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Agenda 06/10/2014 Item #10B _01 ii,, 6/10/2014 10.B. ,tom Board of Collier County Commissioners Donna Fiala Georgia A.Hiller,Esq. Tom Henning Fred W.Coyle Jim Collette District 1 District 2 District 3 District 4 District 5 MEMORANDUM Date: June 4, 2014 To:Leo Ochs,County Manager From: Commissioner Tom Henning, Chairman,District 3 Re: RECONSIDERATION OF MAY 13 ITEM 12A AND SPECIAL MEETING IN JUNE RELATED TO OIL DRILLING ISSUES I am in receipt of a letter from the Florida Department of Environmental Protection sent by Deputy Secretary Jeff Littlejohn concerning the oil drilling issues occurring in Collier County. After meeting with Deputy Secretary Littlejohn and reviewing the letter sent to the BCC on June 3, 2014 (attached), I would like to call for a reconsideration of the May 13 BCC Agenda Item 12A. 5/13/14 Item 12A: "Recommendation to authorize the County Attorney to attend a settlement meeting scheduled for May 15th in Tallahassee involving the potential challenge of a Consent Order entered into between the Florida Department of Environment Protection and the Dan. A. Hughes Company, L.P., and to direct the County Attorney to hold off filing a Petition until the Board has had the opportunity to review the County Attorney's report of the meeting." I am also considering calling for a special_mteting related sally to this issue for us to meet with DEP about what I believe are misunderstandings about what has occurred so that the Board may openly discuss with DEP how it plans to protect the citizens of Collier County. This meeting would occur between the June 10 and June 24 meeting and as it requires notice, I am asking the County Manager to advise the earliest day possible such a special BCC meeting may be hosted while meeting public notice regulations. Commissioner Tom Henm District 3 it/ 3299 Tamiarm Trail East,Suite 303•Naples,Florida 34112-5746.239-252-8097•FAX 239-252-3602 Packet Page-122- 6/10/2014 10.B. COLLIER COUNTY Board of County Commissioners Item Number: 10.10.B. Item Summary: Request for Reconsideration of Item 12A from the May 13, 2014 BCC meeting titled: Recommendation to authorize the County Attorney to attend a settlement meeting scheduled for May 15th in Tallahassee involving the potential challenge of a Consent Order entered into between the Florida Department of Environmental Protection and the Dan A. Hughes Company, L.P., and to direct the County Attorney to hold off filing a Petition until the Board has had the opportunity to review the County Attorney"s report of the meeting. (Commissioner Henning) Meeting Date: 6/10/2014 Prepared By Approved By Name: KlatzkowJeff Title: County Attorney, Date: 6/4/2014 11:29:56 AM Name: OchsLeo Title: County Manager, County Managers Office Date: 6/4/2014 11:49:59 AM Packet Page-123- 6/10/2014 10.B. Kpy RICK SCOTT so, FLORIDA DEPARTMENT OF GOVERNOR V"! :z ENVIRONMENTAL FRO T ECTION CARLOS LOPEZ-CANTERA , -s'w LT.GOVERNOR MARJORY STONEMAN DOUGLAS BUILDING 3900 COMMONWEALTH BOULEVARD lagglageaSSEM TALLAHASSEE,FLORIDA 32399-3000 I IERSCI IEL T.V INYARD JR. SECRETARY June 3,2014 Collier County Board of County Commissioners 3299 Tamiami Trail East, Suite 303 Naples,FL 34112-5746 Re: Proposed Challenge to DEP Consent Order Dear Commissioners: We are writing regarding your May 13, 2014 vote to challenge the Consent Order entered into between the Department of Environmental Protection (DEP) and Dan A.Hughes, L.P. (Hughes) on April 8, 2014, OGC File No. 14-0012. We believe the Commission's decision may have been based on incorrect and incomplete information, and we would like to clarify several issues that you may want to address in your June 10 public meeting as a basis for reconsidering the decision. Should the County choose to move forward with its administrative challenge to the Consent Order, your challenge will cause the Order to be suspended for the duration of the judicial review, effectively removing any obligations on Hughes contained in the Consent Order until the conclusion of litigation. (See paragraph 32 of the Order.) The Consent Order is the legal mechanism for DEP to require the installation of additional monitoring wells,the collection of groundwater monitoring data,and the independent review of the procedure used at the Hogan well. It is essential for DEP and the public to have this information as soon as possible to determine whether any adverse impacts have occurred to the groundwater resources in Collier County. DEP urges the County not to be the cause of this delay. Next,the Commission may have been led to believe that it could challenge the well permit or seek to revoke the permit through this challenge. The Consent Order, not the permit itself, is legally challengeable at this time. Should the County decide to continue with its challenge and prevail,the Consent Order will be vacated, but the permit will remain in place. This concerns DEP because it will eliminate the civil penalties and any enforceable mechanisms currently in place for DEP to require Hughes to perform the additional groundwater monitoring and investigations—above the usual permitted requirements. Under this scenario, the public will be deprived of the important information the study will yield, including discussion of any impacts that may have occurred to groundwater resources. wwu dep.stute..1l.us Packet Page -124- 6/10/2014 10.B. Accordingly, DEP urges the Commission to reconsider its May 13 decision, so that it may receive and consider additional information and return to discussions with DEP and Hughes to address its concerns about the procedure conducted at the Hogan well. We understand that a procedure exists that would allow the Commissioners to take up a simple vote on June 10 to reconsider its May 13 vote, and we recommend you consider doing so. In our experience, governmental entities with the common goals of environmental protection can achieve better results by collaborating rather than resorting to costly and time consuming litigation where the results are uncertain. We hope that we can engage again with the County in this productive effort. Sincerely, Jeff Litlejohn, P.E. Deputy Secretary for Regulatory Programs www.dep.state fl.us Packet Page-125- 6/10/2014 10.B. EXECUTIVE SUMMARY Recommendation to authorize the County Attorney to attend a settlement meeting scheduled for May 15th in Tallahassee involving the potential challenge of a Consent Order entered into between the Florida Department of Environmental Protection and the Dan A. Hughes Company, L.P., and to direct the County Attorney to hold off filing a Petition until the Board has had the opportunity to review the County Attorney's report of the meeting. OBJECTIVE: To potentially resolve this dispute prior to the commencement of litigation. Please note that this has been and continues to be a rapidly evolving matter; any further changes shall be noted on the Change Sheet. CONSIDERATIONS: On or about December 18, 2012, the Department of Environmental Protection (hereinafter referred to as the "DEP") issued an Oil and Gas Well Drilling Permit (Permit No. 1349H, Collier-Hogan 20-3H Well) to the Dan A. Hughes Company, L.P. (hereinafter referred to as the "Hughes Company") to construct a well located at the Hogan Island Farm in Collier County, Florida. This Permit authorized the Hughes Company to drill a "horizontal completion targeting the Lower Sunniland Formation." Upon completion of the construction of the 20-3H Collier-Hogan Well, DEP issued a Five Year Operating Permit to Hughes Company on August 9,2013 under the same permit number(Permit No. 1349H)to operate the .-. well as an oil production well. On or about December 23, 2013, the Hughes Company e-mailed the DEP a workover notification concerning its operation permit for the 20-3H Collier-Hogan Well indicating its intent to conduct a "Workover Operation" commencing on December 28 or 29, 2013. Subsequently, at the request of the DEP, Hughes Company agreed to delay the Workover Operation until at least December 30 to allow DEP additional time to review and respond to the notice. The Hughes Company proceeded with the Workover Operation on December 30, 2013 and continued through January 1, 2014 despite oral notification by the DEP that the proposed Workover Operation was not approved. On December 31, 2013, the DEP entered a Final Order Requiring Operations at Well 20-3H Collier-Hogan to Cease and Desist. The Final Order noted that "the Department is not satisfied that it has sufficient information that the proposed workover would be protective of the State's groundwater resources" and ordered that the Hughes Company "CEASE AND DESIST all operations proposed in the December 23, 2013,workover notice." Even though DEP was clearly concerned that the Hughes Company's actions could adversely impact the State's groundwater resources, no notice of this Final Order was given to Petitioners Collier County or District, nor to the residents of Collier County, who depend and rely on these groundwater resources for their sole source of drinking water. Packet Page-126- 6/10/2014 10.B. On April 18, 2014,DEP issued the following Press Release: "STATEMENT FROM DEP REGARDING CONSENT ORDER WITH THE DAN A. HUGHES COMPANY,L.P. TALLAHASSEE — The Florida Department of Environmental Protection (DEP) finalized a Consent Order last week with the Dan A. Hughes Company, L.P. for unauthorized activities at the Collier—Hogan well south of Lake Trafford in Collier County. "The department caught the Dan. A. Hughes Company conducting unauthorized activities and immediately took action to assess the maximum civil penalties. In addition, the department is requiring Dan A. Hughes to hire an independent expert, approved by the department, to conduct ongoing groundwater monitoring of the area to ensure no damage to the environment or risk to the public occurred because of their unauthorized actions. The results of the monitoring will be reviewed by DEP experts." Background: The department closely regulates oil and gas exploration and extraction to protect public safety and our environment. Every activity is thoroughly reviewed to address waste fluid disposal, well integrity, groundwater protection and spill prevention. On Dec. 23, 2013, the Florida Department of Environmental Protection received a well completion procedure notice, also known as a workover notice, from the Dan A. Hughes Company, L.P. This request was for work to be conducted for well permit number 1349H, the Collier—Hogan well located south of Lake Trafford in Collier County. The drilling permit for this well was issued on Dec. 18, 2012, and the operating permit for the well was issued on Aug. 9, 2013. The department had concerns about the workover notice, which proposed an enhanced extraction procedure that had not previously been used in Florida. The company proposed to inject a dissolving solution at sufficient pressure to achieve some openings in the oil bearing rock formation that would be propped open with sand in pursuit of enhancing oil production. The department requested Dan A.Hughes Company, L.P. not move forward with the workover procedure until additional review could be performed. However, on Dec. 31, 2013, the department became aware the workover procedure had commenced, without approval. Because of the actions of Dan A. Hughes Company, the department was not afforded the opportunity to complete its review of the proposed procedure before operations began. As a result, a Cease and Desist Order was issued and the department immediately pursued formal enforcement." The County first received notice of both the Cease and Desist Order and the April 8`h Consent Order from an April 18`h Naples Daily News article that referenced the April 18th Packet Page-127- 6/10/2014 10.B. Press Release. At the April 22nd Board Meeting, Commissioner Nance, on add-on Item 10C, made the following recommendation to the Board: "Recommendation to direct the Collier County Attorney, supported by staff, to file a challenge to Consent Order (OGC File No. 14-0012) entered into on April 8, 2014, between the State of Florida Department of Environmental Protection (FDEP) and the Dan A. Hughes Company, L.P., regarding oil and gas well operations at the Collier-Hogan 20-3H Well (Permit No. 1349H). Challenge to request the Consent Order be modified to require additional provisions for oversight, safeguards, and monitoring to protect the environment and insure the health, safety and welfare of the citizens of Collier County. Challenge to further request a protocol be established from FDEP that improves communication and coordination between the agencies regulating the Oil; and Gas Program and Collier County local government, and that copies be provided to Collier County of all application packages for future oil and gas exploration, production wells, and class II injection wells, as well as all permit related correspondence, additional submittals, meeting minutes, and agency action. Additional change(s)to the Consent Order as deemed appropriate by the Board." A copy of Commissioner Nance's Executive Summary and back-up is attached. The Board, following a full public hearing, adopted Commissioner Nance's recommendation, .-. further directing that the Petition seek as an alternative remedy the revocation of the permit. The Thursday following the Board meeting, I received a telephone call from Matt Leopold, General Counsel to the Florida Department of Environmental Protection. Mr. Leopold had watched the Board discussion of the Hughes Oil Well matter, appeared very concerned, and expressed a strong desire to avoid litigation. I advised Mr. Leopold that I was under Board direction to file a Petition seeking administrative relief. I then received a second call, this time with Mr. Leopold and an agency member, who requested that Commissioner Nance be conferenced into the call. After Commissioner Nance joined the call, I had an open and frank discussion of the matter with DEP, who requested that the case be mediated prior to the initiation of the Administrative action. It is DEP's expressed belief that everyone involved would be more likely to discuss the issue in full candor in a mediation setting, in which all conversations are confidential, but that once litigation is commenced this will become impossible. The Friday following the Board meeting, I forwarded a draft Petition to DEP, which was then forwarded to Hughes. That led to additional conversations, and at my request, DEP extended the County's time to file the Petition until May 15 to allow me to bring this issue to the Board today. Since that time, both DEP and Hughes have agreed to attend a Settlement Meeting (rather than mediation) with the County at DEP's Offices in Tallahassee. The Settlement Meeting would be held May 15t (conditioned on Board direction today) and I expect DEP to further extend the County's time to answer the Petition prior to the time this Packet Page -128- 6/10/2014 10.B. matter is heard. Because of timing and cost issues, the County Attorney concurs that this be handled as a settlement meeting rather than in a mediation setting. Should the Board approve the recommendation, I have attached a proposed Amended Consent Order which, with Board approval, I will use as a basis for the Settlement Meeting. I hope to have a proposed Amended Consent Order back to the Board for its May 27th Meeting. Should the Board elect not to proceed with this Settlement Meeting, I will file the attached Petition following today's Board meeting. Should either DEP or Hughes later elect not to proceed with the Settlement Meeting, I will immediately file and advise the Board accordingly. FISCAL IMPACT: Travel and overnight costs to and from Tallahassee, of approximately $500, to be paid from the County Attorney's budget. GROWTH MANAGEMENT IMPACT: None. RECOMMENDATION: That the Board of County Commissioners authorize the County Attorney to attend a Settlement Meeting in Tallahassee involving the potential challenge of a Consent Order entered into between the Florida Department of Environmental Protection and the Dan A. Hughes Company, L.P., and to direct the County Attorney to hold off filing a Petition until the Board has had the opportunity to review the County Attorney's report of the meeting. PREPARED BY: Jeffrey A. Klatzkow, County Attorney Attachments: Consent Order; Executive Summary with back-up and Recap (Item 10C April 22 Meeting); Hughes' position set forth in a guest column in the Naples Daily News; Draft Petition;proposed Amended Consent Order Packet Page-129- 6/10/2014 10.B. STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTEC11ON In re: Dan A. Hughes Company LP Permit No: 1349H Welt 20-3H Collier-Hogan FINAL ORDER REQUIRING OPERATION,is ATWELl.20-3h COWER-HOGAN CEEAND DESIST Pursuant to Section 403.081(8), Florida Statutes,the Department of Environmental Protection("Department")Is entering this Final Order requiring the Dan A.Hughes Company LP immediately cease and desist from any further operations at the 20-3H Collier-Hogan well as proposed in its Well Proposal, Proposal No: 1001184786,dated December 23, 2013. The Department enters this Final Order in exercise of its power and duty to issue orders that are necessary to protect the State's waters from water pollution and states u follows: 1. On December 23,2013, Dan A. Hughes Company LP,through counsel, mailed the Department a workover notification concerning Its operation permit for the 20-3H Collier-Hogan well indicating that it intended to conduct a workover operation. The notification provided seven pages of information on the workover proposal. 2. The December 23,2013,email indicated that the proposed workover operation would commence on December 29,2013. The proposed workover operation was initiated on December 30,2013,and is continuing to date despite oral notification by the Department that the proposed wocfcover operation was not approved. Exhibit"C" Collier County's Petition for Administrative Hearing Packet Page-130- - 6/10/2014 10.B. . L 3. After reviewing the documents attached to the December 23,2013 mall, the Department is not satisfied that it has sufficient Information that the proposed ' workover would be protective of the State's groundwater resources,and it is therefore ORDERED that Dan A.Hughes Company, LP CEASE AND DESIST all operations ' proposed in the December 23,2013,workover notification concerning the 20-3H Collier- , , Hogan well. Any party to this Final Order has the right to seek Judicial review of the Final Order under Section 120.68,Florida Statutes, by flung a Notice of Appeal under Rules 9.110 and 9.190, Florida Rules of Appellate Procedure,with the Clerk of the Department of Environmental Protection,Office of the General Counsel, Mail Statleon 35, 3900 Commonwealth Boulevard,Tallahassee,Florida 32399-3000, and by filing a copy . of the Notice of Appeal accompanied by the applicable filing fees with the appropriate • district court of appeal. The Notice of Appeal must be filed within 30 days after this notice is filed with the Berk of the Department. - Exec Executed In Leon County, Florida on December 31,2013, STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION • -iii. ••R'. -I Vinyard . Secretary . 2 Packet Page-131- 6/10/2014 10.B. CgRT1FICATE OF 8ERViCE I CERTIFY that a true copy of the foregoing was sent electronic mail only to Richard S. Brightman and Timothy M Riley, Hopping Green&Sam PA,P.O.Box 8528, Tallahassee,Florida 32314-8526,Attorneys for Dan A.Hughes Company, LP.at rdb®ho,1aw.com;limottwrghoslaw.com,on this 31st day of December,2013. DeP rat FILED ON THIS DATE PURSUANT TO!F 120.52, FLORIDA STATUTES,WITH THE DESIGNATED DEPARTMENT CLERK,RECEIPT OF WHICH IS HEREBY ACKNOMILEDOED. ted/AZZAL411k /(ZI3I//3 CLERK DATE 3 Packet Page-132- 6/10/2014 10.B. BEFORE THE STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION STATE OF FLORIDA DEPARTMENT IN THE DIVISION OF OF ENVIRONMENTAL PROTECTION WATER RESOURCE MANAGEMENT OGC FILE NO. 14-0012 vs. DAN A.HUGHES COMPANY,L.P. CONSENT ORDER This Consent Order("Order")is entered into between the State of Florida Department of Environmental Protection,("Department")and the Dan A.Hughes Company,L.P.("Company"), to reach settlement of certain matters at issue between the Department and the Company. 1. The Department is the administrative agency of the State of Florida having the power and duty to protect Florida's air and water resources and to administer and enforce the provisigns of Chapters 377 and 403,Florida Statutes("F.S."),and Chapters 62C-25 through 62C-30, Florida Administrative Code("F.A.C."). The Department has jurisdiction over the matters addressed in this Order. 2. The Company is a"person"within the meaning of Section 403.161 and 403.031(5),F.S. 3. The Company obtained an Oil&Gas Well Drilling Permit from the Department in December of 2012(Permit No: 1349H,Collier-Hogan 20-3H Well)to construct a well to be located at the Hogan Island Farm in Collier County,Florida. 4. Upon completion of the construction of the 20-3H Collier-Hogan Well("Well'), the Company obtained a Five Year Operation Permit in August of 2013 to operate the Well as an oil production well. Exhibit"A" Collier County's Petition for Administrative Hearing Packet Page-133- 6/10/2014 10.B. 5. On December 23,2013,the Company submitted to the Department a Workover Notification indicating that it intended to conduct a"Workover Operation"as described in Exhibit 1 attached hereto. This notice stated that the Company planned to commence the Workover Operation on December 28 or 29. Subsequently,at the request of the Department,the Company agreed to delay the Workover Operation until at least December 30 to allow the Department more time to review and respond to the notice. 6. The Workover Operation proposed by the Company began on December 30, 2013,and continued through January 1,2014. 7. On December 31,2013,the Department entered a Final Order Requiring Operations at Well 20-3H Cease and Desist and served a copy of the Final Order on the Company on December 31,2013. A copy of the Final Order is attached hereto as Exhibit 2. 8. The Company continued the Workover Operations until approximately 2:30 PM P1 on the afternoon of January 1,2014. 9. The Company contends that at all times it was operating lawfully under a valid permit and followed all applicable procedures required to conduct the Workover Operations described in Exhibit 1. Having reached resolution of the matter,the Department and the Company mutually • agree and it is, ORDERED: 10. Within 10 days of the effective date of this Order,the Company shall pay the • Department$25,000 in settlement of the regulatory matters addressed in this Order. This amount includes$20,000 for civil payments and$5,000 for costs incurred by the Department during the investigation of this matter and the preparation and tracking of this Order. • Packet Page-134- 6/10/2014 10.B.- WELL SAFETY 11. Immediately upon execution of this Order or upon becoming available to the Company(whichever is later),the Company shall provide to the Department the information in paragraphs 12-14 below. 12. The Company shall provide Material Safety Data Sheets(MSDS)for all materials used in the Workover Operation described in Exhibit 1 attached hereto,along with the proportion and total volume of each material used in the Workover Operation. 13. The Company shall identify the total volume of water used in the Workover Operation,and the source of the water,including the permit number if the water was obtained from a permitted source and confirmation that the volume of water used for the Workover Operation does not exceed any limitation set in the permit. 14. The Company shall provide the following information concerning the flowback material management for the Well operations: (a) estimate of the total volume of flowback material;(b)storage capacity at the pad to contain any flowback material that is anticipated to be held onsite;(c)description of the secondary containment measures employed at the site;(d)the final disposal location for the flowback material resulting from the Workover Operation;and(e) and confirmation of the regulatory conditions on final disposal,including the permitting agency and permit number(s). 15. The Company shall submit an Interim Spill Prevention and Cleanup Plan("ISPC Plan")to be implemented at the Well. The ISPC Plan shall be submitted to the Department within fourteen(14)days of the effective date of this Consent Order. If the Department requests additional information or notifies the Company that the ISPC Plan is inadequate or otherwise unacceptable,the Company shall provide the additional information or submit a revised ISPC Packet Page-135- 6/10/2014 10.B. Plan within the time frame,not less than fourteen(14)days,specified by the Department in the request or notification. Implementation of the Department approved ISPC Plan constitutes satisfaction of this requirement. ANALYSIS AND MANAGEMENT 16. The Company shall provide information and analysis to confirm that this Workover Operation was designed and carried out in a way that it is not likely to cause or contribute to any violation of any applicable groundwater quality standard. The Company,at its sole expense,shall retain independent third-party experts with the appropriate qualifications to assess the likelihood that the Workover Operation will cause or contribute to a violation of any • applicable groundwater quality standards. This analysis shall consider at a minimum,the potential for injected or native fluids to migrate through the deep geological formations or the Well casing into surrounding groundwater bearing zones with total dissolved solids concentrations of 10,000 ppm or less. The Department and the Company shall make a good faith effort to reach mutual agreement on the selection of the third-party experts and the"Scope of Work"to be performed by the experts within 60 days of the effective date of this Order. Neither the Department nor the Company shall unreasonably withhold their approval of the experts or the Scope of Work for the analysis. The Scope of Work will be limited to analyses reasonably necessary to evaluate the likelihood that Workover Operations similar to the Workover Operations described in Exhibit 1 will cause or contribute to any violations of any applicable • groundwater quality standards. The experts shall prepare a Report and submit the Report to the Department by December 1,2014. 17. Upon receipt of the Report,the Department shall review the Report and in a timely manner determine whether it provides sufficient information to evaluate the likelihood • • Packet Page -136- 6/10/2014 10.B. - L • that Workover Operations similar to the Workover Operations described in Exhibit 1 will cause or contribute to any violations of any applicable groundwater quality standards. To this end, within 30 days of the receipt of the Report the Department shall notify the Company and the Report author of any apparent errors or omissions and request any additional information needed to evaluate the likelihood groundwater standard violations would result from similar Workover Operations.The Company shall provide the additional information reasonably requested by the Department within 30 days of receipt of the Department's request. If at any time before the study is accepted by the Department anyone files a Workover notice for a Workover Operation similar to the Workover Operation described in Exhibit 1,the Department will respond to such • notice with a request for information similar to the Scope of Work for the Report 18. .No future Workover Operations similar to the Workover Operation described in Exhibit 1 shall be implemented at any of the Company's wells(existing and proposed under valid permits)until the completion and submittal of the Report described in paragraph 16. The Department agrees to provide written notice to the Company when it has satisfied the Report requirements of this Consent Order. 19. Within 30 days of the effective date of this Order,the Company shall submit a groundwater monitoring plan("PIan")to the Department. The objective of the Plan is to provide • information regarding the likelihood that the Workover Operation will cause or contribute to any violation of any groundwater standard in the nearby groundwater aquifer used as public and private water supply. The Plan shall be developed and implemented at the expense of the Company. The Plan shall include:(a)a one-time analytical sampling of the flowback material prior to its final disposal. In addition to the analysis identified in Exhibit 3,the one-time analytical sampling of the flowback material shall be conducted using the following analytical --- Packet Page-137 6/10/2014 10.B.- methods: EPA Method 350.1 —total ammonia,EPA Method 8260 with required reporting of all target analytes and tentatively identified compounds having greater than 10%relative abundance, EPA Method 8270 with required reporting of all target analytes and tentatively identified compounds having greater than 10%relative abundance,EPA Method 8015C with all alcohols and glycols using the heated purge option cited in Section 11.1.2,FL PRO(State of Florida •petroleum range organics),MA VPH(State of Massachusetts volatile petroleum hydrocarbons), Standard Methods 2504B—total dissolved solids,and Standard Methods 4500-CL F(listed as residual chlorine but measures total residual oxidants); ; (b)installation of a series of shallow monitoring wells,placed at the NW,NE,SW,SE comers of the pad. The wells shall be designed to test the full column of the potable water zone;(c)installation of one deep groundwater monitoring well on the pad and southwest of the subject well to a depth equal to the base of the sandstone aquifer(approximately 400');(d)ground water quality sampling and analyses of all wells;;(e)sampling and analyses of all monitoring wells on a quarterly basis for either ten(10) years from the date upon which the Department approves the groundwater monitoring plan or for five(5)years after plug and abandonment of the Well,which ever monitoring period shall expire first;(1)an inventory of freshwater supply wells within a quarter mile of the well bore hole;and(g)a schedule for implementing the Plan. 20. If the Department requests additional information or notifies the Company that the Plan is inadequate or otherwise unacceptable,the Company shall provide the additional information or submit a revised Plan within the time frame specified by the Department in the request or notification. Within 30 days of notification from the Department that the Plan is acceptable, the Company shall begin implementing the Plan. Packet Page -138- 6/10/2014 10.B.- . SETTLEMENT OF ALL DISPUTES 21. The terms of this Consent Order,upon execution,shall supersede the requirements of the Final Order Requiring Operations at Well 20-3H Cease and Desist. • 22. This Consent Order is in settlement of all disputes between the Company and the • Department regarding the Permit No. 1349H,20-30H Collier-Hogan Well. The Department and the Company agree to act in good faith and to cooperate fully with each other in carrying out the intent of this Consent Order,and all matters related thereto,and for that purpose agree to execute any additional documents or take such action as may prove reasonably necessary to accomplish that intent. CONFIDENTIALITY 23. If any of the information submitted by the Company in response to the requirements of this Order is considered a trade secret or is otherwise confidential information in accordance with Chapter 377 or Section 403.111,F.S.,the Company shall request upon submittal of the information that the Department keep such information confidential. The Department will thereafter keep such information confidential in accordance with the requirements of Chapter 377 and Section 403.111,F.S. ORDER ADMINISTRATION 24. The Company acknowledges and waives its right to an administrative hearing pursuant to Sections 120.569 and 120.57,F.S.,on the terms of this Order. The Company acknowledges its right to appeal the terms of this Order pursuant to Section 120.68,F.S.,and waives that right upon signing this Order. 25. If any event,including administrative or judicial challenges by third parties unrelated to the Company,occurs which causes delay or the reasonable likelihood of delay,in Packet Page-139- 6/10/2014 10.B.- complying with the requirements of this Consent Order,the Company shall have the burden of •proving the delay was or will be caused by circumstances beyond the reasonable control of the Company and could not have been or cannot be overcome by the Company's due diligence. The failure of a contractor,subcontractor,materialman or other agent(collectively referred to as "contractor")to whom responsibility for performance is delegated to meet contractually imposed deadlines shall not be a cause beyond the control of the Company,unless the cause of the contractor's late performance was also beyond the contractor's control. Upon occurrence of an event causing delay,or upon becoming aware of a potential for delay,the Company shall notify the Department orally within 24 hours or by the next working day and shall,within seven calendar days of oral notification to the Department,notify the Department in writing of the anticipated length and cause of the delay,the measures taken or to be taken to prevent or minimize the delay and the timetable by which the Company intends to implement these measures. lithe parties can agree that the delay or anticipated delay has been or will be caused by circumstances beyond the reasonable control of the Company,the time for performance hereunder shall be extended for a period equal to the agreed delay resulting from such circumstances. Such agreement shall adopt all reasonable measures necessary to avoid or minimize delay. Failure of the Company to comply with the notice requirements of this paragraph in a timely manner shall constitute a waiver of the Company's right to request an extension of time for compliance with the requirements of this Consent Order. 26. Entry of this Consent Order does not relieve the Company of the need to comply with applicable federal,state or local laws,regulations or ordinances. 27. The terms and conditions set forth in this Consent Order may only be enforced in a court of competent jurisdiction pursuant to Sections 120.69 and 403.121,F.S. Failure to Packet Page-140- 6/10/2014 10.B. - I comply with the terns of this Consent Order shall constitute a violation of Section . 403.161.(1)(b),F.S. 28. MI submittals and payments required by this Consent Order to be submitted to the Department shall be sent to the Program Administrator of the Oil&Gas Program,Division of Water Resource Management,Florida Department of Environmental Protection,2600 Blair Stone Road,MS 3588,Tallahassee,FL 32399. 29. The Department hereby expressly reserves the right to initiate appropriate legal action to prevent or prohibit any violations of applicable statutes or the rules promulgated there` . under that are not specifically addressed by the terms of this Consent Order. 30. This Consent Order is a settlement of the Department's civil and administrative authority arising under Florida law to resolve the matters addressed herein.This Order is not a settlement of any criminal liabilities which may arise under Florida law,nor is it a settlement of any violation which may be prosecuted criminally or civilly under federal law. 31. Electronic signatures or other versions of the parties' signatures,such as pdf or facsimile,shall be valid and have the same force and effect as originals. No modifications of the terms of this Order shall be effective until reduced to writing,executed by both Respondents and the Department, and filed with the clerk of the Department. NOTICE OF RIGHTS 32. This Consent Order is a final order of the Department pursuant to Section 120.52(7),F.S.,and it is final and effective on the date filed with the Clerk of the Department • unless a Petition for Administrative Hearing is filed in accordance with Chapter 120,F.S. Upon the timely filing of a petition,this Order will not be effective until further order of the 1 Department. Packet Page -141- 6/10/2014 10.B.- 33. Persons who are not parties to this Order,but w s•se substantial interests are affected by it,have a right to petition for administrative hearing • ••-r Sections 120.569 and 120.57,F.S. Because the administrative hearing process is designed to formulate final agency action,the filing of a petition concerning this Order means that the Department's final action may be different from the position it has taken in the Order. The petition for administrative bearing must contain all of the following information: • a) The OGC Number assigned to this Order, b) The name,address,and telephone number of each petitioner;the name,address,and telephone number of the petitioner's representative,if any,which shall be the address for service purposes during the course of the proceeding; c) An explanation of how the petitioner's substantial interests will be affected by the Order- d) A statement of when and how the petitioner received notice of the Order, e) Either a statement of all material facts disputed by the petitioner or a statement that the petitioner does not dispute any material facts; f) A statement of the specific facts the petitioner contends warrant reversal or modification of the Order; g) A statement of the rules or statutes the petitioner contends require reversal or • modification of the Order;and h) A statement of the relief sought by the petitioner,stating precisely the action petitioner wishes the Department to take with respect to the Order. The petition must be filed(received)at the Department's Office of General Counsel,3900 Commonwealth Boulevard,MS 35,Tallahassee,Florida 32399-3000 within 21 days of receipt of Packet Page -142- 6/10/2014 10.B.- this notice. Failure to file a petition within the 21-day period constitutes a person's waiver of the right to request an administrative hearing and to participate as a party to this proceeding under Sections 120.569 and 120.57,F. S. Before the deadline for filing a petition,a person whose substantial interests are affected by this Order may choose to pursue mediation as an alternative remedy under Section 120.573,F.S. Choosing mediation will not adversely affect such person's right to request no administrative hearing if mediation does not result in a settlement. Additional information about mediation is provided in Section 120.573, Florida Statutes and Rule 62- 1 10.106(12), F.A.C. FOR THE COMPANY: DAN A.HUGHES COMPANY, L.P. • By.Dan A.Hughes Management, L.L.C. Its general partner AlAi—g. gag. , DATE mers, y• ice President of Land P.O. Drawer 669.Beeville.Texas 7?L04 ADDRESS DONE AND ORDERED this 8th day of April 2014,in Taltahwsee Florida. STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION I r 1/ Me Thomason P.E. • Director, Division of Water Resource Management I Packet Page -143- 6/10/2014 10.B. • • Filed,on this date,pursuant to Section 120.52,Fla.Stat.,with the designated Deputrneat Clerk, receipt of which is hereby acknowledged. 4atiAlz-tt (57-/ Clerk Date Copies furnished to: Lea Crandall,Agency Cleric Mail Station 35 • O Packet Page-144- 6/10/2014 10.B. EXHIBIT l This exhibit is protected as a confidential trade secret under section 815.045,Florida Statutes, and has been submitted separately. • Packet Page-145- 6/10/201410.8.- i EXHIBIT 2 III • Packet Page-146- 6/10/2014 10.B. STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION PERMITTEE: PERMIT No: 1349H PA No: 315034-001 Dan A.Hughes Company,L.P. WELL: 20-3H Collier-Hogan 208 E. Houston SECURITY: Single Bond No.RLB0014778 Beeville,TX 78102 PROJECT:Collier County Wildcat Well FINAL ORDER OIL&GAS WELL DRILLING PERMIT FINDINGS OF FACT: Dan A. Hughes Company, L.P., filed a complete application on November 8, 2012, with the Florida Department of Environmental Protection (the Department) to drill the 20-3H Collier-Hogan well in Collier County, Florida. The proposed exploratory well will be drilled within a non-routine drilling unit in accordance with Rule 62C-26.004(6) Florida Administrative Code (F.A.C.). All of the mineral ownership of the 428-acre drilling unit has been leased by the applicant The permittee has provided all documentation required under Chapters 62C-25 through 62C-30, F.A.C. The application was reviewed and deemed consistent with requirements of Sections 377.241, 377.242, and 377.243, Florida Statutes (F.S.), and implementing Chapters 62C-25 through 62C-30,F.A.C. This permit authorizes the Dan A.Hughes Company,LP.,to drill a horizontal completion targeting the Lower Sunniland Formation, The surface hole location (SHL) is 2,116 feet from the south line and 3,315 feet from the east line of Section 20, Township 47 South, Range 28 East in Collier County.The proposed bottom hole location(PBHL) will be 1,342 feet from the south line and 2,003 feet from the west line of Section 21,Township 47 South, Range 28 East. A new drilling pad will be constructed in a tomato field at the Hogan Island Farm that is owned by the Barron Collier Company. The well site will be located within the Big Cypress Swamp watershed,but there will be no wetlands impacts. The procedure calls for the operator to drill a pilot hole to a total vertical depth (TVD) of 13,500 feet [13,500 feet measured depth (MD)], to evaluate the geology. If the permittee chooses to continue drilling operations, the bottom of the pilot hole will be plugged back with cement and then kicked off at 11,187 feet TVD (11,187 feet MD)to directional drill a 8 1/2 inch hole with a steerable assembly while building angle. After reaching 11,836 feet TVD (12,000 ft MD) 7 5/8 inch casing will be set in the hole and cemented it in place. After setting casing the procedure calls for drilling a 61/2 inch open hole until obtaining an inclination angle of 90 degrees at the landing point at a depth of 11,903 TVD (12,312 feet MD). At this depth the well will be completed drilling horizontally 4,588 feet to the proposed bottom hole location at 11,903 TVD (16,900 MD) in the targeted pay zone of the Lower Sunniland Formation. Packet Page-147- 6/10/2014 10.B. • Dan A.Hughes Company,L.P. FDEP Drilling Permit No.1349H Page 2 of 7 Access to the proposed drilling site will utilize existing private farm roads whose only improvements will consist of surface hardening to accommodate vehicle traffic. No new utilities will be brought into the site. The site plan includes a two-foot earthen berm constructed around the perimeter of a newly built drilling pad. A secondary containment area within the perimeter of the site will be covered by high-density polyethylene to contain and collect any minor accidental spills from drilling operations and to prevent storm water runoff from leaving the site. There will be no earthen mud pits. Drilling mud and well fluids will circulate through a closed system of portable steel tanks and plumbing lines. The operator has applied for a water use permit from the South Florida Water Management District. The permit will allow Hughes to withdraw fresh water from onsite wells for milling, drilling, and cementing operations. The application includes an H2S contingency plan,with predefined responses in the event of an accidental gas release. The plan calls for coordination with other governmental agencies in the unlikely event of an emergency. Safety equipment including blowout preventers will be installed and routinely tested during drilling operations. The wellhead and flow lines are required to be maintained, monitored, and tested by the operator's personnel. Best industry practices will be incorporated into the operator's daily work routine with compliance monitored by inspectors from the Department's Ft. Myers Oil and Gas Office. CONCLUSION OF LAW: This application as approved complies with the standards and criteria of Chapter 377,Part I,F.S.,and Chapters 62C-25 through 62C-30,F.A.C. GENERAL PERMIT CONDITIONS 1. This drilling permit expires one year from the issuance date. If drilling has not begun within that time then, upon written request by the permittee, the Department shall extend the permit for an additional year. In accordance with Rule 62C-26.003(2), F.A.C.,subsequent requests for extensions shall be treated as new applications. 2. This permit authorizes drilling within the state of Florida as designated on the attached location plat prepared by Pickett&Associates,Inc.,dated November 21,2012. 3. Issuance of this permit does not relieve the permittee of the responsibility to comply with all applicable federal, state, county, municipal, and special district laws, ordinances and rules, nor is the permittee relieved of the responsibility to obtain any licenses or permits which may be required by federal, state, county, municipal, or special district laws. Packet Page -148- a 6/10/2014 10.B. Dan A.Hughes Company,L.P. FDEP Drilling Permit No.1349H Page 3 of 7 4. By accepting this permit, the permittee agrees to conduct all operations in accordance with this permit and the application upon which it is based, Chapter 377, F.S., and Chapters 62C-25 through 62C-30,F.A.C. 5. The permittee shall notify the Ft. Myers Oil and Gas Field Office at(239) 344-5721 not less than twenty-four hours prior to starting work and thereafter as directed. 6. The permittee shall file Form 8 (Well Record)within 30 days after reaching total depth, Form 9 (Well Completion Report) within 30 days after testing the well, a directional survey within 30 days after logging the well,and Form 16 (Plugging Report)within 30 days after plugging the well. Geophysical well logs, mud logs, samples, core chips, laboratory core analysis reports, etc., must be submitted to the Oil and Gas Section within 30 days after reaching total depth. 7. Any violation of these permit conditions may result in the suspension or revocation of this permit pursuant to Section 120.60, F.S., or may result in penalties, pursuant to Sections 379.407,377.37,and 403.121,F.S. 8. The additional data derived from this well shall be used to refine existing prospect interpretations and shall provide the basis for determining whether additional field wells,special field rules,or field unitization will be necessary. 9. If additional wells are necessary before adopting special field rules or unitizing the field, commercial production from this well may be governed by allowables to be set by the Department or the distributable royalty interest shall be escrowed until such rules are adopted or unitization proceedings, as outlined in Section 377.28(4), F.S.,are completed. 10.If unitization is required pursuant to Section 377.28, F.S., to prevent waste and protect the coequal and correlative rights of all potentially impacted parties, the operator shall begin unitization proceedings within 60 days after testing is completed, in which case commercial production may be restricted or distributable interests escrowed until a unitization package is approved by the Department This drilling unit shall be included within the field limits. Any additional areas subsequently included within the field shall be defined on the basis of not less than quarter-quarter-quarter sections (square blocks of approximately 10 acres) and shall include all blocks below which the oil pool is projected. 11. During the period between well testing and adoption of special field rules or field unitization in accordance with Section 377.28, F.S., the operator shall be allowed to produce the well but shall escrow all undistributed mineral interests' funds for the Packet.Page-149- 6/10/2014 10.B. Dan A.Hughes Company,L.P. FDEP Drilling Permit No.1349H Page 4 of 7 benefit of any unpaid royalty owners or yet to be determined royalty owners in the case of unitization. SPECIFIC PERMIT CONDITIONS 1. A directional survey shall be run from at least the surface casing shoe to total depth and shall be filed with the administrator within 30 days after logging pursuant to Rule 62C-26.004(5)(e),F.A.C. 2. If the well is successful and it is configured for production, a modified survey plat based on the directional survey must be submitted prior to issuance of the operating permit. 3. If produced test fluids will be removed from the site by transporter(s) not authorized by the Form 14 on file with the Department for this well, a modified Form 14 designating the transporter(s)must be submitted to the Department prior to removing those test fluids. RIGHTS OF AFFECTED PARTIES A person whose substantial interests are affected by the Department's action may petition for an administrative proceeding (hearing) under Sections 120.569 and 120.57, F.S. The petition must contain the information set forth below and must be filed (received by the clerk) in the Office of General Counsel of the Department at 3900 Commonwealth Boulevard,Mail Station 35,Tallahassee,Florida 32399-3000. Under Rule 62-110.106(4), F.A.C., a person whose substantial interests are affected by the Department's action may also request an extension of time to file a petition for an administrative hearing. The Department may,for good cause shown, grant the request for an extension of time. Requests for extension of time must be filed with the Office of General Counsel of the Department at 3900 Commonwealth Boulevard,Mail Station 35, Tallahassee, Florida 32399-3000, before the applicable deadline. A timely request for extension of time shall toll the running of the time period for filing a petition until the request is acted upon. If a request is filed late, the Department may still grant it upon a motion by the requesting party showing that the failure to file a request for an extension of time before the deadline was the result of excusable neglect. If a timely and sufficient petition for an administrative hearing is filed, other persons whose substantial interests will be affected by the outcome of the administrative process have the right to petition to intervene in the proceeding. Intervention will be Packet Page-150- 6/10/2014 10.B. Dan A.Hughes Company,LP. FDEP Drilling Permit No.1349H Page 5 of 7 permitted only at the discretion of the presiding officer upon the filing of a motion in compliance with Rule 28-106.205,F.A.C. In accordance with Rule 62-110.106(3),F.A.C.,petitions for an administrative hearing by the applicant must be filed within 21 days of receipt of this written notice.Petitions filed by any persons other than the applicant, and other than those entitled to written notice under Section 120.60(3),F.S.,must be filed within 21 days of publication of the notice or within 21 days of receipt of the written notice, whichever occurs first. Under Section 120.60(3),F.S.,however,any person who has eaked the Department for notice of agency action may file a petition within 21 days of receipt of such notice,regardless of the date of publication. The petitioner shall mail a copy of the petition to the applicant at the address indicated above at the time of filing. The failure of any person to file a petition for an administrative hearing within the appropriate time period shall constitute a waiver of that person's right to request an administrative determination (hearing) under Sections 120.569 and 120.57,F.S. A petition that disputes the material facts, on which the Department's action is based, must contain the following information: (a) The name and address of each agency affected and each agency's file or identification number,if known; (b) The name, address, and telephone number of the petitioner; the name, address, and telephone number of the petitioner's representative, if any, which shall be the address for service purposes during the course of the proceeding;and an explanation of how the petitioner's substantial interests are or will be affected by the agency determination; (c) A statement of when and how the petitioner received notice of the agency decision; (d) A statement of all disputed issues of material fact If there are none, the petition must so indicate; (e) A concise statement of the ultimate facts alleged, including the facts that the petitioner contends warrant reversal or modification of the agency's proposed action; (f) A statement of the specific rules or statutes that the petitioner contends require reversal or modification of the agency's proposed action, including an explanation of how the alleged facts relate to the specific rules or statutes;and (g) A statement of the relief sought by the petitioner,stating precisely the action that the petitioner wishes the agency to take with respect to the agency's proposed action. Packet Page-151- 6/10/2014 10.B. Dan A.Hughes Company,L.P. FDEP Drilling Permit No.1349H Page 6 of 7 Under Sections 120.569(2)(c) and (d),F.S., a petition for administrative hearing must be dismissed by the agency if the petition does not substantially comply with the above requirements or is untimely filed. This permit constitutes an order of the Department. Subject to the provisions of Section 120.68(7)(a), F.S., which may require a remand for an administrative hearing, the applicant has the right to seek judicial review of the order under Section 120.68,F.S.,by the filing of a notice of appeal under Rule 9.110 of the Florida Rules of Appellate Procedure with the Clerk of the Department in the Office of General Counsel, 3900 Commonwealth Boulevard, Mail Station 35, Tallahassee, Florida 32399-3000; and by filing a copy of the notice of appeal accompanied by the applicable filing fees with the appropriate district court of appeal. The notice of appeal must be filed within 30 days from the date when the order is filed with the Clerk of the Department. The files associated with this order are available for public inspection during normal business hours,8:00 a.m. to 5:00 p.m., Monday through Friday, except legal holidays, at the Department of Environmental Protection, 2051 East Paul Dirac Drive, Tallahassee, Florida 32310-3760. Packet Page-152- 6/10/2014 10.B. Dan A.Hughes Company,L.P. FDEP Drilling Permit No.1349H Page 7 of 7 Executed in Tallahassee,Florida. STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION Danielle Fondren,PWS,Deputy Director Division of Water Resource Management Department of Environmental Protection CERTIFICATE OF SERVICE The undersigned duly designated deputy clerk hereby certifies that this final order was mailed before the close of business on D.n&, ,..IS,2012,to the above listed persons. FILING AND ACKNOWLEDGMENT FILED,on this date,pursuant to Section 120.52(7),F.S., with the designated Deputy Department Clerk,receipt of which is hereby acknowledged. Deputy Clerk Date Prepared by: SS/EG,. 2 page(s)attached. Attachment(s): 1. Survey Plat,2-3H Collier-Hogan,Pickett&Associates,Inc.,revision date November 21,2012. 2. Form 3,Application for Permit to Drill,dated November 21,2012. Packet Page-153- 6/10/2014 10.B. rl OLLI ER-HOGAN ISealed O g ii,al E File !Drawing on Oil Well Permit#1349 File, COLLIER-HOGAN 20-3H . f ,, 18 17 _ – 17 16 — . --_ 19120 20 121 Legend: T T FSL—From South Section Line ` I I FEL—From East Section Line WELL HEADS & PERMIT ,, SECTION 20, (---) NUMBER PROVIDED BY FLORIDA DEPARTMENT OF WELL /20-3H TOWNSHIP 47 SOUTH,RANGE I ENVIRONMENTAL PROTECTION I 1 ® SURFACE HOLE LOCATION 28 EAST LAT. 26'2270.102' N COWER COUNTY,FLORIDA LONG. w N 741361.82 DISTANCES ARE IN FEET. N 741361.82 I E 479083.05 _� GROUND ELEVATION DRILLING UNIT BOUNDARY I NAVE/ 85=20.6' > . NGVD 29-20.9' C • • 1 3,116 feet FSL 3,315 feet FEL z + • . . - _ DRILLING UNIT BOUNDARY _ WELL /2O-3H BOTTOM HOLE LOCATION z ., ' LAT. 2622'12.953' N z LONG. 61'31'28.507' W N 740617.99 tz _ `" E 484408.74 -.' 0a 1,342 feet FSL WELL /20-3H •., • 2,003 feet FlM_ O I O PENETRATION POINT INTO I g RUBBLE ; t LAL 2622'18.552"N r.; :.`1 3 z LONG. 8132'22.586" W PERMIT /86 O N 741304.56 I Z t C2,479493.04 SECTION 21, E �� 1 954 feet FSL. TOWNSHIP 47 SOUTH,RANGE 2.9pa feet FEL 28 EAST 0 DRILLING UNIT BOUNDARY COLUER COUNTY,FLORIDA [ ___ 191 20 I 20 21 DRILLING UNIT BOUNDARY IMMOKALEE ROAD 29 28 30 29 == STATE ROAD 848 Amor Now s MIL • topplik SURVEYOR's NOTES: ; _ , 1. This is o specific purpose survey prepared to Illustrate proposed well loca,{l�g,' t emone 2. North and the coordinate values shown hereon are referenced to the . Zone of the Florldo:,,tate Plane Coordinate System, NAD 83. Vertical values are NAVE/ 88, the NG'LD 29 elhYr fT,s were converted/ NORTH from NAVE/ 88 using Corpecon. Units are In U.S. Survey feet. .3. The east and south lines of Section 20 are based upon o field survey of iii1tng mfinu?j(i atlon. The remainder of the Section Is based upon Information obtained fromller County and is shown for 0 600 i 1200 information only. THIS IS NOT A BOUNDARY SURVEY. RI:x. 1 `Yo "' 4. Distances are In U.S. Survey Feet. yy_h ' y ( IN FEET ) i/ 1( _ 10/1M 1 inch = 1200 it. ll DATE NN M. CLYATT; P.S.M. - . REGISTRATION No. 4092 GRAPHIC & INTENDED DISPLAY SCALE ICKETT& ASSOCIATES, IN . - FL. REGISTRATION No. LB 364 SPECIFIC PURPOSE SURVEY 1i� `��pIcKETT �� LOCATED IN SECTIONS 20 & 21, TOWNSHIP 47 SOUTH, RANGE 28 EAST perismai PREPARED FOR: DAN A. HUGHES COMPANY, L.P. \VI SURVEYYICN�G�&PHOTOGRAMMETRY PROJECT: COWER—HOGAN A880C1A1ES,INC. Project No.: 15925 No. Dote Approved REVISION NOT VALID 1NTHOUT THE SIGNATURE AND Horiz. Scale: l'' = 1200' OR 11/05/12 JMC Original Release TF1E ORIGINAL RAISED 26925-PER.Mi1-2a-3U 1 11/21/12 JMC Add Drilling Unit Boundary SEAL OF A FLORIDA DWG. Name: LICENSED SURVEYOR AND MAPPER. Drawn By, GBA Drawing // SD3138 Field Bk / Pg.: 801 Packet Page -154- 6/10/2014 10.B. F,' 'IDA DEPARTMENT OF ENVIRONMENTAL PROTEC? 9 APPLICATION FOR PERMIT TO DRILL Form 3 Rule 620-251)08.