Presenters: Joe Schneider and Colby Reid, Western States Reclamation, Inc.
34 slide

Chenoweth, David

Holland, David

Jacob, Gerald

Kruckenberg, Lindsey

Rizza, John

Whiteley, Bryan

English

Colorado Law

University of Colorado Law School Colorado Law Scholarly Commons Best Management Practices (BMPs): What? How? And Why? (May 26) 2011 5-26-2011 SLIDES: The Economic Benefits of Completing Initial Reclamation Successfully for Oil and Gas David Chenoweth David Holland Gerald Jacob Lindsey Kruckenberg John Rizza See next page for additional authors Follow this and additional works at: https://scholar.law.colorado.edu/best-management-practices-bmps  Part of the Administrative Law Commons, Animal Law Commons, Climate Commons, Energy and Utilities Law Commons, Energy Policy Commons, Environmental Health and Protection Commons, Environmental Law Commons, Environmental Monitoring Commons, Environmental Policy Commons, Natural Resource Economics Commons, Natural Resources and Conservation Commons, Natural Resources Law Commons, Natural Resources Management and Policy Commons, Oil, Gas, and Energy Commons, Oil, Gas, and Mineral Law Commons, Science and Technology Law Commons, State and Local Government Law Commons, Urban Studies and Planning Commons, Water Law Commons, and the Water Resource Management Commons Citation Information Chenoweth, David; Holland, David; Jacob, Gerald; Kruckenberg, Lindsey; Rizza, John; and Whiteley, Bryan, "SLIDES: The Economic Benefits of Completing Initial Reclamation Successfully for Oil and Gas" (2011). Best Management Practices (BMPs): What? How? And Why? (May 26). https://scholar.law.colorado.edu/best-management-practices-bmps/10 Reproduced with permission of the Getches-Wilkinson Center for Natural Resources, Energy, and the Environment (formerly the Natural Resources Law Center) at the University of Colorado Law School. Authors David Chenoweth, David Holland, Gerald Jacob, Lindsey Kruckenberg, John Rizza, and Bryan Whiteley This conference proceeding is available at Colorado Law Scholarly Commons: https://scholar.law.colorado.edu/best-management-practices-bmps/10 THE ECONOMIC BENEFITS OF COMPLETING INITIAL RECLAMATION SUCCESSFULLY FOR OIL AND GASDAVID CHENOWETHWESTERN STATES RECLAMATION, INCCO-AUTHORSDAVID HOLLAND, GERALD JACOB, LINDSEY KRUCKENBERG, JOHN RIZZA, BRYAN WHITELEYINTRODUCTION TO CASE STUDY APPROACHStorm water management and proper reclamation is viewed as a direct cost of energy production.Until the upper management in energy companies understand  what an adequate reclamation budget is, there is great risk that environmental staff will not be granted adequate budgets for successful initial efforts.INTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOSEnvironmental coordinators and contractors have an obligation to maintain accurate annual cost data that tracks the cost for:• Adequate budget for successful reclamation• Cost of repair for failed reclamationAll of us as environmental professionals realize that our efforts in reclamation and stormwater management do not add to the bottom line profitability and stock value for energy development. However, we can add to the bottom line when our consulting and contracting efforts are on track and geared towards successfully completing initial reclamation. CASE STUDIES + COST DATA• Assesses varying successes of reclamation and stormwater management efforts• Pioneer Natural Resources• Study Area = Raton Basin, Trinidad, CO• Encana Oil and Gas• Study Area = Piceance Basin, Rifle and Rullison, CO• Cost analysis – Based on in-house records from Encana and Pioneer Environmental staff, Actual bids from Western States Reclamation, Inc. and contract amounts for work completedINTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOSSITE LOCATIONSPioneer Natural Resource Study Area = Raton Basin, Trinidad, CO(Figure USGS)INTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOSSITE LOCATIONSEncana Oil and Gas Study Area = Piceance Basin, Rifle and Rullison, CO (Figure USGS)INTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOSDISCUSSION• Round Table – Encana, Pioneer and Western States Reclamation• Poor initial reclamation = Increased Lease Operating Expenses• Establish list of key factors for successful reclamation projects• Commonly associated direct costs• Commonly associated indirect costsINTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOSKEY FACTORS FOR SUCCESSFUL RECLAMATION• Site Inventory + Analysis• Locate facilities and access roads to minimize slope and stormwater runoff• Soil Inventory• Vegetation Species Inventory• Drainage Basin or Watershed Information• Noxious Weed Inventory• Analysis of Inventoried information• Identify areas for potential topsoil salvage and establish a replacement plan for interim and final reclamation• Grade pads and install terraces, berms, benches, etc. to reduce sediment loading during interim and final reclamation• Geomorphic landforming and earthen hydrological controls• Apply the proper types and amounts of soil amendments to the soil when topsoil is lacking or poor quality• Organic fertilizers and humates used on both Pioneer and Encana sites with success. Cost effective and easy to apply by broadcasting or mixing in hydromulcherINTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOSKEY FACTORS FOR SUCCESSFUL RECLAMATION• Perform proper soil tillage to loosen compaction• Design proper seed mixtures and application rates• Adapted and native grasses, forbs and shrubs• Post Disturbance land use (ie. wildlife habitat, livestock grazing)• Number of total seeds per sq. ft.