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BEFORE THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
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IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE LEYDEN GAS STORAGE FACILITY, JEFFERSON COUNTY, COLORADO |
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CAUSE NO. 146
ORDER NO. 146-3 |
REPORT OF THE COMMISSION
This cause came on for hearing before the Commission at 10:00 a.m. on August 18, 2003 in the Petroleum Hall and at 8:00 a.m. on August 19, 2003 in the Metals Hall at the Green Center, Colorado School of Mines, 1500 Illinois Street, Golden, Colorado for an order authorizing the closure of the Leyden Underground Natural Gas Storage Facility.
SUMMARY OF PROCEEDINGS
The Commission finds as follows:
1. Public Service Company (“Public Service”) as applicant herein, is an interested party in the subject matter of the above-referenced hearing.
2. Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.
3. The Commission has jurisdiction over the subject matter embraced in said Notice, and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order.
4. On September 30, 1960, the Commission issued Order No. 146-1 which approved the project as proposed by Public Service for the storage of natural gas in an underground reservoir situated in the Laramie Formations in what is commonly known as the Leyden Coal Mine, Jefferson County, Colorado, situated in all or parts of Sections 21-22, 26-28, and 33-35 of Township 2 South, Range 70 West, 6th P.M. Public Service has operated the Leyden Underground Natural Gas Storage Facility (the “Facility”) since 1960, injecting and withdrawing natural gas to support its natural gas distribution and delivery operations in the Front Range area of Colorado.
5. In the spring of 2000, Public Service announced its decision to close the Facility due to the increasing incompatibility of its continued gas storage operations with the encroaching residential and commercial development of the surrounding area. Public Service obtained authority from the Colorado Public Utilities Commission to abandon the Facility in January, 2001. Injection of natural gas into storage ended on September 30, 2001, and Public Service has been withdrawing natural gas from the Facility since that time.
6. In July 2001, the Colorado General Assembly amended the Oil and Gas Conservation Act to give exclusive authority to the Oil and Gas Conservation Commission to regulate the closure of underground natural gas storage caverns (“Closure Statute”). Prior to closure of the Facility, Public Service is required to obtain a certificate of closure from the Commission. To obtain a certificate of closure, Public Service must demonstrate that its closure plan reasonably protects public health, safety and welfare, including protection of the environment.
7. On March 3, 2003, Public Service filed an application with the Commission for an order authorizing the closure of the Facility. A Closure Plan, which provides for the closure of the Facility as a natural gas storage facility following the withdrawal of recoverable storage gas from the caverns and the abandonment of certain wells and equipment, was filed with the application. Public Service has been withdrawing natural gas from the Facility since the last injection occurred in 2001. According to its Closure Plan, upon issuance of a certificate of closure by the Commission, Public Service will begin to inject potable water through existing wells to flood the underground cavern, displacing storage gas and facilitating the withdrawal process. Following closure, Public Service plans to turn over the site to the City of Arvada (“Arvada”), which will use the underground caverns for municipal water storage. The Closure Plan is submitted in accordance with the requirements of the Closure Statute to protect the public health, safety and welfare, including the environment, relating to the closure of the Facility. Section III of the Closure Plan provides for the recovery of residual natural gas reasonably recoverable from the underground caverns. Section IV of the Closure Plan provides for the transfer of certain wells and well sites to Arvada for its use in ongoing water storage operations, while Section V provides for the abandonment of all other wells and reclamation of all other well sites in compliance with the Commission’s rules and regulations. Section VI of the Closure Plan provides for the abandonment of the mine shafts that were originally sealed during the early 1960’s as part of the process to convert the abandoned coal mine to a natural gas storage facility. Sections VII and VIII provide for the abandonment of wells used as observation wells during natural gas storage operations, and the abandonment of natural gas gathering pipelines and related above-ground facilities. Finally, Sections IX and X of the Closure Plan provide for monitoring during and after closure of the Facility, including corrective actions if such monitoring indicates that the initial measures are insufficient.
8. On April 7, 2003, Union Pacific Railroad Company, (“UPRR”) protested the application.
9. On April 8, 2003, El Dorado Estates Homeowners’ Association (“El Dorado”), Mobelisk, L.L.C. (“Mobelisk”) and Northwest Industrial Subdivision II, Inc. (“NWIS”) (together, “El Dorado et al.”) protested the application and filed a request for continuance to the July hearing.
