[46 Pa.B. 6431]
[Saturday, October 8, 2016]
[Continued from previous Web Page]
Subchapter D. WELL DRILLING, OPERATION AND PLUGGING
GENERAL Sec.
78a.71. Use of safety devices—well casing. 78a.72. Use of safety devices—blow-out prevention equipment. 78a.73. General provision for well construction and operation. 78a.74. Venting of gas. 78a.75. Alternative methods. 78a.75a. Area of alternative methods. 78a.76. Drilling within a gas storage reservoir area. 78a.77. Wells in a hydrogen sulfide area. 78a.78. Pillar permit applications.
CASING AND CEMENTING
78a.81. General provisions. 78a.82. Use of conductor pipe. 78a.83. Surface and coal protective casing and cementing procedures. 78a.83a. Casing and cementing plan. 78a.83b. Casing and cementing—lost circulation. 78a.83c. Intermediate and production casing. 78a.84. Casing standards. 78a.85. Cement standards. 78a.86. Defective casing or cementing. 78a.87. Gas storage reservoir protective casing and cementing procedures.
OPERATING WELLS
78a.88. Mechanical integrity of operating wells. 78a.89. Gas migration response.
PLUGGING
78a.91. General provisions. 78a.92. Wells in coal areas—surface or coal protective casing is cemented. 78a.93. Wells in coal areas—surface or coal protective casing anchored with a packer or cement. 78a.94. Wells in noncoal areas—surface casing is not cemented or not present. 78a.95. Wells in noncoal areas—surface casing is cemented. 78a.96. Marking the location of a plugged well. 78a.97. Plugging a well stimulated with explosives. 78a.98. Restricting surface water from the well bore.
INACTIVE STATUS
78a.101. General provisions. 78a.102. Criteria for approval of inactive status. 78a.103. Annual monitoring of inactive wells. 78a.104. Term of inactive status. 78a.105. Revocation of inactive status.
RADIOACTIVE LOGGING SOURCES
78a.111. Abandonment.
GENERAL § 78a.71. Use of safety devices—well casing.
(a) The operator shall equip the well with one or more strings of casing of sufficient cemented length and strength to attach proper well control equipment and prevent blowouts, explosions, fires and casing failures during installation, completion and operation.
(b) The operator shall determine the amount and type of casing to be run and the amount and type of cement to be used in accordance with current prudent industry practices and engineering. In making the determinations, the operator shall consider the following:
(1) Successful local practices for similar wells.
(2) Maximum anticipated surface pressure.
(3) Collapse resistance.
(4) Tensile strength.
(5) Chemical environment.
(6) Potential mechanical damage.
(7) Manufacturing standards, including American Petroleum Institute or equivalent specifications for pipe used in wells drilled below the Onondaga formation or where blow-out preventers are required.
§ 78a.72. Use of safety devices—blow-out prevention equipment.
(a) The operator shall use blow-out prevention equipment after setting casing with a competent casing seat in the following circumstances:
(1) When drilling a well that is intended to produce natural gas from an unconventional formation.
(2) When drilling out solid core hydraulic fracturing plugs to complete a well.
(3) When well head pressures or natural open flows are anticipated at the well site that may result in a loss of well control.
(4) When the operator is drilling in an area where there is no prior knowledge of the pressures or natural open flows to be encountered.
(5) On wells regulated by the Oil and Gas Conservation Law (58 P.S. §§ 401—419).
(6) When drilling within 200 feet of a building.
(b) Blow-out prevention equipment used must be in good working condition at all times.
(c) Controls for the blow-out preventer shall be accessible to allow actuation of the equipment. Additional controls for a blow-out preventer with a pressure rating of greater than 3,000 psi, not associated with the rig hydraulic system, shall be located at least 50 feet away from the drilling rig so that the blow-out preventer can be actuated if control of the well is lost.
(d) The operator shall use pipe fittings, valves and unions placed on or connected to the blow-out prevention systems that have a working pressure capability that exceeds the anticipated pressures.
(e) The operator shall conduct a complete test of the ram type blow-out preventer and related equipment for both pressure and ram operation before placing it in service on the well. The operator shall test the annular type blow-out preventer in accordance with the manufacturer's published instructions, or the instructions of a professional engineer, prior to the device being placed in service. Blow-out prevention equipment that fails the test may not be used until it is repaired and passes the test.
(f) When the equipment is in service, the operator shall visually inspect blow-out prevention equipment during each tour of drilling operation and during actual drilling operations test the pipe rams for closure daily and the blind rams for closure on each round trip. When more than one round trip is made in a day, one daily closure test for blind rams is sufficient. Testing shall be conducted in accordance with American Petroleum Institute publication API RP53, ''API Recommended Practice for Blowout Prevention Equipment Systems for Drilling Wells,'' or other procedure approved by the Department. The operator shall record the results of the inspection and closure test in the drillers log before the end of the tour. If blow-out prevention equipment is not in good working order, drilling shall cease when cessation of drilling can be accomplished safely and not resume until the blow-out prevention equipment is repaired or replaced and retested.
(g) All lines, valves and fittings between the closing unit and the blow-out preventer stack must be flame resistant and have a rated working pressure that meets or exceeds the requirements of the blow-out preventer system.
(h) When a blowout preventer is installed or required under subsection (a), there shall be present on the well site an individual with a current certification from a well control course accredited by the International Association of Drilling Contractors or other organization approved by the Department. The certification shall be available for review at the well site. The Department will maintain a list of approved accrediting organizations on its web site.
(i) Well drilling and completion operations requiring pressure barriers, as identified by the operator under § 78a.55(d) (relating to control and disposal planning; emergency response for unconventional wells), shall employ at least two mechanical pressure barriers between the open producing formation and the atmosphere that are capable of being tested. The mechanical pressure barriers shall be tested according to manufacturer specifications prior to operation. If during the course of operations the operator only has one functioning barrier, operations shall cease until additional barriers are added and tested or the redundant barrier is repaired and tested. Stripper rubber or a stripper head may not be considered a barrier.
(j) A coiled tubing rig or a hydraulic workover unit with appropriate blowout prevention equipment shall be employed during post-completion cleanout operations in horizontal unconventional formations.
(k) The minimum amount of intermediate casing that is cemented to the surface to which blow-out prevention equipment may be attached shall be in accordance with the following:
Proposed Total Vertical
Depth (in feet)Minimum Cemented
Casing Required
(in feet of
casing cemented)
Up to 5,000 400 5,001 to 5,500 500 5,501 to 6,000 600 6,001 to 6,500 700 6,501 to 7,000 800 7,001 to 8,000 1,000 8,001 to 9,000 1,200 9,001 to 10,000 1,400 Deeper than 10,000 1,800 (l) Upon completion of the drilling operations at a well, the operator shall install and utilize equipment, such as a shut-off valve of sufficient rating to contain anticipated pressure, lubricator or similar device, as may be necessary to enable the well to be effectively shut-in while logging and servicing the well and after completion of the well.
§ 78a.73. General provision for well construction and operation.
(a) The operator shall construct and operate the well in accordance with this chapter and ensure that the integrity of the well is maintained and health, safety, environment and property are protected.
(b) The operator shall prevent gas, oil, brine, completion and servicing fluids, and any other fluids or materials from below the casing seat from entering fresh groundwater, and shall otherwise prevent pollution or diminution of fresh groundwater.
(c) The operators of active, inactive, abandoned, and plugged and abandoned wells identified as part of an area of review survey conducted under § 78a.52a (relating to area of review) that likely penetrate within 1,500 feet measured vertically from the stimulation perforations, if known, shall be notified. Notice shall be provided at least 30 days prior to the start of drilling the well or at the time the permit application is submitted to the Department if the start of drilling is planned less than 30 days from the date of permit issuance. Orphan wells, abandoned wells, and plugged and abandoned wells identified as part of an area of review survey conducted under § 78a.52a that either penetrate within 1,500 feet measured vertically from the stimulation perforations or have an unknown true vertical depth shall be visually monitored during stimulation activities. The operator shall immediately notify the Department of any change to a well being monitored, of any treatment pressure or volume changes indicative of abnormal fracture propagation at the well being stimulated or if otherwise made aware of a confirmed well communication incident associated with their stimulation activities. Notice shall be provided to the Department electronically through the Department's web site. In an event such as this, the operator shall cease stimulating the well that is the subject of the area of review survey and take action to prevent pollution of waters of the Commonwealth or discharges to the surface. The operator may not resume stimulation of the well that is the subject of the area of review survey without Department approval.
(d) An operator that alters an orphan well, or an abandoned well or plugged and abandoned well by hydraulic fracturing shall plug the altered well in accordance with this chapter, or the operator may adopt the altered well and place it into production.
(e) After a well has been completed, recompleted, reconditioned or altered the operator shall prevent surface shut-in pressure and surface producing back pressure inside the surface casing or coal protective casing from exceeding the following pressure: 80% multiplied by 0.433 psi per foot multiplied by the casing length (in feet) of the applicable casing.
(f) After a well has been completed, recompleted, reconditioned or altered, if the surface shut-in pressure or surface producing back pressure exceeds the pressure as calculated in subsection (e), the operator shall take action to prevent the migration of gas and other fluids from lower formations into fresh groundwater. To meet this standard the operator may cement or install on a packer sufficient intermediate or production casing or take other actions approved by the Department. This section does not apply during testing for mechanical integrity in accordance with State or Federal requirements.
(g) Excess gas encountered during drilling, completion or stimulation shall be flared, captured or diverted away from the drilling rig in a manner that does not create a hazard to the public health or safety.
(h) The well must be equipped with a check valve to prevent backflow from the pipelines into the well.
§ 78a.74. Venting of gas.
The venting of gas to the atmosphere from a well is prohibited when the venting produces a hazard to the public health and safety.
§ 78a.75. Alternative methods.
(a) A well operator may request approval from the Department to use an alternative method or material for the casing, plugging or equipping of a well under section 3221 of the act (relating to alternative methods).
(b) A well operator seeking approval under this section shall file an application with the Department on forms furnished by the Department. The application must:
(1) Describe the proposed alternative method or material, in reasonable detail.
(2) Indicate the manner in which the alternative will satisfy the goals of the act and this chapter.
(3) Include a drawing or schematic of the alternative method, if appropriate.
(c) The well operator shall notify all coal owners and operators and gas storage operators of record of the proposal, by certified mail. The well operator shall state in the application that he has sent the certified mail notice to the coal owners and operators and gas storage operators of record, either simultaneously with or prior to submitting the proposal to the Department.
(d) The coal owners and operators and gas storage operators of record shall have up to 15 days from their receipt of the notice to file objections or to indicate concurrence with the proposed alternative method or material.
