OFFICE OF THE STATE ENGINEER RULEMAKING HEARING FOR PRODUCED NONTRIBUTARY GROUND WATER RULES, 2 CCR402-17 ALTERNATE RULE PROPOSED BY QUESTAR MARKET RESOURCES, INC. (QUESTAR EXPLORATION AND PRODUCTION COMPANY AND WEXPRO COMPANY) 1. Persons submitting the proposed alternate rule: Questar Market Resources, Inc. (Questar Exploration and Production Company and Wexpro Company). Julander Energy Company joins in Questar’s proposal. 2. Alternate Proposed Rule: 2.1 Proposed Modification of SEO’s Proposed Rule The following modifications to the SEO’s Proposed Rules and the Proposed Alternate Rule are submitted for consideration by the Hearing Officer during the rulemaking proceeding: Current subparts B, C and D of subsection 17.7 of the Proposed Rules appear to be referenced as exceptions to current subpart 17.7.A. Questar suggests that, for clarification, existing subpart 17.7.A be retained simply as the introductory text of subsection 17.7, as modified below, and the following current subparts B, C and D then be redesignated as subparts 17.7.A, B and C. In addition, in order correctly to state the applicable legal principle reflected in this introductory paragraph, the text of the original Section 17.7.A of the Proposed Rule is proposed to be further modified as follows (added text is underlined): 17.7 Specific Locations of Nontributary Ground Water in Colorado Ground water in the State of Colorado is legally presumed to be “tributary,” or hydraulically connected to surface water in such a fashion so as to require administration within the prior appropriation system in conjunction with surface rights, unless it is demonstrated to be nontributary ground water. See Simpson v. Bijou Irrigation Co., 69 P.3d 50, 57 n.7 (Colo. 2003). Accordingly, absent a determination made pursuant to Rule 17.5 of these rules, the State Engineer shall regard all Produced Water within the State of Colorado to be tributary, with the following exceptions: 2.2 Proposed Additional Nontributary Determination 17.7_ The Vermillion and Sand Wash Basins 000275 Questar APR Page 2 The State Engineer shall regard as nontributary all Produced Water diverted by means of oil and gas wells located within the boundary shown on Exhibit A from (1) the Fort Union Formation, Lance Formation, Lewis Shale, Mesaverde Group, Baxter Shale, Frontier Formation, Mowry Shale, Dakota Sandstone, and Nugget Sandstone and (2) those parts of the Hiawatha member of the Wasatch Formation identified as nontributary in Exhibit B. 3. State Engineer’s authority to promulgate the Alternate Proposed Rule: The State Engineer is specifically authorized to adopt rules to assist in the administration of CRS §37-90-137(7) by CRS §37-90-137(7)(c), and has general rulemaking authority relating to all duties of his office under CRS §37-80-102(1)(g) and (k). See also, CRS §37-90-103(10.5). 4. Relation to subject matter and scope of rulemaking: The alternate proposed rule would modify the rules as proposed by the State Engineer in the course of the rulemaking to identify an additional area within the state as nontributary, as expressly provided in the notice for this hearing. 5. Statement of basis and purpose: A proposed Statement of Basis and Purpose is attached. 6. Map of areal limits of nontributary determination: A map of the areal limits of the requested nontributary determination is attached. The area includes the portions of the following Townships and Ranges lying within the State of Colorado: T12N, R101W; T12N, T100W; T12N, R99W; T12N, R98W, T12N, R97W; T12N, R96W; and the entirety of the following Townships and Ranges: T11N, R101W; T11N, T100W; T11N, R99W; T11N, R98W, T11N, R97W; T11N, R96W; T10N, R98W; T10N, R99W. 7. Description of hydrogeologic justification: The alternate proposed rule is based on both modeling and alternate methods. Alternate methods were primarily used for the Nugget Sandstone, Dakota Sandstone, Mowry Shale, Frontier Formation, Baxter Shale, Mesaverde Group, Lewis Shale, Lance Formation, and the Fort Union Formation. Analytical modeling was used for the Hiawatha member of the Wasatch formation and to develop approximate tributary distances from outcrop for the other formations noted above. The model used in the analytical modeling is the Glover equation as incorporated in the IDS “AWAS” program and the Western Water Consulting, Inc. Well Pumping Depletion Model(WPDM) (© 2001, Western Water Consulting, Inc.). Formation parameters provided by Questar were utilized in the analyses and formation outcrops were identified from geologic maps and reports published by the USGS. The Nugget Sandstone, Dakota Sandstone, Mowry Shale, Frontier Formation, Baxter Shale, Mesaverde Group, Lewis Shale, Lance Formation, and the Fort Union Formation have outcrops in the State of Colorado that range in distance from the study area from 41 to 77 miles, 000276 Questar APR Page 3 primarily to the southeast and east. Formation continuity with outcrop areas to the west and south is interrupted by significant