State of Utah DEPARTMENT OF NATURAL RESOURCES

MICHAEL R. STYLER Executive Director GARY R. HERBERT

Governor

SPENCER J. COX Lieutenant Governor

Division of Oil, Gas and Mining JOHN R. BAZA Division Director

Utah Board of Oil, Gas & Mining Department of Natural Resources State of Utah

Order to File Written Report Docket No. 2009-015 Cause No. WD-04-2009

October 21, 2013

FILED OCT 2 4 2013

SECRETARY, BOARD OF OIL, GAS & MINING

Subject: Montezuma Well Services, Inc.- Recapture Brine Disposal Facilitv- ec. 14, T. 40S, R. 22E, San Juan County, Utah

Board Members:

Attached is a written report, filed on behalfofthe Division ofOil, Gas & Mining (the "Division"), for the above referenced matter.

As stated in the report, the Division is continuing to monitor clean up operations at the referenced facility, and is working closely with MWS staff members to ensure that clean up operations are being conducted in accordance with the original Board Order & 20 11 Stipulation.

Land Farm Cell's 1-11 are being turned on a weekly basis (weather permitting), and manure & hay is being added to the oily soils to help expedite soils remediation. In addition, testing of the soils is being conducted periodically to determine remediation progress.

Land Farm Expansion #3 (Cell's 12-31) was approved by the Division on February 7, 2013 with SITLA concurrence (SULA No. 656); 4 cells have been constructed and MWS is planning to move more oily material from Pit A into the new cells soon which will accelerate clean up operations.

MWS continues to operate Pit B (up to 50%) and has added an additional $32, 911.75 ( 131,64 7 bbls x .25) to their existing facility bond issued by Wells Fargo Bank, total bond amount is now $82,754.14. In addition, Pit B is fully bonded at $46,019 for a total facility bond amount of $128, 773.14.

In conclusion, MWS is complying with the requirements set forth in the original Board Order & 2011 Stipulation.

JCR/LC/js Attachment: (I)

cc: Steve Alder, Assistant Attorney General Julie Ann Carter, Board Secretary Clint Dworshak, Compliance & Public Outreach Manager Brad Hill, Permitting Manager Dan Jarvis, Operations Manager Bart Kettle, Price Office Facility File

1594 West North Temple, Suite 1210, PO Box 145801 , Salt Lake City, UT 84114-5801 tel ephone (801) 538-5340 • facsimile (80 I) 359-3940 • TTY (801) 538-7458 • www.ogm.utah.gov

Oil, GAS • MINING

Written Report By: Division of Oil, Gas and Mining

1594 W. North Temple, Suite 1210 Salt Lake City, Utah 84116

Oct. 21, 2013

Regarding: Montezuma Well Services, Inc.

Recapture Brine Disposal Facility Sec. 14, T.40S, R.22E San Juan County, Utah

Board Order Docket No. 2009-015

Cause No. WD-04-2009

-

Stipulation (4)

• A.

• B.

Montezuma Well Services, Inc. "MWS" Recapture Brine Disposal Facility

Sec. 14, T. 40S, R. 22E, San Juan County, Utah

Board Order of Continuance {10/24/12) & 2011 Stipulation (Docket No. 2009-015, Cause No. WD-04-2009)

FILED OCT 2 4 2013

SECRETARY, BOARD OF OIL, GAS & MINING

Board Order to Continue Hearing (8/20/13) from 8/28/13 to 10/23/13 (Div. request due to heavy Aug. docket)

Board Order to File Written Report (10/14/13) by 10/21/13 & Continue to August 2014 {Div. request due to heavy Oct. docket)

*MWS/Division Compliance with Actions and Terms (8/2012 -10/2013)

Continue to accelerate the work on the Land Farm.

(i) *MWS has dedicated equipment & staff to Cleanup/Land Farm operations and is tilling the oily soils in the Land Farm cells on a weekly basis (weather permitting). In September 2012, they set up a 400 bbl water tank & sprinkler system next to Cell1 to wet down Land Farm Cells 1-6 prior to tilling. *Two additional staff members, dedicated to cleanup operations, were added in Sept. 2013; 4 total.

(ii) *MWS staff is working closely with Division staff to ensure that Cleanup/Land Farm operations continue in a timely & efficient manner, and have increased the amount of manure & hay that is being added to the oily soils in the Land Farm cells to help expedite soils remediation.

Permission granted to accept shipments of E & P waste water from oil field operations into Pit B up to 50% of the depth of the pit (4' deep). Pit B is fully bonded by Great American Ins. Co., Bond No. MS1504258 in the amount of $46,019.00 eff. 8/4/09. (Pit B reconstructed & relined 9/30/09-10/17/09).

(i) *Aug. 2012- Sept. 2013; added an additional $32,911.75 (131,647 bbls x .25) to the existing facility bond issued by Wells Fargo Bank, Cash/Business Savings Account No. 0361028509, eff. 1/12/99; total bond amount is now $82,754.14; see chart, Stip. C #4.

(ii) * Land Farm Cells 1-6 were filled to capacity with oily material removed from Pit A by end of Aug. 2010, weekly wet down & tilling (weather permitting), and periodic soils testing continues; see chart, Stip. C #3 . No new material has been added to any of the cells thus far. (The Cleanup Plan & treatment area was approved by the Division on 6/8/05; SITLA concurrence, SULA No. 656).

