Environmental Best Management Practices for Enhanced Oil Recovery

1. David Cloutier
Senior Consultant
July 8, 2014
Legacy IssuesAssociated with Oil and
Gas Development

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. What is Legacy Liability and Why Do We Care?

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 Out of date SPCC plans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. 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. Typical Legacy Issues and Costs
 Soil and groundwater
impacts
 NORM
 Landfills/boneyards
 Compliance
 Safety/OSHA

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. 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. 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. Emerging Issues Affecting Legacy Liability

11. Key Emerging Issues Affecting Environmental
Liability & Risk
Regulatory
Changes /
Uncertainty
Increasing
Acquisition /
Divestiture
Development
of Legacy
Sites

12. Contact Information:
David Cloutier
Senior Consultant
Trihydro Corporation
dcloutier@trihydro.com
307/745-7474