Title 26 — Subtitle 19. Oil and Gas Resources
Chapter 01. Oil and Gas Exploration and Production
Regulation .01 Definitions.LinkCopy Citation
A.
In this subtitle, the following terms have the meanings indicated.
B.
Terms Defined.
(1)
“Angular deviation and directional survey” means a well survey that indicates, at frequent intervals, the amount and azimuth that the hole has departed from vertical.
(2)
“Annular space” means the area between the outer casing and the wall of a borehole.
(3)
“Barrel” means a unit of measure for crude oil equal to 42 U.S. gallons.
(4)
“Blowout” means an uncontrolled flow of gas, oil, or other well fluids into the atmosphere. This occurs when formation pressure exceeds the pressure applied to it by the column of drilling fluid.
(5)
“Blowout prevention equipment” means devices attached to the top of the well casing that can be closed and shut off to control pressure at the wellhead.
(6)
“Bridge plug” means an expandable device used inside the casing of a well to isolate certain zones or to plug back to a shallower depth.
(7)
“Chesapeake Bay Critical Area” means those areas defined and regulated under Natural Resources Article, §8-1807, Annotated Code of Maryland.
(8)
“Circulating medium” means any type of liquid, gas, or slurry used as an agent to remove drill cuttings and to cool the bit.
(9)
“Commingle production” means to mix hydrocarbons from two or more pay zones in the same well.
(10)
“Conductor pipe” means a pipe used near the surface to prevent unconsolidated material from caving or sloughing into the hole.
(11)
“Coning” means the cone-shaped invasion of water underlying oil or gas in a reservoir or invasion of gas overlying oil in a reservoir as the oil or gas is withdrawn from a well.
(12)
“Cuttings” means the fragments of rocks produced by the drill bit during the drilling process and brought to the surface in the drilling liquid.
(13)
“Department” means the Department of the Environment.
(14)
“Directional drilling” means aiming wells at horizontally displaced bottom-hole targets.
(15)
Drilling Liquid.
(a)
“Drilling liquid” means a fluid, such as mud or water, circulated in a borehole to remove the drill cuttings from the hole and to cool the drill bit.
(b)
“Drilling liquid”, for the purpose of this chapter, does not include air or gas.
(16)
“Dry hole” means a well that encountered no oil or gas of commercial significance.
(17)
“Explosives” means any chemical compound, mixture, or device, the primary purpose of which is to function by explosion through substantially instantaneous release of gas and heat, unless the compound, mixture, or device is otherwise specifically classified by the Interstate Commerce Commission or other federal agencies.
(18)
“Fill-up” means the level to which liquid rises in a well being drilled with air when a fresh or salt water zone is encountered.
(19)
“Free liquid fraction” means fresh water brought to the surface while drilling through strata containing fresh ground water, or fresh water brought to the well site and used in drilling. It may contain drill cuttings, but is not polluted or contaminated by additives, salt water, or oil.
(20)
“Gas” means all natural gas and other fluid hydrocarbons, not defined as oil, that are produced from a natural reservoir.
(21)
“Impermeable” means that the rate of water flow through a material is less than 0.009 centimeter per day.
(22)
“Injection well” means a well used for pumping fluids into a subsurface formation.
(23)
“Killing the well” means overcoming downhole pressure, in a well being drilled, through the use of drilling liquid or water.
(24)
“Log” means a continuous record as a function of depth, usually graphic and plotted to scale on a narrow paper strip, of observations made on the rocks and fluids of the geologic section exposed in a well bore.
(25)
“Lost hole” means a well in which the target could not be reached because of geological or mechanical problems.
(26)
“Mechanical plug” means an expandable device placed in a well to act as a water-tight, oil-tight, and gas-tight seal.
(27)
“Mineral interest owner” means any person who owns a working interest or a royalty interest in the oil or gas, or both, contained in, or produced from, a tract of land.
(28)
“Multiple zone completion” means the completion of a well in two or more separate producing formations with no commingling of the produced oil or gas.
(29)
“Noncementing material” means a mixture of very fine to coarse-grained nonbonding materials, including unwashed crushed stone, drill cuttings, earthen mud, or other equivalent material approved by the Department.
(30)
“Nonporous material” means bentonitic mud, cement, or equivalent materials approved by the Department which will retard the movement of fluids.
(31)
“Nontidal wetland” means those areas defined and regulated under Environment Article, Title 5, Subtitle 9, Annotated Code of Maryland, or COMAR 27.01.01.01B(46).
(32)
“Oil” means crude petroleum oil and other hydrocarbons, regardless of specific gravity, that are produced at the wellhead in liquid form, except liquid hydrocarbons known as distillate or condensate recovered or extracted from gas.
(33)
“Open-flow test” means a measurement of the rate of flow of a gas well when flowing into the air, unrestricted by any pressure other than that of the atmosphere, and usually measured in thousands of cubic feet (Mcf) per day.
(34)
“Operator” means a person who develops, manages, or produces oil or gas.
(35)
“Perforating” means to make holes through the casing opposite the producing zone to allow the oil or gas to flow into the well.
(36)
“Person” means the federal government, the State, a county, municipal corporation, or other political subdivision of the State, or their units, or an individual, receiver, trustee, guardian, executor, administrator, fiduciary, or representative of any kind, or a partnership, firm, association, public or private corporation, or any other entity.
(37)
“Pit” means an impoundment for the retention of water, drilling liquid, or drill cuttings.
(38)
“Plug” means an expandable device or cement placed in a well to prevent the movement of liquids and gas.
(39)
“Pool” means an underground reservoir containing a common accumulation of oil or gas, or both.
(40)
“Pooled unit” means an area within which permittees of different tracts in the area have voluntarily agreed to participate in a well drilled within the unit.
(41)
“Pressure maintenance” means the injection of liquid or gas into an oil or gas reservoir to increase or maintain reservoir pressure in order to recover additional quantities of hydrocarbons.
(42)
“Producing zone” means the stratum, bed, or formation from which oil or gas enters the well.
(43)
“Recomplete a well” means to seal off one producing zone, and perforate a new producing zone.
(44)
“Re-enter” means to drill out the plugs of an abandoned well in a new effort to establish oil or gas production, or use the well for another purpose.
(45)
“Reservoir” means a natural underground oil or gas bearing formation.