• Balancing seeds per sq. ft.• Install and maintain BMPs and erosion control devices until the desired vegetation achieves self sustaining cover• Maintenance and monitoring program that includescomplete mechanical and chemical weed controlINTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOS• Seeding Method Selection• Drilling• Broadcast• Hydroseed• Aerial Seeding• Dozer broadcasting and slope tracking• All broadcast seeding raked or harrowed into soilKEY FACTORS FOR SUCCESSFUL RECLAMATIONINTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOSKEY FACOTORS FOR SUCCESSFUL RECLAMATION• Mulch and Erosion Control Fabrics Selection• Innovation in FGM, BFM, ECM• Straw/Hay• Hydromulch• Combination of Mulch and Structural• Structural BMP Selection• Erosion Logs• Silt Fence• Sediment Tubes• Erosion Control BlanketsINTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOSMONITORING AND MAINTENANCEMAINTENANCE• WSRI wrote and is implementing an Independent contractor monitoring, recommendation and maintenance program for oil and gas  • Recognizing soil condition and inadequate amendments• Recommendations to aid in vegetative establishment (Watering, Additional Amendments, etc.)• Prompt weed control• Contractor becomes responsible for oversightsINTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOSMONITORING AND MAINTENANCEMAINTENANCE• Weed Control• Mechanical – Bush hog, weed eaters, hand pulling• Typically used in 1st growing season and completed 2 times• Chemical applications• Control when 20% canopy cover is achieved• Touch-up Seeding• After first growing season - 2 Seedlings per sq. ft minimum or touch up seeding must occur• Touch up seeding accomplished by broadcast and hand raking in small areas or drill interseeding in large areas.• BMP Repairs• Regrading• Addition of more BMP’s when neededINTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOSCOMMONLY ASSOCIATED DIRECT COSTS OF RECLAMATION FAILURES• Retrieving sediment from erosion and sediment events, including off-site• Replacing sediment or other suitable materials in washout areas• Regrading• Reseeding• Replacing and adding BMPsINTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOSCOMMONLY ASSOCIATED DIRECT COSTS OF RECLAMATION FAILURES• Extending the duration of weed management activities• Additional maintenance and inspection costs• Between Pioneer and Encana the costs are estimated to be between $13,000-$43,000 per acre.INTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOSCOMMONLY ASSOCIATED INDIRECT COSTS• Increased staff and consultant time• Oil and Gas Environmental Staff or private consultants approximate rates are $100.00 per hour. Thus several thousand dollars could be wasted easily in dealing with poor reclamation and erosion issuesINTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOSCOMMONLY ASSOCIATED INDIRECT COSTS• Tarnished agency and landowner relationships• What kind of price tag do you put on production delays due to challenging relationships?• Potential regulatory and non-compliance• What are the potential costs associated with fines?INTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOSTable 1 - Estimated Costs of Proper Reclamation Practices on Drill PadsEnCana - Piceance Basin Pioneer - Raton Basin(2.1:1 to 3:1) (1:1 to 2:1) (2.1:1 to 3:1) (1:1 to 2:1)Treatments Cost per Acre Cost per Acre Cost per Acre Cost per AcreLifespan Planning $950 to $1,150 $950 to $1,150 $1,250 per acre $1,500 per acreTopsoil Conservation $525 - $1,142 $450 - $1,101 $750 $1,000Topsoil Replacement $1,100 - $1,060 $950 - $1,020All Inclusive, Drill Seeding w/ straw mulch, tackifier, BMPs $14,000All Inclusive, Hydroseed w/ Flexterra hydromulch, BMPs  $17,000Pad Regrading $1,224 - $1,632 $1,224 - $1,632Landforming $9,500.00 $9,900.00Soil PreparationAll Inclusive, Drill Seeding & Crimped Straw $2,620.00All Inclusive,  Broadcast Seeding & Flexterra Mulch  $7,015.00Soil AmendmentsSeedingMulchingBMP's $900.00 $900.00Weed Control $125.00 $200.00 $125 $200Total Costs $16,944 to $18,129 $21,589 to $22,921 $16,125 $19,700INTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOSINTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOSCost Impact of Sloping Sites Encana• Price Increase of %21 for steep slope reclamation (2:1 and over)Pioneer• Price Increase of %19 for steep slope reclamation (2:1 and over)Table 2 - Estimated Costs of Low Budget Reclamation Practices on Drill PadsEnCana - Piceance Basin Pioneer - Raton Basin(2.1:1 to 3:1) (1:1 to 2:1) (2.1:1 to 3:1) (1:1 to 2:1)Treatments Cost per Acre Cost per Acre Cost per Acre Cost per AcreInitial Planning $520 to $570 $520 to $570 $1,000 $1,000Topsoil Stockpiling $775 $625 none noneTopsoil