Proposed Issuance of Underground Injection Control (UIC) Permit: Fact Sheet June 27, 2017 This cover sheet provides a brief overview ofproposed Permit AK1I009-B for the operation of two Class I Non-Hazardous Industrial Waste Injection Wells at the Oooguruk Unit, North Slope, Alaska. For more information, please see the attached document, which contains comprehensive, technical details about the proposed permit. What is proposed The permit allows for the construction and use of wells that inject non-hazardous in the permit? waste at depths near one mile below the ground. Injection is limited to oil field wastes exempt from hazardous waste determinations and other non-hazardous fluids in support of hydrocarbon development on Alaska's North Slope. This permit is a reissuance of a ten year permit that is set to expire in August of 2017. Will a new well This permit authorizes the use of two Class I injection wells. One of two wells be drilled? has been constructed and is actively injecting. A second well may be drilled, so long as the siting, construction, and operation adhere to the requirements of this permit and the regulations for injection wells (40 CFR §144-146). Why has this permit been requested? What will be injected into the well? These injection wells will eliminate the need to discharge fluids to surface waters or transport waste to off-site treatment/disposal locations. The waste may include, but not be limited to: drilling muds and cuttings, produced water, desalination brine, domestic and sanitary wastewater, and stormwater. All waste will be either exempt from RCRA hazardous waste characterization or characterized as non-hazardous. How can I comment and/or request a hearing? EPA accepts public comments and requests for public hearings for proposed draft permit actions during the public comment period, which beings on June 30, 2017 and ends on July 31, 2017. If you would like to make a comment or request a hearing, review the "Public Comment" section at the end of this Fact Sheet or go to www.epa.gov/regionlO. Where can I find If you are seeking more information related to this Fact Sheet, please go to more www.epa.gov/regionlO or contact: information? Evan Osborne, UIC Program Specialist: osborne.evan@epa.gov or 206-553- 1747 ------- OOOGURUK UNIT CLASS I UIC WELL FACT SHEET Proposed Issuance of Underground Injection Control Area Permit AK-1I009-B For the Construction and Operation of Class I Non-Hazardous Industrial Waste Injection Wells At the Oooguruk Oil and Gas Unit on the North Slope of Alaska Background Caelus Natural Resources Alaska, LLC (Caelus) has submitted an Underground Injection Control (UIC) permit reissuance application for the operation of two Class I industrial non- hazardous waste injection wells on Alaska's North Slope. This application follows the expiration of a previous EPA permit, AK1I009-A, originally issued to Pioneer Natural Resources Alaska (Pioneer) on August 31, 2007. Permit AK1I009-A was transferred to Caelus in 2014 with approval from EPA. This facility is located on the Oooguruk Drill Site (ODS) gravel drill site located approximately 5.7 miles offshore in the Beaufort Sea near the mouth of the Colville River. Pioneer drilled the first Class I injection wells at ODS in 2008, named ODSDW1-44. This injection well injects fluids at a depth of over 5,000 feet (ft.). In response to Caelus's application submitted in April of 2017, EPA has prepared a draft UIC permit to continue to allow the injection of Class I non-hazardous fluids over the next ten years. This fact sheet communicates EPA's considerations in preparing the draft permit. Regulatory Framework The UIC program is authorized by Part C of the Safe Drinking Water Act for the principal purpose of protecting Underground Sources of Drinking Water (USDW) from pollution by injection through wells. A USDW is defined as an aquifer which is currently serving as a source of potable water or which, by virtue of its potential productivity and natural water quality, could serve as a public water supply. It is defined in the federal regulations (40 CFR §144.3) as, ".. .an aquifer or its portion: (a) (1) Which supplies any public water system; or (2) Which contains a sufficient quantity of groundwater to supply a public water system; and (i) Currently supplies drinking water for human consumption; or (ii) Contains fewer than 10,000 mg/L total dissolved solids; and (b) which is not an exempted aquifer. If injection does not occur above, into, or through a USDW, then less stringent injection well ------- permit conditions may be imposed than would otherwise be required (see 40 CFR § 144.16). As described below, aquifers below the ODS off the coast of the Alaskan North Slope do not meet the criteria of USDWs under 40 CFR § 144.3. Under these circumstances, the Director (i.e., Region 10's Regional Administrator or an authorized representative) may authorize injection with less stringent requirements than would otherwise be required (see 40 CFR § 144.16). EPA intends to grant several waivers requested by Caelus which are described later on in this fact sheet. Primary responsibility for the UIC program in Alaska is shared between EPA and the Alaska Oil and Gas Conservation Commission (AOGCC). The AOGCC regulates Class II injection wells, which are defined as those wells used (1) to dispose of waste fluids brought to the surface from oil and gas production operations, (2) for enhanced recovery of oil and gas, or (3) for storage of hydrocarbons which are liquid at standard temperature and pressure (see 40 CFR § 144.6). EPA regulates Class I non-hazardous injection wells in the state of Alaska. The UIC regulations allow Class II fluids to be disposed of into Class I or II injection wells, but Class I fluids may not be injected into Class II wells. Applicable regulations concerning injection well requirements can be found in 40 CFR §144 and §146 (criteria and standards applicable to Class I Wells are found at 40 CFR §146 Subpart B). EPA Permit and General Project Overview ODS was constructed in State of Alaska waters approximately 5.7 miles offshore in the Beaufort Sea, near the mouth of the Colville River in four to six feet of water. Since this construction in the winter of 1997, the island has served as a drilling and production platform operated by Pioneer and, following the transition, now Caelus. On August 18, 2006, EPA confirmed that portions of aquifers beneath the ODS at two potential locations are not underground sources of drinking water (USDWs): Facility/Well No. Surface Location Latitude and Longitude ODS/DW-1 Well Lat 70.4958 deg N/Long 150.2467 deg W ODS/DW-2 Well Lat 70.4923 deg N/Long 150.2423 deg W Pioneer submitted to EPA the initial application for use of two Class I non-hazardous injection wells on March 6, 2007. The application was approved by EPA on July 7, 2007 and permit AK1I009-A became effective on September 1, 2007. The first well drilled and completed at ODS was the Class I non-hazardous injection well ODSDW1-44. Consistent with the permit, EPA reviewed and approved the construction of this injection well to ensure that it fell within the requirements of the permit and the regulations governing the construction of Class I non- hazardous injection wells (40 CFR § 146 Subpart B). Though permit AK1I009-A and this proposed draft permit allow the construction of two Class I non-hazardous injection wells, the second well has not yet been drilled. Caelus has proposed construction of the second injection well at a later date. ------- EPA's 10-year term permit reissuance would allow Caelus to inject fluids generated at ODS, so long as those fluids are exempt from hazardous waste characterization or are non-exempt and determined to be non-hazardous by characterization. Since the issuance of permit AK1I009-A in 2007, approximately 4.8 million barrels (bbls) of fluids and slurries have been injected into ODSDW1-44. The table below shows the breakdown of waste by source. Domestic and Sanitary Wastewater 353,031 bbls Drilling Mud and Cuttings 2,282,813 bbls Produced Water 0 bbls Desalination/Brine 2,036,509 bbls Stormwater 17,163 bbls Other Exempt Fluids 98,776 bbls Other Non-Exempt Non Hazardous Fluids 60,731 bbls Total 4,849,021 bbls Over forty wells (injection and production) have been drilled from ODS since the construction of ODSDW1-44. In this time period, drilling muds and cuttings produced during well construction and work over activities have contributed to nearly half of the total waste stream destined for Class I injection. Drilling operations are currently shut down at ODS as of the date of this application, but there are eight unused well slots available for future development at ODS and upon resumption of drilling activities, it is estimated that an additional 5.4 million barrels could be disposed of by Class I injection. This assumes an additional 10 years of drilling or work over activities on location. If drilling does not restart or starts at a minimal level, the total disposal volume will likely be significantly reduced. First production at ODS