(46)
“Rework” means to perform remedial measures in a well in order to restore oil or gas production that has declined substantially or stopped completely.
(47)
“Royalty interest” means that portion of the mineral interest that is the landowner's share.
(48)
“Seismic operations” means the controlled application of vibratory energy from any source to determine if favorable conditions exist for the subsurface entrapment of oil or gas.
(49)
“Seismic section” means a graphic, near-vertical display of waveform data processed by a computer program to facilitate interpretation of subsurface conditions.
(50)
“Seismic survey” means a planned network or program of seismic operations conducted by one person, one time, under one permit.
(51)
“Shotholes” means drilled holes which are subsequently loaded with explosives whose detonation generates seismic waves during a seismic survey.
(52)
“Shut-in pressure” means the pressure in the well measured at the wellhead in a specified period of time after the valves are closed.
(53)
“Stimulate a zone” means to use techniques such as hydraulic fracturing and acidizing in order to increase oil or gas production from a formation.
(54)
“Surface casing” means the first casing set inside the conductor pipe, which seals off any shallow aquifers and also serves as a foundation for all subsequent drilling activity.
(55)
“Tidal waters” means all waters of the State subject to tidal influence with the landward boundary being coterminous with the wetlands boundary maps adopted under Environment Article, §16-301, Annotated Code of Maryland.
(56)
“Wellhead protection area” means surface and subsurface area surrounding a water well or well field, supplying a public water system, through which contaminants are reasonably likely to move toward and reach the water well or well field.
(57)
“Wildcat well” means an exploratory well drilled for oil or gas on a geologic feature not yet proven to be productive, or in an unproven territory, or to a zone that has never produced or is not known to be productive in the general area.
Regulation .02 Accident Notification.LinkCopy Citation
In addition to any other notifications required by law or permit, the permittee shall report to the Natural Resources Police Force 24-hour Communications Section at (410) 974-3181 or (800) 628-9944 immediately, but not later than 2 hours after detection of, any condition such as fires, breaks, leaks, escapes, spills, overflows, or other occurrences that create a safety or pollution hazard. The permittee shall remain available until clearance to leave is given by the appropriate officials designated by the Department.
Regulation .03 Seismic Permit Application Procedures.LinkCopy Citation
A.
A person may not conduct seismic operations in the State without obtaining a seismic permit from the Department.
B.
A seismic permit may not be transferred or renewed without written permission of the Department.
C.
Application Procedures for an Applicant.
(1)
A seismic permit application shall be:
(a)
On a form provided by the Department;
(b)
Completed and signed by the seismic contractor or the contractor's authorized agent.
(2)
The seismic permit application shall include:
(a)
The name, address, and telephone number of the applicant's resident agent;
(b)
U.S. Geological Survey 7.5-minute topographic maps, hydrographic charts, or copies, showing the location of seismic lines;
(c)
Certification that State and county permit and bond requirements have been met for any seismic operations;
(d)
A statement, on a form provided by the Department, signed by an affected property owner providing the permittee with the right of entry to conduct seismic operations;
(e)
Authorization, on a form provided by the Department, signed by property owners who can grant legally binding rights of entry to the property authorizing representatives of the Department to enter their private property for the purpose of inspecting seismic operations that are ongoing or have been conducted on the property;
(f)
A reclamation plan detailing how any area disturbed by the seismic operation will be restored;
(g)
A certificate of insurance showing personal injury and property damage liability coverage of not less than $1,000,000 for each person and $5,000,000 for each occurrence or accident; and
(h)
A specific calendar schedule for the proposed operation which prohibits any in-stream work during the spawning season of anadromous fish.
(3)
Applications for permits to conduct seismic operations on the waters of Chesapeake Bay and its tidal tributaries shall be accompanied by a written agreement to provide the Department with processed seismic sections as soon as these sections are available, but not more than 1 year after field operations are completed.
(4)
The applicant shall provide additional information considered necessary by the Department to process the permit.
(5)
A request for modification of the activities approved under the seismic permit shall be submitted to the Department in writing, and shall be approved by the Department before the person conducts the modified seismic operation.
D.
Application Processing Procedures for the Department.
(1)
The Department shall review the application to determine whether it contains all of the required information.
(2)
If the required information is not included, the Department shall advise the applicant by written or oral communication that it is incomplete, and may suspend processing pending receipt of deficiencies.
(3)
The Department may deny a permit if the:
(a)
Applicant does not submit the information required by the Department;
(b)
Proposed activity poses a substantial risk of causing environmental damage that cannot be mitigated by the applicant such as that set forth in Environment Article, §14-109(b)(6)(ii), Annotated Code of Maryland;
(c)
Proposed operation will violate these regulations.
(4)
If the Department's decision is to deny the permit, a notification of denial shall state the reasons for denial, modifications, if any, necessary for approval of the application, and the hearing rights as provided in Regulation .07E of this chapter.
(5)
Information contained in the application and accompanying documents and required reports shall be available to the public, except for confidential geological and geophysical information protected under State Government Article, §10-617, Annotated Code of Maryland.
(6)
The Department may include special provisions or modify conditions in the permit for environmental, safety, or other relevant reasons.
(7)
The seismic permit is valid for 12 months from the date of issuance.
(8)
In addition to any other remedies provided by law, after notice to the permittee and the opportunity for a hearing, the Department may revoke a seismic permit if the permittee has failed to comply with any applicable law, regulation, or condition of the permit.
Regulation .04 Use of Explosives in Seismic Operations.LinkCopy Citation
A.
Persons using explosives in seismic operations shall comply with all applicable local, State, and federal laws and regulations that control the handling or detonation of explosive materials.
B.
The use of explosives in seismic operations on or in the waters of the Chesapeake Bay and its tributaries is prohibited.
C.
Use of explosives shall be conducted by a person licensed to handle explosives under Article 38A, §§28 and 29, Annotated Code of Maryland.
D.
The use of explosives shall be conducted in a manner not to cause injury to persons, damage to public or private property, adverse impacts on an underground mine, or to bring about any change in the course, current, channel, or availability of ground or surface waters.
E.
The use of explosive charges on elevated poles as an energy source, referred to as the Poulter method, or with the charges laid on the surface of the ground, is prohibited.
F.
After explosives are loaded into shotholes, the explosives handler shall keep the loaded holes under surveillance until the charges are detonated.
G.
