COMMONWEALTH OF KENTUCKY OIL AND GAS WELL OPERATOR’S MANUAL Prepared by: Division of Oil and Gas Division of Waste Management Division of Water Representatives of the Oil and Gas Industry Public Service Commission State Fire Marshal's Office December 2012This report was sponsored by tho United States Department of Energy, Office of Fossil Energy, under contract DE-FG22-94MT94006. For information on this and other enesgy related projects contact: US Department of Energy National Technology Petroleum Office PO Box 3628 Tulsa, OK 74101 (018) 699-2000 NOTICE: This report was prepared as an account of work sponsored by an agency of the United States Government, Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefillness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe with privately owned rights, Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise, does not necessatily constitute or imply its endorsement, recommendation, or favoring by the United States Government, any agency thereof or any of their contractors or subcontractors. The views and opinions expressed herein do not necessarily state or reflect those of the Unites States Government, any agency thereof or any of their contractors.TABLE OF CONTENTS Document Created April 1997 ~ Updated July 1999, June 2011 Foreword Introduction . Simplified Checklist Well Operator's Activity Chatt. Agency Regulatory Authority SECTION I. PRE-DRILLING Bonding Wel Pla Shallow Well Definition and Spacing Requirement Deep Well Definition and Spacing Requirements... Variance from Well Spacing... Pooling of Oil and Gas Interests. Gathering Line License ..w Well Permit. n.urnnsnn Gathering Line Permit Wall Permits Underlain by Coal Seams. Coalbed Methane (CBM) Well Permits in Gas Storage AtCA.n.n0 ‘Well Permits on Severed Mineral Tracts Stream Crossing, Wetlands, Wild Rivers anc ‘Twin Wells... cdataneatieee Directional or Horizontal Wells nner SECTIO! DRILLING Spudding-Drilling Blow-Out Preventer Requirements. Emergency Situations... Protection of Fresh Water Zones. Drilling Pits... Storage of Drilling Fluids. Handling and Disposal of Trash.. Protection and Disposal of Trash. Drilling Through Coal Seats .n0 Drill Samples-Generation and Storag Drilling Deeper than Permitted Depth.TABLE OF CONTENTS \CTION IJ. COMPLETION-OPERATION Well Completion-Filing of Well Record ...seunn As-Built (or “As-Drilled”) Well Plat in Coal Areas. Disposal of Completion Fluids. ee Registration of an Oil and Gas Facility. Danger Signs Posted on Storage Facilities. Storage and Piping Systems Compliance. Spill Prevention Control and Countermeasure (SPCC) Plan. Underground Storage Tanks : Disposal of Tank Bottom Sediments (BS) ‘Transfer of Ownership of Oil and Gas Facility... “Transfer of Well Ownership. Holding Pits... Improperly Abandoned Wells “T.A. Permit... ‘Testing Perm : Underground Injection (Class It) Wells Produced Water Disposal Use of Vacuum for Enhanced Recovery Hazardous Waste Generation Storage and Disposal Groundwater Protection Plan Reporting Spills, Bypasses and Leaks of Oil, Produced Fluids and Chemical... Cleanup of Oil, Produced Fluids and Chemical Spills NORM... Filing of Anmuat Oil and Gas Production. Underground Mining Activity near a Well, Fan Tap Service Gas Production or Gas Gathering Pipelines. Quality OF G8 ssn Gas Storage nnn SECTION ABANDONMENT AND CLOSURE Plugging of Wells Site Closure. Well Site Reclamation on Severed Mineral Tracts Bond Release vm Bond Forfeiture 53TABLE OF CONTEN' SECTION V. INSPECTION AND ENFORCEMENT Division of Oil and Gas Inspection — Enforcement Policy Division of Water & Division of Waste Management Inspection Enforcement Policy . Public Service Commission-Enforcement Policy... APPENDIX A See Appendix Cover Page for Listing of Contents APPENDIX B See Appendix Cover Page for