-25.006. -25.003 and-25.001 For infonmtion and fees regarding drilling permits for oil and gas related wells,refer to Chapter 62C-26,Florida Administrative Code. File this form with the Chief,Florida Geological Survey,903 West Tennessee Street,Tallahassee,Florida 32304-7700 (phone numbers 850/487-2219 and 488-4191:fax 8501488-8086). Dan A. Hughes Company, L.P. ` (Company's Name and Address) 208 E. Houston Beeville, Texas 78102 cam• Phone Number. (s 61) 358-3752 Fax Number. (361)I 362-2839 Well Name and Number. Collier - Hogan 20-3H (�.Ymr4 o. I 3 W) Ground Elevation:20•6' NAVD88 Acres Assigned to Well: 428 Latitude: 26 22'20"Longitude: 81 32'27" sHL: N741361.82 E479083.05 Sec. 20 T. 47S R.28E BHL: N740617.99 E1r84418.74 Sec. 71 T. 47S R.7RF Field/Area: Wildcat Field County: Collier Distance to nearest drilling unit boundary: 3:} Z5' Proposed Depth:16,900'I"I) (11,903'TVD) Do you have all of the mineral interest in the drilling unit under lease or title? Yes (Yes or No) If not,attach lease map showing ownership of all mineral acreage within the drilling unit and fist the names and addresses of all nonconsenting mineral owners. (See section 377.2411 and.247,Florida Statutes.) (Please answer YES or NO) Is the structure intended for the drilling or production of this well located(See section 37724,F.S.) a) in a municipality? NO b) in tidal waters within 3 miles of a municipality? No c) on an improved beach? No d) on any submerged land within a bay,estuary,or offshore waters? No a) within one mile seaward of the coastline of the state? No f) within one mile seaward of the boundary of a local,state or federal park or an aquatic or wildlife preserve? NO g) On the surface of a freshwater lake,river or stream? No h) within one mile Inland from the shoreline of the Gulf of Mexico,the Atlantic Ocean or any bay or estuary? NO i) within one mile of any freshwater lake,river or stream? NO If the answer to a,b,or c is YES,attach copies of local governing authorities'permits. If the answer to h or i Is YES,attach a contingency plan specifying safeguards being implemented to prevent accidents and/or blowouts and to protect the natural resources of such bodies of water and shore areas in the event of an accident or blowout The security for this well is attached (attached or on file)with the Florida Geological Survey(see Rule 62C- 26.002) and bears Serial Number RLB0014778 Company's Statement State: TES County: BEE J. Henry Kremers ,am the Chief *iv_ ; "t: ..' (Name) (Title)-.. of Dan A. Hughes Company, L.P. and attest to all information contained herein to be true and correct Signature: �.K.----- Date: /t///7o OF 24, File Number. Action: Date: A.P.I.Number. :MEP (Approved.Denied) DEC 4 n L O2 DEP51 d03(1a) Rawad MS �� RECEIVED ' ti LS RAG Packet Page-155- 6/10/2014 10.B. • STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION PERMI ITEE: Permit No: 1349H PA: 315024 Dan A. Hughes Company LP WELL: 20-3H Collier-Hogan 208 E. Houston/ Drawer 669 API No: 09-021-20211 Beeville,TX 78104 SECURITY: Bond No.RLB0014778 EXPIRATION DATE: August 6,2018 FINAL ORDER FIVE YEAR OPERATING PERMIT FINDINGS OF FACT: Dan A. Hughes Company LP filed an application for a permit to operate the 20-3H Collier-Hogan with the Department of Environmental Protection on August 5,2013. The surface hole is located 2,114 feet from the south line and 3,314 feet from the east line of Section 20, Township 47 South, and Range 28 East in Collier County, Florida. This well has been constructed as a production well having a total vertical depth of 11,903 feet below ground level. The application was reviewed and deemed consistent with requirements of Sections 377.241, 377.242, and 377.243, Florida Statutes (FS.), and • implementing Chapters 62C-25 through 62C-30, Florida Administrative Code (F.A.C.). The well site was inspected in accordance with Rule 62C-26.008(5),FA.C. CONCLUSION OF LAW: This application as approved complies with the standards and criteria of Chapter 377,Part I,F.S.,and Chapters 62C-25 through 62C-30,P.A.C. GENERAL PERMIT CONDITIONS 1. Issuance of this permit does not relieve the permittee of the responsibility to comply with all applicable federal, state, county, municipal, and special district laws, ordinances, and rules nor is the permittee relieved of the responsibility to obtain any licenses or permits which may be required by federal, state, county, municipal, or special district laws. 2. By accepting this permit the applicant agrees to conduct all operations in accordance with Chapter 377,F.S.,and Chapters 62C-25 through 62C-30,F.A.C. 3. Pursuant to Rule 62C-26.008(2), F.A.C., this operating permit is valid for the life of the well, but must be recertified every five years. Application for recertification must be submitted no later than 90 days prior to the end of each 5-year permit term. 4. Pursuant to Rule 62C-29.006(1), F.A.C.,the permittee shall notify the Department's Oil 11111 and Gas Field Office in Ft. Myers at phone number 239.344.5721, or 239.344.5611, not Packet Page-156- 6/10/2014 10.B.- Permit 1349H Page 2 of 5 less than twenty-four hours prior to starting workover operations, and shall report emergencies as soon as possible. 5. A spill prevention and clean-up plan(SPCP) designed to prevent spills of crude oil and associated fluids and to expeditiously remove these fluids from the environment • should a spill occur will be on file with the Department. Pursuant to Rules 62C- 26.008(3)(d) and 28.004(2), F.A.C., the permittee shall keep these plans current and readily available for use onsite as needed in accordance with the plan. 6. Pursuant to Rule 62C-29.009, F.A.C., the permittee shall obtain Department approval prior to commencing plugging and abandonment procedures. 7. Any violation of these permit conditions may result in the suspension or revocation of this permit pursuant to Section 120.60, F.S., or may result in penalties pursuant to Sections 379.407 and 377.37,F.S. SPECIFIC PERMIT CONDITIONS 1. Pursuant to Rule 62C-26.008(2), F.A.C., this operating permit shall be valid for the life of the well. However, the well and permit must be re-certified every five years. The 5-year operating permit term authorized by this order shall be effective beginning August 7,2013;and will expire on August 6,2018. RIGHTS OF AFFECTED PARTIES A person whose substantial interests are affected by the Department's action may petition for an administrative proceeding (hearing) under Sections 120.569 and 120.57, F.S. The petition must contain the information set forth below and must be filed (received by the clerk) in the Office of General Counsel of the Department at 3900 Commonwealth Boulevard,Mail Station 35,Tallahassee,Florida 32399-3000. Under Rule 62-110.106(4), F.A.C., a person whose substantial interests are affected by the Department's action may also request an extension of time to file a petition for art administrative hearing. The Department may, for good cause shown, grant the request for an extension of time. Requests for extension of time must be filed with the Office of General Counsel of the Department at 3900 Commonwealth Boulevard, Mail Station 35, Tallahassee, Florida 32399-3000, before the applicable deadline. A timely request for extension of time shall toll the running of the time period for filing a petition until the request is acted upon. If a request is filed late, the Department may still grant it upon a motion by the requesting party showing that the failure to file a request for an extension of time before the deadline was the result of excusable neglect. If a timely and sufficient petition for an administrative hearing is filed, other persons whose substantial interests will be affected by the outcome of the administrative process have the right to petition to intervene in the proceeding. Intervention will be 1V:\DATA\OIL_GAS\FAG'S\Active Drafts\Hughes\i349H OP FAO j Packet Page-157- -- 6/10/2014 10.B. Permit 1349H Page 3 of 5 • permitted only at the discretion of the presiding officer upon the filing of a motion in compliance with Rule 28406.205,F.A.C. In accordance with Rule 62-110.106(3),F.A.C., petitions for an administrative hearing by the applicant must be filed within 21 days of receipt of this written notice.Petitions filed by any persons other than the applicant, and other than those entitled to written notice under Section 120.60(3),F.S.,must be filed within 21 days of publication of the notice or within 21 days of receipt of the written notice, whichever occurs first. Under Section 120.60(3),F.S.,however, any person who has asked the Department for notice of agency action may file a petition within 21 days of receipt of such notice,regardless of the date of publication. The petitioner shall mail a copy of the petition to the applicant at the address indicated above at the time of filing. The failure of any person to file a petition for an administrative hearing within the appropriate time period shall constitute a waiver of that person's right to request an administrative determination (hearing) under Sections 120.569 and 120.57, F.S. A petition that disputes the material facts, on which the Department's action is based, must contain the following information: • (a) The name and address of each agency affected and each agency's file or identification number,if known; (b) The name, address, and telephone number of the petitioner; the name, address, and telephone number of the petitioner's representative, if any, which shall be the address for service purposes during the course of the proceeding; and an explanation of how the petitioner's substantial interests are or will be affected by the agency determination; (c) A statement of when and how the petitioner received notice of the agency decision; (d) A statement of all disputed issues of material fact. If there are none, the petition must so indicate; (e A concise statement of the ultimate facts alleged, including the facts that the petitioner contends warrant reversal or modification of the agency's proposed action; (f) A statement of the specific rules or statutes that the petitioner contends require reversal or modification of the agency's proposed action, including an explanation of how the alleged facts relate to the specific rules or statutes;and (g) A statement of the relief sought by the petitioner,stating precisely the action that the petitioner wishes the agency to take with respect to the agency's proposed action. Under Sections 120.569(2)(c) and (d), F.S., a petition for administrative hearing must be dismissed by the agency if the petition does not substantially comply with the above requirements or is untimely filed. • 1V:\DATA\OIL_GAS\FAO'S\Ai ti Dratts\Hughc�\l:"-1'H OP FAO Packet Page -158- 6/10/2014 10.B. Permit 1349H Page 4 of 5 This permit constitutes an order of the Department. Subject to the provisions of Section 120.68(7)(a), F.S., which may require a remand for an administrative hearing, the applicant has the right to seek judicial review of the order under Section 120.68, F.S.,by the filing of a notice of appeal under Rule 9.110 of the Florida Rules of Appellate Procedure with the Clerk of the Department in the Office of General Counsel, 3900 Commonwealth Boulevard, Mail Station 35, Tallahassee, Florida 32399-3000; and by filing a copy of the notice of appeal accompanied by the applicable filing fees with the appropriate district court of appeal. The notice of appeal must be filed within 21 days from the date when the order is filed with the Clerk of the Department. The files associated with this order are available for public inspection during normal business hours, 8:00 a.m. to 5:00 p.m.,Monday through Friday, except legal holidays, at the Florida Department of Environmental Protection, 2600 Blair Stone Road, Tallahassee,Florida 32399-2400. Executed in Tallahassee,Florida. STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION el/jdge, 277Z Ed Garrett,P.G.,Oil and Gas Program Administrator Florida Department of Environmental Protection 2600 Blair Stone Road, MS 3588 Tallahassee,FL 32399-2400 :\DATA\O1L_GAS\FAG'S\Arid•Drat ls\Hughcs\13.19H OP FAO Packet Page -159- 6/10/201410.8. Permit 1349F1 • Page 5 of 5 CERTIFICATE OF SERVICE The undersigned duly designated deputy cd lerk hereby certifies that this final order was mailed before the close of business on A y ,2013,to the above listed persons. FILING AND ACKNOWLEDGMENT FILED,on this date,pursuant to Section 120.52(7),F.S., with the designated Department Clerk,receipt of which is hereby acknowledged. Ift4#11 4441•11+ .208 Clerk Date Prepared by: SS • Attachment(s): 1. Form 14,Application for Permit to Operate Well, dated August 1,2013. • :N:\DATA\01L,,GAS\FAOS\Active Drafts\Hughes\1349H OP MO Packet Page -160- 6/10/2014 10.B. -• • FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION APPUCATION FOR PERMIT TO OPERATE WELUREQUEST FOR RECERTIFICATION Four.14 Rub a2C-28.008 Fite des felt with the Chief,Florida Geological Survey 903 West Tennessee Street Telsheous,Florida 32304-7700(phone numbers 850/487.2219 end 488-4191;tax 850)488-8086). Allow 90 days for processing. Permit Number. 1349H API hklrtfDir 09-021-20211 County. B/CO` 4tr, Ws3 Name and Number: Col10f-Hoce'20-311 Flat Wes( Latitude 2(2220.102N 6r32-27.006•W Section Calls Longitude • M11235.70 541917.44 2114'FDt.x 3314'FEL Seder 20 Township 478 Ranpe 205 Operators Marne: Dan A.Hughes Company,L.P. Mailing Address, 208 E.Houston/Drawer 889 Beeville,Texas 78104 Phone Number. 381-358.3752 Fax Number. 381.358-0598 Is this an Application for Penrat t0 Operate Wel or a ragout for Recarascation? Operate (Prmk b OpanteRiscaru cation) Attach or Include by reference the fcllowfng hams(Rule 62C-26.6108): 1.ApplcationfRecitrtlicakin fee 2. Revised/continued bond or security coverage. The sacudty for title well Is c"ra' (attached or on Ole)with the FloddaGeologIca Survey and bears Sena Number rt-eoe847s ,The sunrty company IS '6-'1'h 3. New/revised spill ix-evertor and clean up piers. 4.New/revised Aowtlne specifications and installation plans. b. Secondary containment facility cerNBcsdons,ii appropriate. 8. Required reports and data(reporting forms,drillers loge,welt logs,etc.) List each transporter authorized by producer to transport hydrocarbons from lease. Include transporter's address,phone number,and the amount by ' Dement(%)of each product trererponed. Describe the transportation system used by each transporter.Attach additional sheets as necessary. Au'horized Transporter. swuv..EnemyTrw.Pnn.lan 1Ua DOT 088411 4) Product: •L % 100 Add:eis: 18310 Wright em.PM Transportation System Description: ption: T"1i1""e A.14nn,Two.76001 Phone Number 0104/14142 Fax Ntm>ber. Authorized Transporter Product 9G Address: Transportation System Description: Phone Number. Fax Number. AuBlorized Transpolar Product S .Address: Transportation System Descripton: G>' O `).s Phone Number. D +` r '.. Fax Number AUG 5 Producer's Statement �� State: Taw County: SBe �r� D `+VY RECEIVED 1. Jeffery R.listing ern rts Operations Manager CRi4 L,S R�7 (Ham) (Tfte) Dan A.HOphes Company,L.P. of and attest to ell • ,herein to be qua and correct (ConPeny) D'art: 11/1/13 Signature: 11W • Deportment Action Actin: ey (AOOroved,Delved) (N1memnp Date: Signature: oEV slvlori el . 0.v.occa Packet Page -161- 6/10/2014 10.B. COLLIER-HOGAN 20-3H DRILLING PERMIT APPLICATION FOR FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION PERMIT NO. 1349 Revised December 2012 Prepared For: Dan A. Hughes Company, L.P. P.O. Drawer 669 Beeville, Texas 78104 (361) 358-3752 Prepared By: Passarella &Associates,Inc. Schlumberger Water Services USA,Inc. 13620 Metropolis Avenue, Suite 200 1567 Hayley Lane, Suite 202 Fort Myers, Florida 33912 Fort Myers, Florida 33907 (239) 274-0067 (239) 481-6494 Project No. 12CRC2139 Packet Page-162- 6/10/2014 10.B. TABLE OF CONTENTS Page 1.0 Introduction 1 2.0 Confidentiality 1 3.0 Operator 1 4.0 Agent/Consultants 1 5.0 Well Information 2 5.1 Well Name 2 5.2 Primary Geological Objective 2 5.3 Surface Location 2 5.4 Location Plat 2 6.0 Environmental 2 6.1 Stormwater 2 6.2 Water Supply 2 6.3 Wetlands and Wildlife 3 6.4 Site Environmental Management 3 6.5 Hydrogen Sulfide Safety Plan 3 6.6 Gathering Lines and Pipeline 3 6.7 Housing and Personnel 3 7.0 Bottom Hole Location 3 8.0 Drilling Rig and Equipment 4 9.0 Drilling Operations 4 10.0 Proposed Drilling Program 4 Packet Page-163- 6/10/2014 10.B. Table of Contents (Continued) Page 10.1 Casing and Cementing Program 4 10.2 Well Control Equipment 4 10.3 Directional Drilling Program 5 10.4 Drilling Fluids Program 5 11.0 Financial Security 5 ii Packet Page-164- 6/10/2014 10.B. LIST OF EXHIBITS Page Exhibit 1. FDEP Application for Permit to Drill (Form 3) E1-1 Exhibit 2. Certification to Transact Business in Florida E2-1 Exhibit 3. Organization Report Form (Form 1) E3-1 Exhibit 4. Lease Agreement E4-1 Exhibit 5. Agent Authorization Letters E5-1 Exhibit 6. Well Location Plat E6-1 Exhibit 7. Location Map E7-1 Exhibit 8. Sketch of Pad Layout E8-1 Exhibit 9. Aerial with Pad Layout E9-1 Exhibit 10. Aerial with Access Route E 10-1 Exhibit 11. Hydrogen Sulfide Contingency Plan E 11-1 Exhibit 12. Precision Drilling Rig 314 Information E12-1 Exhibit 13. Proposed Drilling Program E13-1 Exhibit 14. Casing and Cementing Program E14-1 .-., Exhibit 15. Wellbore Schematic E15-1 Packet Page-165- 6/10/2014 10.B. List of Exhibits (Continued) .-. Page Exhibit 16. Well Control Plan E16-1 Exhibit 17. Directional Drilling Program E17-1 Exhibit 18. Drilling Fluids Program E18-1 Exhibit 19. Performance Bond E19-1 iv Packet Page-166- 6/10/2014 10.B. 1.0 INTRODUCTION The following information has been prepared to address the specific requirements of Chapter 62C-26.003 of the Florida Administrative Code (F.A.C.) for a Florida Department of Environmental Protection (FDEP) Application for Permit to Drill for Collier-Hogan 20-3H (Well) (Permit No. 1349). The signed FDEP permit application (Form 3) is included as Exhibit 1, and the following information represents the required items of the permit application. 2.0 CONFIDENTIALITY All information regarding the Well other than the supplemental documents supplied for permit application within this document are to be held confidential as provided by statute and rule. The information that is requested to be held confidential should include but not be limited to: drilling reports, test results, well logging information, production reports, and any geologic interpretations relative to the Well submitted by the applicant/permittee. 3.0 OPERATOR The operator and permit applicant for this well is Dan A. Hughes Company, L.P., whose address is: Dan A. Hughes Company, L.P. 208 E. Houston Beeville, Texas 78102 The Dan A. Hughes Company is a Texas limited partnership registered to transact business in the State of Florida. Their certification to conduct business in Florida is included as Exhibit 2. The Organization Report Form (Form 1) for the Dan A. Hughes Company is provided as Exhibit 3. Dan A. Hughes Company will lease the project area from the Collier Resources Company, LLP. A Memorandum of Oil, Gas, and Mineral Lease is provided as Exhibit 4. 4.0 AGENT/CONSULTANTS Passarella & Associates, Inc. and Schlumberger Water Services USA, Inc. have been authorized to act as agents on behalf of the Dan A. Hughes Company. Agent authorization letters are provided as Exhibit 5. 1 Packet Page-167- 6/10/2014 10.B. 5.0 WELL INFORMATION 5.1 Well Name The Well name is Collier-Hogan 20-3H (FDEP Permit No.1349). 5.2 Primary Geological Objective The primary geologic objective of Collier-Hogan 20-3H is the so-called rubble zone of the Lower Sunniland Formation. The proposed depth of the pilot hole is 13,500 feet MD (13,500 feet TVD), which will allow assessment of the upper Sunniland Formation, Lower Sunniland Formation, and Pumpkin Bay Formation. If the evaluation determines that the well will likely be commercial, it will be completed with the horizontal leg in the Lower Sunniland rubble zone with a landing depth at 11,903 feet TVD and a final total depth of 16,900 feet MD. The well location plat is provided as Exhibit 6. 5.3 Surface Location The drilling site is located on agricultural lands within the Hogan Island Farm owned by the Barron Collier Company. The site is located in Section 20; Township 47 South; Range 28 East, Collier County (Exhibit 7). A sketch of the pad layout and an aerial photograph with the layout of the pad is provided as Exhibits 8 and 9, respectively. Access to the Well pad will be on existing farm roads from the north end of Oil Well Grade Road (Exhibit 10). 5.4 Location Plat The Well location plat has been prepared by Pickett & Associates, Inc. and is provided as Exhibit 6. 6.0 ENVIRONMENTAL 6.1 Stormwater The Well pad will be constructed with a two foot earth berm around the perimeter of the operating area to contain all water on the site. 6.2 Water Supply An industrial water use permit application for groundwater withdrawals associated with the drilling operations was submitted to the South Florida Water Management District (SFWMD) on October 12, 2012 and assigned SFWMD Application No. 121012-22. 2 Packet Page-168- 6/10/2014 10.B. 6.3 Wetlands and Wildlife The Well pad is located within an agricultural field, which is actively farmed as part of the Hogan Island Farm operations. Access to the Well pad will be on existing roads coming from the north end of Oil Well Grade Road. No wetlands or other surface waters will be impacted by construction of the Well pad or access to the drilling site. The Well location does not contain habitat for federal or state listed wildlife species. As previously mentioned, the field is used for active crop production. No listed species have been observed on-site. 6.4 Site Environmental Management The drilling location will have secondary containment areas for oils, grease, and other fluids. The secondary containment areas will be covered with a high-density polyethylene liner system that will collect all rainwater and other fluids to a sump. The areas included will be the rig substructure and the generator/fuel tank area. The containment berm around the fuel tanks will retain 1.5 times the stored volume. 6.5 Hydrogen Sulfide Contingency Plan In accordance with Chapter 62C-27.001(7), F.A.C., a hydrogen sulfide gas (H2S) contingency plan prepared by Total Safety is provided as Exhibit 11. The H2S contingency plan will go into effect at 10,500 feet, which is over 1,000 feet before the top of the expected or unknown hazardous H2S zone. 6.6 Gathering Lines and Pipeline Collier-Hogan 20-3H is an exploratory well. There are no plans yet for gathering lines and pipeline. 6.7 Housing and Personnel The majority of drilling personnel will be housed off-site. Some of the drilling personnel will be housed in temporary trailers located within the pad. All wastewater will be contained in storage tanks and removed from the site by a waste contractor. Drinking water will be supplied by a bottled water contractor. An office trailer with living quarters will be located on the pad for the drilling supervisor and rig manager. 7.0 BOTTOM HOLE LOCATION The proposed bottom hole location is 1,342 feet FSL and 2,003 feet FWL at Latitude 26°22'12.953" North and Longitude 81°31'28.507" West in Section 21, Township 47 South, Range 28 East, Collier County, Florida (Exhibit 6). 3 Packet Page-169- 6/10/2014 10.B. 8.0 DRILLING RIG AND EQUIPMENT The drilling rig to be used for the Well is Precision Drilling Rig 314 or equivalent depending upon availability. Detailed information regarding Rig 314 is provided as Exhibit 12. 9.0 DRILLING OPERATIONS The operations will be underway 24 hours a day for approximately 60-80 days of drilling and testing. There will be a crew of 12-18 persons on site during this time. The majority of drilling personnel will be housed off-site. Some of the drilling personnel will be housed on-site in temporary trailers. Electricity will be provided by diesel generator sets. Sanitary waste will be collected in holding tanks and removed by a local contractor. Solid waste will be placed in containers and hauled to a MSW landfill. Drill cuttings and drilling fluids will be disposed of in a manner approved by FDEP. Water for drilling will be supplied by on-site wells located at the northwest and southeast corners of the drilling pad. 10.0 PROPOSED DRILLING PROGRAM The procedures to drill the Well are presented in Exhibit 13 and major components of the plan are summarized in the following sections. 10.1 Casing and Cementing Program The proposed casing and cementing program prepared by Halliburton is provided as Exhibit 14. The proposed wellbore schematic is included as Exhibit 15. 10.2 Well Control Equipment Details of the well control program are included in Exhibit 16. The rig equipment listed in the following table will be provided. Hole Size Size/Pressure Bottom to Top Low/High Test Pressures Arrangement Rams/Annular 17 1/2" 21 3/4"2M A N/A 12 1/4" 21 3/4"2M A N/A 8 ''/z" 11" 5M P/S/B/A 250-3500/250-2000 6 '/2" 11" 5M P/S/B/A 250-3500/250-2000 A—Annular B—Blind Ram P—Pipe Ram S—Drilling Spool Note: Test 13-3/8"surface casing to 1000#. Test 9-5/8" &7-5/8"casing's to 1500# 4 Packet Page-170- 6/10/2014 10.B. 10.3 Directional Drilling Program The directional drilling program prepared by Aim Directional Services, LLC is provided as Exhibit 17. 10.4 Drilling Fluids Program The proposed drilling fluids program prepared by Dynamic Drilling Fluids is included as Exhibit 18. 11.0 FINANCIAL SECURITY In accordance with Chapter 62C-26.002, F.A.C., the Dan A. Hughes Company, L.P. is providing a performance bond for multiple wells (Form 2A) as security for the Well. A copy of the performance bond is provided as Exhibit 19. 5 Packet Page-171- 6/10/2014 10.B. EXHIBIT 1 FDEP APPLICATION FOR PERMIT TO DRILL (FORM 3) Packet Page-172- FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION APPLICATION FOR PERMIT TO DRILL I I Form 3 •8•O t71.0 Z/O 1./9 Rule 62C-25.008, 0 -25. 8, 6 25.0 For information and fees regarding drilling permits for oil and gas related wells,refer to Chapter .26,Florida Administrative Code. File this form with the Chief,Florida Geological Survey,903 West Tennessee Street,Ti ssee,Florida 32304-7700 (phone numbers 850/487-2219 and 488-4191;fax 850/488-8086). Dan A. Hughes Company, L.P. (Companys Name and Address) 208 E. Houston Beeville, Texas 78102 Phone Number. (361) 358-3752 Fax Number. 2(33661) 362-2839 Well Name and Number. Collier - Hogan 20-3H( j M NO. '13A I J Ground Elevation:20.6' NAVD88 Acres Assigned to Well: 428 Latitude: 26 0 22 20"Longitude: 81 0 32'27" SHL: N741361.82 E479083.05 Sec. 20 T. 47S R.28E BHL: N740617.99 E484408.74 Sec. 71 T. 47S R.7RF. Field/Area: Wildcat Field County: Collier Distance to nearest drilling unit boundary: 725' Proposed Depth:16,900'H) (11,903'TVD) Do you have all of the mineral interest in the drilling unit under lease or title? Yes (Yes or No) If not,attach lease map showing ownership of all mineral acreage within the drilling unit and list the names and addresses of all nonconsenting mineral owners. (See section 377.2411 and.247,Florida Statutes.) (Please answer YES or NO) Is the structure intended for the drilling or production of this well located(See section 377.24,F.S.) a) in a municipality? No b) in tidal waters within 3 miles of a municipality? No c) on an improved beach? No d) on any submerged land within a bay,estuary,or offshore waters? No e) within one mile seaward of the coastline of the state? No f) within one mile seaward of the boundary of a local,state or federal park or an aquatic or wildlife preserve? No g) On the surface of a freshwater lake,river or stream? No h) within one mile inland from the shoreline of the Gulf of Mexico,the Atlantic Ocean or any bay or estuary? No i) within one mile of any freshwater lake,river or stream? No If the answer to a,b,or c is YES,attach copies of local governing authorities'permits. If the answer to h or i is YES,attach a contingency plan specifying safeguards being implemented to prevent accidents and/or blowouts and to protect the natural resources of such bodies of water and shore areas in the event of an accident or blowout. The security for this well is attached (attached or on file)with the Florida Geological Survey(see Rule 62C- 26.002) and bears Serial Number RLB0014778 Company's Statement State: 13=XAS County: BEE I, J. Henry Kremers ,am the Chief Operating Officer/Vice President-Land (Name) (Title) of Dan A. Hughes Company, L.P. and attest to all information contained herein to be true and correct. (Organization) Signature: ;rte/�j/ ' Date: / it/40a, File Number: Action: Date: A.P.I.Number: (Approved,Denied) DEP 51-003(16) Revised 3/98 -ELI- aSed laced 6/10/2014 10.B. EXHIBIT 2 CERTIFICATION TO TRANSACT BUSINESS IN FLORIDA Packet Page-174- 6/10/2014 10.B. 850-617-6381 11/9/2011 9:23: 14 AM PAGE 2/002 Fax Server Ro\.4 JVi' V `VY1 rVv' V IVLV S aQI �+ V V Y V r %..•A�rn., •>n,rA,rn, n Tn,., ern rn A n n n n n fn... RI el „.v, .oti C 141°1:1 - ft 0 414 f %yr lii w. X Sib a .,_:_z_...... . viba .4 RA al. ' ' • N g.. D% HV .. y`o s' aC aoc 30 giurtment If f§tate Nu SAC I certify from the records of this office that DAN A. HUGHES COMPANY, L.P. gi a is a Texas limited partnership registered to transact business in the kil el state of Florida on November 8, 2011. EPI further certify the document was electronically received under FAX audit number H11000266383. This certificate is issued in accordance with 'QC section 15. 16, Florida Statutes and authenticated by the code noted below, AC :Qr ri„C... The document number of this limited partnership is B11000000213. ,V 46_,, A Ci A LI H., '`QC 811A00025420-110911-B11000000213-1/1 U° elj� p , Given under my hand and the Q ... :l Great Seal of the State of Florida DEC Q at Tallahassee, the Capital, this the X 7Ninth day of � November, 2011 iii Nilij 4 nC x 111 A is i ,v, „Tru-i.--!t.via., , , , A:::.* 7 N grgg '. si D C it. :!*.:::::4-4...f7mt.l. Y.4 x G i 1 411 . d ° s- 7,,.. SFr ( / • 91:]0 1 r -+� ` '�_ Rut �. �rAlUtlfIl� Ea,metar�► of 6tate ke , ! ..Rio t��yd« y f! Y Y V V 1 V V HV HV HV r 1 ti V Y V VI Packet Page-175- 850-617-6381 11/9/2011 9:23:14 AM PAGE 1/002 Fax Server 6/10/2014 10.B. d' November 9, 2011 FLORIDA DEPARTMENT OF STATE DAN A. HUGHES COMPANY, L.P. Divssion of Corporations 208 E. HOUSTON BEEVILLE, TX 78102US The Application by Foreign Limited Partnership or Limited Liability Limited Partnership for DAN A. HUGHES COMPANY, L.P. , a Texas limited partnership or limited liability limited partnership was filed on November 8, 2011 and assigned document number B11000000213. Please refer to this number whenever corresponding with this office. Enclosed is your certificate of authority. This document was electronically received and filed under FAX audit number H11000266383. To maintain "active" status with the Division of Corporations, an annual report must be filed yearly between January 1st and May 1st beginning in the year following the file date or effective date indicated above. If the annual report is not filed by May 1st, a $400 late fee will be added. it is your responsibility to remember to file your annual report in a timely manner. A Federal Employer Identification Number (FEI/EIN) will be required when this report is filed. Contact the IRS at 1-800-829-4933 for an SS-4 form or go to www. irs.gov. Please be aware if the limited partnership address changes, it is the responsibility of the limited partnership to notify this office. Should you have any questions concerning this matter, please contact this office at the address given below. Carolyn Lewis Regulatory Specialist II Registration/Qualification Section Division of Corporations Letter Number: 811A00025420 • P.O )30X 6327—Tallahassee,Florida 32314 t"—■4 Packet Page -176- 6/10/2014 10.B. EXHIBIT 3 ORGANIZATION REPORT FORM (FORM 1) Packet Page -177- 6/10/2014 10.B. FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION ORGANIZATION REPORT Form t Rule 62C•25.009 All persons exploring for,storing,transporting,reclaiming,treating,or processing crude oil or natural gas shall file this record with the Chief, Florida Geological Survey, 903 West Tennessee Street,Tallahassee, Florida 32304-7700(phone numbers 850/487-2219 and 488-4191;fax 850/488-8086). 1. Organization:Dan A.Hughes Company,L.P. (Name and Address) 208 E.Houston Beeville,Texas 78102 Phone Number:361-358-3752 Fax Number:361-362-2839 2. Type of Organization:Limited Partnership (Corporation.Joint Association,Firm,Partnership,individual,etc,) 3. Purpose of Organization: 011 and Gas Exploration 4. If Corporation,State and Date of Incorporation: Name and Address of Florida Registered Agent: C T Corp.,1200 South Pine Island Rd.,Plantation,FL 33324 Date Registered with Secretary of State: November 8,2011 5. Officers,Owners,Directors and Trustees Information(Altaai additional sheets as needed): Name Title Address Phone Number Dan A.Hughes, Chief Executive Officer P.O.Drawer 669,Beeville,TX 78102 361-358-3752 Dan A.Hughes, President P.O.Drawer 669,Beeville,TX 78102 361-358-3752 J.H.Kremers C.O.O.N-P Land P.O.Drawer 669,Beeville,TX 78102 361-358-3752 6. Is this a reorganization? Yes If so,previous name: Dan A.Hughes Company Organization's Statement State: Texas County: Bee I, J.H.Kremers ,am the Chief Operating OfficerNice President of Land (Name) (TNo) of Dan A.Hughes Company,L.P. and attest that all information contained herein is true and correct. (Org emotion) Signature: Date: g ►2? DEP 51-001(10 niz.eea ass Packet Page-178- 6/10/2014 10.B. EXHIBIT 4 LEASE AGREEMENT Packet Page-179- 6/10/2014 10.B. Prepared by Kristine Kremers, INSTR 4724360 OR 482z ry ausu RECORDED 8/22012 9:47 AM PAGES 4 Dan A.Hughes Company,L.P. DWIGHT E.BROCK,CLERK OF THE CIRCUIT COURT P.O.Drawer 669 COLLIER COUNTY FLORIDA Beeville,Texas 78104 DOC @.70$0.70 REC$35.50 INDX$2.00 MEMORANDUM OF OIL,GAS&MINERAL LEASE • STATE OF FLORIDA § KNOW ALL MEN BY THESE PRESENTS: COUNTY OF COLLIER § LESSOR: Collier Resources Company LLP,as authorized agent for: Barron Collier Resources,LLP, Collier Land and Cattle Corporation, Collier Land Holdings Ltd.And CDC Land Investments,Inc.,et al LESSOR'S ADDRESS: c/o Collier Resources Company 2600 Golden Gate Parkway,Suite 112 Naples,Florida 34105-3227 LESSEE: Dan A.Hughes Company,L.P. LESSEE'S ADRESS: P.O.Drawer 669 Beeville,TX 78104-0669 DATE OF LEASE: effective June 1,2012 PRIMARY TERM: Said Lease provides for a primary term of FIVE (5) YEARS with an option to extend said lease for an additional THREE (3) YEARS and provides that it may be continued in force thereafter in accordance with the provisions set out in said Lease. ROYALTY: As therein provided PROPERTY COVERED BY LEASE: Being 115,560 acres of land,more or less, in Collier County, Florida,more particularly described on the Exhibit"A"attached hereto. The original executed copy of said Lease is in the possession of Lessee, with Lessor retaining a copy,and the purpose of this memorandum is to give notice of the existence of said Lease. Lessor, for the consideration set out in said Lease, hereby grants, leases, and lets to Lessee the land covered by said Lease,being the lands described and referred to above,for the purposes and with the right of exploring,drilling, mining and operating for,producing and owning oil,liquid hydrocarbons,gas or their constituents, but no other minerals,together with all of the easements and rights which are granted the Lessee as set out in said Lease, upon and subject to all of the provisions and conditions set out in said Lease, to which reference is hereby made for all purposes to the depths covered by said Lease. This Memorandum of Lease shall be binding upon the parties hereto and the provisions hereof shall extend to and be binding on the respective heirs,successors and assigns of the parties hereto. WSJJ 70 PT Packet Page -180- 6/10/2014 10.B. Prepared by Kristine Kremers. Dan A.Hughes Company,L.P. P.O.Drawer 669 Beeville,Texas 78104 This instrument may be executed in any number of counterpart originals, each of which will be of equal force and effect. Failure of any party hereto to execute this instrument or a counterpart thereof shall not render it ineffective as to any party hereto who does execute it or a counterpart thereof, but shall be binding upon each executing party and its successors and assigns.The counterpart originals may be combined by signature page and acknowledgment into a single instrument for purposes of recordation or any other purposes. IN WITNESS WHEREOF,this instrument is effective as of June 1.2012. AS TO LESSOR WITNESSED BY: COLLIER RESOURCES COMPANY,LLP '•1 (/ Name: " .o rS+,. R -I"-IC)ti••'S Title: .71..?-? By: Name: •_ %; By: I.A..,►,_j.. .. _ Name: J '.1 A,_ / ieJ ACKNOWLEDGEMENTS STATE OF FLORIDA § COUNTY OF COLLIER § The foregoing instrument was acknowledged before me this 4 ST day of June,2012,by 77-I0m14S P. ,7D tJ .S (Name),as 5)I4.2_ vic.. Pgrsro.n (Title),of COLLIER RESOURCES COMPANY,LLP.,who is personally known to me or has produced as identification. g .: DANELNGN3i!; Notary Public,State of FLfI �.9 MYOOpaotaryuacUtienel Printed Name: D14A/� G. ✓i /J5 i EXPIRES:July 13,2016 - ::,'^ Bonded lnNeor�ywbscunx new Serial Number: Ff' a 00802-0 My Commission Expired: -7-2),-y /3 v20/Cc Packet Page-181- 6/10/2014 10.B. Prepared by Kristine Kremers. Dan A.Hughes Company,L.P. P.O.Drawer 669 Beeville,Texas 78104 AS TO LESSEE WITNESSED BY: DAN A.HUGHES COMPANY,L.P. BY:Dan A.Hughes Management,L.L.C. Its general p-rtner By: ,�•7-- _.� Name: . `-n y Kremers � Titl.• • ief Operating OfficerNice President of Land By: i"_/ Name: ... `S ti7 Y Qv4CQJ� A , By: Aar) Id `. Name: ACKNOWLEDGEMENTS STATE OF FLORIDA § COUNTY OF COLLIER § This instrument was acknowledged before me on thisisr day of June,2012,by J.Henry Kremers,Chief Operating OfficerNice President of Land of Dan A.Hughes Management,L.L.C.,as general partner of Dan A. Hughes Company,L.P.,a limited partnership,on behalf of said limited partnership,who is personally known to me or has produced 7 4 c Pvc-5e5 L.as identification. /6 7:A y17 Notary Public,State of F-1-4P.../a4 DiAtELVIGNER1 Printed Name: Di194t) L M, :r_ tY IAt ilSSiOF t EE z�' EXPIRES: 13.2016 ,.:137A.7.- +.Y«« Beibec Thv Nouuy Pubic Una Packet Page-182- 6/10/2014 10.B. Prepared by Kristine Kremers, Dan A.Hughes Company,L.P. P.O.Drawer 669 Beeville,Texas 78104 EXHIBIT"A" S.Florida Project,Collier County,Florida 115,560.00 acres described as follows: Township 46S,Range 27E Sections 25,26,27,28,29,31,32,33,34,35,36 Township 47S,Range 27E Sections 1,2,3,4,5,6,7,8,9,10,11, 12, 13,14,15, 18,22,23,24,25,26,27,34,35, 36 Township 47S,Range 28E Sections 1,3,4,5,6,7,8,9, 10, 11, 12, 13, 14, 15, 17, 18,19,20,21,22,23,24,25,26, 27,28,29,30,34,35,36 Township 47S,Range 29E Sections 3,4,5,6,7,9,11, 13, 14, 15,16,17,19,21,23,25,27,29,31,33,35 Township 47S,Range 30E Sections 19,West 491 acres Sections 30,31, Township 48S,Range 27E Sections 1,2,3 Township 48S,Range 29E Sections 2,4,6,8, 10,12, 14,16,18,34,36 Township 48S,Range 30E Section 31 Township 49S,Range 28E Sections 1,2, 10, 11, 12,13, 14, 15,22,23,24,25,26,27,34,35,36 Township 49S,Range 29E Sections 1,2,3,4,5,6,7,8, 10,11, 12, 15, 16, 17, 18,19,30,31,36 Township 49S,Range 30E Sections 6,7 Township 50S,Range 28E Sections 1,2, 12,13,24 Township 50S,Range 29E Sections 6,7,8, 18, 19,20 Township 50S,Range 30E Sections 13, 14,15,22,23,24,25,26,27,34,35,36 Township 50S,Range 31E Sections 17, 18,19,20,28,29,30,31,32,33 Estimated to comprise 100,000 Net Mineral Acres. Packet Page-183- 6/10/2014 10.B. EXHIBIT 5 AGENT AUTHORIZATION LETTERS Packet Page-184- 6/10/2014 10.B. DAN A. Hu HES COMPANY, L.P. Petroleum Exploration And Production August 27, 2012 To Whom It May Concern: RE: Agent authorization for PassareIla &Associates This letter will serve as notice that Ken PassareIla of the firm of Passarella & Associates, Inc. of Fort Myers, Florida, is authorized to act as agent on behalf of Dan A. Hughes Company, L.P., with respect to oil and gas permitting and regulatory matters in the State of Florida. This authorization may be revoked by Dan A. Hughes Company, L.P. at any time. The Division of Corporations of the Office of the Secretary of State designates Dan A. Hughes Company, L.P. authorized to do business in the State of Florida. Sincerely, DAN A. HUGHES COMPANY, L.P. By: A J. H my remers I'ef Operating Officer/Vice President-Land P.O. DRAWER 669 • BEEVILLE, TX 78104-0669 • (3A1) 1M-.1752 • r;FNERAL_ Fax 362-2839 • GEOLOGICAL Fax 358-0598 Packet Page-185- 6/10/2014 10.B. DAN A. Hv HES COMPANY, L.P. ...._., Petroleum Exploration And Production f September 25,2012 To Whom It May Concern: Re: Agent Authorization for Schlumberger Water Services USA Inc. This letter will serve as notice that David L. Hoffman or Robert G. Maliva of Schlumberger Water Services USA Inc. (SWS)are authorized to act as agents on behalf of Dan A. Hughes Company,L.P.,which respect to oil &gas,class II injection well,and consumptive water use permitting and regulatory matters in the State of Florida. The Florida Division of Corporations of the Office of the Secretary of State designates Dan A. Hughes Company, L.P.,of Beeville,Texas,as limited partnership authorized to transact business in the State of Florida. • Sincerely, Dan A. Hughes Company, L.P. By: l- el enry Kremers,Chief Operation Officer/Vice President–Land neral Partner of Dan A. Hughes Company, L.P. P.O. DRAWER 669 • BEEVILLE, TEXAS 78104-0669 """ "r" "—^ "ENERAL FAX 362-2839 • GEOLOGICAL FAX 358-0598 Packet Page-186- 6/10/2014 10.B. EXHIBIT 6 WELL LOCATION PLAT Packet Page-187- Sealed Original COLLIER-HOGAN 6/10/2014 10.B. Drawing on File Oil Well Permit #1349 COLLIER-HOGAN 20-3H 18 17 _ _ - _ _._ 17 16 _ . i . _ . . ___ 19 20 1 20 ` 21 Legend: T• FSL-From South Section Line I I I FEL—From East Section Line WELL HEADS & PERMIT NUMBER PROVIDED BY FLORIDA SECTION 20, I ® ( > DEPARTMENT OF 1 WELL y20-3H TOWNSHIP 47 SOUTH,RANGE SURFACE HOLE LOCATION 28 EAST ENVIRONMENTAL PROTECTION LAT. 81'32'27.096"2.102" N COLLIER COUNTY,FLORIDA N 74. 61.82 w DISTANCES ARE IN FEET. N 741361.82 IE 479083.05 ---------‘,---------‘,GROUND ELEVATION I DRILLING UNIT BOUNDARY NAVD 88=20.6' 2 . NGVD 29=20.9' et I 2,116 feet FSL z _— -- DRILLING UNIT BOUNDARY 3,315 feet FEL _ WELL //20-3H 0 BOTTOM HOLE LOCATION. z LAT. 26'22'12.953" N z Z LONG. 81'31'28.507" W (.5 N 740617.99 >-E 484408.74 4 J �' 1,342 feet FSL ' WELL /20-3H 2,003 feet Flit 0 I PENETRATION POINT INTO I 7 I RUBBLE LA T. 2622'19.552" N LONG. 81'32'22.586" W (PERMIT 86 O N 741304.56 I Z I E 479493.04 SECTION 21, Jim 2,054 feet FSL TOWNSHIP 47 SOUTH,RANGE E I 2,904 feet FEt- ` � • DRILLING UNIT BOUNDARY 26 EAST °COLLIER COUNTY,FLORIDA 19 20 20 21 DRILLING UNIT BOUNDARY _r IMMOKALEE ROAD 29 28 30 29 ,� STATE ROAD 846 Asir INN. ? ti SURVEYOR's NOTES:NS 1. This is a specific purpose survey prepared to illustrate proposed well location. 2. North and the coordinate values shown hereon are referenced to the East Zone of the Florida State Plane Coordinate System. NAD 83. Vertical values are NAVD 88, the NGVD 29 elevations were converted NORTH from NAVD 88 using Corpscon. Units are in U.S. Survey feet. 3. The east and south lines of Section 20 ore based upon a field survey of existing monurnenlotion. The remainder of the Section is based upon information obtained from Collier County and is shown for 0 600 1200 information only. THIS IS NOT A BOUNDARY SURVEY. 4. Distances are in U.S. Survey Feet. ( IN FEET ) 4 dtil---- 10/18/12 1 inch = 1200 ft. �-- I/( DATE aHN M. CLYATT, P.S.M. REGISTRATION No. 4092 GRAPHIC & INTENDED DISPLAY SCALE IICKETT & ASSOCIATES, IFL. REGISTRATION No. LB 364 < SPECIFIC PURPOSE SURVEY 3PICKETT LOCATED IN SECTIONS 20 & 21, 4768aURI MIS AVENUE 84/r6 FLORIDA 64 TOWNSHIP 47 SOUTH, RANGE 28 EAST TOW.FL�' PREPARED FOR: DAN A. HUGHES COMPANY, L.P. SURVEYING&PHOTOGRAMMETRY PROJECT: COLLIER—HOGAN PICKETT&ASSOCIATES,INC. Project No.; 16925 No. Dote Approved REVISION NOT VALID WITHOUT Horiz. Scale: 1" = 1200' OR 11/05/12 JMC U THE SIGNATURE AND Original Release THE ORIGINAL RAISED DWG. Name: 26925-PERMIT10-38 1 11/21/12 JMC Add Drilling Unit Boundary SEAL OF A FLORIDA LICENSED SURVEYOR Drown By: GBA I AND MAPPER. Field Bk / Pg.; 801 Packet Page-188- _Drawing i SD3138 6/10/2014 10.B. EXHIBIT 7 LOCATION MAP Packet Page-189- .; } I 6/10/2014 10.B.iir.0 DANIELs I 82 !, ,,..1„..,,,...),..�l E d�Q'' t yy H i ¢ ,,,P, 4S { PEN6ACOLA TAtC11HAS9jE ~• 'a� yiy^ �1 -. (R�Sf7) /} JPCK6.rill LE 4` Al PAHAM ITY 1 38 ,4*-,:c4t..t....-, { \ \ ....- VW* AYT01:1 EACH BON T.',BE-AC 1RD / I � '` ,"1,6A , iW _...a 57 ® _ . 1 41�L.1:1t 29 —_ Amps, �. Z GOLDEN GATE BLVD - vPAOa cm Z � SAP U EPr Qt Z p dl "S �-mom W FOB 89 ` it, J .V.F,1:',440, IAMI Nqp Po6TAUDERDALE Gulf of � € �I W ft s. \loi _ E Mexico ® I 3 " .. . t' . ,,,,...„,..4„ ,. . . KEY WEST 1 y , ,,,, 2 LaS tr y � �5' . .E u* °.� r F z Cht t ' ''''ik 9. — ? .. ....... :, ,.. , , „.. ... yam- '' . 1y 1 , ...„...t J � .. r„.t 1 . 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J air F c e.;+z y ti Ail, a 1 $ #!'"' £ r'cq ' H ;s 4 y >f t x`xr. :•••".,... wt' zfi` �-3 ��. a� ? ?� i � . ( r 3L�,,,,k--N-..7,_. {fit Packet Pa_e-196- ��yy 6/10/2014 10.B. EXHIBIT 11 HYDROGEN SULFIDE CONTINGENCY PLAN Packet Page-197- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN T$ TALSAFETY TA sA F E Ty HYDROGEN SULFIDE CONTINGENCY PLAN Dan A. Hughes Company Drilling Plan Well Collier Hogan 20-3H Lat. 26'22'20.102" N. Long. 81'32'27.096" W. N. 741361.82 E 479083.05 Collier County, Florida H2S Contingency Plan #001 Revision # 1 Rig: Precision #314 This H2S Contingency Plan is subject to updating October 2012 1 Packet Page -198- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN TABLE OF CONTENTS INTRODUCTION 3 PURPOSE 4-7 A. Operating Procedures B. Procedures to be Initiated Prior to reaching 1000' Above H2S C. Drilling Below Contingency Plan Depth D. Procedures Program CONDITIONS & H2S EMERGENCY PROCEDURES 8-14 A. Definition of Operational "Conditions" B. Responsibilities of Well Site Personnel C. Instructions For Igniting the Well SAFETY EQUIPMENT 15-16 TOXICITY OF VARIOUS GASES 17 PROPERTIES OF GASES 18-19 TREATMENT PROCEDURES FO H2S POISONING 20 3REATHING AIR EQUIPMENT DRILLS ON/OFF DUTY 21 HYDROGEN SULFIDE TRAINING CURRICULUM 22-23 FIT TEST 24 H2S EQUIPMENT LIST 25-26 EMERGENCY PHONE NUMBERS 27-29 EVACUATION OF GENERAL PUBLIC 30-32 ADDENDUM 33 OTHER: NOTES 34 DIRECTIONS TO WELL SITE 35 RESIDENTS LIST 36 LOCATION RIG LAYOUT ROE MAP (RADIUS OF EXPOSURE) Packet Page-199- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN I. INTRODUCTION This H2S Contingency Plan will go into effect at approximately 10,500'which is over 1000' before the top of the expected or unknown hazardous H2S zone. To be effective, the plan requires the cooperation and effort of each person participating in the drilling of an H2S well. Each person must know his/her responsibilities and all emergency and safety procedures. He/she should thoroughly understand and be able to use with accuracy, all safety equipment while performing his/her normal duties, if the circumstance should arise. He/she should therefore familiarize himself/herself with the location of all safety equipment and check to see that it is properly stored, easily accessible at all times, and routinely maintained. It is the intention of Dan A. Hughes Company and the Drilling Contractor to make every effort to provide adequate safeguards against harm to persons on the rig and in the immediate vicinity from the effects of hydrogen sulfide, which may be released into the atmosphere under emergency conditions. However,the initiative rests with the individual in utilizing the safeguards provided. The ideas and suggestions of the individuals involved in the drilling of this well are highly welcomed and act as a fundamental tool for providing the safest working conditions possible. The drilling representative is required to enforce these procedures. They are set up for your safety and the safety of all others. 3 Packet Page -200- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN ii. PURPOSE It is Dan A. Hughes Company's intent to provide a safe working place, not only for its employees, but also for other contractors who are aiding in the drilling of this well. The safety of the general public is of utmost concern. All precautions will be taken to keep a safe working environment and protect the public. There is a possibility of encountering toxic hydrogen sulfide gas. Safety procedures must be adhered to in order to protect all personnel connected with the operations as well as people living within the area. The Dan A. Hughes Company representative will enforce all aspects of the H2S Contingency Plan. This job will become easier by a careful study of the following pages and training and informing all personnel on location their duties and responsibilities. A. OPERATING PROCEDURES GENERAL: Before this H2S contingency plan becomes operational,the drilling contractor's personnel, necessary service personnel, and the operator's personnel shall be thoroughly trained in the use of breathing equipment, emergency procedures, and responsibilities. Total Safety shall keep a list of all personnel who have been through the on-site H2S training program at the drill site. All personnel shall be given H2S training and the steps to be taken during H2S conditions under which the well may be drilled. General information will be explained about toxic gases, as well as the physiological effects of H25 and the various classified operating conditions. In addition, the reader will be informed his/her general responsibility concerning safety equipment and emergency procedures. The Total Safety H25 Safety Consultant shall make available the H2S Contingency Plan for all personnel to read and understand it thoroughly. Without exception, all personnel on the drill site must proceed directly to the Total Safety H2S Safety Consultant for location and/or assignment of breathing apparatus. An instruction and orientation briefing will also be held. B. PROCEDURES TO BE INITIATED PRIOR TO REACHING 1000' ABOVE THE H2S BEARING ZONE: A list of emergency phone numbers and contacts will be on location and posted at the following locations: 1. Dan A. Hughes Company Representative's Office 2. Drilling Contractor's,Toolpusher Office 3. Living Quarters Area 4 Packet Page-201- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN All safety equipment and H2S related hardware must be set up as required by Dan A. Hughes Company with regard to location of briefing areas, breathing equipment, etc. All safety equipment must be inspected periodically with particular attention to resuscitators and breathing equipment. All personnel on the drill site will be assigned breathing apparatus. Operator and drilling contractor personnel required to work in the following areas will be provided with breathing equipment connected to a cascade bottled air supply: 1. Rig Floor 2. Mud Pits 3. Derrick 4. Shale Shaker 5. Cellar The Total Safety H2S Safety Consultant will be responsible for rigging up and monitoring all H2S continuous monitoring-type detectors. These units must be tested and recalibrated by the Total Safety H2S Safety Consultant during drilling conditions. In the event H2S is detected, or when drilling in a zone containing H2S, the units shall be bump tested at least once every 24 hours. A calibration log will be kept on location. All results will be reported to the Dan A. Hughes Company Representative. C. DRILLING BELOW CONTINGENCY PLAN DEPTH Blowout drills will be held as often as necessary to acquaint the crews and service company personnel of their responsibilities and the proper procedures to shut-in a well. After the Dan A. Hughes Company's representative is satisfied with blowout drill procedures, a drill will be conducted weekly with each crew, as necessary. A Total Safety H2S Safety Consultant will be on duty prior to reaching contingency plan depth or as otherwise deemed necessary. He/she will conduct safety talks and drills, maintain the safety equipment, consult and carry out the instructions of the drilling supervisor. All personnel allowed on the drill site during drilling or testing operations will be instructed in the use of breathing equipment until supervisory personnel are satisfied that they are capable of using it. After familiarization, each person must perform a drill with breathing equipment. The drill should include getting the breathing equipment, donning the breathing apparatus, and working for a short period. A record shall be kept of all personnel drilled and the date of the drill. Rig crews and service company personnel shall be made aware of the location of spare air bottles, resuscitation equipment, portable fire extinguishers, H2S monitors and detectors. Knowledge of the location of the H2S monitors and detectors are vital in determining as our gas 5 Packet Page-202- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN location and the severity of the emergency conditions. In addition, key personnel shall be trained in the use of a resuscitator. After H2S has been initially detected by any device, all areas of poor ventilation shall be inspected periodically by means of a portable H2S detector instrument. D. PROCEDURES PROGRAM 1. Drill Site a. The drilling rig will be located to allow prevailing winds to blow across the reserve pit. b. Safe Briefing Areas will be provided with a safety equipment trailer at the Primary Area. A Breathing air cascade system will be available at the Secondary Area. Personnel will assemble at the most up-wind station under alarm conditions, or when so ordered by the Dan A. Hughes Company's representative, the Contractor representative, or the Total Safety H25 Safety Consultant. Windsocks or streamers will be anchored to various strategic places on a pole about 30 feet high, so it is in easy view from the rig floor at all times. c. Warning signs will be posted on the perimeters. "No Smoking" signs will be posted as well. d. One multi-channel automatic H2S monitor will be provided by Total Safety and the detector heads will be at the shale shaker, bell nipple, mud pits and on the rig floor and monitored there, or in the logging unit. Should the alarm be shut off to silence the sirens, the blinker light must continue to warn of H2S presence. The safety representative will continuously monitor the detectors and will reactivate the alarm if H2S concentrations increase to a dangerous level. Additional sensor/s will be located outside the living quarter's area, as needed. e. A method of escape will be open at all times. f. Explosion-proof electric fans (bug blowers) will be positioned to insure adequate circulation at all critical locations. These fans are to be supplied by rig contractor. g. If available, land line telephone service will be provided or cell phones provided. (Primary communications provided) h. A rig communication system will be provided, as needed. A gas trap, choke manifold, and degasser will be installed. j. A kill line securely anchored and of ample strength, will be laid to the well-head from a safe location. This line is to be used only in an emergency. 6 Packet Page-203- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN 2. General a. The Dan A. Hughes Company representative and/or the Contractor's Toolpusher will be available at all times. The drilling supervisor, while on duty, will have complete charge of the rig and location operations and will take whatever action is deemed necessary to insure personnel safety,to protect the well, and to prevent damage. b. A Mud Engineer will be on location at all times when drilling takes place at the depth H2S may be expected. The mud engineer will be able to verify the presence or absence of H2S. 7 Packet Page -204- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN III. CONDITIONS AND EMERGENCY PROCEDURES �-o A. DEFINITION OF OPERATIONAL"CONDITIONS" CONDITION I "POSSIBLE DANGER" Warning Flags Green Alarms No Alarm. Less than 10 ppm Characterized By: Drilling operations in zones that may contain hydrogen sulfide. This condition remains in effect unless H2S is detected and it becomes necessary to go to Condition II. General Action: a. be alert for a condition change b. Check all safety equipment for availability and proper functioning. c. Perform all drills for familiarization and proficiency. CONDITION II "MODERATE DANGER" Warning Flags Yellow Alarms: Actuates at 10 ppm. Continuous flashing light. Characterized By: Drilling operations in zones containing hydrogen sulfide. This condition will remain in effect until hydrogen sulfide can be neutralized by adding chemicals to the mud system or if it becomes necessary to go to Condition Ill. General Action: a. Be alert for a condition change b. Check all safety equipment for availability and proper functioning. c. Follow instructions. d. All persons working in hazardous area will wear SCBA or work unit. 8 Packet Page-205- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN CONDITION III "EXTREME DANGER" Warning Flags Red Alarms Actuate at 15 ppm. Continuous Sirens and Flashing Lights Characterized by: Critical well operations which pose an immediate threat of H25 exposure to on-site personnel and a potential threat to the public. General Action: a. Breathing Apparatus on. b. If not specifically designated to control the well, go to the appropriate safe briefing area. c. During any emergency, use the "buddy" system to prevent anyone from entering or being left in a gas area alone, even wearing breathing apparatus. d. Personnel shall ensure that their breathing apparatus is properly fitted and operational before entering an H2S contaminated area to provide assistance to anyone who may be injured or overcome by toxic gases. e. Remain in safe briefing area and wait for instructions. f. If well is ignited do not assume area is safe. SO2 is hazardous and not all H2S will burn. H25 EMERGENCY PROCEDURES A. Day To Day Drilling Operations 1. Upon discovering a release of H2S gas in the ambient air by warning alarms or in any other way. Do Not Panic. 2. Hold your breath and rapidly move up or across-wind away from the areas where H2S sensing devices are in place,to the closest available breathing apparatus, don your mask, continue to use breathing apparatus until it has been determined that the exposure of H2S gas in the ambient air no longer exists. Do Not Panic! 3. Utilize the "Buddy System", i.e.; select and pair up each person participating in the drilling of an H2S well prior to an emergency situation. 4. Help anyone who is overcome or affected by the H2S gas by taking him/her up-wind out of the contaminated area. 5. Take necessary steps to confirm the release of the H2S gas into the ambient air. • While wearing your self-contained breathing apparatus, determine by the read-out on the fixed monitor which sensing device has detected the release of the H2S gas. 9 Packet Page-206- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN • Utilize the hand-held sniffer type device at the particular sensing point disclosed on the fixed monitor to corroborate the fact that H2S gas has actually been released. That is to rule out the possibility of a false alarm. 6. Refer to the Emergency Phone Numbers and call emergency personnel. 7. Take the necessary steps to suppress the release of H2S gas into the ambient air. Comply with Dan A. Hughes Company's Representative to physically suppress the release of H2S gas at the actual release point. 8. Check all Dan A. Hughes Company's monitoring devices and increase gas monitoring activities with the portable hand-operated H2S and gas detector units. Do Not Panic! The Dan A. Hughes Company's representative will assess the situation and with assistance of the Contractor's Representative and Total Safety's H2S Safety Consultant, will assign duties to each person to bring the situation under control. Emergency Procedures at the Drilling Rig: When the H2S monitors activate the siren and blinker light,toxic gas is present. Do Not Panic! • Put on your gas mask • Render Assistance • Follow Instructions B. RESPONSIBILITIES OF WELL-SITE PERSONNEL In the event of a release of potentially hazardous amounts of H2S, all personnel will immediately proceed upwind to the nearest designated safe briefing area and put on their protective breathing apparatus. Consideration will be given to evacuating non essential personnel, as situation warrants. 