occurred in early 2008 and is anticipated to last another 20+ years. Peak production at ODS is around 15,000-20,000 barrels of oil per day (BOPD). Oil production comes from the Nuiqsut formation at 6,300ft., from the Kuparuk C-sand at 6,100 ft., and from the Torok at 5,000 ft. Total oil production from all three reservoirs is approximately 13,000 BOPD at present day. As the field develops, Caelus expects that water production will increase steadily to 30,000 to 40,000 barrels of water per day (BWPD). No processing of produced fluids occurs on the drillsite. All production fluid is routed fluids from ODS to the on-shore Oooguruk Tie-in Pad (OTP) through a subsea three-phase flowline. Water for injection, gas for gas injection, gas for gas lift, and diesel are also transferred between ODS and OTP. Caelus operates water injection wells for the purpose of Class II enhanced oil recovery, and historically has not used the Class I injection well on location for disposal of produced water. Caelus has not applied for a hazardous waste injection well permit. Therefore, any listed hazardous wastes would need to be collected, stored, and transported to a RCRA-approved hazardous waste treatment or disposal facility. Those wastes which are hazardous only because of a characteristic (i.e., ignitability, corrosivity, toxicity, etc.) may be treated to remove that characteristic, and then injected in a Class IUIC well. The only radioactive substance which ------- may be injected under the proposed permit is naturally occurring radioactive material from sludge or pipe scale, which can be injected into either Class II or Class I injection wells. All wastes that are allowed for injection must either be exempt from hazardous characterization, or be non-hazardous. Caelus has developed a Waste Analysis Plan for handling, monitoring, controlling batch deliveries, and other related operational matters. Geologic Setting and Injection The geologic setting at the Oooguruk Unit is defined by a sequence and lithology correlative with the formations found at Prudhoe Bay, where hundreds of Class II and Class I injection disposal wells have operated for over two decades. The disposal zone for ODS development and production wastes is the Middle Cretaceous Albian-aged Torok sand. This zone has been used to inject permitted ODS wastes into the ODSDW1-44 well since it was drilled in 2008, accepting over 4.8 million barrels of fluids. Injection and Confining Zones The proposed injection and confining zones are within the same formations as those successfully utilized for waste disposal and confinement at the Prudhoe Bay, Northstar and Duck Island Units. The chosen injection and confining zones are located between approximately 4,000 ft. and 5,900 ft. below ODS. Litho-stratigraphic log markers were compiled from previously- drilled nearby wells to correlate the confining, arresting, and injection zones to establish continuity across the two injection wells, ODSDW1-44 (drilled and active, logs confirm injection and disposal zones) and ODSDW2 (proposed, not yet drilled). The Torok sand has been chosen as the proposed injection zone for the two injection wells due to the formation properties of the sand and the thickness of the zone. The Torok is deposited within the Albian to Cenomanian-aged marine Hue Shale as thin bedded distal levees, consisting of thin bedded laminated very fine to fine grained sands interbedded with siltstones and mudstones. The Torok sand ranges in thickness between these correlative logs; the ODSDW1-44 log indicates that the thickness of the Torok is approximately 264 ft, from the Kalubik-1 log, the well nearest to OSDW1-44, the Torok is approximately 281 ft. thick. Other logs shown on this geologic cross section indicate that the Torok ranges from 200 ft. to 281 ft. thick along the structure map based on well data and seismic data mapping. The first injection well, ODSDW1-44, has been completed from 5,065 ft. total vertical depth (TVD) in reference-to-Kelly-bushing (RKB) to 5,300 ft. TVD in the Torok formation. ODSDW1-44 has been used to inject Class I fluids under EPA permit AK1I009-A into the Torok sand over the previous ten years. The second proposed but not yet drilled injection well, named ODSDW2, is located near ODSDW1-44 and would utilize a correlative injection zone to emplace fluids. The correlative nature of the markers shows the locations of ODSDW1-44 and proposed injection well ODSDW2, in addition to logs from Kalubik-1, Kalubik-2, Sikumi-1, and Ivik-1 (all of which penetrate the