Listing of Contents,THIS PAGE WAS INTENTIONALLY LEFT BLANKFOREWORD For over 100 years, exploration for oil and gas has occurred in the Commonwealth of Kentucky, Conservation of these resources was addressed by the ratification of the interstate compaet io conserve oil and natural gas in 1942. ‘This compact was later repealed, amended and re-enacted by joint resolution of the General Assembly in 1948. Regulation regarding these exploration and conservation efforts began in 1960 by the formation of the Kentucky Oil and Gas Conservation Commission and the Oil and Gas Division under the Department of Mines and Minerals. From 1960 until the present, various other agencies have adopted regulations regarding the numerous activities related to the exploration of oil and gas in Kentucky. These agencies, as listed throughout this document, have developed regulations regarding the activities which in many cases overlap and possibly add confusion to the regulated community as to which agency and regulation apply to a given situation. In order to provide a better understanding of all the regulations and agencies responsible for these rogulations, this manual was prepared. Use of this manual shall hopefully provide guidance to compliance with the respective regulation of the appropriate agency and the manner under which operations should be conducted. The Division of Oil and Gas wishes to acknowledge and express appreciation to the following team members that participated in the preparation of this manual. They include the following: Rick Bender (resigned), Brian Gilpin (retired), and Marvin Combs from the Division of Oil and Gas, Dan Juctt, Jim Sproies and Gene Blair (retired) from the Division of Water, James Hale and Tim Hubbard from the Division of Waste Management, Ralph Dennis from the Public Service Commission, Rodney Raby and James Helm from the State Fire Marshal's Office, and Charles P, Susie and Michael Sanders representing the Kentucky Oil and Gas Association. In addition, the Division would also like to thank the U.S. Department of Energy for the financial support of this effort, The regulated community should use this document as a reference manual and shall serve as a useful tool for achieving compliance and fostering further exploration efforts in the Commonwealth of Kentucky. The Department of Energy should be commended for their support and encouragement of this and other similar projects. vii‘THIS PAGE WAS INTENTIONALLY LEFT BLANK viiiINTRODUCTION ‘This handbook was prepared by a task force consisting of representatives from state regulatory agencies and the oil and gas industry under a grant from the U.S. Department of Energy. The purpose of this handbook is to serve as a guidance document and reference manual for oil and gas well operators in dealing with state and federal agencies which regulate the various phases of drilling, production, operation and abandonment of oil and gas wells. The manual is composed of sections listed in chronological order from Pre-Drilling through Well Abandonment which an operator would typically follow in drilling a well. A plified step-by-step checklist using this format is included (See Pages xi-xiii). A Well ‘Operator’s Activity Chart is included describing regulatory agencies’ involvement in the various phases of operation (See Pages xiv-xvii). A natrative describing each phase of well operation with regulatory agency requirements is included and listed in the Table of Contents. The appendix contains directories of state and federal agencies and personnel, regulatory agency forms and other information to assist the well operator in complying with Kentucky statutes and regulations, Forms shown in Appendix B of this manual are for example and ate not intended for official use. It is recommended the agency