands.

Source: MCA Section 53-1-17(3) (1972)

RULE OS-1.3 MARKING OF WELLS, PLATFORMS AND FIXED STRUCTURES. The operator shall comply with the following requirements:

1. Identification of Platforms, Fixed Structures

Platforms and structures, other than individual wellhead structures, shall be identified at two diagonal corners of the platform or structure by a sign with letters and figures not less than twelve (12) inches in height with the following information: The name of lease operator, the name of the county, the block number in which the platform or structure is located and the

2

platform or structure designation. The information shall be abbreviated as in the following example:

"The Blank Oil Company operates 'C' platform in Block 60 in Harrison County, Mississippi." The identifying sign on the platform would show:

"BOC-Har.-60-C."

2. Identification of Single Well Structures and Small Structures.

Single well and small structures may be identified with one (1) sign only, with letters and figures not less than (3) three inches in height. The information shall be abbreviated as in the following example:

"The Blank Oil Company operates Well No. 1, which is equipped with a protective structure, in Block 60 in Hancock County, Mississippi."

The identifying sign on the protective structure would show:

"BOC-Han.-60-No. 1."

3. Identification of Wells

The State lease and well number shall be painted on, or a sign affixed to, each singly completed well. In multiply completed wells each completion shall be individually identified at the wellhead. All identifying signs shall be maintained in a legible condition.

Source: MCA Section 53-1-17(3) (1972)

RULE OS-1.4 APPLICATION TO DRILL AND DRILLING PROCEDURES. All exploratory wells drilled for oil and gas shall be drilled in accordance with the provisions of this order. Initial development wells drilled for oil and gas shall be drilled in accordance with the provisions of this order which shall continue in effect until special field rules are issued. After special field rules have been established by the Board after notice and hearing, development wells shall be drilled in accordance with such rules.

Where sufficient geologic and engineering information is obtained through exploratory drilling, operators may petition the Board for a hearing to establish special field rules, but the operator(s) shall make such application before more than five (5) development wells have been drilled in the field. Each Application to Drill, submitted in duplicate, for exploratory wells and development wells not covered by special field rules shall include the following information:

(a) A statement that all zones which contain oil, gas or fresh water shall be fully protected by casing and cement.

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(b) The complete, integrated casing (size, weight, grade and setting depth), cementing (quantity and kind), mud (weight,

viscosity and water loss), and blowout prevention program (number, kind, pressure rating and accompanying equipment).

(c) Surface location and projected bottom-hole location in feet from the lease boundaries.

(d) Elevation of the derrick floor (or KB), water depth and depth to which the well is proposed to be drilled.

(e) Estimated depths to the top of significant paleontological and/or lithological markers.

(f) If on a platform, information as to how many wells have been drilled and how many more are presently planned from the platform.

(g) Two (2) copies of a certified plat on a scale of 2,000 feet to the inch, showing surface and subsurface location of the proposed well and all other wells previously drilled in the vicinity for which information is available.

(h) An exploratory drilling or development plan for the lease must accompany the application. If such a plan has been submitted, make a statement to that effect indicating the date submitted and/or approved.

Note: A company well prognosis, covering any of the above items, will be acceptable if attached to the application.

An Application to drill must be covered by an exploratory drilling or development plan for the lease. These plans shall be submitted to the Supervisor for approval. Each exploratory plan for the leased area shall include (1) a description of drilling vessels, platforms or other structures showing the location, the design and the major features thereof, including features pertaining to pollution prevention and control, and (2) the general location of each well drilled or to be drilled including surface and projected bottom-hole location. Where warranted and after consultation with the operator, the Supervisor may request additional information pertaining to any anticipated abnormal pressured formations, anticipated formation tops and structural data. Each development plan shall include the same type of information as prescribed for the exploratory plan, also incorporating necessary revisions.

In supplying the information for (1), refer to Rule OS-8 and OS-9 for guidance. To simplify submittals and to avoid duplication we suggest that every effort be made to incorporate the application for approval of platforms or fixed structures required by rule OS-9 in the development plans. Also, the filing of the emergency plan and the approval of pollution equipment and location as required for each lease under Rule OS-8 should be incorporated, likewise, in both the exploratory and development plans. We realize that the emergency plan and type and location of equipment may be a general company plan that will cover all leases. In this event, after the initial filing and approval, it could be referred to in subsequent submittals,

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modifying as necessary. In addition, an application for establishment of, or modification of, special field rules may be an appropriate part of the development plans. The Application to Drill and accompanying location plat would supply most of the information required under (2). Each plan should specify the time interval covered by such plan, and a revised plan shall be submitted and approved prior to the expiration of the existing plan.

In addition to the above, the Application to Drill shall include the integrated casing, cementing, mud and blowout prevention program for the well and shall comply with the following requirements:

1. Well Casing and Cementing

The Application to Drill shall contain a statement that all zones which contain oil, gas or fresh water shall be fully protected by casing and cement. For the purpose of this rule, the several casing strings in order of normal installation are drive or structural casing, conductor casing, surface casing, intermediate casing and production casing. All depths refer to true vertical depth (TVD).

A. Drive or Structural Casing This casing shall be set by drilling, driving or jetting to a minimum depth of 100 feet below the waters' floor or to such greater depth required to support unconsolidated deposits and to provide hole stability for initial drilling operations. If drilled in, the drilling fluid shall be a type that will not pollute the waters, and a quantity of cement sufficient to fill the annular space back to the waters' floor must be used.

B. Conductor and Surface Casing - General Principles Determination of proper casing setting depths shall be based upon all geologic factors including the presence or absence of hydrocarbons and water depths on a well-for-well basis. The setting depths of all casing strings shall be determined by taking into account formation fracture gradients and hydrostatic pressure to be contained within the well bore. The conductor and surface casing shall be new pipe or reconditioned pipe that has been tested and inspected to verify a new condition.

(1) Conductor Casing This casing shall be set in accordance with the table below. A quantity of cement sufficient to fill the annular space back to the waters' floor must be used. The cement may be washed out or displaced to a depth of forty (40) feet below the waters' floor to facilitate casing removal upon well abandonment.

