Board of Minerals and Environment Adopts Revisions to the State’s Oil and Gas Conservation Rules

 

 

On November 16, 2011, the South Dakota Board of Minerals and Environment (BME) held a public hearing to consider proposed revisions* to the state's oil and gas conservation rules. During the hearing the board considered the proposed revisions and associated public comments, made minor changes to the proposed revisions, and then unanimously voted to adopt the revisions.  Changes to the proposed revisions made during the hearing include form and style corrections, adding or clarifying definitions of technical terms, changing how often oil producers must check metering equipment at central tank batteries, retaining the existing approval process for commingling of oil from different pools, and retaining an existing rule requiring oil and gas operators to submit pipeline maps.

 

The revisions adopted by the BME involved repealing the existing oil and gas conservation article (74:10), and starting afresh with a new article (74:12) that is largely the same, but less cluttered than the previous article. These recisions provided for the removal of about 11 pages of “clutter” from the rules, including previously repealed and transferred rules.

 

The guiding principles behind these revisions include simplifying and clarifying rules, eliminating unnecessary rules, simplifying regulatory approval processes, and removing unnecessary time delays inherent within the existing regulatory process.

 

These revisions are the result of Governor Daugaard’s charge to state agencies to review and recommend changes in statutes, administrative rules, and practices that will result in fewer, shorter, and simpler regulations.

 

 

 

*Proposed rule revisions adopted by the BME: Text highlighted in gray indicates previously repealed or transferred rules that will not be included in the new article. Text highlighted in yellow indicates proposed changes: added text is underlined, and strikethroughs are used to show deleted text.  This document does not include the minor changes (described above) incorporated by the board when they adopted the revised oil and gas rules.

 

RULES REVISION PROCESS UPDATE: The recently adopted version of South Dakota's Oil & Gas Conservation Rules were presented before the Legislative Interim Rules Review Committee on December 20, 2011, and filed with the Secretary of State on December 23, 2011. The new version of the rules (ARSD Article 74:12) became provisionally effective on January 12, 2012.

 

What laws apply to oil and gas development in South Dakota?

The Oil and Gas Conservation Act, SDCL 45-9, contains the laws that apply to oil and gas development in the state.  The Board of Minerals and Environment (board) and the department implement the requirements of the Act. 

 

What requirements apply to me if I want to drill for oil and gas?

Drilling for oil and gas is regulated under SDCL 45-9 and the Administrative Rules of South Dakota (ARSD) Article 74:12. Underground injection for the purpose of enhanced oil recovery or the disposal of exploration and production wastes is regulated by the same statute and rules. The requirements of ARSD 74:09, which pertain to board hearings and petitions, also apply to oil and gas operations.

 

How do I gain approval to undertake oil and gas operations?

There are five different approval processes that apply to oil and gas operations: 1) Contested Case Hearings for spacing, pooling or unitization requests; 2) Potential Contested Case Hearings under the Notice of Recommendation procedure; 3) Applications for Permit to Drill (APD) for drilling, deepening or reentering requests; 4) Underground Injection Control Class II Permits to Inject; and 5) Sundry Notice Requests for administrative approvals.

 

  • Contested Case Hearing--Spacing, Pooling or Unitization Requests:

Spacing, unitization, and pooling requests are automatically scheduled for hearing before the board. This process is initiated by the submission of a petition in accordance with ARSD 74:09:01. Spacing, pooling and unitization requirements are found in SDCL 45-9 and ARSD 74:12.

 

  • Potential Contested Case Hearings (Notice of Recommendation Procedure):

The Department Secretary or designee may grant administrative approval after publishing a Notice of Recommendation for applications involving the following: drilling at exception locations, drilling a directional or horizontal well in an area not already spaced by the board, exception to gas to oil ratios, underground commingling of oil from separate pools, new underground injection permits, major modifications of injection permits, exemption of a portion of an aquifer, and multiple zone completions of oil wells. If the recommendation is not contested, approval is granted by the Secretary in accordance with the recommendation. If the recommendation is contested, then the issue is subject to board approval under a contested case hearing. The Notice of Recommendation process is initiated by the submission of a petition in accordance with ARSD 74:09:01.

 

  • Application for Permit to Drill (APD)--Drilling, Deepening or Reentering Requests:

Permits for drilling new wells, or deepening or reentering existing wells require department approval and possibly the submission of a pit liner variance application. This is initiated by the submission of an application for a permit to drill. Forms and procedures required for obtaining a permit to drill, deepen, or reenter an oil or gas well are available at Oil & Gas forms.

 

  • Underground Injection Control Class II Permits to Inject:

In conjunction with submitting a petition to initiate the Notice of Recommendation procedure (see "Potential Contested Case Hearings", above), a permit to inject is required for any injection of fluid associated with oil and gas production into, above, or through underground sources of drinking water. For more information on permits to inject contact Brian Walsh of the Ground Water Quality Program at 605-773-3296 or via email.  The permit to inject application form is available at Oil & Gas forms.

 

  • Sundry Notice Requests for Approval:

The Department Secretary or designee may grant administrative approval of the following: proposed well cementing procedures, proposed plugging procedures, temporary abandonment of a well, proposed mechanical integrity test procedures, drilling without a blowout preventer, extending the term of an APD beyond 12 months, proposed soil remediation techniques, using produced water on roads for dust suppression, atmospherically discharging water produced from a gas well, surface restoration, construction of produced water handling facilities, conversion of a mud pit to an evaporation pit, dissolving abandoned oil or gas fields, the method of annual gas well test to determine daily open flow, the method of determining production from separate pools prior to commingling, confidentiality of technical data, and the method of and interval for checking tank metering equipment against actual tank measurements. The Sundry Notice form used to approve these requests is available at Oil & Gas forms.

 

Leasing Information: Although a valid lease is required before a permit can be issued to drill an oil or gas well, the Department of Environment and Natural Resources does not regulate or have any data pertaining to leasing availability and requirements on state, federal, or private lands. You can obtain this information from the following agencies.