having regulatory control of the form be contacted concerning any requirements for form use and reproduction. ‘This manual is presented as a general reference and illustrates those practices which have been proven in a safe and workman-like manner to conform to State and Federal regulation at the time of printing, It is beyond the scope of this manual to cite every applicable state and federal regulation and statute, and thus this manual is not intended to take the place of one’s responsibility to know and understand all applicable regulations and statutes. Statutes and regulations referred to in this manual are not provided in their complete form. The reader is encouraged to read the full fext of cach statute and regulation and seek counsel if and when necessary for clarification as to the applicability of each.THIS PAGE WAS INTENTIONALLY LEFT BLANK.SIMPLIFIED STEP-BY-STEP CHECKLIST (i) PROCEDURE FOR DRILLING A WELL IN KENTUCKY Section 1. Pre-Drilling and Permitting a Well (1 Prepare a Game Plan for each well drilled. It is recommended that the operator prepare an overall game plan that incorporates all actions to be undertaken by the operation. This plan should include all impacts to the environment and the rights of all parties involved. (Post bond with Division of Oil and Gas. See Page I. ‘Obtain a Gathering Line License with Division of Oil and Gas. See Page 6. Prepare a well plat of the well location. See Page 3. Obtain a well permit, See Page 7. Obtain a flowline/gathering line permit, See Page 8. Obtain permits for stream/river crossing. See Page 14. gauadcmwmcdadcmcallca Plan for management and disposal of waste generated by the operation including construction of the drilling pit. See Page 21. Section 2, Drilling Notify Division of Oil and Gas Inspector (on permit) 24 hrs. before spudding. See Page 19. 3 Construct drilling pit adequate to contain drilling fluids and prevent flow into streams, See Page 21. (1 Contain and dispose of drilling muds/fluids in accordance with applicable regulations. See Page 21. © Post drilling permit at the well site during drilling, 1 Set surface or intermediate easing in accordance with regulations, See Page 17. 1 Provide Oil and Gas inspector with total depth, amount of easing, if'run and coment quantity immediately following completion of drilling. See Page 17. xiSimplified Step-by-Step Checklist (M1) Procedure for Drilling a Well in Kentucky Contain and clean-up oil spills, leaks, discharges or releases of pollutants immediately. For reportable spills notify Environmental Response Team 1-800-928-2380. See Page 43. Section 3. Well Completion and Operation. Fille well records with Division of Oil and Gas 90 days after reaching total depth, See Page 25. CG Fife As-Built well plat in coal areas and inclination/directional surveys with Division of Oil and Gas 30 days after reaching total depth. See Page 26. battery with Division of Water within 60 Days after production begins, See 1 Submit annual production report to Division of Oil and Gas on or before April 15" for previous year, See Page 45, J Dispose of waste in accordance with applicable regulations. See Page 41. J Contain and clean-up oil spills, leaks, discharges or releases of pollutants immediately. For reportable spills notify Knvironmental Response Team 1-800-928-2380. See Page 43, Section 4, Abandonment and Closure (Plugging well in accordance with Inspector's instruction, See Page 50. File plugging affidavit with the Division of Oil and Gas. See Page 50. © Remove del See Page 51. is and associated equipment in conjunction with site closure. CG Remove equipment upon closure of lease activities and contact Division of Water for inactivation of registration. Sec Page 51. backfill of (Take steps as necessary in order to prevent erosion and sedimentation