(2) Surface Casing This casing shall be set at a depth in accordance with the table below and cemented in a manner necessary to protect all fresh water sands and provide well control until the next string of casing is set. This casing shall be cemented with a quantity sufficient to fill the calculated annular space back to the waters' floor. Whenever there are any indications of improper cementing, such as lost returns, cement channeling or mechanical failure of equipment, a temperature or cement bond survey shall be run, either before or after remedial cementing, to aid

5

in determining whether the casing is properly cemented. Where warranted, the Supervisor may specify that a temperature or cement bond survey be run on any or all wells. If the annular space is not adequately cemented by the primary operation, the operator shall either squeeze cement or re-cement the shoe after drilling out.

(3) Conductor and Surface Casing Setting Depths These strings of casing shall be set at the depths specified in the following table subject to minor variation to permit the casing to be set in a competent bed; provided, however, that the conductor casing shall be set before drilling into shallow formations known to contain oil or gas or, if unknown, upon encountering such formations. These casing strings shall be run and cemented prior to drilling below the specified setting depths. For those wells which may encounter abnormal pressure conditions, after consultation with the operator, the Supervisor may vary the setting depths to exceed the ranges specified below.

Required Setting Depth Below Waters' Floor (TVD in feet) Proposed Total Depth of Well or Depth of First Full String of Intermediate Casing (TVD) Casing in Feet Surface Casing Conductor Casing from Rotary Table Minimum Maximum Minimum Maximum

0 - 7,000 1,500 - 2,500 300 - 800 7,000 - 9,000 1,750 - 3,000 400 - 800 9,000 -11,000 2,250 - 3,500 500 - 900 11,000 - 13,000 3,000 - 4,000 600 - 900 13,000 - Below 3,500 - 4,500 700 - 1,000

C. Intermediate Casing This string of casing shall be set when required by anticipated abnormal pressure, mud weights, sediment and other well conditions. The intermediate casing shall be new pipe or reconditioned pipe that has been tested and inspected to verify a new condition. A quantity of cement sufficient to cover and isolate all hydrocarbon zones and to isolate abnormal pressure intervals from normal pressure intervals shall be used. If a liner is used as an intermediate string, the cement shall be tested by a fluid entry or pressure test to determine whether a seal between the liner top and next larger string has been achieved. The test shall be recorded on the driller's log. When such liner is used as production casing, it shall be extended to the surface and cemented to avoid surface casing being used as production casing.

D. Production Casing This string of casing shall be set before completing the well for production. The production casing shall be new pipe or reconditioned pipe that has been tested and inspected to verify a new condition. It shall be cemented in a manner necessary to cover or isolate all zones which contain hydrocarbons, but in any case, a calculated volume sufficient to fill the annular space at least 500 feet above the uppermost producible hydrocarbon zone must be used. When a liner is used as

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production casing, the testing of the seal between the liner top and next larger string shall be conducted as in the case of intermediate liners.

E. Pressure Testing Prior to drilling the plug after cementing, all casing strings, except the drive or structural casing, shall be pressure tested as shown in the table below. This test shall not exceed the working pressure of the casing. The surface casing shall be tested with water in the top 100 feet of the casing. If the pressure declines more than ten percent (10%) in thirty (30) minutes, or if there is other indication of a leak, the casing shall be recemented, repaired or an additional casing string run, and the casing shall be tested again in the same manner.

Casing String Minimum Pressure Test (psi)

Conductor 200 Surface 1,000 Intermediate 1,500 or 0.2 psi/ft., whichever is greater Liner 1,500 or 0.2 psi/ft., whichever is greater Production 1,500 or 0.2 psi/ft., whichever is greater

After cementing any of the above strings, drilling shall not be commenced until a time lapse of: (1) Twenty-four (24) hours, or

(2) Eight (8) hours under pressure for conductor casing string. Twelve (12) hours under pressure for all other strings. (Cement is considered under pressure if one (1) or more float valves are employed and are shown to be holding the cement in place or when other means of holding pressure are used.)

All casing pressure tests shall be recorded on the driller's log.

2. Blowout Prevention Equipment Blowout preventers and related well control equipment shall be installed, used and tested in a manner necessary to prevent blowouts. Prior to drilling below the conductor casing, blowout prevention equipment shall be installed and maintained ready for use until drilling operations are completed as follows:

A. Conductor Casing Before drilling below this string, at least one (1) remotely controlled bag-type blowout preventer and equipment for circulating the drilling fluid to the drilling structure or vessel shall be installed. To avoid formation fracturing from complete shut-in of the well, a large diameter pipe with control valves shall be installed on the conductor casing below the blowout preventer so as to permit the diversion of hydrocarbons and other fluids; except that when the blowout preventer assembly is on the waters' floor, the choke and kill lines shall be equipped to permit the diversion of hydrocarbons and other fluids.

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B. Surface Casing Before drilling below this string, the blowout prevention equipment shall include a minimum of :

(1) three (3) remotely controlled, hydraulically operated blowout preventers with a working pressure which exceeds the maximum anticipated surface pressure, including one (1) equipped with pipe rams, one (1) with blind rams and one (1) bag-type;

(2) a drilling spool with side outlets, if side outlets are not provided in the blowout preventer body; (3) a choke manifold; (4) a kill line; (5) a fill-up line.

C. Intermediate Casing Before drilling below this string, the blowout prevention equipment shall include a minimum of:

(1) four (4) remotely controlled, hydraulically operated blowout preventers with a working pressure which exceeds the maximum anticipated surface pressure, including at least one (1) equipped with pipe rams, one (1) with blind rams and one (1) bag-type; (2) a drilling spool with side outlets, if side outlets are not provided in the blowout preventer body; (3) a choke manifold; (4) a kill line; and (5) a fill-up line.

D. Testing Ram-type blowout preventers and related control equipment shall be tested with water to the rated working pressure of the stack assembly or to the working pressure of the casing, whichever is the lesser, (1) when installed; (2) before drilling out after each string of casing is set; (3) not less than once each week while drilling; and (4) following repairs that require disconnecting a pressure seal in the assembly. The bag-type blowout preventer shall be tested to seventy percent (70%) of the above pressure requirements.