(e) If no objections are filed within 15 days from receipt of the notice, and if none are raised by the Department, the Department will make a determination whether to allow the use of the proposed alternative method or material.
§ 78a.75a. Area of alternative methods.
(a) A well operator may request approval from the Department to use an alternative method or material for the casing, plugging or equipping of a well under section 3221 of the act (relating to alternative methods).
(b) To establish an area of alternative methods, the Department will publish a notice in the Pennsylvania Bulletin of the proposed area of alternative methods and provide the public with an opportunity to comment on the proposal. After reviewing any comments received on the proposal, the Department will publish a final designation of the area and required alternative methods in the Pennsylvania Bulletin.
(c) Wells drilled within an area of alternative methods established under subsection (b) must meet the requirements specified by the Department unless the operator obtains approval from the Department to drill, operate or plug the well in a different manner that is at least as safe and protective of the environment as the requirements of the area of alternative methods.
§ 78a.76. Drilling within a gas storage reservoir area.
(a) An operator proposing to drill a well within a gas storage reservoir area or a reservoir protective area shall forward by certified mail a copy of the well location plat, the drilling, casing and cementing plan, and the anticipated date drilling will start to the gas storage reservoir operator and to the Department for approval by the Department and shall submit proof of notification to the gas storage reservoir operator to the Department with the well permit application.
(b) The storage operator may file an objection with the Department to the drilling, casing and cementing plan or the proposed well location within 15 calendar days of receipt of the notification and request a conference in accordance with section 3251 of the act (relating to conferences).
§ 78a.77. Wells in a hydrogen sulfide area.
(a) An operator proposing to drill a well within a 1-mile radius of a well drilled to or through the same formation where hydrogen sulfide has been found while drilling shall install monitoring equipment during drilling at the well site to detect the presence of hydrogen sulfide in accordance with American Petroleum Institute publication RP49, ''Recommended Practices for Safe Drilling of Wells Containing Hydrogen Sulfide.''
(b) When hydrogen sulfide is detected in concentrations of 20 ppm or greater, the well shall be drilled in accordance with American Petroleum Institute publication RP49, ''Recommended Practices for Safe Drilling of Wells Containing Hydrogen Sulfide.''
(c) An operator who operates a well in which hydrogen sulfide is discovered in concentrations of 20 ppm or greater shall operate the well in a way that presents no danger to human health or to the environment.
(d) When an operator discovers hydrogen sulfide in concentrations of 20 ppm or greater during the drilling of a well, the operator shall notify the Department and identify the location of the well and the concentration of hydrogen sulfide detected. The Department will maintain a list of all notices that will be available to operators for their reference.
§ 78a.78. Pillar permit applications.
(a) The Department will use recommendations for coal pillar size and configuration set forth in the coal pillar study, listed in the Department's Coal Pillars, Commonwealth of Pennsylvania, Department of Environmental Protection, No. 550-2100-006, as amended and updated, as a basis for approval or disapproval of coal pillar permit applications submitted by underground coal mine operators.
(b) Where proposed coal pillar size and configuration does not conform to the recommendations of the coal pillar study referenced in subsection (a), the underground coal mine operator may request Department approval for an alternate coal pillar size and configuration.
CASING AND CEMENTING § 78a.81. General provisions.
(a) The operator shall conduct casing and cementing activities under this section and §§ 78a.82, 78a.83, 78a.83a, 78a.83b, 78a.83c and 78a.84—78a.87 or an approved alternate method under § 78a.75 (relating to alternative methods). The operator shall case and cement a well to accomplish the following:
(1) Allow effective control of the well at all times.
(2) Prevent the migration of gas or other fluids into sources of fresh groundwater.
(3) Prevent pollution or diminution of fresh groundwater.
(4) Prevent the migration of gas or other fluids into coal seams.
(b) The operator shall drill through fresh groundwater zones with diligence and as efficiently as practical to minimize drilling disturbance and commingling of groundwaters.
§ 78a.82. Use of conductor pipe.
If the operator installs conductor pipe in the well, the following provisions apply:
(1) The operator may not remove the pipe.
(2) Conductor pipe shall be installed in a manner that prevents the subsurface infiltration of surface water or fluids by either driving the pipe into place or cementing the pipe from the seat to the surface.
(3) Conductor pipe must be made of steel unless a different material is approved for use by the Department.
§ 78a.83. Surface and coal protective casing and cementing procedures.
(a) For wells drilled, altered, reconditioned or recompleted after February 5, 2011, surface casing or any casing functioning as a water protection casing may not be utilized as production casing unless one of the following applies:
(1) In oil wells where the operator does not produce any gas generated by the well and the annulus between the surface casing and the production pipe is left open.
(2) The operator demonstrates that the pressure in the well is no greater than the pressure permitted under § 78a.73(e) (relating to general provision for well construction and operation), demonstrates through a pressure test or other method approved by the Department that all gas and fluids will be contained within the well, and installs a working pressure gauge that can be inspected by the Department.
(b) If the well is to be equipped with threaded and coupled casing, the operator shall drill a hole so that the diameter is at least 1 inch greater than the outside diameter of the casing collar to be installed. If the well is to be equipped with plain-end welded casing, the operator shall drill a hole so that the diameter is at least 1 inch greater than the outside diameter of the casing coupling.
(c) The operator shall drill to approximately 50 feet below the deepest fresh groundwater or at least 50 feet into consolidated rock, whichever is deeper, and immediately set and permanently cement a string of surface casing to that depth. Except as provided in subsection (f), the surface casing may not be set more than 200 feet below the deepest fresh groundwater except if necessary to set the casing in consolidated rock. The surface hole shall be drilled using air, freshwater or freshwater-based drilling fluid. Prior to cementing, the wellbore shall be conditioned to ensure an adequate cement bond between the casing and the formation. The surface casing seat shall be set in consolidated rock. When drilling a new well or redrilling an existing well, the operator shall install at least one centralizer within 50 feet of the casing seat and then install a centralizer in intervals no greater than every 150 feet above the first centralizer.
(d) The operator shall permanently cement the surface casing by placing the cement in the casing and displacing it into the annular space between the wall of the hole and the outside of the casing.
(e) Where potential oil or gas zones are anticipated to be found at depths within 50 feet below the deepest fresh groundwater, the operator shall set and permanently cement surface casing prior to drilling into a stratum known to contain, or likely containing, oil or gas.
(f) If additional fresh groundwater is encountered in drilling below the permanently cemented surface casing, the operator shall document the depth of the fresh ground water zone in the well record and protect the additional fresh groundwater by installing and cementing a subsequent string of casing or other procedures approved by the Department to completely isolate and protect fresh groundwater. The string of casing may also penetrate zones bearing salty or brackish water with cement in the annular space being used to segregate the various zones. Sufficient cement shall be used to cement the casing to the surface. The operator shall install at least one centralizer within 50 feet of the casing seat and then install a centralizer in intervals no greater than, if possible, every 150 feet above the first centralizer.
(g) The operator shall set and cement a coal protective string of casing through workable coal seams. The base of the coal protective casing shall be at least 30 feet below the lowest workable coal seam. The operator shall install at least two centralizers. One centralizer shall be within 50 feet of the casing seat and the second centralizer shall be within 100 feet of the surface.
(h) Unless an alternative method has been approved by the Department in accordance with § 78a.75 (relating to alternative methods), when a well is drilled through a coal seam at a location where the coal has been removed or when a well is drilled through a coal pillar, the operator shall drill to a depth of at least 30 feet but no more than 50 feet deeper than the bottom of the coal seam. The operator shall set and cement a coal protection string of casing to this depth. The operator shall equip the casing with a cement basket or other similar device above and as close to the top of the coal seam as practical. The bottom of the casing must be equipped with an appropriate device designed to prevent deformation of the bottom of the casing. The interval from the bottom of the casing to the bottom of the coal seam shall be filled with cement either by the balance method or by the displacement method. Cement shall be placed on top of the basket between the wall of the hole and the outside of the casing by pumping from the surface. If the operator penetrates more than one coal seam from which the coal has been removed, the operator shall protect each seam with a separate string of casing that is set and cemented or with a single string of casing which is stage cemented so that each coal seam is protected as described in this subsection. The operator shall cement the well to isolate workable coal seams from each other.
(i) If the operator sets and cements casing under subsection (g) or (h) and subsequently encounters additional fresh groundwater zones below the deepest cemented casing string installed, the operator shall protect the fresh groundwater by installing and cementing another string of casing or other method approved by the Department. Sufficient cement shall be used to cement the casing to the surface. The additional casing string may also penetrate zones bearing brackish or salt water, but shall be run and cemented prior to penetrating a zone known to or likely to contain oil or gas. The operator shall install at least one centralizer within 50 feet of the casing seat and then, if possible, install a centralizer in intervals no greater than every 150 feet above the first centralizer.
(j) If it is anticipated that cement used to permanently cement the surface casing cannot be circulated to the surface a cement basket may be installed immediately above the depth of the anticipated lost circulation zone. The casing shall be permanently cemented by the displacement method. Additional cement may be added above the cement basket, if necessary, by pumping through a pour string from the surface to fill the annular space. Filling the annular space by this method does not constitute permanently cementing the surface or coal protective casing under § 78a.83b (relating to casing and cementing—lost circulation).
§ 78a.83a. Casing and cementing plan.
(a) The operator shall prepare and maintain a casing and cementing plan showing how the well will be drilled and completed. The plan must demonstrate compliance with this subchapter and include the following information:
(1) The anticipated depth and thickness of any producing formation, expected pressures, anticipated fresh groundwater zones and the method or information by which the depth of the deepest fresh groundwater was determined.
(2) The diameter of the borehole.
(3) Casing type, whether the casing is new or used, depth, diameter, wall thickness and burst pressure rating.
(4) Cement type, yield, additives and estimated amount.
(5) The estimated location of centralizers.
(6) The proposed borehole conditioning procedures.
(7) Alternative methods or materials as required by the Department as a condition of the well permit.
(b) The plan shall be available at the well site for review by the Department.
(c) Upon request, the operator shall provide a copy of the well-specific casing and cementing plan to the Department for review and approval.
(d) Revisions to the plan made as a result of onsite modification shall be documented in the plan and be available for review by the Department. The person making the revisions to the plan shall initial and date the revisions.
§ 78a.83b. Casing and cementing—lost circulation.