10. On April 8, 2003, Jefferson County Department of Health and Environment (“JCDHE”) filed a petition to intervene on the application.
11. On April 8, 2003, a prehearing conference was held to clarify the nature and scope of the hearing to be conducted on the application filed by Public Service.
12. On April 11, 2003, UPRR filed a request for continuance to the August hearing.
13. On April 14, 2003, a prehearing conference was held to clarify the nature and scope of the hearing to be conducted on the application filed by Public Service.
14. On April 21, 2003, site visits to the Facility and the initial hearing on the application were held. Public comments were made and procedural issues were decided. JCDHE withdrew its request to intervene on the application. The Commission continued the matter to the July hearing, appointed Commissioner Mueller as Hearing Officer to preside over and rule upon scope of hearing, discovery requests and hearing management issues.
15. On April 22, 2003, a prehearing conference was held to clarify the nature and scope of discovery to be conducted on Public Service’s application.
16. On May 13, 2003, a prehearing conference was held to discuss discovery requests and to rule on objections to discovery requests on the application filed by Public Service and the issues raised by the protestants thereto.
17. On June 13, 2003, Public Service filed with the Commission a Motion to Dismiss UPRR’s Protest. On June 16, 2003, UPRR filed with the Commission a Request for Briefing Schedule in Response to Public Service’s Motion to Dismiss.
18. On June 18, 2003, El Dorado et al. filed with the Commission a Motion to Compel Applicant to Allow Protestants to Continue Copying.
19. On June 24, 2003, UPRR filed with the Commission a Motion to Strike Public Service’s Motion to Dismiss.
20. On June 26, 2003, El Dorado et al. filed with the Commission a Motion to Strike Public Service’s First Expert Disclosures and Witness List of Protestants El Dorado et al. On June 27, 2003, Public Service filed a Response to the Motion to Strike and a Supplemental Motion to Strike.
21. On June 30, 2003, a prehearing conference was held to discuss issues related to discovery and several motions from the parties on the application filed by Public Service and the issues raised by the protestants thereto.
22. On July 2, 2003, El Dorado et al. filed with the Commission a Motion to Conduct Hearing at Arvada City Council Chambers.
23. On July 11, 2003, El Dorado et al. filed with the Commission a Request for the Commission to Consult with Other State Agencies and Independent Experts.
24. On July 11, 2003, El Dorado et al. filed with the Commission a Motion to Dismiss Public Service’s application.
25. On July 11, 2003, a Notice of El Dorado et al.’s Withdrawal from the Evidentiary Stage of the Hearing and Notice of Withdrawal of Welborn Sullivan Meck & Tooley, P.C. as Counsel of Record.
26. On July 14, 2003, Public Service filed with the Commission a Response to Motion to Withdraw Filed By El Dorado et al.
27. On July 15, 2003, a prehearing conference was held to discuss several motions from the parties on the application filed by Public Service.
28. On August 13, 2003, a prehearing conference was held to discuss witnesses, subject matter, timing, Rule 510. statements, and management of the hearing.
BASIS OF FINDINGS
APPLICANT’S EVIDENCE
29. The Commission heard expert testimony and reviewed exhibits from Bill Uding, Gas Storage Projects Director, Xcel Energy Services Inc. regarding the history of the Facility, the proposed closure plan and monitoring program, lost and unaccounted for natural gas, and Arvada’s plans for water storage. Mr. Uding testified that natural gas has been stored in the caverns at approximately 700 to 1100 feet, the caverns will be injected with water until flooded and the natural gas displaced, shafts and gathering systems will be abandoned, wellheads and surface facilities will be cleaned up and the surface restored, and post closure monitoring will occur for twenty-four (24) months after the #9 Well is filled with water. In addition, he testified that approximately three percent (3%) of the total volume of natural gas injected into the Facility has been recognized on Public Service’s accounting books as lost or unaccounted for, due in part to natural gas used at the Facility and to inaccurate metering. Mr. Uding opined that twenty-one percent (21%) of this natural gas was used at the Facility to fuel 17,000 horsepower of compressors used in gas storage operations and for other uses, with the remainder miscalculated due to meter inaccuracies, and that less than two hundred thousand (200,000) MCF of natural gas will remain in the Facility due to the uneconomic withdrawal or recovery of this natural gas. He further testified that some of this gas will be subsequently withdrawn when Arvada commences water withdrawal and re-injection activities, and that Arvada has prepared for the additional gas recovery. Mr. Uding further opined that the caverns are currently one third (1/3) filled with water, and that the proposed Closure Plan will adequately protect public health, safety, welfare and the environment.
