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Legacy Issues Associated with Oil and Gas Development

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Environmental Best Management Practices for Enhanced Oil Recovery

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Legacy Issues Associated with Oil and Gas Development

  1. 1. David Cloutier Senior Consultant July 8, 2014 Legacy IssuesAssociated with Oil and Gas Development
  2. 2. Types of  Legacy Issues  Associated  with Oil & Gas  Development Best Practices  to Address  Legacy  Environmental  Issues Emerging  Issues  Affecting  Legacy Liability Questions and  Discussion Presentation Outline
  3. 3. What is Legacy Liability and Why Do We Care?
  4. 4. Typical Sources of Legacy Impacts  Historic drilling pits  Historic releases and spills  Improper materials management  Waste disposal  Leaking tank batteries  Junkyards/boneyard/landfills  Abandoned pipelines  Legacy compressor stations and gas plants  Damaged well casing  Non-compliant operations  Air permits and reporting  NPDES discharges  Out of date SPCC plans  OSHA
  5. 5. Why a Concern?  Older fields were likely developed prior to current regulations and BMPs  Mature field often operated by smaller firms with limited staff and resources  Priority is production not environmental  Often overlooked by regulators and inspectors until notice of the transaction is public
  6. 6. Typical Legacy Issues and Costs  Soil and groundwater impacts  NORM  Landfills/boneyards  Compliance  Safety/OSHA
  7. 7. Best Management Practices (BMPs) to Reduce Risk  Know what you are buying, selling, shipping, or developing  Negotiation of liability with buyer, seller, NOD, etc.  Use of environmental pollution liability insurance
  8. 8. BMPs for Legacy Issues– Due Diligence DEFINE  OBJECTIVES DATA ROOM  SEARCH REGULATORY &  RECORDS  REVIEW SITE  ASSESSMENTS  AND INTERVIEWS INTRUSIVE  ASSESSMENTS  AND SAMPLING QUANTIFICATION  OF LIABILITIES CONCLUSION  AND PATH  FORWARD
  9. 9. Advantages of Knowing Legacy Risk Conditions Reduces risk by managing financial and business exposures Eliminates or reduces unknown legacy conditions  Allows risk to be managed proactively Negotiated with seller as environment defect Environmental liability insurance bridges gap between buyer‐seller Exclusions manage “high‐risk” elements Manage liability reserves (Sarbanes‐Oxley / Financial Accounting Standards)
  10. 10. Emerging Issues Affecting Legacy Liability
  11. 11. Key Emerging Issues Affecting Environmental Liability & Risk Regulatory  Changes /  Uncertainty Increasing  Acquisition /  Divestiture Development  of Legacy  Sites
  12. 12. Contact Information: David Cloutier Senior Consultant Trihydro Corporation dcloutier@trihydro.com 307/745-7474

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