(a) If cement used to permanently cement the surface or coal protective casing is not circulated to the surface despite pumping a volume of cement equal to or greater than 120% of the calculated annular space, the operator shall determine the top of the cement, notify the Department and meet one of the following requirements as approved by the Department:
(1) Run an additional string of casing at least 50 feet deeper than the string where circulation was lost and cement the additional string of casing back to the seat of the string where circulation was lost and vent the annulus of the additional casing string to the atmosphere at all times unless closed for well testing or maintenance. Shut-in pressure on the casing seat of the additional string of casing may not exceed the requirements of § 78a.73(e) (relating to general provision for well construction and operation).
(2) Run production casing and set the production casing on a packer in a competent formation below the string where circulation was lost and vent the annulus of the production casing to the atmosphere at all times unless closed for well testing or maintenance.
(3) Run production casing at least to the top of the formation that is being produced and cement the production casing to the surface.
(4) Run intermediate and production casing and cement both strings of casing to the surface.
(5) Produce oil but not gas and leave the annulus between the surface casing and the production pipe open.
(b) In addition to meeting the requirements of subsection (a), the operator may also pump additional cement through a pour string from the surface to fill the annular space.
§ 78a.83c. Intermediate and production casing.
(a) Prior to cementing the intermediate and production casing, the borehole, mud and cement shall be conditioned to ensure an adequate cement bond between the casing and the formation.
(b) If the well is to be equipped with an intermediate casing, centralizers shall be used and the casing shall be cemented to the surface by the displacement method. Gas may be produced off the intermediate casing if a shoe test demonstrates that all gas will be contained within the well and a relief valve is installed at the surface that is set less than the shoe test pressure. The shoe test pressure shall be recorded in the completion report.
(c) Except as provided in § 78a.83 (relating to surface and coal protective casing and cementing procedures), each well must be equipped with production casing. The production string may be set on a packer or cemented in place. If the production casing is cemented in place, centralizers shall be used and cement shall be placed by the displacement method with sufficient cement to fill the annular space to a point at least 500 feet above true vertical depth or at least 200 feet above the uppermost perforations, whichever is greater.
§ 78a.84. Casing standards.
(a) The operator shall install casing that can withstand the effects of tension, and prevent leaks, burst and collapse during its installation, cementing and subsequent drilling and producing operations.
(b) Except as provided in subsection (c), all casing must be a string of new pipe with an internal pressure rating that is at least 20% greater than the anticipated maximum pressure to which the casing will be exposed.
(c) Used casing may be approved for use as surface, intermediate or production casing but shall be pressure tested after cementing and before continuation of drilling. A passing pressure test is holding the anticipated maximum pressure to which it will be exposed for 30 minutes with not more than a 10% decrease in pressure.
(d) New or used plain end casing, except when being used as conductor pipe, that is welded together for use must meet the following requirements:
(1) The casing must pass a pressure test by holding the anticipated maximum pressure to which the casing will be exposed for 30 minutes with not more than a 10% decrease in pressure. The operator shall notify the Department at least 24 hours before conducting the test. The test results shall be entered on the drilling log.
(2) The casing shall be welded using at least three passes with the joint cleaned between each pass.
(3) The casing shall be welded by a person trained and certified in the applicable American Petroleum Institute, American Society of Mechanical Engineers, American Welding Society or equivalent standard for welding casing and pipe or an equivalent training and certification program as approved by the Department. The certification requirements of this paragraph shall take effect August 5, 2011. A person with 10 years or more of experience welding casing as of February 5, 2011, who registered with the Department by November 7, 2011, is deemed to be certified.
(e) When casing through a workable coal seam, the operator shall install coal protective casing that has a minimum wall thickness of 0.23 inch.
(f) Casing which is attached to a blow-out preventer with a pressure rating of greater than 3,000 psi shall be pressure tested after cementing. A passing pressure test must be holding the anticipated maximum pressure to which the casing will be exposed for 30 minutes with not more than a 10% decrease. Certification of the pressure test shall be confirmed by entry and signature of the person performing the test on the driller's log.
§ 78a.85. Cement standards.
(a) When cementing surface casing or coal protective casing, the operator shall use cement that meets or exceeds the ASTM International C 150, Type I, II or III Standard or API Specification 10. The cement must also:
(1) Secure the casing in the wellbore.
(2) Isolate the wellbore from fresh groundwater.
(3) Contain any pressure from drilling, completion and production.
(4) Protect the casing from corrosion from, and degradation by, the geochemical, lithologic and physical conditions of the surrounding wellbore. For wells employing coal protective casing, this includes, but is not limited to, formulating cement to withstand elevated sulfate concentrations and other geochemical constituents of coal and associated strata which have the potential to adversely affect the integrity of the cement.
(5) Prevent gas flow in the annulus. In areas of known shallow gas producing zones, gas block additives and low fluid loss slurries shall be used.
(b) After the casing cement is placed behind surface casing, the operator shall permit the cement to set to a minimum designed compressive strength of 350 pounds per square inch (psi) at the casing seat. The cement placed at the bottom 300 feet of the surface casing must constitute a zone of critical cement and achieve a 72-hour compressive strength of 1,200 psi and the free water separation may be no more than 6 milliliters per 250 milliliters of cement. If the surface casing is less than 300 feet, the entire cemented string constitutes a zone of critical cement.
(c) After any casing cement is placed and cementing operations are complete, the casing may not be disturbed for a minimum of 8 hours by doing any of the following:
(1) Releasing pressure on the cement head within 4 hours of cementing if casing equipment check valves did not hold or casing equipment was not equipped with check valves. After 4 hours, the pressure may be released at a continuous, gradual rate over the next 4 hours provided the floats are secure.
(2) Nippling up on or in conjunction to the casing.
(3) Slacking off by the rig supporting the casing in the cement sheath.
(4) Running drill pipe or other mechanical devices into or out of the wellbore with the exception of a wireline used to determine the top of cement.
(d) Where special cement or additives are used, the operator may request approval from the Department to reduce the cement setting time specified in subsection (c).
(e) The operator shall notify the Department a minimum of 1 day before cementing of the surface casing begins, unless the cementing operation begins within 72 hours of the start of drilling.
(f) A copy of the cement job log shall be available at the well site for inspection by the Department during drilling operations. The cement job log must include the mix water temperature and pH, type of cement with listing and quantity of additive types, the volume, yield and density in pounds per gallon of the cement and the amount of cement returned to the surface, if any. Cementing procedural information must include a description of the pumping rates in barrels per minute, pressures in psi, time in minutes and sequence of events during the cementing operation.
(g) The cement job log shall be maintained by the operator after drilling operations for at least 5 years and be made available to the Department upon request.
§ 78a.86. Defective casing or cementing.
In a well that has defective, insufficient or improperly cemented casing, the operator shall report the defect to the Department within 24 hours of discovery by the operator and shall correct the defect. The operator shall correct the defect or submit a plan to correct the defect for approval by the Department within 30 days. If the defect cannot be corrected or an alternate method is not approved by the Department, the well shall be plugged under §§ 78a.91—78a.98 (relating to plugging).
§ 78a.87. Gas storage reservoir protective casing and cementing procedures.
(a) In addition to the other provisions in this subchapter, a well drilled through a gas storage reservoir or a gas storage reservoir protective area shall be drilled, cased and cemented as follows:
(1) An operator shall use drilling procedures capable of controlling anticipated gas flows and pressures when drilling from the surface to 200 feet above a gas storage reservoir or gas storage horizon.
(2) An operator shall use drilling procedures capable of controlling anticipated gas storage reservoir pressures and flows at all times when drilling from 200 feet above a gas storage reservoir horizon to the depth at which the gas storage protective casing will be installed. Operators shall use blow-out prevention equipment with a pressure rating in excess of the allowable maximum storage pressure for the gas storage reservoir.
(3) To protect the gas storage reservoir, an operator shall run intermediate or production casing from a point located at least 100 feet below the gas storage horizon to the surface. The operator shall cement this casing by circulating cement to a point at least 200 feet above the gas storage reservoir or gas storage horizon.
(4) When cementing casing in a well drilled through a gas storage reservoir, the operator shall ensure that no gas is present in the drilling fluids in an amount that could interfere with the integrity of the cement.
(b) A request by an operator for approval from the Department to use an alternative method or material for the casing, plugging or equipping of a well drilled through a gas storage reservoir under section 3221 of the act (relating to alternative methods) shall be made in accordance with § 78a.75 (relating to alternative methods).
OPERATING WELLS § 78a.88. Mechanical integrity of operating wells.
(a) Except for wells that have been granted inactive status, the operator shall inspect each operating well at least quarterly to ensure it is in compliance with the well construction and operating requirements of this chapter and the act. The results of the inspections shall be recorded and retained by the operator for at least 5 years and be available for review by the Department and the coal owner or operator.
(b) At a minimum, inspections shall determine:
(1) The well-head pressure or water level measurement.
(2) The open flow on the annulus of the production casing or the annulus pressure if the annulus is shut in.
(3) If there is evidence of gas escaping from the well and the amount escaping, using measurement or best estimate of quantity.
(4) If there is evidence of progressive corrosion, rusting or other signs of equipment deterioration.
(c) For structurally sound wells in compliance with § 78a.73(e) (relating to general provision for well construction and operation), the operator shall follow the reporting schedule outlined in subsection (e).
(d) For wells exhibiting progressive corrosion, rusting or other signs of equipment deterioration that compromise the integrity of the well, or the well is not in compliance with § 78a.73(e), the operator shall immediately notify the Department and take corrective actions to repair or replace defective equipment or casing or mitigate the excess pressure on the surface casing seat or coal protective casing seat according to the following hierarchy:
(1) The operator shall reduce the shut-in or producing back pressure on the casing seat to achieve compliance with § 78a.73(e).
(2) The operator shall retrofit the well by installing production casing to reduce the pressure on the casing seat to achieve compliance with § 78a.73(e). The annular space surrounding the production casing must be open to the atmosphere. The production casing shall be either cemented to the surface or installed on a permanent packer. The operator shall notify the Department at least 7 days prior to initiating the corrective measure.
(3) Additional mechanical integrity tests, including, but not limited to, pressure tests, may be required by the Department to demonstrate the integrity of the well.
(e) The operator shall submit an annual report to the Department identifying the compliance status of each well with the mechanical integrity requirements of this section. The report shall be submitted on forms prescribed by, and available from, the Department or in a similar manner approved by the Department.
§ 78a.89. Gas migration response.
(a) When an operator or owner is notified of or otherwise made aware of a potential natural gas migration incident, the operator shall immediately conduct an investigation of the incident. The purpose of the investigation is to determine the nature of the incident, assess the potential for hazards to public health and safety, and mitigate any hazard posed by the concentrations of stray natural gas.