Torok sand). ------- To ensure the confinement of injected fluids, a 225 to 275 ft thick upper confining zone (UCZ), 650-800 ft thick upper arresting zone, the 380-640 ft thick lower arresting zone, and 115-130 ft thick lower confining zone (LCZ) have been identified in the permit application. They are all part of the thick laterally-extensive marine, E-M Cretaceous aged Hue Shale, which includes the HRZ Shale, and prevent the movement of fluids above or below the intended injection zone. There are no significant sands within the arresting or confining zones in the Oooguruk area, and consequently the permeability is expected to be low horizontally and vertically. Structure maps on the Torok disposal interval, the upper arresting zone, and upper confining zone are similar indicating long term geologic stability. From the structure maps showing the top of the upper arresting zone (approximately 4,219 ft. TVD) and the top of the UCZ (approximately 3,951 ft. TVD), the thickness of the UCZ above the injection zone at ODSDW1-44 is approximately 268 ft. Between the UCZ and the injection zone there is also an arresting zone approximately 763 ft. thick. Based on the geologic cross section, the UCZ and arresting zone at the proposed ODSDW2 injection well are correlative to ODSDW1 and thicknesses of confining and arresting zones would be similar in size. The distance between the bottom of the injection zone and the top of the LCZ is 466 ft., based off of the exhibited geologic cross section. Based on the thickness of the LCZ (the HRZ shale) being 125 ft., the total thickness of the arresting zone and the LCZ is approximately 591 ft. Structure maps on the Torok disposal interval, the upper arresting zone, and UCZ are very similar indicating long term geologic stability. Structure There are no significant faults in the disposal area. Based on well data and seismic data, the Torok formation dips regionally to the east and includes small faults to the west of the disposal location. These small faults, less than the thickness of the disposal interval, are hydraulically isolated within the Torok Formation. Oil production at ODS comes from the Nuiqsut at 6,300 ft. from the Kuparuk C-sand at 6,100 ft. and from the Torok at 5,000 ft. The Nuiqsut and Kuparuk C-sand reservoirs are separated from the Torok disposal interval by a thick continuous shale interval. Several ODS wells drilled to the Nuiqsut have drilled through the Torok and there is no evidence from logs that the Torok oil accumulation extends into the ODSDW1-44 fault block. Oil production from the Torok takes place approximately 1.25 miles away from the disposal well up-dip and in a completely separate fault block. No communication has been seen between the oil production wells and the disposal well. Testing and log data in the Ivik-1, Kalubik-1 and Oooguruk-1 wells proved to be water productive and as such yield no economic value in this disposal area. The permafrost below the drillsite begins at approximately 250 ft in depth and extends to approximately 1,800 ft in depth. This forms an additional barrier to any upward fluid migration. Injection Zone Properties The Torok injection interval properties range from 16-22% porosity (19% average) and permeability of between 1-70 millidarcies (5 millidarcy average) based on core samples from the Kabulik-1 and Kabulik-2 nearby wells. The levee and overbank deposits are typically less than ------- 10 millidarcies, while channels and crevasse splays are in the higher range. The thin bedded character of the Torok Sands results in lower vertical porosities than horizontal porosities measured in the core. Drill stem tests or formation tests in two wells in the area (Kalubik-2 and Texaco Colville Delta #3) tested oil in the Torok; however, the disposal well is anticipated to have no impact to any potential oil production from the Torok. The aquifers beneath the permafrost at the ODS exhibit salinity that significantly exceeds the 10,000 mg/1 TDS threshold; samples taken from the Torok Formation showed 24,300 ppm TDS. There is usually a small amount of hydrocarbon gas dissolved in the water. The pressure gradient is estimated to be 0.44 pounds per square inch per foot (psi/ft) of depth from the surface to the Torok Formation Sands. The Torok interval has a fracture gradient of 0.64 psi/ft of depth. The Hue shales that lie above and below the Torok Sands have a fracture gradient of 0.74 psi/ft of depth. The temperature gradient below the permafrost is estimated to be 2.5 degrees per 100 feet, which makes