inch pits. See Page 52. xiiSimplified Step-by-Step Checklist (1) Procedure for Drilling a Well in Kentucky Perform well site reclamation on severed mineral tracts in accordance with applicable regulations. See Page 41, Contain and clean-up oil spills, leaks, discharges or releases of pollutants immediately. For reportable spills notify Environmental Response Team 1-800-928-2380. See Page 43, Assure that all wastes have been properly disposed and all releases have been cleaned up. [Request release of bond upon completion of site closure, filing of records or transfer of wells to another operator. See Page 53. xiiiWELL OPERATOR'S ACTIVITY CHART 1 DOG.Division of O1& Gas DOW-Diision of Water DWNEL.SWB-Dhvsion of Waste Management Solid Waste Branch DWWMHWB-Division of Waste Management Hazardous Waste Branch SFM Kenlucky State Fie Marshare Office ‘EPAUnited Statos Environmental Protection Agency ‘STATEFEDERAL REGULATORY “ADMINISTRATIVE REGULATORY PERMIT AGENCY REGULATION or \CIVITY__AGENCY FEE REQUIRED FORMNO. TIME STATUTE _REMARKS. Ir PREDRLUNG D5, E08 ot aona sear eas hoaiear et Bons loonding p00 oaadesns ears | tise | sosxan rose [Bored mer lorwwor cnogn | we e020 | _we1_| _xnassas00 see [Gathering Lo} f equa : [Flow Line >rowy lLiconse 00 ico] ves x02 esa aewoved | se tna | sneer s030 went | 00g | re No vweseiat__| 1 vearcs | wn a520010 |» Ps kaso man a0o0rLo Perit 659510. feet Diol ste [suatowwets | _o05._| ress | __voe coo | sveor | reas fe paces Pat cor 05 xa 100 feastero¢oeg. 26 an, beep Wes, eon | vex 02 | tyes | anpran sto [mesos i Welt Spacing Reon Wvariance. p00 | noes wo | none | none | eas assen0 [sPace 6 epost iecstes on As On, Wat Pt 553670 Jeepers, oe pane, as3sasi0 fspuavinint Year Iwetremats | pos | _ssso ves cor__| sveae | nesasasen [+ pager = i ae [eave on a7 es | Gathering Line 20022 tavine osxar w1eo focnpie. [Permit 08. ves eo [pase Wed Pernits Fem iS oy stsan Far in Coat Foe Fer costes. exausten Regions voa_| ise ve co1__|_tvesr_| xesaseo [ence 10" [Coated ‘sv e010” [isco FL petesot CO Wale Itethano Well Tough PSOFL From Propane Regulations | _oa6 ves cova | tyes | aosxanscon fe Pace Wel Permits Nety cas Sra linGas Storage est pce. Irelas 00 | seo) ves eo tear _| easier 1000 [Pace 2 (Wel Pevaite Tete) soo seein Feo lon Sovored Se et eas xart70 Sut Owns & Ofer Mineral Tracts ranaae | _ veo cos | svese_ | xasss.s901 |race 13s {Gross Wetlmds, ‘orsuect J er [stm cosa Iie Rivet, Steam exoraing | to | aoskansoun [aaqorarreene | lbischarge "| cow | Nave ve. isan | cms | ues sins [ease 16 [wer site 401A 06 i set Eno Iwvaste hom. Jowesne | eee | Xeno Nena ena | cor ARTO00 [strats [cuidatnes J ease ae [Pace 134 200 xiv‘STATEREDERAL REGULATORY ‘ROMINISTRATIVE REGULATORY PERMIT AGENCY [REGULATION or \CTIVITY AGENCY FEE REQUIRED FORMNO. TIME STATUTE __ REMARKS [objection Wait 1508 Henin lny CoalOper. | 006 | none Ne None novo _|_ xassss050_[wence : Pent Jars st Padace re warps Iremonicatzores frwinweis | 000 | aso) ves £03 | sve | kesssseiorm | PAse 16 werriat SI6KAR 1020 ebrCross Seen IDirectonal or Part r03 fexskan 1140 [Reason vin Pat Iorizontal f ©? 1KRB.52550 | 20. Regus hwets pos _| xa) Yoo eos | syex | ImPace ss z [Pooing of a, Weaty eure Icas acts | 009 | nore No woo | rvexr | xnssson | race o™ I. DRILLING out 000 wapecra Te 8 let Spas, conse specter Ispucaing et lat voit Det [Dating 05 | rene | vos coo | tvew | nesssses0 [Pace 10 : stk Con aT ie ja Prmventstace str Contaninaon sor Kan sono lonnng Pis_| cow | nure No one__| 0090 | a i5is25_ | page 210 [Protection of (casiy Se 20 Baie Fresh Water saskan tao [agaor,cenentt Saco iors 08_| ters no | nano one _|_wesaasz0_ [pace 20° [Dning Tixough (Gsig Se 27 BobH nate n9 359.090 [coal ean, Cemerte curaee icoaseans | cos | None | No _None | None | kas 55100 Pace Gor KAR 91035 [on