Additional safety measures are to be observed as follows:
(1)
Explosives in a shothole may not be detonated unless the explosives handler determines that the area is clear and safe to proceed;
(2)
Explosives may not be left in a shothole overnight;
(3)
Seismic operations that use explosives shall be conducted only during daylight hours, and the Department may impose a more restrictive time period.
H.
Additional blasting restrictions include the following:
(1)
The permittee shall obtain written approval from the Department before blasting within 500 feet of any occupied dwelling, commercial building, school, church, or hospital;
(2)
The Department may require a seismographic record of any blast; and
(3)
The Department may prohibit blasting in specific areas, if necessary, for public safety.
Regulation .05 Completion of Seismic Permit Operations.LinkCopy Citation
A.
Within 30 days after the completion of seismic work, the permittee shall notify the Department of the status of the operation in writing.
B.
Reclamation work shall be completed within 30 days of the completion of seismic work as required by the permit.
Regulation .06 Drilling and Operating Permit Application Procedures for the Applicant.LinkCopy Citation
A.
A person proposing to conduct any of the following operations to obtain or increase the production of oil or gas within the State shall first obtain a drilling and operating permit from the Department before the person:
(1)
Prepares a well site for the operation;
(2)
Drills a well for oil or gas;
(3)
Redrills at a location previously permitted;
(4)
Deepens an existing well drilled for oil or gas;
(5)
Drills a core hole or stratigraphic test; or
(6)
Drills a well for the storage of natural gas or the observation of the storage of natural gas.
B.
A person continuously operating or producing an oil well, a gas well, or a gas storage well before July 1, 1991 shall obtain a new drilling and operating permit within 12 months of the effective date of this regulation.
C.
An application for a new drilling and operating permit shall be submitted to the Department on forms provided by the Department and shall contain the following:
(1)
The names, addresses, business status, and telephone numbers of the applicant, operator, and resident agent;
(2)
A plat prepared and certified by a Maryland licensed professional land surveyor or property line surveyor containing the information required in §E of this regulation;
(3)
An environmental assessment;
(4)
A certificate of liability insurance showing personal injury and property damage liability coverage in the name of the permittee of at least $1,000,000 for each person and $5,000,000 for each occurrence or accident, or proof of self-insurance that is in a form acceptable to the Department under the following criteria:
(a)
The applicant has been in continuous operation as a business entity for not less than 5 years, with “continuous operation” meaning that the business was conducted over a period of 5 years immediately preceding the time of application,
(b)
The applicant has a current rating for its most recent bond issuance of “AA” or higher as issued by either Moody's Investor Service or Standard and Poor's Corporation,
(c)
The applicant's fixed assets in the United States total at least $20,000,000, and the applicant has a ratio of total liabilities to net worth of 2.5 times or less, and a ratio of current assets to current liabilities of 1.2 times or greater,
(d)
The applicant submits financial statements for the most recently completed fiscal year accompanied by a report prepared by an independent certified public accountant in conformity with generally accepted accounting principles, and containing the accountant's audit opinion or review opinion of the financial statements that contain no adverse opinion;
(5)
A performance bond conditioned on compliance with Environment Article, §§14-101—14-120, Annotated Code of Maryland, this chapter, and the permit issued under this chapter, and which shall be:
(a)
Made payable to the Department in an amount not to exceed $100,000 per well, or not to exceed $500,000 as a blanket bond for all of the applicant's wells, and
(b)
In the form of irrevocable letters of credit payable to the State from any bank within the State, or a surety bond issued by an insurance company authorized to do business in the State;
(6)
A copy of the oil and gas lease that gives the permittee the right to enter and drill at the location shown on the plat, and if the mineral rights have been severed, a copy of the right of entry agreement with the surface owner;
(7)
If a pooled unit, copies of all leases in the unit which shall accompany the application showing the right to pool interests;
(8)
A copy of an agreement signed by the applicant and the landowner stating that the Department may enter the land, after making a reasonable effort to notify the permittee, the owner, or any subsequent owners, at any reasonable time during the term of the permit and until the performance bond is released;
(9)
Certification by the applicant that the applicant has notified, in writing, each landowner and leaseholder of real property that borders the proposed drillable lease area of the applicant's intention to file an application for permit to drill a well;
(10)
Notification to owners or leaseholders of property within 2,000 feet of a well proposed in an underground storage reservoir that existed on July 1, 1990;
(11)
Written approval by the local zoning authority that all local planning and zoning requirements have been met;
(12)
A sediment and erosion control plan approved by the Department of the Environment, or the appropriate soil conservation district;
(13)
A stormwater management plan approved by the Department of the Environment or delegated county agency;
(14)
A reclamation plan for restoring the well site that includes the criteria stated in §F of this regulation;
(15)
A pit design plan that will prevent any drilling liquid from coming into contact with any waters of the State;
(16)
A spill prevention, control, and countermeasures plan in accordance with 40 CFR 112;
(17)
A statement listing all equipment available for the detection, prevention, and containment of gas leaks and oil spills;
(18)
A statement listing all other federal, State, county, and local permits and approvals required, and the status of each; and
(19)
Other relevant materials and documents considered necessary by the Department.
D.
When an applicant seeks to directional drill, the applicant shall state the:
(1)
Reason for the proposed directional drilling;
(2)
Depth at which deviation from the vertical is planned; and
(3)
Horizontal distance and direction of the planned objective with reference to the surface location.
E.
Drilling and Operating Permit Plat.
(1)
The plat or plats shall be drawn in ink on polyester drafting film or similar base-stable material at a scale of 1 inch equals 600 feet.
(2)
Information Required to be Included in Plat.
(a)
The plat or plats shall include the following information prepared by a licensed land surveyor:
(i)
The proposed well location;
(ii)
If directional drilling is proposed, both the surface location and the proposed bottom-hole location shall be shown;
(iii)
At least two permanently established property tract boundary corners, with bearings and distances to the proposed well established by an on-ground survey;
(iv)
Boundaries of the lease or pooled unit containing the well location, with individual lease boundaries within a pooled unit being shown by an on-ground survey, deed calls, or tax map references;
(v)
Boundaries of adjoining properties with names and addresses of fee owners, surface owners, mineral owners, and oil and gas lessees;
(vi)
All plat lines actually surveyed shall be shown with solid lines, and lines taken only from deed descriptions or tax maps shall be shown by broken lines;
(vii)
Ownership and lease information may be based upon current tax records or land record indexes.