While drill pipe is in use, ram-type blowout preventers shall be actuated to test proper functioning once each trip, but in no event less than once each day. The bag-type blowout preventer shall be actuated on the drill pipe once each week. Accumulators or accumulators and pumps shall maintain a pressure capacity reserve at all times to provide for repeated operation of hydraulic preventers. A blowout prevention drill shall be conducted weekly for each drilling crew to insure that all equipment is operational and that crews are properly trained to carry out emergency duties. All blowout preventer tests and crew drills shall be recorded on the driller's log.

E. Other Equipment An inside blowout preventer assembly (back pressure valve) and drill string safety valve in the open position shall be maintained on the rig floor at all times while drilling operations are being conducted. Separate valves shall be maintained on the rig floor to fit all pipe in the drill string. A Kelly cock shall be installed below the swivel, and an essentially full opening Kelly

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cock shall be installed at the bottom of the Kelly of such design that it can be run through the blowout preventers.

3. Mud Program - General The characteristics, use and testing of drilling mud and the conduct of related drilling procedures shall be such as are necessary to prevent the blowout of any well. Quantities of mud materials sufficient to insure well control shall be maintained readily accessible for use at all times. A. (1) Mud Control Before starting out of hole with drill pipe, the mud shall be circulated with the drill pipe just off bottom until the mud is properly conditioned except under the conditions in subparagraph 3. A(2) below. When coming out of the hole with drill pipe, the annulus shall be filled with mud before the mud level drops below 100 feet, and a mechanical device for measuring the amount of mud required to fill the hole shall be utilized. The volume of mud required to fill the hole shall be watched, and any time there is an indication of swabbing, or influx of formation fluids, the necessary safety device(s) required in subparagraph 2(E) above shall be installed on the drill pipe, the drill pipe shall be run to bottom and the mud properly conditioned. The mud shall not be circulated and conditioned except on or near bottom, unless well conditions prevent running the pipe to bottom. The mud in the hole shall be circulated or reverse circulated prior to pulling drill stem test tools from the hole.

(2) It will not be required that the mud at the bottom of the hole be circulated out prior to removing the drill pipe from the hole, provided that in every case the driller's log contains proper documentation that:

(a) There was no indication of influx of formation fluids prior to starting to remove the pipe from the hole; (b) The weight of the returning mud is sufficient to contain formation pressures; and (c) Other mud properties recorded on the daily drilling log are within the specified ranges at that stage of the hole to perform their required functions.

(3) In those cases when the hole is circulated, the driller's log should be so noted.

B. Mud Testing Equipment Mud testing equipment shall be maintained on the drilling platform at all times, and mud tests shall be performed daily, or more frequently as conditions warrant. Suitable mud test records must be kept and made available to the Supervisor's representative upon his request. The following mud system monitoring equipment must be installed (with derrick floor indicators) and used throughout the period of drilling after setting and cementing the conductor casing: (1) Recording mud tank level indicator to determine mud tank volume gains and losses. This indicator shall include a visual or audio warning device. (2) Mud volume measuring device for accurately determining mud volumes required to fill the hole on trips.

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(3) Mud return indicator to determine that returns essentially equal the pump discharge rate.

Source: MCA Section 53-1-17(3) (1972)

RULE OS-1.5 PLUGGING AND ABANDONMENT OF WELLS. The operator shall comply with the following minimum plugging and abandonment procedures which have general application to all wells drilled for oil and gas. Plugging and abandonment operations must not be commenced prior to obtaining approval from an authorized representative of the Board. Where not in conflict with this rule or special field rules, Statewide Rules 27 and 28 shall be followed:

(1) Permanent Abandonment

A. Isolation in Uncased Hole In uncased portions of wells, cement plugs shall be spaced to extend 100 feet below the bottom to 100 feet above the top of any oil, gas and fresh water zones so as to isolate them in the strata in which they are found and to prevent them from escaping into other strata.

B. Isolation of Open Hole Where there is open hole (uncased and open into the casing string above) below the casing, a cement plug shall be placed in the deepest casing string by (1) or (2) below, or in the event lost circulation conditions exist or are anticipated, the plug may be placed in accordance with (3) below: (1) A cement plug placed by displacement method so as to extend a minimum of 100 feet above and 100 feet below the casing shoe. (2) A cement retainer with effective back pressure control set not less than fifty (50) feet, nor more than 100 feet, above the casing shoe with a cement plug calculated to extend at least 100 feet below the casing shoe and fifty (50) feet above the retainer. (3) A permanent type bridge plug set within 150 feet above the casing shoe with fifty (50) feet of cement on top of the bridge plug. This plug shall be tested prior to placing subsequent plugs.

C. Plugging or Isolating Perforated Intervals A cement plug shall be placed opposite all open perforations (perforations not squeezed with cement) extending a minimum of 100 feet above and 100 feet below the perforated interval or down to a casing plug whichever is less. In lieu of the cement plug, a bridge plug set at a maximum of 150 feet above the open perforations with fifty (50) feet of cement on top may be used, provided the perforations are isolated from the hole below.

D. Plugging of Casing Stubs If casing is cut and recovered, a cement plug 200 feet in length shall be placed to extend 100 feet above and 100 feet below the stub. A retainer may be used in setting the required plug.

E. Plugging of Annular Space

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No annular space that extends to the waters' floor shall be left open to drilled hole below. If this condition exists, the annulus shall be plugged with cement.

F. Surface Plug Requirement A cement plug of at least 150 feet, with the top of the plug 150 feet or less below the waters' floor, shall be placed in the smallest string of casing which extends to the surface.

G. Testing of Plugs The setting and location of the first plug below the top 150-foot plug will be verified by either (1) placing a minimum pipe weight of 15,000 pounds on the plug, or (2) testing with a minimum pump pressure of 1,000 psig with no more than a ten percent (10%) pressure drop during a fifteen (15) minute period.

H. Mud Each of the respective intervals of the hole between the various plugs shall be filled with mud fluid of sufficient density to exert hydrostatic pressure exceeding the greatest formation pressure encountered while drilling such interval.

2. Clearance of Location All casing and piling shall be severed and removed to at least fifteen (15) feet below the waters' floor, and the location shall be dragged to clear the well site of any obstructions.