1. Dan A. Hughes Company's Well-site Representatives a. If Dan A. Hughes Company's well-site representative is incapacitated or not on location,this responsibility will fall to the Toolpusher/Driller. b. Immediately upon assessing the situation, set this plan into action by initiating the proper procedures to contain the gas and notify the appropriate people and agencies. c. Ensure that the alarm area indicated by the fixed H2S Monitor is checked and verified with a portable H2S detector. 10 Packet Page-207- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN d. Consult Pusher/driller of remedial actions as needed. e. Ensure that non-essential personnel proceed to the safe briefing area. f. Ensure location entrance barricades are positioned. Keep the number of persons on location to a minimum during hazardous operations. g. Consult each contractor, service company, and all others allowed to enter the site, that H2S gas may be encountered and the potential hazards that may exist. h. Authorize the evacuation of local residents if H2S threatens their safety. Non essential personnel should be evacuated from location Situation warrants. 2. Toolpusher a. Toolpusher/Driller will assume responsibilities of Dan A. Hughes Company's well-site representative if that person is incapacitated or not on location. b. Ensure that the alarm area indicated by the fixed H2S monitor is checked and verified with a portable H2S gas detector. c. Confer with Dan A. Hughes Company's well-site representative or superintendent and direct remedial action to suppress the H2S and control the well. d. Ensure that personnel at the safe briefing area are instructed on emergency actions required. e. Ensure that personnel at the drill floor area are instructed on emergency actions required. f. Ensure that the appropriate safety and emergency procedures are observed by all personnel. g. Ensure that all persons are accounted for and provided emergency assistance as necessary. 3. Mud Engineer a. Run a sulfide check on the flowline mud. b. Take steps to determine the source of the H2S and suppress it. Caustic and H2S scavenger shall be added to the mud as necessary. 11 Packet Page-208- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN 4. H2S Safety Consultant a. Check and verify with a portable H2S detector the alarm area indicated by the fixed H2S monitor. Advise the Tool pusher/Driller and Dan A. Hughes Company's well-site representative of findings. b. If H2S is flared, check for sulfur dioxide (502) near the flare as necessary.Take hourly readings at different perimeters, log readings and record on location. c. Ensure that personnel at the safe briefing area are instructed on emergency actions required. d. Ensure that explosion-proof bug blowers are positioned as necessary to disperse H2S away from workers performing their job tasks.These will be provided by rig contractor. e. Ensure that the appropriate warning flags are displayed. f. Ensure that all personnel are in S.C.B.A. as necessary. g. Ensure that all persons are accounted for and provide emergency assistance as necessary. h. Be prepared to evacuate rig if order is issued. 5. General Personnel &Visitors a. If not specifically designated to control the well, go to the appropriate (upwind) safe briefing area. All non essential personnel should be evacuated, as situation warrants. b. During any emergency, use the "buddy" system to prevent anyone from entering or being left in a gas area alone, even wearing breathing apparatus. c. Provide assistance to anyone who may be injured or overcome by toxic gases. Personnel shall ensure that their breathing apparatus is properly fitted and operational before entering H2S contaminated area. d. Remain in safe briefing area and wait for instructions. C. INSTRUCTIONS FOR IGNITING THE WELL 1. The Toolpusher/Driller will confer with Dan A. Hughes Company's well-site representative who will secure the approval of higher Dan A. Hughes Company's authority, prior to igniting the well, if at all possible. 12 Packet Page-209- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN The Toolpusher/Driller will be responsible for igniting the well in the event of severe well control problems. This decision should be made only as a last resort in situations where it is clear that: a. Human life and property are endangered, or b. There is no hope of controlling the well under current conditions. 2. Once the decision has been made,the following procedures should be followed: a. Two people wearing self-contained breathing apparatus will be needed for the actual lighting of the well. They must first establish the flammable perimeter by using an explosimeter. This should be established at 30%to 40% of the lower flammable limits. b. After the flammable perimeter has been established anti everyone removed from the area,the ignition team should select a site upwind of the well from which to ignite the well. This site should offer the maximum protection and have a clear path for retreat from the area. c. The ignition team should have safety belts and lanyards attached and manned before attempting ignition. If the leak is not ignited on the first attempt, move in 20 to 30 feet and fire again. Continue to monitor with the explosimeter and NEVER fire from an area with over 75%of the Lower Explosive Limit (LEL). If ^ i having trouble igniting the well,try firing 40 degrees to 90 degrees on either side of the well. d. If ignition is not possible due to the makeup of the gas,the toxic perimeter must be established and evacuation continued until the well is contained. e. All personnel must act only as directed by the person in charge of the operations. NOTE: After the well is ignited, burning hydrogen sulfide (H2S) will convert to sulfur dioxide (502), which is also a highly toxic gas. DO NOT ASSUME THE AREA IS SAFE AFTER THE WELL IS IGNITED Normal Operations 1. Responsibilities of well-site personnel a. Well-site Representative 1. Notify H2S Safety Consultant of expected date to reach Contingency Plan implementation depth (1,000' above suspected H2S bearing zone) or prior to starting well work. 13 Packet Page-210- 6/10/2014 1O.B. Dan A.Hughes Company CONTINGENCY PLAN 2. Ensure H2S Safety Consultant completes rig-up procedures prior to reaching Contingency Plan effective depth. 3. Restrict the number of personnel at the drilling rig or well-site to a minimum while drilling, starting well work,testing or coring. 4. Ensure weekly H2S drills/training are performed. b. Toolpusher 1. Ensure that necessary H2S safety equipment is provided on the rig, and that it is properly inspected and maintained. 2. Ensure that all personnel are thoroughly trained in the use of H25 safety equipment and periodic drills are held to maintain an adequate level of proficiency. c. All Personnel (Including Visitors) 1. Remain clean-shaven. Beards and long sideburns do not allow a proper facepiece seal. 2. Receive H2S safety training on location 3. Familiarize yourself with the rig's Contingency Plan. 4. Inspect and practice putting on your breathing apparatus. 5. Know the location of the "safe briefing areas". 6. Keep yourself"wind conscious". Be prepared to quickly move upwind and away in the event of any emergency involving release of H2S. d. Total Safety H2S Safety Consultant 1.. Conduct training as necessary to ensure all personnel are familiar with the contingency procedures and the operation of emergency equipment. 3. Check all H2S safety equipment to ensure that it is ready for emergency use: • Check pressure daily for each shift on breathing apparatus (both 30- minute and hip-packs) to make sure they are charged to full volume. • Check pressure on cascade air bottles to see that they are capable of recharging breathing apparatus. 14 Packet Page-211- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN • Check oxygen resuscitator to ensure that it is charged to full volume. • Check H2S detectors daily for each shift (fixed and portable), and explosimeter, to ensure they are working properly. 4. Provide a weekly report to Dan A. Hughes Company's well-site representative documenting: • Calibrations performed on H2S detectors. • Proper location and working order of H2S safety equipment. • Attendance of all personnel, trained or retrained, and their company. • Weekly drills including list of personnel participating and summary of actions. 15 Packet Page -212- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN IV. SAFETY EQUIPMENT All respirators will be designed, selected, used and maintained in conformance with ANSI Z88.2, American National Standard for respiratory protection. Personal protective equipment must be provided and used. Those who are expected to use respiratory equipment in case of an emergency will be carefully instructed in the proper use and told why the equipment is being used. Careful attention will be given to the minute details in order to avoid possible misuse of the equipment during periods of extreme stress. Self-contained breathing apparatus provides complete respiratory and eye protection in any concentration of toxic gases and under any condition of oxygen deficiency. The wearer is independent of the surrounding atmosphere because he/she is breathing with a system admitting no outside air. It consists of a full face mask, breathing tube, pressure demand regulator, air supply cylinder, and harness. Pure breathing air from the supply cylinder flows to the mask automatically through the pressure demand regulator which reduces the pressure to a breathing level. Upon inhalation, air flows into the mask at a rate precisely regulated to the user's demand. Upon exhalation, the flow to the mask stops and the exhaled breath passes through a valve in the face piece to the surrounding atmosphere. The apparatus includes an alarm & gauge which warns the wearer to leave the contaminated area for a new cylinder of air or cylinder refill. To enable men/women to work in a toxic atmosphere for prolonged periods of time, a hose line with a quick connect can be added to the unit, thereby connecting it to a cascade system breathing air.The installation of a ---,hose bank series of manifolds on the rig floor connected to a series of cascade bottles at a remote location, allows all personnel to remain with masks on for an extended period. The derrickman is provided with a full face piece unit attached to a 5—minute escape cylinder, connected to one or more 300 cubic-foot air cylinders through a quick disconnect "T". In case evacuation via trolley or ladder becomes necessary, he will also have a full bottle of air in his own self-contained breathing apparatus. All respiratory protective equipment, when not in use, should be stored in a clean, cool, dry place, and out of direct sunlight to retard the deterioration of rubber parts. After each use,the mask assembly will be scrubbed with soap and water, rinsed thoroughly, and dried. Air cylinders can be recharged to a full condition from a cascade system. Personnel in each crew will be trained in the proper techniques of bottle filling. The primary piece of equipment to be utilized, should anyone be overcome by hydrogen sulfide, is the oxygen resuscitator. When asphyxiation occurs, the victim must be moved to fresh air and immediately given artificial respiration. In order to assure readiness, the bottles of oxygen will be checked at regular intervals and an extra tank kept on hand. Hand-operated pump-type detectors incorporating detector tubes will give more accurate readings of hydrogen sulfide. The pump-type draws air to be tested through the detector tube containing lead acetate- silica gel granules. Presence of hydrogen sulfide in the air sample is shown by the development of a dark 16 Packet Page-213- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN brown stain on the granules, which is the scale reading of the concentration of hydrogen sulfide. By changing the type of detector tube used, this detector may also be used for sulfur dioxide (502) detection when hydrogen sulfide (H2S) is being burned in the flare area. Provisions must be made for the storage of all safety equipment as is evident from the foregoing discussion. All equipment must be stored in an available location so that anyone engaged in normal work situations is no more than "one breath away'from a mask. II 17 Packet Page-214- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN V. TOXICITY OF VARIOUS GASES Chemical Specific Lethal4 Common Name Formula Gravityl PEL(OSHA)2 STEL3 ppm Hydrogen Cyanide HCN 0.94 10 150 300 Hydrogen Sulfide H2S 1.18 10 15 ppm 600 Sulfur Dioxide SO2 2.21 2 5 ppm 1000 Chlorine CL2 2.45 1 Carbon Monoxide CO 0.97 35 200/1 Hour 1000 Carbon Dioxide CO2 1.52 5000 5% 10% Methane CH4 0.55 90000 Combustible (9%) (Above5% in air) 'Air= 1.0 2 Permissible- Concentration at which is believed that all workers may repeatedly be exposed, day after day, without adverse effect. 'STEL- Short Term Exposure Limit. 4 Lethal - Concentration that will cause death with short-term exposure. Reference: API RP-49, September 1974- Reissued August 1978 18 Packet Page-215- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN VI. PROPERTIES OF GASES A. CARBON DIOXIDE 1. Carbon Dioxide (CO2) is usually considered inert and is commonly used to extinguish fires. It is 1.52 times heavier than air and will concentrate in low areas of still air. Humans cannot breathe air containing more than 10% CO2 without losing conscience or becoming disorientation in a few minutes. Continued exposure to CO2 after being affected will cause convulsions, coma, and respiratory failure. 2. The threshold limit of CO2 is 5000 ppm. Short-term exposure to 50,000 ppm (5%) is reasonable. This gas is colorless, odorless, and can be tolerated in relatively high concentrations. B. HYDROGEN SULFIDE 1. Hydrogen Sulfide (H2S) is a colorless,transparent,flammable gas. It is heavier than air and, hence, may accumulate in low places. 2. Although the slightest presence of H25 in the air is normally detectable by its characteristic"rotten egg" odor, it is dangerous to rely on the odor as a means of detecting excessive concentrations because the sense of smell is rapidly lost, allowing lethal concentrations to be accumulated without warning. The following table indicates the poisonous nature of H2S. CONCENTRATION EFFECTS %H2S PPM GR/100 SCF1 0.001 10 .65 Safe for 8 hours without respirator. Obvious and unpleasant odor. 0.0015 15 0.975 Safe for 15 minutes of exposure without respirator. 0.01 100 6.48 Kills smell in 3-15 minutes; may sting eyes and throat. 0.02 200 12.96 Kills smell quickly; stings eyes and throat. 0.05 500 32.96 Dizziness; breathing ceases in a few minutes; need prompt artificial respiration. 0.07 700 45.92 Rapid Unconsciousness; death will result if not rescued promptly. 0.1 1000 64.80 Instant unconsciousness,followed by death within minutes. 1 Grains Per 100 Cubic Feet 19 Packet Page-216- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN C. SULPHUR DIOXIDE 1. Sulfur Dioxide (SO2) is a colorless, non-flammable,transparent gas. 2. SO2 is produced during the burning of H2S. Although SO2 is heavier than air, it can be picked up by a breeze and carried downwind at elevated temperatures. Since SO2 is extremely irritating to the eyes and mucous membranes of the upper respiratory tract, it has exceptionally good warning powers in this respect. The following table indicates the toxic nature of 502: CONCENTRATION EFFECTS SO2 PPM 0.005 3 to 5 Pungent odor, normally a person can detect 502 in this range. 0.012 12 Throat irritation, coughing,constriction of the chest,tearing and smarting of eyes. 0.15 150 So irritating that it can only be endured for a few minutes. .05 500 Causes a sense of suffocation, event with the first breath. 20 Packet Page-217- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN VII. Treatment Procedures for Hydrogen Sulfide Poisoning A. Remove the victim to fresh air. B. If breathing has ceased or is labored, begin resuscitation immediately. Note: This is the quickest and preferred method of clearing victim's lungs of contaminated air; however, under disaster conditions, it may not be practical to move the victim to fresh air. In such instances, where those rendering first aid must continue to wear masks, a resuscitator should be used. C. Apply resuscitator to help purge H2S from the blood stream. D. Keep the victim at rest and prevent chilling. E. Get victim under physician's care as soon as possible. 21 Packet Page-218- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN VIII. BREATHING AIR EQUIPMENT DRILLS FOR ON & OFF DUTY PERSONNEL An H25 Drill and Training Session must be given once a week to ALL on-duty personnel with off duty personnel. On-duty and Off-duty personnel will reverse roles on alternate drills. An H2S drill and training session must be given once a week to all off-duty personnel in coincidence with on- duty personnel reversing roles on alternate drills. The purpose of this drill is to instruct the crews in the operation and use of breathing air and H2S related emergency equipment and to allow the personnel to become acquainted with using the equipment under working conditions. The crews should be trained to put on the breathing air equipment within one minute after an H2S emergency has been alerted. The following procedure should be used for weekly drills. The Dan A. Hughes Company's supervisor must be satisfied that the crews are proficient with the equipment. 1. All personnel should be informed that a drill will be held. 2. The H2S Safety Technician should initiate the drill by signaling as he would if he 3. detected H2S. 4. Personnel should don their breathing apparatus. 5. Once the breathing air equipment is on, the H2S Technician should check all personnel to insure proper operation. A training and information session will be conducted after each drill to answer any H2S related questions and to cover one or more of the following: • Condition II, and Ill alerts and steps to be taken by all personnel. • The importance of wind direction when dealing with H2S. • Proper use and storage of all types of breathing equipment. • Proper use and storage of oxygen resuscitators. • Proper use and storage of H2S detectors (Mini Checks or equivalent). • The "buddy system" and the procedure for rescuing a person overcome by H2S. • Responsibilities and duties. • Location of H2S safety equipment. • Other parts of the "H2S Contingency Plan"that should be reviewed. NOTE: A record of attendance must be kept for weekly drills and training sessions. 22 Packet Page -219- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN IX. HYDROGEN SULFIDE TRAINING CURRICULUM (FOR EMPLOYERS, VISITORS, AND CONTRACTORS) EACH PERSON WILL BE INFORMED ON THE RESTRICTIONS OF HAVING BEARDS AND CONTACT LENS. THEY WILL ALSO BE INFORMED OF THE AVAILABILITY OF SPECTACLE KITS. AFTER THE H2S EQUIPMENT IS RIGGED UP, ALL PERSONNEL WILL BE H2S TRAINED AND PUT THROUGH A DRILL. ANY DEFICIENCIES WILL BE CORRECTED. Training Completion cards are good for one year and will indicate date of completion or expiration. Personnel previously trained on another facility and visiting, must attend a "supplemental briefing" on H2S equipment and procedures before beginning duty. Visitors who remain on the location more than 24 hours must receive full H2S training given all crew members. A "supplemental briefing" will include but not be limited to: Location, use and donning of an assigned respirator, familiarization with safe briefing areas, alarms with instruction on responsibilities in the event of a release and hazards of H2S and (502, if applicable). A training and drill log will be kept. Topics for full H2S training shall include, but not be limited to the following: 1. Brief Introduction on H2S A. Slide or VCR presentation (If Available) B. H2S material will be distributed C. Re-emphasize the properties,toxicity, and hazards 1. of H2S D. Source of SO2 (if applicable) 2. H2S Detection A. Description of H2S sensors B. Description of warning system (how it works &it's 1. location) C. Actual location of H2S sensors D. Instruction on use of pump type detector(Gastec) E. Use of card detectors, ampoules, or dosemeters F. Use of combustible gas detector G. Other personnel detectors used H. Alarm conditions I & II, SO2 alarms (if applicable) 3. H2S Protection A. Types of breathing apparatus provided (30-minute SCBA &SKA PAK with voice diaphragms for communication) B. Principle of how breathing apparatus works C. Demonstration on how to use breathing apparatus D. Location of breathing apparatus 23 Packet Page -220- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN 4. Cascade System A. Description of cascade system B. How system works C. Cascade location of rig with reference to briefing areas D. How to use cascade system (with SKA PAKS& refill) E. Importance of wind direction and actual location of windsocks F. Purpose of compressor/function (if one is on site) 5. H2S Rescue and First Aid A. Importance of wind direction B. Safe briefing area C. Buddy system D. H2S symptoms E. Methods of rescue 6. Hands on Training A. Donning/familiarization of SCBA B. Donning/familiarization of SKA PAK C.Familiarization of cascades D. Use of 02 resuscitator E. Alarm conditions- upwind briefing areas, etc... F. Duties and responsibilities of all personnel G.Procedures for evacuation H. Search and Rescue teams 7. Certification A. Testing on material covered 24 Packet Page-221- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN X. EMPLOYEE INFORMATION TOTAL SAFETY US INC., FIT TEST Employee Name: Date: Date of Employee Medical Evaluation: Medical Status (circle): Unrestricted Limitations on Use Use Not Authorized RESPIRATOR INFORMATIOIN Respirator Type (Dustmask,SCBA,etc): Brand: Size: (circle): XS S M L XL II FIT TEST INFORMATION Type of Fit Test Performed: Quantitative Porta Count Fit Factor: Fittester 3000 Fit Factor: Qualitative Irritant Smoke Passed/Failed Isoamyl Acetate (Banana Oil) Passed/Failed Saccharin Passed/Failed Bitrex Passed/Failed I hereby certify that this fittest was conducted in accordance with the OSHA Fit Testing Protocols found in Appendix A of 1910.134. Fit Tester Name (Print): Signature: Date: 25 Packet Page-222- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN XI. H2S SAFETY SERVICES HYDROGEN SULFIDE SAFETY PACKAGE RESPIRATORY SAFETY SYSTEMS QTY DESCRIPTION 1 20 Bottle Trailer 12 30-Minute Pressure Demand SCBA w/Pigtail 8 5-Minute Work Units 2 Regulators 4 100' Low Pressure Hose Lines 10 50' Low Pressure Hose Lines 16 3'-5' Pigtails 1 12 Man Manifold 1 6 Man Manifold 1 3 Man Manifold 1 8 Bottle Cascade DETECTION AND ALARM SYSTEMS 1 4-Channel H2S Monitor 4 H2S Controllers 5 H2S Sensors 1 Explosion Proof Alarm 1 Portable Quad Meter 1 Sensidyne/Rae Manual Gas Detection Pump 4 Boxes H2S Tubes (Various Ranges) 4 Boxes SO2 Tubes (Various Ranges) 1 Calibration Kit 1 Record Keeping paperwork (ie: Training, Calibration, Inspection, Daily Reports) 1 Rig Up Box 26 Packet Page -223- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN ADDITIONAL SAFETY EQUIPMENT QTY DESCRIPTION 1 Windsock with Pole and Bracket 1 Megaphone (Bullhorn) w/Spare Batteries 1 Well Condition Sign w/Green, Yellow, Red Flags 1 Primary and Secondary Safe Briefing Area Signs 1 Flare Pistol, w/Flares 1 White Marker Board with Erasers and Markers 1 Safety Harness w/50' Safety Line 1 02 Resuscitator 1 Litter 1 24 Piece First Aid Kit Contact: Larry Sneath: Isneath @totalsafety.com Chris McDonald: cmcdonald @totalsafety.com 1-800-833-2974- Office 27 Packet Page-224- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN EMERGENCY PHONE NUMBERS Dan A. Hughes Company Representatives Jeff Ilseng (OP's Mgr) 361-362-3304 Hank Kremers (C.0.0) 361-362-3842 Rig Company Precision Rig#314 Kevin Satter 713-435-6256 713-553-4242 Hydrogen Sulfide Safety Contractor Total Safety 5237 Halls Mill Rd. Bldg J Mobile, AL 36695 800-833-2974 FIRE DEPARTMENTS 911 Big Cypress National Preserve 239-695-2000 X33100 Tamiami Trail East 800-788-0511 Ochopee, FL 34141 SHERIFF DEPARTMENTS 911 Collier County Sherriff 239-354-2377 AMBULANCE 911 Emergency Medical Services 239-252-8459 2705 S. Horseshoe Dr. Naples, FL 34104 Air Ambulance America 800-827-0745 A ACLS advanced Air Ambulance 800-633-3590 Angel Medflight World Air Ambulance 866-694-9310 HOSPITALS 911 MT determined 28 Packet Page -225- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN HIGHWAY DEPARTMENT Florida Highway Patrol 239-354-2377 3205 Beck Blvd. Naples, FL 34114 FEDERAL AGENCIES U.S. Environmental Protection Agency Phone: 404-562-9900 Region #4 Fax: 404-562-8174 Sam Nunn Atlanta Federal Center Toll Free: 800-241-1754 61 Forsyth St. SW Atlanta, GA 30303 OSHA Phone: 404-562-2300 Regional Office Fax: 404-562-2295 61 Forsyth St. SW Atlanta, GA 30303 Fort Lauderdale Area Office Phone: 954-424-0242 8040 Peters Road, Bldg H-100 Fax: 954-424-3073 Fort Lauderdale, FL 33324 NATIONAL RESPONSE CENTER 800-424-8802 Toxic Chemical and Oil Spills Tallahassee Office Florida DEP/Bureua of Mine Reclamation Phone: 850-488-8217 Oil and Gas Section V-Mail: 850-413-8192 2051 East Paul Dirac DR./M.S. 715 Fax: 850-488-1254 Tallahassee, FL 32310 CONTACTS: Ed Garrett Professional Geologist/Administrator 850-488-8217 Ext 12 Levi Sciara Engineering Specialist II 850-488-8217 Ext 64 29 Packet Page-226- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN John Leccese Cell: 850-393-6309 Engineering Specialist IV Steve Spencer Professional Geologist 850-488-8217 Ext 65 Dave Taylor Geophysical Operations Engineer 850-488-8217 Ext 26 Fort Myers Field Office Florida DEP/Bureau of Mine Reclamation Office-239-344-5611 2295 Victoria Avenue, Suite 179 Fax-850-412-0590 Ft. Myers, FL 33901 CONTACTS: Paul Attwood Cell: 239-229-4293 Professional Geologist Home: 239-947-4348 Pierre Bruno Cell: 239-229-4291 Environmental Specialist III Home: 239-260-1738 30 Packet Page-227- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN XII. EVACUATION OF THE GENERAL PUBLIC The procedure to be used in alerting nearby persons in the event of any occurrence that could pose a threat to life or property will be arranged and completed with public officials in detail, prior to drilling into the hydrogen sulfide formations. In the event of an actual emergency,the following steps will be immediately taken: 1. The Dan A. Hughes Company's representative will dispatch sufficient personnel to immediately warn each resident and transient's down-wind within radius of exposure from the well site. Then warn all residence in the radius of exposure. Additional evacuation zones may be necessary as the situation warrants. 2. The Dan A. Hughes Company's representative will immediately notify proper authorities, including the Sheriff's Office, Highway Patrol, and any other public officials as described above and will enlist their assistance in warning residents and transients in the calculated radius of exposure. 3. The Dan A. Hughes Company's representative will dispatch sufficient personnel to divert traffic in the vicinity away from the potentially dangerous area. A guard to the entrance of the well site will be posted to monitor essential and non essential traffic. 4. General: A. The area included within the radius of exposure is considered to be the zone of maximum potential hazard from a hydrogen sulfide gas escape. Immediate evacuation of public areas, in accordance with the provisions of this contingency plan, is imperative. When it is determined that conditions exist which create an additional area (beyond the initial zone of maximum potential hazard)vulnerable to possible hazard, public areas in the additional hazardous area will be evacuated in accordance with the contingency plan. B. In the event of a disaster, after the public areas have been evacuated and traffic stopped, it is expected that local civil authorities will have arrived and within a few hours will have assumed direction of and control of the public, including all public areas. Dan A. Hughes Company will cooperate with these authorities to the fullest extent and will exert every effort by careful advice to such authorities to prevent panic or rumors. C. Dan A. Hughes Company will attempt to have appropriate management personnel at the disaster site as soon as possible. The company's personnel will cooperate with and provide such information to civil authorities as they might require. D. One of the products of the combustion of hydrogen sulfide is sulfur dioxide (502). Under certain conditions this gas may be equally as dangerous as H2S. A pump type 31 Packet Page-228- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN detector device, which determines the percent of 502 in air through concentrations in ppm, will be available. Although normal air movement is sufficient to dissipate this material to safe levels,the 502 detector should be utilized to check concentrations in the proximity of the well once every hour, or as necessary and the situation warrants. Also, if any low areas are suspected of having high concentrations, personnel should be made aware of these areas, and steps should be taken to determine whether or not these low areas are hazardous. 32 Packet Page-229- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN ADDENDUM: "In the event that conditions relating to drilling of the subject well require evacuation of personnel in the proximity of the drilling location due to a release of hydrogen Sulfide gas, in addition to the housing and reasonable per diem for the displaced people involved, the operator will provide appropriate reimbursement for reasonable and competitive evacuation and boarding costs for horses and/or cattle that must be included in the evacuation. Formal evacuation would be the result of a decision and declaration resulting from the safety evaluation of the operator,the professional safety company employed on location, and local public emergency officials." 33 Packet Page-230- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN OTHER: NOTES: 34 Packet Page-231- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN DIRECTIONS TO WELL SITE: From Naples- From Intersection of 175 and Immokalee Road, go 20 miles East to intersection of Oil Well Grade Road. Turn Left onto Oil Well Grade Road and follow road for 1 mile. Turn left onto New Road, go .8 miles and turn left on new road to rig. 35 Packet Page-232- 6/10/2014 10.B. Dan A.Hughes Company CONTINGENCY PLAN RESIDENTS LIST: Ref Contact Name Phone# #of Household Address Special Transportation # Needs 1 NOT HOME 20950 Yes Immokalee Road 2 Corkscrew Independent Small 22022 No Yes Baptist Church Congregation Immokalee Road 3 Amanda Annido Did not 2 No Yes Disclose 36 Packet Page -233- 6/10/2014 10.B. EXHIBIT 12 PRECISION DRILLING RIG 314 INFORMATION Packet Page-234- 6/10/2014 10.B. n T N Rat ALT.ROAD 11' Mouse —225' T --� 10.70' ✓— 4.76' L ^' < T 20' Hole 1 7' I Mouse Hole-4.76' Cellar 103' Rat Hole-11' 115' C 35' > 3,_._. T12' <, 60' 130' ) r—Nc-w E ny x 295' ss' 82' 200' 200' r. > 180' Reserve 20' Pit 98' 20' J, < 210' > Road S 'Rig 314 REV.2 Aug 01 Packet Page -235- 6/10/2014 10.B. RIG 314 CLASSIFICATION: NOl SK 150 DRILL COLLARS: SCR 8 inch and 61/inch (Quantities to be determined) DRILLING DEPTH CAPACITY: 17,000' KELLY: POWER SYSTEM: 5-1/4"Hex x 40' Three(3)Caterpillar D3512B engines with Kato 1365 KW AC generators, and Ross Hill ANNULAR PREVENTERS: SCR, Model 1400,three(3) bays to power Hydril GK 13 5/8"x 5,000 psi WP pumps,drawworks and lighting plus hotel load. RAM PREVENTERS: DRAWWORKS: Shaffer Type SL, double ram 13 5/8"x NO] 150DL with Eaton brake 10,000 psi WP, H2S trim Driven by two(2) 1,000 HP G.E.752 DC traction Shaffer Type SL,single ram, 13 5/8"x motors. 10,000 psi WP, H2S trim MAST: CHOKE MANIFOLD: NOI 136'x 13'base, 710,000#static hook load Cameron 4-1/16"x 3-1/16" 10,000 psi WP, dual chokes DRILL LINE: ACCUMULATOR SYSTEM: 1-3/8"EIPS Koomey type 80, seven(7)station,with 165 gallon capacity with dual air pumps and one(1) SUBSTRUCTURE: electric triplex pump NO]25'high floor,735,000#casing capacity with 400,000#setback capacity,21'clear height MUD TANK SYSTEM: from rotary beam to ground level. Two (2)tank 1,000 BBL total Two (2) Derrick Flo-line cleaners Model 513 MUD PUMPS: Mud agitators Two (2) Gardner Denver PZ-10 triplex pumps NOI two(2) 10"cone desander rated at 1,350 HP,each driven by two (2) 1,000 NOI twelve(12) 5"cone desilter HP G.E.752 DC traction motors. NOI vacuum degasser ROTARY: MUD MIXING PUMPS: Continental Emsco T2750, 27 1/2" Two (2) 5"x 6"centrifugal pumps driven by 75 HP electric motor CROWN BLOCK: NOl with six(6)sheaves AUXILIARY EQUIPMENT: Toolpusher and crew quarters TRAVELING BLOCK AND HOOK: One(1)500 BBL water tank National 350 ton UTB with 350 hook One(1) 19,000 gallon fuel tank Automatic driller SWIVEL: Two (2)hydraulic hoist National P-400 Pipe spinner MD Totco EDR DRILL PIPE: One(1)Mathey(Surveyor)wireline unit 5"OD 0-7 degree drift indicator(standard only) Rev 925107 Packet Page-236- 6/10/2014 10.B. EXHIBIT 13 PROPOSED DRILLING PROGRAM Packet Page-237- 6/10/2014 10.B. Dan A. Hughes Company, L.P. Collier-Hogan 20-3H Permit #1349 Drilling Program This procedure is to serve only as a general guideline for the drilling of this well and will be reviewed and modified when required as determined by actual wellbore conditions encountered in the drilling operations. Safety and prudent drilling practices will take priority at all times. Packet Page-238- 6/10/2014 10.B. Permit #1349 Dan A. Hughes Company, L.P. Drilling Prognosis Collier County, Florida Date: 11-30-2012 Well: Collier-Hogan 20-3H Field: Wildcat County: Collier API#: 09-021- Location: Section 20,T47S-R28E @Surface:Section 20 @ BHL: Section 21 Elevation: 20.6'(GL) GL; RKB is 27' above GL Proposed TD: 13,500' (MD)/13,500' (TVD)---Pilot Hole 16,900' MD/11,903' (TVD)---Lateral Hole Directions: From Naples,from intersection of Interstate 75 & Immokalee Road go 20 miles east to intersection of Oil Well Grade Road. Turn Left onto Oil Well Grade Road to Rig/Well site. PROCEDURE SUMMARY 1. Drive 20"Conductor down to refusal around 250' 2. N/U a 20" 2000 psi, diverter system with 8" diverter lines. 3. Drill a 17-1/2" surface hole to 1950'. 4. Run 13-3/8" 54.5#/ft,J-55 BT&C surface casing and cement to surface. 5. Drill a 12-1/14" hole through the Boulder Zone to 4000'. 6. Run 9-5/8"47#/ft P-110 GB Buttress intermediate casing to 4000' &cement back to 3500'. 7. Drill 8-1/2"vertical pilot hole down to 13,500'MD/13,500'TVD. 8. Run Open Hole Logs on wireline. 9. Plug back with cement kick-off plug. Dress off cement to 11,187'. 10. Directionally drill from 11,187' MD down to 12,000'MD/11,836'TVD to casing point. 11. Run 7-5/8" 33.7#/ft, L80 LT&C casing to 12,000' &cement back to 9000'. Dan A. Hughes Company, L.P. Collier-Hogan 20-3H Packet Page-239- 6/10/2014 10.B. 12. Drill out cement&shoe with 6-1/2" bit. Directionally drill& build to 90 degrees by 12,312'MD/11,903'TVD. 13. POOH & RIH with new directional tools. Drill horizontally from 12,312' MD to 16,900' MD/11,903'TVD. CASING PROGRAM Depth (MD) Depth (TVD) Hole Size Casing Size WT(ppf) Grade Thread 250' 250' Driven 20" /z" wt B PE 1950' 1950' 17-1/2" 13-3/8" 54.5 J-55 BT&C 4000' 4000' 12-1/4" 9-5/8" 47# P-110 BT&C 12,000' 11,836' 8-1/2" 7-5/8" 33.7# L-80 LT&C 16,900' 11,903' 6-1/2" Open Hole CASING SPECIFICATIONS Casing Size WT(#/ft) Grade Thread Internal Yield Collapse Jt Strength 13-3/8" 54.5# J55 BT&C 3560 2070 931,000 9-5/8" 47# P-110 BT&C 9440 5300 1,500,000 7-5/8" 33.7# L-80 LT&C 7900 6560 820,000 ANTICIPATED FORMATIONS FORMATION SUBSEA MD ND EST PORE PRS(EMW-PPG) Boulder-Top -2052' 2100' 2100' Boulder- base -3452' 3500' 3500' Lake Trafford -11,475' 11,523' 11,523' 9.1 Sunniland -11,654' 11,702' 11,702' 9.1 Rubble Zone -11,839' 11,887' 11,887' 9.1 Rubble Lateral -11,880' 11,928' 11,928' 9.1 Punta Gorda -11,892' 11,940' 11,940' 9.1 Pumpkin Bay-Top -13,141' 13,189' 13,189' 9.1 Pumpkin Bay-Base -13,441' 13,489' 13,489' 9.1 Dan A. Hughes Company, L.P. Collier-Hogan 20-3H Packet Page-240- 6/10/2014 10.B. BOP PROGRAM HOLE SIZE/ Bottom to Top Low/High Test Pressures SIZE PRESURE Arrangement Rams/Annular 17-1/2" 21-3/4" 2M A N/A 12-1/4" 21-3/4" 2M A N/A 8-1/2" 11"5M P/S/B/A 250-3500/250-2000 6-1/2" 11" 5M P/S/B/A 250-3500/250-2000 P= Pipe Ram B= Blind Ram A=Annular S= Drilling Spool NOTE: Well Control will use IADC accepted methods. This area is known more for Lost Circulation than for kicks. Pictures of BOP's in Attachments. Test surface casing to 1000#before drilling out cement. Test Intermediate & production casings to 1500#. Florida Dept. of Environmental Protection rules are that the BOP's will be tested every week or called and ask for extension. CEMENT/FLOAT EQUIPMENT&CENTRALIZATION Surface: 13-3/8" casing x 17-1/2" hole @ 1950' Planned cement volume is based on 85%open hole excess. Spacer: 30 bbls of fresh water Lead Cement: 1035 sacks HFC-12 Extendacem TM System, mixed at 12.0 ppg Tail Cement: 575 sacks Standard Cement—HalcemTM System, mixed @ 15.6 ppg Top Out: 100 sacks Standard Cement+2%CaCl2 Run 13-3/8" casing and centralize w/bow springs 6' above shoe, 6' above float collar, and one per joint latched over the next 5 collars for a total of 7 centralizers. Pump Lead cement until cement to surface and then switch to Tail cement. Leave cement above shoe for drill out. Catch cement returns in Catch Tank. Intermediate: 9-5/8"casing x 12-1/4" hole @ 4000' Planned cement volume is based on 100%open hole excess, 500' of Annular fill Spacer: 50 bbls Tail Cement: 330 sacks Premium Cement ThermacemTM System mixed at 16.4 ppg Dan A. Hughes Company, L.P. Collier-Hogan 20-3H Packet Page-241- 6/10/2014 10.B. Use top & bottom plugs and displace at 8 bpm with rig pump. Reciprocate casing w/15' stroke. Leave cement (line capacity) above plugs for drill out. Production: 7-5/8" casing x 8-1/2" hole @ 12,000' Spacer: 40 bbls of Tuned Spacer III Lead Cement: 140 sacks 50/50 Poz+2%gel EconocemTM System mixed at 14.2 ppg Tail Cement: 185 sacks Premium Cement+additives BONDCEM TM System mixed at 16.4 ppg Use top& bottom plugs and displace at 7 bpm with rig pump. WELLHEAD PROGRAM 13-5/8"3K C22 x 13-3/8"SOW 13-5/8" 3K x 11" 5K C-22 11' 5K x 7-1/16" 10K TCM DRILLING FLUIDS PROGRAM Hole Depth from Depth To MW WL Size MD/TVD MD/TVD ppg API/HTHP pH Comments 17-1/2" 0' 1950' 8.4-8.8 N/C 9.0-9.5 Freshwater(gel,Lime,Polymer) 12-1/4" 1950' 4000' 9.0-9.2 25-20 9.0-9.5 Freshwater(gel,Lime,Polymer) Lost Circulation Interval in Boulder Zone 2100'-3500' 8-1/2" 4000' 6000' 8.6-8.9 25-20 9.0-9.5 Freshwater(dispersed polymer) 8-1/2" 6000' 13,500' 8.9-9.1 25-10 9.0-9.5 Freshwater(dispersed polymer) Log Pilot Hole&set cement plug&Kick Off @ 11,187' 8-1/2" 11,187' 12,000'/11,836' 8.9-9.1 25-10 9.0-9.5 Freshwater(dispersed polymer) Set 7-5/8"casing 6-1/2" 12,000'/11,836'16,900'/11,903' 8.8-9.0 25-20 9.0-9.5 Freshwater(HEC polymer) EVALUATION PROGRAM Mud Logger on location and operational by 10,000' Quad Combo log from 13,500'to 10,000' in the Vertical Pilot Hole. Drill pipe conveyed (6-1/2"open hole)from TD back to 12,000' MD/11,836'TVD Cement Bond Log on 7-5/8"CASING FROM 12,000'MD up 8500'(500'above top of cement) Dan A. Hughes Company, L.P. Collier-Hogan 20-3H Packet Page-242- 6/10/2014 10.B. SAMPLING PROGRAM State requirements: Geologist/Mud Logger to catch one set of dry samples every 30'(keep at rig)from 10,000'to TD on Vertical Pilot Hole &also the Horizontal Section. Dan A. Hughes Company, L.P. requirements: Geologist/Mud Logger to catch one set of dry samples every 30'(keep at rig)from 10,000'to TD on Vertical Pilot Hole&also the Horizontal Section. BIT PROGRAM Bit Size Depth # (inch) Type Out(FT) WOB RPM Remarks 1 17-1/2" Rock 1950' 5/25 120 2 12-1/4" Rock 2100' 5/35 120 3 12-1/4" Button 4000' 35/- 50 4 8-1/2" PDC 13,500' 5/35 90/140 Vertical Pilot 5 8-1/2" PDC 12,000' 5/35 60/120 Directional Build 6 6-1/2" PDC 16,900' 5/35 60/120 Horizontal SURVEY PROGRAM We will take directional survey in 17-1/2"surface hole every 100'to 1950'. In the 12-1/4" intermediate hole,we will take a survey every 100'to 4000'. In the 8-1/2" hole,we will take a survey every 100' down to 13,500' in the Vertical Pilot Hole. We will then run a Gyro Survey from 13,500' back to surface. After setting kick-off plug, we will directionally drill using MWD surveys to a final Horizontal Depth of 16,900'MD (11,903'TVD). SPECIAL INSTRUCTIONS 1. Notify Florida Department of Environmental Protection (FDEP) in Fort Meyers.Contact Mr. Paul Attwood work cell @239-229-4293 and Mr. Pierre Bruno work cell @ 239-229-4291 within 24 hours prior to spud and prior to running and cementing casing. 2. Test 13-3/8" surface casing to 1000# prior to drilling out. 3. Test the 9-5/8" intermediate casing to 1000#before drilling out float collar. 4. Test the 9-5/8" casing shoe to 11.0# Equivalent Mud Weight(EMW). 5. Test the 7-5/8" casing to 1500#before drilling out float collar. 6. Test the 7-5/8"casing shoe to 11.0#Equivalent Mud Weight (EMW). 7. Have all H2S equipment set up by 10,000' along with Mud logger. 8. All cement blends will be mixed with location water and pump times will be run in there lab. All results are to be submitted to the Dan A. Hughes Company office prior to cementing. 9. Safety meetings will be done every morning during crew change for everyone. Dan A. Hughes Company, L.P. Collier-Hogan 20-3H Packet Page-243- 6/10/2014 10.B. DAN A. HUGHES COMPANY, L.P. DRILLING WELL PROCEDURE COLLIER-HOGAN 20-3H — COLLIER COUNTY, FLORIDA SECTION 20 T47S-R28E OCTOBER 31,2012 Packet Page -244- 6/10/2014 10.B. .-� DRILLING PROCEDURE 1. MIRU Precision Rig#314. 2. Install 20" Diverter and 8" diverter lines. Function Test. 3. Spud with 17-1/2" rock bit, 17-1/2" stabilizers, 8" Pro-drift survey tool, 8" drill collars, 6" drill collars, and 5" HWDP(BHA will be recommended by DAH office). Drill down to 1950'while running both pumps @ 95 spm for a combined flow rate of 600-800 gpm. Weight on bit from 5k-25k at a rotary speed of 60-100 rpm. 4. Take & record Pro-drift directional surveys every 100'to 1950'. Drill as recommended by mud engineers. At 1950', sweep hole and circulate clean. POOH to bit and trip back in to 1950'. Circulate &condition mud and POOH. 5. RU 6 man casing crew w/200 ton tools,stabbing board and rental bails(if necessary). RU Laydown machine. PU and run Float shoe,two(2)joints of 13-3/8" 54.5#155 BT&C of casing, Float Collar, and 13-3/8" 54.5#J55 BT&C casing down to 1950'. Note: centralize w/bow springs 6' above FS, and one per joint latched over the next 6 casing collars. 6. Circulate &condition mud for 1-1/2 casing volumes. Mix& pump cement per recommendation. Pump LEAD cement until cement is seen at surface and immediately switch over to TAIL cement. Displace TAIL cement with fresh water. Note:When cement gets to surface divert cement to open top tank. 7. After displacement,Top Off annulus with 50' of TAIL cement. If cement falls or fails to circulate, notify FDEP in Fort Meyers. 8. Make rough cut/final cut on conductor&Casing. Weld on 13-3/8"SOW x 13-3/8" 3M C-22 wellhead. Test well head to 1000#. 9. NU BOP's. Test all rams,choke manifold &related vales to 3000#(High)/250#(Low). Test annular preventer to 2000#(High)/200#(Low). Test all floor valves, IBOP&mud lines back to mud pumps to 5000#(High)/250#(Low). 10. RIH w/12-1/4" mill tooth bit and slick BHA to top of cement. 11. Pressure test casing to 1000#. Drill out float collar, cement, &float shoe. 12. Drill new hole from 1950'-2100'with both pumps for a combined flowrate of 500-800 gpm. Vary bit weight from 5k-35k at a rotary speed of 80 rpm. POOH for button bit to drill Boulder zone cap& Boulder zone. 13. RIH w/12-1/4" button bit drill thru Boulder zone(2100'-3500')with lost returns. Take Pro-drift surveys every 100'. 14. POOH & RU Laydown Machine. 15. RU casing crew w/350 ton tools, stabbing board, &rental bails. RIH w/FS, 2 jts 9-5/8"47#P110 GB Buttress of casing, FC, &9-5/8"47#P110 GB Buttress casing down to 4000'. 16. RU cement crew, cement plug container(top& bottom plugs), & iron. Circulate &condition mud for 1 casing volume. Mix& pump cement per recommendation. Reciprocate casing 15' and displace cement with mud. Bump plug 500#over differential pressure. Bleed back to check floats. RD cementers. Packet Page-245- 6/10/2014 10.B. 17. ND flowlines &turn buckles. RU stack lift. Break bolts @ wellhead &spacer spool. Pick up BOP's&set casing slips. Make rough cut on casing& remove spacer spool& DSA. Make final cut on casing& NU 13-5/8" 3M x 11" 5M C-22 casing spool. Finish NU "B" section. Set BOP's & RD stack lift. NU BOP's. 18. Test "B" section flange & pack off to 2000#.Test all rams, choke manifold & related vales to 3500#(High)/250#(Low). Test annular preventer to 2000#(High)/250#(Low). Test all floor valves, IBOP&mud lines back to mud pumps to 5000#(High)/250#(Low). 19. RIH w/8-1/2" PDC bit, stabilizers, Pro Drift directional survey tool, 6" DC's, &5" DP's with drilling jars down to top of cement. Test casing to 1500#. Drill out FC, cement, & FS. Drill 10' of new hole &circulate bottoms up until clean. Test casing shoe to 11.0# EMW. 20. Drill down to top of Upper Sunniland. Take Pro-Drift surveys every 100'. Make frequent wiper trips every 30 hrs or however the hole dictates & POOH. RU core bit& barrel. RIH and core Upper Sunniland(as per geologist instructions). POOH & RIH w/PDC bit and drill down to top of Rubble Zone & POOH. 21. RU core bit&barrel. RIH and core the Rubble zone(as per geologist recommendation). POOH & RIH w/PDC bit and drill down to top of Pumpkin Bay& POOH. 22. RU core bit& barrel. RIH and core the Pumpkin Bay zone(as per geologist recommendation). POOH & RIH w/PDC bit. 23. Drill remaining part of hole to 13,500' (Approx 100' below base of Pumpkin Bay). 24. Circulate &condition mud. Make wiper trip up to shoe. RIH back to bottom circulate bottoms up. Drop gyro & POOH. 25. RU Well Loggers & RIH and log well as per Geologist recommendations. 26. RIH opened ended with drill pipe and set cement kick-off plug from 10,800'-11,400'. POOH. 27. RIH w/directional tools and kick off cement plug. Kick-off at approx. 11,187'at 8 deg/100' down to 12,000'MD/11,836'TVD(Depth will change after reviewing previous logging runs). Make wiper trip&circulate/condition mud. RU laydown machine. POOH & lay down drill pipe, BHA, & bit. 28. RU casing crew w/350 ton tools,stabbing board, & rental bails. RIH w/FS, 2 jts 7-5/8" 33.7#L80 LT&C of casing, FC, &7-5/8"33.7#L80 LT&C casing down to 12,000'. 29. RU cement crew, cement plug container(top& bottom plugs), &iron. Circulate &condition mud for 1-1/2 casing volumes. Mix& pump cement per recommendation. Reciprocate casing 5'-10' and displace cement with mud. Bump plug 500#over differential pressure. Bleed back to check floats. RD cementers. 30. ND flowlines. RU stack lift. Break bolts on BOP's. Pick up BOP's&set casing slips. Make rough cut on casing& lay down piece. Make final cut on casing& NU 11" 5M x 7-1/16" 10M TCM tubing head.Test flange &pack off to 4000#. NU DSA&Set BOP's. RD stack lift. NU BOP's. 31. Test all rams, choke manifold &related vales to 3500#(High)/250#(Low). Test annular preventer to 2000#(High)/250#(Low). Test all floor valves, IBOP& mud lines back to mud pumps to 5000#(High)/250#(Low). 32. RIH w/6-1/2" PDC bit, horizontal directional BHA, &drill pipe down to top of cement. Test casing to 1500#. Drill out FC, cement, & FS. Drill 10' of new hole &circulate bottoms up until Packet Page-246- 6/10/2014 1O.B. clean. Test casing shoe to 11.0# EMW. Directly drill horizontally with steerable assembly in Rubble Zone as directed by Hughes Geologist to a Final TD of 16,900' MD/11,903'TVD. 33. After reaching TD, circulate & condition mud. POOH with drill pipe & lay down directional tools. RIH &set packer at 11,100'. POOH & lay down drill pipe. ND BOP's & RDMO drilling rig and wait on completion rig. Packet Page -247- 6/10/2014 10.B. EXHIBIT 14 CASING AND CEMENTING PROGRAM Packet Page-248- 6/10/2014 10.B. HALLIBURTON Dan A Hughes Company Lp Ebiz Do Not Mail-po Box 669 P.o. Drawer 669 Beeville, Texas 78104-0669 Collier-Hogan 20-3H Collier County, Florida United States of America Cementing Cost Estimate Prepared for: Jeff Ilseng October 19, 2012 Version: 1 Submitted by: Larry Mitschke Halliburton 10200 Bellaire Blvd 1-1ALLIBURTON Houston, Texas 77072-5299 +12819882489 1/15 Proposal 331430H_Collier Land&Cattle corp 21_1H_v.1 Packet Page-249- 6/10/2014 10.B. HALLIE3URTON Halliburton appreciates the opportunity to present this cost estimate and looks forward to being of service to you. Foreword Enclosed is our cost estimate for cementing the casing strings in the referenced well. The information in this cost estimate includes well data,calculations,materials requirements, and cost estimates. This cost estimate is based on information from our field personnel and previous cementing services in the area. The selection and use of non-Halliburton plugs and casing attachments often compromises the holistic approach and may jeopardize the overall objective for effective zonal isolation. Furthermore,Halliburton is not involved in the design,manufacture or use of plugs and casing attachments supplied by other manufacturers and assumes no liability for their installation and operation.For this reason we recommend Halliburton plugs and casing attachments be used when Halliburton performs any zonal isolation operation. Halliburton Energy Services recognizes the importance of meeting society's needs for health, safety, and protection of the environment. It is our intention to proactively work with employees, customers,the public,governments,and others to use natural resources in an environmentally sound manner while protecting the health, safety,and environmental processes while supplying high quality products and services to our customers. We appreciate the opportunity to present this cost estimate for your consideration and we look forward to being of service to you. Our Services for your well will be coordinated through the Service Center listed below. If you require any additional information or additional designs,please feel free to contact myself or our field representative listed below. Prepared by: Dennis Polzien Technical Sales Analyst Submitted by: Larry Mitschke Technical Advisor SERVICE CENTER: LAFAYETTE,LA. SERVICE COORDINATOR: SID SERVAT PHONE NUMBER: 800/444-7830 BULK PLANT: CAMERON,LA. WIRELINE&PERFORATING: NEW IBERIA, LA PHONE NUMBER: 337/367-9261 2/ 15 Proposal 331430H_Collier Land&Cattle corp 21_1H_v.1 Packet Page-250- 6/10/2014 10.B. HALLIBURTON Job Information 13 3/8" Surface Casing Well Name: Collier-Hogan 20-3H Well#: #1H 24"Drive Pipe 0-250 ft(MD) Outer Diameter 24.000 in Inner Diameter 23.000 in 17 1/2" Open Hole 250- 1950 ft(MD) Inner Diameter 17.500 in Job Excess 85 % 13 3/8" Surface Casing 0- 1950 ft(MD) Outer Diameter 13.375 in Inner Diameter 12.615 in Linear Weight 54.50 lbm/ft Thread BTC Casing Grade J-55 Mud Type Water Based Mud 3/ 15 Proposal 331430H_Collier Land&Cattle corp 21_1H_v.1 Packet Page-251- 6/10/2014 10.B. HALL1BURTON Calculations 13 3/8"Surface Casing Spacer: Total Spacer = 280.73 ft3 = 50.00 bbl Cement : (1450.00 ft fill) 250.00 ft * 1.9096 ft3/ft * 0% = 477.39 ft3 1200.00 ft * 0.6946 ft3/ft * 85 % = 1542.10 ft3 Total Lead Cement = 2019.48 ft3 = 359.68 bbl Sacks of Cement = 1031 sks Cement : (500.00 ft fill) 500.00 ft * 0.6946 ft3/ft * 85 % = 642.54 ft3 Tail Cement = 642.54 ft3 = 114.44 bbl Shoe Joint Volume: (40.00 ft fill) 40.00 ft * 0.868 ft3/ft = 34.72 ft3 = 6.18 bbl Tail plus shoe joint = 677.26 ft3 = 120.62 bbl Total Tail = 574 sks Total Pipe Capacity: 1950.00 ft * 0.868 ft3/ft = 1692.53 ft3 = 301.45 bbl Displacement Volume to Shoe Joint: Capacity of Pipe- Shoe Joint = 301.45 bbl -6.18 bbl = 295.27 bbl 4/ 15 Proposal 331430H Collier Land&Cattle corp 21_1H_v.1 Packet Page-252- 6/10/2014 10.B. HALLIBURTON Job Recommendation 13 3/8" Surface Casing Fluid Instructions Fluid 1: Water Spacer Fresh Water Fluid Density: 8.33 lbm/gal Fluid Volume: 50 bbl Fluid 2: HFC-12 EXTENDACEM(TM) SYSTEM Fluid Weight 12 lbm/gal 10.688 Gal/sk Fresh Water(Mixing Fluid) Slurry Yield: 1.96 ft3/sk Total Mixing Fluid: 10.69 Gal/sk Top of Fluid: 0 ft Calculated Fill: 1450 ft Volume: 359.68 bbl Calculated Sacks: 1030.87 sks Proposed Sacks: 1035 sks Estimated Slurry Properties: 24:00 127 psi Fluid 3: Standard Cement HALCEM(TM) SYSTEM Fluid Weight 15.60 lbm/gal 5.245 Gal/sk Fresh Water(Mixing Fluid) Slurry Yield: 1.18 ft3/sk Total Mixing Fluid: 5.25 Gal/sk Top of Fluid: 1450 ft Calculated Fill: 500 ft Volume: 120.62 bbl Calculated Sacks: 573.95 sks Proposed Sacks: 575 sks Estimated Slurry Properties: 24:00 2200 psi Fluid 4: Mud Water Base Mud Displacement Fluid Density: 01bm/gal Fluid Volume 295.27 bbl 5/15 Proposal 331430H_Collier Land&Cattle corp 21_1H_v.1 Packet Page-253- 6/10/2014 10.B. -ALLIBURTDN Job Procedure 13 3/8" Surface Casing Detailed Pumping Schedule Fluid# Fluid Fluid Name Surface Estimated Downhole Type Density Avg Rate Volume lbm/gal bbl/min Spacer Spacer 8.3 50 bbl 2 Cement Lead Cement 12.0 1035 sks 3 Cement Tail Cement 15.6 575 sks 4 Mud Displacement Fluid 295.27 bbl This cement cost estimate is based on information presently available.Actual well conditions will dictate laboratory testing for additive type and concentration. 6/ 15 Proposal 331430H_Collier Land&Cattle corp 21_1H_v.1 Packet Page-254- 6/10/2014 10.B. HALLIBURTON Job Information 9 5/8"Intermediate Casing Well Name: Collier-Hogan 20-3H Well#: #1H 13 3/8" Surface Casing 0 - 1950 ft(MD) Outer Diameter 13.375 in Inner Diameter 12.615 in Linear Weight 54.501bm/ft Thread BTC Casing Grade J-55 12 1/4" Open Hole 1950 -4000 ft(MD) Inner Diameter 12.250 in Job Excess 100 9 5/8" Intermediate Casing 0 -4000 ft(MD) Outer Diameter 9.625 in Inner Diameter 8.681 in Linear Weight 471bm/ft Thread LTC Casing Grade P-110 Mud Type Water Based Mud 7/15 Proposal 331430H_Collier Land&Cattle corp 21_1H_v.1 Packet Page-255- 6/10/2014 10.B. HALL B RTON Calculations 9 5/8"Intermediate Casing Spacer: 448.18 ft * 0.3132 ft3/ft * 100% = 280.73 ft3 Total Spacer = 280.73 ft3 = 50.00 bbl Cement : (500.00 ft fill) 500.00 ft * 0.3132 ft3/ft * 100% = 313.19 ft3 Primary Cement = 313.19 ft3 = 55.78 bbl Shoe Joint Volume: (80.00 ft fill) 80.00 ft* 0.411 ft3/ft = 32.88 ft3 = 5.86 bbl Tail plus shoe joint = 346.07 ft3 = 61.64 bbl Total Tail = 326 sks Total Pipe Capacity: 4000.00 ft* 0.411 ft3/ft = 1644.09 ft3 = 292.82 bbl Displacement Volume to Shoe Joint: Capacity of Pipe- Shoe Joint = 292.82 bbl -5.86 bbl = 286.97 bbl 8/15 Proposal 331430H_Collier Land&Cattle corp 21_1H_v.1 Packet Page-256- 6/10/2014 10.B. HALLIBURTON Job Recommendation 9 5/8"Intermediate Casing Fluid Instructions Fluid 1: Water Spacer Fresh Water Fluid Density: 8.33 lbm/gal Fluid Volume: 50 bbl Fluid 2: Premium Cement THERMACEM(TM) SYSTEM Fluid Weight 16.40 lbm/gal 4.351 Gal/sk Fresh Water(Mixing Fluid) Slurry Yield: 1.06 ft3/sk Total Mixing Fluid: 4.35 Gal/sk Top of Fluid: 3500 ft Calculated Fill: 500 ft Volume: 61.64 bbl Calculated Sacks: 325.87 sks Proposed Sacks: 330 sks Estimated Slurry Properties: 12:00 1590 psi 24:00 2503 psi Fluid 3: Mud Water Base Mud Displacement Fluid Density: 9 lbm/gal Fluid Volume 286.97 bbl 9/ 15 Proposal 3314301 Collier Land&Cattle corp 21_1H_v.1 Packet Page-257- 6/10/2014 10.B. HALLIBURTOrti Job Procedure 9 5/8" Intermediate Casing Detailed Pumping Schedule Fluid# Fluid Fluid Name Surface Estimated Downhole Type Density Avg Rate Volume lbm/gal bbl/min 1 Spacer Spacer 8.3 50 bbl 2 Cement Primary Cement 16.4 330 sks 3 Mud Displacement Fluid 9.0 286.97 bbl This cement cost estimate is based on information presently available.Actual well conditions will dictate laboratory testing for additive type and concentration. 10/ 15 Proposal 331430H Collier Land&Cattle corp 21_1H_v.1 Packet Page-258- 6/10/2014 10.B. HALLIBURTON Job Information 7 5/8"Intermediate Casing Well Name: Collier-Hogan 20-3H Well #: #1H 9 5/8" Intermediate Casing 0 -4000 ft(MD) Outer Diameter 9.625 in Inner Diameter 8.681 in Linear Weight 47 Ibm/ft Thread LTC Casing Grade P-110 8 1/2" Open Hole 4000- 12000 ft(MD) 4000 - 11836 ft(TVD) Inner Diameter 8.500 in Job Excess 50% 7 5/8" Intermediate Casing 0 - 12000 ft(MD) 0- 11836 ft(TVD) Outer Diameter 7.625 in Inner Diameter 6.765 in Linear Weight 33.70 lbm/ft Thread LTC Casing Grade L-80 Mud Type Water Based Mud 11/ 15 Proposal 331430H_Collier Land&Cattle corp 21_1H_v.1 Packet Page-259- 6/10/2014 10.B. HALLIBURTON Calculations 7 5/8"Intermediate Casing Spacer: 1945.59 ft* 0.077 ft3/ft * 50% = 224.58 ft3 Total Spacer = 224.58 ft3 = 40.00 bbl Cement: (1500.00 ft fill) 1500.00 ft* 0.077 ft3/ft * 50 % = 173.15 ft3 Total Lead Cement = 173.15 ft3 = 30.84 bbl Sacks of Cement = 139 sks Cement: (1500.00 ft fill) 1500.00 ft* 0.077 ft3/ft * 50 % = 173.15 ft3 Tail Cement = 173.15 ft3 = 30.84 bbl Shoe Joint Volume: (80.00 ft fill) 80.00 ft* 0.2496 ft3/ft = 19.97 ft3 = 3.56 bbl Tail plus shoe joint = 193.12 ft3 = 34.40 bbl Total Tail = 182 sks Total Pipe Capacity: 12000.00 ft* 0.2496 ft3/ft = 2995.33 ft3 = 533.49 bbl Displacement Volume to Shoe Joint: Capacity of Pipe- Shoe Joint = 533.49 bbl -3.56 bbl = 529.93 bbl 12/ 15 Proposal 331430H_Collier Land&Cattle corp 21_1H_v.1 Packet Page -260- 6/10/2014 10.B. HALLIBURTON Job Recommendation 7 5/8"Intermediate Casing Fluid Instructions Fluid 1: Rheologically Enhanced Spacer TUNED SPACER III Fluid Density: 13 lbm/gal 233.2 lbm/bblBarite(Heavy Weight Additive) Fluid Volume: 40 bbl ii Fluid 2: 50/50 Poz Premium,2%Bentonite ECONOCEM(TM) SYSTEM Fluid Weight 14.20 lbm/gal 0.3 % HR-S (Retarder) Slurry Yield: 1.24 ft3/sk 5.618 Gal/sk Fresh Water(Mixing Fluid) Total Mixing Fluid: 5.62 Gal/sk Top of Fluid: 9000 ft Calculated Fill: 1500 ft Volume: 30.84 bbl Calculated Sacks: 139.19 sks Proposed Sacks: 140 sks Estimated Slurry Properties: 24:00 1240 psi Fluid 3: Premium Cement BONDCEM (TM) SYSTEM Fluid Weight 16.40 lbm/gal 0.5 % Halad(R)-344 (Low Fluid Loss Control) Slurry Yield: 1.06 ft3/sk 0.15 % HR-5 (Retarder) Total Mixing Fluid: 4.31 Gal/sk 4.308 Gal/sk Fresh Water(Mixing Fluid) Top of Fluid: 10500 ft Calculated Fill: 1500 ft Volume: 34.40 bbl Calculated Sacks: 181.50 sks Proposed Sacks: 185 sks Estimated Slurry Properties: 24:00 3118 psi Free Water: 0.0 % Actual Fluid Loss: 80 cc/30min Fluid 4: Mud Water Base Mud Displacement Fluid Density: 0 lbm/gal Fluid Volume 529.93 bbl 13/15 Proposal 331430H_Collier Land&Cattle corp 21_1H_v.1 Packet Page-261- 6/10/2014 10.B. HALL-MURTON Job Procedure 7 5/8"Intermediate Casing Detailed Pumping Schedule Fluid# Fluid Fluid Name Surface Estimated Downhole Type Density Avg Rate Volume ibm/gal ! bbl/min 1 Spacer Spacer 13.0 40 bbl 2 Cement Lead Cement 14.2 140 sks 3 Cement Tail Cement 16.4 185 sks 4 Mud Displacement Fluid 529.93 bbl This cement cost estimate is based on information presently available.Actual well conditions will dictate laboratory testing for additive type and concentration. 