Replacement $1,350 $1,250 none nonePad Regrading $1469 to $2122 $1469 to $2122 $1,000 $2,000Subsoil Contour Grading $11,100 $10,750 none noneSoil Preparation none none minimal minimalSoil Amendments none none none noneSeeding $500 $500 $500 $500Mulching none none none noneBMP'sminimal non-structuralminimal non-structuralminimal non-structuralminimal non-structuralWeed Control $250 $400 $250 $400Total Costs$15,964 to $16,667$15,514 to $16,217 $2,750 $3,900INTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOSLarge cost variability between Encana and Pioneer is based upon….EncanaNew staff hired specifically to address reclamation procedures and reduce associated fines.PioneerEnvironmental staff still working with low and inadequate budgets.INTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOSCosts Associated With Unsuccessful Reclamation Programs • Redo Costs can be very subjective but an estimate between professionals is $20,000 to $40,000 (depending on severity of site degradation)• Starting the process over• Fines• Administrative time• Direct costsTable 3 - Costs Associated with Reclamation FailuresEnCana - Piceance Basin Pioneer - Raton Basin(2.1:1 to 3:1) (1:1 to 2:1) (2.1:1 to 3:1) (1:1 to 2:1)Redo Treatments Cost per Acre Cost per Acre Cost per Acre Cost per AcreSediment Clean Up $500 to $1000 $500 to $5,000 $500 to $1,000 $1,000 to $5,000Fill Placement $500 to $1000 $500 to $5,000 $500 to $1,000 $1,000 to $5,000Regrading$11,100 to $13,100$10,750 to$13,750 $5,000 to $10,000$8,000 to $15,000Reseeding and MulchingDrill Seeding & Crimped Straw$2,620Broadcast Seeding & Flexterra Hydromulch  $8,017Drill Seed, Straw Mulch w/Tackifier$2,000Hydroseed, Flexterra Hydromulch $8,000Fix BMP's and Add More $5,000 $5,000 to $10,000 $5,000 $10,0001 Year Extended Weed Control $350 $450 $250 $400Total Costs$20,070 to $23,070$25,217 to $42,217$13,250 to $19,250 $28,400 to $43,400INTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOSINTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOSIndirect Cost Estimates Resulting From Unsuccessful Reclamation• Fines can range from $0.10 - $15.00 per acre depending on site conditions and other relevant factors• Administrative costs can range from $20,000 to $120,000 per year depending on the amount and severity of unsuccessful reclamation• An estimate of lost opportunity costs to be in the area of $1,000 per acre in standard situationsAverage Cost Per Acre$0$10,000$20,000$30,000$40,000(1:1 to 2:1) (2.1:1 to 3:1) (1:1 to 2:1) (2.1:1 to 3:1)EnCana - Piceance Basin Pioneer - Raton BasinLow Budget Proper Reclamation Reclamation FailureComparison of Successful and Failed Reclamation (per acre)$0$10,000$20,000$30,000$40,000$50,000(1:1 to 2:1) (2.1:1 to 3:1) (1:1 to 2:1) (2.1:1 to 3:1)EnCana - Piceance Basin Pioneer - Raton BasinProper Reclamation Total for Reclamation FailureINTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOSINTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOSCONCLUSIONS • Significant proof that there are economic benefits to proper initial reclamation• Minimal input reclamation programs result in significantly higher failure rates• Reclamation failures can result in a 50% cost increase over initiating proper initial reclamation techniquesINTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOSCONCLUSIONS Include the accounting department!• Environmental staff has an obligation with company to have a system in place that can track costing and that presents the importance of having adequate budgets for initial reclamation• Environmental staff should consult with accounting staff to find out availability of job costing software and systems. If a software program or system isn’t established an Excel spreadsheet or QuickBooks program can suffice• Set up effective job costing, coding and report system to account for:• Administrative time• Consultant time• Field repairsINTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOS JUNE 2005SEPTEMBER 2008O’NEILL RANCH – PIONEERINTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOS JUNE 2005SEPTEMBER 2008O’NEILL RANCH – PIONEERINTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOS JUNE 2005SEPTEMBER 2008O’NEILL RANCH – PIONEERINTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOS BMP Blanket InstallFGM ApplicationENCANA OIL & GASINTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOS Seed + Straw + SlashROW – Shrubs + Seed + SlashENCANA OIL & GASINTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOS Trapped SedimentSediment PondENCANA OIL & GASINTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOS BeforeAfterENCANA OIL & GASINTRODUCTIONCASE STUDIESDISCUSSIONCONCLUSIONSITE PHOTOSCONTACT INFORMATIONWestern States Reclamation, Inc.Frederick, CODavid Chenoweth 303.833.8821dchenoweth@wsreclamation.com

SLIDES: The Economic Benefits of Completing Initial Reclamation Successfully for Oil and Gas

https://scholar.law.colorado.edu/cgi/viewcontent.cgi?article=1009&context=best-management-practices-bmps

SLIDES: The Economic Benefits of Completing Initial Reclamation Successfully for Oil and Gas

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