(b)
The applicant may list ownership and lease information on a supplemental list indexed to the tracts on the plat.
(c)
The plat or plats shall include the following information obtained from the best available sources:
(i)
Active oil and gas drilling, production wells, abandoned wells, storage wells, and injection wells within 2,640 feet of the proposed well location;
(ii)
Water wells within 2,640 feet of the proposed well location;
(iii)
Churches, schools, buildings, and occupied dwellings within 2,640 feet of the proposed well location;
(iv)
Any part of the Chesapeake Bay Critical Area, 100-year floodplain as established by the Federal Emergency Management Agency flood insurance rate maps, nontidal wetlands, streams, or other bodies of water within 1 mile of the proposed well;
(v)
Roads, railroads, and other transportation routes within 2,640 feet of the proposed well;
(vi)
Location of active and abandoned underground coal mines and workings within 1 mile of the proposed well;
(vii)
Superimposed on the plat, the same proposed well location (both surface and bottom hole locations, if the well is to be directionally drilled) marked with a cross and plotted at the topographic quadrangle map scale of 1 inch equals 2,000 feet, showing distances in feet from the proposed well location to the nearest 2.5 minutes of latitude and longitude to the northeast, as represented at the upper right hand corner of the plat; and
(viii)
A legend identifying the different types of wells and other features shown on the plat.
F.
Drilling and Operating Reclamation Plan.
(1)
The reclamation plan shall describe how roads, well sites, and pits will be reclaimed.
(2)
The reclamation plan shall include a:
(a)
Proposed time schedule for each major step in the reclamation plan;
(b)
Description of measures to be employed to dispose of debris, acid-forming and toxic-forming materials, and materials constituting a fire hazard, and a description of the contingency plans which have been developed to preclude sustained combustion of these materials;
(c)
Plan for backfilling, soil stabilization, compacting, grading, and controlling surface drainage following regrading, with contour maps at a scale of 1 inch equals 50 feet and cross sections that show the existing slope and the anticipated final surface configuration of the proposed permit area;
(d)
Plan for removal, storage, and redistribution of topsoil, subsoil, or other materials, and revegetation to protect the site from erosion;
(e)
Description, including appropriate cross sections and maps, of the measures to be used to plug, case, or manage exploration holes, other bore holes, wells, and other openings within the proposed permit area;
(f)
Description of how the free liquid fraction and contaminated materials will be disposed of in accordance with requirements of the Department;
(g)
Plan for disposing of the cuttings by:
(i)
Land farming into those areas of disturbance,
(ii)
Transporting to an approved disposal facility, or
(iii)
Other methods of disposal as approved by the Department; and
(h)
Plan for eliminating the impermeability of the pit at approximately 10-foot intervals to allow water percolation.
Regulation .07 Drilling and Operating Permit Application Review Procedures for the Department.LinkCopy Citation
A.
Following receipt of a permit application, the Department shall conduct a review for completeness and notify the applicant of any application deficiencies.
B.
When the Department determines that all information is included and in proper form, it shall notify the applicant that the application is considered complete and provide for public involvement in the Department's review by the following means:
(1)
The Department shall publish notice of the application once a week for 2 consecutive weeks in a newspaper of general circulation in the county where the proposed permit activity would occur;
(2)
The applicant shall pay all costs associated with publishing notice of the application;
(3)
The published notice of the application shall provide an opportunity to request a public informational hearing on the application;
(4)
Following publication of the notice of the application, a person interested in the pending application for a drilling and operating permit may request that the Department schedule a public informational hearing;
(5)
If the Department receives a request for an informational hearing, a hearing shall be held within 45 calendar days, unless extenuating circumstances justify an extension of time;
(6)
The Department shall publish notice of the public informational hearing once a week for 2 consecutive weeks in a newspaper of general circulation in the county where the proposed permit activity would occur.
C.
The Department's decision to grant or deny a drilling or operating permit may be issued not later than 30 calendar days after the close of the record for the public informational hearing.
D.
The Department shall mail written notice of the decision to grant or deny the permit to:
(1)
The applicant;
(2)
Participants at a public informational hearing on the application;
(3)
Persons who comment on the application; and
(4)
All landowners, royalty owners, and owners of mineral, oil, and gas rights within 1,000 feet of the proposed well.
E.
Upon written request received within 30 calendar days following notice of a permit decision, the Department shall hold a contested case hearing if the Department determines that:
(1)
A hearing requestor has a specific right, duty, privilege, or interest which is or may be adversely affected by the permit decision;
(2)
The requestor raises adjudicable issues which are within the scope of Environment Article, §14-101—14-120, Annotated Code of Maryland; and
(3)
The request is timely.
F.
Upon written motion by a party to a contested case hearing, the Department may grant a temporary stay of activity under the permit pending a final decision in the contested case, provided that the:
(1)
Parties to the proceeding have been notified and given an opportunity to be heard on a request for the temporary stay;
(2)
Person requesting the temporary stay shows that there is a substantial likelihood of prevailing on the merits of the final determination of the contested case proceeding;
(3)
Temporary stay does not adversely affect the public health or safety or cause significant imminent environmental harm to natural resources; and
(4)
Conditions and criteria for granting a temporary stay exist as provided in COMAR 08.01.04.
Regulation .08 Review Procedures for Drilling and Operating in the Chesapeake Bay Critical Area.LinkCopy Citation
A.
Following receipt of a permit application for a project located in the Chesapeake Bay Critical Area, the Department shall send a copy of the permit application and all accompanying documents to the Chesapeake Bay Critical Area Commission for review and recommendations.
B.
The Chesapeake Bay Critical Area Commission shall submit written recommendations on the application to the Department within 150 days of receipt of the application and accompanying documents.
C.
Following receipt of the recommendations by the Chesapeake Bay Critical Area Commission on the application, the Department shall adopt, to the maximum extent permitted by law, permit conditions recommended by the Chesapeake Bay Critical Area Commission.
Regulation .09 Criteria for Approval of Drilling and Operating Permit.LinkCopy Citation
A.
The Department may not issue a drilling and operating permit for drilling in the waters or tributaries of the Chesapeake Bay.
B.
The Department may not issue a drilling and operating permit to drill in the Chesapeake Bay Critical Area unless the applicant has obtained written approval from the Critical Area Commission.