3. Temporary Abandonments Any drilling well which is to be temporarily abandoned shall be mudded and cemented as required for permanent abandonment except for requirements F and I of Paragraph 1 above. When casing extends above the waters' floor, a mechanical bridge plug (retrievable or permanent) shall be set in the casing between fifteen (15) and 200 feet below the waters' floor. Source: MCA Section 53-1-17(3) (1972)

RULE OS-1.6 INSTALLATION OF SUBSURFACE SAFETY DEVICE. The operator shall comply with the following requirements. All departures from the requirements specified in this rule shall be subject to approval by the Supervisor. All applications for approval under the provisions of this rule shall be submitted to the Supervisor. References in this rule to approvals, determinations or requirements are to those given or made by the Supervisor or his delegated representative:

1. Installation All tubing installations open to hydrocarbon-bearing zones shall be equipped with a subsurface-controlled or a surface - or other remotely controlled subsurface safety device, to be installed at a depth of 100 feet or more below the waters' floor unless, after application and justification, the well is determined to be incapable of flowing oil or gas. These installations shall be made as required in Subparagraph A below within two (2) days after stabilized production is established, and during this period of time the well shall not be left unattended while open to production.

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A. New Wells All tubing installations in wells shall be equipped with a surface or other remotely controlled subsurface safety device; provided, that wells with a shut-in tubing pressure of 4,000 psig or greater shall be equipped with a subsurface-controlled subsurface safety device in lieu of a surface or other remotely controlled subsurface safety device unless a surface or other remotely controlled subsurface safety device is approved or required. When the shut-in tubing pressure declines below 4,000 psig, a surface or other remotely controlled subsurface safety device shall be installed when the tubing is first removed and reinstalled.

B. Shut-in Wells A tubing plug shall be installed in lieu of, or in addition to, other subsurface safety devices if a well has been shut-in for a period of six (6) months. Such plugs shall be set at a depth of 100 feet or more below the waters' floor. All retrievable plugs installed shall be of the pump-through type. All wells perforated and completed, but not placed on production, shall be equipped with a subsurface safety device or tubing plug within two (2) days after completion.

C. Injection Wells Subsurface safety devices as required in Subparagraph A above shall be installed in all injection wells unless, after application and justification, it is determined that the well is incapable of flowing oil or gas, which condition shall be verified annually.

2. Technological Advancement As technological research, progress and product improvement result in increased effectiveness of existing safety devices or the development of new devices or systems, such devices or systems may be required or used upon application, justification and approval. Applications for routine use shall include evidence that the device or system has been field-tested at least once each month for a minimum of six (6) consecutive months, and that each test indicated proper operation.

3. Testing and Inspection Subsurface safety devices shall be designed, adjusted, installed and maintained to insure reliable operation. During testing and inspection procedures, the well shall not be left unattended while open to production unless a properly operating subsurface safety device has been installed in the well.

A. Surface-Controlled Subsurface Safety Devices Each surface or other remotely controlled subsurface safety device installed in a well shall be tested in place for proper operation when installed and thereafter at intervals not exceeding six (6) months. If the device does not operate properly, it shall be removed, repaired and reinstalled or replaced and tested to insure proper operation.

B. Subsurface-Controlled Subsurface Safety Devices Each subsurface-controlled subsurface safety device installed in a well shall be removed, inspected and repaired or adjusted as necessary and reinstalled at intervals not exceeding six (6) months; provided, that such removable devices set in a landing nipple shall be removed, inspected and repaired or adjusted as necessary and reinstalled at intervals not exceeding twelve

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(12) months. Each velocity-type device shall be designed to close at a flow rate not to exceed the larger of either 150 percent of, or 200 BFPD above, the most recent well-test rate which equals or exceeds the approved production rate. The above closing flow rate shall not exceed the calculated capacity of the well to produce against a flowing wellhead pressure of fifty (50) psig. Each preset tubing-pressure-actuated device shall be designed to close prior to reduction of the flowing wellhead pressure to fifty (50) psig.

C. Tubing Plugs A shut-in well equipped with a tubing plug shall be inspected for leakage by opening the well to possible flow at intervals not exceeding six (6) months. If sustained liquid flow exceeds 400 cc/min., or gas flow exceeds fifteen (15) cu.ft./min., the plug shall be removed, repaired and reinstalled or an additional tubing plug installed to prevent leakage.

4. Temporary Removal Each wireline or pumpdown-retrievable subsurface safety device may be removed, without further authority or notice, for a routine operation for a period not to exceed fifteen (15) days. The well shall be clearly identified as being without a subsurface safety device and shall not be left unattended while open to production. The provisions of this paragraph are not applicable to the testing and inspection procedures in Paragraph 3 above.

5. Additional Protective Equipment All tubing installations in which a wireline or pumpdown- retrievable subsurface safety device is to be installed shall be equipped with a landing nipple, with flow couplings or other protective equipment above and below, to provide for setting of the subsurface safety device. All wells in which a subsurface safety device or tubing plug is installed shall have the tubing- casing annulus packed off above the uppermost open casing perforations. The control system for all surface-controlled subsurface safety devices shall be an integral part of the platform shut-in system, or of an independent remote shut-in system.

6. Departures All departures (or waivers) shall be applied for in writing to the Supervisor. All applications for departures shall include a detailed statement of the well conditions, efforts made to overcome any difficulties and proposed alternate safety measures.

7. Emergency Action All tubing installations open to hydrocarbon-bearing zones and not equipped with a subsurface safety device as permitted by this rule shall be clearly identified as not being so equipped, and a subsurface safety device or tubing plug shall be available at the field location. In the event of an emergency, such as an impending hurricane, such device or plug shall be promptly installed within the limits of practicability, due consideration being given to personnel safety.

8. Records The operator shall maintain the following records for a minimum period of one (1) year for each subsurface safety device and tubing plug installed, which records shall be available to any authorized representative of the Board:

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A. Field Records Individual well records shall be maintained at or near the field and shall include, as a minimum, the following information:

(1) A record which will give design and other information, i.e., make, model, type, spacers, bean and spring size, pressure, etc. (2) Verification of assembly by a qualified person in charge of installing the device and installation date. (3) Verification of setting depth and all operational tests as required in this order. (4) Removal date, reason for removal and reinstallation date. (5) A record of all modifications of design in the field. (6) All mechanical failures or malfunctions, including sandcutting, of such devices, with notation as to cause or probable cause. (7) Verification that a failure report was submitted.