14/ 15 Proposal 331430H_Collier Land&Cattle corp 21_1H v.1 Packet Page-262- 6/10/2014 10.B. HALLIE3URTON Conditions NOTE The cost in this analysis is good for the materials and/or services outlined within and shall be valid for 30 days from the date of this proposal. In order to meet your needs under this proposal with a high quality of service and responsive timing, Halliburton will be allocating limited resources and committing valuable equipment and materials to your area of operations. Accordingly, the discounts reflected in this proposal are available only for materials and services awarded on a first-call basis. Alternate pricing may apply in the event that Halliburton is awarded work on any basis other than as a first-call provider. The unit prices stated in the proposal are based on our current published prices. The projected equipment, personnel, and material needs are only estimates based on information about the work presently available to us. At the time the work is actually performed, conditions then existing may require an increase or decrease in the equipment, personnel, and/or material needs. Charges will be based upon unit prices in effect at the time the work is performed and the amount of equipment,personnel, and/or material actually utilized in the work. Taxes, if any, are not included. Applicable taxes,if any, will be added to the actual invoice. It is understood and agreed between the parties that with the exception of the subject discounts, all services performed and equipment and materials sold are provided subject to Halliburton's General Terms and Conditions contained in our current price list,(which include LIMITATION OF LIABILITY and WARRANTY provisions),and pursuant to the applicable Halliburton Work Order Contract(whether or not executed by you),unless a Master Service and/or Sales Contract applicable to the services,equipment, or materials supplied exists between your company and Halliburton,in which case the negotiated Master Contract shall govern the relationship between the parties. A copy of the latest version of our General Terms and Conditions is available from your Halliburton representative or at: http://www.halliburton.com/tenns for your convenient review,and we would appreciate receiving any questions you may have about them. Should your company be interested in negotiating a Master Contract with Halliburton,our Law Department would be pleased to work with you to finalize a mutually agreeable contract. In this connection,it is also understood and agreed that Customer will continue to execute Halliburton usual field work orders and/or tickets customarily required by Halliburton in connection with the furnishing of said services,equipment,and materials. Any terms and conditions contained in purchase orders or other documents issued by the customer shall be of no effect except to confirm the type and quantity of services, equipment, and materials to be supplied to the customer. If customer does not have an approved open account with Halliburton or a mutually executed written contract with Halliburton, which dictates payment terms different than those set forth in this clause, all sums due are payable in cash at the time of performance of services or delivery of equipment,products,or materials. If customer has an approved open account,invoices are payable on the twentieth day after date of invoice. Customer agrees to pay interest on any unpaid balance from the date payable until paid at the highest lawful contract rate applicable,but never to exceed 18%per annum. In the event Halliburton employs an attorney for collection of any account,customer agrees to pay attorney fees of 20%of the unpaid account, plus all collection and court costs. 15/15 Proposal 331430H_Collier Land&Cattle corp 21_1H_v.1 Packet Page -263- 6/10/2014 10.B. EXHIBIT 15 WELLBORE SCHEMATIC Packet Page-264- 6/10/2014 10.B., li PROPOSED I I WELLBORE SCHEMATIC II �• III I ''I,1 20"Conductor—Driven down to 250' III III 17-1/2"Hole size i I I I III SURFACE LOCATION: I III III X=479,083.05 Y=741,361.82 IIII 1 1 1 Latitude:26°22'20.102N 1 1 1 1 1 1 1 13-3/8"54.5#J-55 BT&C @ 1950' Longitude: 081°32'27.096W BOTTOMHOLE LOCATION: BOULDER ZONE from 2100'-3500' X=484,408.74 Y=740,617.99 Latitude:26°22'12.953N 12-1/4"Hole size Longitude: 081°31'28.507W I I I 1 1 I I'I'j_ Top of Cement @ 3500' 111111 II III III 1 1 1 1 1 1 1 1 PENETRATION POINT(RUBBLE): 1 1 1 1 1 1 1 1 1 1 1 X=479,493.04 Y=741,304.56 1 1 1 1 1 1 1 1 1 1 1 Latitude:26°22'19.552 1 1 1 1 1 1 I I I I' Longitude: 081°32'22.586W Illlll 1111 1'1 ' 19-5/8"47#P-110 GB Buttress @ 4000' 8-1/2"open hole FORMATION TOPS: GROUND LEVEL--20.6' RKB--27'above GL Top of Cement @ 9000 Lake Trafford (-11,475') Sunniland(-11,654') Rubble zone(-11,839) Target in Rubble(-11,880') Punta Gorda(-11,892') Kick Off Point—11,187' ,'Cyr Top Pumpkin Bay(-13,141') 4----- ��6 Lower Pumpkin Bay(-13,441') �ti, O\ ]tit G @ eS- 0V ^*v� .0 Lower Sunniland(Rubble)landing depth @ 11,903' TVD 7 0 © `° 6-1/2"open hole 0 �` w . �I N 0 0 Landing Point-12,312'MD/11,903"TVD @ 90 Degr DAN A. HUGHES COMPANY, L.P. WELL NAME: COLLIER-HOGAN 20-3H COLLIER COUNTY,FLORIDA LOCATION: Section 20 T47S-R28E BY: JEFF ILSENG DATE: 10/18/12 ■ Packet Page-265- 6/10/2014 10.B. EXHIBIT 16 WELL CONTROL PLAN Packet Page-266- 6/10/2014 10.B. DAN A. HUGHES COMPANY, L.P. WELL CONTROL PLAN COLLIER-HOGAN 20-3H COLLIER COUNTY, FLORIDA SECTION 20 T47S-R28E NOVEMBER 30, 2012 Dan A. Hughes Company, L.P. Collier-Hogan 20-3H Packet Page-267- 6/10/2014 10.B. BOP PROGRAM HOLE SIZE/ Bottom to Top Low/High Test Pressures SIZE PRESURE Arrangement Rams/Annular 17-1/2" 21-3/4" 2M A N/A 12-1/4" 21-3/4" 2M A N/A 8-1/2" 11" 5M P/S/B/A 250-3500/250-2000 6-1/2" 11" 5M P/S/B/A 250-3500/250-2000 P= Pipe Ram B= Blind Ram A=Annular S= Drilling Spool Test 13-3/8" surface casing to 1000#. Test 9-5/8" &7-5/8" casing's to 1500# NOTE: Well Control will use IADC accepted methods. This area is known more for Lost Circulation than for kicks. Pictures of BOP's in Attachments. Florida Dept. of Environmental Protection rules are that the BOP's will be tested every week or called and ask for extension. Dan A. Hughes Company, L.P. Collier-Hogan 20-3H Packet Page-268- 6/10/2014 10.B. EXHIBIT 17 DIRECTIONAL DRILLING PROGRAM Packet Page-269- g er N N 2 n _ r E...... o • • • • • - 6/10/201410.B. ; o • N if o co co O 4f,I.Mili U • • U : - m i r• o -ft.- E .. CD EM o oN _ i ^ g p GG o n J G • _ W p • ▪ g— 0 N N O O V 1 a g :--\ - ° I I _ i g III I I I milli rr i l l 'ilir r i m l g o g o g g g g °M °N °_ °_ °N °M ° R - - , 1 , ° m o 4. g M E 'rn o jam• \ o -- F. •�, E c' Cam• I _ • �_ ._._ _ 0 o c >. oM0 6 ON or- - - - 5 rn La N .� ° --- - - - -- p g n N M =,p0'• O U C O C :. 0 0=0� _ 1 O a'. °3 m - ono° 1 ° _ •- v Cc°c u`7 Zii °0:c= O ..do, cO oW - v)o eL o = 000 - - - - ° O U x Z U a 2. R o, ___-__—.J .._._____ 0 00 I-- M W - - F-• ti aN N S - _.. m 0 E_ N M o �C2: 0 F-N N O : n . 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Planning Report -Database: EDM 5000.1 Single User Db Local Co-ordinate Reference: Well 20-30H 'ompany: Dan A.Hughes TVD Reference: WELL @ 23.0usft(Original Well Elev) /roject: Collier County,Florida MD Reference: WELL @ 23.0usft(Original Well Elev) Site: Collier-Hogan#20-30H North Reference: Grid Well: 20-30H Survey Calculation Method: Minimum Curvature Wellbore: Lateral 1 r1 Design: Lateral 1r1 Project Collier County, Florida Map System: US State Plane 1983 System Datum: Mean Sea Level Geo Datum: North American Datum 1983 Map Zone: Florida Eastern Zone Site Collier-Hogan#20-30H Site Position: Northing: 741,360.33 usft Latitude: 26°22'20.087 N From: Lat/Long Easting: 479,082.09 usft Longitude: 81°32'27.107 W Position Uncertainty: 0.0 usft Slot Radius: 13-3/16" Grid Convergence: -0.24° Well 20-30H Well Position +N/-S 0.0 usft Northing: 741,360.33 usft Latitude: 26°22'20.087 N +El-W 0.0 usft Easting: 479,082.09 usft Longitude: 81°32'27.107 W Position Uncertainty 0.0 usft Wellhead Elevation: 23.0 usft Ground Level: 23.0 usft Wellbore Lateral 1r1 Magnetics Model Name Sample Date Declination Dip Angle Field Strength (°) (°) (nT) W M M_2010 10/22/2012 -5.45 55.92 44,953 Design Lateral 1 r1 Audit Notes: Version: Phase: PROTOTYPE Tie On Depth: 11,187.0 Vertical Section: Depth From(TVD) +N/-S +E/-W Direction (usft) (usft) (usft) (°) 0.0 0.0 0.0 97.95 Plan Sections Measured Vertical Dogleg Build Turn Depth Inclination Azimuth Depth +NI-5 +E/-W Rate Rate Rate TFO (usft) (°) (°) (usft) (usft) (usft) (°l100usft) (°I100usft) (°/100usft) (°) Target 11,187.0 0.00 0.00 11,187.0 0.0 0.0 0.00 0.00 0.00 0.00 12,312.0 90.00 97.95 11,903.2 -99.1 709.3 8.00 8.00 8.71 97.95 16,973.2 90.00 97.95 11,903.0 -743.8 5,325.7 0.00 0.00 0.00 0.00 PBHL-Lateral#20 10/22/2012 11:58:13AM Page 1 COMPASS 5000.1 Build 65 Packet Page-271- Aim Directional Services, LLC 6/10/2014 10.B. Planning Report Database: EDM 5000.1 Single User Db Local Co-ordinate Reference: Well 20-30H �, Company: Dan A.Hughes TVD Reference: WELL @ 23.0usft(Original Well Elev) Project: Collier County,Florida MD Reference: WELL @ 23.0usft(Original Well Elev) Site: Collier-Hogan#20-30H North Reference: Grid Well: 20-30H Survey Calculation Method: Minimum Curvature Weilbore: Lateral 1r1 Design: Lateral 1 r1 Planned Survey Measured Vertical Vertical Dogleg Build Turn Depth Inclination Azimuth Depth +N/-S +E/-W Section Rate Rate Rate (usft) (°) (°) (usft) (usft) (usft) (usft) (°/100usft) (°/100usft) (°1100usft) 11,187.0 0.00 0.00 11,187.0 0.0 0.0 0.0 0.00 0.00 0.00 KOP,Build 8.00°I100' 11,200.0 1.04 97.95 11,200.0 0.0 0.1 0.1 8.00 8.00 0.00 11,250.0 5.04 97.95 11,249.9 -0.4 2.7 2.8 8.00 8.00 0.00 11,300.0 9.04 97.95 11,299.5 -1.2 8.8 8.9 8.00 8.00 0.00 11,350.0 13.04 97.95 11,348.6 -2.6 18.3 18.5 8.00 8.00 0.00 11,400.0 17.04 97.95 11,396.9 -4.3 31.1 31.4 8.00 8.00 0.00 11,450.0 21.04 97.95 11,444.1 -6.6 47.3 47.7 8.00 8.00 0.00 11,500.0 25.04 97.95 11,490.1 -9.3 66.7 67.3 8.00 8.00 0.00 11,550.0 29.04 97.95 11,534.7 -12.5 89.2 90.0 8.00 8.00 0.00 11,600.0 33.04 97.95 11,577.5 -16.0 114.7 115.8 8.00 8.00 0.00 11,650.0 37.04 97.95 11,618.4 -20.0 143.1 144.5 8.00 8.00 0.00 11,700.0 41.04 97.95 11,657.2 -24.3 174.3 176.0 8.00 8.00 0.00 11,750.0 45.04 97.95 11,693.8 -29.1 208.1 210.1 8.00 8.00 0.00 I 11,800.0 49.04 97.95 11,727.8 -34.1 244.3 246.7 8.00 8.00 0.00 11,850.0 53.04 97.95 11,759.3 -39.5 282.8 285.6 8.00 8.00 0.00 11,900.0 57.04 97.95 11,787.9 -45.2 323.4 326.5 8.00 8.00 0.00 11,950.0 61.04 97.95 11,813.6 -51.1 365.9 369.4 8.00 8.00 0.00 12,000.0 65.04 97.95 11,836.3 -57.3 410.0 414.0 8.00 8.00 0.00 12,050.0 69.04 97.95 11,855.8 -63.6 455.6 460.0 8.00 8.00 0.00 12,100.0 73.04 97.95 11,872.0 -70.2 502.4 507.3 8.00 8.00 0.00 12,150.0 77.04 97.95 11,885.0 -76.9 550.2 555.6 8.00 8.00 0.00 12,200.0 81.04 97.95 11,894.5 -83.6 598.8 604.7 8.00 8.00 0.00 12,250.0 85.04 97.95 11,900.5 -90.5 648.0 654.3 8.00 8.00 0.00 12,300.0 89.04 97.95 11,903.1 -97.4 697.4 704.2 8.00 8.00 0.00 12,312.0 90.00 97.95 11,903.2 -99.1 709.3 716.2 8.00 8.00 0.00 Hold 90.00°,97.95°Azimuth 12,400.0 90.00 97.95 11,903.2 -111.2 796.5 804.2 0.00 0.00 0.00 12,500.0 90.00 97.95 11,903.2 -125.1 895.5 904.2 0.00 0.00 0.00 12,600.0 90.00 97.95 11,903.2 -138.9 994.5 1,004.2 0.00 0.00 0.00 12,700.0 90.00 97.95 11,903.2 -152.7 1,093.6 1,104.2 0.00 0.00 0.00 12,800.0 90.00 97.95 11,903.2 -166.6 1,192.6 1,204.2 0.00 0.00 0.00 12,900.0 90.00 97.95 11,903.2 -180.4 1,291.7 1,304.2 0.00 0.00 0.00 13,000.0 90.00 97.95 11,903.2 -194.2 1,390.7 1,404.2 0.00 0.00 0.00 13,1 00.0 90.00 97.95 11,903.2 -208.1 1,489.7 1,504.2 0.00 0.00 0.00 13,200.0 90.00 97.95 11,903.2 -221.9 1,588.8 1,604.2 0.00 0.00 0.00 I 13,300.0 90.00 97.95 11,903.2 -235.7 1,687.8 1,704.2 0.00 0.00 0.00 13,400.0 90.00 97.95 11,903.2 -249.6 1,786.9 1,804.2 0.00 0.00 0.00 I 13,500.0 90.00 97.95 11,903.1 -263.4 1,885.9 1,904.2 0.00 0.00 0.00 I 13,600.0 90.00 97.95 11,903.1 -277.2 1,984.9 2,004.2 0.00 0.00 0.00 13,700.0 90.00 97.95 11,903.1 -291.1 2,084.0 2,104.2 0.00 0.00 0.00 13,800.0 90.00 97.95 11,903.1 -304.9 2,183.0 2,204.2 0.00 0.00 0.00 13,900.0 90.00 97.95 11,903.1 -318.7 2,282.0 2,304.2 0.00 0.00 0.00 14,000.0 90.00 97.95 11,903.1 -332.6 2,381.1 2,404.2 0.00 0.00 0.00 14,100.0 90.00 97.95 11,903.1 -346.4 2,480.1 2,504.2 0.00 0.00 0.00 14,200.0 90.00 97.95 11,903.1 -360.2 2,579.2 2,604.2 0.00 0.00 0.00 14,300.0 90.00 97.95 11,903.1 -374.1 2,678.2 2,704.2 0.00 0.00 0.00 14,400.0 90.00 97.95 11,903.1 -387.9 2,777.2 2,804.2 0.00 0.00 0.00 14,500.0 90.00 97.95 11,903.1 -401.7 2,876.3 2,904.2 0.00 0.00 0.00 14,600.0 90.00 97.95 11,903.1 -415.6 2,975.3 3,004.2 0.00 0.00 0.00 14,700.0 90.00 97.95 11,903.1 -429.4 3,074.4 3,104.2 0.00 0.00 0.00 14,800.0 90.00 97.95 11,903.1 -443.2 3,173.4 3,204.2 0.00 0.00 0.00 14,900.0 90.00 97.95 11,903.1 -457.1 3,272.4 3,304.2 0.00 0.00 0.00 15,000.0 90.00 97.95 11,903.1 -470.9 3,371.5 3,404.2 0.00 0.00 0.00 10/22/2012 11:58:13AM Page 2 COMPASS 5000.1 Build 65 Packet Page-272- Aim Directional Services, LLC 6/10/2014 10.B. Planning Report ,--,patabase: EDM 5000.1 Single User Db Local Co-ordinate Reference: Well 20-30H 'ompany: Dan A.Hughes TVD Reference: WELL @ 23.0usft(Original Well Elev) ?roject: Collier County,Florida MD Reference: WELL @ 23.0usft(Original Well Elev) Site: Collier-Hogan#20-30H North Reference: Grid Well: 20-30H Survey Calculation Method: Minimum Curvature Wellbore: Lateral 1r1 Design: Lateral 1r1 Planned Survey Measured Vertical Vertical Dogleg Build Turn Depth Inclination Azimuth Depth +N/_S +E/-W Section Rate Rate Rate (usft) (°) (°) (usft) (usft) (usft) '` (usft) (°/100usft) (°/100usft) (°/100usft) 15,100.0 90.00 97.95 11,903.1 -484.7 3,470.5 3,504.2 0.00 0.00 0.00 15,200.0 90.00 97.95 11,903.1 -498.6 3,569.5 3,604.2 0.00 0.00 0.00 15,300.0 90.00 97.95 11,903.1 -512.4 3,668.6 3,704.2 0.00 0.00 0.00 15,400.0 90.00 97.95 11,903.1 -526.2 3,767.6 3,804.2 0.00 0.00 0.00 15,500.0 90.00 97.95 11,903.1 -540.1 3,866.7 3,904.2 0.00 0.00 0.00 15,600.0 90.00 97.95 11,903.1 -553.9 3,965.7 4,004.2 0.00 0.00 0.00 15,700.0 90.00 97.95 11,903.1 -567.7 4,064.7 4,104.2 0.00 0.00 0.00 15,800.0 90.00 97.95 11,903.0 -581.5 4,163.8 4,204.2 0.00 0.00 0.00 15,900.0 90.00 97.95 11,903.0 -595.4 4,262.8 4,304.2 0.00 0.00 0.00 16,000.0 90.00 97.95 11,903.0 -609.2 4,361.9 4,404.2 0.00 0.00 0.00 16,100.0 90.00 97.95 11,903.0 -623.0 4,460.9 4,504.2 0.00 0.00 0.00 16,200.0 90.00 97.95 11,903.0 -636.9 4,559.9 4,604.2 0.00 0.00 0.00 16,300.0 90.00 97.95 11,903.0 -650.7 4,659.0 4,704.2 0.00 0.00 0.00 16,400.0 90.00 97.95 11,903.0 -664.5 4,758.0 4,804.2 0.00 0.00 0.00 16,500.0 90.00 97.95 11,903.0 -678.4 4,857.1 4,904.2 0.00 0.00 0.00 16,600.0 90.00 97.95 11,903.0 -692.2 4,956.1 5,004.2 0.00 0.00 0.00 16,700.0 90.00 97.95 11,903.0 -706.0 5,055.1 5,104.2 0.00 0.00 0.00 16,800.0 90.00 97.95 11,903.0 -719.9 5,154.2 5,204.2 0.00 0.00 0.00 16,900.0 90.00 97.95 11,903.0 -733.7 5,253.2 5,304.2 0.00 0.00 0.00 16,973.2 90.00 97.95 11,903.0 -743.8 5,325.7 5,377.4 0.00 0.00 0.00 PBHL-Lateral Design Targets Target Name -hit/miss target Dip Angle Dip Dir. TVD +N/-S +E/-W Northing fasting -Shape (0) (0) (usft) (usft) (usft) (usft) (usft) Latitude Longitude' PBHL-Lateral#20-3( 0.00 0.00 11,903.0 -743.8 5,325.7 740,616.50 484,407.78 26°22'12.938 N 81°31'28.518 W -plan hits target center -Point Plan Annotations Measured Vertical Local Coordinates Depth Depth +N/-S +E/-W (usft) (usft) (usft) (usft) Comment 11,187.0 11,187.0 0.0 0.0 KOP,Build 8.00°/100' 12,312.0 11,903.2 -99.1 709.3 Hold 90.00°,97.95°Azimuth 16,973.2 11,903.0 -743.8 5,325.7 PBHL-Lateral „....1 10/22/2012 11:58:13AM Page 3 COMPASS 5000.1 Build 65 Packet Page-273- 6/10/2014 10.B. EXHIBIT 18 DRILLING FLUIDS PROGRAM Packet Page-274- 6/10/2014 10.B. ii) Dynamic �. Drilling Fluids Proposal Drilling Fluids DAN A HUGHES COMPANY Collier-Hogan 20-3H Section 20 T47S-R28E Collier County, Florida it r :�' - '' ice-.i.' 1. LL 1 r,, , ;lilt lid. , 111 fQ Attention: Mr. Jeff Ilseng 5350 S. Staples; Suite 215, Corpus Christi, Texas 78411 / Tel: (361) 985-2600/ Fax: (361)985-2604 Packet Page-275- Dynamic 6/10/2014 10.B. 11 )11 Drilling Fluids October 23, 2012 Mr. Jeff Ilseng Dan A. Hughes Company P.O. Drawer 669 Beeville, Texas 78104 Dear Mr. Ilseng: Thank you for giving Dynamic Drilling Fluids this opportunity to serve you by submitting the enclosed drilling fluid program for your Collier-Hogan 20-3H well to be drilled in Collier County, Florida. I sincerely hope this information will aid you in planning your drilling operation. To prepare this program, we have used well data from several wells located in the vicinity of your proposed location. This information is included in the "Reference Wells" section of this program for your use and evaluation. We recommend a Lightly Dispersed /Polymer mud system, supplemented with shale stabilizer down to intermediate casing point. Fresh water/Zan Plex/HEC polymer. The estimated discounted cost of $295,000 is based on a minimum number of 80-85 days assuming no unusual hole problems are encountered. We at Dynamic Drilling Fluids would be very pleased to be awarded the privilege of supplying the drilling fluid for your well and will strive for your complete satisfaction in both engineering service and product performance. Should you have any questions concerning our recommendations or if we may be of further service, please do not hesitate to call upon us at any time. Sincerely, Jason Ferguson Packet Page-276- Project Summary Dan A. Huc 6/10/2014 10.B. Collier-Hogan 20-3H Casing Hole Casing ND/MD Mud Mud Sum Size Size Program System Weight Days (in) (in) (ft) (PPg) 17 1/2" 0 Massive sand, Lost Circulation,Water Flow 8.4 0 Mix High Vis GEL Sweep Be prepared to control drill to allow solids control equipment to handle sand pump $° High viscosity sweeps while drilling Mud up viscosity 50-60 sec/qt 13 3/8" 1950' Gel/Polymer/Lime 8.8 12 1/4" R BOULDER ZONE 2,100'-3,500' 8.6 Massive Sand, Salt Water influx and Lost Circulation in Boulder Zone Expect complete lost returns in the upper boulder zone. Plan on drilling blind with no returns pumping massive GEL/Lime sweeps At TD mix and pump (2) massive, thick GEL sweeps. Prior to POOH to run casing mix and spot 80bbl GEL slurry on bottom 9-5/8" 4,000' Do not rotate pipe out when POOH 9.1 8 1/2" Adjust MW as hole conditions dictate 8.8 Reduce Rheological properties to 34-38 sec/qt Monitor Chlorides and calcium closely for Salt n Water flows through this section. Increase MW if necessary to control Salt Water flow } Salt Gel will be used if Chlorides/calcium are too high for GEL, Treat Calcium with Soda 1 Ash to maintain 80-120 ppm KOP 11,187' } MIL-Lube may be added 1-3% by volume to 11,836'TVD reduce torque and drag. Sweep hole with 7-5/8" 12,000'MD 15-20 ppb graphite sweeps to reduce torque 9.1 6 1/2 Lateral section Lateral section will be drilled with HEC/Zan Plex Polymer system Pi Utilizing High Vis polymer/graphite sweeps Weighted Calcium Carbonate sweeps Lower Sun niland is expected to be normal 11,903'TVD pressure. Build slugs brine water or Calcium 16,900'MD Carbonate 85 Packet Page -277- 6/10/2014 10.B. Dan A. Hughes Collier-Hogan 20-3H 0' —1 ,350' 17 1/2" Hole — Set 13-3/8" Surface Casing Drilling Fluid System Spud Mud Key Products Mil-Gel, Mil-Bar, Polymer, Lime, SAPP, Caustic Soda, Fiber M solids Control Linear Motion Shakers, Desilter/Desander, Dilution. Potential Problems !Massive Sand section, Lost Circulation,water flows • Interval Drilling Fluid Properties Depth Mud Mud Plastic Yield API HTHP Interval Weight Viscosity Viscosity Point Fluid Loss Fluid Loss (ft) (ppg) (sec/qt) (cp) (Ib/100ft2) (ml/30min) (m1/30min) 0'-1,950' I 8.4-8.8 50 to 60 I 4 to 8 12 to 18 N/C I N/A • This interval should be drilled with a Flocculated GEL mud system supplemented with high viscosity sweeps and MF 55 (Polyacrylate/Polyacrylate Co-Polymer). • Control Drill this section due to Massive Sand sections to allow solids control equipment to process fluid. • Some offsets experienced Lost Circulation in this section • Run all solids control equipment to maintain MW 8.8 ppg • Set 13-3/8 inch Surface Casing at approximately 1,950' feet. Packet Page -278- 6/10/2014 10.B. Dan A. Hughes Collier-Hogan 20-3H 1 ,950' 4,000' 12-1/4" Hole — Set 9 5/8" Casing Drilling Fluid System 'Gel/Polymer System Key Products Gel, Barite, Caustic Soda, Mica M, Fiber M, MF 55, Lime Solids Control Linear Motion Shaker, Dilution. Potential Problems Massive Sand Sections, Salt Water Influx, LOST Circulation in boulder Zone, torque and drag Interval Drilling Fluid Properties Depth Mud Mud Plastic Yield API HTHP Interval Weight Viscosity Viscosity Point Fluid Loss Fluid Loss (ft) (ppg) (sec/qt) (cp) (lb/1 00ft2) (m1/30min) (m1130min) 1,950'-4,000' 9.0-9.2 40 to 44 10 to 16 ' 10 to 12 25-20 N/A • After drilling cement, casing shoe, and 10 feet of formation, test casing seat to company specifications. • After test holds, continue drilling with a native mud supplemented with polymer sweeps to improve hole cleaning . • Lost Returns are expected in the Boulder Zone 2,100'-3,500' • The section will be drilled blind with no returns. While drilling blind build and pump flocculated Gel/MICA M sweeps to keep cutting off bottom and reduce potential pack off. Continue pumping GEL sweeps thru this section. Washing and reaming connections is highly recommended. • Once the Boulder Section is drilled Circulate and pump 2-3 thick, flocculated GEL/Lime sweeps at TD. • Once hole is clean mix and spot (80bbl) Gel Slurry on bottom before pulling out to run 9-5/8" casing. Packet Page -279- 6/10/2014 10.B. Dan A. Hughes Collier-Hogan 20-3H 4,000' - 11 ,836'TVD, 12,000'MD 8 1/2" Hole Drilling Fluid System Lightly dispersed polymer system Key Products Gel, Lignite, MF 55, Caustic, Soda Ash, MICA M, Mil-Lube, Salt Gel, Drispac Solids Control Linear Motion Shaker, Dilution. Potential Problems Massive Sand, Hole Cleaning, Lost Circulation, Salt Water Flow, torque and drag Interval Drilling Fluid Properties Depth Mud Mud Plastic Yield API HTHP Interval Weight Viscosity Viscosity Point Fluid Loss Fluid Loss (ft) (ppg) (sec/qt) (cp) (lb/100ft2) (ml/30min) (m1/30min) 4,000'-6,000' 8.6-8.9 36-40 10 to 16 10 to 14 25-20 6,000'- 11,000' 8.9-9.1 36-40 10 to 16 10 to 14 25-20 _ 11,000-11,836'TVD 9.1 40-48 16 to 22 ' 10 to 14 20-10 12,000' MD • Set 9-5/8" Casing at 4,000' • Drill out with Lightly dispersed mud, pump high VIS Gel/Polymer sweeps as needed • Salt Water Flows are expected in this section, monitor Chlorides and Calcium closely. • Adjust Mud Weight accordingly to control Salt Water flow. • Maintain pH 9.5, added Soda Ash to control and maintain Calcium • Recommend added 3-4% by volume if Mil-Lube to active system. • Added in sweep form +/- 11,187' Kick off point • Run 15-20 ppb Graphite sweeps to help reduce torque • Maintain pH 10-10.5 with Caustic Soda, add small amounts of Biocide as needed Formation Tops Ground Level 23' Lake Trafford (-11,475') Sunniland (-11,654') Rubble Zone (-11,839') Target (-11,880') Punta Gorda (-11,892') Packet Page -280- 1 6/10/2014 10.B. Collier-Hogan 20-3H 11 ,836'TVD, 12,000'MD- 11 ,903' TVD, 16,900'MD 6 1/2" Hole Drilling Fluid System Zan Plex/HEC polymer system Key Products Gel, Lignite, MF 55, Caustic, Soda Ash, MICA M, Mil-Lube, Salt Gel, Drispac Solids Control Linear Motion Shaker, Dilution. Potential Problems Massive Sand, Hole Cleaning, Lost Circulation, Salt Water Flow, torque and drag Interval Drilling Fluid Properties Depth Mud Mud Plastic Yield API HTHP Interval Weight Viscosity Viscosity Point Fluid Loss Fluid Loss (ft) (ppg) (sec/qt) (cp) (Ib/100ft2) (ml/30min) (ml/30min) 11,836'TVD-16,900'MD 8.8-9.0 36-40 ! 10 to 16 10 to 14 25-20 • After 7 5/8" casing is run and cemented discard the saltwater contaminated fluids and drill the lower Sunniland with Zan Plex/HEC Polymer. • If Saltwater flow occur, there is the option to pump the contaminated system to the boulder zone and then build new system using fresh water. • Normal pressure is expected if MW is needed weight up with Calcium Carbonate, if its Saltwater weight up with Brine Water or Salt. • Mix Calcium Carbonate for Slugs for fresh water • Mix Brine water or Sack Salt if salt water is present. • Mix and pump 15-20 ppb graphite sweeps as need while sliding. Packet Page -281- 6/10/2014 10.B. r-. EXHIBIT 19 PERFORMANCE BOND Packet Page-282- 6/10/2014 10.6. FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION PERFORMANCE BOND FOR MULTIPLE WELLS Form 2A Rile 62C-25 008 This form may be used to effect bond coverage for single or multiple wells and,in conjunction with Form 5A,those geophysical operations defined in Section 62C-26.007, Florida Administrative Code. In either case,this bond(or other form of authorized security)must be approved by the Department before the related applications will bo processed. File with tho Chief, Florida Geological Survey, 903 W;st Tennessee Street, Tallahassee, Florida 32304.7700 (phone 850/487-2219 and 486-4191;fax 850/488-8066). Know All Men by These Presents That We, Dan A.Hughes Company,L.P. (Operators Name and Address) P.O. Drawer 669 Beeville,TX 78104-0069 Phone Number: (361)358-3752 Fax Number: I As Principal,and RLI Insurance Company (Siaeys Name end Address) 8 Greenway Plaza Suite 400 Houston,TX 77046 Phone Number: (713)961-1300 Fax Number: (713) 961-0285 as surety,are hold horoby and firmly bound unto the Governor of the Stete of Florida in the penal sum of$1,000,000.00 lawful money of the United States,for the faithful payment of which wo hereby bind ourselves,our heirs,executors,administrators, and assigns. The condition of this obligation is that the above principal properly plug the ten or fewer existing and future wells named below(strike one if appropriate)in Florida for which the principal is or will be (strike one If appropriate)responsible,and otherwise complies with Chapter 377,Part 1,Florida Statutes,Chapter 62C-29,Florida Administrative Code,and with all Special Permit Conditions of the Department. The permit numbers of the ten well to be covered are Whon the above principal plugs said wells and restores said sites or when geophysical rider Form 5A is attached,restores lands traversed during geophysical operations defined in Section 62C-26.007, Florida Administrative Code, In compliance with the foregoing Laws,Rules and Regulations,and Special Permit Conditions of tho Department,this obligation is void;otherwise,tho same shall remain in full force and effect. Effective date of this bond: September 6,2012 . (The ten walls to be covered by this bond and whose permit numbers appear above must be included by name,location and permit number, and listed on the back of this form or on an attached page. Future wells,up to a total of ten wells,may be added to this bond at a futuro date,by reference.) Principal Company: Dan A.Hughes Company,L.P. Agent: Title: Via., ��`: Li / •f`... 14 d La Signature: Date: #.-11-10--- Surety Company: RLI Insurance Company Agent: Attorney in Fact: Jason T.Kilp Signature: ./..-----✓ % h , Date: ptember 6,2 ,. i. - } r Florida Resident Agent Company: Sanger&Altgeit,LLD . .. • .,may Agent: Joe Haynes P.O sox 12365 San Antonio, TX 78212 210-734-6677/210-734-6771 Addross/Phono/Fax: Serial Number of Bond: RL 7.78 Signature: -0014e )• 42h Date: 9/10 f Z. Approved as to Form and Logality: Approved by Department: DEP Attorney Department Approving Authority Data Title Data DEP 514021416) ++e1 3116 Packet Page-283- 6/10/2014 10.B. RLI. .......... RLB001477B Vi Altblonor POWER OF ATTORNEY A CMisbn of Au lnsumncO GxnAarry RLI Insurance Company Know All Men by These Presents: That the ELI INSURANCE COMPANY, a corporation organized and existing under the laws of the State of Illinois, and authorized and licensed to do business in all states and the District of Columbia does hereby make, constitute and appoint: JASON T.KILPATRICK in the City of HOUSTON , State of TEXAS , as Attorney-in-Fact, with full power and authority hereby conferred upon him to sign, execute,acknowledge and deliver for and on its behalf as Surety and as its act and deed,all of the following classes of documents to-wit: $1,000,000.00 Indemnity, Surety and Undertakings that may be desired by contract,or may be given in any action or proceeding in any court of law or equity;policies indemnifying employers against loss or damage caused by the misconduct of their employees;official, bail and surety and fidelity bonds.Indemnity in all cases where indemnity may be lawfully given;and with full power and authority to execute consents and waivers to modify or change or extend any bond or document executed for this Company,and to compromise and settle any and all claims or demands made or existing against said Company. The RLI INSURANCE COMPANY further certifies that the following is a true and exact copy of a Resolution adopted by the Board of Directors of ELI Insurance Company,and now in force to-wit: °All bonds,policies,undertakings, Powers of Attorney, or other obligations of the corporation shall be executed in the corporate name of the Company by the President, Secretary,any Assistant Secretary,Treasurer, or any Vice President,or by such other officers as the Board of Directors may authorize.The President, any Vice President, Secretary,any Assistant Secretary, or the Treasurer may appoint Attorneys-in-Fact or Agents who shall have authority to issue bonds,policies, or undertakings in the name of the Company. The corporate seal is not necessary for the validity of any bonds,policies, undertakings, Powers-of-Attorney,or other obligations of �� the corporation.The signature of any such officer and the corporate seal may be printed by facsimile." (Blue shaded areas above indicate authenticity) IN WITNESS WHEREOF, the ELI Insurance Company has caused these presents to be executed by its PRESIDENT with its corporate seal affixed this 0001u1;1 ww/4i „ ATTEST: �• Pp��.Q •••' % RLIINSURAN ECOMPANY , J - ' z: •.... • 0 . , c: .--0, 1 . • SEAL : - , 0 CORPORATE SECRETARY •� PRESIDENT ''' State of Illinois ) J��i • `.I.N.•` , I ��'����L0�5 County of Peoria ) ''!/tltllltlttt%" On this 6 day of September 2012 before me, a Notary Public, personally appeared Michael J. Stone and Jean M. Stephenson, who being by me duly sworn, acknowledged that they signed the above Power of Attorney as President and Corporate Secretary, respectively, of the said RLI INSURANCE COMPANY,and acknowledged said instrument to be the voluntary act and deed of said corporation. Illik Notary Public ; �CYS?>" "OFFICIAL SEAL" 1 . 1.r. NOTARY euc JACQUELINE M.BOCKLER �� STATE OF MOON COMMISSION EXPIRES 03/01/14 1 I SPA028(03/11) Packet Page-284- 6/10/2014 10.B. RILL R1.1 Insurance Company Peoria, Illinois 61615 TEXAS POLICYHOLDER NOTICE TEXAS TEXAS IMPORTANT NOTICE AVISO IMPORTANTE To obtain information or make a complaint: Para obtener informacion o para someter una queja: You may call RLI Insurance Company's Usted puede llamar al numero de telefono gratis de toll-free telephone number for information or to RLI Insurance Company's para informacion o make a complaint at: para someter una queja al: 1-800-444-0406 1-800-444-0406 You may also write to RLI Insurance Company Usted tambien puede escribir a at: RLI Insurance Company: RLI Insurance Company RLI Insurance Company 9025 N.Lindbergh Drive 9025 N. Lindbergh Drive Peoria,Illinois 61615 Peoria, Illinois 61615 You may contact the Texas Department of Insurance to Puede comunicarse con el Departamento de Seguros de obtain information on companies, coverages,rights or Texas para obtener informacion acerca de companias, - complaints at: coberturas,derechos o quejas al: 1-800-252-3439 1-800-252-3439 You may also write the Texas Department of Puede escribir al Departamento de Seguros de Texas: Insurance: P.O.Box 149104 P.O.Box 149104 Austin,Texas 78714-9104 Austin,Texas 78714-9104 Fax Number: (512)475-1771 Fax Number: (512)475-1771 Web: http://www.tdi.state.tx.us Web: http://www.tdi.state.tx.us E-mail: ConsumerProtection@tdi.state.tx.us tdi.state.tx.us E-mail: ConsumerProtection @tdi.state.tx.us DISPUTAS SOBRE PRIMAS 0 RECLAMOS: PREMIUM OR CLAIM DISPUTES: Si tiene una disputa concerniente a su prima o a un Should you have a dispute concerning your premium or reclamo,debe comunicarse con el agente primero. Si about a claim you should contact the agent first.If the no se resuelve la disputa,puede entonces comunicarse dispute is not resolved, you may contact the Texas con el departamento (TDI). Department of Insurance. UNA ESTE AVISO A SU POLIZA: ATTACH THIS NOTICE TO YOUR POLICY: Este aviso es solo para proposito de informacion y no This notice is for information only and does not se convierte en parte o condicion del documento become a part or condition of the attached document. adjunto. Packet Page-285- 6/10/2014 10.B. Ch.377 ENERGY RESOURCES F.S. 2013 F.S. 2013 CHAPTER 377 Department of. been extende ENERGY RESOURCES September 1, History.--s.1,ch. PART I REGULATION OF OIL AND GAS RESOURCES (ss. 377.01-377.43) 377.03 Ext, PART Ii PLANNING AND DEVELOPMENT (ss.377.601-377.712) Florida is furths the name of th PART III RENEWABLE ENERGY AND GREEN GOVERNMENT PROGRAMS (ss.377.801-377.810) further extensio Interstate Oil C■ determine if anc PART I 377.2433 Protection of natural gas storage facilities; the state to with remedies. notice as prov REGULATION OF OIL AND GAS RESOURCES 377.2434 Property rights to injected natural gas. Governor shalt c 377.2435 Rule adoption relating to natural gas from said comp. 377.01 Governor to enter into interstate compact storage. authority to give to conserve oil and gas. 377.244 Conditions for granting permits for surface all steps necess 377.03 Extension of compact. exploratory and extraction operations. of the state frorr 377.04 Official report of state. 377.245 Provision for distribution of earnings to History.--s.3,ch.2 377.06 Public policy of state concerning natural . lessees or owners of the fractional resources of oil and gas. undivided mineral rights not owned by 377.04 Offic 377.07 Division of Resource Management; applicant for permit under ss. 377.243 shall be the offii powers, duties, and authority. and 377.244. Interstate Oil Co 377.075 Division of Technical Services; geological 377.247 Designation and distribution of earnings compact to cons' functions. owed to owners of mineral rights who perform for the 377.10 Certain persons not to be employed by are unknown or unlocated. member of tya� division. 377.25 Production pools; drilling units. provided, th appoint an a. 377.26 Location of wells. 377.18 Common sources of oil and gas. 377.19 Definitions. 377.27 Drilling units. or her stead as tr 377.20 Waste prohibited. 377.28 Cycling,pooling,and unitization of oil and a member of sa sentative shall to 377.21 Jurisdiction of division. 377.29 Agreements in interest of conservation. Constitution,whir 377.22 Rules and orders. g State. 377.23 Monthly reports to division. 377.30 Limitation on amount of oil or gas taken. History.-s.4,ch.zz, 377.24 Notice of intention to drill well; permits; 377.31 Evidence of rules and orders. 377.32 Issuance of subpoenas; service, etc. abandoned wells and dry holes. 377.06 Public 377.33 Injunctions against division. 377.2407 Natural gas storage facility permit appli- resources of oil cation to inject gas into and recover gas 377.34 Actions and injunctions by division. public policy of tf 377.35 Suits, proceedings, appeals, etc. from a natural gas storage reservoir, natural resources 377.24075 Exemption from public records require 377.36 False entries and statements; incomplete products made frc entries; penalties. ments. 377.37 Penalties. waste of natural rc 377.2408 Application to conduct geophysical opera- 377.371 Pollution prohibited; reporting, liability. and adjustment of tions. the land in which tl 377.38 Illegal oil, gas, and other products; sale, 377.2409 Geophysical activities; confidential infor and producers of c mation; penalties. purchase, acquisition, transportation, made from oil and refining,processing,or handling prohib resources and 377.241 Criteria for issuance of permits. ited. p 377.2411 Lawful right to drill, develop, or explore. 377.39 Seizure and sale of illegal oil, gas, or property, and put 377.242 Permits for drilling or exploring and ex- state and other int product. . indicated b tracting through well holes or by other 377.40 Negligently permitting gas and oil to go y the p; means. declared that unde wild or out of control. the public interest 377.2421 Division to review federal applications. 377.41 • Disposition of fines. motes conservatio 377.2424 Conditions for granting permits for geo- 377.42 Big Cypress Swamp Advisory Committee. readil available t physical operations. 377.43 Disbursement of funds received for da industrial consum 377.2425 Manner of providing security for geophy- mages caused by the Deepwater Hor accumulation of la sical exploration, drilling, and produc- izon oil spill. orderly withdrawal tion. c.. 377.2426 Abandonment of geophysical holes. 377.01 Governor to enter into interstate corn- peak demand. It is 377.243 Conditions for granting permits for extrac- g; limit, restrict, or 9 g P pact to conserve oil and gas.-The Governor of the law. tion through well holes. state is hereby authorized and directed, for and in the ` History.-s.1,ch. 377.2431 Conditions for granting permits for natural name of the state, to join with other states in the 4', gas storage facilities. interstate compact to conserve oil and gas,which was 377.07 Divisic 377.2432 Natural gas storage facilities;protection of heretofore executed in the City of Dallas, Texas, on ty powers,- duties, . water supplies. February 16, 1935, and is now deposited with the Resource Manac 1850 Packet Page-286- F.S.2013 ' F.S. 2013 ENERGY RESOURCES 6/10/2014 10.B. Department of State of the United States,and which has Environmental Protection is hereby vested with i• been extended with the consent of Congress to power, authority, and duty to administer, carry out, September 1, 1947. • and enforce the provisions of this law as directed in 1s. /"..\ History.—s.1,ch.22823,1945. 370.02(3). 1- 3) History.—s.2,ch.22819.1945;S.8,ch.61-231;ss.25,35,ch.69-106;s.64, 377.03 Extension of compact.—The Governor of c1;' ;S.307.ch.94-356. Note.—Repealed by s.4,ch.94-356. '12) '. '" Florida is further authorized and empowered,for and in I. t the name of the state, to execute agreements for the 377.075 Division of Technical Services; geolo- ss. 377.801-377.810) further extension of the expiration date of the said"The gloat functions.— Interstate Oil Compact"to conserve oil and gas, and to (1) PERSONNEL.—The Department of Environ- determine if and when it shall be for the best interest of mental Protection shall, through the Division of Tech- -,_ Jral gas storage facilities, ' the state to withdraw from said compact upon 60 days' nical Services, establish the Florida Geological Survey .' notice as provided by its terms. In the event the and employ such suitable persons as in the judgment of 1 injected natural gas. Governor shall determine that the state should withdraw the department may be necessary to conduct the 'elating to natural gas from said compact he or she shall have full power and geological survey of the state. authority to give necessary notice and to take any and (2) DISBURSEMENTS; SURVEY EXPENSES.- tnting permits for surface all steps necessary and proper to effect the withdrawal For the purpose of expeditiously and thoroughly carry- 1 extraction operations. of the state from said compact. ing out the geological survey,there shall be included a History--s.3,ch.22823,1945;s.619,oh.95-148. tribution of earnings to sufficient appropriation in the annual General Appro- vners of the fractional `` 377.04 Official report of state.—The Governor priations Act.The amount annually appropriated, or so !rai rights not owned by much thereof as may be necessary, shall be expended armit under ss. 377.243 shall be the official representative of the state on the for the salaries and for the contingent expenses of the >' Interstate Oil Compact Commission,provided for in the survey, including compensation of all temporary and distribution of earnings 2, compact to conserve oil and gas,and shall exercise and permanent assistance;travel expenses of the division, perform for the state all the powers and duties as a s nl cated.l rights who member of the Interstate Oil Compact Commission; purchase of materials,or other necessary expenses for provided, that the Governor shall have the authority to outfit;expenses incurred in providing for the transporta- drilling units. :` appoint an assistant representative who shall act in his tion, arrangement, and proper exhibition of the geolo- . or her stead as the official representative of the state as gical and other collections made under the provisions of ' a member of said commission. Said assistant repre this law and for postage,stationery,and printing and the tnd unitization of oil and sentative shall take the oath of office prescribed by the printing and engraving of maps and sections to illustrate Constitution,which shall be filed with the Department of the annual reports. erest of conservation. (3) STATE GEOLOGIST.—The geological functions unt of oil or gas taken. State. of the division shall be under the direction of a full-time and orders. History.--s.4,ch.22823,1945;ss.10,35,ch.69-106;s.620,ch.95148. and service, etc. ,- professional geologist who is registered in this state, 377.06 Public policy of state concerning natural who shall be of established reputation,and who shall be t di> n. _ - resources of oil and gas.—It is hereby declared the known as the State Geologist. :tk division. (4) DUTIES.—The Florida Geological a, als, etc. public policy of this state to conserve and control the O g' al Survey shall natural resources of oil and gas in this state, and the make periodic reports of the progress of its surveys and statements; incomplete products made from oil and gas in this state;to prevent explorations of minerals,water supply,and other natural s. waste of natural resources;to provide for the protection resources of the state and shall include in such reports a and adjustment of the correlative rights of the owners of full description of such surveys and explorations, d; reporting, liability. - the land in which the natural resources lie,of the owners occurrences and location of mineral and other deposits d other products; sale, and producers of oil and gas resources and the products of value, surface and subterranean water supply, and isition, transportation, made from oil and gas,and of others interested in these 'the best and most economical method of development, ing,or handling prohib- 2, resources and products; to safeguard the health, together with analyses of sediments, minerals, and of illegal oil, gas, or property, and public welfare of the residents of this mineral waters,with maps,charts, and drawings of the g g state and other interested persons and for all purposes same. , indicated by the provisions in this section. Further, it is (a) The State Geologist and his or her professional ing gas and oil to go _, declared that underground storage of natural gas is in staff shall conduct field and laboratory investigations of �trol• the public interest because underground storage pro the geologic structure of this state; the nature and motes conservation of natural gas; makes gas more composition of the igneous, metamorphic, and sedi- p Advisory Committee.- y.-readily available to the domestic, commercial, and mentary rocks and economic minerals; the nature of unds received for da- industrial consumers of this state; and allows the physiographic features; and other aspects of geology y the Deepwater Hor- waccumulation of large quantities of gas in reserve for and hydrology which may lead to a better understanding • orderly withdrawal during emergencies or periods of of the geology of this state,with special reference to the = Practical bearing of the subjects peak demand. It is not the intention of this section to P g j cts of such investigations into interstate corn limit,restrict,or modify in any way the provisions of this on the well-being of this state and the citizens of this —The Governor of the;, v k s: law. state. ,irected, for and in the':;? ., , History.—s.1,ch.22819,1945;s.25,ch.90-54;s.5,ch.2013-205. (b) The State Geologist shall provide technical i other states in the= assistance to, and consult and cooperate with, the ii and gas,which was ; F 377.07 Division of Resource Management; general public; other agencies of federal, state, and of Dallas, Texas on v deposited with the+� Resource Managementtofrithe Deparrtment of sh call government; lso consider scientific,educ State > 1851 • Packet Pare-287- 6/10/201410.8. j ,- i.." Ch.377 ENERGY RESOURCES F.S. 2013 F.S. 2013 questions related to the geology and hydrology of the the location in latitude and longitude of all oil field wells - term includes the state which are of value to the people of this state. and gas field wells, oil test wells and gas test wells, t` (c) The State Geologist shall prepare and publish nonoil test wells and non as test wells,and strati ra hic containing oil e O g P P p g g P � � pool" mean the Florida Geological Survey reports, with necessary test wells, and seismic line recording points, or any reservoir is invol` illustrations and maps, which provide general and other deep, geologic information that may provide the term "pool," rr detailed descriptions of the geology and earth resources useful subsurface information for industry and other g (5) "Gas" mea of this state, shall maintain a comprehensive research public agencies.When available,fluid levels in any oil, ii head gas, and all library,open to the public,of published and unpublished gas, or other test well shall be measured or obtained i in subsection (15) geological information,and shall otherwise disseminate from the operator or owner and shall be tested for water (6) "Horizontal geological information to the citizens of this state. chemistry.The department may use for such tasks such 1 the wellbore in a t (d) The department may contract with the govern- funds from the Petroleum Exploration and Production r f tion within 10 degi ment of the United States,or any agency or instrumen- Bond Trust Fund as may be appropriated by the r formation. tality thereof, or with this state or any county, munici- Legislature. (7) "Illegal gas pality, district authority, or political subdivision of this (5) COLLECTION OF GEOLOGICAL SPECIMENS. i within the state fry state, or with any private person, to assist in providing The Division of Technical Services shall, through the t:: amount allowed b this state with geologic information or to accomplish the geological staff, make collections of specimens illus- $> division, as distinc purposes of this act. The department may receive and trating the geological and mineral features of the state, u State of Florida fr accept from any federal agency, state agency,or other including lands beneath the sovereign water of this +. the amount so ally public body grants or loans for or in aid of the purposes state. The staff shall operate and maintain a central, = (8) "Illegal oil" of this act,and the department may receive and accept statewide repository for such specimens, for well * within the state fri aid, contributions, or loans from any other source of cuttings and cores and related surface and subsurface k:: amount allowed I money, property, labor, or other thing of value to be samples, and associated supplemental data. division, as distinl held, used,and applied only for the purposes for which (6) NOTIFYING OWNER OF DEPOSITS LO- state from a well r such aid, grants, or loans were made. CATED.—The State Geologist and his or her assis- so allowed, which (e) The Florida Geological Survey shall cooperate or tants,when they discover any mineral deposits or other (9) "Illegal/9R coordinate with, or act as a clearinghouse for, other geologic substance of value, shall make a reasonable any part of agencies funded by the state who contribute to the study attempt to notify the owner of the land upon which such j< ss in part,from i. or revision of geologic interpretations and nomencla- deposits occur. thereof,as distin 1 ture. The State Geologist, through the Division of History.—s.2 oh.28145 1953;s.4 ch.61-231;ss.25,35 oh.69-106;S. 322, s r g g g oh.71-136;s.1,d,.73.305;S.65,ch.79 65;s.1,ch.83-178;ss.308,483,ch. c product processec Technical Services, shall designate areas as "state 94-356;S.1020,ch.95-148;s.72,ch.96-323;s.49,ch.97-96. g or illegal gas. geological sites" or "state invertebrate paleontological Note.—Former ss.370.04,373.011. ': (10)"Lateral stc sites" pursuant to the provisions of this section, which 377.10 Certain persons not to be employed b 1--, projection up to areas are determined to be of great and continuing P by V. horizontal extent significance to the scientific study and public under- division.—No person in the employ of, or holding any L.g y P official connection or position with any person, firm, i. natural gas storag standing of the geological history of this state. No P y p :: privately owned site shall be so designated without the partnership, corporation, or association of any kind, (11)"Native gai express written consent of the private surface and engaged in the business of buying or selling mineral rs within this state r mineral owners of the site. The State Geologist shall leases, drilling wells in the search of oil or gas, outside the state, producing, transporting, refining, ,or distributing oil or into a permitted m provide written notice to the surface and mineral owners n (12)"Natural a and occupants of a site designated by the State gas shall hold any position under, or be employed by, ( ) 9 Geologist as a state geological or invertebrate paleon the Division of Resource Management in the prosecu- I- ground reservoir f tion of its duties under this law. Ei been produced an tological site.Once such a site has been so designated, History.—s.5,ch.22819,1945;ss.25,35,ch.69-106;s.66,ch.79-65. underground stora no person may conduct geological or paleontological subsurface structi field investigations on the site without first securing a 377.18 Common sources of oil and gas.—All The term also incl consent letter from the division. common sources of supply of oil or native gas shall sary or useful in (f) The State Geologist shall cooperate or coordi- have the production controlled or regulated in accor- underground stor nate with various federal agencies, including, but not dance with the provisions of this law. necessary or real limited to,the United States Geological Survey,Bureau History.—s.13,ch.22819,1945;s.6,ch.2013-205. designated for the of Mines, and the Minerals Management Service, and . tion of the storac various state and local agencies to collect and maintain 377.19 Definitions.—As used in ss. 377.06, natural gas stora data on the economic mineral industry of this state.Data 377.07, and 377.10-377.40, the term: ;, or migrati shall include commodities mined, amount extracted, (1) "Completion date" means the day, month, and sion thereof. The reserves, market and market trends, estimated value, year that a new productive well, a previously shut-in distribution, or gat and any other parameters determined necessary by the well, or a temporarily abandoned well is completed, used primarily as State Geologist to comply with this section. Such repaired, or recompleted and the operator begins storage facility. information shall be periodically updated and company producing oil or gas in commercial quantities. .-- "Natural gai data may be maintained confidential subject to the same (2) "Department"means the Department of Environ field from whicf requirements as that required by the federal agency of mental Protection. , which is jurisdiction or, if no specific language exists in federal (3) "Division"means the Division of Resource Man- suitable for th, law, the confidential period shall not exceed 10 years. agement of the Department of Environmental Prot ec as identified in a (g) The Florida Geological Survey shall prepare, tion. department under maintain, and make available, in both paper and (4) "Field"means the general area that is underlaid, (14)"New field electronic or computer-based formats, maps identifying 'or appears to be underlaid, by at least one pool. The completed after 185 Packet Page-288- , - ` � F.S._2013 ';' F.S. 2013 ENERGY RESOURCES 6/10/2014 10.B. ^ all oil field wells '' term includes the underground reservoir, or reservoirs, designated by the Department of Environmental Pro- gas test wells, containing oil or gas, or both. The terms "field" and tection. nd stratigraphic "pool" mean the same thing if only one underground (15)"Oil" means crude petroleum oil and other P94""h or any t reservoir is involved; however, the term "field," unlike hydrocarbons, regardless of gravity, which are pro- it provide the term"pool," may relate to two or more pools. duced at the well in liquid form by ordinary production 1st, .end other (5) "Gas" means all natural gas, including casing- methods, and which are not the result of condensation evels in any oil, head gas,and all other hydrocarbons not defined as oil of gas after it leaves the reservoir. red or obtained in subsection (15). (16)"Oil and gas°has the same meaning as the term tested for water (6) "Horizontal well" means a well completed with "oil or gas." such tasks such the wellbore in a horizontal or nearly horizontal orienta- (17)"Oil and gas administrator" means the State and Production • tion within 10 degrees of horizontal within the producing Geologist. ipriated by the formation. (18)"Operator" means the entity who: (7) "Illegal gas"means gas that has been produced (a) Has the right to drill and to produce a well; or L SPECIMENS. within the state from any well or wells in excess of the (b) As part of a natural gas storage facility,injects,or all, through the amount allowed by any rule, regulation, or order of the is engaged in the work of preparing to inject,gas into a I Y Y 9 P P 9 1 9 ;pecimens illus- ? division,as distinguished from gas produced within the natural gas storage reservoir; or stores gas in, or res of the state, i., State of Florida from a well not producing in excess of removes gas from, a natural gas storage reservoir. n water of this i the amount so allowed, which is "legal gas." (19)"Owner" means the person who has the right to intain a central, (8) "Illegal oil" means oil that has been produced drill into and to produce from any pool and to appropriate mens, for well f within the state from any well or wells in excess of the the production for the person or for the person and and subsurface 1 amount allowed by rule, regulation, or order of the another, or others. I data. S LO division, as distinguished from oil produced within the (20)"Person" means a natural person, corporation,•E or her assts- state from a well not producing in excess of the amount association, partnership, receiver, trustee, guardian, is or her r other so allowed, which is"legal oil." executor, administrator, fiduciary, or representative of le a reasonable (9) "Illegal product" means a product of oil or gas, any kind. ce a reasonable able any part of which was processed or derived,in whole or (21)"Pool"means an underground reservoir contain- in part, from illegal gas or illegal oil or from any product ing or appearing to contain a common accumulation of i,35,ch.6 9-106;s.322, h thereof,as distinguished from"legal product,"which is a oil or gas or both. Each zone of a general structure 3-176;ss.306,483,ch. product processed or derived to no extent from illegal oil which is completely separated from any other zone on 97-96. or illegal gas. the structure is considered a separate pool as used (10)"Lateral storage reservoir boundary" means the herein. e employed by ` projection up to the land surface of the maximum (22)"Producer"means the owner or operator of a well f, or holding any horizontal extent of the gas volume contained in a or wells capable of producing oil or gas, or both. iy person, firm, natural gas storage reservoir. (23)"Product" means a commodity made from oil or on 9f�any kind, (11)"Native gas" means gas that occurs naturally gas and includes refined crude oil, crude tops, topped r mineral within this state and does not include gas produced crude, processed crude petroleum, residue from crude 0 or gas, outside the state,transported to this state,and injected petroleum, cracking stock, uncracked fuel oil, fuel oil, listributing oil or into a permitted natural gas storage facility. treated crude oil, residuum, gas oil, casinghead gaso- )e employed by (12)"Natural gas storage facility" means an under- line, natural gas gasoline, naphtha, distillate, conden- t in the prosecu- ground reservoir from which oil or gas has previously sate, gasoline, waste oil, kerosene, benzine, wash oil, been produced and which is used or to be used for the blended gasoline, lubricating oil, blends or mixtures of 16;s.66,ch.79-65. underground storage of natural gas,and any surface or oil with one or more liquid products or byproducts subsurface structure, or infrastructure, except wells. derived from oil or gas,and blends or mixtures of two or I and gas.—All The term also includes a right or appurtenance neces- more liquid products or byproducts derived from oil or native gas shall sary or useful in the operation of the facility for the gas, whether hereinabove enumerated or not. iulated in accor- underground storage of natural gas, including any (24)"Reasonable market demand" means the necessary or reasonable reservoir protective area as amount of oil reasonably needed for current consump- designated for the purpose of ensuring the safe opera- tion,together with a reasonable amount of oil for storage tion of the storage of natural gas or protecting the and working stocks. in ss. 377.06, natural gas storage facility from pollution, invasion, (25)"Reservoir protective area" means the area . escape, or migration of gas, or any subsequent exten- extending up to and including 2,000 feet surrounding day, month, and sion thereof. The term does not mean a transmission, a natural gas storage reservoir. reviously shut-in distribution, or gathering pipeline or system that is not (26)"Shut-in bottom hole pressure" means the ores- Al is completed, used primarily as integral piping for a natural gas sure at the bottom of a well when all valves are closed operator begins storage facility. and no oil or gas has been allowed to escape for at least antities. (13)Natural gas storage reservoir"means a pool or 24 hours. tment of Environ field from which gas or oil has previously been produced (27)"Shut-in well means an oil or gas well that has and which is suitable for or capable of being made been taken out of service for economic reasons or f Resource Man suitable for the injection, storage, and recovery of gas, mechanical repairs. )nmental Protec as identified in a permit application submitted to the (28)"State" means the State of Florida. h� department under s. 377.2407. (29)"Temporarily abandoned well means a per- that is underlaid, – (14)"New field well means an oil or gas well mitted well or wellbore that has been abandoned by st one pool The -.