C.
Except as provided in §D of this regulation, the Department may not issue a permit to drill a well closer than 1,000 feet to the boundary of any property adjoining the tract on which the well is situated except by written agreement with the landowners and royalty owners of that property.
D.
The Department may issue a permit to drill a well closer than 1,000 feet to a well site tract boundary or pooled unit boundary if:
(1)
The Department determines that a well location at a distance less than 1,000 feet to adjacent lands is necessary due to site constraints; and
(2)
The applicant has notified all landowners and royalty owners within 2,000 feet of the proposed well by registered mail, return receipt requested, of the location of the proposed well.
E.
The Department may not issue a permit to drill and complete a gas well closer than 2,000 feet to an existing gas well in the same reservoir unless the Department is provided with credible geologic evidence of reservoir separation to warrant granting a spacing exception.
F.
The Department may not issue a permit to drill and complete an oil well closer than 1,320 feet to an existing oil well in the same reservoir unless the Department is provided with credible geologic evidence of reservoir separation to warrant granting a spacing exception.
G.
The Department may not issue a drilling and operating permit if the well location is closer than 1,000 feet to a school, church, drinking water supply, wellhead protection area, or an occupied dwelling unless written permission of the owners is submitted with the application and approved by the Department.
H.
The Department may deny a drilling and operating permit if the Department determines that the proposed drilling or well operation poses a substantial threat to public safety or a risk of environmental damage particularly to:
(1)
The Chesapeake Bay Critical Area;
(2)
Tidal or nontidal wetlands;
(3)
Endangered or threatened species, or species in need of conservation or their habitat;
(4)
Historic properties as provided for in Article 83B, §5-618, Annotated Code of Maryland; or
(5)
Populated areas.
I.
The Department may issue a permit for directional drilling when:
(1)
It is necessary to protect specific features including:
(a)
A water body;
(b)
Chesapeake Bay Critical Area;
(c)
A park;
(d)
A building;
(e)
A highway, or other developed or natural features; or
(2)
Required for proper geologic evaluation.
J.
The Department may not issue a drilling and operating permit when the proposed drilling or well operation would result in physical and preventable loss of oil and gas through inefficient or careless operating practices, such as:
(1)
Operating or producing any oil or gas well in a manner that would result in a reduction of the ultimate quantity of oil or gas to be recovered from a pool;
(2)
Inefficient storing or improper handling of oil causing excessive evaporative loss, spillage on the surface, or leakage into the subsurface;
(3)
Producing oil or gas in a manner causing unnecessary water channeling or coning;
(4)
Permitting gas produced from a gas well to escape into the air;
(5)
Flaring of gas from a well producing both oil and gas; or
(6)
Creating fire hazards.
K.
The Department may issue a permit limited to exploration for operations determined to be a wildcat well and may deny production until additional data is submitted and approved including:
(1)
An impact analysis of production operations to the surrounding area;
(2)
A waste disposal plan; and
(3)
A transportation plan for the produced product.
Regulation .10 Drilling and Operating Requirements and Permit Conditions.LinkCopy Citation
A.
The permit shall contain an effective date and an expiration date, and shall be valid for a period not to exceed 5 years.
B.
The permit shall be renewed by the Department upon written application by the permittee not less than 2 weeks before expiration unless:
(1)
The information required by this regulation is not submitted;
(2)
Any of the reasons for denial listed in Environment Article, §4-109(b)(6), Annotated Code of Maryland, apply.
C.
The permit shall require that the well site be posted with a sign:
(1)
Having letters at least 1 inch high;
(2)
Indicating the name of the permittee, the name of the lessor or landowner, and the Department and American Petroleum Institute well identification numbers;
(3)
Indicating phone numbers for the permittee and regulatory agencies required to be contacted in the event of an emergency at the site;
(4)
Posted in a prominent place as directed by the Department; and
(5)
Kept in good condition.
D.
A copy of the drilling and operating permit, including any special provisions, shall be maintained at the well site from the time work begins until drilling and reclamation operations are completed.
E.
Wells shall be drilled with rotary tools unless special approval to drill by cable tool is obtained in writing from the Department.
F.
Drilling liquid may be required when there is insufficient geological data to safely drill with air as the circulating medium.
G.
The drilling liquid used shall be conditioned and tested daily to assure it is capable of:
(1)
Sealing off each oil, gas, salt water, or fresh water zone to be encountered; and
(2)
Exerting pressure in excess of those anticipated by the operator in any formation to be penetrated.
H.
Except in emergency situations, additives to drilling liquids are not permitted without approval of the Department.
I.
When air is permitted as the circulating medium, sufficient liquid shall be available at the site at all times to kill any flow from the well.
J.
Pits or tanks shall be used to contain or condition liquids used in drilling or killing the well and shall be designed and constructed to:
(1)
Have sufficient capacity to contain all liquid and solid substances used or produced during drilling, completing, and plugging the well, and to provide for containment of emergency overflow;
(2)
Have at least 2 feet of freeboard at all times;
(3)
Be at least 1 foot above the ground water table;
(4)
Be impermeable;
(5)
Allow no liquid or solid discharge of any kind into the waters of the State;
(6)
Provide for diverting surface runoff from pits.
K.
Dikes associated with pits shall be:
(1)
Constructed of compacted material, free of trees and other organic material, and essentially free of rocks or any other material which could affect their structural integrity;
(2)
Maintained with a slope that shall preserve their structural integrity;
(3)
Constructed and maintained in accordance with the current Maryland Standards and Specifications for Soil Erosion and Sediment Control, which is incorporated by reference in COMAR 26.17.01.11.
L.
Pits may not be used for the retention or disposal of trash or garbage not associated with drilling fluids.
M.
The permit shall specify that the Department has the authority to visit and inspect the permitted operation.
N.
The permit shall specify that it is the permittee's responsibility to prove the accuracy of the oil and gas meters.
O.
When actual drilling begins, the permittee shall:
(1)
Notify the Department at least 72 hours before beginning;
(2)
Collect samples of drill cuttings for the Department's use as directed in the drilling and operating permit;
(3)
Conduct an electrical induction and gamma ray log to determine depth of fresh water zones;
(4)
Run and permanently cement a string of surface casing in the hole to a depth which is at least 100 feet below the deepest known strata bearing fresh water, or the deepest known workable coal, whichever is deeper.