rating Pewit 401 KAR 4s000 fRoustemcnts uid ormswe| tone | _ opie Nowe one _| wRs2a¢¢0 260 |» Pace 22 Ky. O00 Sa87 Reed r Ree lo Geol saves p00_| teas te Nese oe a “or Ka a a0 taco lot Porat sor aR G00 |Renscenent ISomples | onmeows| rene | _syrue__|_tlone none _| sor gan asc |» PAGE 23 Dring Teint Hetty 0.06, apace, JDeoper Bova oy lay Reqs Revsonct [Than Be usa 1120 |Past Bond Permited ocean loepin Ne noe roms_| ngesmsn [+ pA0€ 29 [Biow-oat easkaR ra0 [isn8 Teo Passe preventer asian s140 |is008 Tet Pressure (BOP) |_wone_| vo or ions _| “kas seisz0 |*Page 19" Ii COMPLETION. OPERATION Fae £0.00 Daye Aer Wel Completion 09 | coy lrnng, etc Logs Filing of Wel les eos8xenooed Records 900_| nme Ne 0. sows | wesseaseo [Paoe 25" fas-Buik "Fs Ore ee fw. Vanco o 16 wen 00 | tne No “asm | 500%; vee vane 180 FL [Prot | Watt [space 26" xvSATEFEDERAL REGULATORY ‘ADHAINISTRATWE REGULATORY PERMIT AGENCY REGULATION o¢ lkctvy "ABENGY FEE REQUIRED FORMINO, TIE STATUTE _RERUARKS. lovectonay 30 05}> a tty mac Iircination | 00c | re to seo | won te Centon Isurw ans Ivexce20~ fRcaisvation oF ale Ga [Sparcceawin Cones lora cas Footy fsa, tess Pave a | lracity etuaton ses can save [s 00% Rowse to, ankBatley| | oom | none ves Fam | coonys | wea 6125 |» paces one Are G15 xan 1908 [ope aretha coup [storage and ‘Toms EPAID fuindFPA 308 Carartes, IPeing Systm Patri | aes | ay.tie fig. terre. comn Icompionce | srw | ssa ve soz ua. _|carsmuon| riercoy [eave 99 ger Sion iPsisco oF lon On Storage. rae every Facies | ans 0 noe | neo | nasssaosn [-enoeso » spt Prevenfon EPAWOOFR [Pan ntbo [Gontcoland | vpn | pons i102 42 faconeace [Countermeasure rcs | sor kan sasn frtnan ors ire (SPco)Pian | vow | tom ye erconm faotup | Kes e128 PAog91 Minster of \ewcpoasttoree Well festa Retaton Fame Jormeship | 000 | sower | no cots foro __|nssxxeo _freaoese Tonsiten | 20 Oa fat uices sions Bopirain | sete |eornansos9 forrossea vem. lHotaing Pas _| vow | sicoso| vos Bin fooswuatnn|ene 1405 opaceas rnproporiy Abandoned Jit conpion por, lwers-Tempoiary frsceaornast [Abandoned vow | veto feceroTA, lpermiss p03_| Nose es aves | 2yeas | ssssass0 Paces 7 : esa [Fis Rap often Testing Part ea ose lrermis__| 00s vez __[reputcrst | soaps fens 353.20 [paces lijecion Weis [ea ves 16208 foisan L10[erawoo 73370) loins lets vos | ners to m2 leasuar reco Depents eps Jacrosaterrcauea Produced ‘pen rere fastener [water spent Wate serra soeo vee vate iy Disposal wow | mrtos | vo xooes | neve | was sts25 |vercesom [vacuony TS KAR 1080 Pemy ALATA THOT Pumps 50a _| Nee Ne soo | none | “xnossiei0_fveasevoe [Operator “ot xan 22816 [oerersteera tan [clasitcaton 4O1KAR |20bs.taraons [ot Hazcrclons ‘hap. 2091 pact pormenh laste oamawa| rove Ne ico | tore _| nag 22046510 [Pace (Groundealer =f Uren] 404 KAR 087 wn an seaman OPP Protection ecity | xe 22101-010 [oreaorn yin S24 IFian GPP) | gow | nove No Noor | statap_| wns 22¢.10:1¢0 | Pace 62" xvi'STATEIFEDERAL REGULATORY ADMINISTRATIVE REGULATORY PERMIT AGENCY REGULATION or lactivity AGENCY FEE _REUIRED FORMNO, TIME STATUTE __REMARKS ow [tase cn ows [Reno | 20rKAR 5696 [Sots arco wateAOis lReponting ‘soe | 404 vam 5000 [shave pledsingzt spits, Byrasses tmatatey| xR 22 010 esac OOH ERT ay teats oo se 234 70-400 [a agen 2000 [Produced Fluids 10161425 /paacAa land Chamieats farce al apo Ba separ [ERT itmve to 29 Of oF ‘alt | KRG22601400 [75g laa a nina | none ie rons | mneastoy| x9 72401405 PAGES fees Ta ‘canna Freestenevgsu. Now. | rosoxces | None No om Irerseasn [ows Gas Fiona Tene Production fers Proecin Repacting 00_| None Ne cow | asas | praasaane |worce ise Iv. ABANDONMENT & CLOSURE Fes feeae negate Plugging of Fi Days fesmnossnucens [wets 00 | None ie oaa__| rupsea | wnaasa1i0 [>ercesom emninaion oF ‘Aer | 401 KAR 5060 [Toms Renoe, Si lors Gas cconatin | eR 15.428 |Redatond, Fact son | None Ne ow Graves | xn 24,4010 | pao stm fol Sa Freee ae Jrectomation year | axsrar sen fanerraaigans jon Severed ‘ater | KA 253501 [Reema ot, INinerat acts | vos | None Ke co1n | pea [eras szonsy|eacesa Jer iviaes Brera Fd fsond usar soto forvtats Tonstund laelesse woe | None | __ we 008 rone__| ee 3942069 | Paes” way looxaonnyor leond ‘ate | sian tas lesen Fovteture os | _None no | none __| notation | nas 351200 [Paes V. INSPECTION & ENFORCEMENT RE 0720 [spec MoyTepal [Divaion of OF & Gas 3992.50 [any Wesans Garsengtne Inspection & Enforcement een assen1 any Tine [Potcy B03 _|None Ne ore | severe | rus ssao2_ [races [Bniskan of Water “TNS 0 gens HOFER lz Waste Management 922140400 [anyon 8 Ga sey lnspection & Enforcement spo 2240400 fatany Tie Poly ‘oo [None Ne ow | aryine | x5522430010 PubieSenice fscon arse [commission peor Peete Forty KEnforcement es arscco |avanytive [Paticy psc fone ie vicoe | seve | i arncea_ Pace sss xviiTHIS PAGE WAS INTENTIONALLY LEFT BLANK. xvitiREGULATORY AUTHORITY Division of Oil and Gas ‘The Department for Natural Resources, Division of Oil and Gas is responsible for: © Regulating the bonding, permitting, drilling, casing, operating and plugging of all wells and associated flow lines and gathering tines in Kentucky. © Protecting the correlative rights of mineral owners. © Conserving and protecting the crude oil and natural gas reserves of Kentucky. Ensuring fresh water aquifers and mineable coal scams are protected from unreasonable damage due to production of crude oil and natural ges. Statute-KRS Chapter 353 Division of Water ‘The Department for Environmental Protection, Division of Water is responsible for: © Preserving the water resources of Kentuoky, ¢ Prevention, abatement and control of all water pollution. Regulating water pollution from oil and gas facilities, Statule-KRS Chapters 146, 151 and 224 Division of Waste Management ‘The Department of Environmental Protection, Division of Waste Management is responsible for: ¢ Ensuring that waste management activities within Kentucky are conducted in a manner to protect human health and the environment, ‘# Regulating hazardous waste, solid waste, special waste, abandoned sites, underground storage tanks and remediation of chemical and petroleum releases to the environment, ‘Statute-KRS Chapter 224 xixRegulatory Authority Public Service Commission The Public Service Commission is responsible for: # Inspecting and safety management of, natural gas transmission within the state and ulility ‘owned lines, compressor stations, meters, regulators and other pipeline facilities operated by oil and gas companies and natural gas utilities in Kentucky. ‘© Providing inspection end approval for farm taps. ‘© Responding to reported gas line leaks and potential hazards relating to state regulated pipelines, ‘© Regulating the rate utilities charge consumers for natural gas usage. ‘© Ensuring the quality of gas for consumers, Public Service Commission responds to reported gas line leaks, potential hazards relating to pipelines as well as dictates the rate utilities charge consumers for natural gas usage. Statute-KRS Chapter 278 State Fire Marshal’s Office ‘the Kentucky State Fire Marshal is responsible for: Inspecting to ensure safe storage and handling of ail flammable and combustible liquids near oil or gas wells and related production facilities. Statute-KRS Chapter 227 Underground Injection Control Section The U.S, Environmental Protection Agency, Underground Injection Control Section is responsible for: ¢ Preventing contamination of groundwater supplies from underground injection. # Regulating Class II wells which are injection and/or disposal wells associated with the production of oil and natural gas, Federal Regulation-40 CFR 100 to 149 XKI. PRE-DRILLING