°,-,; ', completed after July 1, 1997, in a new field as plugging in a manner that allows reentry and 4, ' 1853 • Packet Pare-289- 6/10/2014 10.B. j. Ch.377 ENERGY RESOURCES F.S. 2013 .' F.S. 2013 redevelopment in accordance with oil or gas rules of the to the storage of gas in and recovery of gas from natural (f) To require E Department of Environmental Protection. gas storage reservoirs. ' security acceptab (30)`Tender" means a permit or certificate of clear- (2) The division shall have authority, and it shall be upon the perform ance for the transportation or the delivery of oil,gas, or its duty,to make such inquiries as it may deem proper to F 4, each dry and aban products, approved and issued or registered under the determine whether waste,over which it has jurisdiction, restoration by the authority of the division. exists or is imminent. In the exercise of such power,the it, geophysical exploi (31)'Waste," in addition to its ordinary meaning, division shall have the authority to: ducted to the simi means "physical waste" as that term is generally (a) Collect data. �. existence prior to: '. understood in the oil and gas industry. The term (b) Make investigations and inspections. (g) To require a "waste" includes: (c) Examine properties, leases, papers, books, and monitoring or ins (a) The inefficient, excessive, or improper use or records and to examine,survey,check,test,and gauge w producing wells, r dissipation of reservoir energy; and the locating, spa- oil and gas wells,tanks,storage tanks,treatment plants I. inspections by divi cing, drilling, equipping, operating, or producing of any and facilities, and modes of transportation used to (h) To require oil or gas well or wells in a manner that results,or tends gather and process crude oil or gas and products . location of all oil ar to result, in reducing the quantity of oil or gas ultimately derived from wells within the state, prior to delivery to g q tY 9 Y rY logs;the taking anc to be stored or recovered from any pool in this state. a common carrier. of electrical,sonic, (b) The inefficient storing of oil; and the locating, (d) Hold hearings. oil and gas wells; spacing, drilling, equipping, operating, or producing of (e) Provide for the keeping of records and the ., cores, the cuts of ti any oil or gas well or wells in a manner that causes, or making of reports. Geology; and the tends to cause, unnecessary or excessive surface loss (f) Take such action as may be reasonably neces- 1.' drilling and product or destruction of oil or gas. sary to enforce this law. "• tion, or any part th (c) The producing of oil or gas in a manner that (3) The jurisdiction of the division shall extend to the ( shall be exempt frc causes unnecessary water channeling or coning. state boundaries as set forth in s. 1, Art. II of the State held confidential b (d) The operation of any oil well or wells with an Constitution. ;t after the letic History.—s.16,ch.22819,1945;ss.25,35,Cr,.69-106;s.1,ch.72-394;s.1, p inefficient gas oil ratio. ch.76-188;s.a,ch.2013-205. 4 (i) To prev/'`, (e) The drowning with water of any stratum or part r produced in com thereof capable of producing oil or gas. 377.22 Rules and orders.— neighboring lease: (f) The underground waste, however caused and (1) The department shall provide,by rule,for ratable 1 reservoirs. whether or not defined. takings in all pools on a reasonable and equitable basis. (j) To prevent t (g) The creation of unnecessary fire hazards. (2) The department shall issue orders and adopt or part thereof,cap (h) The escape into the open air, from a well rules pursuant to ss. 120.536 and 120.54 to implement quantities and to I producing both oil and gas, of gas in excess of the and enforce the provisions of this chapter. Such rules encroachment of amount that is necessary in the efficient drilling or and orders shall ensure that all precautions are taken to reduce,the total ul' operation of the well. prevent the spillage of oil or any other pollutant in all r pool. (i) The use of gas for the manufacture of carbon phases of the drilling for, and extracting of, oil, gas, or (k) To require i black. other petroleum products, or during the injection of gas gas-oil ratio, and ti (j) Permitting gas produced from a gas well to into and recovery of gas from a natural gas storage (I) To prevent ' escape into the air. reservoir. The department shall revise such rules from in the sense that cc (k) The abuse of the correlative rights and opportu- time to time as necessary for the proper administration generally understo nities of each owner of oil and gas in a common and enforcement of this chapter. Rules adopted and (m) To prevent 1 reservoir due to nonuniform, disproportionate, and orders issued in accordance with this section are for,but (n) To identify t unratable withdrawals, causing undue drainage be- not limited to, the following purposes: producing leases, tween tracts of land. (a) To require the drilling, casing, and plugging of (32)"Well site"means the general area around a well, wells to be done in such a manner as to prevent the • and storage and try To which area has been disturbed from its natural or pollution of the fresh, salt, or brackish waters or the (o) re regulate existing condition, as well as the drilling or production lands of the state and to protect the integrity of natural mica)treatment of pad,mud and water circulation pits,and other operation gas storage reservoirs. • (p) To regulate areas necessary to drill for or produce oil or gas, or to (b) To prevent the alteration of the sheet flow of ?. ing the introduction inject gas into and recover gas from a natural gas water in any area. into producing forn storage facility. (c) To require that appropriate safety equipment be r- (q) To regulate History.--s,14,ch.22819,1945;ss.25,35,a,.69-106;6.138,ch.71-377;s.1, installed to minimize the possibility of an escape of oil or - (r) To regulate ch.76-104;s.1,ch.77-174;s.67,ch.79-65;s.1,ch.94-193;s.309,ch.94-356;s. _. injected into nature 1021,ch.95-148;S.74,ch.96-323;s.7,ch.,2013-205. other petroleum products in the event of accident, -� human error,or a natural disaster during drilling,casing, i.,_ (s) If necessar 377.20 Waste prohibited.—Waste of oil or gas or plugging of any well and during extraction operations. >'! herein defined, to defined in this law is hereby prohibited. , (d) To require the drilling, casing, and plugging of 4, production of oil or HIstory.—s.15,ch.22819,1945. wells to be done in such a manner as to prevent the the state. escape of oil or other petroleum products from one (t) To requ/— 377.21 Jurisdiction of division.— stratum to another. areas,certifier. (1) The division shall have jurisdiction and authority (e) To prevent the intrusion of water into an oil or gas 4.1 with the transports over all persons and property necessary to administer stratum from a separate stratum,except as provided by product. and enforce effectively the provisions of this law and all rules of the division relating to the injection of water for r g (u) To regulate other laws relating to the conservation of oil and gas or brooer reservoir conservation and brine disposal. drilling units. 185,Packet Page -290- ;, F.S. 2_013 F.S.2013 ENERGY RESOURCES 6/10/2014 10.B. _ VII.Jr gas from natural (f) To require a.reasonable bond, or other form of (v) To prevent, so far as is practicable, reasonably E security acceptable to the department, conditioned avoidable drainage from each developed unit which is y, and it shall be upon the performance of the duty to plug properly not equalized by counterdrainage. y r''l proper to each dry and abandoned well and the full and complete (w) To require that geophysical operations requiring t h. ;isdictioh, restoration by the applicant of the area over which a permit be conducted in a manner which will minimize `sucn power,the geophysical exploration, drilling, or production is con- the impact on hydrology and biota of the area,especially ducted to the similar contour and general condition in environmentally sensitive lands and coastal areas. existence prior to such operation. (x) To regulate aboveground crude oil storage tanks tions. (g) To require and carry out a reasonable program of in a manner which will protect the water resources of the pers, books, and monitoring or inspection of all drilling operations, state. ,test,and gauge producing wells, or injecting wells, including regular (y) To act in a receivership capacity for fractional treatment plants inspections by division personnel. mineral interests for which the owners are unknown or ortation used to (h) To require the making of reports showing the unlocated and to administratively designate the opera- is and products location of all oil and gas wells;the making and filing of tor as the lessee. tor to delivery to 1 logs;the taking and filing of directional surveys;the filing ch.71161°07.s. .16,�228 a9,1 ch.;s ss;sic.ei i ;s.2,chh:72-394;-- ;s.1, iof electrical, sonic, radioactive,and mechanical logs of ch.89-117;s.6,ch.94-193;s.310,ch.94-356;s.174,ch.96-408;s.88,ch,96-200; oil and gas wells; if taken, the saving of cutting and S.s,ch.201 205. ecords and the cores,the cuts of which shall be given to the Bureau of Geology; and the making of reports with respect to 377.23 Monthly reports to division.—Every pro- :asonably neces- drilling and production records. However,such informa ducer of oil or gas in the state shall submit to the tion, or any part thereof, at the request of the operator, division,on forms prescribed by the division,a monthly hall extend to the shall be exempt from the provisions of s. 119.07(1)and report of the actual production from each and every oil 1rt. 11 of the State and gas well operated by him or her. Such producer held confidential by the division for a period of 1 year shall submit a duplicate copy of such report at the same after the completion of a well. 06;s.1,c+,.7z-394;s.t, time to the Department of Financial Services;and such (i) To prevent wells from being drilled, operated, or reports shall be submitted through the medium of the produced in such a manner as to cause injury to United States mails, and it shall be unlawful for the iy rule,for ratable re ighvboiring leases, property, or natural gas storage same to be transmitted or received in any other way. History.—s.17,ch.22819,1945;s.1,ch.69-266;ss.12,25,35,ch.69-106;s. i equitable basis. (j) To prevent the drowning by water of any stratum, 621,ch.95-148;s.398,ch.2003-261. rders and adopt or part thereof,capable of producing oil or gas in paying 1.54 to implement quantities and to prevent the premature and irregular 377.24 Notice of intention to drill well; permits; 3pter. Such rules encroachment of water which reduces, or tends to abandoned wells and dry holes.— tions are taken to reduce,the total ultimate recovery of oil or gas from any (1) Before drilling a well in search of oil or gas, or er pollutant in all pool. before storing gas in or recovering 9 g gas from a natural ng mil, gas, or (k) To require the operation of wells with efficient gas storage reservoir,the person who desires to drill for, e on of gas gas-oil ratio, and to fix such ratios. store,or recover gas,or drill for oil or gas,shall notify the ural yas storage (I) To prevent "blowouts," "caving,"and "seepage," division upon such form as it may prescribe and shall a such rules from in the sense that conditions indicated by such terms are pay a reasonable fee set by rule of the department not to ter administration generally understood in the oil and gas business. exceed the actual cost of processing and inspecting for ties adopted and (m) To prevent fires. each well or reservoir. The drilling of any well and the ection are for,but (n) To identify the ownership of all oil or gas wells, storing and recovering of gas are prohibited until such producing leases, refineries, tanks, plants, structures, notice is given,the fee is paid,and the permit is granted. and plugging of and storage and transportation equipment and facilities. (2) An application for the drilling of a well in search of 3s to prevent the (o) To regulate the 'shooting," oil or gas,or for the storing of gas in and recovering of sh waters or the ( ) g 9," Perforating and the gas from a natural gas storage reservoir, in this state �tegrity of natural mica) treatment of wells. must include the address of the residence of the (p) To regulate secondary recovery methods,includ- applicant, or applicants, which must be the address of he sheet flow of ing the introduction of gas,air,water,or other substance each person involved in accordance with the records of into producing formations. the Division of Resource Management until such ety equipment be (q) To regulate gas cycling operations. address is changed on the records of the division sn escape of oil or (r) To regulate the storage and recovery of gas after written request. gent of accident, injected into natural gas storage facilities. (3) Each abandoned well and each dry hole shall be -1g drilling,casing, . If necessary for the prevention of waste, as plugged promptly in the manner and within the time action operations. herein defined, to determine, limit, and prorate the required by regulations to be prescribed by the Depart- and plugging of production of oil or gas,or both,from any pool or field in ment of Environmental Protection, and the owner of as to prevent the the state. such well shall give notice upon such form as the oducts from one (t) To require,either generally or in or from particular division may prescribe, of the drilling of each dry hole areas,certificates of clearance or tenders in connection and of the owner's intention to abandon.No well shall be r into an oil or gas with the transportation or delivery of oil or gas, or any abandoned without prior approval of the division. 1pt as provided,by - product. (4) Application for permission to drill or abandon any action of water for (u) To regulate the spacing of wells and to establish well may be denied by the division for only just and ne disposal. ;:, drilling units. lawful cause. 1855 • Packet Pare-291- 6/10/2014 10.B. I '-'""-i'~ i Ch.377 ENERGY RESOURCES F.S. 2013 F.S.2013 (5) No permit to drill a gas or oil well shall be granted and recertifying the permit application, and inspecting (c) Has not bee within the corporate limits of any municipality,unless the for compliance with the permit. - or a private agreen • governing authority of the municipality shall have first (2) Each application must contain: will not be release duly approved the application for such permit by (a) A detailed, three-dimensional description of the (d) Is not publ resolution. natural gas storage reservoir, including geologic-based ascertainable thn (6) No permit to drill a gas or oil well shall be granted descriptions of the reservoir boundaries, and the source in the sam at a location in the tidal waters of the state, abutting or horizontal and vertical dimensions. department. immediately adjacent to the corporate limits of a (b) A geographic description of the lateral storage (e) Includes, In municipality or within 3 miles of such corporate limits reservoir boundary. 1. Trade secre extending from the line of mean high tide into such (c) A general description and location of all injection, 2. Leasing pia waters, unless the governing authority of the munici- recovery, withdrawal-only, and observation wells. exploration budge pality shall have first duly approved the application for (d) A description of the reservoir protective area. sure of which woul such permit by resolution. (e) Information demonstrating that the proposed its affiliates to cc (7) No permit to drill a,gas or oil well shall be granted natural gas storage reservoir is suitable for the storage acquire real prope on any improved beach, located outside of an incorpo- and recovery of gas. 3. Competitive rated town or municipality, or at a location in the tidal (f) Information identifying all reasonably known design or complel waters of the state abutting or immediately adjacent to abandoned or active wells within the natural gas storage studies related to an improved beach, or within 3 miles of an improved facility. acteristics, or fiel beach extending from the line of mean high tide into• (g) A field-monitoring plan that requires, at a mini- plans,the disclose such tidal waters, unless the county commissioners of mum, monthly field inspections of all wells that are part titive business of ti- the county in which such beach is located shall have first of the natural gas storage facility. (f) May be foul duly approved the application for such permit by (h) A monitoring and testing plan for the well 1. Filed with I resolution. integrity. affiliated person s (8) For the purposes of this section and law, an (i) A well inspection plan that requires, at a mini- permit pursuant tc improved beach,situated outside of the corporate limits mum, the inspection of all wells that are part of the 2. Sent toy of any municipality or town, shall be and is hereby natural gas storage facility and plugged wells within the mental entity defined to be any beach adjacent to or abutting upon the natural gas storage facility boundary. mance of its o,..,a tidal waters of the state and having not less than 10 (j) A spill prevention and response plan. the information is hotels, apartment buildings, residences or other struc- (k) A well spacing plan. held by the goveri tures, used for residential purposes, on or to any given (I) An operating plan for the natural gas storage (2) The depart mile of such beach. reservoir, which must include gas capacities, antici- exempt proprietar (9) Without exception, after July 1, 1989, no permit pated operating conditions, and maximum storage (a) Pursuant tc to drill a well in search of oil or gas shall be granted pressure. (b) If the applit south of 26°00'00" north latitude off Florida's west (m) A gas migration response plan. written consent; o coast and south of 27°00'00"north latitude off Florida's (n) A location plat and general facility map surveyed (c) To another east coast, within the boundaries of Florida's territorial and prepared by a registered land surveyor licensed entity agrees in WI seas as defined in 43 U.S.C. 1301.After July 31, 1990, under chapter 472. exempt status of no permit to drill a well in search of oil or gas shall be (3) The department may require the applicant to writing its legal aut granted north of 26°00'00" north latitude off Florida's provide additional information that is deemed necessary (3) This sectioi west coast to the western boundary of the state to permit the development of the natural gas storage Sunset Review AI bordering Alabama as set forth in s. 1, Art. II of the facility. Each well related to the natural gas storage shall stand repe State Constitution,or located north of 27°00"00"north facility shall be authorized and permitted individually _ reviewed and say latitude off Florida's east coast to the northern boundary upon the applicant's satisfying applicable well construc- by the Legislature of the state bordering Georgia as set forth in s. 1,Art. II tion and operation criteria under this part; however, History.—s.1,a,.201: of the State Constitution, within the boundaries of notwithstanding any other provision of this chapter,well Florida's territorial seas as defined in 43 U.S.C. 1301. spacing requirements do not apply. 377.2408 App History.—s.18,ch.22819,1945;ss 25,35,ch.69-106;s.68,ch.79-65;s.3, History.—s.ch.87-183;s.6,ch.89-175;s.2,ch.90-72;s.8,ch.91-286;s.6,ch.95-150;s.10, rY'—s'11,ch.2013-205. operations.— ch.2013-205. (1) Before any 377.24075 Exemption from public records re- gas,or minerals st 377.2407 Natural gas storage facility permit quirements.—Proprietary business information held by to conduct such of application to inject gas into and recover gas the Department of Environmental Protection in accor- department upon from a natural gas storage reservoir.— dance with its statutory duties with respect to an shall pay a reasor (1) Before drilling a well to inject gas into and recover application for a natural gas storage facility permit is (2) Each appli gas from a natural gas storage reservoir, the person confidential and exempt from s. 119.07(1)and s.24(a), general terms,of t who desires to conduct such operation shall apply to the Art. I of the State Constitution. intended to be col department in the manner described in' this section (1) As used in this section, the term "proprietary (3) Any inform using such form as the department may prescribe to business information" means information that: operation an(Th obtain a natural gas storage facility permit.The depart- (a) Is owned or controlled by the applicant or a plans, explor. ment shall also require any applicant seeking to obtain person affiliated with the applicant. 7 formation that cou such permit to pay a reasonable permit application fee. (b) Is intended to be private and is treated by the competitors shall t Such fee must be in an amount necessary to cover the applicant as private because disclosure would harm the _ for 10 years anc costs associated with receiving, processing, issuing, apolicant or the aonlir_ant's business operations. 119.07(1), and s 1856 Packet Page-292- ;, F.S.2013 F.S.2013 ENERGY RESOURCES 6/10/2014 10.B. tion, and inspecting (c) Has not been disclosed except as required by law without the consent of the person submitting the or a private agreement that provides that the information application. I lin: will not be released to the public. History.—s.2,ch.80-283;s.6,ch.89-117;s.311,ch.94-356;s- 175,ch. 96-406.al i •cription of the (d) Is not publicly available or otherwise readily di ologic-based ascertainable through proper means from another 377.2409 Geophysical activities;confidential in-un.. ries, and the source in the same configuration as requested by the formation; penalties.— department. the lateral storage (e) Includes, but is not limited to: (1) Whenever geophysical activities are conducted 1. Trade secrets an not limited in : 688.002. on state-owned mineral lands, the person conducting 1. such activities shall furnish to the division, acting as :ation of all injection, 2. Leasing plans, real property acquisition plans, agent of the owner of the minerals,upon written request, ervation wells. exploration budgets, or marketing studies, the disclo- a copy of the noninterpreted information derived from r protective area. sure of which would impair the efforts of the applicant or the geophysical activities. Any information received that the proposed its affiliates to contract for goods or services or to hereunder by the division shall, upon request of the :able for the storage acquire real property interests on favorable terms. person conducting the geophysical activities, be held 3. Competitive-interests, which may include well confidential for 10 years from the date of receipt by the reasonably known design or completion plans, geological or engineering division and shall be exempt from disclosure under any natural gas storage studies related to storage reservoir performance char- state statute, including,but not limited to,ss. 119.07(1) acteristics, or field utilization strategies or operating and 377.2424(3). For purposes of this section, state- requires, at a mini- plans,the disclosure of which would impair the compe- owned mineral lands shall include mineral lands title to .II wells that are part titive business of the applicant providing the information. which is held by a water management district. (f) May be found in a document: (2) Any person who willfully discloses for personal plan for the well 1. Filed with the department by the applicant or benefit or private gain information received by the affiliated person seeking a natural gas storage facility division under this section and made confidential by requires, at a mini- permit pursuant to s. 377.2407; or this section,without the consent of the person furnishing hat are part of the 2. Sent to the department from another govern- the information, is guilty of a felony of the third degree, ged wells within the mental entity for use by the department in the perfor- punishable as provided in s.775.082, s. 775.083, or s. y. mance of its duties. This subparagraph applies only if 775.084. 'Ise plan. the information is otherwise confidential or exempt as History.—s.2,ch.87-183;s.7,ch.89-117;s.4,ch.91-114;s.176,ch.96-406. held by the governmental entity. iatural gas storage (2) The department may disclose confidential and 377.241 Criteria for issuance of permits.—The capacities, antici- exempt proprietary business information: division, in the exercise of its authority to issue permits maximum storage (a) Pursuant to a court order; as hereinafter provided,shall give consideration to and (b) If the applicant to which it pertains gives prior be guided by the following criteria: in. written consent; or (1) The nature, character and location of the lands iciljiap surveyed (c) To another governmental entity if the receiving involved; whether rural, such as farms, groves, or ranches,, !or licensed entity agrees in writing to maintain the confidential and ranches, or urban property ss purposes o presently are dsuch exempt status of the information and has verified in aped for residential or business purposes or are in such re the applicant to writing its legal authority to maintain such confidentiality, a location or of such a nature as to make such deemed necessary (3) This section is subject to the Open Government impro and developments a probability in the -latural gas storage Sunset Review Act in accordance with s. 119.15 and near fuvements ture. iatural gas storage shall stand repealed on October 2, 2018, unless applicant,The nature,type and extent of the length h of time rmitted individually reviewed and saved from repeal through reenactment the aapli including wne matters as the limed of hme the applicant has owned the rights claimed without cable well construe= by the Legislature. having performed any exploratory p this part; however, History.—s.1,ch.2013-206. 9 p y of the ex lorato operations so granted or authorized. of this chapter,well (3) The proven or indicated likelihood of the pre- 377.2408 Application to conduct geophysical sence of oil,gas or related minerals in such quantities as operations.— 9 q (1) Before any operation in search of oil, to warrant the exploration and extraction of such public records re- gas,or minerals shall be conducted,the person desiring products For a commercially operations rations basis. information held by to conduct such operation shall make application to the (4) For storage and , thr nature,e, structure,a and 'rotection in accor- department upon such forms as it may prescribe and prof gas sse of facility,nat the nature, serueservacs vith respect to an shall pay a reasonable fee for processing. suitable use of the natural gas v ry of reservoir t ge facility permit is (2) Each application shall contain a statement, in suitable effect the storage and recovery saery of gas without ..07(1)and s.24(a), general terms,of the location in which such operation is adverse effect to public health or safety or the environ intended to be conducted. ment. History.—s.1,ch.61-299;ss.25,35,ch.69-106;s.12,ch.2013.205. a term "proprietary (3) Any information relating to the location of the cation that: operation and other information relating to leasing 377.2411 Lawful right to drill, develop, or ex- the applicant or a plans, exploration budgets, and other proprietary in- plore.—Before applying for a drilling permit, the appli- formation that could provide an economic advantage to cant or operator must acquire a lawful right to drill, d is treated by the -- competitors shall be kept confidential by the department explore, or develop from a majority of the mineral .ure would harm the - for 10 years and exempt from the provisions of s. interests within a drilling unit. This acquired right may s operations. '•-;'17 w' 119.07(1), and shall not be released to the public be in the form of mineral ownership,a lease,farmout,or "ye 1857 ., z III Packet Pare-293- 6/10/2014 10.B. . :.x z,'IC' !=15tR°! ;i�'. ^• 1Ho . Ch.377 ENERGY RESOURCES F.S. 2013 F.S. 2013 any other legal instrument which conveys said mineral 4. No structure intended for the drilling for, or (2) The division interest or the right to develop it to the applicant or production of, oil, gas, or other petroleum products form of well records operator. may be permitted or constructed within 1 mile inland other data from oi (1)(a) Any operator who has obtained a permit to drill from the shoreline of the Gulf of Mexico, the Atlantic exploration and pa shall give written notice by certified mail, return receipt Ocean, or any bay or estuary or within 1 mile of any including offshore c requested, of a proposal to drill a well to those mineral freshwater lake, river, or stream unless the department when available from owners who would be deemed"notified owners"holding is satisfied that the natural resources of such bodies of These data shall be a minority interest within the drilling unit and who are: water and shore areas of the state will be adequately requirements as tha 1. Unleased mineral owners; or protected in the event of accident or blowout. are exempt from th 2. Owners of mineral leases which have not entered 5. Without exception, after July 1, 1989, no struc- extent necessary to into a farmout agreement or any other agreement to drill ture intended for the drilling for,or production of,oil,gas, History.—s.4,oh.72-394 or produce a well with the operator. or other petroleum products may be permitted or (b) The notice shall include an offer by the operator constructed south of 26°00"00" north latitude off 377.2424 Cond to allow the notified owner to participate for its pro rata Florida's west coast and south of 27'00"00" north geophysical opera share of the costs and expenses of drilling the well,or to latitude off Florida's east coast,within the boundaries of minerals by means lease or farm out all of its right,title, and interest in the Florida's territorial seas as defined in 43 U.S.C.s.1301. exercised only pu drilling unit to the applicant. In no instance shall the After July 31, 1990,no structure intended for the drilling department, upon I bonus and royalty amounts in the offer to lease from the for, or production of, oil, gas, or other petroleum following conditions notified owner be less than provided in s. 377.247(2). products may be permitted or constructed north of (1) The applican (c) The notice must be given at least 60 days prior to ""north latitude off Florida's west coast to the can be in the form < 26'00"00 the commencement of drilling of the well. western boundary of the state bordering Alabama as set owner of the miner (2)(a) The notified owner must respond in writing forth in s. 1, Art. II of the State Constitution, or located affirming that he or: north of 2700"00""north latitude off Florida's east coast within 30 days after receipt of said notice if the notified through geophysica to the northern boundary of the state bordering Georgia underlying the land: owner elects to lease,farm out,or participate in the well. a All notified owners who fail to respond in writing to the as set forth in s. 1,Art.II of the State Constitution,within (2) The applicar applicant's notice within 30 days after receipt of said the boundaries of Florida's territorial seas as defined in surety bond or 9 43 U.S.C. s. 1301. ment in such ar notice shall be deemed to be a carried leasehold is adequate to working interest owner or"carried owner." (b) Subparagraphs (a)1. and 4. do not apply to q permitting or construction of structures intended for operations are cord (b) A carried owner shall receive no revenue until the the drilling for, or production of, oil, restore the area to tt applicant and its joint working interest owners have g p gas, or other similar to that in exit been paid from the sale of production from the well an petroleum products pursuant to an oil, gas, or mineral amount equal to 300 percent of the actual costs of lease of such lands by the state under which lease any bond shall contain drilling, developing, and producing the well. valid drilling permits are in effect on the effective date of guards from which (c) The applicant will provide to each of the carried this act. In the event that such permits contain condi should be paid by tl owners an annual accounting of the amounts left to tions or stipulations, such conditions and stipulations (3) The applicar shall govern and supersede subparagraphs(a)1.and 4. persons, acceptable recover before such owner begins to receive revenues. (c) The prohibitions of subparagraphs(a)1.-4.in this regular employees c (d) This section shall not apply to state-owned subsection do not include "infield gathering lines," be to accompany minerals. provided no other placement is reasonably available - explosives and to History.—s.4,oh.88-278;s.2,oh.94-193. each seismic hole a and all other required permits have been obtained. explosive charges le it 377.242 Permits for drilling or exploring and (2) To issue permits to explore for and extract the supervisor minerals which are subject to extraction from the land pervisor of oi extracting through well holes or by other means. these activities. The The department is vested with the power and authority: by means other than through a well hole. cal permit informatio (1)(a) To issue permits for the drilling for, exploring (3) To issue permits to establish natural gas storage p g P g facilities or construct wells for the injection and recovery request and may, for,or production of oil,gas,or other petroleum products f-. information with a cc which are to be extracted from below the surface of the of any natural gas for storage in natural gas storage reservoirs. ,r' municipality shall n land, including submerged land, only through the well _ such information, a hole drilled for oil, gas, and other petroleum products. Each permit shall contain an agreement by the per- - such information she 1. No structure intended for the drilling for, or mitholder that the permitholder will not prevent inspec- s. 119.07(1). Howe' production of, oil, gas, or other petroleum products tion by division personnel at any time.The provisions of " duplication, no cou may be permitted or constructed on any submerged this section prohibiting permits for drilling or exploring ' subdivision of the land within any bay or estuary. for oil in coastal waters do not apply to any leases - grams to accomplis 2. No structure intended for the drilling for, or entered into before June 7, 1991. History.—s.4,ch.80-283; production of, oil, gas, or other petroleum products History•—s.1,cfi.61-299;ss.25,35,oh.69 106;s.3,oh.72-394;s.69,ch. oh.as-117;s.922,d,.ss to may be permitted or constructed within 1 mile seaward 79-65;s.3,ch.80-283;s.2,oh.63-176;s.7,ch.89-175;s.3,ch.90-72;s.9.ch. - 91-286;s.75,ch.96-323;s.13,ch.2013-205. 377.2425 Mann of the coastline of the state. physical exploratic 3. No structure intended for the drilling for, or 377.2421 Division to review federal applies' (1) Prior to g.•'1 production of, oil, gas, or other petroleum products tions.— operations; drill may be permitted or constructed within 1 mile of the (1) The division shall review all applications for tion wells; produuele seaward boundary of any state,local,or federal park or federal oil leases in the territorial waters of the United transporting oil an aquatic or wildlife preserve or on the surface of a States adjacent to Florida waters and shall signify its , system, the departr freshwater lake, river, or stream. approval or objection to each application. operator to provide 1858 Packet Page-294- F.S. 2013 F.S. 2013 ENERGY RESOURCES 6/10/2014 10.B. I for the drilling for, or (2) The division shall maintain geologic data in the conducted in a safe and environmentally compatible ether petroleum products form of well records,logs,seismic records, reports,and manner. cted within 1 mile inland other data from oil, gas, mineral, or other•geologic (a) The applicant for a drilling, production, or injec- If of4exico, the Atlantic exploration and production activity on federal lands, tion well permit or a geophysical permit may provide the y " '.+hin 1 mile of any including offshore continental shelf submerged lands following types of surety to the department for this im -ss the department when available from the managing or permitting agency. purpose: >ources of such bodies of These data shall be subject to the same confidentiality 1. A deposit of cash or other securities made state will be adequately requirements as that required by the federal agency and payable to the Minerals Trust Fund. Such cash or lent or blowout. are exempt from the provisions of s. 119.07(1) to the securities so deposited shall be held at interest by the r July 1, 1989, no struc- extent necessary to meet the federal requirements. Chief Financial Officer to satisfy safety and environ- ,or production of,oil,gas, History.—s.4,ch.72-394;s.8,ch.69-117;s.177,ch.96-406. mental performance provisions of this chapter. The may be permitted or interest shall be credited to the Minerals Trust Fund. '00" north latitude off 377.2424 Conditions for granting permits for Such cash or other securities shall be released by the iuth of 2700'00" north geophysical operations.—Exploration for oil, gas, or Chief Financial Officer upon request of the applicant and :,within the boundaries of minerals by means of geophysical activities shall be certification by the department that all safety and ned in 43 U.S.C.s. 1301. exercised only pursuant to permit issued by the environmental performance provisions established by 'e intended for the drilling department, upon the applicant's complying with the the department for permitted activities have been as, or other petroleum following conditions: fulfilled. or constructed north of (1) The applicant must have legal permission,which 2. A bond of a surety company authorized to do orida's west coast to the can be in the form of a lease, written permission of an business in the state in an amount as provided by rule. )ordering Alabama as set owner of the minerals, or an affidavit of the applicant 3. A surety in the form of an irrevocable letter of Constitution, or located affirming that he or she will obtain permission to explore credit in an amount as provided by rule guaranteed by le off Florida's east coast through geophysical operations for oil,gas,or minerals an acceptable financial institution. state bordering Georgia underlying the lands. 9 9 (b) An applicant for a drilling,production,or injection State Constitution,within (2) The applicant shall post a good and sufficient well permit, or a permittee who intends to continue -itorial seas as defined in surety bond or other form of security with the depart- participating in long-term production activities of such ment in such amount as the department may determine wells,has the option to provide surety to the department .nd 4. do not apply to is adequate to protect areas upon which geophysical by paying an annual fee to the Minerals Trust Fund.For structures intended for operations are conducted from failure by the applicant to an applicant or permittee choosing this option the 1 of, oil, gas, or other restore the area to the general condition and the contour following shall apply: o an oil, gas, or mineral similar to that in existence prior to such operations.The 1. For the first year, or part of a year, of a drilling, e under which lease any bond shall contain reasonable standards and safe- production, or injection well permit, or change of ;t on the effective date of guards from which to determine whether any sum operator,the fee is $4,000 per permitted well. 1 permits contain condi- should be paid by the surety. 2. For each subsequent year, or part of a year, the editions and stipulations (3) The applicant shall contract with a person or fee is $1,500 per permitted well. �p raphs a 1.and 4. persons, acceptable to the department, who are not ( ) regular employees of the applicant, whose duties shall 3. The maximum fee that an applicant or permittee r 3rr is(a)1.-4.in this may be required to pay into the trust fund is$30,000 per nth. gathering lines," be to accompany each geophysical crew utilizing calendar year, regardless of the number of permits . is reasonably available explosives and to witness the location and depth of applied for or in effect. lave been obtained. each seismic hole and the loading and detonation of all 4. The fees set forth in subparagraphs 1.,2.,and 3. xplore for and extract explosive charges in each hole,and who shall report to shall be reviewed by the department on a biennial basis extraction from the land the supervisor of oil and gas, Bureau of Geology, on and adjusted for the cost of inflation. The department well hole. these activities. The department shall share geophysi shall establish by rule a suitable index for implementing dish natural gas storage cal permit information with a county or municipality upon such fee revisions. e injection and recovery request and may, on its own initiative, share such pp drilling operating permit for j ry (c) Ana applicant for a drillin or o eratin information with a county or municipality.The county or in natural gas storage municipality shall maintain the confidential status of operations planned in coastal waters that by their nature such information, as required by s. 377.2408(3), and accordance greater surety shall provide or similar only of such information shall be exempt from the provisions of financi am a wns ity other paragraph (a),as similar in e- agreement by the per- p p financial responsibility ohe than as provided in para- will not prevent inspec- s. 119.07(1). However, in order to avoid unnecessary graph (b). For all such applications, including applica- f time.The provisions of duplication, no county, municipality, or other political tions pending at the effective date of this act and for drilling or exploring subdivision of the state may adopt or establish pro- notwithstanding the provisions of paragraph (b), the it apply to leases grams to accomplish the purposes of this section. pp y any History.—.4,ch.80-283;s.1,ch.86-34;s.4,ch.87-183;s.2,ch.88-278;s.9, Governor and Cabinet in their capacity as the Admen 11 a,.89-117;s.622,on.95-148;s.178,ch.96-406. cos. istration Commission, at the recommendation of the 39-106;s.3,ch.72-394;s.69,ch. Department of Environmental Protection, shall set a h.89-175;s.3,ch.90.72;s.9,ch. ''�' p 377.2425 Manner of providing security for geo- reasonable amount of surety required under this sub- physical exploration,drilling, and production.— section. The surety amount shall be based on the iew federal applica- (1) Prior to granting a permit to conduct geophysical projected cleanup costs and natural resources da- operations; drilling of exploratory, injection, or produc- mages resulting from a maximum oil spill and adverse :w all applications for -; tion wells; producing oil and gas from a wellhead; or hydrographic and atmospheric conditions that would al waters of the United transporting oil and gas through a field-gathering tend to transport the oil into environmentally sensitive rs and shall signify its-'° system, the department shall require the applicant or areas, as determined by the Department of Environ- aplication. operator to provide surety that these operations will be mental Protection. 1859 • Packet Pare-295- 6/10/201410.6. Ch.377 ENERGY RESOURCES F.S.2013 F.S. 2013 (2) The department shall establish by rule reason- public convenience and necessity for the natural gas the storage rig able standards and procedures to determine the storage reservoir from the Federal Energy Regulatory reservoir. circumstances in which execution shall be made against Commission pursuant to the Natural Gas Act, 15 U.S.C. History.—s.14,ch.2 any surety provided under this section. ss. 717 et seq. (a) Such standards and procedures must provide a (c) The applicant has used all reasonable means to 377.2432 Na reasonable opportunity for a permittee to correct to the identify known wells that have been drilled into or tion of water su satisfaction of the department any safety or environ- through the natural gas storage reservoir or the (1) An operate mental performance violation arising out of the per- reservoir protective area to determine the status of affects a public o mitted activity before execution is made against any the wells and whether inactive or abandoned wells have pollution or dim surety provided under this section. been properly plugged. For any well that has not been affected supply (b) If there is an unresolved violation of a department properly plugged, before conducting injection opera- adequate in quan rule or permit for which the department has issued a tions and after issuance of the permit, the applicant by the supply. T notice of violation and order for corrective action, no must plug or recondition the well to ensure the integrity quality of restore further surety under this section shall be allowed the of the storage reservoir or the reservoir protective area. the quality of the permittee except by special consideration of the Gov- (d) The applicant has tested the quality of water operator. error and Cabinet. produced by all water supply (2) Unless rel y wells within the lateral History.—s.3,ch.88-278;s.3,ch.89-358;s.312,ch.94-356;s.54,ch.96-321; subsection 4, a s.1,ch.97-49;5.399,ch.2003-261. boundary of the natural gas storage facility and corn- ( ) plied with all requirements under s. 377.2432. The presumed respor 377.2426 Abandonment of geophysical holes. applicant shall provide to the department and the owner water supply if: Each hole drilled as part of permitted geophysical of the water supply well a written copy of the water (a) The water. operations shall be plugged promptly in the manner quality data collected under this paragraph. the natural gas st prescribed by the department. (e) A determination has been made whether native (b) The pollute History,—s.4,ch.80-283. gas or oil will be severed from below the soil or water of completion of dril this state in the recovery of injected gas. If native gas or associated with th 377.243 Conditions for granting permits for oil will be severed, the applicant or operator must the initial injectior whOlbokk extraction through well holes.— acquire a lawful right to develop the native gas or oil reservoir, e (1) Prior to the application to the Division of Re- before injecting gas into the natural gas storage (3) If the r source Management for the permit to drill for oil, gas, reservoir. the rebuttable 1 i and related products referred to in s. 377.242(1), the (3) The applicant shall maintain records of well section (2) and th applicant must own a valid deed, or other muniment of pressures recorded monthly, and monthly volumes of natural gas story title, or lease granting said applicant the privilege to gas injected into and withdrawn from the reservoir, temporary water explore for oil, gas, or related mineral products to be These records shall be maintained at the natural gas readily available al extracted only through the well hole on the land or lands storage facility and shall be made available for inspec- tee owner oa te r use s included in the application. However, unallocated inter- tion by the department at any reasonable time. temporary wa s ests may be unitized according to S. 377.27. 4 a must be adequa (2) As a condition precedent s.to the issuance or ( )( ) The maximum storage pressure for natural purposes served t renewal t) of a permit,nd the precedent n t shall require issuance sa ce or gas storage reservoir shall be the highest shut-in bottom (4) A natural g; a evidence that the applicant divisio has ll r quire sa implemented, f is- hole pressure found to exist during the production history of the reservoir, unless a higher pressure is any o the to in any) the follower, in the process of implementing, programs for control of established by the department based on testing of pollution related to oil, petroleum products or their caprock and pool containment. The methods used for er on e activity y byproducts, and other pollutants and the abatement determining the higher pressure must be approved by alteration activity thereof when a discharge occurs. the department. prealteration surve . .1, .61-299, .25,35,ch.69-106;s.5,ch.72-394;s.70,ch. (b) The landowi History—s 1 ch 61-299 ss 25 79-65. (b) If the shut-in bottom hole pressure of the original discovery or of the highest production is not known,or a the operator survey.r 377.2431 Conditions for granting permits for higher pressure has not been established through a alteration(c) The wter natural gas storage facilities.— method approved by the department pursuant to para- un The water ; (1) A natural gas storage facility permit shall author- graph (a), the maximum storage reservoir pressure bou) The p the of ize the construction and operation of a natural gas must be limited to a freshwater hydrostatic gradient. ) The pollutioe storage facility and must be issued for the life of the (5) A completion a ed with h thr ( ) permit may not be issued for a natural gas associated with the facility, subject to recertification every 10 years. storage facility that includes a natural gas storage (2) Before issuing or recertifying a permit, the reservoir located beneath an underground source of (er The pollutioe department shall require satisfactory evidence of the drinking water unless the applicant demonstrates that other than actipen following: the injection,storage,or recovery of natural gas will not storage facility pen (a) The applicant has implemented, or is in the cause or allow natural gas to migrate into the under- (5) A natural se process of implementing, programs for the control and ground source of drinking water;in any offshore location preserve a defense mitigation of pollution related to oil, petroleum products in the Gulf of Mexico, the Straits of Florida, or the independent on sui or their byproducts, and other pollutants. Atlantic Ocean;or in any solution-mined cavern within a survey vey results p sue (b) The applicant or operator has acquired a lawful salt formation. survey results p^� right to drill, explore, or develop a natural gas storage the led by t ei g (6) A natural gas storage facility permit issued by the scribed by the law reservoir from owners of at least 75 percent of the department must contain a condition that requires the .storage rights within the natural gas storage reservoir; permittee to obtain the lawful right to develop qa natural (6) A natural c or the applicant or operator has obtained a certificate of gas storage reservoir from the owners of 100 ercent of provide written rn P purveyor indicatinc 1860 Packet Page-296- . F.S. 2013. F.S. 2013 ENERGY RESOURCES 6/10/2014 10.B. natural gas the storage rights within the natural gas storage under subsection (2) may be void if the landowner or ly Regulatory reservoir. water purveyor refused to allow the operator access to pct,15 U.S.C. History.-5.1a,on.2013205. conduct a predrilling or prealteration survey. Proof of •b moans to 377.2432 Natural gas storage facilities; protec- written notice to the landowner or water purveyor must lion of water supplies.— be provided to the department in order for the operator rill,_ into or pplles: to retain the protections under subsection 4 . rvoir or the (1) An operator of a natural gas storage facility who (7) This section does not prevent a landowner or :he status of affects a public or private underground water supply by water purveyor who claims pollution or diminution of a ad wells have pollution or diminution shall restore or replace the water supply from seeking any other remedy at law or in has not been affected supply with an alternate source of water equity. )ction opera- adequate in quantity and quality for the purposes served History.—s.15,ch.2013-205. the applicant by the supply. The department shall ensure that the the integrity quality of restored or replaced water is comparable to 377.2433 Protection of natural gas storage facil- )tective area. the quality of the water before it was affected by the hies; remedies.- ility of water operator. - (1) The department may not authorize the drilling of in the lateral (2) Unless rebutted by a defense established in any well into or through a permitted natural gas storage ity and corn- subsection(4), a natural gas storage facility operator is reservoir or reservoir protective area, except upon 7.2432. The presumed responsible for pollution of an underground conditions deemed by the department to be sufficient rid the owner water supply if: to prevent the loss,migration,or escape of gas from the of the water , (a) The water supply is within the lateral boundary of natural gas storage reservoir. The department shall h the natural gas storage facility; and provide written notice to the natural gas storage facility nether native (b) The pollution occurred within 6 months after operator of any application filed with the department and Dil or water of completion of drilling or alteration of any well under or any agency action taken related to drilling a well into or native gas or associated with the natural gas storage facility permit or through a permitted natural gas storage facility bound- Derator must the initial injection of gas into the natural gas storage ary or reservoir protective area. reservoir, whichever is later. ve gas or oil (2) As a condition for the issuance of a permit by the gas storage (3) If the affected underground water supply is within department, an applicant seeking to drill a well into or the rebuttable presumption area as provided in sub- through a permitted natural gas storage facility bound- ords of well section(2) and the rebuttable presumption applies,the ary or reservoir protective area must provide the natural gas storage facility operator shall provide a affected natural gas storage facility operator a reason- volumes of temporary water supply if the water user is without a able right of entry to observe and monitor all drilling le reservoir. readily available alternative source of water at no cost to natural gas activities. e for inspec- the owner or user of the affected water supply. The (3) The department shall require by permit condition e or temporary water supply provided under this subsection that any well drilled into or through a permitted natural for a natural must be adequate in quantity and quality for the gas storage reservoir or reservoir protective area is purposes served by the affected supply. cased and cemented in a manner sufficient to protect iv---•ottom (4) A natural gas storage facility operator rebuts the the integrity of the natura! as storage reservoir. action presumption in subsection (2) by affirmatively proving History.—s.16,ch.2013-205. g g pressure is any of the following: Jr) testing of a ods used for (a) The pollution existed before the drilling or 377.2434 Property rights to injected natural gas. alteration activity as determined by a predrilling or (1) All natural gas that has previously been reduced approved by prealteration survey. to possession and that is subsequently injected into a (b) The landowner or water purveyor refused to allow natural gas storage facility is at all times the property of if the original the operator access to conduct a predrilling or pre- the injector or the injector's heirs, successors, or t known,or a alteration survey. assigns, whether owned by the injector or stored •d through a (c) The water supply well is not within the lateral under contract. .pant to para- boundary of the natural gas storage facility. (2) Such gas may not be subject to the right of the oir pressure (d) The pollution occurred more than 6 months after owner of the surface of the lands or of any mineral gradient. completion of drilling or alteration of any well under or interest therein, under which the natural gas storage natural gas associated with the natural gas storage facility permit. facilities lie,or to the right of an gas storage g any person,otherthanthe gas source of (e) The pollution occurred as the result of a cause injector or the injector's heirs,successors,or assigns,to id other than activities authorized under the natural gas waste or otherwise interfere with or exercise control nstrates that storage facility permit. over such gas, to produce, to take, or to reduce to d gas will not (5) A natural gas storage facility operator electing to possession, by means of the law of capture or other- the under- preserve a defense under subsection(4)must retain an wise.This subsection does not affect the ownership of lore location independent certified laboratory to conduct a predrilling hydrocarbons occurring naturally within this state or the Tide, or the or prealteration survey of the water supply. A copy of right of the owner of the surface of the lands or of any vem within a survey results must be submitted to the department and mineral interest therein to drill or bore through the the landowner or water purveyor in the manner pre- natural gas storage facilities in a manner that will protect ssued by the scribed by the department. the facilities against pollution or the escape of stored requires the (6) A natural gas storage facility operator must natural gas. lop a natural - provide written notice to the landowner or water (3) With regard to natural gas that has migrated to )0 percent of purveyor indicating that the presumption established adjoining property or to a stratum, or portion thereof, `it 1861 a • Packet Pare-297- 6/10/2014 10.B. Ch. 377 ENERGY RESOURCES F.S. 2013 F.S. 2013 which has not been condemned or otherwise pur- activities are conducted for substances which come (d) The de chased: within the purview of the regulatory provisions of this procedure so (a) The injector or the injector's heirs,successors,or act. _ rights parcels assigns: History.