P.
The surface casing cement shall be:
(1)
Circulated in the annular space outside the casing in a volume required to return to the surface to completely fill the annular space unless otherwise approved by the Department;
(2)
American Petroleum Institute Class A ordinary portland cement with not more than 3 percent calcium chloride and no other additives, unless the Department approves a different cement type in advance; and
(3)
Allowed to set at static balance or under pressure for a minimum of 12 hours before drilling the plug.
Q.
Blowout prevention equipment shall be:
(1)
Installed before drilling the plug on the surface casing;
(2)
Tested to a pressure in excess of that which may be expected at the production casing point before:
(a)
Drilling the plug on the surface casing, and
(b)
Penetrating the target formation; and
(3)
Tested on a weekly basis according to standard operating practice.
R.
The permittee shall maintain, at the site, a driller's log book that includes a:
(1)
Record of each pressure test and each mechanical test of:
(a)
Casings,
(b)
Blowout preventers,
(c)
Surface connections,
(d)
Fittings, and
(e)
Auxiliary wellhead equipment; and
(2)
Daily record of:
(a)
Footage drilled,
(b)
Hole size, and
(c)
Accidents.
S.
If other strings of casing, in addition to surface casing, are run in the hole, they shall be:
(1)
Of a type and weight sufficient for the depth and pressure expected;
(2)
Cemented with sufficient cement circulated in the annular space to provide an effective seal above any producing zone;
(3)
Properly pressure tested;
(4)
Allowed to set a minimum of 12 hours before operations continue.
T.
When a drilling and operating permit authorizes directional drilling, a complete angular deviation and directional survey of the well shall be made to determine the exact course of the directionally drilled hole following the completion of drilling, and before setting the final string of casing.
U.
In anticipation of vertical hole deviation, the permittee shall:
(1)
Select a surface location that provides a reasonable allowance for the bottom hole location to meet the minimum spacing requirements in Regulation .09 of this chapter;
(2)
Estimate the probable direction and extent of the deviation when making application for a drilling and operating permit;
(3)
Make periodic surveys to determine amount and direction of deviation during drilling to verify the accuracy of the estimate, with the results of the deviation surveys included in the weekly depth report to the Department.
V.
Within 30 days after the drilling, stimulating, and testing of a well are completed, a completion report of the well shall be submitted to the Department. Except for confidential geological and geophysical information protected under State Government Article, §10-617, Annotated Code of Maryland, information contained in the completion report and accompanying documents shall be available to the public. The report shall be on a form furnished by the Department and shall include:
(1)
Depth at which any fresh water inflow was encountered;
(2)
Lithology of penetrated strata, including color;
(3)
Total depth of the well;
(4)
A record of all commercial and noncommercial oil and gas encountered, including depths, tests, and measurements;
(5)
A record of all salt-water inflows;
(6)
A record of all casing used, including:
(a)
Size, weight, amount, and depth set;
(b)
Amount of cement used on each casing string;
(c)
Amount of casing recovered from the hole if the well was abandoned;
(7)
Generalized core descriptions, including:
(a)
The type and depth of sample;
(b)
Indications of oil, water, or gas;
(c)
Estimates of porosity and permeability; and
(d)
Percent recovery;
(8)
Existing data on perforating, stimulating, and testing, including open-flow tests and shut-in pressures;
(9)
Existing data on bridge plugs set, make and type of plug, depth plug was set, whether plug was left in place or removed, and details of the plug-back operation below the bridge;
(10)
A copy of all electric, radiation, sonic, caliper, directional, and any other type of logs run in the well; and
(11)
The date on which verbal approval was obtained from the Department to plug the hole as a dry hole in a continuous progression from drilling or reworking.
W.
Land farming of cuttings shall be permitted only on approval from the Department and shall require:
(1)
Soils analysis before site preparation;
(2)
Cuttings analysis as directed by the Department; and
(3)
Post land farming soils analysis.
X.
A completed oil and gas well shall be:
(1)
Equipped with wellhead controls adequate to control the flow; and
(2)
Secured to prevent unauthorized access.
Y.
The permittee shall file, on a form provided by the Department, a monthly report of oil and gas production from each well with the Department before the end of the succeeding month, regardless of the status of the well.
Z.
The Department may modify requirements of a drilling and operating permit or include special provisions or conditions in the permit for environmental, safety, and other sufficient reasons.
Regulation .11 Oil and Gas Correlative Rights.LinkCopy Citation
A.
Unless the drilling and operating permit provides for controlled directional drilling or estimated natural deviation, a well may not vary more than 3 degrees from the vertical.
B.
If a permittee needs to deviate more than 3 degrees from the vertical, the permittee shall notify the Department. Deviations larger than 3 degrees from vertical may be permitted by the Department in order to straighten the hole, sidetrack impenetrables, or to correct other mechanical difficulties, if correlative rights are not in dispute.
C.
The Department may require the deviation to be less than 3 degrees to protect correlative rights.
D.
The Department shall have the right to require the permittee to run a complete angular deviation and directional survey by a company knowledgeable about downhole surveys in directionally drilled wells at the permittee's sole cost and risk.
E.
If an angular deviation and directional survey verifies violations of the approved well location or spacing requirements, the Department may require the well to be redrilled or plugged and abandoned.
Regulation .12 Requirements for Plugging of Oil or Gas Wells.LinkCopy Citation
A.
Upon the abandonment or ending of operation of any dry hole, gas or oil well, storage well, pressure maintenance well, or stratigraphic well, the permittee shall plug the hole.
B.
The permittee shall notify the Department at least 72 hours before plugging operations.
C.
A dry hole shall be plugged within 60 days of completion of the well or before removal of the drill or completion rig, whichever occurs first.
D.
An oil or gas well shall be plugged within 60 days after primary production has stopped for 12 consecutive months.
E.
The Department may grant an extension of time to begin plugging operations upon written request of the permittee, if the Department determines that the request is reasonable.
F.
Surface casing may not be recovered at any location, except by written approval of the Department.
G.
After plugging a well, the permittee shall erect a permanent marker over the plugged well which:
(1)
Consists of a length of pipe with a minimum diameter of 6 inches, filled with concrete;
(2)
Extends at least 30 inches above the surface;
(3)
Extends at least 10 feet into the well and is set in concrete; and
(4)
Has the Department and American Petroleum Institute well identification numbers stamped or welded on the marker in a permanent manner.
