Legacy Environmental Issues
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Transcript of Legacy Environmental Issues
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Legacy Environmental IssuesCraig Smith, P.G.Senior GeologistJuly 9, 2013
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What are Legacy Environmental Risks? Improperly closed or reclaimed
drilling pits Leaking tank batteries, either active
or out of service Junkyards/Boneyards/Abandoned
Drums Abandoned pipelines Damaged well casing Non‐compliant operations
Air permits and reporting NPDES discharges Out of date SPCC plans OSHA
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Why a Concern to EOR Operators
Developed prior to current regulations and BMPs
Mature field often operated by smaller firms with limited staff and resources Priority is production not environmental
Often overlooked by regulators and inspectors until notice of the transaction is public
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Acquisitions and Divestiture Trends 2011
Projections were high for 2011 698 transaction $300.6B
2012 Projections for steady growth 576 transactions $321.5B
2013 Projected to moderate to 2011 levels
Sources: Deloitte Oil and Gas Mergers and Acquisitions Report, 2011 & 2012 and RR Donnelley, 2013 M&A Outlook.
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Typical Legacy Issues and Costs Soil and groundwater impacts
NORM Landfills/Boneyards Compliance Safety/OSHA
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Best Management Practices to Reduce Risk
Know what you are buying
Negotiation of liability with seller
Use of environmental pollution liability insurance
More capital for drilling and EOR
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Advantages of Knowing Legacy Risk Conditions Reduces risk by managing financial and business exposures
Eliminates or reduces unknown legacy conditions
Allows risk to be managed proactively Negotiated with seller as environment defect Environmental liability insurance bridges gap between buyer‐seller
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Contact Information:Craig Smith, P.G./George Mathes, [email protected]/[email protected]/745‐7474