the Torok about 130 degrees Fahrenheit. Average Reservoir Properties Disposal Interval Gross Interval Thickness 200 - 300 feet Net sand thickness, approximate 80 - 125 feet Porosity 16 - 22%, average is 19% Permeability 1-70 mD, average 5mD Fluid Content at Disposal Location 100% brine Injection will occur on an intermittent basis in batches of about 1,000 barrels. The expected injection rate will be about six barrels/minute (BPM) at average injection pressures of 1,800- 2,300 psi. The maximum permitted injection pressure at the wellhead will be 3,500 psi. Table 2 of the fracture simulation study provided as part of the application provides estimated fracture growth lengths for twelve different fracture simulation scenarios based on various injection parameters. The estimated length of fracture half-lengths (fractures in the horizontal direction from the point of injection to the tip of the fracture) across all simulations ranged from 293 ft. to 653 ft. The estimated total fracture length in the vertical direction (total fracture length below and above injection point) ranged from 254 ft. to 342 ft. depending on the scenario. The fracture simulations estimate an upward fracture height of no more than 35 ft. across all simulations. All simulations show the propagation of fractures being within the confines of the UCZ and LCZ of the ODSW1-44 well (the UCZ being 763 ft. above the top of the injection zone, the LCZ being 466 ft. below the bottom of the injection zone) and all horizontal fractures propagating short of any nearby well bores (the nearest well within the area of review penetrating the Torok is 1,160 ft. from ODSW1-44). Subsurface Aquifers/No USDW Ruling/Waivers Granted Areal pressure data from the Prudhoe Bay area and indicates that a flat piezometric surface exists in the Torok. No subsurface fluid movement is expected within this aquifer and since the groundwater is static, only injection and production from this area would be expected to produce fluid movement. ------- Pioneer had previously requested that EPA confirm that the aquifers beneath the ODS in the Beaufort Sea do not qualify at USDWs and submitted petro-physical and water sample data to support this request. This information showed that the aquifers below ODS, within the correlative intervals (referenced in the Arco Kalubic-1 type log) below the Hue Shale marker within a V2 mile radius of the candidate Class I injection wells (DW-1 and DW-2), do not qualify as USDW and are authorized for Class I injection activities. Based on information provided by Pioneer, EPA confirmed the "No- USDW" ruling for the portions of aquifers requested. Aquifers below the permafrost have salinities in excess of 10,000 ppm TDS based on logging data and confirmed by Torok fluids samples that show salinities between 16,800 and 24,300 ppm. (EPA letter from Michael Bussell, Director, OCE, to John Hellen, Pioneer, dated August 18, 2006). Due to the absence of USDWs at the proposed location(s), EPA granted three (3) waivers of UIC regulatory program requirements upon issuance of AK11009-A. EPA intends to waive the following requirements in the draft permit reissuance: (1) Compatibility of Formation and Iniectate (40 CFR § 146.12 (e)(4) and (5) and 146.14 (a) (8): Based upon the applicability of past injectability studies, injection history at the North Slope of Alaska, and the performance of ODSDW1-44 since 2008, EPA intends to waive the requirement to sample and characterize formation fluids and the rock matrix in order to determine whether or not they are compatible with the approved injectate stream. (2) Injection Zone Fracturing (40 CFR § 146.13 (a)(1)): Class I injection wells are prohibited from injecting at pressures that would initiate new fractures or propagate existing fractures within the injection zone. The draft permit would waive this prohibition, and would instead allow hydraulic fracturing of the injection and arresting zones so long as fractures are not propagated within the confining zones as indicated in the application submitted by Caelus and discussed in the section Injection and Confining Zones of the fact sheet. (3) Ambient Monitoring Above the Confining Zone (40 CFR 146.13 (b)(1) and (4) and 40 CFR § 146.13(d)): EPA intends to waive the requirement to monitor the strata overlying the confining zone for fluid movement since the aquifers at the Oooguruk Unit are too naturally saline to qualify as USDWs (meet "No USDW" criteria). Summary of Proposed Action and Permit Conditions EPA has primary enforcement