B. Other Records The following records, as a minimum, shall be maintained at the operator's office:

(1) Verified design information of subsurface- controlled subsurface safety devices for the individual well. (2) Verification of assembly and installation according to design information. (3) All failure reports. (4) All laboratory analysis reports of failed or damaged parts. (5) Quarterly failure-analysis report.

9. Reports Well completion reports (Form No. 3) and any subsequent reports of workover (Form No. 3) shall include the type and the depth of the subsurface safety devices and tubing plugs installed in the well or indicate that a departure has been granted.

To establish a failure-reporting and corrective-action program as a basis for reliability and quality control, each operator shall submit a quarterly failure-analysis report to the Supervisor, identifying mechanical failures by lease and well, make and model, cause or probable cause of failure and action taken to correct the failure. The reporting period shall begin the first day of the month following the date of this order. The reports shall be submitted by February 28, May 31, August 31 and November 30 for the periods ending January 31, April 30, July 31 and October 31 of each year.

Source: MCA Section 53-1-17(3) (1972)

RULE OS-1.7 PROCEDURE FOR COMPLETION OF OIL AND GAS WELLS.

1. Wellhead Equipment and Testing Procedures

A. Wellhead Equipment All completed wells shall be equipped with casingheads, wellhead fittings, valves and connections with a rated working pressure equal to or greater than the surface shut-in pressure of

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the well. Connections and valves shall be designed and installed to permit fluid to be pumped between any two strings of casing. Two master valves shall be installed on the tubing in wells with a surface pressure in excess of 5,000 pounds per square inch. All wellhead connections shall be assembled and tested, prior to installation, by a fluid pressure which shall be equal to the rated test pressure of the fitting to be installed.

B. Testing Procedure Any wells showing sustained pressure on the casinghead, or leaking gas or oil between the production casing and the next larger casing string, shall be tested in the following manner: The well shall be killed with water or mud and pump pressure applied. Should the pressure at the casinghead reflect the applied pressure, the casing shall be condemned. After corrective measures have been taken, the casing shall be tested in the same manner. This testing procedure shall be used when the origin of the pressure cannot be determined otherwise.

2. Storm Choke All completed wells shall meet the requirements prescribed in Rule OS-6.

3. Procedures for Multiple or Tubingless Completions

A. Multiple Completions The rules and regulations governing all multiple completions shall be the same as set forth in Statewide Rule 15, Multiple and Dual Completions, and any other applicable Statewide Rules, and shall include the following: (1) Information shall be submitted on required form showing top and bottom of all zones proposed for completion or alternate completion, including a partial electric log and a diagrammatic sketch showing such zones and equipment to be used. (2) When zones approved for multiple completion become intercommunicated the operator shall immediately repair and separate the zones after approval is obtained.

B. Tubingless Completions

(1) All tubing strings in a multiple completed well shall be run to the same depth below the deepest producible zone. (2) The tubing string(s) shall be new pipe and cemented with a sufficient volume to extend a minimum of 500 feet above the uppermost producible zone. (3) A temperature or cement bond log shall be run in all tubingless completion wells where lost circulation or other unusual circumstances occur during the cementing operations. (4) Information shall be submitted on, or attached to, Form No. 3 showing the top and bottom of all zones proposed for completion or alternate completion, including a partial electric log and a diagrammatic sketch showing such zones and equipment to be used.

Source: MCA Section 53-1-17(3) (1972)

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RULE OS-1.8 PREVENTION OF WASTE, INCLUDING POLLUTION, AND WASTE DISPOSAL. (a) The operator shall not cause waste or pollute land or water or damage the aquatic life of the waters or allow extraneous matter to enter and damage any mineral- or water- bearing formation.

(b) If the waters are polluted by the drilling or production operations conducted by or on behalf of the operator, and such waste by pollution damages or threatens to damage aquatic life, wildlife or public or private property, the control and total removal of the pollutant, wheresoever found, proximately resulting therefrom shall be at the expense of the operator. Upon failure of the operator to control waste and remove the pollutant, the Supervisor shall have the right to accomplish the control and removal of the pollutant in accordance with any established contingency plan for combating oil spills or by other means at the cost of the operator. Such action shall not relieve the operator of any responsibility as provided herein.

(c) The operator's liability to third parties, other than for cleaning up the pollutant in accordance with Paragraph (b) of this section, shall be governed by applicable law.

The Operator shall comply with the following requirements:

1. Waste Prevention Including Pollutant A. Liquid Disposal

(1) Oil in any form shall not be disposed of into the waters. (2) Liquid waste materials containing substances which may be harmful to aquatic life or wildlife, or injurious in any manner to life or property, shall be treated to avoid disposal of harmful substances into the waters. (3) Drilling mud containing oil shall not be disposed of into the waters. (4) Detergents, surfactants or dispersants in harmful quantities shall not be introduced into the waters without prior approval of the Supervisor.

B. Solid Waste Disposal

(1) Drill cuttings, sand and other solids shall not be disposed of into the waters without prior approval of the Supervisor. (2) Mud containers and other solid waste materials shall be incinerated or transported to shore for disposal.

C. Production Facilities

(1) All production facilities, such as separators, tanks, treaters and other equipment shall be such as are necessary to control the maximum anticipated pressures and production of oil, gas and associated sulphur, and shall be maintained at all times in a manner necessary to prevent waste and pollution. (2) All platforms and structures shall be curbed and connected by drains to a collecting tank or sump unless drip pans, or equivalents, are placed under

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equipment from which a pollutant may spill into the waters and piped to a tank or sump. (3) The operator's personnel shall be thoroughly instructed in the techniques of equipment maintenance and operation for the prevention of waste and pollution. Non-operator personnel shall be informed in writing, prior to executing contracts, of the operator's obligations to prevent waste and pollution.

2. Inspections and Reports The operator shall comply with the following waste and pollution inspection and reporting requirements:

A. Waste and Pollution Inspections

(1) Manned facilities shall be inspected daily. (2) Unattended facilities, including those equipped with remote control and monitoring systems, shall be inspected at frequent intervals. The Supervisor may prescribe the frequency of inspections for these facilities.