fault bands that offset the formations and eliminate the potential for any hydraulic connection between pumping wells and surface waters of Colorado in any outcrop areas that may be present south and west of these fault bands. The stratigraphy of these formations also tends to be laterally discontinuous over larger areas, further limiting the potential for hydraulic continuity with the outcrops, regardless of the presence of faulting. The hydraulic conductivities of the formations, as per data provided from field and laboratory testing by Questar, range from 0.000274 feet per day (ft/day) to 2.74 ft/day, although the bulk of the values reported are typically less than 0.01 ft/day. The saturated thicknesses of these formations range from as little as 20 feet to as much as several hundred feet; however, the bulk of the thicknesses involved in the production intervals are less than 60 feet This results in a range of typical transmissivities of 0.04 gallons per day per foot (gpd/ft) up to 1.23 gpd/ft. Storage coefficients for these formations, utilizing a specific storage of 1 x 10-6, range from 2 x 10-5 to 6 x 10-5. With these aquifer properties and the measured distances to outcrop for the respective formations there will be no depletion to any surface waters in Colorado greater that 0.1 percent of the pumping rate after 100 years of continuous pumping. Therefore, withdrawal of Produced Water from these formations will not, within 100 years of continuous withdrawal, deplete the flow of a natural stream, including a natural stream as defined in sections 37-82-101(2) and 37- 92-102(1)(b), at an annual rate greater than one-tenth of one percent of the annual rate of withdrawal. Therefore, Produced Water from the above named formations within the study area is nontributary ground water. Results of modeling carried out with the AWAS and WPDM programs utilizing conservative scenarios incorporating the infinite aquifer and infinite stream length options, and the ranges of transmissivities and storage coefficients developed from Questar data for the Nugget Sandstone, Dakota Sandstone, Mowry Shale, Frontier Formation, Baxter Shale, Mesaverde Group, Lewis Shale, Lance Formation, and the Fort Union Formation shows that wells located greater than four to five miles from a point of contact with a surface stream or its alluvial aquifer will not, within 100 years of continuous withdrawal, deplete the flow of a natural stream, including a natural stream as defined in sections 37-82-101(2) and 37-92-102(1)(b), at an annual rate greater than one-tenth of one percent of the annual rate of withdrawal. The nearest such point of contact to the study area for any of these formations is more than 25 miles away. This confirms that Produced Water from the Nugget Sandstone, Dakota Sandstone, Mowry Shale, Frontier Formation, Baxter Shale, Mesaverde group, Lewis Shale, Lance Formation, and the Fort Union Formation in the study area is nontributary ground water. For the Hiawatha member of the Wasatch Formation, geologic maps indicate that the main body of the Wasatch, comprising the lower portions of the overall formation, and in which the Hiawatha member is found, does outcrop within the study zone. Specifically, in Township 12N, R100W, there is a small area of the Wasatch main body outcrop crossed by a stream alluvium associated with a tributary of Vermillion Creek. The analytical modeling has shown that there will be a zone of tributary water extending out approximately 7.5 miles from the stream as it crosses the main body of the Wasatch. The parameters used in carrying out these analyses include a permeability of 1 mD, equivalent to 0.00274 ft/day or 0.00205 gpd/ft, a zone thickness of 45 feet, representing the average of the production zone thicknesses as per Questar data, and a storage coefficient of 4.5 x 10-5, based on a specific storage of 1 x 10-6. Any water 000277 Questar APR Page 4 produced from wells in the remainder of the main body of the Wasatch formation within the subject property and lying beyond the 7.5 mile tributary zone are nontributary. The data sources, reports and maps relied upon to formulate the rule include: 1. Tweto, Ogden; 1976; Geologic Map of the Craig 1 x 2 Quadrangle, Northwestern Colorado; United States Geologic Survey Miscellaneous Investigations Series Map I-972 2. Rowley, Peter D., Hansen, Wallace R., Tweto, Ogden, and Carrara, Paul; Geologic map of The Vernal 1 x 2 Quadrangle, Colorado, Utah, and Wyoming; United States Geologic Survey Miscellaneous Investigations Series Map I-1526 3. United States Geological Survey Digital Data Series 069–D 4. URL: <http://pubs.usgs.gov/dds/dds-069/dds-069-d/reports.html> 5. National Assessment of Oil and Gas Project: Petroleum Systems and Geologic Assessment of Oil and Gas in the Southwestern Wyoming Province, Wyoming, Colorado, and Utah By USGS Southwestern Wyoming Province Assessment Team Chapter 7 The Hilliard-Baxter-Mancos Total Petroleum System, Southwestern Wyoming Province By Thomas M.