authority in Alaska for Section 1422 of the UIC program (authorized by Part C of the Safe Drinking Water Act), which includes the regulation of Class I ------- injection wells. Class I non-hazardous industrial wells are used to inject waste fluids that are exempt from hazardous characterization or non-exempt and non-hazardous beneath any existing USDW. EPA proposes to reissue a permit to Caelus for up to two Class I non-hazardous waste injection wells at the Oooguruk Unit. At the Oooguruk Drill Site, Caelus operates one non- hazardous Class I injection well, ODSDW1-44, and is authorized to drill a second injection well at a later date. Over 4.8 million barrels of approved fluids for disposal have been injected through ODSDW1-44, including produced water, domestic wastewater, drilling mud and cuttings, and other non-hazardous fluids. The proposed, reissued permit would contain limits on the construction specifications of Class I wells, type of injected fluids, and the pressure of injection. It would also require mechanical integrity testing and reporting at regular intervals. These terms and the regulations that govern underground injection are implemented to ensure proper construction and use of injection wells. Caelus intends to operate injection wells at ODS for the 10-year life of this permit. Based upon available information, EPA has determined that the aquifers beneath the Oooguruk Unit meet the criteria for a No-USDW Ruling area and has waived some of the requirements for Class I wells. Namely, EPA has previously waived and intends to continue waiving the requirements for Caelus to determine compatibility of injected fluids and the rock matrix, to monitor the aquifers above the injection zone, and the prohibition against fracturing the subsurface. The Director can waive certain requirements under 40 CFR § 144.16(a)), and has chosen to do so in this case based on historical injection performance, the lithology of the injection and confining zones, and the ruling that "No USDWs" are located within V2 mile of the injection wells. The draft permit contains general legal provisions common to EPA permits, specific technical requirements that apply to all Class I injection wells, and particular technical, monitoring and reporting requirements for the proposed injection operations at the Oooguruk Unit. Underground injection is a disposal option that can replace direct discharges to surface water bodies and/or the transportation of waste to above-ground disposal sites. In the event that the Class I injection wells are non-operational, camp wastewater may be discharged to the Beaufort Sea under the general North Slope Alaska Pollutant Discharge Elimination System (APDES) permit. Marine discharge would only be used as a last resort in the event that injection is not an available disposal method. The conditions in draft permit AK1I009-B allow injection in a manner protective of USDWs, human health, and the environment." Public Comment Persons wishing to comment or request a Public Hearing on this Class I Non-Hazardous Draft Permit may do so during the public comment period. The public comment period will begin on June 30, 2017 at 9:00 AM Alaska Time Zone, and end on July 31, 2017 at 5:00 PM Alaska Time Zone. A request for a Public Hearing must state the nature of the issues to be raised as well as the requester's name, address, and telephone number. All comments and requests for Public Hearings must be in physical or electronic writing and should be submitted to the EPA as described in the Public Comments Section of the attached Public Notice. Please send your ------- comments and requests to the below physical or email address by the close of the public comment period. Evan Osborne, UIC Program Specialist U.S. Environmental Protection Agency, Region 10 OCE-101, Ground Water Protection Unit 1200 Sixth Avenue Seattle, Washington 98101 osborne.evan@epa.gov After the Public Notice expires and all comments have been considered, the EPA's Regional Director for the Office of Compliance and Enforcement will make a final decision regarding permit issuance. If no substantive comments are received, the tentative conditions in the draft permit will become final, and the permit will become effective upon issuance. If substantive comments are received, the EPA will address the comments and issue the permit. The permit will become effective no less than 30 days after the issuance date, unless an appeal is submitted to the Environmental Appeals Board within 30 days pursuant to 40 CFR § 124.19. ------- |