Regulatory Conference San Antonio 2014

1. Regulatory Conference San Antonio 2014 Introduction to Drilling Permits and Online Filing Valerie Atkins-Team Leader

3. Accessing Drilling Permits • You may go through the Main Page or you may already have your Online Drilling Permit page bookmarked to where you do not have to go through it. • If by chance you can not access the Drilling Permits Online System, please check to see if your P-5 Organization Report is not delinquent by calling 512-463-6772.

8. Filing a W-1 • New W-1: First time filing a permit on a well location • Amended W-1: Amending information on a permit that has not yet been completed *note* You can not change the Purpose of Filing when you are amending a permit unless you are filing to reflect a unintentional deviation from a vertical well. You may then show Amended As-Drilled BHL as the Purpose of Filing but the wellbore profile remains as vertical

9. Filing a W-1 con’t • Duplicate W-1: Using this selection is only good when you have multiple filings under one lease name *note* Please make sure that you change all information for the well that you are applying for • Existing W-1’s: Filings that you have started on but have yet to submit to the RRC. After 30 days of non activity on a filing, it will fall out of your queue

10. Queries • Drilling Permit Query: This is the link to query all filings you have submitted to the Drilling Permits Online System • Field Query: This is where you query all fields that are recognized by the RRC

12. What is your Purpose of Filing? • New Drill-New location • Recompletion-Completion work done on a established location • Re Class-Going from Oil to Gas, Gas to Oil or Injection to Producing

13. What is your Purpose of Filing? • Field Transfer-Well being moved from one field to another field that has the well set at the same perfs*note* You must provide an approval letter from Scott Rosenquist when asking for a Field Transfer • Re Enter-Entering a well that has been plugged to surface and a W-3 was filed at the District Office

14. What are your wellbore profiles? • Vertical Well-A well that will not intentionally deviate or perforate a horizon. *SWR Exceptions are shown at surface* • Horizontal Well-A well that is developed with one or more horizontal drain holes having a horizontal drain hole displacement of at least 100 feet. *SWR Exceptions are shown from wherever the well will perforate from top to bottom*

15. What are your Wellbore Profiles? • Directional Well-The intentional deviation of a wellbore from vertical. *SWR Exceptions are shown from bottom hole only* • Sidetrack-To drill around broken drill pipe or casing that has become permanently lodge in the hole *note* When using “Sidetrack” you must show it as either a Vertical Sidetrack, Horizontal sidetrack or Directional Sidetrack

16. Lease Names • Lease names will be what the legal document executed between landowner or lessor that grants the right to exploit the premises for minerals or other products. Every thing on the filing is pertaining to that lease. The “name of the well” is the “LEASE NAME”, it can not change based on the well filing on that lease unless you change all the wells filed on that lease too. The system gives you 32 characters for this name.

17. Well Numbers • Well numbers are the numbering of any well drilled within the boundaries of an established lease. You are allowed 6 spaces and the numbering system is formulated to show Alpha and Numeric characters. First space is Alpha or Numeric, next 3 spaces are numeric only and last 2 spaces are Alpha only. Ex: A/N NNN AA

18. Total Vertical Depth of Well • This is the maximum approved depth you can reach in a well • You are allowed 100 feet or 2% of the Total Vertical Depth before you would have to amend your permit • This is not the “measured” depth of the well

19. Surface Location • This is the legal location of where the well will penetrate the surface and where you will see a oil derrick for oil and a christmas tree for gas • You must always provide at least the survey name for the surface location • You must provide the distance & direction FROM the nearest town to the surface location • You must always give 2 perpendicular locations pertaining to the surface location

22. Field List • The Field List Screen will be where you select all fields you intend to possibly complete in • The Primary Field (first field selected) is the field that you may change the lease name and well number after selected on the General Information Screen so that it is changed in the header up top

23. Field List con’t • The Primary Field will determine what your District Number will be and wellbore profile • The Primary Field will also prepopulate all fields listed after they have been selected