(b) The investigation undertaken by the operator under subsection (a) shall include, but not be limited to, the following:
(1) A site visit and interview with the complainant to obtain information about the complaint and to assess the reported natural gas migration incident.
(2) A field survey to assess the presence and concentrations of natural gas and aerial extent of the stray natural gas.
(3) If necessary, establishment of monitoring locations at potential sources, in potentially impacted structures and the subsurface.
(c) If combustible gas is detected inside a building or structure at concentrations equal to or greater than 10% of the L.E.L., the operator shall do the following:
(1) Immediately notify the Department, local emergency response agency, gas and electric utility companies, police and fire departments, and, in conjunction with the Department and local emergency response agencies, take measures necessary to ensure public health and safety.
(2) Initiate mitigation measures necessary to control and prevent further migration.
(3) Implement the additional investigation and mitigation measures as provided in subsection (e)(1)—(5).
(d) The operator shall notify the Department and, in conjunction with the Department, take measures necessary to ensure public health and safety, if sustained detectable concentrations of combustible gas satisfy any of the following:
(1) Greater than 1% and less than 10% of the L.E.L., in a building or structure.
(2) Equal to or greater than 25% of the L.E.L. in a water well head space.
(3) Detectable in the soils.
(4) Equal to or greater than 7 mg/l dissolved methane in water.
(e) The Department may require the operator to take the following additional actions:
(1) Conduct a field survey to assess the presence and concentrations of combustible gas and the areal extent of the combustible gas in the soils, surface water bodies, water wells and other potential migration pathways.
(2) Collect gas or water samples, or both, at a minimum for molecular and stable carbon and hydrogen isotope analyses from the impacted locations such as water wells, and from potential sources of the migration such as gas wells.
(3) Conduct an immediate evaluation of the operator's adjacent oil or gas wells to determine well cement and casing integrity and to evaluate the potential mechanism of migration. This evaluation may include assessing pressures for all casing intervals, reviewing records for indications of defective casing or cement, application of cement bond logs, ultrasonic imaging tools, geophysical logs and other mechanical integrity tests as required. The initial area of assessment must include wells within a radius of 2,500 feet and may be expanded if required by the Department.
(4) Take action to correct any defect in the oil and gas wells to mitigate the stray gas incident.
(5) Establish monitoring locations and monitoring frequency in consultation with the Department at potential sources, in potentially impacted structures and the subsurface.
(f) If concentrations of stray natural gas as defined in subsection (c) or (d) are not detected, the operator shall notify the Department, and do the following if requested by the Department:
(1) Conduct additional monitoring.
(2) Document findings.
(3) Submit a closure report.
(g) If concentrations of stray natural gas are detected inside a building or structure at concentrations equal to or greater than 10% of the L.E.L., the operator and owner shall file a report with the Department by phone and email within 24 hours after the interview with the complainant and field survey of the extent of stray natural gas. Additional daily or weekly reports shall be submitted if requested by the Department.
(h) For all stray natural gas migration incidents, a final written report documenting the results of the investigation shall be submitted to the Department for approval within 30 days of the close of the incident, or in a time frame otherwise approved by the Department. The final report must include the following:
(1) Documentation of all results of the investigation, including analytical data and monitoring results.
(2) Operational changes established at the operator's oil and gas wells in this Commonwealth.
(3) Measures taken by the operator to repair any defects at any of the investigated oil and gas wells.
(i) Reports submitted in accordance with this section that contain an analysis of geological or engineering data shall be prepared and sealed by a geologist or engineer licensed in this Commonwealth.
PLUGGING § 78a.91. General provisions.
(a) Upon abandoning a well, the owner or operator shall plug the well under §§ 78a.92—78a.98 or an approved alternate method under section 3221 of the act (relating to alternative methods) to stop the vertical flow of fluids or gas within the well bore unless one of the following applies:
(1) The Department has granted inactive status under §§ 78a.101—78a.105 (relating to inactive status).
(2) The well is part of a plugging schedule that has been approved by the Department and the operator is complying with that schedule, and the schedule takes into account potential harm that the well poses to the environment or public health and safety.
(3) The Department has approved the identification of the well as an orphan well under section 3213 of the act (relating to well registration and identification), and the Department has not determined a prior owner or operator received economic benefit after April 18, 1979, from this well other than economic benefit derived only as a landowner or from a royalty interest.
(b) The operator shall plug a well where a radioactive logging source has been lost under §§ 78a.92—78a.98 and 78a.111.
(c) When a well is being plugged from the attainable bottom, the operator shall install a 50-foot plug of cement at the attainable bottom and plug the remainder of the well under §§ 78a.92—78a.98.
(d) If the production casing cannot be retrieved, the operator shall plug strata bearing or having borne oil, gas or water by perforating the casing and squeezing cement into the annulus or other method approved by the Department. The maximum distance the stub of the uncemented production casing may extend is 100 feet below the surface casing seat or coal protective casing seat, whichever is deeper. The uncemented portion of the casing left in the well above the total depth or attainable bottom may not extend through a formation bearing or having borne oil, gas or water or extend to a point where it interferes with subsequent plugging requirements of §§ 78a.92(a)(2) and 78a.93(a)(2) and (b)(4) (relating to wells in coal areas—surface or coal protective casing is cemented; and wells in coal areas—surface or coal protective casing anchored with a packer or cement). The remainder of the well shall be plugged under §§ 78a.92—78a.98.
(e) When plugging a well, an operator shall ensure that no gases are present in the well in an amount that could interfere with cementing the well.
(f) When plugging a well with a casing string cemented through a gas storage reservoir or reservoir protective area, an operator shall use bridge plugs immediately above and below the gas storage reservoir unless an alternate plugging plan has been approved by the Department.
(g) When a well located in a coal area is plugged to allow mining through it, the person authorized by the Department to plug the well under the act or section 13 of the Coal and Gas Resource Coordination Act (58 P.S. § 513) shall clean out the gas well to a depth of at least 200 feet below the coal seam which will be mined and, unless impracticable, to a point 200 feet below the deepest minable coal seam the well penetrates.
(h) In lieu of the plugging requirements of §§ 78a.92—78a.95 and 78a.97, an operator may cement a well from the total depth or attainable bottom to the surface. Wells in coal areas still shall meet the venting requirements of § 78a.92 or § 78a.93.
§ 78a.92. Wells in coal areas—surface or coal protective casing is cemented.
(a) In a well underlain by a workable coal seam, where the surface casing or coal protective casing is cemented and the production casing is not cemented or the production casing is not present, the owner or operator shall plug the well as follows:
(1) The retrievable production casing shall be removed by applying a pulling force at least equal to the casing weight plus 5,000 pounds or 120%, whichever is greater. If this fails, an attempt shall be made to separate the casing by cutting, ripping, shooting or other method approved by the Department, and making a second attempt to remove the casing by exerting a pulling force equal to the casing weight plus 5,000 pounds or 120% of the casing weight, whichever is greater. The well shall be filled with nonporous material from the total depth or attainable bottom of the well to a point 50 feet below the lowest stratum bearing or having borne oil, gas or water. At this point there shall be placed a plug of cement, which shall extend for at least 50 feet above this stratum. Each overlying formation bearing or having borne oil, gas or water shall be plugged with cement a minimum of 50 feet below this formation to a point 50 feet above this formation. The zone between cement plugs shall be filled with nonporous material. The cement plugs shall be placed in a manner that will completely seal the hole. The operator may treat multiple strata as one stratum and plug as described in this subsection with a single column of cement or other materials approved by the Department. Where the production casing is not retrievable, the operator shall plug that portion of the well under § 78a.91(d) (relating to general provisions).
(2) After plugging strata bearing or having borne oil, gas or water, the well shall be filled with nonporous material to a point approximately 100 feet below the surface or coal protective casing seat, whichever is deeper. At this point, a 100-foot plug of cement shall be installed.
(3) After the plug has been installed below the casing seat, the inner casing shall be emptied of liquid from the surface to the plug of cement. A vent or other device approved by the Department shall then be installed on top of the inner string of casing to prevent liquids and solids from entering the well but permit access to the full internal diameter of the inner casing when required. The vent or other device approved by the Department must extend, when finally in place, a distance of at least 72 inches above ground level and the permit or registration number must be permanently affixed.
(b) The owner or operator shall plug a well, where the surface casing, coal protective casing and production casing are cemented, as follows:
(1) If the total depth or attainable bottom is deeper than the cemented production casing seat, the operator shall plug that portion of the well under subsection (a)(1).
(2) Cement plugs shall be set in the cemented portion of the production casing so that the plugs will extend from at least 50 feet below each stratum bearing or having borne oil, gas or water to a point at least 100 feet above each stratum bearing or having borne, oil, gas or water. A Department-approved mechanical plug may be set 20 feet above each stratum bearing or having borne oil, gas or water as a substitute for the plug of cement. Nonporous material must separate each cement plug or mechanical plug. The operator may treat multiple strata as one stratum and plug as described in this subsection with a single column of cement or other materials as approved by the Department.
(3) Following the plugging of the cemented portion of the production casing, the uncemented portion of the production casing shall be separated from the cemented portion and retrieved by applying a pulling force at least equal to the casing weight plus 5,000 pounds or 120%, whichever is greater. If this fails, an attempt shall be made to separate the casing by cutting, ripping, shooting or other method approved by the Department, and making a second attempt to remove the casing by exerting a pulling force equal to the casing weight plus 5,000 pounds or 120% of the casing weight, whichever is greater. The maximum distance the stub of the uncemented portion of the production casing may extend is 100 feet below the surface or coal protective casing whichever is lower. In no case may the uncemented portion of the casing left in the well extend through a formation bearing or having borne oil, gas or water. Other stratum above the cemented portion of the production casing bearing or having borne oil, gas or water shall be plugged by filling the hole with nonporous material to 20 feet above the stratum and setting a 50-foot plug of cement. The operator may treat multiple strata as one stratum and plug as described in this subsection with a single column of cement or other material as approved by the Department. When the uncemented portion of the production casing is not retrievable, the operator shall plug that portion of the well under § 78a.91(d).
(4) After plugging all strata bearing or having borne oil, gas or water, the well shall be filled with nonporous material to a point approximately 100 feet below the surface or coal protective casing seat, whichever is deeper. At this point a 200-foot cement plug shall be placed so that the plug extends from 100 feet below the casing seat to a point at least 100 feet above the casing seat.
(5) After the 200-foot plug has been installed, the remainder of the well shall be plugged and vented as described in subsection (a)(3).