—s.1,ch.61-299;ss.25,35,ch.69-106;s.71.oh.79-65. within the drill 1. May not lose title to or possession of the gas if the (e) The op injector or the injector's heirs, successors, or assigns 377.245 Provision for distribution of earnings to bonus determ can prove by a preponderance of the evidence that the lessees or owners of the fractional undivided Trust Fund. gas was originally injected into the underground sto- mineral rights not owned by applicant for permit (f) The op( rage; and under ss. 377.243 and 377.244.—Lessees or owners in the county• 2. Have the right to conduct tests on any existing of the fractional undivided oil,gas or other mineral rights (g) The op wells on adjoining property as may be reasonable to in lands described in permits issued under the provi- the applicatior determine ownership of the gas,but the tests are solely sions of ss. 377.243 and 377.244, not owned by the (2) The prc at the injector's risk and expense. applicant named in said permits, shall, as to all mineral owner (b) The owner of the stratum and the owner of the productive wells or surface mineral operations on said amounts desic surface are entitled to compensation, including corn- lands,be entitled to and be paid their pro rata part of the established in pensation for use of or damage to the surface or earnings after costs of exploration and operation have (a) The an' substratum, as provided by law. been allocated. The division shall prescribe such one-time,per-i History.—s.17,oh.2013-205. reasonable and appropriate rules and regulations as 1994, this fig shall be deemed necessary and proper to implement the percentage ec 377.2435 Rule adoption relating to natural gas provisions of this section and all other sections of this index publishe storage.—The Department of Environmental Protec- act. Commerce. tion shall adopt rules relating to natural gas storage History.—s.1,ch.61-299;ss.25,35,ch.69-106. (b) The arm before issuing a natural gas storage facility permit. History.—s.25,on.2013-205. 377.247 Designation and distribution of earn- ei(3)h) O of the p ( Once th 377.244 Conditions for rantin ings owed to owners of mineral rights who are on an annual b g g permits for sur- unknown or unlocated.— date of the ordi face exploratory and extraction operations.— (1) In the event that the operator of a well cannot oil and gase—'■ (1) Exploration for and extraction of minerals under locate the owner of a minority mineral interest within a share of rc and by virtue of the authority of a grant of oil, gas, or drilling unit or the identity of the minority mineral interest unlocated ml�le mineral rights,or which,subsequent to such grant, may owner remains unknown to the operator after reason- these funds in be interpreted to include the right to explore for and able and diligent attempts to locate said owner, the drilling units sc extract minerals which are subject to extraction from the operator may request that the department act in a accounting for land by means other than through a well hole,that is by p y q uest de p means of surface exploratory and extraction operations receivership capacity for these rights.These rights shall graph (1)(d). ' such as sifting of the sands,dragline,open pit mining,or be administratively assigned to the operator and Minerals Trust other type of surface operation, which would include designated as "leased to the operator" by an oil and the unknown oi movement of sands, dirt, rock, or minerals, shall be gas order of the department for the economic life of the ment shall rel exercised only pursuant to permit issued by the Division well after satisfying the following conditions: independent CE of Resource Management upon applicant complying (a) The oil and gas administrator has been provided accuracy of the with the following conditions: a legal description and a current title opinion for the gas administrat (a) The applicant must own a valid deed, or other mineral rights or interests at issue. expense of the muniment of title,or lease granting applicant the right to (b) The operator has attempted to locate the owner shares on dept explore for and extract oil, gas,and other minerals from of the mineral rights and has provided the oil and gas unknown or unl said lands. administrator documentation that the attempt was in a of record for thi (b) The applicant shall post a good and sufficient diligent manner. For purposes of this subsection, a located.The pul surety bond with the division in such amount as the diligent attempt to notify shall be an attempt to contact tion that would I dmi ni s c division may determine is adequate to afford full and the owner by registered mail at the owner's last known ain shall complete protection for the owner of the surface rights of address. admstrator foi the lands described in the application,conditioned upon (c) The oil and gas administrator has prepared and owner is identifi the full and complete restoration,by the applicant,of the the department has adopted an order that describes: (4) Should c area over which the exploratory and extraction opera- the mineral interest,the record of the attempt to locate person come s fc tions are conducted to the same condition and contour the owner, the pro rata share of the earnings from the department shat in existence prior to such operations. well owed to this mineral owner, and the method by of the claim.ache (2) The provisions of this act shall not apply to the which the pro rata share was determined. The order ' to the opa or s exploration and removal from lands of peat,muck,marl, shall designate the operator as"lessee"for revenue and to the operator s limestone, limerock, kaolin, fuller's earth, hos hate, accountin be made directl' p p g purposes. The order shall remain in effect economic life of common clays, gravel, shell, sand, and similar sub- for the economic life of the well but must contain a (5) Upon issi. stances, it being the legislative determination that the provision that allows for direct payment by the operator now administrat mining and extraction operations, and the grants of to the mineral owner of the pro rata share in the event entitled to sr authority under which these activities are conducted for that the mineral owner is identified. A single order minerals,ar. said substances exempted from the provisions of this issued by the department may apply to one or more entitled to the pi act, are dissimilar from the exploratory and extraction unknown Or unlocated mineral owners in a single unit or value of the proc operations and the grants of authority under which these more than one unit in a single field. the well.The ope 1862 ' Packet Page-298- F.S. 2013 F.S. 2013 ENERGY RESOURCES 6/10/2014 B. Ch.. 3 37 77 r s which come (d) The department has established an accounting lien on the mineral rights by operator's failure to pay visions of this procedure so that funds can be allocated to mineral applicable state and county taxes. rights parcels owned by unknown or unlocated persons (6) If the funds on deposit remain unclaimed,after a °h^\ within the drilling unit. period of 5 years from the date of first production from (e) The operator has deposited a sum equal to the the well, the funds are presumed abandoned and shall of ba,flings to bonus determined in paragraph (2)(a)into the Minerals be disposed of pursuant to chapter 717. at undivided Trust Fund. ant for permit (7) For purposes of this section, the term"unit"shall (f) The operator has filed the order as a public record also mean"unit operation"as used in s. 377.28. ;ees or owners in the county where the unit is located. History.—s.3,ch.94-193;s.55,ch.96-321. r mineral rights (g) The operator has paid a filing fee equivalent to Zder the provi- the application fee for a permit to drill an oil and gas well. 377.25 Production pools; drilling units.— owned by the (2) The pro rata share due the unknown or unlocated (1) No rule, regulation or order of the division shall call, as to all mineral owner shall be the total of the bonus and royalty be such in terms or effect: rations on said amounts designated by the oil and gas administrator as (a) That it shall be necessary at any time for the rata part of the established in the-following manner: producer from,or the owner of,a tract of land in the pool, operation have (a) The amount of$25 per acre shall be paid as a in order that he or she may obtain such tract's just and rescribe such one-time,per-acre bonus providing that from October 1, equitable share of the production of such pool,as such regulations as 1994, this figure shall be increased annually by a share is set forth in this section,to drill and operate any i implement the percentage equal to the increase in the cost-of-living well or wells on such tract in addition to such well or sections of this index published by the United States Department of wells as can without waste produce such share, or Commerce. (b) As to occasion net drainage from a tract, unless (b) The amount of royalty shall be the value of one- there be drilled and operated upon such tract a well or eighth of the produced oil and gas for the unit. wells in addition to such well or wells thereon as can ition of earn- (3) Once the department has issued the order and without waste produce such tract's just and equitable ghts who are on an annual basis,within 30 days after the anniversary share, as set forth in this section, of the production of date of the order,the operator shall forward funds to the such pool. a well cannot oil and gas administrator in the amount of the pro rata (2) For the prevention of waste and to avoid the iterest within a share of royalty identified as belonging to an unknown or augmenting and accumulation of risks arising from the -mneral interest unlocated mineral owner.The operator may elect to pay drilling of an excessive number of wells,the board shall 'r after reason- these funds in a lump sum, annually, for one or more establish a drilling unit or units for each pool. A drilling aid owner, the drilling units so long as they are accompanied by an unit,as contemplated herein,means the maximum area ment act in a accounting for each entity as established under para- in a pool which may be efficiently and economically ese rights shall graph (1)(d). The funds shall be deposited in the drained by one well, and such unit shall constitute a operator and Minerals Trust Fund on account for and on behalf of developed area as long as a well is located thereon byte oil and the unknown or unlocated mineral owner. The depart- which is capable of producing oil or gas in paying for 9 of the ment shall require an annual statement from an quantities. on independent certified public accountant verifying the (3) Each well permitted to be drilled upon any drilling been provided accuracy of the royalty accounting.Annually,the oil and unit shall be drilled approximately in the center thereof, opinion for the gas administrator shall cause to have published at the with such exception as may be reasonably necessary expense of the operator a notice of the value of pro rata where the division finds that the unit is partly outside the cate the owner shares on deposit in the Minerals Trust Fund for all pool or,for some other reason, a well approximately in the oil and gas unknown or unlocated mineral owners in a newspaper the center of the unit would be nonproductive or where tempt was in a of record for the county in which the producing unit is .topographical conditions are such as to make the drilling subsection, a located.The published notice shall provide any informa- approximately in the center of the unit unduly burden ?mot to contact tion that would help to identify or locate the owner.The some or where the operator proposes to complete the er's last known royalties shall continue to be sent to the oil and gas well with a horizontal or nearly horizontal well in the administrator for the economic life of the well unless the producing zone.Whenever an exception is granted,the prepared and owner is identified. division shall take such action as will offset any that describes: (4) Should a previously unidentified or unknown advantage which the person securing the exception person come forward to claim a pro rata share, the may have over other producers by reason of the drilling tempt to locate department shall disburse the amount of principal and of the well as an exception, and so that drainage from rnings from the interest on account after verification of the authenticity developed units to the tract, with respect to which the the method by of the claim.The name of the person shall then be given exception is granted, will be prevented or minimized, led. The order to the operator so that continuing royalty payments can and the producer of the well drilled,as an exception,will or revenue and be made directly to the person through the remaining be allowed to produce no more than his or her just and emain in effect economic life of the well. equitable share of the oil and as in the pool, as such nust contain a (5) Upon issuance of the order,the operator who is share is set forth in this section. This subsection does by the operator now administratively designated as "lessee" shall be not apply to wells associated with a natural gas storage ire in the event entitled to seven-eighths of the value of the produced facility. A single order minerals,and the unknown or unlocated owner shall be (4) Subject to the reasonable requirements for o one or more - entitled to the pro rata share of the one-eighth of the prevention of waste, a producer's just and equitable a single unit or value of the produced minerals for the economic life of share of the oil and gas in the pool, also sometimes p , the well The operator is prohibited from causing any tax referred to as a tract's just and equitable share, is that ,_ 1863 • Packet Pare-299- 6/10/2014 10.B. Ch. 377 ENERGY RESOURCES F.S. 2013 F.S. 2013 part of the authorized production for the pool,whether it referenced to established governmental section corners upon the corre be the total which could be produced without any which may exist within the field. Permanent monuments determine the ar restriction on the amount of production, or whether it installed pursuant to this section shall be protected and the owners of be an amount less than that which the pool could maintained by the operator for the life of the field. considered exr produce if no restriction on amount were imposed, History—s.21,ch.22819,1945;ss.25,35,ch.69-106;s.78,ch.96-323. against such tra which is substantially in the proportion that the quantity may be treated i of recoverable oil and gas in the developed area of his or 377.28 Cycling, pooling, and unitization of oil separate from tl- her tract or tracts in the pool bears to the recoverable oil and gas.— (e) A provisio and gas in the total developed area of the pool, insofar (1) The department may consider the need for the operation, incluc as these amounts can be practically ascertained; and, operation as a unit of an entire field, or of any pool or be charged to th to that end,the rules,regulations,permits,and orders of pools,portion or portions,or combinations thereof within proportions that the division shall be such as will prevent or minimize a field,for the production of oil or gas,or both,and other The expenses ct reasonably avoidable net drainage from each devel- minerals which may be associated and produced person not enti oped unit, that is, drainage which is not equalized by therewith, in order to avoid the drilling of unnecessary operating costs counterdrainage, and will give to each producer the wells, otherwise to prevent waste, or to increase the operation, woulc opportunity to use his or her just and equitable share of ultimate recovery of the unitized minerals by additional developing and the reservoir energy. recovery methods. son's interest in History,—s.19,ch.22819,1945;ss.25,35,ch.69-106;s.23,ch.78-95;s.623, (2) The department shall issue an order requiring E ch.95-148;s.76,ch.96-323;s.18,ch.2013-205. primarily respon. .unit operation if it finds that: of such persons i 377.26 Location of wells.—Whenever the division (a) Unit operation of the field,or of any pool or pools, for the payment fixes the location of any well or wells on the surface,the portion or portions, or combinations thereof within the several, and not point at which the maximum penetration of such well field,is reasonably necessary to prevent waste,to avoid shall have a first into the producing formation is reached shall not the drilling of unnecessary wells, or to increase the 1. The lease unreasonably vary from the vertical drawn from the ultimate recovery of oil or gas by additional recovery interest provided center of the hole at the surface; provided, that the methods; gas rights, exclu: division shall prescribe rules, regulations and orders (b) The estimated additional cost incident to the and to each "."-- governing the reasonableness of such variation, and conduct of such operation will not exceed the value of 2. The in shall take into account technological advances in drilling the estimated additional recovery of oil or gas; and unit production at and production technology,including,but not limited to, (c) The additional recovery of oil or gas does not unit, horizontal well completions in the producing formation adversely interfere with the storage or recovery of using directional drilling methods. natural gas within a natural gas storage reservoir. to secure the payr History.--s.20,ch.22819,1945;ss.25,35,ch.69-106;s.77,ch.96-323. charged to and The phrase "additional recovery methods" as used owned tract. 377.27 Drilling units.— herein includes, but is not limited to, the maintenance (1) When two or more separately owned tracts of or partial maintenance of reservoir pressures;recycling; The design land are embraced within an established drilling unit,the flooding a pool or pools, or parts thereof, with air, gas, tion the e a unit open b owners thereof may validly agree to integrate their water,liquid hydrocarbons,any other substance,or any by the unit e interest and to develop their lands as a drilling unit. combination thereof; or any other method of producing the unit operator additional hydrocarbons approved by the department. provisions of the i Where, however, such owners have not agreed to Y PP Y (g) A provision integrate their interests, the division shall, for the (3) The order shall be fair and reasonable under all prevention of waste and to avoid the risks involved in the circumstances,shall protect the rights of interested charge made agai the drilling of unnecessary wells,require such owners to parties, and shall include: 1- tract is not paid do so and to develop their lands as a drilling unit. (a) A description of the area embraced, termed the primarily responsil (2) Should the owners of separate tracts embraced "unit area" and a description of the pool or pools, or production allocat within a drilling unit fail to agree upon the integration of portions thereof,affected and lying within the unit area. separately owned the tracts and the drilling of a well on the unit,and should (b) A statement of the nature of the operations may be appropriat it be established that the division is without authority to contemplated. and sold for the p� require integration as provided for in subsection (1), (c) A method of allocation among the separately interest at a rate of then, subject to all other applicable provisions of this owned tracts in the unit area of all the oil or gas,or both, portion of the unit law, the owners of each tract embraced within the produced from the unit pool within the unit area and not therefrom, allocati drilling unit may drill on their respective tracts; but the required in the conduct of such operation or unavoidably shall in all events allowable production therefrom shall be such proportion lost,such method of allocation to be on a formula that is the owners, free a of the allowable for the full drilling unit as the area of fair and equitable and that will protect the correlative :. and clear of any such separately owned tract bears to the full drilling unit. rights of all interested parties. overriding royalty,■ (3) The department may allow a person who is an (d) A provision for adjustment among the owners of who is not primarily applicant for a drilling permit in areas lacking adequate the unit area (not including royalty owners) of their shall,to the extent governmental survey control to define a proposed respective investments in wells,tanks, pumps, machin- or her share, be st drilling unit using latitude and longitude coordinates ery,materials,equipment,and other things and services operator with/ determined from global positioning satellites and instru- of value attributable to the unit operations.The amount primarily resp ment systems, if at least one permanent reference to be charged unit operations for any such item shall be received by t,. monument is installed within each proposed unit. In the determined by the owners of the unit area(not including production shall be event of a new field discovery,the latitude and longitude royalty owners).However,if said owners of the unit area 4. from whom it was coordinates of the permanent monument shall be are unable to agree upon the amount of such charges or respective interest. 1864 Packet Page-300- My F.S.2013 ENERGY RESOURCES F.S. 2013 'f a 6/10/2014 O.B -- — — . - --_ -. r upon the correctness thereof, the department shall (h) The time the unit operation shall become effec- section corners determine the amount.The net amount charged against tive and the manner in which, and the circumstances ent monuments the owners of a separately owned tract shall be under which, the unit operation shall terminate. e pr,g,tpcted and considered expense of unit operation chargeable (4) An order requiring unit operation shall not )G. �f Id. ' against such tract. The adjustment provided for herein become effective unless and until: . 9&323. may be treated separately and handled by agreements (a) A contract incorporating the unitization agree- itization of oil ' separate from the unitization agreement. ment has been signed or ratified or approved in writing (e) A provision that the costs and expenses of unit by the owners of at least 75 percent in interest as costs he need for the operation, including investment, past and prospective, are shared under the terms of the order and by 75 1r of any pool or be charged to the separately owned tracts in the same percent in interest as production is to be allocated to the ns thereof within proportions that such tracts share in unit production. royalty owners in the unit area. If any entity owns both r both,and other , The expenses chargeable to a tract shall be paid by the royalty interests and interests responsible for costs, and produced person not entitled to share in production free of such party may vote as an owner responsible for costs of unnecessary operating costs and who, in the absence of unit or as a royalty owner, at his or her election, but not as to increase the operation, would be responsible for the expense of both, and the entity's interest that is not voted shall be als by additional developing and operating such tracts, and such per- excluded in calculating the percentages of consent and son's interest in the separately owned tract shall be nonconsent. i order requiring primarily responsible therefor.The obligation or liability (b) A contract incorporating the required arrange- of such persons in the several,separately owned tracts ments for operations has been signed or ratified or my pool or pools, for the payment of unit expense shall at all times be approved in writing by the owners of at least 75 percent hereof within the several, and not joint or collective. The unit operator in interest as costs are shared, it waste,to avoid shall have a first and prior lien upon: and the department has made a finding to that effect to increase the 1. The leasehold estate, exclusive of the royalty either in the order or in a supplemental order. Both iditional recovery interest provided thereby, and upon unleased oil and contracts may be encompassed in a single document. gas rights, exclusive of one-eighth interest therein, in In the event the required percentage interests have not incident to the and to each separately owned tract; and signed,ratified,or approved the said agreements within ;eed the value of 2. The interest of the owners thereof in and to the 6 months after the date of such order, or within such iil or gas; and unit production and all equipment in possession of the extended period as the department may prescribe, it or gas does not unit, shall be automatically revoked. or recovery of (5)(a) The department, by entry of new or amending ge reservoir. to secure the payment of the amount of the unit expense orders, may from time to time add to unit operations charged to and assessed against such separately portions of pools not theretofore included, may add to ethods" as used I owned tract. unit operations new pools or portions thereof,and may the maintenance (f) The designation of, or a provision for the selec- :ssures;recycling; extend the unit area as required. Any such order, in tion of,a unit operator.The conduct of all unit operations providing for allocation of production from a unitized ec'' h air, gas, by the unit operator and the selection of a successor to zone of the unit area,shall first allocate to such pool or SL ,ce,or any the unit operator shall be governed by the terms and pools or portion thereof so added a portion of the total Thou of producing provisions of the unitization agreements. production of oil or gas,or both,from all pools affected the department. (g) A provision that when the full amount of any within the unit area,as enlarged,and not required in the Isonable under all charge made against any interest in a separately owned conduct of unit operations or unavoidably lost; such ights of interested tract is not paid when due by the person or persons allocation to be based on a formula for sharing that is primarily responsible therefor,then all of the oil and gas considered to treat each tract and each owner fairly and raced, termed the production allocated to the interest in default in such . equitably during the remaining course of unit opera- pool or pools, or separately owned tract,upon which operator has a lien, tions.The production so allocated to such added pool or rithin the unit area. may be appropriated by the unit operator and marketed pools or portions thereof shall be allocated to the of the operations and sold for the payment of such charge,together with separately owned tracts which participate in such interest at a rate of 6 percent per annum.The remaining production on a fair and equitable basis.The remaining ng the separately portion of the unit production, or the proceeds derived portion of unit production shall be allocated among the oil or gas,or both, therefrom, allocated to each separately owned tract e unit area and not ,• P Y separately owned tracts within the previously estab- oon unit unavoidably shall in all events be regarded as royalty to be paid to lished unit area in the same proportions as those on a formula that is ,„, the owners, free and clear of all unit expense and free specified prior to the enlargement unless such propor- :ect the correlative :; and clear of any lien therefor. The owner of any tions are shown to be erroneous by data developed overriding royalty,oil and gas payment,or other interest subsequent to the former determination,in which event who is not primarily responsible for the unpaid obligation the errors shall be corrected.Orders promulgated under long the owners of shall,to the extent of any payment or deduction from his this section shall become operative at 7 a.m.on the first V owners) of their ^;;-% or her share, be subrogated to all the rights of the unit day of the month next following the day on which the ,. Y P Y cs,pumps,machin- things and services operator with respect to the interest or interests order becomes effective. tions.The amount primarily responsible for such payment. Any surplus (b) An order promulgated by the department shall not such item shall be received by the operator from any such sale of become effective unless and until: area(not including , production shall be credited to the person or persons 1. All of the terms and provisions of the unitization Hers of the unit area r from whom it was deducted, in the proportion of their agreement relating to the extension or enlargement of t of such charges or : i u respective interest. the unit area or to the addition of pools or portions "' 1865 Packet Pare-301- 6/10/2014 10.B. Ch.377 ENERGY RESOURCES F.S.2013 F.S. 2013 thereof to unit operations have been fulfilled and from the wells drilled by such designated operator the uniform program satisfied and evidence thereof has been submitted to actual expenditures required for such purpose, not in the division shall the department. • excess of what are reasonable, including a reasonable amount of natun 2. The extension or addition effected by such order charge for supervision,and the operator shall have the quately the reaso has been agreed to in writing by the owners of at least right to receive the first production from such wells light and fuel p 75 percent in interest as costs are shared in the area or drilled by him or her thereon which otherwise would be obtained without pools or portions thereof to be added to the unit delivered or paid to the other parties jointly interested in the amount allot operation by such order and by 75 percent in interest the drilling of the well so that the amount due by each of allowable for the as production is to be allocated to the royalty owners in them for his or her share of the expense of drilling, the pool should the area or pools or portions thereof to be added to the equipping, and operating the well may be paid to the division shall fix tl unit operations by such order and evidence thereof has operator of the well out of production, with the value of will be prevented been submitted to the department. If any entity owns production calculated at the market price in the field at (2) Whenever both royalty interests and interests responsible for the time such production is received by the operator or oil or gas which costs, such party may vote as an owner responsible placed to his or her credit. In the event of any dispute state to an amour for costs or as a royalty owner,at his or her election,but relative to such costs, the division shall determine the could produce if not as both, and the entity's interest that is not voted proper cost. In the event a dry hole should be drilled on limitation may b shall be excluded in calculating the percentages of an individual drilling unit, no liability for any part of the without, a limitat consent and nonconsent. cost of drilling said well shall attach to any person or which may be pr, . persons by reason of the unit operation order of the prorate or distribu In the event both of the requirements specified in department. producers in the subparagraphs 1.and 2.are not fulfilled within 6 months History.—s.22,ch.22819,1945;ss.25,35,ch.69-106;s.1,ch.74-316;s.1, prevent or minir after the date of such order, or within such extended 2013-21774;s.23,ch.78-95;s.313,ch.94-356;s.1022.ch.95-148;s.19,ch. from each devel period as the department may prescribe, it shall be counterdrainage, automatically revoked. 377.29 Agreements in interest of conservation. the opportunity to (6) When the contribution of a separately owned Agreements made in the interest of conservation of oil equitable share, tract with respect to any unit pool has been established, or gas, or both,or for the prevention of waste, between reasonable r such contribution shall not be subsequently altered and among owners and operators, or both, owning (3) After except to correct a mathematical or clerical error that separate holdings in the same oil or gas pool, or in any order of the di,,..,0 caused the tract contribution to be erroneous,unless an area that appears from geological or other data to be or gas, or both, f enlargement of the unit is effected. No change or underlaid, by a common accumulation of oil or gas, or from any well,lea correction of the contribution of any separately owned both,or between and among such owners or operators, production which tract shall be given retroactive effect, but appropriate or both,and royalty owners therein,of the pool or area, be produced in a adjustment shall be made for the investment charges as or any part thereof, as a unit for establishing and be authorized. provided in this section. carrying out a plan for the cooperative development and (4) This sectil (7) The portion of unit production allocated to a operation thereof,when such agreements are approved recovered from a separately owned tract within the unit area shall be by the division, are hereby authorized and shall not be History.—s.24,ch.Z deemed, for all purposes, to have been actually y y 20,�n.2013-205. held or construed to violate any of the statutes of this produced from such tract, and operations with respect state relating to trusts, monopolies, or contracts and 377.31 Evide to any unit pool within the unit area shall be deemed,for combinations in restraint of trade. copy of any divis all purposes, to be the conduct of operations for the History.—s.23,ch.22819,1945;ss.25,35,ch.69-106. received in evide production of oil or gas, or both, from each separately same effect as tr owned tract in the unit area. 377.30 Limitation on amount of oil or gas taken. History.—s.25,ch.2; (8) Subsections (1)-(7) shall apply only to field or (1) Whenever the total amount of oil or gas which all pool units, and shall not apply to the unitization of the pools in the state can produce exceeds the amount 377.32 Issua interests within an individual drilling unit. reasonably required to meet the reasonable market (1) The divisi (9) All orders requiring integration, pooling, cycling, demand for oil or gas in this state,then the division shall subpoenas for w repressuring pressure maintenance, or secondary re- limit the total amount of oil or gas which may be and the giving of covery operations shall be upon terms and conditions produced in the state by fixing an-allowable for the production of b, that are just and reasonable, will afford to the owner of state among the pools on a reasonable basis and in proceeding befoi each tract the opportunity to recover his or her just and such a manner as to avoid undue discrimination,and so '' upon questions equitable share of the oil and gas in the pool without that waste will be prevented. In allocating the allowable subpoenas shall unnecessary expense, and, as to individual drilling for the state,and in fixing allowable for pools producing officer authorized units, will prevent or minimize reasonably avoidable oil or gas, the division shall take into account the li No person shall t drainage from each unit which is not equalized by producing conditions and other relevant facts with a ing, or from pro counterdrainage. The portion of the production alto- respect to such pools, including the separate needs before the divisio cated to the owner of each tract included in unit for oil and gas and shall formulate rules setting forth subpoena of the c operation formed by a unit operation 'order shall, standards or a program for the distribution of the the reason that th when produced, be considered as if it had been allowable for the state,and shall distribute the allowable , or otherwise produced from such tract by a well drilled thereon. In for the state in accordance with such standards or incriminate h the event such integration or pooling is required, the program,and where conditions in one pool or area are or forfeiture; pia operator designated by the department to develop and substantially similar to those in another pool or area, '' shall be construe operate the unit operation shall have the right to charge then the same standards or program shall be applied to l*, any books, paper against each other owner's interest in the production such pools and areas so that as far as practicable a to any inquiry no lass Packet Page-302- F.S. 2013 F.S. 2013 ENERGY RESOURCES 6/10/2014 10.B. operator the uniform program will be followed; provided, however, before the division or court for determination.No natural rpose, not in the division shall permit the production of a sufficient person shall be subjected to criminal prosecution or to a reasonable amount of natural gas from any pool to supply ade- any penalty or forfeiture for, or on account of, any ;hall have the / quately the reasonable market demand for such gas for transaction,matter,or thing concerning which he or she n \wells ;1 light and fuel purposes if such production can be may be required to testify or produce evidence, is Jld be obtained without waste; and provided, further, that if documentary, or otherwise, before the division or interested in the amount allocated to a pool as its share of the court, or in obedience to its subpoena; provided, that ue by each of allowable for the state is in excess of the amount which no person testifying shall be exempted from prosecution >e of drilling, the pool should produce to prevent waste, then the and punishment for perjury committed in so testifying. a paid to the division shall fix the allowable for the pool so that waste (2) In case of failure or refusal on the part of any 1 the value of will be prevented. person to comply with any subpoena issued by the in the field at (2) Whenever the division limits the total amount of division, or, in case of the refusal of any witness to e operator or ! oil or gas which may be produced in any pool in this testify or answer as to any matter regarding which he or f any dispute state to an amount less than that amount which the pool she may be lawfully interrogated,any circuit court in this letermine the could produce if no restriction were imposed, which state, on the application of the division, may issue an be drilled on limitation may be imposed either incidentally to, or attachment for such person and compel him or her to ty part of the without, a limitation of the total amount of oil or gas comply with such subpoena and to attend before the ny person or which may be produced in the state, the division shall division and produce such documents, and give his or order of the prorate or distribute the allowable production among the her testimony upon such matters as may be lawfully producers in the pool on a reasonable basis so as to required,and such court shall have the power to punish 1,ch.74-316;s.1, prevent or minimize reasonably avoidable drainage for contempt as in case of disobedience of like 95-148;S. 19,ch. from each developed unit which is not equalized by subpoena issued by or from such court, or for refusal counterdrainage, and so that each producer will have to testify therein. )nservation. the opportunity to produce or receive his or her just and History.—s.26,ch.22819,1945;s.23,ch.29737,1955;ss.25,35,ch.69-106; ;rvation of oil equitable share, as above set forth, subject to the S.525,a,.ss-tae. ste, between reasonable requirement for the prevention of waste. 377.33 Injunctions against division.— Doth, owning (3) After the effective date of any rule, regulation or (1) Any interested person adversely affected by any ool,or in any order of the division fixing the allowable production of oil statute of this state with respect to conservation of oil or ar data to be or gas, or both, for any pool, no person shall produce gas,or both,or may oil or gas, or from any well,lease or property more than the allowable g n provisions of this law ma seek relief or operators, production which is applicable, nor shall such amount by a suit for injunction against the division, as defen- or or area, be produced in a different manner than that which may dant, or the members thereof by suit in the chancery iblishing and be authorized. court in the county or counties wherein the property �lopment and (4) This section does not apply to nonnative gas involved is situated, or in the chancery court of Leon are approved recovered from a permitted natural gas storage facility. County.Such suit shall have precedence over all other History.—s.24,oh.22819,1945;ss.25,35,ch.69-106;s.624,ch.95-148;S. causes, proceedings, or suits on the docket of a I shale of be 20,ch.2013-205. different nature, and the attorne y representing the f this division may have the case set for trial after 10 days' on. .s and 377.31 Evidence of rules and orders.-A certified notice to the plaintiff or his or her attorney, Such trial copy of any division rule, regulation, or order shall be shall be de novo,and the burden of proof shall be upon received in evidence in all courts of this state with the the plaintiff. The statute or provision of this law rr gas taken. same effect as the original thereof. complained of shall be taken as prima facie valid, and g History.-s.25,ch.22819,1945;ss.25,35,ch.69-106;s.23,ch.78-95. such presumption shall not be overcome, in connection gas which all with any application for injunctive relief, including s the amount 377.32 Issuance of subpoenas; service,etc.— temporary restraining order, by verified complaint or cable market (1) The division is hereby empowered to issue affidavit of, or in behalf of,the applicant. division shall subpoenas for witnesses, to require their attendance (2) No temporary restraining order or injunction shall rich may be and the giving of testimony before it, and to require the be granted against the division or against its attorneys, /able for the production of books, papers, and records in any agents, employees, or representatives restraining the basis and in proceeding before the division as may be material attorneys, agents, employees, or representatives from ration,and so upon questions lawfully before the division. Such enforcing any statute of this state relating to conserva- the allowable subpoenas shall be served by the sheriff or any other tion of oil or gas, or any of the provisions of this law, )Is producing officer authorized by law to serve process in this state. except after due notice, served upon the executive account the No person shall be excused from attending and testify- director of the department,and after a hearing at which it facts with ing, or from producing books, papers, and records it shall be shown to the court by legal evidence that the rarate needs before the division or a court, or from obedience to the act done or threatened is without sanction of law or that setting forth subpoena of the division or a court,on the ground or for the provisions of this law are invalid or unreasonable ution of the the reason that the testimony or evidence,documentary and, if enforced against the complaining party, will the allowable or otherwise, required of the person may tend to cause an irreparable injury. If the division shall so standards or incriminate him or her or subject him or her to a penalty request at such hearing, it shall be entitled to a trial on >I or area are or forfeiture; provided, that nothing herein contained the merits within 10 days after the granting of any Dool or area, -- - shall be construed as requiring any person to produce temporary order,and,if the plaintiff is not ready for trial be applied to ----- any books, papers, or records, or to testify in response at such time, the court shall be authorized to dissolve practicable a to any inquiry not pertinent to some question lawfully the temporary restraining order. 1867 III Packet Pare-303- 6/10/2014 10.B. • Ch. 377 ENERGY RESOURCES F.S.2013 F.S. 2013 (3) No temporary injunction of any kind against the division, or the Department of Legal Affairs, mailing and abating tl division, or against its attorneys,agents,employees,or copy of the complaint in the action to the defendant at restoring the ail representatives,shall become effective until the plaintiff the address of the defendant then recorded with the plant, and aqu: shall execute a bond in the amount and upon the division, or the Department of Legal Affairs. person, lessee conditions the court directs. The bond shall be made History.—s.30,ch.22819,1945;s.1,ch.69-350;ss.11,25,35,ch.69-106;s. the judicial imp to the Governor and his or her successors in 627,ch.95-148;s.21,ch.2013-205. payable not more than; office,shall be approved by the court or clerk, and shall 377.35 Suits, proceedings, appeals, etc.—In all court may reci be for the use and benefit of all persons who may be during any pa injured by the acts done under the protection of the proceedings brought under authority of this law, or of constitutes a s injunction. any oil or gas conservation statute of this state,or of any give the departr History.—ss.27-29,ch.22819,1945;s.10,ch.26484,1951;s.2,ch.29737, rule, regulation, or order made thereunder, and in all of any private F 1955;as.25,35,ch.69-106;5.27,ch.74-382;s.23,ch.78-95;s.88,ch.79-164;5. proceedings instituted for the purpose of contesting the 626,ch.95-148. (b) WhenevE validi of any validity y provision of the law, or of any oil or gas waters of the str conservation statute,or of any rule, regulation, or order 377.34 Actions and injunctions by division.— regulation,or of made thereunder,review may be had pursuant to Art.V, (1) Whenever it appears that a person is violating,or State Constitution; the Florida Rules of Appellate that the damagE threatening to violate, any statute of this state with Procedure; and chapter 120. severally liable respect to the conservation of oil or gas,or both,or any History.—s.31,ch.22819,1945;s.22,ch.63-512;s.121,ch.77-104. cost and expen provision of this law, or any rule, regulation or order source of the d made by any act done in the operation of a well 377.36 False entries and statements; incom- source and tht producing oil or gas, or storing or recovering natural plete entries; penalties.—Any person who, for the waters, and pm gas, or by omitting an act required to be done, the purpose of evading this law, or of evading any rule, aquatic life, of division,through its counsel,or the Department of Legal regulation, or order made hereunder,shall intentionally However, if th Affairs on its own initiative, may bring suit against such make,or cause to be made,any false entry or statement attributed to a person in the Circuit Court in the County of Leon,state, of fact in any report required to be made by this law,or violator is liablE or in the circuit court in the county in which the well in by any rule, regulation, or order made hereunder; or his or her violet question is located, at the option of the division, or the who, for such purpose, shall make, or cause to be (c) The payr Department of Legal Affairs,to restrain such person or made, any false entry in any account, record, or provided foe" persons from continuing such violation or from carrying memorandum kept by any person in connection with illegal prod1 out the threat of violation. In such suit, the division, or any provision of this law, or of any rule, regulation, or or illegal gas intc the Department of Legal Affairs,may obtain injunctions, order made hereunder; or who,for such purpose, shall the effect of autl prohibitory and mandatory, including temporary re- omit to make, or cause to be omitted, full, true, and transportation, r straining orders and temporary injunctions, as the correct entries in such accounts, records, or memor other way of suc facts may warrant, including, when appropriate, an (d) The payn injunction restraining any ands, of all facts and transactions pertaining to the j g y person from moving or dis- interest or activities in the petroleum industry of such shall not impair c posing of illegal oil,illegal gas or illegal product,and any person, as may be required by the division under person may he or all such commodities may be ordered to be im- authority given in this law, or by any rule, regulation, provision of this pounded or placed under the control of a receiver for an injury rest or order made hereunder; or who, for such purpose, appointed by the court if, in the judgment of the court, shall remove out of the jurisdiction of the state, or who (2) Any per; such action is advisable. abetting any oth (2) In the event the division, or the Department of shall mutilate, alter,or, by any other means,falsify any of this state rela Legal Affairs, should fail to bring suit within 10 days to book, record, or other paper pertaining to the transac- the violation of enjoin any actual or threatened violation of any statute by law, by any rule, regulation,tion regulated b this law or b an rule reulation or regulation, or OR order made hereunder,shall be guilty of a misdemeanor the same dams of this state with respect to the conservation of oil and of the first degree,punishable as provided in s.775.082 gas, or of any provision of this law, or of any rule, violation by sect regulation or order made thereunder,then any person or or s. 775.083. - H3-176;.--5.33,ch. g y P History.—s.32,ch.22819,1945;ss.25,35,ch.69-106;s.327,ch.71-136;s.6, ch.83-176;s.628,ch.9 party in interest adversely affected by such violation, ch.72-394. and who has notified the division, or the Department of 377.371 Poll Legal Affairs, in writing of such violation, or threat 377.37 Penalties.— 4 (1) A person■ thereof, and has requested the division, or the Depart- (1)(a) Any person who violates any provision of this , petroleum prods ment of Legal Affairs, to sue, may, to prevent any or law or any rule,regulation,or order of the division made storage facility, r further violation,bring suit for that purpose in the Circuit under this chapter or who violates the terms of any '; aquatic or marirn Court of the County of Leon,in the state. If, in such suit, permit to drill for or produce oil, gas,or other petroleum property; or allo the court should hold that injunctive relief should be products referred to in s.377.242(1)or to store gas in a any min granted, then the division, or the Department of Legal natural gas storage facility,or any lessee,permitholder, (2) All spills c Affairs, shall be made a party and shall be substituted or operator of equipment or facilities used in the products, or wa for the person who brought the suit, and the injunction exploration for, drilling for, or production of oil, gas, or division and tho shall be issued as if the division, or the Department of other petroleum products,or storage of gas in a natural immediatly cons Legal Affairs, had at all times been the complainant. gas storage facility, who refuses inspection by the the division (3) If any such defendant cannot be personally division as provided in this chapter, is liable to the ;;t,':::::- (3) Seca served with summons in that county, personal jurisdic- state for any damage caused to the air, waters, or the means tion of that defendant in such suit may be obtained by property, including animal, plant, or aquatic life, of the minimize damag, service made upon him or her or any employee or agent state and for reasonable costs and expenses of the of this chapter, if of that defendant at any place in Florida and by the state in tracing the source of the discharge,in controlling the drilling, stoi 1868 Packet Page-304- F.S.S. 2013 ;",, ` F.S.2013 ENERGY RESOURCES 6/10/2014 10.B. Wait's, mailing and abating the source and the pollutants, and in operations of any person or persons and such pollution • e defendant at t r restoring the air,waters,and property,including animal, damages or threatens to damage human, animal, or xded with the i•. plant, and aquatic life, of the state. Furthermore, such plant life, public or private property, or any mineral or iir ..... . - person, lessee, permitholder, or operator is subject to water-bearing formation, said person shall be liable to 2' 106;s. i: the judicial imposition of a civil penalty in an amount of the state for all costs of cleanup or other damage ;.` not more than$10,000 for each offense. However,the incurred by the state.In any suit to enforce claims of the Is, etc.—In all +` court may receive evidence in mitigation. Each day state under this chapter,it is not necessary for the state this law, or of i during any portion of which such violation occurs to plead or prove negligence in any form or manner on state,or of any constitutes a separate offense. Nothing herein shall the part of the person or persons conducting the drilling der, and in all give the department the right to bring an action on behalf or production operations;the state need only plead and contesting the - of any private person. prove the fact of the prohibited discharge or other any oil or gas (b) Whenever two or more persons pollute the air or polluting condition and that it occurred at the facilities of lation,or order waters of the state in violation of this chapter or any rule, the person or persons conducting the drilling or suant to Art.V, r regulation,or order of the department in such a manner production operation. A person or persons conducting of Appellate that the damage is indivisible,each violator is jointly and the drilling,storage,or production operation may not be , severally liable for such damage and for the reasonable held liable if said person or persons prove that the 21,ch.77.104. cost and expenses of the state incurred in tracing the prohibited discharge or other polluting condition was the source of the discharge; in controlling and abating the result of any of the following: ents; incom- source and the pollutants; and in restoring the air, (a) An act of war. ■ who, for the waters, and property, including the animal, plant, and (b) An act of government, either state, federal, or ding any rule, aquatic life, of the state to their former condition. municipal. all intentionally However, if the damage is divisible and may be (c) An act of God, which means an unforeseeable ry or statement attributed to a particular violator or violators, each act exclusively occasioned by the violence of nature by this law,or violator is liable only for that damage attributable to without the interference of any human agency. hereunder; or his or her violation. (d) An act or omission of a third party without regard r cause to be (c) The payment of any damages or penalties as to whether any such act or omission was or was not nt, record, or provided for herein shall not have the effect of changing negligent. Dnnection with illegal product into legal product,illegal oil into legal oil, (4) Any person who is found liable for damages or •regulation, or or illegal gas into legal gas;nor shall such payment have costs of cleanup as provided in this section shall not be purpose, shall the effect of authorizing the sale, purchase,acquisition, liable for penalties under the provisions of chapter 376 full, true, and transportation, refining, processing, or handling in any or chapter 403. ds, or memor- other way of such illegal oil,illegal gas,or illegal product. History.—S.8,ch.72-394;s.23,ch.2013-205. staining to the (d) The payment of any such damages or penalties dustry of such shall not impair or abridge any cause of action which any 377.38 Illegal oil,gas,and other products; sale, division under person may have against the person violating any purchase,acquisition,transportation,refining,pro- division u ion, provision of this law or any rule, regulation, or order cessing, or handling prohibited.- s� urpose, for an injury resulting to him or her from such violation. (1) The sale, purchase, or acquisition, or the trans- sta,a, or who (2) Any person knowingly and willfully aiding or portation, refining, processing, or handling in any other ins, falsify any abetting any other person in the violation of any statute way,of illegal oil,illegal gas,or illegal product is hereby :o ins, falsify any of this state relating to the conservation of oil or gas or prohibited. • the c- the violation of any provision of this law, or any rule, (2) Unless and until the division provides for certi- egdemonnor regulation,or order made hereunder shall be subject to ficates of clearance or tenders, or some other method, the same damages as are prescribed herein for the so that any person may have an opportunity to d in s.775.082 violation by such other person. • determine whether any contemplated transaction of History.—s.33,ch.22819,1945;ss.25,35,oh.69-106;s.7,ch.72.394;s.3, sale, purchase, or acquisition, or of transportation, 327,ch.71-136;S.6, - ch.83-176;S.628,ch.95-148;S.22,ch.2013-205. P q P refining, processing, or handling in any other way, 377.371 Pollution prohibited;reporting,liability. involves illegal oil, illegal gas, or illegal product, no rovision of this (1) A person drilling for or producing oil,gas,or other liquidated damage shall be imposed for the sale, division made petroleum products, or storing gas in a natural gas Purchase, a acquisition,i or the transportation,r of illegal fini oil, storage facility, may not pollute land or water; damage processing, 9 Y Y terms of any aquatic or marine life,wildlife, birds,or public or private illegal gas, or illegal product, except under circum- ther petroleum property; or allow any extraneous matter to enter or stances hereinafter stated.Liquidated damages shall be i store gas in a damage any mineral or freshwater-bearing formation. imposed for the commission of each transaction pro- , permitholder, (2) All spills or leakage of oil, gas, other petroleum hibited in this section when the person committing the used in the products, or waste material shall be reported to the same knows that illegal oil,illegal gas,or illegal product of oil, gas, or division and those of any quantity which cannot be is involved in such transaction, or when such person as in a natural immediately controlled shall be reported immediately to could have known or determined such fact by the ection by the the division and the appropriate federal agencies. exercise of reasonable diligence or from facts within liable to the (3) Because it is the intent of this chapter to provide his or her knowledge. However, regardless of lack of lir, waters, or the means for rapid and effective cleanup and to actual notice or knowledge, liquidated damages as atic life, of the - minimize damages resulting from pollution in violation provided in this law shall apply in any sale, purchase, penses of the of this chapter, if the waters of the state are polluted by or acquisition, and to the transportation, refining, in controlling the drilling, storage of natural gas, or production processing, or handling in any other way, of illegal oil, 1869 • Packet Pare-305- 6/10/2014 10.B. Ch. 377 ENERGY RESOURCES F.S. 2013 F.S. 2013 illegal gas, or illegal product, where administrative once each week for 4 successive weeks in some rules, regulati provision is made for identifying the character of the newspaper published in the county where the suit is ._ sale or purcha commodity as to its legality. It shall likewise be a •pending and having a bona fide circulation therein if -transportation, violation for which liquidated damages shall be imposed such a newspaper is published. No judgment shall be other way, of I for any person to sell, purchase, or acquire, or to pronounced by any court condemning such commodity (7) Nothing transport, refine, process, or handle in any other way as contraband until after the lapse of 5 days from the last cause of actioi any oil, gas, or product without complying with all publication or posting of said summons.Proof of service other claimant applicable rules, regulations, or orders of the division of said summons, and the manner thereof, shall be the illegal oil, i relating thereto. provided by general law. person whose History.