Draft Only Approval Pending of SUMMARY P ROCEEDINGS JOINT MINERALS, BUSINESS AND ECONOMIC DEVELOPMENT COMMITTEE COMM ITTEE M EETING I NFORMATION December 12 and 13, 2013 Conference Room, Oil and Gas Commission Building 2211 Kings Boulevard Casper, Wyoming JOINT M INERALS, BUSINESS AND ECO NOM IC DEVELOPMENT COM M ITTEE M EM BERS PRESENT Senator John Hines, Cochairman Representative Tom Lockhart, Cochairman Senator Jim Anderson (SD02) Senator Henry “Hank” Coe Senator Stan Cooper Senator Chris Rothfuss Representative Richard Cannady Representative Mike Greear Representative Norine Kasperik Representative Lloyd Larsen Representative Tom Reeder Representative Albert Sommers Representative Nathan Winters COMM ITTEE M EM BERS NOT PRESENT Representative James Byrd LEGISLATIVE SERVICE OFFICE STAFF Tania Hytrek, Staff Attorney Kelley Shepp, Research Analyst OTHERS PRESENT AT M EETING Please refer to Appendix 1 to review the Committee Sign-in Sheet for a list of other individuals who attended the meeting. The Committee Meeting Summary of Proceedings (meeting minutes) is prepared by the Legislative Service Office (LSO) and is the official record of the proceedings of a legislative committee meeting. This document does not represent a transcript of the meeting; it is a digest of the meeting and provides a record of official actions taken by the Committee. All meeting materials and handouts provided to the Committee by the Legislative Service Office, public officials, lobbyists, and the public are on file at the Legislative Service Office and are part of the official record of the meeting. An index of these materials is provided at the end of this document and these materials are on file at the Legislative Service Office. For more information or to review meeting materials, please contact the Legislative Service Office at (307) 777-7881 or by e-mail at [email protected]. The Summary of Proceedings for each legislative committee meeting can be found on the Wyoming Legislature’s website at http://legisweb.state.wy.us. PAGE 2 OF 12 EXECUTIVE SUMMARY. The Joint Minerals, Business and Economic Development met to receive information from the Wyoming Oil and Gas Conservation Commission, Governor Matt Mead's Office, the Department of Environmental Quality, the School of Energy Resources, the Wyoming Business Council and the Aeronautics Division of the Department of Transportation. Topics discussed included reclamation of abandoned or orphaned oil and gas wells, groundwater baseline monitoring, the atomic energy study, landfill cease and transfer activities and regional haze. The 2013 Consensus Revenue Estimating Group report and the activities of the Select Federal Natural Resource Management Committee were also discussed. Draft legislation was also presented. CALL TO ORDER. Chairman Hines called the meeting to order at 9:00 a.m. The following sections summarize the Committee proceedings by topic. Please refer to Appendix 2 to review the Committee Meeting Agenda. APPROVAL OF MINUTES. Minutes from the September 26 and 27, 2013 Joint Minerals, Business and Economic Development Committee meeting were approved without revision. STATEWIDE PLAN AND SCHEDULE – ABANDONED AND ORPHANED OIL AND GAS WELL RECLAMATION AND BONDING. Mr. Cameron Nazminia, Governor Matt Mead's Office, spoke to the Committee about the statewide plan and schedule for reclamation of abandoned and orphaned oil and gas wells. See Appendix 3. Chairman Hines inquired about the reporting process for idle or orphaned wells. Mr. Nazminia responded reporting is governed by a process adopted by the Oil and Gas Conservation Commission. Mr. Nazminia state in addition to the wells currently identified as abandoned or orphaned, there are approximately 10,000 additional wells that are "of concern" to the OGCC. Representative Sommers inquired about the process for determination of wells that are “of concern.” Mr. Nazminia responded the wells are classified “of concern” based on criteria established by the OGCC. The wells are labeled "of concern" when the operator is not in compliance with OGCC rules in some regard. Representative Kasperik asked Mr. Nazminia to explain how the approach proposed today differs from the approach in the past. Mr. Nazminia responded the approach proposed today is a coordinated approach. He noted a four year plan, as opposed to a longer time period, was proposed as a result of the direction by co-chairs in the memo dated October 30, 2013. Mr. Nazminia summarized the costs associated with the plan as proposed, noting the average cost for reclamation per well is approximately $7,430. Senator Rothfuss requested the Governor’s Office provide additional information regarding possible options for additional funding for the reclamation activities. Supervisor Black explained the various revenues that flow to the Commission, noting a one-mill increase in the conservation tax would result in an additional one million dollars approximately. Supervisor Black noted the OGCC is currently working on revision of rules and Chairman Lockhart requested Supervisor Black provide the Committee with a copy of the revised rules