(c) A person authorized by the Department under the act or section 13 of the Coal and Gas Resource Coordination Act (58 P.S. § 513) to plug a gas well that penetrates a workable coal seam that was drilled prior to November 30, 1955, or which was permitted after that date but not plugged in accordance with the act, shall plug the well to mine through it in the following manner:
(1) The gas well shall be cleaned out to a depth of at least 200 feet below the coal seam which is proposed to be mined and, unless impracticable, to a point 200 feet below the deepest mineable coal seam that the well penetrates.
(2) The gas well shall be plugged in accordance with section 13(a)(1), (2), (3) or (4) of the Coal and Gas Resource Coordination Act.
§ 78a.93. Wells in coal areas—surface or coal protective casing anchored with a packer or cement.
(a) In a well where the surface casing or coal protective casing and production casing are anchored with a packer or cement, the owner or operator shall plug the well as follows:
(1) The retrievable production casing shall be removed by applying a pulling force at least equal to the casing weight plus 5,000 pounds or 120%, whichever is greater. If this fails, an attempt shall be made to separate the casing by cutting, ripping, shooting or other method approved by the Department, and making a second attempt to remove the casing by exerting a pulling force equal to the casing weight plus 5,000 pounds or 120% of the casing weight, whichever is greater. The well shall be filled with nonporous material from the total depth or attainable bottom of the well to a point 50 feet below the lowest stratum bearing or having borne oil, gas or water. At this point there shall be placed a plug of cement, which must extend for at least 50 feet above this stratum. Each overlying formation bearing or having borne oil, gas or water shall be plugged with cement a minimum of 50 feet below this formation to a point 50 feet above this formation. The zone between cement plugs shall be filled with nonporous material. The cement plugs shall be placed in a manner that will completely seal the hole. The operator may treat multiple strata as one stratum and plug as described in this subsection with a single column of cement or other material as approved by the Department. When the production casing is not retrievable, the operator shall plug this portion of the well under § 78a.91(d) (relating to general provisions).
(2) The well shall then be filled with nonporous material to a point approximately 200 feet below the lowest workable coal seam, or surface or coal protective casing seat, whichever is deeper. Beginning at this point a 100-foot plug of cement shall be installed.
(3) After it has been established that the surface casing or coal protective casing is free and can be retrieved, the surface or coal protective casing shall be retrieved by applying a pulling force at least equal to the casing weight plus 5,000 pounds or 120%, whichever is greater. If this fails, an attempt shall be made to separate the casing by cutting, ripping, shooting or other method approved by the Department, and making a second attempt to remove the casing by exerting a pulling force equal to the casing weight plus 5,000 pounds or 120% of the casing weight, whichever is greater. A string of casing with an outside diameter of at least 4 1/2 inches for gas wells, or at least 2 inches for oil wells, shall be run to the top of the 100-foot plug described in paragraph (2) and cemented to the surface.
(4) If the surface or coal protective string is not free and cannot be retrieved, it shall be perforated or cut below the lowest workable coal to allow the cement used to cement the 4 1/2-inch or 2-inch casing to communicate between the surface casing or coal protective casing, or both, and the well bore. A string of casing of at least 4 1/2 inches for gas wells or at least 2 inches for oil wells shall be run to the top of the 100-foot plug described in paragraph (2) and cemented to the surface.
(5) The inner casing shall then be emptied of liquid and cement from the base of the casing to the surface and a vent or other device approved by the Department shall be installed on the top of the casing to prevent liquids and solids from entering the well, but permit ready access to the full internal diameter of the inner casing. The inner string of casing and the vent or other device approved by the Department must extend, when finally in place, a distance of at least 72 inches above ground level and the permit or registration number must be permanently affixed to the vent.
(b) The owner or operator shall plug a well, where the surface casing and coal protective casing is anchored with a packer or cement and the production casing is cemented, as follows:
(1) If the total depth or attainable bottom is deeper than the cemented production casing seat, the operator shall plug that portion of the well under subsection (a)(1).
(2) A cement plug shall be set in the cemented portion of the production casing so that the plugs extend from at least 50 feet below each stratum bearing or having borne oil, gas or water to a point at least 100 feet above each stratum bearing or having borne, oil, gas or water. A Department approved mechanical plug may be set 20 feet above the stratum bearing or having borne oil, gas or water as a substitute for the plug of cement. Nonporous material shall separate each cement plug or mechanical plug. The operator may treat multiple strata as one stratum and plug as described in this subsection with a single column of cement or other materials as approved by the Department.
(3) Following the plugging of the cemented portion of the production casing, the uncemented portion of the production casing shall be separated from the cemented portion and retrieved. The maximum distance the stub of the uncemented portion of the production casing may extend is 100 feet below the surface or coal protective casing whichever is lower. In no case may the uncemented portion of the casing left in the well extend through a formation bearing or having borne oil, gas or water. Other stratum above the cemented portion of the production casing bearing or having borne oil, gas or water shall be plugged by filling the hole with nonporous material to 20 feet above the stratum and setting a 50-foot plug of cement. The operator may treat multiple strata as one stratum and plug as described in this paragraph with a single column of cement or other material approved by the Department. When the uncemented portion of the production casing is not retrievable, the operator shall plug that portion of the well under § 78a.91(d).
(4) The well shall be filled with nonporous material to a point approximately 300 feet below the bottom of the surface casing or coal protective casing, whichever is deeper. In this case, a 100-foot plug of cement shall then be placed in the well beginning at that point and extending to a point approximately 200 feet below the bottom of the casing seat.
(5) After it has been established that the surface casing or coal protective casing is free and can be retrieved, the surface or coal protective casing shall be retrieved and a string of casing with an outside diameter of not less than 4 1/2 inches for gas wells, or not less than 2 inches for oil wells, shall be run to the top of the 100-foot plug described in paragraph (4) and cemented to the surface.
(6) If the surface or coal protective string is not free and cannot be retrieved, it shall be perforated or cut below the lowest workable coal seam to allow the cement used to cement the 4 1/2-inch or 2-inch casing to communicate between the surface casing or coal protective casing, or both, and the well bore. A string of casing of not less than 4 1/2 inches for gas wells or not less than 2 inches for oil wells shall be run to the top of the 100-foot plug described in paragraph (4) and cemented to the surface.
(7) The inner casing shall then be emptied of liquid and cement from the base of the casing to the surface and a vent or other device approved by the Department shall be installed on the top of the casing to prevent liquids and solids from entering the well, but permit ready access to the full internal diameter of the inner casing. The inner string of casing and the vent or other device approved by the Department shall extend, when finally in place, a distance of not less than 72 inches above ground level and the permit or registration number shall be permanently affixed to the vent.
(c) A person authorized by the Department under the act or section 13 of the Coal and Gas Resource Coordination Act (58 P.S. § 513) to plug a gas well that penetrates a workable coal seam which was drilled prior to November 30, 1955, or which was permitted after that date but not plugged in accordance with the act shall plug the well to mine through it in the following manner:
(1) The gas well shall be cleaned out to a depth of at least 200 feet below the coal seam which is proposed to be mined and, unless impracticable, to a point 200 feet below the deepest minable coal seam which the well penetrates.
(2) The well shall be plugged in accordance with section 13(a)(2) or (4) of the Coal and Gas Resource Coordination Act.
§ 78a.94. Wells in noncoal areas—surface casing is not cemented or not present.
(a) The owner or operator shall plug a noncoal well, where the surface casing and production casing are not cemented, or is not present as follows:
(1) The retrievable production casing shall be removed by applying a pulling force at least equal to the casing weight plus 5,000 pounds or 120%, whichever is greater. If this fails, an attempt shall be made to separate the casing by cutting, ripping, shooting or other method approved by the Department, and making a second attempt to remove the casing by exerting a pulling force equal to the casing weight plus 5,000 pounds or 120% of the casing weight, whichever is greater. The well shall be filled with nonporous material from the total depth or attainable bottom of the well to a point 50 feet below the lowest stratum bearing or having borne oil, gas or water. At this point there shall be placed a plug of cement, which must extend for at least 50 feet above this stratum. Each overlying formation bearing or having borne oil, gas or water shall be plugged with cement a minimum of 50 feet below this formation to a point 50 feet above this formation. The zone between cement plugs shall be filled with nonporous material. The cement plugs shall be placed in a manner that will completely seal the hole. The operator may treat multiple strata as one stratum and plug as described in this paragraph with a single column of cement or other materials as approved by the Department. When the production casing is not retrievable, the operator shall plug this portion of the well under § 78a.91(d) (relating to general provisions).
(2) After plugging strata bearing or having borne oil, gas or water, the well shall be filled with nonporous material to approximately 100 feet below the surface casing seat and there shall be placed another plug of cement or other equally nonporous material approved by the Department extending at least 50 feet above that point.
(3) After setting the uppermost 50-foot plug, the retrievable surface casing shall be removed by applying a pulling force at least equal to the casing weight plus 5,000 pounds or 120%, whichever is greater. If this fails, an attempt shall be made to separate the casing by cutting, ripping, shooting or other method approved by the Department, and making a second attempt to remove the casing by exerting a pulling force equal to the casing weight plus 5,000 pounds or 120% of the casing weight, whichever is greater. The hole shall be filled from the top of the 50-foot plug to the surface with nonporous material other than gel. If the surface casing is not retrievable, the hole shall be filled from the top of the 50-foot plug to the surface with a noncementing material.
(b) The owner or operator shall plug a well, where the surface casing is not cemented or not present, and the production casing is cemented as follows:
(1) If the total depth or attainable bottom is deeper than the cemented production casing seat, the operator shall plug that portion of the well under subsection (a)(1).
(2) Cement plugs shall be set in the cemented portion of the production casing so that each plug extends from at least 50 feet below each stratum bearing or having borne oil, gas or water to a point at least 100 feet above each stratum. A Department-approved mechanical plug may be used as a substitute for the plug of cement. The mechanical plug shall be set 20 feet above each stratum having borne oil, gas or water. The operator may treat multiple strata as one stratum and plug as described in this subsection with a single column of cement or other material approved by the Department.
(3) Following the plugging of the cemented portion of the production casing, the uncemented portion of the production string shall be separated from the cemented portion and retrieved. The maximum distance the stub of the uncemented portion of the production casing may extend is 100 feet below the surface casing. In no case may the uncemented portion of the production casing left in the hole extend through stratum bearing or having borne oil, gas or water. Other stratum bearing or having borne oil, gas or water shall be plugged by filling the hole with nonporous material to 20 feet above the stratum and setting a 50-foot plug of cement. When the uncemented portion of the production casing is not retrievable, the operator shall plug that portion of the well under § 78a.91(d).
(4) The remainder of the well shall be plugged under subsection (a)(2) and (3).
§ 78a.95. Wells in noncoal areas—surface casing is cemented.