—s.34,ch.22819,1945;$s.25,35,ch.69-106;s.629,ch.95-148. (3) Where it appears by a verified pleading on the oil, illegal gas, part of the plaintiff or by affidavit or affidavits, or by oral than the avers 377.39 Seizure and sale of illegal oil, gas, or testimony, that grounds for the seizure and sale exist, similar product product.— the clerk, in addition to the summons or warning order, History.—s.35,ch ch.95-148. (1) Apart from, and in addition to, any other remedy shall issue an order of seizure,which shall be signed by or procedure which may be available to the division, or the clerk and bear the seal of the court. Such order of 377.40 Nec any liquidated damages which may be sought against or seizure shall specifically describe the illegal oil, illegal wild or out of imposed upon any person with respect to violations gas, or illegal product, so that the same may be (1) to order relating to illegal oil, illegal gas, or illegal product, all identified with reasonable certainty. It shall direct the fields in the stat illegal oil, illegal gas, and illegal product shall, except sheriff to whom it is addressed to take into his or her under such circumstances as are stated herein, be custody,actual or constructive,the illegal oil,illegal as, any person to p contraband and shall be seized and sold, and the y g g gas, or to get of or illegal product described therein, and to hold the shall,after 24 h� proceeds applied as herein provided. Such sale shall same subject to the orders of the court. Said order of to the owner or not take place unless the court shall find, in the seizure shall be executed as a writ of attachment is make reasonab proceeding provided for in this subsection, that the executed. No bond shall be required before the (2} In the er commodity involved is contraband. Whenever the issuance of such order of seizure, and the sheriff well, within 24 division believes that illegal oil, illegal gas, or illegal shall be responsible upon his or her official bond for provided fob product is subject to seizure and sale, as provided the proper execution thereof. within the F herein,it shall,through its counsel,bring a civil action in (4) In a proper case, the court may direct the sheriff of such notice, c rem for that purpose in the circuit court of the county to deliver the custody of any illegal oil, illegal gas, or failure to prosec where the commodity is found or the action may be illegal product, seized by him or her under an order of division shall ha. maintained in connection with any suit or cross action seizure,to a receiver or conservator to be appointed by controlling such for injunction or for liquidated damages relating to any the court,which receiver or conservator shall act as the proceed, throng prohibited transaction involving such illegal oil, illegal agent of the court and shall give bond with such responsible cons gas, or illegal product.Any interested person, who may approved surety as the court may direct, conditioned to prevent the es show himself or herself to be adversely affected by any that he or she will faithfully conserve such illegal oil, all at the reason such seizure and sale, shall have the right to intervene illegal gas,or illegal product,as may come into his or her order to secure in such suit to protect his or her rights. custody and possession in accordance with the order of reasonable cost (2) The action referred to above shall be strictly in the court; provided, that the court may in its discretion of such well, the rem and shall proceed in the name of the state as appoint any agent of the division as such receiver or the same and sh plaintiff against the illegal oil, illegal gas, or illegal conservator. rents, revenues product mentioned in the complaint, as defendant, (5) Sales of illegal oil, illegal gas, or illegal product and expenses in and no bond or bonds shall be required of the plaintiff made under the authority of this law,and notices of such When all such cc in connection therewith.Upon the filing of the complaint, sales, shall be in accordance with the laws of this state the division shall the clerk of the court shall issue a summons directed to relating to the sale and disposition of attached property; j owner; provided, the sheriff of the county, or to such other officer or provided, however, that where the property is in the by the division sl person as the court may authorize to serve process, custody of a receiver or conservator, the sale shall be division,as provic requiring him or her to summon any and all persons held by said receiver or conservator, and not by the have lien or priv without undertaking to name them, who may be sheriff. For his or her services hereunder,such receiver owner of such we i.interested in the illegal oil, illegal gas, or illegal product or conservator shall receive a reasonable fee to be paid and the division mentioned in the complaint to appear and answer within out of the proceeds of the sale or sales to be fixed by the 30 days after the issuance and service of such court ordering such sale. , privilege by suit summons. The summons shall contain the style and jurisdiction, the o ty (6) The court may order that the commodity be sold the judgment so 0 number of the suit and a very brief statement of the in specified lots or portions, and at specified intervals, manner now pro' nature of the cause of action. it shall be served by instead of being sold at one time. Title to the amount ments. Any exce: posting one copy thereof at the courthouse door of the sold shall pass as of the date of the act which is found by which the proper county where the commodity involved in the suit is the court to make the commodity contraband. The alleged to be located and by postin another co payment of court c 9 py judgment shall provide for payment of the proceeds of 7 of such well. thereof near the place where the commodity is alleged the sale into the General Revenue Fund, after first History.—s.36,f to be located. One copy of such summons shall be deducting the costs in connection with the proceedings posted at least 5 days before the return day stated and the sale:The amount sold shall be treated as legal ,, Dis.,o; therein, and the posting of such copy shall constitute oil,legal gas,or legal product,as the case may be,in the as fines for violatio constructive possession of such commodity by the hands of the purchaser, but the purchaser and the `• permit conditions : state. A copy of the summons shall also be published commodity shall be subject to all applicable laws, and Fund established 1870 Packet Page-306- F.S.2013 F.S. 2013 ENERGY RESOURCES 6/10/2014 10.B. eks in some rules, regulations, and orders with respect to further these fines shall be used first to pay all amounts re the suit is sale or purchase or acquisition, and with respect to the necessary to restore the polluted areas which were lion therein if transportation, refining, processing, or handling in any the subject of state action.Any remaining moneys shall • rnp' ' all be other way, of the commodity purchased. be used in accordance with the provisions of S.376.40. •f•, nodity (7) Nothing in this section shall deny or abridge any History.—s.3,ch.83-176;S.6,ch.89-358;s.56,ch.96-321. S fru.'i the last cause of action a royalty owner, or a lienholder, or any •oof of service other claimant, may have, because of the forfeiture of 377.42 Big Cypress Swamp Advisory Commit- eof, shall be the illegal oil, illegal gas, or illegal product, against the tee. person whose act resulted in such forfeiture. No illegal (1) For purposes of this section, the Big Cypress lading on the oil, illegal gas, or illegal product shall be sold for less watershed is defined as the area in Collier County and /its, or by oral than the average market value at the time of sale of the adjoining portions of Hendry,Broward,Miami-Dade, nd sale exist, similar products of like grade and character. and Monroe Counties which is designated as the Big vamin 9 order, History.—s.35,ch.22819,1945;ss.25,35,ch.69-106;5.1.ch.77-174;S.630, Cypress Swamp in U.S. Geological Survey Open-File oh.95-146. Report No. 70003.Re I be signed by p Such order of 377.40 Negligently permitting gas and oil to go (2) The Big Cypress Swamp Advisory Committee is gal oil, illegal wild or out of control.— hereby created in the Department of Environmental 3me may be (1) In order to protect further the gas fields and oil Protection.The Big Cypress Swamp Advisory Commit- tall direct the fields in the state,it is hereby declared to be unlawful for tee shall be appointed by and serve at the pleasure of to his or her any person to permit negligently any gas or oil well to go the Secretary of Environmental Protection. To ensure Al,illegal gas, wild or to get out of control.The owner of any such well compliance with all requirements for obtaining a permit i to hold the shall,after 24 hours'written notice by the division given to explore for hydrocarbons in the Big Cypress Swamp Said order of to the owner or the person in possession of such well, area,each application for such permit shall be reviewed attachment is make reasonable effort to control such well. by the Big Cypress Swamp Advisory Committee. The i before the (2) In the event of the failure of the owner of such committee shall have no final authority on approval or d the sheriff well, within 24 hours after service of notice above denial of permits but shall make recommendations to icial bond for provided for, to control the same, if such can be done the department.The committee shall meet at the call of within the period or to begin, in good faith upon service the chair to evaluate a pending application for a permit ect the sheriff of such notice, operations to control such well,or upon to drill in the Big Cypress watershed and may make liege! gas, or failure to prosecute diligently such operations,then the other evaluations requested by the department. The ?.r an order of division shall have the right to take charge of the work of membership of the committee shall be as follows: appointed by controlling such well, and it shall have the right to (a) The State Geologist,who shall serve as chair. hall act as the proceed, through its own agents or by contract with a (b) A representative from the oil industry. id with such responsible contractor, to control the well or otherwise (c) A representative from an organized conservation t, conditioned to prevent the escape or loss of gas or oil from such well, group. ich illegal oil, all at the reasonable expense of the owner of the well.In (d) A botanist. inter-`c or her order to secure the division in the payment of the (e) A hydrologist. th 'der of reasonable cost and expense of controlling or plugging (3) The committee shall administer this section its uiscretion of such well, the division shall retain the possession of pursuant to the laws of the state, and the rules and :h receiver or the same and shall be entitled to receive and retain the orders of the department which apply generally to oil rents, revenues and income therefrom until the costs and gas. If site-specific conditions require,the commit- !legal product and expenses incurred by the division shall be repaid. tee may recommend that additional procedures, safe- otices of such When all such costs and expenses have been repaid, guards,or conditions which are necessary to protect the s of this state the division shall restore possession of such well to the integrity of the Big Cypress area be required as a :hed property; owner; provided, that in the event the income received • condition to the issuance of a permit to drill and produce. erty is in the by the division shall not be sufficient to reimburse the History.—s.73,ch.96-323;s.91,ch.2008-4. sale shall be division,as provided for in this section,the division shall 377.43 Disbursement of funds received for da- 1d not by the have lien or privilege upon all of the property of the mages caused by the Deepwater Horizon oil spill. such receiver owner of such well, except such as is exempt by law, (1) For purposes of this section, the term Dispro- fee to be paid and the division shall proceed to enforce such lien or ortionall Affected County" means Bay County, Es - cambia fixed by the privilege by suit brought in any court of competent portionally y ty jurisdiction,the same as any other like civil action, and cambia County, Franklin County, Gulf County, Okaloo- iodity be sold the judgment so obtained shall be executed in the same sa County, Santa Rosa County, Walton County, or fied intervals, manner now provided by law for execution of judg- Wakulla County. o the amount ments. Any excess over the amount due the division (2) Any funds received by the state from any ch is found by which the property seized and sold may bring, after governmental or private entity for damages caused by traband. The payment of court costs, shall be paid over to the owner the Deepwater Horizon oil spill shall be deposited into proceeds of of such well. the applicable state trust funds and expended pursuant nd, after first History.—s.36,ch.22819,1945;ss.25,35,ch.69.106;s.631,ch.95-148. to state law or as approved by the Legislative Budget proceedings Commission. sated as legal 377.41 Disposition of fines.—Moneys collected (3) Seventy-five percent of such moneys may be may be,in the --_-_ as fines for violations of this part,implementing rules,or used for: aser and the permit conditions shall be paid into the Minerals Trust (a) Scientific research into the impact of the oil spill ble laws, and Fund established pursuant to s. 376.40. Moneys from on fisheries and coastal wildlife and vegetation along 1871 • Packet Pare-307- 6/10/2014 10.B. Ch. 377 ENERGY RESOURCES F.S.2013 F.S. 2013 any Disproportionally Affected County's shoreline and 377.711 Florida party to Southern States Energy potential energy the development of strategies to implement restoration Compact. of these activitii measures suggested by such research; 377:712 Florida participation. (k) Develop (b) Environmental restoration of coastal areas da- paredness plan maged by the oil spill in any Disproportionally Affected 377.601 Legislative intent.— shortage within County; (1) The Legislature finds that the state's energy History.—s.1,ch. (c) Economic incentives directed to any Dispropor- security can be increased by lessening dependence on tionally Affected County; and foreign oil;that the impacts of global climate change can 377.6015 D (d) Initiatives to expand and diversify the economies be reduced through the reduction of greenhouse gas sumer Service of any Disproportionally Affected County. emissions; and that the implementation of alternative (1) The deg; (4) The remaining 25 percent of such moneys may energy technologies can be a source of new jobs and (a) Employ be used for: employment opportunities for many. Floridians. The performance of (a) Scientific research into the impact of the oil spill Legislature further finds that the state is positioned at (b) Prosecute on fisheries and coastal wildlife and vegetation along the front line against potential impacts of global climate name. any of the state's shoreline that is not a Disproportion- change. Human and economic costs of those impacts (c) Form ads ally Affected County's shoreline, and the development can be averted by global actions and,where necessary, the public to prc of strategies to implement restoration measures sug- adapted to by a concerted effort to make Florida's (2) The dept gested by such research; communities more resilient and less vulnerable to these (a) Administi • (b) Environmental restoration of coastal areas da- impacts.In focusing the government's policy and efforts Energy-Efficien'i maged by the oil spill in any county other than a to benefit and protect our state, its citizens, and its suant to s. 377. Disproportionally Affected County; resources,the Legislature believes that a single govern- (b) Develop 1 ment entity (c) Economic incentives directed to an county other y with a specific focus on energy and climate royalty-sharing y ty change is both desirable and advantageous. Further, government for than a Disproportionally Affected County; and the Legislature finds that energy infrastructure provides under a state gi (d) Initiatives to expand and diversify the economies the foundation for secure and reliable access to the (c) AdministE of any county other than a Disproportionally Affected energy supplies and services on which Florida depends. Act pursuar County. Therefore, there is significant value to Florida consu- grants. (5)(a) The Department of Environmental Protection mers that comes from investment in Florida's energy (d) Admh,._.c is the lead agency for expending the funds designated in functions u for environmental restoration efforts. infrastructure that increases system reliability, en- 9 P (b) The Department of Economic Opportunity is the hances energy independence and diversification, sta- Compact u sur bilizes energy costs, and reduces greenhouse gas P P lead agency for expending the funds designated for emissions. (f) Administe economic incentives and diversification efforts. and Climate Pr History.—s.499,ch.2011-142. (2) It is the policy of the State of Florida to: 377.807. (a) Develop and promote the effective use of energy PART II in the state, discourage all forms of energy waste, and (g) Advocate recognize and address the potential of global climate and provide edi PLANNING AND DEVELOPMENT change wherever possible. tance in cooper. (b) Play a leading role in developing and instituting tions. 377.601 Legislative intent. energy management programs aimed at promoting (h) Be a path 377.6015 Department of Agriculture and Consumer energy conservation,energy security,and the reduction submit commer, Services; powers and duties. of greenhouse gas emissions. pursuant to s. 3, 377.602 Definitions. (c) Include energy considerations in all state, regio- (i) Adopt rule 377.603 Energy data collection; nal, and local planning. implement all I gy powers and duties (d) Utilize and manage effectively energy resources section. of the department. Histo p History—s.46,ch. 377.604 Required reports. used within state agencies. f 2011-142. 377.605 Use of existing information. (e) Encourage local governments to include energy _. 377.606 Records of the department; limits of con considerations in all planning and to support their work 377.602 Del fidentiality. in promoting energy management programs. 377.608: 377.607 Violations; penalties. (f) Include the full participation of citizens in the (1) "Departm 377.608 Prosecution of cases by state attorney. development and implementation of energy programs. k ture and Consur (g) Consider in its decisions the energy needs of li (2) "Energy I 377.701 Petroleum allocation. each economic sector, including residential, industrial, 377.703 Additional functions of the Department of g limited to: P commercial, agricultural, and governmental uses, and (a) Energy c Agriculture and Consumer Services. reduce those needs whenever possible. hydraulic potenti 377.704 Appropriation of funds from settlement of (h) Promote energy education and the public dis- mal sources, ar petroleum overcharge litigation. semination of information on energy and its environ- ment-determine: 377.705 Solar Energy Center;development of solar mental, economic, and social impact. -, of ever y energy standards. (i) Encourage the research, development, demon- (b) Prop 377.709 Funding by electric utilities of local govern- stration, and application of alternative energy re- - home heat' mental solid waste facilities that generate sources, particularly renewable energy resources. aviation gasoline electricity. (j) Consider, in its decisionmaking,the social, eco- jet fuel, residual 377.71 Definitions; Southern States Energy Corn- nomic, and environmental impacts of energy-related products and by pact. activities, including the whole-life-cycle impacts of any the department I 1872 Packet Page-308- k„ 6/10/2014 10.B. CHAPTER 62C-25 CONSERVATION OF OIL AND GAS: GENERAL 62C-25.001 Introduction 62C-25.002 Definitions 62C-25.006 Permits 62C-25.0075 Enforcement Actions 62C-25.008 Forms 62C-25.001 Introduction. The rules in this chapter and Chapters 62C-26 through 62C-30,F.A.C.,are adopted to implement the provisions of Chapter 377,Part I,F.S.,Regulation of Oil and Gas Resources. (1) By accepting or renewing a permit under these rules, the permittee agrees to conduct all operations in accordance with Chapter 377,Part I,F.S.,and these rules. (2)Pursuant to Section 377.22(2),F.S.,and in addition to these rules, the Department shall issue Orders dealing with all phases of exploration, development, and accounting of petroleum resources when such orders are necessary for the proper administration and enforcement of Chapter 377,Part I,F.S.(e.g.,protect correlative rights,prevent waste). (3) All persons holding permits pursuant to these rules shall allow the Department's agents to examine at any time all records and facilities related to those permits. Inspections of records and papers shall be conducted during regular operating hours unless an emergency exists;other inspections may be conducted at any time. (4) The Department's agent shall be on call around the clock and shall supervise all field operations as necessary to enforce these rules and to verify that all alternate procedures and substitutions of equipment and materials afford protections similar to those specified in the permit. (5) The Department shall authorize amendments to permits when site specific circumstances make the permit conditions ineffective or counterproductive or when a more effective method or technology has been developed. In such cases operators may orally apply to the Department's agent for technical amendments to permits by discussing the problems and proposed alternatives with the agent. The agent shall grant the request if the proposed amendments afford equal protection and shall document such amendments on well inspection reports. If the agent cannot make a determination as to the effectiveness of the proposal, then the operator, at its discretion, may either drop the request or seek written authorization from the Department for a determination. Requests for amendments may be oral or written but the Department's response shall be confirmed in writing. (6) Unless otherwise specified in Chapters 62C-25 through 62C-30, F.A.C., all information required pursuant to Rule 62C- 25.008,F.A.C.,shall be submitted within 30 days of the triggering requirement. Rulemaking Authority 377.22 FS.Law Implemented 377.04, 377.21 FS. History—New 11-26-81,Formerly 16C-25.01,Amended 5-12-93,Formerly 16C-25.001,Amended 3-24-96,4-29-13. 62C-25.002 Definitions. Unless the context otherwise requires, the words defined shall have the following meaning when found in Chapters 62C-25 through 62C-30,F.A.C.: (1) ADMINISTRATOR (OIL AND GAS ADMINISTRATOR) shall mean the Department's Oil and Gas Program Administrator. (2)AGENT shall mean a professional employee of the Department acting on behalf of the Department. (3) BARREL OF OIL shall mean 42 United States gallons of oil at a temperature of 60 degrees Fahrenheit, adjusted in accordance with generally accepted industry practices for basic sediment,water and other impurities. (4)BLOWOUT shall mean a dangerous and uncontrolled eruption of oil, gas or other well bore fluids from a well. (5) BLOWOUT PREVENTER shall mean the equipment designed for oil field use and installed at the wellhead to prevent a blowout. (6) BOTTOM-HOLE PRESSURE shall mean the pressure in pounds per square inch at the face of the producing horizon as determined by means of an industry recognized pressure recording instrument. (7)CASING PRESSURE shall mean the pressure at the surface built up between the casing and the tubing. (8)CASINGHEAD GAS shall mean any gas produced with oil from an oil reservoir(see DRY GAS). Packet Page-309- 6/10/2014 10.B. (9) CIRCULATION shall mean pumping a fluid down the drill stem and up the annulus to the surface in the process of rotary rig operations. REVERSE CIRCULATION shall mean pumping a fluid down the drill stem annulus and up the drill stem to the surface. (10)CLASS II WELL shall mean any well which injects fluids: (a)Which are brought to the surface in connection with conventional oil or natural gas production and may be commingled with waste waters from gas plants which are an integral part of production operations, unless those waters are classified as a hazardous waste at the time of injection. (b)For enhanced recovery of oil or natural gas. (c)For storage of hydrocarbons which are liquid at standard temperature and pressure. (11) COMMON CARRIER shall mean a pipeline,railroad,barge, truck or other transportation facility offering service for hire to remove oil, gas, and products derived from any producer to a designated purchaser, as opposed to a transporter who carries exclusively his own production of oil or gas. (12)COMMON SOURCE OF SUPPLY shall mean a common accumulation of oil or gas or both. (13) COMPLETION DATE shall mean the day, month, and year that a new well is either plugged and abandoned, or is tested for oil and gas and determined to be productive or nonproductive,or is tested as an injection well and is considered to be completed and suitable for injection use. The Department shall determine the well completion date when the operator fails to determine and report on the prescribed forms its completion, temporary abandonment, or abandonment within 30 days after the well has been drilled to total depth. (14) CONDENSATE shall mean the liquid hydrocarbons produced by the condensation of a vapor or gas, either after it leaves the reservoir or while still in the reservoir.Condensate is often called DISTILLATE,DRIPS,WHITE OIL,etc. (15) CONSERVATION shall mean conserving, preserving, guarding, or protecting the oil and gas resources of the State by obtaining the maximum efficiency with minimum waste in the producing,transporting,processing,refining,treating,and marketing of the unrenewable oil and gas resources of the State. (16) CUBIC FOOT OF GAS shall mean that amount of gaseous hydrocarbons contained in a cubic foot of space at a base temperature of 60 degrees Fahrenheit and an absolute pressure of 14.65 lbs. per square inch, which temperature and pressure are referred to as the base temperature and pressure respectively. (17)DAY shall mean a period of 24 consecutive hours,from 7:00 a.m.one day to 7:00 a.m.the following day. (18)DEPARTMENT shall mean the State of Florida,Department of Environmental Protection. (19) DRILLING MUD shall mean the liquid circulated through the wellbore during rotary drilling and workover operations, primarily to remove cuttings and prevent blowouts. (20)DRILLING UNIT shall mean the block of land surrounding and assigned to a particular well and into which no other like well may be completed. (21)DRY GAS shall mean natural gas obtained from formations that produce gas only, or natural gas which does not contain the heavier fractions which may easily condense under normal atmospheric conditions;not casinghead gas. (22)ENHANCED RECOVERY shall mean the recovery of additional oil from a reservoir above the oil that could be produced using only existing reservoir energy.Enhanced recovery is accomplished by imparting man-made energy to the reservoir,usually by injecting fluids into the producing zone to maintain reservoir pressure and displace hydrocarbons, and includes secondary, tertiary, and exotic forms of recovery. (23)FLOW LINE shall mean the infield surface pipe through which produced or pressure maintenance fluids travel to or from a well and the field processing equipment or storage. (24) FRESHWATER shall mean any surface or ground waters of the State whose total dissolved solids content is less than 1,000 milligrams per liter. (25) GATHERING LINE shall mean the pipe used in transferring produced fluids from field storage to the point of sale to a common carrier or other purchaser. (26) GEOPHYSICAL SEISMIC INFORMATION shall mean that non-interpreted data defined in subsection 62C-26.007(2), F.A.C. (27)HORIZONTAL WELL shall mean any well with a horizontal or nearly horizontal borehole within the productive interval. (28)LEASE TANK shall mean the tank or other receptacle into which the oil is produced,either directly from a well or from a well through gas separator,gun barrel or similar equipment. /-1 Packet Page -310- 6/10/2014 10.B. (29)LOCATION shall mean the place where a well is drilled and may,depending upon context,refer to either the wellbore or to the pad upon which the drilling rig is assembled. (30)MONTH and CALENDAR MONTH shall mean the period or interval of time from 7 a.m.on the first day of any month of the calendar to 7 a.m.of the first day of the next succeeding month of the calendar. (31)MUD PIT shall mean an earthen pit utilized to contain mud-laden fluid.Example:Reserve Pit. (32)NONROUTINE DRILLING UNIT shall mean any drilling unit composed of unsurveyed land not divided into townships and sections,composed of irregular townships and sections,or composed of odd sized lots other than 40, 160,or 640 acres.See Rule 62C-26.004,F.A.C. (33)NONROUTINE SPACING shall mean that the required amount of land surrounding an oil or gas well is uncommon in its size,shape,etc.,and does not conform to subsections 62C-26.004(1)through(4),F.A.C. (34) OPERATE shall mean to develop a lease and/or drilling or producing well, produce or transport produced fluids from a lease,dispose of saltwater via a Class H well,or inject fluids for pressure maintenance. (35) OPERATOR shall mean any duly authorized person who is in charge of the development of a lease and/or a drilling or producing well. (36) PRESSURE MAINTENANCE (see enhanced recovery) shall mean the injection of fluid(s) into a reservoir to maintain reservoir pressure. (37) PURCHASER shall mean any person who directly or indirectly purchases, transports, takes, or otherwise removes production to his account from a well,lease,or common source of supply. (38) RESERVE PIT (Tank) shall mean a pit(tank) utilized for storage of all excess wellbore and pad fluids produced during drilling. (39)RESERVE CIRCULATION(See CIRCULATION). (40) ROUTINE DRILLING UNITS are those units based on U.S. Government surveyed township and range lines and, for oil wells,are quarter-quarter or quarter sections(depending on well depth)and for gas wells of any depth,full sections. (41)ROUTINE LOCATION or WELL shall mean an oil or gas well whose bottom hole position complies with subsection 62C- t 26.004(4),F.A.C.A routine oil well drilled to a depth of less than 7,000 feet has a bottom hole position no closer than 460 feet to the nearest drilling unit boundary while an oil well drilled to a greater depth has a bhp no closer than 920 feet to the nearest drilling unit boundary.A routine gas well of any depth has a bhp no closer than 1,360 feet to the nearest drilling unit boundary. (42)ROUTINE SPACING shall mean well spacing based on the U.S.Government Township and Range System as described in Rule 62C-26.004, F.A.C. Routine spacings for oil wells are quarter-quarter sections for wells less than 7,000 feet deep and quarter sections for wells greater than 7,000 feet deep.Gas wells,regardless of depth,are assigned 640 acres. (43) SECONDARY CONTAINMENT FACILITY shall mean any safety back-up system or structure(s) designed to contain spilled fluids in the event of an accident. Examples include firewalls, dikes, concrete platforms, hard packed clay drilling or producing pads or loading racks,drip pans,curbs,gutters,and drains. (44) SENSITIVE ENVIRONMENTS shall mean those areas identified by commenting agencies during the Department's external review process as especially susceptible to disturbances peculiar to the proposed activity. Sensitive environments may be related to species specific habitat or other ecosystems. Some examples are aquatic preserves, live bottom areas, water conservation areas,endangered or threatened species habitat,wetlands,etc. (45)SEPARATOR shall mean an apparatus for separating oil,gas,water,etc.,with relative efficiency as it is produced. (46) SHUT IN PRESSURE shall mean the pressure noted at the wellhead when the well is completely shut in. Not to be confused with BOTTOM-HOLE PRESSURE. (47) SPECIFIED MINIMUM YIELD STRENGTH shall mean the minimum yield strength expressed in pounds per square inch,prescribed by the specification under which the material is purchased from the manufacturer. (48)SUBMERGED LANDS shall mean those lands overlain by the Gulf of Mexico,the Atlantic Ocean,the bays and estuaries, and all inland rivers,streams,and lakes within the territorial limits of the State. (49) SURGE PRESSURE shall mean pressure produced by a change in velocity of the moving stream that results from shutting down a pump station or pumping unit,closure of a valve,or any other blockage of the moving stream. (50)TOXIC GAS(SOUR GAS)shall mean any natural gas containing more than 50 parts per million of hydrogen sulfide. (51)TYPE I WELL(or LOCATION)shall mean either a well which flows without artificial lift and has a gas-oil ratio greater than 200 cubic feet of gas per barrel of oil or a well whose produced fluids contain more than 50 parts per million of hydrogen Packet Page-311- 6/10/2014 10.B. sulfide. (52)TYPE II WELL(or LOCATION)shall mean a well or location not classified as a Type I. (53)TUBINGLESS COMPLETION shall mean any well equipped with 4.5 inch OD or smaller production casing and which is produced through the production casing without tubing. (54)UNDERGROUND SOURCE OF DRINKING WATER(USDW)shall mean an aquifer or its portion: (a)Which supplies any public water system,or (b)Which contains a sufficient quantity of ground water to supply a public water system and: 1.Currently supplies drinking water for human consumption or 2.Contains fewer than 10,000 milligrams per liter total dissolved solids and is not an exempted aquifer. (55)WATERS shall include all ground and surface waters of Florida,both freshwater and saltwater, contained in lakes, rivers, streams,swamps,marsh basins,wetlands,bays,the Gulf of Mexico,and the Atlantic Ocean. (56)WELL COMPLETION DATE(see COMPLETION DATE). (57) WELL LOGS shall mean any record obtained by lowering an instrument into a well and recording some physical, chemical,or other property of formation fluids and rock matrix.Examples:electric log,radioactivity log,sonic log,temperature log. (58) WELL RECORD shall mean Oil & Gas Form No. 8, as defined in Rules 62C-25.008 and 62C-27.002, F.A.C., of these rules. (59)WELL SITE shall mean the surface location of the well and all attendant facilities necessary to produce,transport,treat,or store production from the well. Well site includes access road, drilling pad, reserve pit, flowline, and production pad, including separating or treating facility and tank battery.See location and routine location. (60) WETLANDS shall mean those lands of the State of Florida which are overlain by water periodically, seasonally, or permanently. (61) WORKOVER shall mean an operation involving a deepening, plug back, repair, cement squeeze, perforation, hydraulic fracturing,acidizing, or other chemical treatment which is performed in a production,disposal,or injection well in order to restore, sustain,or increase production,disposal,or injection rates. Rulemaking Authority 377.22 FS.Law Implemented 377.19,377.22(2)FS.History-New 11-26-81,Amended 4-12-83, 8-1-83,Formerly 16C-25.02, Amended 6-4-89,5-12-93,Formerly 16C-25.002,Amended 3-24-96,4-29-13. 62C-25.006 Permits. Each person who conducts geophysical surveys (unless exempted by Rule 62C-26.007, F.A.C.), drills an oil or gas related well (Rule 62C-26.003, F.A.C.), or operates an oil or gas related well (Rule 62C-26.008, F.A.C.), shall first obtain a permit from the Department. (1)Ordinarily a single permit will be issued for drilling a well and either transporting test oil or injecting test fluids for a period of 90 days after testing is commenced.However,the Department reserves the right,on a well by well basis and depending on health and human safety or environmental sensitivity, to restrict a permit to drilling only and to require an operator to return to seek an operating permit(Oil&Gas Form 14)for transportation of test oil or injection of test fluids. (2) Operating Permits (Oil &Gas Form 14; http://www.flrules.org/Gatewav/reference.asp?No=Ref-02455, effective date 4-29- 13)are required for each well not plugged and abandoned and shall be valid for the life of the well.However,every five years from the date of the permit, the Department shall perform a comprehensive field inspection and file review for each such well and operating permit to verify full compliance. Operating permits are written to authorize operators to use wells for their intended purpose and should be obtained during the testing phase. (3) Existing permits authorizing the transportation of produced fluids from lease or the injection of fluids into subsurface formations are operating permits and must be re-certified in accordance with Rule 62C-26.008, F.A.C., within 5 years of the effective date of this subsection. (4)Copies of permit application forms may be obtained by contacting the Department of Environmental Protection,Oil and Gas Regulatory Program, http://www.dep.state.fl.us/water/mines/oillgas/forms.htm. Permit application forms shall be filed as required below: (a) All persons seeking a permit to drill an oil or gas related well shall apply on Oil & Gas Form 3, Application for Permit to Drill,http://www.flrules.org/Gateway/reference.asp?No=Ref-02453,effective date 4-29-13,hereby incorporated by reference. (b)All persons seeking a permit to conduct geophysical operations shall apply on Oil&Gas Form 4,Application for Permit to Packet Page-312- 6/10/2014 10.B. Perform Geophysical Exploration, http://www.flrules.org/Gateway/reference.asp?No=Ref-02454, effective date 4-29-13, hereby incorporated by reference and must meet all of the requirements for geophysical operators as specified in Rule 62C-26.007,F.A.C. (c)Each well owner or operator intending to retain any new well as an oil and gas production well or service well, shall apply at least 60 days prior to drilling permit expiration for an operating permit on Oil & Gas Form 14, Application For Permit to Operate Well. (5) The Department of Environmental Protection, Oil and Gas Regulatory Program, prefers electronic submittal of permit application materials. Rulemaking Authority 377.22 FS. Law Implemented 377.24 FS. History—New 11-26-81,Amended 8-1-83, Formerly 16C-25.06, Amended 6-4-89, 5-12-93,Formerly 16C-25.006,Amended 4-29-13. 62C-25.0075 Enforcement Actions. The Department will implement provisions of Section 377.34,F.S.,to enjoin and seek penalties for violations of Chapter 377,F.S. Rulemaking Authority 377.22 FS. Law Implemented 377.21, 377.34, 377.35, 377.36, 377.37 FS. History—New 8-1-83, Formerly 16C-25.075, Amended 6-4-89, 5-12-93,Formerly 16C-25.0075,Amended 3-24-96, 4-29-13. 62C-25.008 Forms. Rulemaking Authority 377.22 FS.Law Implemented 377.21, 377.22 FS.History—New 11-26-81,Amended 4-12-83,Formerly 16C-25.08,Amended 6-4-89,5-12-93,Formerly 16C-25.008,Amended 3-24-96,Repealed 4-29-13. Packet Page-313- 6/10/2014 10.B. CHAPTER 62C-26 CONSERVATION OF OIL AND GAS: PERMITTING 62C-26.002 Performance Bonds and Securities 62C-26.003 Drilling Applications 62C-26.004 Well Spacing and Drilling Units 62C-26.007 Geophysical Applications 62C-26.008 Operating Applications 62C-26.002 Performance Bonds and Securities. (1)Before a permit to conduct geophysical operations(see Rule 62C-26.007,F.A.C.),or to construct any oil or gas related well is granted, the owner or operator shall post a bond (Oil & Gas Form 2 or 2A) or other form of approved security (see subsection 62C-26.002(5),F.A.C.), with the Department. This security shall be made payable to the State of Florida,executed by the owner or operator as principal, and by a surety approved by the General Counsel of the Department, conditioned upon the owner or operator complying with all safety and environmental requirements of the Department and with the laws of the State of Florida. (2) The amount of the security for each well shall vary in accordance with the table below and shall cover attendant facilities integral with the well and necessary for its production, including flowlines, tank batteries, and treating facilities. Should the well become a producer or class II well, a replacement security must be submitted to cover the well and its attendant facilities for its useful life.The total amount of coverage for each such well shall be twice the amount cited in the table below. WELL DEPTH SECURITY (FEET) REQUIRED 0—9,000 $50,000 9,001 or more $100,000 (3)In lieu of furnishing a separate security for each particular well,an owner or operator may file with the Department a blanket bond for multiple operations within the State in the amount of$1,000,000.Each blanket bond may cover up to ten wells. (4)The Department reserves the right to require a larger or separate bond or security in addition to the single well or blanket PTh bond or security for a particular well or wells where the circumstances indicate that the standard condition and amount would not be sufficient to cover a reasonable estimate of potential liability for damages to persons or property. (5)In addition to bonds,surety may also be provided to the Department in any of the following ways: (a)By depositing cash or other securities in the Department of Environmental Protection Petroleum Trust Account.Such cash or securities shall be held at interest by the Comptroller to satisfy safety and environmental performance provisions of this section.The interest shall be credited to the Petroleum Exploration and Production Bond Trust Fund. Such cash or other securities shall be released by the Comptroller upon request of the applicant and certification by the Department that all safety and environmental performance provisions established by the Department for permitted activities have been fulfilled; (b)By providing for a single well or geophysical permit a surety in the form of an irrevocable letter of credit guaranteed by an acceptable financial institution; (c)By paying an annual fee to the Petroleum Exploration and Production Bond Trust Fund. For those choosing this option the following shall apply: 1. For the first year, or part of a year, of a geophysical or well construction permit, or upon the change of operator, the fee is $4,000 per application. 2.For each subsequent year,or part of a year,the fee is$1,500 per existing well or permit. 3.The maximum fee that an applicant or permittee may be required to pay into the trust fund for surety coverage is$30,000 per calendar year,regardless of the number of existing wells,permits,or applications for permits. 4. The Department shall,beginning July 1, 1993,biennially adjust these fees for inflation in accordance with the Construction Cost Index published by the Engineering News Record. (6) The Department shall notify and give the permittee no less than 14 days to begin corrective action before escheating the security to rectify a major permit violation. Should the permittee not respond within 14 days or immediately upon notice if an emergency situation exists (e.g., blowout, flowline rupture), the Department shall take immediate remedial or corrective action without further notice. The permittee shall reimburse the trust fund for all reasonable sums expended from the trust fund for the purposes of responding to and taking any necessary remedial actions to correct said emergency. f".\ Packet Page-314- 6/10/2014 10.B. P"\, (7)Upon written request of the operator,the Department shall release a security after all permit conditions have been satisfied by the operator and verified by the Department. Rulemaking Authority 377.22 FS.Law Implemented 377.22,377.2425,377.244 FS.History—New 11-26-81,Formerly 16C-26.02,Amended 6-4-89, 5-12-93,Formerly 16C-26.002,Amended 3-24-96. 62C-26.003 Drilling Applications. The permittee shall notify all carried working interests in accordance with Section 377.2411,F.S.,and shall designate and distribute earnings owed unknown or unlocated owners in accordance with Section 377.247,F.S. (1) Except as noted in subsection 62C-26.003(4), F.A.C., no person shall begin any work other than making environmental assessments or surveying at the site of a proposed drilling operation of any well without first obtaining a permit to drill as specified in Rule 62C-25.006, F.A.C. A separate permit is required for any viable bottom hole location not in compliance with subsection 62C-26.004(10),F.A.C. (2) Each permit is valid for one year from the date of approval. If permitted activities are not begun within that time, the Department shall, upon written request of the permittee, extend the permit for an additional year. An additional fee of$1,000 is required for this extension. Subsequent requests for extensions shall be treated as new applications. (3) All Applications For Permit to Drill (Oil & Gas Form 3) shall include an Organization Report (Oil & Gas Form 1; Rule 62C-25.008, F.A.C.), performance security (Rules 62C-25.008, 62C-26.002, F.A.C.), location plat (subsection 62C-26.003(7), F.A.C.), site construction plans (subsection 62C-26.003(9), F.A.C.), casing and cementing program (subsection 62C-26.003(5), F.A.C.), contingency plan if appropriate (subsection 62C-27.001(7), F.A.C.), and application fee (subsection 62C-26.003(8), F.A.C.). In addition to these items, an application to drill a nonroutine well shall include a lease map or document and a letter of justification,both as described in paragraph 62C-26.004(6)(d),F.A.C. Any of these items already on file with the Department may be included by reference. (4)The application to drill shall be considered incomplete until the applicant requests a preliminary site inspection be made by the Department. Should the Department determine that the proposed site and access road are located on developed or highly /-impacted uplands,the prior-work prohibition in subsection 62C-26.003(1),F.A.C., shall not apply.However,the operator shall not spud the well until the permit has been granted. (5)A proposed casing and cementing program must be included with the application to drill.This program shall at a minimum include setting depths,casing size,weight per foot, wall thickness, specified minimum yield strength,grade of pipe, class of cement to be used, cement additives, cement quantity, intended interval to be cemented, hole size, displacement method, special tools to be used,and calculated percent excess cement to be used. (6)Hyphenated well numbers shall be assigned to wells so as to indicate the section,quarter section and, for wells based on 40 acre spacing, the quarter-quarter section within the drilling unit. The first number shall indicate the section, the second the quarter section (1-2-3-4 counter-clockwise from the northeast quarter), and the third number'shall designate the quarter-quarter section. Wells based on other sized drilling units will be numbered by the permittee so as to avoid confusion with routinely numbered wells. (7)Each application shall be accompanied by a location plat surveyed and prepared by a registered land surveyor licensed under Chapter 472, F.S. All such plats shall meet the minimum technical standards for land surveys as specified in Chapter 61G17-6, F.A.C.;and must: (a)Be drawn to a scale sufficient to show the required detail,preferably 1 inch= 1,000 feet. (b)Show and provide a legal description of all mineral acreage within the drilling unit which is not under lease to the applicant. (c) Show the exact well location (both surface and bottom if different) and unit acreage within the drilling unit and indicate distances to adjacent wells, drilling unit boundaries, quarter-section corners, rivers and other prominent features. With prior notice and explanation to the Department, other established lines, reference points, or methods may be used when section corners are unavailable and an inordinate amount of preliminary surveying would have to be done to establish section corners or other standard reference points.In any case,a standard survey or equivalent with plat shall be made prior to obtaining an operating permit. (d)Show ground elevation,with tolerances,at the drill site. (e) State whether the proposed drilling unit is routine or nonroutine and specify the applicable subsection of Rule 62C-26.004, F.A.C.,under which the well is located. (8)Each application to drill shall be accompanied by a$2,000 processing and regulatory fee(check made payable to DEP) for (...4\costs incurred by the Department through well completion or plugging. If not plugged and abandoned, the operator must obtain an Packet Page -315- 6/10/2014 10.B. operating permit pursuant to Rule 62C-26.008,F.A.C.There is no additional permitting fee for deepening or sidetracking when done "1 prior to plugging provided the bottom hole location conforms to permit specifications. (9)An operator must obtain a new permit prior to deepening or sidetracking a well when the resultant bottom hole location will not conform to the existing permit spacing requirements (see Rule 62C-26.004, F.A.C.), or when reentering a plugged and abandoned well.In any case submittal of Form 3 with plat and new application fee is required. (10)The applicant shall describe the provisions made for locating and constructing roads,pads,utility lines and other facilities needed for drilling operations and shall make every effort to minimize related impacts. Applications for permits in wetlands, submerged lands,and other sensitive areas shall be reviewed in accordance with Rule 62C-30.005,F.A.C. Rulemaking Authority 377.22 FS.Law Implemented 377.24, 377.245, 377.27, 377.28 FS.History-New 11-26-81,Amended 8-1-83,Formerly 16C- 26.03,Amended 6-4-89,5-12-93,Formerly I6C-26.003,Amended 3-24-96. 62C-26.004 Well Spacing and Drilling Units. (1)Field Wells. Wells drilled in existing fields shall be spaced in accordance with the special field rules adopted as orders by the Department.Where no such orders exist,general spacing subsections 62C-26.004(2)through(5),F.A.C.,shall apply. (2) Exploratory Wells. Exploratory oil wells drilled to a depth of less than 7000 feet shall be located on 40 acre units; exploratory oil wells drilled to a depth greater than 7000 feet shall be located on 160 acre units. All gas test wells, regardless of depth,shall be located on 640 acre units. (3) Drilling Units. Routine drilling units shall be based on the U.S. Government Surveyed Township and Range system. This system will be utilized to space wells as specified in subsection 62C-26.004(4),F.A.C. (a)No drilling unit shall contain more than one currently producing well in the same pool or be attributed in whole or in part to any other producing well in the same reservoir except where provided for by special field Rules or by subsection 62C-26.004(5), F.A.C. (b) All routine drilling units shall be shaped so that all diagonals lie wholly within the unit with the length of the longest diagonal not exceeding 125% of the length of a diagonal of a square containing the same number of acres as the unit. All other drilling units shall be created in accordance with subsection 62C-26.004(5),F.A.C. fa". (4)Well Locations within Drilling Units: Surface locations shall be determined by surface conditions and shall be located where they cause the least surface disturbance and do not result in drainage or other environmental problems. (a)Routine oil test wells drilled to a depth of less than 7000 feet shall have a bottom hole location no closer than 460 feet to the nearest drilling unit boundary; oil test wells drilled to more than 7000 feet shall have a bottom hole location no closer than 920 feet to the nearest drilling unit boundary. (b) Routine gas test wells or gas condensate wells shall have a bottom hole location no closer than 1320 feet to the nearest drilling unit boundary. (c) Should the bottom hole location of any producing well not meet the spacing requirements in Rule 62C-26.004,F.A.C, and where such location was not approved as a condition of the drilling permit, the well shall be considered a nonroutine location as defined in subsection 62C-26.004(5),F.A.C.,and the operator shall apply for a nonroutine location as outlined therein.No such well shall be produced,except for testing,prior to meeting the criteria defined in subsection 62C-26.004(5),F.A.C. (5)Horizontal Wells and Associated Drilling Units(Wells Deeper Than 7,000 Feet). (a)No producing section of any well may be closer than 1840 feet to another productive well. (b)All ten acre blocks,each being one-sixteenth of a routine 160 acre drilling unit,whose nearest boundary is within 920 feet of the productive section of a horizontal well shall be included in the unit. Horizontal wells with productive sections penetrating the 400 foot square in the center of a routine drilling unit shall include the entire 160 acre unit. (c)Productive horizontal wells shall be unitized as soon as possible after testing is completed. (d)Horizontal wells shall be numbered according to the quarter section of the entrance to the producing formation. (e)A Directional Survey shall be run from the surface casing shoe to total depth and shall be filed with the Administrator within 30 days after logging. (f)The special requirements for non-routine drilling units and wells shall apply to horizontal wells. (6)Nonroutine Drilling Units and Wells.The Department may grant drilling permits within shorter distances to adjacent drilling unit boundaries or on different drilling units than those prescribed in this rule whenever the Department determines that such steps are necessary to protect correlative rights or to prevent waste. Packet Page-316- 6/10/2014 10.B. (a)Applicants seeking permits for nonroutine wells or drilling units must include in the application the names and addresses of all substantially affected parties(offsetting mineral-interest owners,operators,and lessees): (b) The Department shall determine whether the nonroutine well or unit is necessary to prevent waste as defined in Section 377.19(10),F.S.,or to protect correlative rights,and shall grant,deny or condition the permit on that basis. (c)The Department shall advise all substantially affected parties,whose names and addresses appear on the application or who have so requested in writing to the Department,of its proposed final agency action. Such notice shall be given to the affected parties no later than 28 days prior to final agency action by the Department. (d) In addition to the documents required for a routine application, the applicant shall submit a letter explicitly stating what action the applicant wishes the Department to take and why. Supporting material shall include any studies, data, cross sections, maps, plats, or other available documents which support or explain the request. All interpreted geologic data shall be signed by a geologist licensed under Chapter 492,F.S. Rulemaking Authority 377.20, 377.22 FS.Law Implemented 377.25, 377.26, 377.27 FS.History-New 11-26-81,Formerly 16C-26.04,Amended 6- 4-89,5-12-93,Formerly 16C-26.004,Amended 3-24-96. 62C-26.007 Geophysical Applications. (1)Intent. This regulation shall govern all geophysical activities utilized in the exploration for hydrocarbons and other minerals. The Department intends to permit these activities provided they are conducted so as to minimize damage to all other resources. (2)State Owned Lands.Whenever geophysical activities are conducted on state owned mineral lands,the permittee shall furnish a copy of all non-interpreted information derived from the permitted activity. All confidential information shall be conspicuously marked and, upon written request, shall be held confidential for a period of ten years as specified in Section 377.2409(1),F.S., and shall be exempt from the requirements of Section 119.07,F.S. (3)Applications.No person shall engage in geophysical operations until that person has obtained a permit from the Department. To apply, the applicant must submit an Application (Oil & Gas Form 4), Organization Report (Oil & Gas Form 1), approved security (see subsection 62C-26.007(5), F.A.C.), a non-refundable application processing fee of$500.00 and, if the survey uses t."-•'explosives, an additional non-refundable observer coordinator fee of$1,000.00 for the first week of field work(see paragraph 62C- 26.007(6)(a),F.A.C.),and two plat maps described below. (a)Two plat maps: a detailed plat map showing the location of lines along which geophysical operations are to be conducted, and a generalized plat map for public distribution showing the general vicinity of the geophysical program. Permittees shall use Florida DOT county road maps (1 inch = 2 miles) for local exploratory programs and USGS topographic maps (1:250,000 or 500,000)for regional geophysical programs conducted on road rights-of-way. Symbols used for survey lines on highway rights-of- way shall be different from those used for offroad survey lines. Plat maps are to be accompanied by a copy of a complete, detailed plan of operations for all work to be done, including personnel, equipment,energy sources,use of explosives,restoration activities, etc. (b)Use Agreement. A statement agreeing to obtain written approval from the Division of State Lands prior to conducting field operations. (4)Permits. Permits issued by the Department shall be valid for one year from the date approved. The permit may be renewed for up to one additional year provided no substantive changes are requested.A fee of$250 is required for renewal. (a)Work Notice.The operator shall notify the Department's agent not less than seven days prior to starting operations. (b)Well Evaluation. Downhole geophysical well evaluation conducted through an existing well bore does not require a permit but operators are required to submit copies of logs as specified by subsection 62C-27.007(2),F.A.C. (5) Bonds. The applicant shall post with the Department a bond or other form of approved security as required by Rule 62C- 26.002, F.A.C. The amount of the security shall be $25,000 per field crew or a $100,000 per operation. Operators who have a blanket bond for oil wells (Oil & Gas Form 2A) on file may attach to it a Geophysical Rider(Oil & Gas Form 5A) to effect the required coverage.Using a vibrator source along highway rights-of-way will be considered a one-crew party. (6)Operational Requirements. (a) Uplands. It is the intent of the Department to insure that all geophysical activities are conducted in a manner to minimize environmental damage and disturbance to wild life,especially threatened or endangered species and their habitats. 