Bonding Division of Oil and Gas ‘The Division of Oil and Gas requires a performance bond to be on fie before a well is drilled or acquired from another operator. This bond is posted to ensure the proper plugging and abandonment of wells and to ensure the filing of well records with the Division. Should an operator fail to correct a violation, the bond may be seized by the Commonwealth of Kentucky. « INDIVIDUAL BONDS should accompany the well permit application when it is submitted 10 the Division of Oil and Gas. Bonds for individual wells are based on the well’s total depth as listed below: DEPTH (FT) BOND AMOUNT (8) 0-500" $500 501°-1,000° $1,000 1,001°-1,500° $1,500 1,501°-2,000" $2,000 2,001?-2,500" $2,500 2,501?-3,000° $3,000 3,0017-3,500° $3,500 3,501?-4,000° $4,000 4,001” or Deeper $5,000 or an amount set by the Oil and Gas Conservation Commission. * BLANKET BOND may be established fo cover all wells operated by an operator and shall be on file at the Division of Oil and Gas prior to permitting or acquiring wells. Any violation against a well listed under a Blanket Bond will prohibit any fature wells being permitted or transferred under that Blanket Bond, Porfeiture of any portion of a blanket bond will prohibit any additional operation. ‘The various types of bonds accepted for both blanket and individual bonds are listed below: CASH — Certified Check, Cashier’s Check, Money Order or CASH. SURETY - Obtained from an insurance company, Division assigned “Power of Attorney” from insurance company. LETTER OF CREDIT - Obtained from bank or other financial institution. CERTIFICATE OF DEPOSIT - Obtained from bank or other financial institution. Original Certificate of Deposit must be on file with Division along with verification form. A Certificate of Deposit may serve for a blanket bond, provided the first five thousand dollars ($5,000.00) of the blanket bond is posted with the division in cash.INDIVIDUAL PROPERTY BOND - A lien on the property to cover one well for domestic use, The property bond must be combined with a $1,000 cash bond. BONDING AMENDMENT KRS 353,590 has been amended duc to legislative action to include a Blanket Bond Tier Schedule Effective July 15, 2006 based on the well operator being classified as “Qualified” or “Non-Qualified” as described below: Qualified © Operator must have a blanket bond on file prior to July 15, 2006 and have no outstanding, unabated violations. © Oporator must have a record on compliance with all DOGC statutes and regulations for a period of thirty-six (36) months, © Provide proof of financial ability to plug and abandon wells covered by the blanket bond, Qualified Bla jond Tier Schedule No. of Wells Bond Amount 1-25 Wells, sn $10,000 26-100 Wells, $25,000 101-500 Wells, 501+ Wells... An operator which Is operating more than 25 wells under an existing blanket bond prior to this amendment will continue to operate under the $10,000.00 bond. If new acquisitions or permitting places the operator in a new tier, the bonding guidelines for that ier will apply. Non-Qualified ‘© Operator has more than ten (10) violations of KRS chapter 353 within the thirty-six (36) period ‘Operator has outstanding, unabated violations which have not been appealed. ‘Operator has had a forfeiture of an individual bond or partial forfeiture of a blanket bond. ‘And has no agreement with DOG for plugging of the well(s). © Operator has a permit or permits upon which a portion or the entire bond has been forfeited and the proceeds have been spent by DOG to plug the well(s). Non-Qualified Blank d Tier Schedule No. of Wells. Bond Amount. 1-100 Wells, $50,000 101 + Wells. $100,000 Regulation-805 KAR 1:050 ‘Statute-KRS 353,590 Fornis Surely, Leter of Credit, Cerificate of Deposit (Forms ED-5, ED-6, ED-16 and ED-20, See Append B) 2