(a) The owner or operator shall plug a well, where the surface casing is cemented and the production casing is not cemented or not present, as follows:
(1) The retrievable production casing shall be removed by applying a pulling force at least equal to the casing weight plus 5,000 pounds or 120%, whichever is greater. If this fails, an attempt shall be made to separate the casing by cutting, ripping, shooting or other method approved by the Department, and making a second attempt to remove the casing by exerting a pulling force equal to the casing weight plus 5,000 pounds or 120% of the casing weight, whichever is greater. The well shall be filled with nonporous material from the total depth or attainable bottom of the well to a point 50 feet below the lowest stratum bearing or having borne oil, gas or water. At this point there shall be placed a plug of cement, which extends for at least 50 feet above this stratum. Each overlying formation bearing or having borne oil, gas or water shall be plugged with cement a minimum of 50 feet below this formation to a point 50 feet above this formation. The zone between cement plugs shall be filled with nonporous material. The cement plugs shall be placed in a manner that will completely seal the hole. The operator may treat multiple strata as one stratum and plug as described in this subsection with a single column of cement or other materials as approved by the Department. When the production casing is not retrievable, the operator shall plug this portion of the well under § 78a.91(d) (relating to general provisions).
(2) After plugging all strata bearing or having borne oil, gas or water, the well shall be filled with nonporous material to approximately 100 feet below the surface casing seat. Another plug of cement, or other equally nonporous material approved by the Department, shall be placed extending at least 50 feet above that point.
(3) After setting the 50-foot plug, the hole shall be filled from the top of the 50-foot plug to the surface with a noncementing material or the operator shall set a 100-foot cement plug which extends 50-feet into the surface casing and fill the hole to the surface with noncementing material.
(b) The owner or operator shall plug a noncoal well, where the surface casing and production casing are cemented, as follows:
(1) If the total depth or attainable bottom is deeper than the cemented production casing seat, the operator shall plug that portion of the well under subsection (a)(1).
(2) Cement plugs shall be set in the cemented portion of the production casing so that each plug extends from at least 50 feet below each stratum bearing or having borne oil, gas or water to a point at least 100 feet above the stratum. A Department-approved mechanical plug may be used as a substitute for the plug of cement. The mechanical plug shall be set 20 feet above each stratum having borne oil, gas or water. The operator may treat multiple strata as one stratum and plug as described in this subsection with a single column of cement or other materials approved by the Department.
(3) Following the plugging of the cemented portion of the production casing, the uncemented portion of the production string shall be separated from the cemented portion and retrieved. The maximum distance the stub of the uncemented portion of the production casing may extend is 100 feet below the surface casing. In no case may the uncemented portion of the production casing left in the hole extend through stratum bearing or having borne oil, gas or water. Other stratum bearing or having borne oil, gas or water shall be plugged by filling the hole with nonporous material to 20 feet above the stratum and setting a 50-foot plug of cement. When the uncemented portion of the production casing is not retrievable, the operator shall plug that portion of the well under § 78a.91(d).
(4) The remainder of the well shall be plugged under subsection (a)(2) and (3).
§ 78a.96. Marking the location of a plugged well.
Upon the completion of plugging or replugging a well, the operator shall erect over the plugged well a permanent marker of concrete, metal, plastic or equally durable material. The marker must extend at least 4 feet above the ground surface and enough below the surface to make the marker permanent. Cement may be used to hold the marker in place provided the cement does not prevent inspection of the adequacy of the well plugging. The permit or registration number shall be stamped or cast or otherwise permanently affixed to the marker. In lieu of placing the marker above the ground surface, the marker may be buried below plow depth and shall contain enough metal to be detected at the surface by conventional metal detectors.
§ 78a.97. Plugging a well stimulated with explosives.
Where strata bearing or having borne oil, gas or water in the well have been stimulated with explosives, thereby creating cavities which cannot be readily filled as described in §§ 78a.92—78a.95, the well operator shall place at the nearest suitable point, but at least 20 feet above the stratum, a plug of cement which extends at least 50 feet above that point. If the stimulation has been done above one or more strata bearing or having borne oil, gas or water in the well, plugging in the applicable manner specified in §§ 78a.92—78a.95 shall be done at the nearest suitable points, to at least 20 feet below and at least 20 feet above the stratum stimulated. From a point immediately above and below these plugs, the well shall be plugged under §§ 78a.94 and 78a.95 (relating to wells in noncoal areas—surface casing is not cemented or not present; and wells in noncoal areas—surface casing is cemented).
§ 78a.98. Restricting surface water from the well bore.
When casing, including conductor pipe, is left in the well at the surface, the area between the casings or the casing and the well bore shall be permanently filled to the surface with a nonporous material to restrict surface water from the well bore.
INACTIVE STATUS § 78a.101. General provisions.
Upon application, the Department will grant inactive status for 5 years for a permitted or registered well if the application meets the requirements of section 3214 of the act (relating to inactive status) and §§ 78a.102—78a.105. The Department may require information to demonstrate that the conditions imposed by § 78a.102 (relating to criteria for approval of inactive status) are satisfied.
§ 78a.102. Criteria for approval of inactive status.
To obtain inactive status, the applicant shall affirmatively demonstrate to the Department's satisfaction that:
(1) The condition of the well is sufficient to:
(i) Prevent damage to the producing zone or contamination of fresh water or other natural resources or surface leakage of substances.
(ii) Stop the vertical flow of fluid or gas within the well bore.
(iii) Protect fresh groundwater.
(iv) Pose no threat to the health and safety of persons, property or the environment.
(2) The well complies with one of the following:
(i) The well meets casing and cementing requirements of §§ 78a.81—78a.83, 78a.83a, 78a.83b, 78a.83c and 78a.84—78a.86.
(ii) For wells not drilled in conformance with casing and cementing requirements of §§ 78a.81—78a.83, 78a.83a, 78a.83b, 78a.83c and 78a.84—78a.86, and for the purpose of the annual monitoring of wells granted inactive status as required under § 78a.103 (relating to annual monitoring of inactive wells), the applicant demonstrates that:
(A) For oil and gas wells equipped with surface casing, the operator shall demonstrate that the liquid level in the well bore is maintained at a level at no higher than the water protection depth. For purposes of this clause where oil or gas bearing formations are encountered less than 100 feet below the surface casing seat, the water protection depth shall be that point midway between the top of the oil or gas bearing formation and the surface casing seat.
(B) If the liquid level in an oil or gas well equipped with surface casing stands above the water protection depth and below the groundwater table depth, the operator shall test the liquid to determine its quality. If the liquid has a total dissolved solids content or conductivity generally equivalent to fresh groundwater in the immediate area, the casing is assumed to be either leaking or not set deep enough to shut off groundwater, and mechanical integrity is not demonstrated and inactive status will not be granted unless the operator demonstrates that the well is in compliance with the shut-in portion of the mechanical integrity test requirements of the Under Ground Injection Control program under the Safe Drinking Water Act (42 U.S.C.A. §§ 300f—300j-26). If the liquid has a total dissolved solids content or conductivity equivalent to the production formation or production liquid, mechanical integrity is considered to be demonstrated.
(C) For oil wells not equipped with surface casing or for oil wells equipped with surface casing that cannot be approved for inactive status under clause (A) or (B), the operator shall modify the well to meet one of the following:
(I) The operator shall set a string of casing on a packer sufficiently deep to isolate the fresh groundwater system. The casing shall be set to the water protection depth for wells in the area, and the requirements of clause (A) or (B) shall be met.
(II) The operator has set a temporary plug or mechanical seal at the water protection depth and isolated the fresh groundwater system. The operator may demonstrate the integrity of the plug by demonstrating that water standing above the plug is, and continues to be, fresh water not contaminated by production fluids, or by other means acceptable to the Department.
(III) The operator shall fill the well with a freshwater bentonite gel or other material approved by the Department which will restrict vertical migration of gas or fluids in the well bore. The operator shall monitor the gel level and report significant changes to the Department on an annual basis and take remedial action approved by the Department.
(D) For gas wells equipped with production casing separate from the surface casing, the annulus between the surface or coal protective casing and the production casing is vented to the atmosphere. The owner or operator of a well granted inactive status under this clause shall monitor the annular vents for gas flow volumes. If the gas flow volume exceeds 5,000 cubic feet per day, the owner or operator shall notify the Department and take remedial action approved by the Department.
(E) For gas wells not equipped with separate production casing, but with cemented or uncemented surface casing present, the produced gas shut-in pressure is less than the pressure necessary to cause gas migration into the adjacent formation at the surface casing seat. Compliance with this condition may be demonstrated by mechanical tests of the casing and by evidence that the gas wellhead shut-in pressure does not exceed 0.433 psi per foot of surface or coal protective casing depth.
(3) If gas exists at an inactive oil well, the operator may vent the gas to the atmosphere or equip the well to confine the gas to the producing formation. If this gas flow is greater than 5,000 cubic feet per day, the owner or operator shall notify the Department and take remedial action approved by the Department.
(4) The applicant shall certify that the well is of future utility and shall present a viable plan for utilizing the well within a reasonable time. In addition to providing information to demonstrate compliance with paragraphs (1) and (2), the application for inactive status must include the following:
(i) A plan showing when the well will be used.
(ii) A certification identifying that one of the following applies:
(A) Significant reserves remain in place and the operator plans to produce the well.
(B) The well will be used as a disposal well.
(C) The well will be used as a storage well.
(D) The well will be used as an observation well.
(E) The well will be used as a secondary or tertiary recovery injection well or that the well will be used for other purposes specified by the applicant.
(iii) Other information necessary for the Department to make a determination on inactive status.
§ 78a.103. Annual monitoring of inactive wells.
The owner or operator of a well granted inactive status shall monitor the integrity of the well on an annual basis and shall report the results to the Department. The owner or operator shall give the Department 3 business days prior notice of the annual monitoring and mechanical integrity testing. For wells that were drilled in accordance with the casing and cementing standards of §§ 78a.81—78a.83, 78a.83a, 78a.83b, 78a.83c and 78a.84—78a.86, the operator shall monitor the integrity of the well by using the method described in § 78a.102(2)(ii)(A), (B), (D) or (E) (relating to criteria for approval of inactive status), as appropriate. For a well that was not drilled in accordance with the casing and cementing standards, the wells shall be monitored in accordance with § 78a.102(1). To qualify for continued inactive status, the owner or operator shall demonstrate, by the data in the monitoring reports, that the condition of the well continues to satisfy the requirements of § 78a.102. The owner or operator shall submit the report by March 31 of the following year.
§ 78a.104. Term of inactive status.