30. The Commission heard testimony and reviewed an exhibit from Benjamin Fowke, Vice President/Treasurer, Public Service who opined that Public Service’s financial position is sufficient to guarantee performance and the ability to fulfill any obligation imposed under §34-60-106(17), C.R.S., including but not limited to, post closure corrective action. Mr. Fowke testified that the closure of the Facility is estimated to cost between six million dollars ($6,000,000) and nine million dollars ($9,000,000), however Public Service’s guarantee is not limited to a dollar amount.
31. The Commission heard expert testimony and reviewed expert reports and exhibits from Dr. Robert Weimer, Consulting Geologist regarding the structural and stratigraphic geology of the Facility in relation to storage and closure, including sandstone reservoirs, natural gas migration and seals. Dr. Weimer testified that in the Lower Laramie Sandstone the crevass splay channel sandstones are three (3) to five (5) acres in size, the point bar sandstones in meander belts north of the mined area are ten (10) to twenty (20) acres, and the size of the reservoir compartments would limit lateral migration of natural gas to a few hundreds of feet. According to Dr. Weimer, sandstones above and below the mine rubble zone are not continuous and sheet-like, but occur as lenticular and isolated lenses, encased by impermeable claystones that form seals to prevent gas migration. In addition, he testified that no faulting was recorded on the detailed mine maps over the approximate two (2) square miles of the Facility, nor have faults been identified on the west side of the Facility. Dr. Weimer opined that the absence of faulting and associated fracturing, and the excellent caprock seal of the Upper Laramie Formation, consisting mostly of claystones and siltstones, has prevented natural gas migration to the surface, and based on the reservoir sizes any vertical migration would be confined to the mine collapse rubble. He testified that natural gas leakage to the surface at the Facility has been related to breaking the sealing beds by drilling wells, each of which were remediated by restoring a seal in the wellbore, and that the proposed Closure Plan would protect public health, safety, welfare and the environment.
32. The Commission heard expert testimony and reviewed expert reports and exhibits from Dave Cox, Senior Consultant, Questa Engineering Corp. regarding the potential for natural gas leakage out of the Facility, methods to abandon wells, amount of natural gas remaining in the Facility at closure and the proposed use of the Facility for water storage. Mr. Cox testified that there have been six (6) significant occurrences of identified natural gas migration out of the immediate area of the mine workings, as a result of mining or natural gas storage activities. In addition, he testified that there have been four (4) insignificant natural gas shows on mud logs or neutron-density logs from wells outside the mined area, unrelated to storage natural gas or so minor they did not warrant further investigation. Mr. Cox further testified that there have been no indications of significant migration into the Fox Hills Aquifer and no incidents of storage natural gas above the Lower Laramie Formation. He testified that any potential for natural gas leakage after closure will be greatly reduced by most of the wells being plugged with cement from top to bottom, most of the natural gas being removed by depletion and then displacement by water injection, and any remaining natural gas being left as small isolated pockets at depth below the Upper/Middle Laramie seal. Mr. Cox opined that approximately 0.197 BCF of natural gas (0.020 BCF attic natural gas, plus 0.032 BCF inaccessible trapped natural gas pockets, plus 0.055 BCF possibly trapped in sandstone lenses, plus 0.090 BCF adsorbed natural gas) is estimated to remain in the Facility at closure, with almost half of the natural gas in an adsorbed and unmobile state. These figures were confirmed by material balance calculations, which is a separate, independent engineering calculation. He further testified that future use of the Facility for water storage will provide water to fill up the caverns more rapidly than natural water influx, displacing a significant volume of natural gas and reducing the potential for any future natural gas migration. Mr. Cox opined that the proposed Closure Plan would protect public health, safety, welfare and the environment.