H.
Upon written request by the permittee or by the surface owner, the Department may allow an offset marker to replace the marker over a plugged well if the wellhead marker interferes with subsequent activities such as agriculture or construction.
I.
The area immediately around the surface casing and conductor pipe shall be permanently filled to the surface with nonporous material to keep surface water from entering the well bore.
J.
For wells in noncoal areas, the permittee shall plug the well as follows:
(1)
If total depth is deeper than the cemented production casing seat, as in an open hole completion, that part of the well shall be filled with cement to a point 50 feet above the top of the uncased portion of the hole;
(2)
In the cemented part of the production casing, cement plugs shall be set to extend from at least 50 feet below the base of each oil, gas, or water-bearing zone to a point at least 100 feet above the top of the zone;
(3)
A mechanical plug, set at least 20 feet above the oil, gas, or water-bearing zone after filling the hole to that point with nonporous material, may be used instead of a cement plug;
(4)
When multiple oil, gas, or water zones occur within 500 vertical feet of one another, they may be treated as one zone for plugging, unless one zone has greater than hydrostatic pressure;
(5)
Following the plugging of the cemented portion of the production casing, the uncemented portion of the production casing may be separated from the cemented portion and recovered;
(6)
A cement plug shall be set 50 feet below and 50 feet above the point of casing separation;
(7)
If the uncemented portion of the production casing cannot be recovered, oil or gas zones behind the casing shall be plugged by perforating the casing and squeezing cement into the annular space;
(8)
If the production casing is not set, a cement plug shall be set at least 50 feet below and 50 feet above each oil, gas, or water-bearing zone;
(9)
A cement plug shall be set at least 50 feet below and 50 feet above the base of the surface casing;
(10)
A cement plug of at least 50 vertical feet shall be placed in the top of the well;
(11)
After placing the top plug, the operator may be required to cut the casing below plow depth to prevent interference with any subsequent agricultural activities;
(12)
Nonporous material shall be placed in all portions of the well between cement plugs.
K.
If total depth cannot be reached in plugging a well with or without cemented production casing, the permittee shall obtain written permission of the Department for an alternate means to plug the well.
L.
If a mineable coal seam greater than 1 foot in thickness is encountered in the drilling of a well, the permittee shall contact the Department to obtain additional plugging instructions.
M.
An affidavit certifying that the well was plugged according to plans approved by the Department shall be submitted by the permittee within 30 days after the plugging of the well.
Regulation .13 Oil and Gas Bond Performance and Release Procedures.LinkCopy Citation
A.
The liability on the performance bond required in Regulation .06C(5) of this chapter is conditioned on compliance with the law, regulations, permit, orders of the Department, and the regulations and approvals, if any, of the Critical Area Commission under COMAR 27.01 and shall continue until the:
(1)
Ownership of the well has changed and the permits have been transferred, with Departmental approval, at which time the seller's bond shall be released;
(2)
Department has approved the:
(a)
Physical plugging of the well;
(b)
Reclamation of the well site;
(c)
Receipt of all logs, plugging records, and samples, and
(d)
Performance of all requirements of these regulations and the drilling and operating permit; or
(3)
Drilling and operating permit terminates because drilling was not started within 18 months, and the Department approves the reclamation of the site.
B.
A bond or other security shall contain a provision that it cannot be cancelled by the surety, bank, or other issuing entity except after not less than 90 days written notice to the permittee and Department. At least 45 days before the cancellation date indicated in the notice, the permittee shall file with the Department a commitment from a surety, bank, or other issuing entity, to provide a substitute bond or other security which shall be effective on the cancellation date indicated in the notice.
C.
The permittee may apply for bond release from the Department upon meeting all the requirements of these regulations and the drilling and operating permit.
D.
Upon written request by the permittee, the Department shall notify the surety and the principal by U.S. mail when the liability under the bond has been terminated.
E.
The performance bond shall be forfeited on failure of the permittee to perform in a manner set forth in the authorized drilling and operating permit and the reclamation plan, or upon revocation of the permit.
F.
The Department shall notify the permittee by certified mail, return receipt requested, bearing a postmark from the United States Postal Service, of its intention to initiate a forfeiture proceeding.
G.
Following receipt of the forfeiture notice by the permittee, the permittee has 30 days to show cause why the bond should not be forfeited.
H.
On the permittee's showing of cause, the Department shall provide sufficient time for the permittee to comply with all permit conditions.
I.
On failure of the permittee to show cause, the bond shall be forfeited nisi, and notice by the Department shall be given by certified mail, return receipt requested, to the permittee and surety of the forfeiture.
J.
If the permittee fails to comply with the permit conditions following forfeiture nisi within the time period set by the Department, the bond shall be forfeited absolute.
K.
On an absolute forfeiture, the Department shall use the funds made available by the forfeiture to complete abandonment procedures and reclaim the area authorized by the drilling and operating permit.
Regulation .14 Modification, Termination, or Transfer of Drilling and Operating Permits.LinkCopy Citation
A.
A person holding a valid drilling and operating permit, and who proposes to conduct any of the following operations in an effort to obtain or increase the production of oil or gas within the State, shall obtain a modification of the drilling and operating permit from the Department before the person:
(1)
Recompletes a well in a different reservoir or formation;
(2)
Recompletes a well to commingle production from two or more reservoirs within the same formation;
(3)
Stimulates a zone that has been in production;
(4)
Deepens a well;
(5)
Skids a drill rig 75 feet or less; or
(6)
Converts from one type of well to another.
B.
A drilling and operating permit terminates 18 months after the date of issuance, if the proposed drilling has not started.
C.
A drilling and operating permit may be transferred or assigned with prior written approval by the Department, and the posting by the acquiring party of a performance bond and insurance which meets the requirements of Regulation .06C(4) and (5) of this chapter.
D.
The transfer or assignment of a drilling and operating permit shall be on a form provided by the Department, signed by both the transferor and the recipient, which contains provisions that the recipient acknowledges:
(1)
Full awareness of the obligations, costs, and liabilities in performing reclamation, plugging, and other requirements of the drilling and operating permit and any other permit associated with the well; and
(2)
The obligation to fulfill all requirements of the permit and this chapter regardless of whether the transferor or assignor started the activity, or failed to properly perform the requirements before the transfer or assignment.