Approval of inactive status for a well is valid for 5 years unless revoked. After 5 years, the owner or operator shall plug or return to active status a well granted inactive status unless the Department grants an application for a 1-year extension. The operator of a well granted inactive status may apply for renewal of inactive status by demonstrating that the well continues to satisfy the conditions imposed on the well by §§ 78a.102 and 78a.103 (relating to criteria for approval of inactive status; and annual monitoring of inactive wells).
§ 78a.105. Revocation of inactive status.
The Department may revoke inactive status and may order the immediate plugging of a well if one of the following applies:
(1) The well is in violation of the act or regulations administered by the Department.
(2) The operator of the inactive well has become insolvent, to the extent that the plan provided under § 78a.102 (relating to criteria for approval of inactive status) is no longer viable to return the well to active status, or the operator otherwise demonstrates a lack of ability or intention to comply with applicable laws and regulations.
(3) The condition of the well no longer satisfies the requirements of section 3214 of the act (relating to inactive status) and § 78a.102 and §§ 78a.103 and 78a.104 (relating to annual monitoring of inactive wells; and term of inactive status).
(4) The owner or operator is unwilling or unable to perform his obligations under the act.
RADIOACTIVE LOGGING SOURCES § 78a.111. Abandonment.
(a) The owner or operator may not abandon a radioactive source licensed by the Commonwealth for logging purposes without consent of the Department. Approval of a plan of abandonment may be arranged with the Department by telephone and is to be followed by a written report to the Department within 30 days after abandonment of the radioactive source. The plan shall be approved by the Department.
(b) The operator shall notify the Department of his intention to leave a radioactive source in a well.
(c) The operator shall mechanically equip a well in which a radioactive source is abandoned to prevent the accidental or intentional mechanical disintegration of the radioactive source.
(1) The operator shall cover the radioactive source being abandoned in the bottom of a well with a substantial standard color-dyed cement plug on top of which a mechanical stop or deflector shall be set. The dye must contrast with the color of the formation to alert a re-entry operator prior to encountering the source.
(2) In a well where a logging source has been cemented in place behind a casing string and above total depth, upon plugging the well, a color-dyed cement plug shall be placed opposite the abandoned source inside the well bore and a mechanical stop or deflector shall be placed on top of the plug.
(3) If, after expending a reasonable effort, the operator cannot comply with paragraph (1) or (2) because of hole conditions, the operator shall request Department approval to cease efforts to comply with paragraph (1) or (2) and shall obtain approval for an alternate method for abandoning the source and plugging the well.
(d) Upon plugging a well in which a radioactive source is left in the hole, the operator shall place a permanent plaque by welding, bolting or cementing it to the top of the bore hole in a manner approved by the Department that re-entry cannot be accomplished without disturbing the plaque. The plaque shall serve as a visual warning to a person re-entering the hole that a radioactive source has been abandoned in-place in the well. The plaque shall depict the trefoil radiation symbol with the words ''Caution, Radioactive Material'' under 10 CFR 20.1901(a) (relating to caution signs) and must be constructed of a long-lasting material such as monel, stainless steel, bronze or brass. The marker must bear the following information:
(1) Farm name.
(2) Permit number.
(3) Name and address of operator.
(4) The type and strength of radioactive material abandoned in the well.
(5) The total well depth.
(6) Depth at which the source was abandoned.
(7) A warning not to drill below the plug-back depth or to enlarge the casing.
(8) The date the source was abandoned.
(e) Prior to workover or re-entry activity, if a radioactive source is present, the operator shall have the plan of operation approved by the Department before the workover or re-entry is permitted.
(f) This section does not relieve the licensee, owner or operator from the obligation to comply with Federal regulations and this title, including Chapters 225 and 226 (relating to radiation safety requirements for industrial radiographic operations; and licenses and radiation safety requirements for well logging).
Subchapter E. WELL REPORTING Sec.
78a.121. Production reporting. 78a.122. Well record and completion report. 78a.123. Logs and additional data. 78a.124. Certificate of plugging. § 78a.121. Production reporting.
(a) Each operator of an unconventional well shall submit a monthly production and status report for each well on an individual basis within 45 calendar days of the close of each monthly reporting period. Production shall be reported for the preceding reporting period. When the production data is not available to the operator on a well basis, the operator shall report production on the most well-specific basis available.
(b) The monthly production report must include information on the amount and type of waste produced and the method of waste disposal or reuse, including the specific facility or well site where the waste was managed. Waste information submitted to the Department in accordance with this subsection is deemed to satisfy the residual waste biennial reporting requirements of § 287.52 (relating to biennial report).
(c) The production report shall be submitted electronically to the Department through its web site.
§ 78a.122. Well record and completion report.
(a) For each well that is drilled or altered, the operator shall keep a detailed drillers log at the well site available for inspection until drilling is completed. Within 30 calendar days of cessation of drilling or altering a well, the well operator shall submit a well record to the Department on a form provided by the Department that includes the following information:
(1) Name, address and telephone number of the permittee.
(2) Permit number, and farm name and number.
(3) Township and county.
(4) Date drilling started and completed.
(5) Method of drilling.
(6) Size and depth of conductor pipe, surface casing, coal protective casing, intermediate casing, production casing and borehole.
(7) Type and amount of cement and results of cementing procedures.
(8) Elevation and total depth.
(9) Drillers log that includes the name and depth of formations from the surface to total depth, depth of oil and gas producing zone, depth of fresh water and brines and source of information.
(10) Certification by the operator that the well has been constructed in accordance with this chapter and any permit conditions imposed by the Department.
(11) Whether methane was encountered other than in a target formation.
(12) The country of origin and manufacture of tubular steel products used in the construction of the well.
(13) The borrow pit used for well site development, if any.
(14) Other information required by the Department.
(b) Within 30 calendar days after completion of the well, when the well is capable of production, the well operator shall arrange for the submission of a completion report to the Department on a form provided by the Department that includes the following information:
(1) Name, address and telephone number of the permittee.
(2) Name, address and telephone number of the service companies.
(3) Permit number, and farm name and number.
(4) Township and county.
(5) Perforation record.
(6) Stimulation record which includes the following:
(i) A descriptive list of the chemical additives in the stimulation fluid, including any acid, biocide, breaker, brine, corrosion inhibitor, crosslinker, demulsifier, friction reducer, gel, iron control, oxygen scavenger, pH adjusting agent, proppant, scale inhibitor and surfactant.
(ii) The percent by mass of each chemical additive in the stimulation fluid.
(iii) The trade name, vendor and a brief descriptor of the intended use or function of each chemical additive in the stimulation fluid.
(iv) A list of the chemicals intentionally added to the stimulation fluid, by name and chemical abstract service number.
(v) The maximum concentration, in percent by mass, of each chemical intentionally added to the stimulation fluid.
(vi) The total volume of the base fluid.
(vii) A list of water sources used under an approved WMP and the volume of water used from each source.
(viii) The total volume of recycled water used.
(ix) The pump rate and pressure used in the well.
(7) Actual open flow production and shut in surface pressure.
(8) Open flow production and shut in surface pressure, measured 24 hours after completion.
(9) The well development impoundment, if any, used in the development of the well.
(10) Certification by the operator that the monitoring plan required under § 78a.52a (relating to area of review) was conducted as outlined in the area of review report.
(c) When the well operator submits a stimulation record, it may designate specific portions of the stimulation record as containing a trade secret or confidential proprietary information. The Department will prevent disclosure of the designated confidential information to the extent permitted under the Right-to-Know Law (65 P.S. §§ 67.101—67.3104) or other applicable State law.
(d) The well record required under subsection (a) and the completion report required under subsection (b) shall be submitted electronically to the Department through the Department's web site.
§ 78a.123. Logs and additional data.
(a) The well operator shall, within 90 days of completion or recompletion of drilling, submit a copy of any electrical, radioactive or other standard industry logs which have been run.
(b) In addition, if requested by the Department within 1 year of the completion or recompletion of drilling, the well operator shall file with the Department a copy of the drill stem test charts, formation water analysis, porosity, permeability or fluid saturation measurements, core analysis and lithologic log or sample description or other similar data as compiled. Information is not required unless the operator has had the information described in this subsection compiled in the ordinary course of business. Interpretation of the data is not required to be filed.
(c) Upon notification by the Department prior to drilling, the well operator shall collect additional data specified by the Department, such as representative drill cuttings and samples from cores taken, and other geological information that the operator can reasonably compile. Interpretation of the data is not required to be filed.
(d) Data requested by the Department under subsections (b) and (c) shall be retained by the well operator and filed with the Department no more than 3 years after completion of the well. Upon request for good cause, the Department may extend the deadline up to 5 years from the date of completion or recompletion of drilling the well. The Department may request submission of the information before these time frames if the information is necessary to conduct an investigation or for enforcement proceedings.
(e) The Department is entitled to utilize information collected under this section in enforcement proceedings, in making designations or determinations under section 1927-A of The Administrative Code of 1929 (71 P.S. § 510-27), and in aggregate form for statistical purposes.
§ 78a.124. Certificate of plugging.
(a) Within 30 calendar days after the well has been plugged, the owner or operator of the well shall submit a certificate of plugging to the Department and each coal operator, lessee or owner who was sent notice by certified mail of the intent to plug the well.
(b) The certificate of plugging must be on a form provided by the Department and contain information required by the Department.
(c) The certificate of plugging shall be prepared and signed by two experienced and qualified people who participated in the work, and shall also be signed by the well owner or operator.
Subchapter G. BONDING REQUIREMENTS Sec.
78a.301. Scope. 78a.302. Requirement to file a bond. 78a.303. Form, terms and conditions of the bond. 78a.304. Terms and conditions for surety bonds. 78a.305. Terms and conditions for collateral bonds—general. 78a.306. Collateral bonds—letters of credit. 78a.307. Collateral bonds—certificates of deposit. 78a.308. Collateral bonds—negotiable bonds. 78a.310. Replacement of existing bond. 78a.311. Failure to maintain adequate bond. 78a.312. Forfeiture determination. 78a.313. Incapacity of operators. 78a.314. Preservation of remedies. § 78a.301. Scope.
In addition to the requirements of section 3225 of the act (relating to bonding), this subchapter specifies certain requirements for surety bonds, collateral bonds, replacement of existing bonds, maintaining adequate bond and bond forfeiture.
§ 78a.302. Requirement to file a bond.
For a well that has not been plugged, the owner or operator shall file a bond or otherwise comply with the bonding requirements of section 3225 of the act (relating to bonding) and this chapter. A bond or bond substitute is not required for a well drilled before April 18, 1985.
§ 78a.303. Form, terms and conditions of the bond.