33. The Commission heard expert testimony and reviewed expert reports and exhibits from Greg Sherman, Geologist and President of Western Environmental and Ecology, Inc. regarding subsidence in the context of closure at the Facility. Mr. Sherman testified that the depth to the top of the mined interval ranges from approximately 684 feet to 1104 feet, and the width of the working is approximately 200 feet, with an average mined seam thickness reported at 7.5 feet. In addition, he testified that the fracture/rubble zone associated with collapse of the mine occurs between 24 feet and 61 feet above the workings, and no surficial evidence of significant mine subsidence was observed or has been reported. Mr. Sherman opined that the maximum subsidence-related surface strain that could have occurred above the Leyden Mine is 0.27%, and the maximum surface subsidence is 0.81 feet. He further testified that 95% of subsidence occurs within two (2) years of initial mining, and that the maximum amount of subsidence that could affect the railroad is .018 feet. Mr. Sherman concluded that additional subsidence will likely not occur as a result of the closure of the Facility or with the proposed use by Arvada. He stated that the subsidence that could occur, as a result of or concurrent with the closure of the Facility, would be orders of magnitude less than the maximum worst case predicted to occur at the time of mining, and as a result, no damage could occur to infrastructure on or adjacent to the Facility. Mr. Sherman opined that the proposed Closure Plan will adequately protect public health, safety, welfare and the environment.
34. The Commission heard expert testimony and reviewed expert reports and exhibits from Tom Hesemann, Hydrogeologist and Engineering Geologist, Tetra Tech RMC regarding the adequacy of the proposed Closure Plan with respect to hydrogeology. Mr. Hesemann testified on the geologic materials and structural geology in the area of the Facility, movement and occurrence of ground water, and water quality. He opined that in addition to the effective seal formed by the Upper Laramie Formation, the water level (pressure) in the Laramie-Fox Hills Aquifer is above the natural gas pressure level in the caverns, demonstrating there is no hydraulic potential for natural gas to migrate into the aquifer. Mr. Hesemann concluded that absent manmade pathways, storage gas or stored water will not migrate to the surface or to the surficial aquifer. He testified that any residual natural gas remaining in the caverns and the surrounding formations will be properly monitored and managed. Mr. Hesemann opined that the well plugging program will maintain the integrity of the natural condition of the Laramie-Fox Hills Aquifer, and that the proposed Closure Plan will adequately protect public health, safety, welfare and the environment.
35. The Commission heard expert testimony and reviewed expert reports and exhibits from David Folkes, Engineer and President, EnviroGroup Limited regarding the potential for storage gas to be present in shallow soils after the closure of the Facility. Mr. Folkes testified about the requirements necessary for natural gas to migrate from the subsurface into buildings which include a source of natural gas, a driving mechanism to cause natural gas to move and a pathway for natural gas to move along. In addition, he testified that there is no evidence of storage gas in shallow soils nor is it likely to exist once the Facility is closed. In Mr. Folkes’ opinion, previous conclusions that data recorded from the 1992 GR-5 seismic line showed faulting and associated soil gas anomalies indicated leaking gas were in error. He opined that the potential for storage gas leaks along well casings and abandoned borings, which were occasionally observed in shallow soils in small areas on the Facility property, will be significantly reduced due to the removal of driving pressure heads, the much smaller aerial extent of any remaining natural gas, and the lack of replenishment and ultimate depletion of any residual pockets of natural gas that could leak to the surface. Mr. Folkes testified that the potential for storage gas in shallow soils at the Facility after closure is even further reduced by the lack of gas pressure and small volumes of residual gas. He recommended that Public Service install additional soil gas monitoring wells along the GR-5 seismic line in Section 26 and at other locations above the areas of mining era borings identified on Exhibit E-1. Mr. Folkes further opined that the proposed Closure Plan will adequately protect public health, safety, welfare and the environment.
36. The Commission heard testimony from Mark Floyd, Engineer, City of Arvada regarding the post-closure use of Facility. Mr. Floyd testified that the City wants to ensure the protection of the public health, safety and welfare of the citizens of Arvada and believes the storage of water in the Facility will attain this goal. In addition, he testified that the City plans to perform maintenance at the Facility beginning in November, with three (3) contractors working on plans for water injection by gravity flow into the caverns within the next several months. Mr. Floyd testified that Arvada owns or will own most of the surface over the Facility.
37. Based on recommendations from the expert witnesses and questions from the Commission, Public Service proposed three (3) additional provisions to be included in the proposed Closure Plan to address soil natural gas testing at surface exploration drill holes, blowout prevention equipment for water wells and the use of Well #34 as an observation well during the two (2) year post-closure phase. In addition, Public Service agreed with Mr. Folkes’s recommendation to install additional soil gas monitoring wells along the GR-5 line in Section 26 and at other locations above the areas of mining era borings identified on Exhibit E-1.