B. Waste and Pollution Reports

(1) All spills or leakage of oil and liquid pollutants shall be recorded showing the cause, size of spill and action taken, and the record shall be maintained and available for inspection by the Supervisor or duly authorized representatives. (2) All spills or leakage of oil and liquid pollutants of one (1) barrel or more shall be reported orally to the Supervisor or his authorized representative without delay and shall be confirmed in writing to the Supervisor. (3) Operators shall notify each other upon observation of equipment malfunction or waste and pollution resulting from another's operation.

3. Control and Removal

A. Corrective Action Immediate corrective action shall be taken in all cases where waste and pollution has occurred. Each operator shall have an emergency plan for initiating corrective action to control and remove pollution and such plan shall be filed and reviewed with the Supervisor. Corrective action taken under the plan shall be subject to modification when directed by the Supervisor.

B. Equipment Standby waste and pollution control equipment shall be maintained by or shall be immediately available to each operator at a land base location. This equipment shall include containment booms, skimming apparatus and approved chemical dispersants and shall be available prior to the commencement of operations. The equipment shall be regularly inspected and maintained in good condition for use. The adequacy of the equipment and the location of land bases shall be approved by the Supervisor. The operator shall notify the Supervisor of the location at which each item of equipment is located for operations conducted on or for each

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lease. All changes in location and equipment maintained at each location shall be approved by the Supervisor.

Source: MCA Section 53-1-17(3) (1972)

RULE OS-1.9 APPROVAL PROCEDURE FOR INSTALLATION AND OPERATION OF PLATFORMS, FIXED AND MOBILE STRUCTURES AND ARTIFICIAL ISLANDS. The operator shall be responsible for compliance with the requirements of this rule in the installation and operation of all platforms, fixed and mobile structures and artificial islands, including all facilities installed on a platform or structure whether or not operated or owned by the operator.

1. The following requirements are applicable to all platforms:

A. General Design The design and engineering of platforms, fixed structures and artificial islands shall include consideration of such factors as water depth, surface and subsurface soil conditions, wave and current forces, wind forces, total equipment weight and other pertinent geological, geographical, environmental and operational conditions.

B. Application The operator shall submit, in duplicate, the following to the Supervisor for approval:

(1) Design Features Information relative to design features on an 8- 1/2" x 11" plat or plats showing the platform dimensions, plan and two elevations, number and location of well slots and water depth. In addition, the plat shall include:

(a) Nominal size and thickness range of piling. (b) Nominal size and thickness range of jacket column leg. (c) Nominal size and thickness range of deck column leg. (d) Design piling penetration. (e) Maximum bearing and lateral load per pile in tons. (f) Identification data which shall be the lease number, block number, county and operator. (g) The following certification signed and dated with the title of the company representative:

"Operator certifies that this platform has been certified by a registered professional engineer and that the structure will be constructed, operated and maintained as described in the application, and any approved modification thereto. Certified plans are on file at the State Oil and Gas Board's located at 500 Greymont Avenue, Suite E, Jackson, Mississippi.”

(2) Non-design Features Information relative to non-design features including the following:

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(a) Primary use intended, including drilling, production of oil, gas and associated sulphur. (b) Personnel and personnel transfer facilities including living quarters, boat landings and heliport. (c) Type of deck, such as steel or wood, and whether coated with protective material. (d) Method of protection from corrosion. (e) Production facilities, including separators, treaters, storage tanks, compressors, line pumps and metering devices, except that when initially designed and utilized for drilling, this information may be submitted prior to installation. (f) Safety, waste and pollution control equipment and features. (g) Other information when required.

C. Certified Plan Detailed structural plans certified by a registered professional engineer [See Rule OS-9 (1)(g)] shall be on file and maintained by the operator or his designee.

2. Waste, Safety and Pollution Control Equipment and Procedures

A. The following requirements shall apply to all platforms:

(1) The following shut-in devices shall be installed and maintained in an operating condition on all pressurized vessels and water separation facilities when such vessels and separation facilities are in service. The operator shall submit records to the Supervisor semi-annually showing the present status and past history of each device including dates and details of inspection, testing, repairing, adjustment and reinstallation:

(a) All sensors shall be equipped to permit testing with an external pressure source. All separators shall be equipped with high- low pressure shut-in sensors, low level shut- in controls and a relief valve. High liquid level control devices shall be installed when the vessel can discharge to a flare. (b) All pressure surge tanks shall be equipped with a high and low pressure shut-in sensor, a high level shut-in control, flare line and relief valve. (c) Atmospheric surge tanks shall be equipped with a high level shut-in sensor. (d) All other pressured hydrocarbon-handling pressure vessels shall be equipped with high- low pressure shut-in sensors, high-low level shut-in controls and relief valves, unless determined to be otherwise protected. (e) Pilot-operated pressure relief valves shall be equipped to permit testing with an external pressure source. Spring-loaded pressure relief valves shall either be bench- tested or equipped to permit testing with an external pressure source. A relief valve shall be set no higher than the designed working pressure of the vessel. The high pressure shut-in sensor shall be set no higher than five percent (5%) below the rated or designed working pressure, and the low pressure shut-in sensor shall be set no lower than ten

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percent (10%) below the lowest pressure in the operating pressure range on all vessels with a rated or designed working pressure of more than 400 psi. On lower pressure vessels, the above percentages shall be used as guidelines for sensor settings considering pressure and operating conditions involved; except that sensor settings shall not be within five (5) psi of the rated or designed working pressure or the lowest pressure in the operating pressure range. (f) All sensors shall be equipped to permit testing with an external pressure source. (g) All flare lines shall be equipped with a scrubber or similar separation equipment.

(2) The following remote and local automatic shut-in devices shall be installed and maintained in an operating condition at all times when the affected well (or wells) is producing. The operator shall submit records to the Supervisor semi-annually showing the present status and past history of each such device including dates and details of inspection, testing, repairing, adjustment and reinstallation.