Regulation .15 Violations of Statutory, Regulatory, or Permit Requirements.LinkCopy Citation
A.
A person who violates or causes an act which violates a provision of Environment Article, §§14-101—14-120, Annotated Code of Maryland, and this chapter, or who violates or fails to comply with a permit or an order of the Department when due notice is given, is guilty of a misdemeanor, and, upon conviction, the violator is subject to a fine not exceeding $1,000 per day for each day of the offense, not to exceed a total fine of $50,000, with costs imposed at the discretion of the court.
B.
If the Department determines that there has been a violation of a provision of Environment Article, §§14-101—14-120, Annotated Code of Maryland, and this chapter, or a violation or failure to comply with a permit issued under this chapter, the Department may cause a written complaint to be served upon the alleged violator specifying the nature of the violation.
C.
After or concurrent with service of the complaint, the Department may:
(1)
Issue an administrative order requiring necessary corrective action, including stopwork, or restoration to be taken within the time prescribed and providing the alleged violator with the opportunity to request a hearing before the Department within 10 days after receipt of the order;
(2)
Require the alleged violator to file a written report regarding the alleged violation;
(3)
Require the alleged violator to appear before the Department at a time and place the Department specifies to answer the charge outlined in the complaint.
D.
An order the Department issues shall be served on the alleged violator personally or by registered mail, return receipt requested.
E.
Upon failure by the alleged violator to comply with the requirements of an administrative order, a permit may be modified or suspended by the Department.
F.
Modification or suspension of a permit shall be effective without stay upon appropriate notice to the alleged violator.
G.
An administrative action or a permit suspension or modification may not be stayed pending a hearing.
H.
Under emergency conditions, such as violation or imminent violation of an applicable State requirement, a permit may be modified or suspended.
I.
The Department may inspect a permitted site at any time in order to determine whether conditions of the permit have been satisfied or whether the permit should be modified, suspended, or revoked.
J.
A permit may be revoked after notice to the permittee, if the Department determines that:
(1)
The permittee has failed to comply with the requirements of an administrative order;
(2)
False or inaccurate information was contained in the application for the permit;
(3)
Conditions or requirements of the permit have been or are about to be violated;
(4)
Substantial deviation from plans, specifications, or requirements has occurred;
(5)
The permittee has failed to allow an authorized representative of the Department upon presentation of proper credentials to:
(a)
Enter at any reasonable time upon the permittee's premises where pertinent operations are conducted, or where records are required to be kept under terms and conditions of the permit;
(b)
Have access to and copy any records required to be kept under terms and conditions of the permit;
(c)
Inspect facilities to ensure compliance with the conditions of the permit;
(d)
Inspect any monitoring equipment or method required in the permit; or
(6)
A change in conditions exists that requires temporary or permanent modification or elimination of the permitted operation.
K.
The permittee has 10 calendar days to request a hearing, in writing, on the permit revocation to determine if the permit shall be reinstated.
L.
The provisions of this regulation may not be construed to limit or otherwise affect the authority of the Department to proceed against violators under State law.
Chapter 02. Natural Gas Category Determination Under the Natural Gas Policy Act of 1978
Regulation .01 Category Determination Application Procedures for the Applicant.LinkCopy Citation
A.
A person seeking a determination that natural gas meets the requirements under the Natural Gas Policy Act of 1978, §102, 103, 107, or 108 (15 U.S.C. §§3312, 3313, 3317, and 3318) shall submit to the Department:
(1)
An original and two complete copies of an application, on forms provided by the Department, containing all the information required to be filed under 18 CFR 274;
(2)
When an application for a category determination is sought for natural gas for which the applicant has an identified purchaser, a statement included in the application that the applicant has delivered or mailed a copy of the completed Federal Energy Regulatory Commission Form No. 121 to the purchaser;
(3)
A copy of a proposed notice of application that incorporates the requirements of §B of this regulation; and
(4)
Any additional information that the Department considers necessary after the Department's preliminary review of the application.
B.
Notification.
(1)
Upon receipt of Departmental notification that an application is complete, the applicant shall advertise at least once a week for 2 consecutive weeks in a:
(a)
Local newspaper of general circulation in the county where the operation is located; and
(b)
Newspaper of general circulation Statewide.
(2)
The advertisement in §B(1) of this regulation shall contain, at a minimum, the following information:
(a)
A heading of “Notice of Application for Natural Gas Category Determination” in bold-face type;
(b)
The name and business address of the applicant, and the name and telephone number of an individual to whom questions regarding the application may be directed;
(c)
What category is being requested, and a summary of the economic impacts on the applicant, the purchaser, if applicable, and the consumer, if the application is approved; and
(d)
The name and address of the Department and a statement that:
(i)
A copy of the application is available for public inspection at the Department office,
(ii)
Written comments or objections on the application may be submitted to the Department within 30 days from the date of the last advertisement, and
(iii)
A public hearing will be held on the application, if a request for a public hearing is submitted to the Department within 15 days of the publication date of the last advertisement.
Regulation .02 Category Determination Application Review by the Department.LinkCopy Citation
A.
The Department shall conduct a detailed review of the application and all other factors relevant to a natural gas category determination under State and federal law.
B.
If a public hearing is requested, the Department shall notify the applicant in writing of the date, time, and location of the hearing.
C.
Within 5 working days of the Department's notification under §B of this regulation, the Department shall provide general notice, at the applicant's expense, of the public hearing as follows:
(1)
The owner of surface rights and the owner of oil and gas rights on the tract of land where the well is located, and the purchasers, if applicable, as identified by the applicant, shall be notified in writing of the date, time, and location of the hearing;
(2)
A person who commented on or objected to the application shall be notified in writing of the date, time, and location of the hearing so that the person may attend and present their views either orally or in writing;
(3)
An advertisement shall be placed in a newspaper of general circulation in the county where the operation is located, and in a newspaper of general circulation Statewide, once a week for 2 consecutive weeks, ending not less than 15 days before the date of the hearing, stating the date, time, and location of the hearing;
(4)
A notice of the public hearing containing all pertinent information shall be placed in the Maryland Register.
D.
A public hearing shall be held following the procedures established in COMAR 26.01.07.
E.
The Department shall provide notice of a natural gas determination to the Federal Energy Regulatory Commission within 15 days after the Department's final decision.