38. The Commission heard staff analysis from Morris Bell, COGCC Operations Manager, who has reviewed the expert reports and heard the testimony from the expert witnesses. Mr. Bell agrees with two (2) of the three (3) additional proposed plan provisions but would prefer to have COGCC staff notified by the State Engineer’s Office when water well permits are proposed on or near the Facility. After discussion on his proposed language for this change, Public Service agreed with COGCC staff’s proposal. Mr. Bell recommended that the Commission adopt the proposed Closure Plan with the additional provisions, indicating he agreed with the proposed plugging procedures and believes the proposed Closure Plan will protect public health, safety, welfare and the environment.
39. The Commission heard staff analysis from Al Amundson, Mining Engineer with the Division of Minerals and Geology who has reviewed the expert reports and provided a written report, and heard the testimony from the expert witnesses. Mr. Amundson concluded that most if not all subsidence has occurred over the mine, the only instances of natural gas migration from the Facility have been along constructed openings into the mine, drill holes and shafts, and any natural gas migration off the property or to the surface in the future will likely only be along fractures induced by subsidence or produced in water withdrawn from the mine. He recommended that water be placed in the caverns by gravity flow at atmospheric pressure. In addition, he believes the proposed Closure Plan will protect public health, safety, welfare and the environment.
40. The Commission heard staff analysis from Kevin Rein, Water Engineer with the Division of Water Resources, State Engineer’s Office who provided a written report, described the manner in which water wells are permitted by his office, and the agreement currently in place to notify Public Service of any proposed water well over or within a one-half (˝) mile of the Facility.
41. Pursuant to Rule 510., five (5) citizens made statements at the April hearing regarding concerns about natural gas migration, subsidence, migration of underground water, boundaries of the mined area, disclosure of data, lost and unaccounted for storage gas, safety and value of nearby homes, and related lawsuits.
42. Pursuant to Rule 510., five (5) citizens made statements at the August hearing regarding concerns about the technical interpretation of the geology and engineering data at the Facility, monitoring wells, lost and unaccounted for storage gas, natural gas migration, remediation and payment for potential damages, water well drilling, plugging of wells, partnering between Public Service and the Colorado School of Mines for more science-based studies, and the abuse of the Rule 510. statement process.
43. In response to Commission questions to one of the Rule 510. statement makers, Public Service indicated its plan to provide the COGCC staff with quarterly monitoring data that will be posted to the COGCC website and will be documented as the fourth additional plan provision.
44. After deliberation, the Commission suggested that Public Service consider installing additional soil gas monitoring wells in an effort to provide nearby homeowners with more data. Public Service consented to the installation of twenty (20) new soil gas monitoring wells, to be evenly spaced along the perimeter of the Facility, where it can obtain surface access, not located near the landfill or Superfund site, and with the wells to remain in place for two (2) years post-closure. In addition, Public Service proposed that approval of the location of the additional soil gas monitoring wells by COGCC staff be obtained within ninety (90) days of the date of the hearing and agreed to let Mr. Greg Murray participate in the discussion with COGCC staff.
45. Based on the facts stated in the verified application, review of the closure plan, field tours of the Facility and the surrounding area, the presentation of compelling evidence, including credible expert testimony and exhibits, the financial assurances of Public Service, DNR staff analysis, and public comments presented at the April and August hearings, the Commission finds that the Closure Plan as amended and modified herein, adequately protects public health, safety, welfare and the environment. As such, the Commission should issue a certificate of closure and enter an order to approve the proposed Closure Plan for the Leyden Underground Natural Gas Storage Facility with the four (4) additional plan provisions and the twenty (20) additional soil gas monitoring wells.
ORDER AND CERTIFICATE
NOW, THEREFORE IT IS ORDERED, that the Closure Plan for the Leyden Natural Gas Storage Facility as amended and modified herein, attached as Exhibit A and incorporated herein, is hereby approved.
IT IS FURTHER ORDERED, that Public Service is hereby issued a certificate of closure in accordance with §34-60-106(17)(b), authorizing Public Service to terminate operations and permanently close the Leyden Underground Natural Gas Storage Facility in accordance with the Closure Plan and this Order.
IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective forthwith.
IT IS FURTHER ORDERED, that the Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.
ENTERED this day of September 2003, as of August 19, 2003.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By
Patricia C. Beaver, Secretary
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203