(a) All wellhead assemblies shall be equipped with an automatic fail-close valve. Automatic safety valves temporarily out of service shall be flagged. (b) All flowlines from wellheads shall be equipped with high-low pressure sensors located close to the wellhead. The pressure sensors shall be set to activate the wellhead valve in the event of abnormal pressures in the flowline. (c) All headers shall be equipped with check valves on the individual flowlines. The flowline and valves from each well located upstream of, and including, the header valves shall withstand the shut-in pressure of that well, unless protected by a relief valve with connections to bypass the header and flow to an appropriate surge facility. If there is an inlet valve to a separator, the valve, flowline and all equipment upstream of the valve shall also withstand shut-in wellhead pressure, unless protected by a relief valve with connections to bypass the header. (d) All pneumatic shut-in control lines shall be equipped with fusible material at strategic points. (e) Remote shut-in controls shall be located on the helicopter deck and all exit stairway landings, including at least one (1) on each boat landing. These controls shall be quick- opening valves. (f) All pressure sensors shall be tested for proper pressure settings monthly for at least four (4) months. At such time as the monthly results are consistent, a quarterly test shall be required for at least one (1) year. If these results are consistent, a longer period of time between testing may then be approved by the Supervisor. In the event any testing sequence reveals inconsistent results, the monthly testing sequence shall be reinstituted. Results of all tests shall be recorded and maintained in the field.

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(g) All automatic wellhead safety valves shall be tested for operation weekly. All automatic wellhead safety valves shall be tested for holding pressure monthly. If these results are consistent, a longer period of time between pressure tests, not to exceed quarterly, may then be approved by the Supervisor. In the event that any pressure testing sequence, exceeding monthly, reveals inconsistent results, the monthly testing sequence shall be reinstituted. Results of all tests shall be recorded and maintained in the field. (h) Check valves shall be tested for holding pressure monthly for at least four (4) months. At such time as the monthly results are satisfactory, a quarterly test shall be required for at least one (1) year. If these results are consistent, a longer period of time between testing may then be approved by the Supervisor. In the event any testing sequence reveals inconsistent results, the monthly testing sequence shall be reinstituted. Results of all tests shall be recorded and maintained in the field. (i) A complete testing and inspection of the safety system shall be witnessed by a representative of the Board at the time production is commenced. Thereafter, the operator shall arrange for a test every six (6) months, notifying the Supervisor or his authorized representative such that a representative of the Board may be present during the test. (j) A standard procedure for testing of safety equipment shall be prepared and posted in a prominent place on the platform.

(3) Curbs, gutters and drains shall be constructed in all deck areas in a manner necessary to collect all contaminants, unless drip pans or equivalent are placed under equipment and piped to a sump which will automatically maintain the oil at a level sufficient to prevent discharge of oil into the Gulf waters. Alternate methods to obtain the same results will be acceptable. These systems shall not permit spilled oil to flow into the wellhead area.

(4) An auxiliary electrical power supply shall be installed to provide emergency power capable of operating all electrical equipment to maintain safety of operation in the event the primary electrical power supply fails.

(5) The following requirements shall apply to the handling and disposal of all produced waste water. All waste water shall be disposed of by: (1) Injecting into an approved subsurface formation; or (2) Transporting said water ashore and disposing of it in a manner already approved under existing onshore regulations; or (3) Discharging into the waters offshore provided the water quality meets standards established by appropriate regulatory agencies and when approved by the Supervisor.

(a) Water discharged shall not create conditions which will adversely affect the public health or use of the waters (as defined by the Mississippi Bureau of Pollution Control) for the propagation of aquatic life, recreation, navigation or other legitimate uses not prohibited by high natural mineral content.

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(6) A firefighting system shall be installed and maintained in an operating condition in accordance with the following:

(a) A fixed automatic water spray system shall be installed in all inadequately ventilated wellhead areas as these areas are defined in Paragraph 9 of API RP 500A. These systems shall be installed in accordance with the most current edition of National Fire Protection Association's Pamphlet No. 15. (b) A firewater system of rigid pipe with fire hose stations shall be installed and may include a fixed water spray system. Such a system shall be installed in a manner necessary to provide needed protection in areas where production handling equipment is located. A firefighting system using chemicals may be considered for installation in certain platform areas in lieu of a firewater system in that area, if determined to provide equivalent fire protection control. (c) Pumps for the firewater systems shall be inspected and test-operated weekly. A record of the tests shall be maintained in the field and submitted semi-annually to the Supervisor. An alternate fuel or power source shall be installed to provide continued pump operation during platform shutdown unless an alternate firefighting system is provided. (d) Portable fire extinguishers shall be located in the living quarters and in other strategic areas. (e) A diagram of the firefighting system showing the location of all equipment shall be posted in a prominent place on the platform and a copy submitted to the Supervisor.

(7) An automatic gas detector and alarm system shall be installed and maintained in an operating condition in accordance with the following:

(a) Gas detection systems shall be installed in all enclosed areas containing gas-handling facilities or equipment and in other enclosed areas which are classified as hazardous areas as defined in API RP 500B and the most current edition of the National Electric Code. (b) All gas detection systems shall be capable of continuously monitoring for the presence of combustible gas in the areas in which the detection devices are located. (c) The central control shall be capable of giving an alarm at some point below the lower explosive limit of one and three-tenths percent (1.3%) as shown in the Bureau of Mines Bulletin No. 503. This low level shall be for alarm purposes only. (d) A high level setting of not more than four and nine-tenths percent (4.9%) shall be used for shut-in sequences and the operation of emergency equipment. (e) An application for the installation and maintenance of any gas detection system shall be filed with the Supervisor for approval.

The Application shall include the following:

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(i) Type, location and number of detection or sampling heads. (ii) Cycling, non-cycling and frequency information. (iii) Type and kind of alarm, including emergency equipment, to be activated. (iv) Method used for detection of combustible gas. (v) Method and frequency of calibration. (vi) A diagram of the gas detection system. (vii) Other pertinent information.

(f) A diagram of the gas detection system showing the location of all gas detection points shall be posted in a prominent place on the platform.

(8) The following requirements shall be applicable to all electrical equipment and systems installed:

(a) All engines shall be equipped with low- tension ignition systems containing rigid connections and shielded wiring which shall prevent the release of sufficient electrical energy under normal or abnormal conditions to cause ignition of a combustible mixture. (b) All electrical generators, motors and lighting systems shall be installed, protected and maintained in accordance with the most current edition of the National Electric Code and APIRP 500A and B as appropriate. (c) Marine-armored cable or metal-clad cable may be substituted for wire in conduit in any area.