25. Field Details • Basic Details Box-This box determines any and all exceptions for the filing based on the WELLBORE PROFILE • Distance to nearest line-Determines lease line SWR 37 exceptions • Distance to nearest well-Determines between well SWR 37 exceptions

26. Field Details con’t • Total Acres in lease & Number of wells on lease-Determines SWR 38 exceptions • Total Acres in lease-Total amount of acres that is contractually written up for that lease. The lease can be non contiguous but the acreage being assigned to each well must be contiguous or you will have an exception to SWR 39

27. Field Details con’t • What determines a pooled unit (SWR 40): A pooled unit is a contractual authority between mineral interest owners or operators to create individual tracts or leases to form a unit

28. Field Details con’t • What is needed?: A Certificate of Pooling Authority (Form P-12) that lists all the individual tracts/leases and the acreage that is being assigned from that tract. The acreage amount must be exact and not rounded up. If the tract is not 100% leased or pooled, then you must select the “unleased” or “non-pooled” box next to that tract. That box will determine if the well could have “interior” lease line Rule 37 issues.

29. Field Details con’t • If a lease is pooled, you must submit a lease plat clearly identifying all tracts listed as it is shown on the P-12 EVERYTIME YOU FILE ON THAT POOLED UNIT AND THE PLAT MUST BE CERTIFIED. You CAN NOT file a partial plat.

30. Field Details con’t • What is a Unitized Lease: This means that in some point or time, the lease went before a hearing to be deem that the acreage could be unitized for Secondary Recovery Issues and therefore, would not need to submit a P-12 and plat

31. Field Details con’t • Well Types: Oil or Gas, Oil, Gas, Injection (Water/Salt Water, Gas, Steam Injection, Disposal, PTSD, Brine), Storage (LPG, Gas, Underground), Service (Testing Tool, Slim Hole Test, Monitor, Demonstration, Observation, Geothermal), Water Supply, Cathodic Protection and Exploratory Test (Core, Stratigraphic, Seismic, Sulphur, Uranium) • Oil and Gas wells are the only wells that have to adhere to Statewide Ruling exceptions

34. Attachments • A plat is needed EVERYTIME you file an application no matter what type of permit you are filing. The plat must be a clear representation of the W-1/online filing. First well on the lease requires that you must provide a clearly identifiable plat with either hash marks or bold black line of that total acreage in the lease. The plat must be to scale and we only accept scales of what is shown on the Allen Engineering System using footage calls. (ie, 1’=1000) Please see SWR 5 on what is needed on your plat if you are unclear.

35. Attachments Con’t • When uploading a plat and all other attachments, they MUST BE saved and entered as a .TIF (not .TIFF) attachment. • Please do not convert a .pdf document when scanning in the attachment and then convert to a .tif attachment. It makes for problems on the RRC’s part to open up attachments. • Please select all plats as “PLATS” and not “OTHER” because we always need to know the size of the plat (ie, letter, legal and ledger) in case we need to print it out or someone else in the general public

36. Attachments Con’t • If the system will not allow you to upload an attachment, please check the file name that was saved for that attachment-do not include any annotations (ie, ‘, “ () *) because the system does not recognize those symbols • Please only scan in attachments in black and white, no color or gray scale because this can potentially make your attachment upload larger than 4 megs and that is to large

37. Review Screen • This screen is the last screen you may look at to see if you have any potential problems. If you have blue checks for every screen created, then you may submit the filing. • If you do not have blue checks and have a red caution sign, then that particular tab has some issues that will not allow you to file the permit online. Go to that screen and hit save, the system will tell you what those problems will be.

39. FYI • Each screen has a “ Drilling Permits Help” at the top of the screen. If you are having problems, that screen may be able to help you with your problem. The same goes for the FAQ screen. Please take the time to look over the Drilling Permits Online Filing Users Guide because you may be able to resolve any and all problems you may encounter via this instruction manual.

41. Contact Information • Valerie Atkins-Team Leader for Drilling Permits Section. • 512-463-6979 (Direct) • 512-463-6751 (Main) • 512-463-2388 (Fax) • Valerie.atkins@rrc.state.tx.us