1.Observers.The applicant shall provide independent third party observers as required by Section 377.2424(3),F.S. Observers shall be paid directly by the permittee and shall witness all drilling, loading,detonating,and plugging of all shot holes,maintain log Packet Page -317- 6/10/2014 10.B. books,witness all remedial operations to neutralize unexploded charges,and verify that the permittee has removed from the site all equipment,trash,debris,and materials resulting from the permitted activity. 2. Shot Point Maps.Prior to drilling and loading,the applicant shall provide a map showing all intended shot points and,within 10 days of completion, update the map to show actual shot points. This location map shall be on an aerial photographic base at a scale sufficiently large,preferably 1 inch to 400 feet,to allow reoccupation of all shot points. 3. Explosives. All persons conducting geophysical operations who use explosives shall be licensed pursuant to Chapter 4A-2, F.A.C. The loading and shooting of all charges, including nondetonating charges, shall be handled as instructed by the State Fire Marshal,Bureau of Explosives and Fire Equipment. a.Depth of Charges. The minimum required depths of charges detonated in holes below the land surface are shown below. No part of the charge shall be above the minimum required depth. 1 pound or less 10 feet below the surface Up to 05 pounds 20 feet below the surface Up to 20 pounds 40 feet below the surface Up to 30 pounds 50 feet below the surface Up to 40 pounds 60 feet below the surface Up to 50 pounds 70 feet below the surface More than 50 pounds 100 feet below the surface (b) Sensitive Environments. Great care shall be taken to do all work in such a way as to absolutely minimize environmental damage. Clearing shall be kept to a minimum, existing roads and trails shall be used to the greatest extent possible, work parties shall minimize multiple passes over sensitive areas, and tree islands shall be avoided. In addition, all ruts shall be repaired and a monitoring plan developed to measure line reclamation and prevent ORV recreational use of restored lines. 1. Vehicles. Only vehicles designed to minimize surface impacts shall be used. Routes shall be carefully chosen to avoid damage; submerged grassbeds and dense stands of cypress shall be avoided. 2. Staging Areas. Wetlands shall not be used for staging areas unless the applicant demonstrates to the Department that there is no other practical alternative. 3. Vessels. Vessels shall be used so as to minimize damage to all marine life and shall be operated in strict accordance with posted speed and other restrictions. a. Transportation. The permittee shall provide transportation necessary for the Department's agent to inspect the vessel and working area as specified in the permit. b.Fish Kills.The permittee shall immediately report and dispose of any fish killed in conjunction with geophysical operations. (7)Plugging. Shot holes shall be plugged in accordance with the rules of the jurisdictional water management district and the top two feet plugged with native material. If artesian conditions are encountered, drilling shall be discontinued immediately and the hole plugged in accordance with instructions provided by the water management district. Upon completion of operations, the permittee shall file a shot hole map notated with plugging procedures together with Oil&Gas Form 7 as specified below. (8)Reclamation. When geophysical activities under any permit have been concluded, the permittee shall remove from the site all trash, debris,equipment and materials and shall reclaim the area to the general condition and contour existing prior to permitted activities. The operator shall notify the Department using Oil & Gas Form 7, Geophysical Completion Notice, incorporated by reference in Rule 62C-25.008,F.A.C.,when reclamation activities are concluded. (9) Revocation of Permit. Any violation of these rules may result in the suspension or revocation of any violated permit pursuant to Rule 62C-25.0075, F.A.C., and Section 120.60, FS., or may result in civil penalties pursuant to Sections 370.021 and 377.37,F.S. Rulemaking Authority 377.021(1), 377.22, 377.242 FS.Law Implemented 377.22, 377.2408, 377.2409, 377.242, 377.2424, 377.2426 FS.History— New 5-10-84,Amended 4-23-85,Formerly 16C-26.07,Amended 12-23-86, 6-4-89,5-12-93,Formerly 16C-26.007,Amended 3-24-96,5-9-13. 62C-26.008 Operating Applications. All required forms are incorporated by reference in Rule 62C-25.008,F.A.C. (1) Before any company may use a well for its intended purpose (produce oil, dispose of saltwater, inject fluids for pressure maintenance, hold for future use, etc.), it must first obtain a permit to operate that well. For purposes of this rule, existing permits authorizing operators to conduct these activities shall be considered new operating permits coinciding with the effective date of this Packet Page-318- 6/10/2014 10.B. t."\rule. (2) Operating Permits shall be valid for the life of the well so long as the operator complies with the conditions of the permit and these rules. However, each operating well and permit must be re-certified every five years from the permit date. Operators wishing to continue operations beyond that time must request re-certification no later than 90 days prior to the end of the permit term. The Department shall complete field and file inspection reviews within 90 days following receipt of a request for re- certification and verify that operators have and are complying with all applicable Department rules. Should any discrepancies arise, operators will be given an opportunity for correction pursuant to Rules 62C-25.007 and 62C-25.0075,F.A.C.If the operating permit is not re-certified,no further operation shall be authorized on the well site other than those operations which are necessary to plug, abandon,and restore the well site. (3)Each new application and subsequent re-certification for an operating permit shall consist of the following: (a)Oil&Gas Form 14,Application For Permit to Operate Well; (b)Application fee of$2,000; (c)Continued or Revised bond or security coverage(Rule 62C-26.002,F.A.C.),as appropriate; (d)New or revised Spill Prevention and Clean Up Plan(Rule 62C-28.004,F.A.C.),as appropriate; (e)New or revised Flowline specifications and installation plan(Rule 62C-28.015,F.A.C.),as appropriate; (f)Secondary Containment Facility Certification(subsection 62C-28.004(4),F.A.C.),if not already on file and current; (4)An Operating Permit shall not be issued by the Department unless all reporting and data submission requirements have been met.These requirements are: (a)Oil&Gas Form 8,Well Record with driller's log(Rule 62C-27.002,F.A.C.); (b)Oil&Gas Form 9,Well Completion Report(Rule 62C-28.010,F.A.C.); (c) Oil &Gas Form 10,Monthly Well Production and Test Report(Rules 62C-25.004, 62C-28.011, and 62C-28.013,F.A.C.). Test oil should also be reported on Oil&Gas Form 10. (d)Oil&Gas Form 10A,Monthly Injection Well Report(Rule 62C-28.013,F.A.C.); (e)Copies of all mud logs,well logs,samples,cores,core analysis reports,and directional surveys(Rule 62C-27.002,F.A.C.). t (5) The Department shall inspect all wells, flowlines, and facilities during construction and again when applicants seek re- certifications for their operating permits. (6) A new operating permit shall not be required to change an operator of record (Oil & Gas Form 3A; Rule 62C-26.006, F.A.C.). (7) Subsection 62C-27.001(2),F.A.C., Continuous Operations, shall apply equally to existing wells for which operating permits have been granted. Rulemaking Authority 377.22 FS. Law Implemented 377.21, 377.22, 377.24, 377.245, 377.27 FS. History—New 5-12-93, Formerly 16C-26.008, Amended 3-24-96. Packet Page -319- 6/10/2014 10.B. r CHAPTER 62C-27 CONSERVATION OF OIL AND GAS:DRILLING 62C-27.001 General 62C-27.005 Casing 62C-27.006 Blowout Prevention Equipment 62C-27.007 Drilling Fluid 62C-27.010 Deviation Tests 62C-27.001 General. (1)Identification of Wells.Every person drilling or operating an oil or gas well shall keep posted in a conspicuous place near the well a sign legible from 100 feet and displaying the name of the operator, fee owner, well number,Department permit number, county name,section,township,and range.This sign shall remain until the well is plugged and the site restored. (2)Continuous Operations.Once commenced,drilling operations shall not be suspended except in emergency situations created by hurricanes, flooding, fire, etc. and shall be resumed as soon as the emergency passes. All wells under construction on which drilling activities have been suspended in non-emergency situations shall be considered abandoned and shall be plugged in accordance with Rule 62C-29.009,F.A.C. (a) Shut-in Periods.Every well not plugged and abandoned must have an operating permit. Once an operating permit has been granted,the operator may shut the well in for the life of the operating permit after first pressure testing the well in accordance with Rule 62C-29.007,F.A.C.Every shut in well must be retested prior to recertification of its operating permit. (b)Security.All shut in wells shall be continuously covered by security as specified in Rule 62C-26.003,F.A.C. (3) Reporting Requirements. The operator shall submit to the Department a Well Record (Oil & Gas Form 8), abbreviated driller's log, a cut of all samples and cores taken, a complete set of all well logs,a mud log,and a core or sample analysis report, if made. (a)Logs.The operator shall keep at the well site a complete driller's log and a copy of all well logs run on the well. (b)Water Quality Analysis.If necessary to determine the depth to the base of the deepest USDW,the Department shall require �� resistivity and porosity logs be run before setting surface casing and a representative water sample taken immediately after drilling out of the surface casing. (4)Mud Tanks,Reserve Pits, and Dikes.Before spudding the well,mud tanks of sufficient size to hold the active mud volume at the surface shall be installed for containment of all active drilling fluids.Earthen mud pits shall not be used for this purpose. (a) Additional Requirements. In national and state forests and parks, in wetlands, and in other sensitive areas, prefabricated tanks and drip pans shall be required for the containment of all waste fluids and, on a site specific basis,reserve pits must be either lined with impermeable material or reserve pit fluids intermittently pumped down the wellbore to reduce hydrostatic head. (b)Pit Volume. If the volume of fluid in the reserve pit exceeds 75%of pit capacity,all drilling operations shall be suspended until additional pit volume is provided or the level reduced. (c)Dikes.Dikes of sufficient size and strength to prevent rain water from washing onto and inundating pads and to contain any spills that may occur during drilling operations shall be constructed around well sites.For productive wells drilled subsequent to this rule and located where potential spillage, flooding or drainage problems exist, such as in closed drainage basins, floodplains, hillsides overlooking rivers,etc.the Department shall require the dike to remain until permanent abandonment. (5) Control of Wells.The operator shall take all necessary precautions to keep all wells under control at all times, shall utilize only contractors or employees trained and competent to drill and operate such wells, and shall use only oil field equipment and practices generally used in the industry. The design of the integrated casing, cementing, drilling mud, and blowout prevention programs shall be based upon sound engineering principles, and shall take into account all relevant geologic and engineering data and information. (6) Drill Stem Tests. All drill stem tests shall be conducted in accordance with generally accepted industry standards and practices and shall be concluded only during daylight hours. Prefabricated tanks shall be used to contain all produced fluids and a gas flare system with automatic ignition and scrubbers shall be used to safely flare gas and prevent spills. Flare pits shall be lined and the fluid level kept to a minimum.Earthen flare pits shall not be used for long-term production. (7)Operations Involving Hydrogen Sulfide. When rig operations are undertaken where H2 S is likely, operators shall use only materials and equipment rated for sour service and shall develop a plan to safely and effectively control any H2 S encountered. Such Packet Page-320- 6/10/2014 10.B. plan shall meet generally accepted industry standards and practices and shall include well and mud design,a personnel training and safety program,and a contingency plan for notifying authorities and evacuating civilians in the event of an accident. Rulemaking Authority 377.22 FS. Law Implemented 377.22 FS. History—New 11-26-81, Formerly 16C-27.01, Repromulgated 5-12-93, Formerly 16C-27.001,Amended 3-24-96,5-9-13. 62C-27.005 Casing. The operator shall case and cement all wells so as to maintain well control and prevent degradation of other natural resources, including water and petroleum. All casing shall be new pipe or reconditioned so as to be equivalent to new pipe. After cementing, drilling shall be discontinued for 12 hours if float valves are used;24 hours if such valves are not used or do not hold pressure. (1) Surface casing. Surface casing shall be set below the deepest USDW and cemented to the surface. If circulation is lost, a survey shall be run and if a seal to a point at least 100 feet above the base of the deepest freshwater aquifer has not been achieved, remedial measures will be taken to do so. (a)Lost Circulation. Surface casing may be set above the deepest USDW if necessitated by lost circulation zones provided the operator implements an alternate and equally effective method of protecting such aquifers. (b) Minimum Depth. The minimum acceptable surface casing depths are based on the proposed total depth of the well or the first full string of intermediate casing in true vertical feet from the rotary table and are as follows: Minimum Surface Casing(Feet) Well Depth Surface Casing 0—7,000 1,500 7,000—9,000 1,750 9,000— 11,000 2,250 11,000—13,000 3,000 13,000—Below 3,500 (2) Intermediate Casing. The intermediate casing shall be set and cemented in accordance with generally accepted industry standards and practices. If a liner is used as intermediate casing, the liner seal shall be pressure tested to determine whether a seal between the liner top and next larger string has been achieved.The test shall be recorded on the driller's log. When such liner is used as production casing, it shall be extended to the surface and cemented as described above to avoid surface casing being used as production casing. (3) Production/Injection Casing. Production casing shall be set and cemented in accordance with generally accepted industry standards and practices. However, a sufficient quantity of cement to fill the annular space at least 1,500 feet above the uppermost producible hydrocarbon zone must be used. When a liner is used as production casing, the testing of the seal between the liner top and next larger string shall be conducted as in the case of intermediate liners. (4)Pressure Tests.All casing strings except the conductor shall be pressure tested as specified below prior to well completion or drilling out after cementing.These tests shall not exceed the working pressure of the casing. CASING STRING MINIMUM SURFACE TEST PRESSURE (whichever is greater) (a)Surface 1000(psi) (b)Intermediate 1500 or 0.2 psi/ft. of depth (c)Liner 1500 or 0.2 psi/ft. of depth (d)Production 1500 or 0.2 psi/ft. of depth (e)Tubing and Packer 1000 or 0.2 psi/ft. of depth (5) Retests. These pressure tests shall be thirty minutes long and shall have no more than a 10 percent pressure drop. If there is an indication of a leak, necessary remedial measures will be taken and the casing retested. All pressure tests will be recorded in the driller's log and may be witnessed by an agent of the Department. (6)Tubing and packer pressure tests are waived for Type II Wells. Rulemaking Authority 377.22 FS. Law Implemented 377.22 FS.History—New 11-26-81, Formerly 16C-27.05,Amended 6-4-89, 5-12-93, Formerly 16C-27.005,Amended 3-24-96. Packet Page-321- 6/10/2014 10.B. 62C-27.006 Blowout Prevention Equipment. teTh (1)Blowout preventers and related well control equipment shall be installed,used,and tested in a manner necessary to prevent blowouts. Prior to drilling below the surface casing,blowout prevention equipment shall be installed and maintained ready for use until drilling operations are completed and, in addition, an inside blowout preventer assembly(back pressure valve) and drill-string safety valve in the open position shall be maintained on the rig floor at all times while drilling operations are being conducted. Separate valves shall be maintained on the rig floor to fit all pipe in the drill string. In water operations, a Kelly cock shall be installed below the swivel, and an essentially full opening Kelly cock of such design that it can be run through the blowout preventers shall be installed at the bottom of the Kelly. (2)Blowout preventers and related well-control equipment shall be pressure-tested when installed,before drilling out after each string of casing is set,not less than once each week while drilling,following repairs that require disconnecting a pressure seal in the assembly,and at such other times as prescribed by the Department. A required weekly test while drilling may be deferred up to one week to avoid unnecessary tripping of the drill string or conditions that would endanger the hole. Blowout preventer tests shall be recorded on the driller's log. (3)Ram-type blowout preventers shall be tested to the working pressure of the stack assembly or the casinghead, whichever is the lesser.Bag-type blowout preventers shall be tested up to 70 percent of the above pressure requirements. (4)A bag-type blowout preventer shall be actuated on the drill pipe or drill collars once each week. Accumulators and pumps shall maintain a pressure capacity reserve at all times to provide for repeated operation of hydraulic preventers. A blowout prevention drill shall be conducted weekly for each drilling crew to insure that all equipment is operational and that crews are properly trained to carry out emergency duties.All blowout preventer tests and crew drills shall be recorded in the driller's log. (a) Before drilling below the conductor casing in non-field Type I wells, at least one remotely controlled bag-type blowout preventer and equipment for circulating the drilling fluid to the shale shaker shall be installed. To avoid formation fracturing from complete shut-in of the well, a large diameter pipe with control valves shall be installed on the conductor pipe below the blowout preventer so as to permit the diversion of hydrocarbons and other fluids. (b) Before drilling below the surface casing (except in south Florida locations which drill through the Boulder Zone) the blowout prevention equipment shall include a minimum of three remotely controlled, hydraulically operated, blowout preventers to■\ with a working pressure which exceeds the maximum anticipated surface pressure,including one equipped with pipe rams,one with blind rams,and one bag-type;drilling spool with side outlets,if side outlets are not provided in the blowout preventer body,a choke manifold,a kill line,and a fill-up line.In locations in which the hole below the surface hole is drilled through the Boulder Zone,the blowout prevention equipment shall include a bag-type blowout preventer and a drilling spool with side outlet. (c) Before drilling below the intermediate string the blowout prevention equipment shall include a minimum of three, or in abnormal pressure areas, four remotely controlled, hydraulically operated, blowout preventers with a working pressure which exceeds the maximum anticipated surface pressure, including at least one equipped with pipe rams, one with blind rams, and one bag-type; a drilling spool with side outlets, if side outlets are not provided in the blowout preventer body, a choke manifold, a kill line,and a fill-up line. Rulemaking Authority 377.22 FS.Law Implemented 377.22 FS.History—New 11-26-81,Formerly 16C-27.06,Amended 6-4-89, 5-12-93,Formerly 16C-27.006. 62C-27.007 Drilling Fluid. (1)The operator shall maintain readily accessible for use quantities of mud and mud additives sufficient to insure well control. The testing procedures, characteristics and use of drilling fluid and the conduct of related drilling procedures shall be such as are necessary to prevent blowouts. Necessary mud testing equipment and mud volume measuring devices shall be maintained at all times,and mud tests shall be performed frequently and recorded in the driller's log. (2)Before starting out of hole with drill pipe,the drilling fluid shall be circulated with drill pipe just off bottom until the drilling fluid is properly conditioned to insure a safe trip. When coming out of the hole with drill pipe, the annulus shall be filled with drilling fluid before the drilling fluid level drops below 100 feet,and a mechanical device for measuring the amount of drilling fluid required to fill the hole shall be utilized. The volume of drilling fluid required to fill the hole shall be watched,and any time there is an indication of swabbing,or an influx of formation fluids,the necessary safety device(s)shall be installed on the drill pipe,the drill pipe shall be run to bottom and the drilling fluid properly conditioned. The drilling fluid shall not be circulated and conditioned except on or near bottom, unless well conditions prevent running the pipe to bottom. The provisions of this subsection shall not Packet Page -322- 6/10/2014 10.B. apply when drilling in lost circulation zones. (3) Drilling fluid testing equipment shall be maintained on the drilling location at all times, and drilling fluid tests shall be performed daily,or more frequently as conditions warrant. (4) The following drilling fluid system monitoring equipment, with derrick floor indicators, shall be installed and used throughout the period of drilling after setting and cementing surface casing,if weighted drilling fluid is required. (a)Pit level and mud flow indicators with charts and alarms. (b)A drilling fluid volume measuring device for accurately determining volumes required to fill the hole on trips. (c)A drilling fluid return indicator to determine that returns essentially equal the pump discharge rate. Rulemaking Authority 377.22 FS.Law Implemented 377.22 FS. History—New 11-26-81, Formerly 16C-27.07,Amended 6-4-89, 5-12-93,Formerly 16C-27.007. 62C-27.010 Deviation Tests. (1)A directional survey or equivalent shall be run to total depth and a certified copy filed with the Department on all Type I and productive Type II wells when the inclination survey is insufficient to demonstrate that the bottom hole location conforms to Rule 62C-26.004,F.A.C.For non-productive Type I Wells,total depth shall mean within 500 feet of the target formation. (2)No well shall be produced, except for testing, unless its bottom hole location conforms to its permit. If a well is drilled as a standard location in accordance with Rule 62C-26.004, F.A.C., but the bottom hole location wanders outside of the approved limit then it shall be treated as a nonroutine location and subsection 62C-26.004(5), F.A.C., shall apply. In such a case the operator must obtain a new permit or have the existing permit amended accordingly. Until the new location is approved the well may not be produced except as noted above. (3) The Department may require the operator of any well to run a directional survey whenever the Department determines that there is a reasonable need to do so. Rulemaking Authority 377.22 FS.Law Implemented 377.22 FS.History—New 11-26-81, Formerly 16C-27.10,Amended 6-4-89, 5-12-93,Formerly ^ 16C-27.010. Packet Page-323- 6/10/2014 10.B. CHAPTER 62C-28 CONSERVATION OF OIL AND GAS:PRODUCTION AND FLOWLINES 62C-28.001 Wellhead Equipment 62C-28.004 Production and Production Facilities 62C-28.005 Notification of Blowouts,Fires,Breaks,Leaks,and Spills 62C-28.015 Field Flowlines and Gathering Lines 62C-28.001 Wellhead Equipment. All completed wells shall be equipped with casingheads, wellhead fittings, valves and connections with a rated working-pressure equal to or greater than the shut-in pressure to which they will normally be subjected. Connections and valves shall be designed and installed to permit fluid to be pumped between any two strings of casing,except between conductor and surface casing.In wells with a surface pressure in excess of five thousand pounds per square inch a master valve shall be installed below the production tee and another above or across it.Prior to placing the well in service all wellhead connections shall be tested to the rated test pressure of the assembly. (1)Pressure Sensors. All flowlines from wellheads shall be equipped with both high and low pressure sensors located close to the wellhead. The pressure sensors shall be set to shut in the well and pumping unit in the event of abnormal pressures in the flowline. (2) Safety Valves. All wellhead assemblies for flowing wells shall be equipped with an automatic fail-close valve. Automatic safety valves temporarily out of service shall be flagged and,unless a backup automatic fail-close valve or equivalent safety system is operable,the well shall be shut in until repairs are completed. (3)Casingheads.All wells shall be equipped with casingheads rated to withstand the conditions and pressures to which they will be subjected.Casingheads shall be equipped with proper connections and valves which are accessible at the surface.Reconditioning shall be required on any well showing pressure on the casinghead,or leaking gas or oil between the production casing and the next larger string. Specific Authority 377.22 FS.Law Implemented 377.21, 377.22 FS.History—New 11-26-81,Formerly 16C-28.01,Amended 6-4-89,Repromulgated 5-12-93,Formerly 16C-28.001,Amended 3-24-96. 62C-28.004 Production and Production Facilities. (1) Production Measurement. All production, prior to sales or commingling with another production, shall be measured in accordance with generally accepted industry standards and practices. Casinghead gas, when produced in quantities insufficient for sale,may be estimated by using gas/oil ratios obtained from periodic well tests or other suitable means. Saltwater may be measured anytime prior to disposal or injection.See Rule 62C-25.008,F.A.C.,for reporting requirements. (2)Spill Prevention and Clean Up Plan(SPCP).Every person operating a well or field in Florida shall devise and submit to the Department a plan designed to prevent spills of crude oil and associated fluids and to expeditiously remove these fluids from the environment should a spill occur. These plans must be field specific and, where more than one operator exists in a field, must be coordinated with each of the other operators. In such cases, one plan shall be devised and submitted to the Department on behalf of each operator involved. These plans shall be kept current and shall at a minimum identify each potential spill source, outline protective measures taken to avoid a spill at that point,list and show location of equipment to be used in an emergency,and specify what action has been planned to remove each such spill that might occur.Field maps showing wells,flowlines,tank batteries,access roads, treating facilities, gathering lines, and associated facilities must be included and updated as changes occur. Equipment necessary to rapidly control spills and to comply with SPCP's shall be maintained readily available at all times. See paragraph 62C- 26.008(3)(d)and subsection 62C-28.004(7),F.A.C. (3) Production Facilities and Equipment. All production facilities and related equipment shall be designed and maintained as necessary to prevent pollution. Each piece of equipment, including flowlines, valves, fittings, separators, heater treaters, pumps, coolers, storage tanks,etc.,shall be properly maintained to perform its design function and shall be removed from the location when no longer used or useful. High-low pressure and level sensors and shut down devices, pressure relief valves, check valves, gas detection systems, testing schedules and procedures, etc. shall all be designed, tested and operated in accordance with generally accepted industry standards and practices. Housekeeping shall be sufficient to maintain human health, safety, and environmental Packet Page-324- 6/10/2014 10.B. P-\protection. Bonds and securities required under Rule 62C-26.002, F.A.C., cover production facilities and tank batteries associated with the covered well and cannot be released until these facilities are removed and the sites restored unless the facilities are also covered under a different well security. (4) Secondary Containment Facilities. All new tank batteries and those renovated subsequent to this rule shall be constructed upon pads certified by a registered professional engineer to be relatively impermeable to hydrocarbon and saltwater spills. These pads shall be surrounded by dikes or fire walls of sufficient size and strength to contain twice the volume of the largest storage tank within the diked area. The containment pads shall be sloped so as to drain surface fluids away from storage tanks and shall be kept clean and free of liquids. Drain lines with locked valves shall be installed through the fire walls at the lowest point of the containment facility but fluids may be drained only in accordance with NPDES and other permits and these rules. (5) Storage Tanks. Crude oil storage tanks shall be equipped with equalizing overflow lines. Such tanks, when constructed or refurbished subsequent to this rule shall be, unless an exception is granted pursuant to Rule 62C-25.001, F.A.C., installed on foundations above the floor of the containment area so that any leaks can be readily seen immediately around the tanks. Tanks containing sour fluids shall be equipped so that they can be gauged, sampled, and the temperature measured at ground level. All tanks shall be installed, maintained, pressure tested, and protected against corrosion in accordance with generally accepted petroleum industry standards and practices. (6)Inspections and Reports. The operator shall monitor all equipment and facilities so as to immediately detect any leak which might cause pollution. All unattended facilities equipped with remote controlled and automatic monitoring systems shall be inspected at least every third day; all other facilities shall be inspected daily. All spills shall be reported as required in Rule 62C- 28.005,F.A.C. (7) Control and Removal. Immediate corrective action shall be taken in accordance with the operator's SPCP to rapidly bring any spill under control and to clean up the site without delay. If a relatively minor spill or a spill of undetermined size occurs adjacent to or beneath permanent structures such as storage tanks,pump foundations,pipelines, etc.,and complete excavation is not practical, the Department shall require that the site be monitored for possible ground water contamination. Monitoring includes installation and periodic sampling of monitor wells and/or surface water bodies. If levels of hydrocarbons or dissolved chlorides P--\occur above background levels,continued monitoring or site clean up will be required in accordance with Chapter 62C-770,F.A.C. (8) Safety and Pollution Control Equipment Testing. All safety, fire, and pollution prevention programs and equipment, facilities, and procedures shall conform to generally accepted industry standards and practices. Diagrams of the gas detection and fire fighting systems together with schedules and procedures for testing safety equipment shall be posted in a prominent place. Specific Authority 377.22 FS. Law Implemented 377.22 FS. History—New 11-26-81, Formerly 16C-28.04, Amended 6-4-89, 5-12-93, Formerly 16C-28.004,Amended 3-24-96. 62C-28.005 Notification of Blowouts,Fires,Breaks,Leaks,and Spills. (1)Any operator spilling crude petroleum or associated fluids into the environment shall immediately notify the Department and any other agency having jurisdiction and shall immediately confirm in writing all such spills greater than 5 barrels. (2)The operator shall,in the event of a blowout or other emergency,bring the situation under control as rapidly as possible. If not,the Department shall do so at the operator's expense. Specific Authority 377.22 FS. Law Implemented 377.21, 377.22, 377.40 FS.History—New 11-26-81,Formerly 16C-28.05,Amended 6-4-89, 5-12- 93,Formerly 16C-28.005,Amended 3-24-96. 62C-28.015 Field Flowlines and Gathering Lines. The operator shall submit a plan of installation for the laying and construction of flowlines and gathering lines and associated structures. This plan shall include a detailed map showing location and complete design specifications of all lines and associated equipment. All such lines shall be designed,operated,inspected,tested,and repaired in accordance with generally accepted industry standards and practices.In the event of a leak the operator shall submit within one week a written report indicating the cause,effect, /."' and remedial action taken to clean up any spill and prevent future occurrences. Specific Authority 377.22 FS. Law Implemented 377.21, 377.22, 377.30 FS. History—New 11-26-81, Formerly 16C-28.15,Amended 6-4-89, 5-12- Packet Page -325- 6/10/2014 10.B. 93,Formerly 16C-28.015,Amended 3-24-96. Packet Page-326- 6/10/2014 10.B. CHAPTER 62C-29 CONSERVATION OF OIL AND GAS:INJECTION WELLS,WELL WORKOVERS,AND ABANDONMENTS 62C-29.001 General 62C-29.002 Injection Wells 62C-29.006 Workover Operations 62C-29.007 Pressure Tests 62C-29.009 Plugging and Abandonment of Wells 62C-29.001 General. (1) All safety and environmental standards applicable to oil and gas wells are equally applicable to injection wells. Well workovers must conform to all applicable safety and environmental protection standards required under Chapters 62C-27 and 62C- 28,F.A.C.,and,in addition,the regulations of this chapter which apply specifically to injection wells and well workovers. (2) Pressure Maintenance Wells. Regulations governing the drilling of oil, gas, or saltwater disposal wells apply equally to pressure maintenance wells. (3) Monitoring. All injection wells shall be equipped with pressure gauges to monitor the tubing and tubing-casing annulus. Injection pressures and volumes shall be read and recorded weekly. If a malfunction or failure is detected, operators shall cease injection until the well is repaired and retested in accordance with Rule 62C-29.007,F.A.C. (4) The operator of each injection well shall file Oil & Gas Form 10A, Monthly Well Injection Report (Rule 62C-25.008, F.A.C.),with the Department within 30 days subsequent to the report period. (5)All injection wells shall be visually inspected at quarterly intervals; pressure gauges shall be calibrated or proven quarterly and reported on Oil&Gas Form 10A. Rulemaking Authority 377.22 FS.Law Implemented 377.22 FS.History-New 11-26-81,Formerly 16C-29.01,Amended 6-4-89,5-12-93,Formerly 16C-29.001,Amended 3-24-96. 62C-29.002 Injection Wells. (1)Permits,as specified in Rules 62C-25.006,62C-26.003,F.A.C.,and subsection(3)below are required prior to both spudding and operating a Class II well.Wells initially constructed for the production of oil or gas may be converted to injection wells but shall not be operated without an Operating Permit(Oil&Gas Form 14)issued by the Department.Wells drilled or converted for injection purposes are subject to the same requirements of plugging and site restoration as oil or gas wells. For information regarding an Application for Permit to Operate Well(Form 14)see Rules 62C-25.006,62C-26.008,62C-28.016,F.A.C.,and this section. (2)No subsurface formation or zone will be approved for fluid disposal if total dissolved solids of the formation fluid do not equal or exceed 10,000 ppm and chloride content does not equal or exceed 5,000 ppm. (3)As part of the application for a permit required by subsection(1)above the operator shall submit to the Department a written application containing at least the following information: (a)In the case of a well already drilled, a detailed plan for workover together with an appropriate well log of the well with the proposed zone marked and a statement giving the name of the disposal formation. In the case of undrilled wells, the name of the formation or zone to be used for injection and its approximate depth. In addition, any of the information required in paragraphs(b) through(h)below may also apply,depending on well history and data available in the file. (b) A plat showing the location of the proposed injection well and all wells within a one-half mile radius thereof which penetrated the formation proposed for injection if the formation is non-productive and all wells within a two-mile radius thereof if the proposed injection zone is productive of oil or gas within two miles. (c)The following data are required for each well identified on the plat required in paragraph(b)above: 1.A description of well type,character and amount of material being injected. 2.A description of well construction. 3.Depth of the injection zone. 4.Record of completion and plugging activities. 5. Additional information may be required by the Department to properly evaluate environmental impacts on a site specific t""'\basis. (d)A statement of estimated daily volume of saltwater to be injected,and of the injection pressure anticipated. Packet Page-327- 6/10/2014 10.B. (e)A statement of other known instances in which the proposed disposal zone has been used for saltwater disposal. (f)A chemical analysis of a sample of the formation waters of the zone proposed for brine injection.This sample may be taken from the proposed injection well or from any suitable well within two miles of the proposed injection well.When the well is drilled, well logs must be run over the proposed injection zone. These logs must indicate that contained chlorides are no less than 5,000 parts per million(ppm). (g) A statement that the proposed disposal well will be completed in a manner to insure that the disposal products are injected into the proposed injection zone and that provision has been made for adequate protection of freshwater aquifers and other zones of commercial value. A schematic diagram of the disposal well showing the casing and cementing program shall be attached together with an explanation thereof. Adequate provision must be made to insure that surface casing is set below the base of all underground sources of drinking water. (h)All supporting interpretative geologic data shall be signed by a geologist licensed in Florida as required by Sections 492.111 and 492.116,F.S. (4) Prior to the injection of saltwater, the operator shall obtain from the Department a permit to operate well (Oil &Gas Form 14),and an agent of the Department shall inspect each completed disposal facility to insure compliance. (5)The operator shall measure the amount of saltwater injected into each disposal well and shall submit Oil & Gas Form 10A, Monthly Well Injection Report,to the Department within 25 days subsequent to the reported period. (6) All injection wells shall be equipped with tubing and packer set no more than 100 feet above the injection zone unless otherwise specified by the Department. (7)No injections shall be permitted using casing as the injection string,in the annulus between casing strings,or between casing and the well bore. (8) The integrity of the casing and tubing strings for injection wells shall be pressure tested in the presence of an agent of the Department upon initial construction or conversion and within two year intervals thereafter. Wells drilled for the purpose of injection shall be initially tested in accordance with Chapter 62C-27,F.A.C.Initial testing for wells converted for injection purposes and all subsequent testing shall be in accordance with Rule 62C-29.007,F.A.C. Exceptions to this testing schedule may be granted by the Department provided the operator proposes and agrees to follow equivalent means of monitoring casing and tubing integrity. '"•■ If the casing or tubing fails to hold the scheduled pressure during the test time specified, the well shall be shut in until successful remedial action and retests have been completed. (9)Each permit for an injection well shall include a condition specifying the upper limit of allowable pressure. Rulemaking Authority 377.22 FS.Law Implemented 377.22 FS. History—New 11-26-81,Amended 4-12-83, 8-1-83,Formerly 16C-29.02,Amended 6-4-89,5-12-93,Formerly 16C-29.002,Amended 3-24-96. 62C-29.006 Workover Operations. (1) Notification. Each operator shall notify the Department's agent prior to commencing a workover operation or, during an emergency,as soon thereafter as possible. (2) Blowout Preventer Requirements. All workover operations for Type I wells shall provide blowout preventer systems and tests which shall meet or exceed the requirements in Chapter 62C-27,F.A.C. (3) Reporting Requirements. The operator shall submit to the Department within 30 days of completion of any workover operation a revised Well Record(Oil&Gas Form 8). Rulemaking Authority 377.22 FS. Law Implemented 377.22 FS. History—New 11-26-81,Formerly 16C-29.06,Amended 6-4-89, Repromulgated 5- 12-93,Formerly 16C-29.006,Amended 3-24-96. 62C-29.007 Pressure Tests. (1) Type I Wells. The production casing,tubing, and packers in all Type I wells shall be tested to a pressure equivalent to the length of production casing multiplied by.1 psi/ft. This pressure shall be applied at the surface for 30 minutes with no more than a 10% pressure drop. If there is evidence of a leak or an invalid test, necessary remedial measures shall be taken, and the casing retested. This pressure test shall be conducted after every fishing job or if requested by the Department. All pressure tests shall be recorded on the driller's log. (2)Type II Wells.The production casing,tubing, and packers in all Type II wells shall be pressure tested in the same manner as Type I well except that the test pressure shall be half as great. Packet Page-328- 6/10/2014 10.B. (3)Mechanical Integrity Tests. Pressure requirements for Class II MIT's shall be 1.15 times the actual injection pressure of the well being tested. If the pressure is applied to the back side of the tubing on the packer and injection casing, the required pressure shall be .2 psi/ft for new wells and .1 psi/ft for existing wells. Pressure requirements for Class II wells constituting very low environmental risk(injection pressures less than 250 psig,injecting only freshwater,etc.)shall be,upon request,set correspondingly lower. (4) Any well showing pressure on the casinghead, or leaking fluids between the production casing and the next larger casing string,shall be tested and repaired in accordance with this section. Rulemaking Authority 377.22 FS.Law Implemented 377.22 FS.History—New 11-26-81, Formerly 16C-29.07,Amended 6-4-89, 5-12-93,Formerly 16C-29.007,Amended 3-24-96. 62C-29.009 Plugging and Abandonment of Wells. Operators must obtain Department approval prior to commencing plugging operations. To apply, operators may contact either the Chief or his agent and request authorization to plug and abandon the well and restore the site. Operators must specify exactly how the well will be plugged and the site restored. Oral approval to plug and abandon shall be granted when the operator meets the criteria defined in this section. (1) Pulling of Casing from an Abandoned Hole. Before pulling casing from an abandoned hole the operator shall obtain approval from the Department for reentry into the well. To apply, the operator must submit a written request to the Department, Oil and Gas Program, 2600 Blair Stone Road, MS 3588, Tallahassee, Florida 32399-2400. The Department shall approve the request when the operator meets the criteria specified in this section. All requests shall contain an Organization Report(Rule 62C-25.008, F.A.C.),Performance Surety(Rule 62C-26.002,F.A.C.),well diagram,proposed procedure,and replugging schedule. (2) Permanent Abandonment. The Department recognizes that no single plugging and restoration schedule can suffice for all wells. However, the following criteria will apply to most wells; others shall be handled in accordance with subseciton 62C- 25.001(5),F.A.C. (a) Uncased-hold plugs: Cement plugs shall be placed in uncased portions of wells as necessary to prevent the migration of formation fluids from one zone to another.These plugs shall be placed in accordance with the following criteria. 1. All nonproductive intervals containing shows of hydrocarbons shall be isolated from the wellbore by placing a minimum cement plug of 200 feet in length across the showing interval. Such plugs shall extend from 100 feet below to 100 feet above the show and shall be verified by either tagging with 15,000 pounds of drill stem weight or pumping sufficient excess cement to guarantee proper placement. 2.All nonproductive intervals which are or have been productive within 5 miles of the well being plugged shall be isolated and verified in accordance with subparagraph(a)1.above. 3. All flows of saltwater requiring 12 or more pounds per gallon to control shall be isolated as in subparagraph(a)1. above and the plugs verified by tagging with 15,000 pounds of drill stem weight. 4.Underground Sources of Drinking Water shall be isolated from adjoining saline zones by a minimum cement plug of 400 feet extending from 200 feet below to 200 feet above the base of the USDW. Such plugs shall be verified by tagging with sufficient drill stem weight to guarantee proper placement of the plug. 5. Freshwater zones shall be isolated from nonfreshwater zones as in subparagraph(a)4. above and the plugs verified in a like manner. 6.All intervals between any of the above plugs may be filled with drilling fluid. (b)Cased Hole Plugs: 1.Perforated Interval Plugs:No perforation shall be permitted to remain open upon abandonment.Either a cement retainer shall be set a minimum of 100 feet above the open perforation interval with cement squeezed into the perforation interval and 50 feet of cement placed on top of the retainer, or a 200 foot cement plug placed to extend from 100 feet below to 100 feet above the perforations. If a cement retainer is not used or does not hold pressure, this plug shall be verified by either tagging with 15,000 pounds of drill stem weight or by utilizing an amount of cement 100%in excess of that needed for the 200 foot plug. If cement can not be squeezed below a properly operating cement retainer,then a 200 foot cement plug shall be set on top of the retainer. 2. Casing Seat Plugs: Where there is open hole below any casing seat, a cement plug shall be placed at the base of the string, extending at a minimum from 150 feet below to 150 feet above the casing shoe. If a cement retainer is used,it should be set not less than 50 feet nor more than 100 feet above the casing shoe and the cement plug placed so that it will extend at least 100 feet below Packet Page-329- 6/10/2014 10.B. the casing shoe and 100 feet above the retainer.If a retainer is not used or fails to hold pressure,the plug shall be verified by tagging with 15,000 pounds of drill stem weight. In the event lost circulation conditions were encountered immediately below the casing shoe so that any attempted casing seat plug would be lost to the formations below, a permanent type bridge plug shall be set within 100 feet of the casing shoe and 200 feet of cement placed on top of the bridge plug. Regardless of the method used to set this plug, the pipe,unless it is to be cut and recovered,shall be tested by placing on it a minimum pump pressure of 1000 psig.No more than a 10%pressure drop during a 30 minute test period shall be allowed. If this test fails, necessary remedial measures shall be taken and the pipe retested and plugged in accordance with subparagraph(a)4.above. 3. Casing-Stub Plugs. When casing is cut and recovered, a cement plug 200 feet in length shall be placed at the base of the cut so that the plug extends from 100 feet below to 100 feet above the stub. This plug shall be verified as directed by the Department's agent. (c)Up Hole Plugs: 1.USDW Plugs. All casing strings not cemented to the surface shall be cut not less than 200 feet below the base of the deepest USDW and pulled out of the hole.A cement plug shall then be set across the USDW as described in subparagraph(a)4. above.If the casing seat depth exceeds the required plug depth and can not be cut and pulled out of the hole,then the plug shall be set inside the casing. 2. Freshwater Plug. A cement plug shall be set across the freshwater interval as described in subparagraph (a)5. above. If the surface casing seat depth exceeds the required plug depth,then the plug shall be set inside the surface casing. 3. Annular Space Plugs. No annular space connecting saline water intervals with freshwater intervals or the surface with the drilled hole below shall be allowed to exist. If such space exists it shall be destroyed by cutting and recovering the necessary casing strings as described in subparagraph (c)1. above. In the event that it is physically impossible to recover such casing, the operator shall devise an alternate method to accomplish the same result. Such alternate method must have prior approval of the Department's agent. 4. Surface Plug.A 100 foot cement plug shall be placed in the top of the largest string of pipe cemented to the surface.This plug shall extend from the top of the casing downward the required distance. A 1/2 inch thick steel plate shall be welded across the top of the casing. (d)Restoration of location. 1. Mud pits. All fluids and recoverable slurry that remain in the pits shall be either returned to the wellbore below all USDW during the process of plugging,placed between plugs in the casings,or removed to an approved land fill. 2. Drilling sites. The operator shall remove all waste, debris, and equipment and shall restore the site as necessary to prevent erosion, invasion of exotic species, interruption of sheetwater flow or other similar impacts. Land drilling sites and access roads shall be restored to the approximate original contour of the surface and revegetated with native vegetation. However, upon written request of the landowner, or the operator with the landowner's consent, and where other natural resources are not endangered, the Department shall permit alternate restoration standards, including landowner retention of the access road, pad, or other improvements. 3.All casing shall be cut off at least four feet below ground surface. 4. The operator shall file Oil & Gas Form 16 immediately upon plugging any well. The comments section shall include a detailed plugging schedule plus a clearly differentiated description of all completed restoration work and work yet to be completed with time frame. 5. The Department shall perform a final inspection on each restored site before relieving the operator of liability under these rules. (3) Temporary Abandonments. Any well which is to be temporarily abandoned shall be plugged in accordance with Rule 62C- 25.001,F.A.C. Rulemaking Authority 377.22 FS.Law Implemented 377.22, 377.24 FS. History—New 11-26-81,Amended 4-12-83,Formerly 16C-29.09,Amended 6-4-89,5-12-93,Formerly 16C-29.009,Amended 3-24-96. Packet Page-330- 6/10/2014 10.B. CHAPTER 62C-30 CONSERVATION OF OIL AND GAS: WETLANDS AND SUBMERGED LANDS 62C-30.001 General (Repealed) 62C-30.005 Applications to Drill in the Big Cypress Watershed 62C-30.001 General. Rulemaking Authority 377.22 FS. Law Implemented 377.21, 377.22, 377.24, 377.241, 377.242, 377.243, 377.371 FS. History New 11-26-81, Formerly 16C-30.01,Amended 6-4-89,5-12-93,Formerly 16C-30.001,Amended 3-24-96,Repealed 2-16-12. 62C-30.005 Applications to Drill in the Big Cypress Watershed. (1) The Department shall evaluate each application to drill and visit each proposed access route and drilling site in the Big Cypress Watershed to insure that the exploration and production activities will cause no permanent adverse impact on the water resources and sheet flow of the area, or on the vegetation or the wildlife of the area, with special emphasis on rare and endangered species.In the event a proposed site is located on developed or highly impacted uplands,the Department shall review the application and staff field inspection reports and thereby determine whether to reinspect the site. If a reinspection is not necessary, the prior construction prohibition in subparagraph 62C-30.005(2)(a)1.,F.A.C.,below shall not apply. (2)In evaluating applications,the Department shall use the following criteria: (a)Roads,including road extensions. 1.No road construction or improvement shall begin prior to obtaining a permit to drill. 2.Existing roads shall be used wherever feasible. 3. Existing roads, if improved, or new roads where constructed, shall be from trucked-in fill material or from material taken from approved borrow pits.There shall be no parallel borrow canals along roads. 4.All roads shall be culverted and maintained to prevent degradation by industry vehicles.The size and number of culverts shall be determined so that the natural flow of water is not impeded and the resource is protected. 5. All roads shall be only wide enough to accommodate one lane of traffic, but shall have at least one turn-out every mile for passing. 6.All roads shall be high enough to assure year round usage, except where otherwise expressly required to be lower. 7. All roads shall follow the best practical route suited to protect the natural environment. Where feasible, roads and road extensions should follow existing woods roads. 8. Roads shall be constructed to avoid serious damage or enduring scars to land and wildlife, and to avoid obstructing the natural movement of water and wildlife. 9.All roads shall be restored as specified in Rule 62C-29.009,F.A.C. 10. All new access roads authorized to serve the needs of the exploration activities shall be limited in use to the permitted purpose. For these limited use access roads, the applicant shall submit as a part of the permit application the means to accomplish the limited use, including the control of unauthorized vehicles,for the life of the permitted purpose of the road. 11. Access corridors and drilling pads shall not be constructed into or through sensitive resources such as cypress-mixed forest swamps, hardwood hammocks, mangrove forests, archeological sites, native ceremonial grounds and those zones which are documented and/or confirmed by the Florida Game and Fresh Water Fish Commission as areas of high level Florida panther activity unless reasonable and prudent alternatives are not available. Known red-cockaded woodpecker colonies, rookeries, alligator holes, research sites,pine uplands,and threatened or endangered species habitats shall be avoided where possible. 12. Access corridors (including pipelines) shall be contiguous where possible and corridors emanating from new entry points shall be prohibited unless demonstrated to be the more prudent and reasonable alternative. (b)Drilling sites. 1. Drilling sites shall be located to minimize negative impacts on the vegetation and wildlife, including rare and endangered species,and the surface water resources. 2. Topographical and engineering surveys of the drill site shall be prepared and together with an aerial photograph of the drill site at a large scale,which can be obtained from existing governmental photographs with the well spotted thereupon,shall be made a '\part of the Application For Permit to Drill(Oil&Gas Form 3). Packet Page-331- 6/10/2014 10.B. 3. No site preparation shall begin prior to obtaining a permit to drill except as specified in subsection 62C-30.005(1), F.A.C., above. 4.Every effort shall be made to limit the impact upon the environment of the Big Cypress Watershed by using areas covered by prairies,limited forest growth,grazing,farming,or cleared lands where practical. 5.Drilling pads shall be constructed from trucked-in fill material or from material taken from approved borrow pits. 6.Drilling pads shall be constructed to a height to assure year round usage. 7. A protective levee of sufficient height and impermeability to prevent the escape of pad fluids shall be constructed around the drilling site and storage tank areas. 8. Directional (slant) drilling shall be utilized from existing drilling pads where technically feasible and when it will have a beneficial effect upon maintaining the quality of the environment. 9.All drilling sites shall be restored as specified in Rule 62C-29.009,F.A.C. (c)Production. 1. The operating company shall submit to the Department a field development plan as soon as practical for each new field. All transportation of oil in the Big Cypress National Preserve and wetlands within the Big Cypress Watershed shall be by pipeline. 2.If the oil from a producing well is to be removed by pipeline,the pipeline shall be equipped with automatic shut-down valves. All storage and loading facilities shall be located within impervious dikes as required by subsection 62C-28.004(4),F.A.C. 3.All flowlines and utilities shall be contained within the rights-of-way secured for road construction. 4. The operating company shall develop an emergency and contingency plan and shall have standby equipment consistent to meet the requirements of the area in which the operations are being conducted. 5. The operating company shall clean the site of any oil or other contaminants spilled in conjunction with the drilling, production,and transportation activities. Rulemaking Authority 377.22 FS.Law Implemented 377.22, 377.243, 377.371 FS.History—New 11-26-81,Amended 7-17-84,Formerly 16C-30.05, Amended 6-4-89, 5-12-93,Formerly 16C-30.005,Amended 3-24-96. Packet Page-332-