(a) The following types of security are approvable:
(1) A surety bond as provided in § 78a.304 (relating to terms and conditions for surety bonds).
(2) A collateral bond as provided in §§ 78a.305—78a.308.
(b) A person submitting a bond shall comply with the Department guidelines establishing minimum criteria for execution and completion of the bond forms and related documents.
(c) A bond shall be conditioned upon compliance with the drilling, water supply replacement, restoration and plugging requirements in the act, this chapter and permit conditions relating thereto. The bonds are penal in nature and are designed to ensure compliance by the operator to protect the environment, public health and safety affected by the oil and gas well.
(d) The person named in the bond or other security shall be the same as the person named in the permit.
§ 78a.304. Terms and conditions for surety bonds.
(a) The bond of a surety company that has failed, refused or unduly delayed to pay, in full, on a forfeited surety bond is not approvable.
(b) Only the bond of a surety authorized to do business in this Commonwealth is approvable. If the principal place of business of the surety is outside of this Commonwealth, or if the surety is not a Pennsylvania corporation, the surety bond shall also be signed by an authorized resident agency of the surety that maintains an office in this Commonwealth.
(c) The surety may cancel the bond by filing written notice of cancellation with the Department, the operator and the principal on the bond, only under the following conditions:
(1) The notice of cancellation shall be sent by certified mail, return receipt requested. Cancellation may not take effect until 120 days after receipt of the notice of cancellation by the Department, the operator and the principal on the bond as evidenced by return receipts.
(2) Within 30 days after receipt of a notice of cancellation, the operator shall provide the Department with a replacement bond under § 78a.310 (relating to replacement of existing bond).
(d) The Department will not accept surety bonds from a surety company when the total bond liability to the Department on the bonds filed by the operator, the principal and related parties exceeds the surety company's single risk limit as provided by The Insurance Company Law of 1921 (40 P.S. §§ 341—991.2610).
(e) The bond must provide that the surety and the principal shall be jointly and severally liable for payment of the bond amount.
(f) The bond must provide that the amount shall be confessed to judgment and execution upon forfeiture.
(g) The Department will retain, during the term of the bond, and upon forfeiture of the bond, a property interest in the surety's guarantee of payment under the bond which is not affected by the bankruptcy, insolvency or other financial incapacity of the operator or principal on the bond.
(h) The surety shall give written notice to the Department, if permissible under law, to the principal and the Department within 10 days of a notice received or action filed by or with a regulatory agency or court having jurisdiction over the surety alleging one of the following:
(1) The insolvency or bankruptcy of the surety.
(2) A violation of regulatory requirements applicable to the surety, when as a result of the violation, suspension or revocation of the surety's license to do business in this Commonwealth or another state is under consideration by a regulatory agency.
§ 78a.305. Terms and conditions for collateral bonds—general.
(a) Collateral documents shall be executed by the owner or operator.
(b) The market value of collateral deposited shall be at least equal to the required bond amount with the exception of United States Treasury Zero Coupon Bonds which shall have a maturity date of not more than 10 years after the date of purchase and at maturity a value of at least $25,000.
(c) Collateral shall be pledged and assigned to the Department free from claims or rights. The pledge or assignment shall vest in the Department a property interest in the collateral which shall remain until release as provided by law and is not affected by the bankruptcy, insolvency or other financial incapacity of the operator.
(d) The Department's ownership rights to deposited collateral shall be such that the collateral is readily available to the Department upon forfeiture. The Department may require proof of ownership and other means, such as secondary agreements, as it deems necessary to meet the requirements of this subchapter. If the Department determines that deposited collateral does not meet the requirements of this subchapter, it may take action under the law to protect its interest in the collateral.
§ 78a.306. Collateral bonds—letters of credit.
(a) Letters of credit submitted as collateral for collateral bonds shall be subject to the following conditions:
(1) The letter of credit must be a standby or guarantee letter of credit issued by a Federally-insured or equivalently protected financial institution, regulated and examined by the Commonwealth or a Federal agency and authorized to do business in this Commonwealth.
(2) The letter of credit must be irrevocable and must be so designated. However, the Department may accept a letter of credit for which a limited time period is stated if the following conditions are met and are stated in the letter:
(i) The letter of credit is automatically renewable for additional time periods unless the financial institution gives at least 90 days prior written notice to both the Department and the operator of its intent to terminate the credit at the end of the current time period.
(ii) The Department has the right to draw upon the credit before the end of its time period, if the operator fails to replace the letter of credit with other acceptable means of compliance with section 3225 of the act (relating to bonding) within 30 calendar days of the financial institution's notice to terminate the credit.
(3) Letters of credit must name the Department as the beneficiary and be payable to the Department, upon demand, in part or in full, upon presentation of the Department's drafts, at sight. The Department's right to draw upon the letter of credit does not require documentary or other proof by the Department that the customer has violated the conditions of the bond, the permit or other requirements.
(4) A letter of credit is subject to 13 Pa.C.S. (relating to Uniform Commercial Code) and the latest revision of Uniform Customs and Practices for Documentary Credits as published in the International Chamber of Commerce Publication No. 400.
(5) The Department will not accept a letter of credit from a financial institution which has failed, refused or unduly delayed to pay, in full, on a letter of credit or a certificate of deposit previously submitted as collateral to the Department.
(6) The issuing financial institution shall waive rights of set-off or liens which it has or might have against the letter of credit.
(b) If the Department collects any amount under the letter of credit due to failure of the operator to replace the letter of credit after demand by the Department, the Department will hold the proceeds as cash collateral as provided by this subchapter. The operator may obtain the cash collateral after he has submitted and the Department has approved a bond or other means of compliance with section 3225 of the act.
§ 78a.307. Collateral bonds—certificates of deposit.
A certificate of deposit submitted as collateral for collateral bonds is subject to the following conditions:
(1) The certificate of deposit shall be made payable to the operator and shall be assigned to the Department by the operator, in writing, as required by the Department and on forms provided by the Department. The assignment shall be recorded upon the books of the financial institution issuing the certificate.
(2) The certificate of deposit shall be issued by a Federally-insured or equivalently protected financial institution which is authorized to do business in this Commonwealth.
(3) The certificate of deposit must state that the financial institution issuing it waives rights of setoff or liens which it has or might have against the certificate.
(4) The certificate of deposit must be automatically renewable and fully assignable to the Department. Certificates of deposit must state on their face that they are automatically renewable.
(5) The operator shall submit certificates of deposit in amounts which will allow the Department to liquidate those certificates prior to maturity, upon forfeiture, for the full amount of the bond without penalty to the Department.
(6) The Department will not accept certificates of deposit from financial institutions which have failed, refused or unduly delayed to pay, in full, on certificates of deposit or letters of credit which have previously been submitted as collateral to the Department.
(7) The operator is not entitled to interest accruing after forfeiture is declared by the Department, until the forfeiture declaration is ruled invalid by a court having jurisdiction over the Department, and the ruling is final.
§ 78a.308. Collateral bonds—negotiable bonds.
Negotiable bonds submitted and pledged as collateral for collateral bonds under section 3225(a)(3) of the act (relating to bonding) are subject to the following conditions:
(1) The Department will use the current market value of governmental securities, other than United States Treasury Zero Coupon Bonds, for the purpose of establishing the value of the securities for bond deposit.
(2) The current market value must be at least equal to the amount of the required bond.
(3) The Department may periodically evaluate the securities and may require additional amounts if the current market value is insufficient to satisfy the bond amount requirements for the oil or gas well operations.
(4) The operator may request and receive the interest accruing on governmental securities filed with the Department as the interest becomes due and payable. An operator will not receive interest accruing on governmental securities until the full amount of the bond has been accumulated. No interest may be paid for postforfeiture interest accruing during appeals and after resolution of the appeals, when the forfeiture is adjudicated, decided or settled in favor of the Commonwealth.
§ 78a.310. Replacement of existing bond.
(a) An owner or operator may replace an existing surety or collateral bond with another surety or collateral bond that satisfies the requirements of this chapter, if the liability which has accrued against the bond, the owner or operator who filed the first bond and the well operation is transferred to the replacement bond. An owner or operator may not substitute a phased deposit of collateral bond under section 3225(d) and (d.1) of the act (relating to bonding) for a valid surety bond or collateral that has been filed and approved by the Department.
(b) The Department will not release existing bonds until the operator has submitted and the Department has approved acceptable replacement bonds.
§ 78a.311. Failure to maintain adequate bond.
The permittee shall maintain a bond in an amount and with sufficient guarantee as provided by this chapter. If a surety company that had provided surety bonds, or a financial institution that had provided certificates of deposit or letters of credit for an operator enters into bankruptcy or liquidation, has its license suspended or revoked or for another reason indicates an inability or unwillingness to provide an adequate financial guarantee of the obligations under the bond, the operator shall submit a bond within 45 days of notice from the Department.
§ 78a.312. Forfeiture determination.
(a) A collateral or surety bond may be forfeited when the Department determines that the operator fails or refuses to comply with the act, this title, an order of the Department, or the terms or conditions of the permit relating to drilling, water supply replacement, plugging and site restoration.
(b) If forfeiture of the bond is required, the Department will:
(1) Send written notification by mail to the permittee, and the surety, if any, of the Department's intent to forfeit the bond and describe the grounds for forfeiture. The notification will also provide an opportunity to take remedial action or submit a schedule for taking remedial actions acceptable to the Department within 30 days of the notice of intent to forfeit, in lieu of collecting the bond.
(2) If the permittee and surety, if any, fail either to take remedial action or to submit a plan acceptable to the Department within 30 days of the notice of the intent to forfeit, the bond will be subject to forfeiture and collection up to the face amount thereof. The Department will issue a declaration to forfeit the bond.
(3) The declaration to forfeit is an action which may be appealable to the Environmental Hearing Board under section 4 of the Environmental Hearing Board Act (35 P.S. § 7514).
§ 78a.313. Incapacity of operators.
An owner or operator shall notify the Department by certified mail within 10 calendar days after the start of a voluntary or involuntary proceeding under 11 U.S.C.A. §§ 101—1532, known as the Federal Bankruptcy Act, naming the owner or operator as debtor.
§ 78a.314. Preservation of remedies.
Remedies provided or authorized by law for violation of statutes, including the act, the applicable environmental protection acts, this title, the terms and conditions of permits and orders of the Department, are expressly preserved. Nothing in this subchapter is an exclusive penalty or remedy for the violations. No action under this subchapter waives or impairs another remedy or penalty provided in law or equity.
[Pa.B. Doc. No. 16-1757. Filed for public inspection October 7, 2016, 9:00 a.m.]
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