(9) Sewage disposal systems shall be installed and used in all cases where sewage is discharged into the waters. Sewage is defined as human body wastes and the wastes from toilets and other receptacles intended to receive or retain body wastes. Following sewage treatment, the effluent shall contain fifty (50) ppm or less of biochemical oxygen demand (BOD), 150 ppm or less of suspended solids, and shall have a minimum chlorine residual of one (1.0) mg/liter after a minimum retention time of fifteen (15) minutes provided further that any sewage disposal system shall conform to any standard established by the Mississippi Bureau of Pollution Control.

B. The requirements of Sub-paragraphs 2.A(3), (4), (8) and (9) shall apply to all mobile drilling structures used to conduct drilling or workover operations.

Source: MCA Section 53-1-17(3) (1972)

RULE OS-1.10 APPROVAL PROCEDURE FOR OIL AND GAS PIPELINES. The Supervisor shall approve a plan for installation of all pipelines for which a right of use or easement has been granted by the State, or permitted under the provisions of any lease, in or over submerged offshore lands. The operator shall comply with the following requirements:

1. General Design All pipelines shall be designed and maintained in accordance with the following:

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A. The operator shall be responsible for the installation of the following control devices on all oil and gas pipelines connected to a platform, including pipelines which are not operated or owned by the operator. The operator shall submit records to the Supervisor semi-annually showing the present status and past history of each device, including dates and details of inspection, testing, repairing, adjustment and re- installation:

(1) All oil and gas pipelines leaving a platform receiving production from the platform shall be equipped with a high-low pressure sensor to directly or indirectly shut-in the wells on the platform.

(2) (a) All oil and gas pipelines delivering production to production facilities on a platform shall be equipped with an automatic shut-in valve connected to the platform's automatic and remote shut-in system. (b) All oil and gas pipelines coming onto a platform shall be equipped with a check valve to avoid backflow. (c) Any oil or gas pipelines crossing a platform which do not deliver production to the platform, but which may or may not receive production from the platform, shall be equipped with high- low pressure sensors to activate an automatic shut-in valve to be located in the upstream portion of the pipeline at the platform. This automatic shut-in valve shall be connected to either the platform automatic and remote shut-in system or to an independent remote shut- in system. (d) All pipeline pumps shall be equipped with high-low pressure shut-in devices.

B. All pipelines shall be protected from loss of metal by corrosion that would endanger the strength and safety of the lines either by providing extra metal for corrosion allowance, or by some means of preventing loss of metal such as protective coatings or cathodic protection.

C. All pipelines shall be installed and maintained to be compatible with trawling operations and other uses.

D. All pipelines shall be hydrostatically tested to one and twenty-five one-hundredths (1.25) times the designed working pressure for a minimum of two (2) hours prior to placing the line in service.

E. All pipelines shall be maintained in good operating condition at all times and inspected monthly for indication of leakage using aircraft, floating equipment or other methods. Records of these inspections including the date, methods and results of each inspection shall be maintained by the pipeline operator and submitted annually by April 1. The pipeline operator shall submit records indicating the cause, effect and remedial action taken regarding all pipeline leaks within one (1) week following each such occurrence.

F. All pipelines shall be designed to be protected against water currents, storm scouring, soft bottoms and other environmental factors.

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2. Application The operator shall submit in duplicate the following to the Supervisor for approval:

A. Drawing on 8-1/2" x 11" plat or plats showing the major features and other pertinent data, including: (1) water depth, (2) route, (3) location, (4) length, (5) connecting facilities, (6) size and (7) burial depth, if buried. B. A schematic drawing showing the following pipeline safety equipment and the manner in which the equipment functions:

(1) High-low pressure sensors, (2) Automatic shut-in valves, and (3) Check valves.

C. General information concerning the pipeline including the following:

(1) Product or products to be transported by the pipeline. (2) Size, weight and grade of the pipe. (3) Length of line. (4) Maximum water depth. (5) Type or types of corrosion protection. (6) Description of protective coating. (7) Bulk specific gravity of line (with the line empty). (8) Anticipated gravity or density of the product or products. (9) Design working pressure and capacity. (10) Maximum working pressure and capacity. (11) Hydrostatic pressure and hold time to which the line will be tested after installation. (12) Size and location of pumps and prime movers. (13) Any other pertinent information as the Supervisor may prescribe.

3. Completion Report The operator shall notify the Supervisor when installation of the pipeline is completed and submit a drawing on 8-1/2" x 11" plats showing the location of the line as installed, and also submit the original hydrostatic pressure test including procedure, test pressure, hold time, and results.

Source: MCA Section 53-1-17(3) (1972)

RULE OS-1.11 BOND. Before any person shall begin drilling of any well in search of oil or gas or assume operation of an oil or gas well or construct or operate any pipeline in the submerged offshore lands of Mississippi, said person shall file with the Board a bond in the amount of not less than ONE HUNDRED THOUSAND DOLLARS ($100,000.00) for each well or pipeline or TWO HUNDRED THOUSAND DOLLARS ($200,000.00) for all wells and pipelines, payable to the State of Mississippi for the use and benefit of the Mississippi State Oil and Gas Board. The Board shall require an increase of the minimum specified herein, by

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appropriate rider, when in the opinion of the Board the minimum does not constitute a reasonable bond as authorized to be required by Section 53-1-17, Mississippi Code of 1972.

Source: MCA Section 53-1-17(3) (1972)

RULE OS-1.12 APPLICATION OF STATEWIDE RULES AND REGULATIONS. Where not in conflict with these rules and regulations, all existing Statewide Rules and Regulations of the State Oil and Gas Board as adopted by Order No. 201-51, and all additions and amendments thereto, shall apply and be in force.

Source: MCA Section 53-1-17(3) (1972)

RULE OS-1.13 PENALTY. Any person, firm or corporation violating any of these rules and regulations shall be punished as provided by law.

Source: MCA Section 53-1-17(3) (1972)

RULE OS-1.14 HEARINGS. The Board reserves the right to require notice and hearing on any application for a drilling permit in submerged offshore lands.

Source: MCA Section 53-1-17(3) (1972)

RULE OS-1.15 EXCEPTIONS. The Board expressly reserves the right, after notice and hearing, to alter, amend, repeal or grant exceptions to any and all of the foregoing rules and regulations.

Source: MCA Section 53-1-17(3) (1972)