as soon as possible. Representative Greear inquired about changes that will be necessary to accomplish the activities listed for the first quarter in the proposed plan. Supervisor Black stated the Commission has approximately $500,000 allocated through June 30, 2014 for the purpose of plugging activities. He stated further the Commission will proceed with the preliminary activities associated with plugging and reclamation to ensure that when the funds become available the agency is prepared. He noted that 67 wells are ready to go to bid for reclamation soon. Representative Sommers inquired about the possibility of an increase in the conservation tax to fund the $5 million shortfall. Mr. Nazminia commented that increasing the conservation tax would be the responsibility of the OGCC, not the Governor's Office. JOINT EDUCATION INTERIM COMMITTEE Summary of Proceedings WYOMING LEGISLATIVE SERVICE OFFICE • 213 State Capitol • Cheyenne, Wyoming 82002 TELEPHONE (307) 777-7881 • FAX 307-777-5466 • E-MAIL [email protected] • WEB SITE http://legisweb.state.wy.us PAGE 3 OF 12 Supervisor Black echoed the comments of Mr. Nazminia on the unpredictability of some aspects of the report, including the number of the wells that will become abandoned or orphaned and the financial resources that will be necessary for remediation of all abandoned or orphaned wells. Supervisor Black moved on to discussion of vacancies within the Commission, noting some of the positions have been vacant for some time. Representative Greear inquired about implementation of the plan to ensure progress continues to be made once the 67 wells have been plugged. Supervisor Black responded the preliminary work associated with plugging for the next group of wells is already underway to ensure progress continues. He noted that in the future, to further expedite the process, the project manager will group wells together for the purpose of receiving bids for completion of the work. Supervisor Black stated the Commission has a good working relationship with the Bureau of Land Management (BLM). He urged the Committee to maintain the rainy day fund for unforeseen issues that may arise, citing to the “Wheeler Well” which took substantially more funds to rectify than anticipated. Ms. Jill Morrison, Power River Basin Resource Council, commented on the reclamation of abandoned and orphaned wells, noting the BLM does not move quickly in rectifying wells on federal land. She discussed the possibility of using funds generated by the conservation tax, which is imposed on all wells in the State, to rectify wells on federal land. Ms. Morrison encouraged the Committee to consider increasing the mill levy to generate funds to use in rectifying abandoned and orphaned wells. She urged the Committee to consider exploring mechanisms to increase the number of wells that are transferred to water use in a more simplified manner. Ms. Morrison noted the importance of putting together a plan to deal with the wells in production today to ensure the issue of abandoned and orphaned doesn’t repeat in the years to come. She requested the Committee consider revisiting the law in relation to bonding to ensure bonding is adequate with the onset of production rather than dealing with it on the back end. Mr. Bruce Hinchey, Wyoming Petroleum Association, provided comments to the Committee on the efforts related to reclamation and plugging of wells on federal land. He explained OGCC can increase the mills imposed by an additional 4 mills, doubling the funds available for these activities. Senator Anderson inquired about the impact of horizontal drilling on plugging and reclamation. Mr. Hinchey responded that he didn’t see a significant increased threat with those types of wells. Representative Greear inquired about the appropriate time to review the bonding capacity and if it was related to the transfer of a well from a large company to a smaller operator. Mr. Hinchey responded, his opinion is that the issue is not due to transfer, but simply an issue related to the individual operator and their ability to bond appropriately and their financial stability. Senator Anderson urged the Committee to consider activities that will ensure the next generation of Wyoming citizens do not face the same issues. GROUNDWATER BASELINE MONITORING. Mr. Jeremiah Rieman, Governor’s Office, spoke to the Committee about groundwater baseline monitoring and the rules and regulations associated with this topic. He noted the Governor’s Office received a substantial number of public comments during the informal comment period. Mr. Rieman summarized the proposed revisions to the rules and regulations. See Appendix 4 and 5. POWER ATOMIC ENERGY AGREEMENT STATE FEASIBILITY STUDY. Mr. Todd Parfitt, Director of Department Environmental Quality (DEQ), introduced the topic of the atomic energy agreement state feasibility study to the Committee. Ms. Nancy Nuttbrock, Deputy, DEQ, provided a detailed outline of the report submitted to the Committee on this topic. Appendix 6 and 7. Ms. Nuttbrock described the areas of overlapping jurisdiction in reference to in-situ mining operations.