* LF Expansion #1 - Cells 7-8 were filled to capacity with oily material removed from Pit A by end of March 2011, weekly tilling (weather permitting) & periodic soils testing continues; see chart, Stip. C #3. No new material has been added to any ofthe cells thus far. (Approved by the Division on 9/29/10; SITLA concurrence, SULA No. 656).

* LF Expansion #2- Cells 9-11 were filled to capacity with oily material removed from an Oil Burn Pit "OBP" by end of June 2012, weekly tilling (weather permitting) & periodic soils testing continues. No soils testing have been conducted thus far in Cellll; see chart, Stip. C #3. (Approved by the Division on 5/25/11"Cells 9-13", amended 6/28/11"Cells 9-11"; SITLA concurrence, SULA No. 656).

The Division & SITLA requested that the OBP, located adjacent to Cells 9-11, also be reclaimed . Initially Cell 9 was the only cell designated to remediate OBP material, however more material

• c.

than anticipated was encountered so Cells 10 & 11 were also designated for OBP material only. Following the removal of the oily material from the OBP, soil testing was conducted in the OBP bottom (east & west halves); see chart, Stip. C #3. The Division's cleanup standards were met on the east half and permission was granted to backfill it with clean soil; the work was completed in 7/2012. In February 2013, the Division determined that the cleanup standards were met on the west half of OBP and permission was granted to backfill it with clean soil; the work was completed in 2/2013. (Waste oil emergency pit approved by the Division on 10/6/88, Stip. #4 "Burning of the pit should only be conducted as approved by the appropriate agencies in accordance with state and local laws & ordinances") .

*LF Expansion #3- Cells 12-31 (Approved by the Division on 2/7/13; SITLA concurrence, SULA No. 656).

Pit/Cell No. Dimensions (LF Acres) Pit/Cell Capacity (cy) Pit A 250'x230'x6' +12,777 Cells 1-6 961'x181'x10" (3.99) 5,347 Cells 7-8 475'x118'x10" (1.28) 1,723 Cells 12-31 410'x1000'x10" (9.41) 12,603

Oil Burn Pit 280'x27'x8-9' (0.17) 2,349 'E. lS Reclaimed 7/2012 'W 'h. Reclaimed 2/2013

Cell9 19S'x170'x+10" (0.76) (1,283 cv by 5/2012) 1,019 Cells 10-11 34S'x100'x10" (0 .79) (1,066 cv by 6/2012) 1,060

Total(s) LF Acres (16.4) (Pit A/Cells 1-8) 7,070 (OBP/Cells 9-11) 2,349 (Pit A/Cells 12-31) 12,603

(iii) *LF Cells (1-11) are being tilled weekly (weather permitting) & periodic soils testing is being conducted in Cells 1-10; testing in Cell11 & Cells 12-31 will be conducted when appropriate. MWS continues to add manure & hay to the material in the cells as needed to help expedite soils remediation.

(iv) *Facility "secondary containment" has not been constructed, therefore approval to fill Pit B to capacity (82,058 bbls/-2' FB) has not been granted by the Division; MWS is complying with Stipulation 48. (SMA Eng. Plan approved 3/8/10). *3/2013 Eng. Maps to MC/MWS; intend to construct in spring 2014 according to 7/2013 inspection report comments.

Monthly reporting.

1. *Reported material from Pit A to Land Farm (Cells 1-8, and Cells 12-31), and from OBP to Land Farm (Cells 9-11) . See B (ii) pit/cell capacity.

Year- Month(s) Cubic Yards Destination Cell Status

2010 July-Aug 1,350 Cells 1-6 Full(+/ 5347 total cy)

2010 Sept.-Oct. 371 Cell 7 "lf Exp n\ (9/29/101 Full H · 861 S tota cy)

2010 - Nov 188 Ce II 8 · Lf Exp #I (9 /29/ 10) <Half Full 2010/2011 Dec Jan. ? Ce II 8 •Lr Exp #1 (9/29/ lO) Half Full

2011 - Feb-March ? Cell 8 "LF Exp n1 (9/29/ IO) Full (+/ 861 S tota l cy)

2011 ·April 0

2011- May 0 LF Exp. #2 (5/25/11) Cells 9-13 Empty

2011 - June 0 LF Exp. #2 (Amended Cells 9-11 Empty 6/28/11)

2011 - July 1,019 Cell 9 *oeP Fu II (+/ -1019 total cy)

2011 - Aug. 696 Cell10 •oeP 2/3 Full

2011- Sept. 211 Cell 9 (89 Cy) (+10" deep) Cell 10 (75 cy) +2/3 Full

Cell11 (47 cy) ·asp %Full?

2011- Oct. 0

2011- Nov. 0

2011- Dec. 136 Cell9 (86 cy) 'OBP (+10" deep) Cell10 (SO cy) ·asP +2/3 Full

2012- Jan . 0

2012- Feb. 0 OBP EX (soils test1ng)

2012 -March 0

2012 -April 0 2012- May 161 Cell9 (89 cy) 'OBP (t10" deep)

Cell10 (72 cy) ·asP +2/3 Full

2012 -June 126 Cell 10 (51 cy) ·asP Full!•/· 530 tot3 1 cy)

Cell11 (75 cy) ·asP <Fu Ill •I- 530 to<al cy)

OBP W X (soils testing)

2012 -July 0 OBP E Y, (reclaimed)

2012- Aug. 0

2012- Sept. 0 2012- Oct. 0 2012- Nov 0

2012- Dec. 0

2013- Jan. 0 2013- Feb. 0 LF Exp. #3 (Cells 12-31)

OBP W Y, (reclaimed) 2013- March 0

2013- April 0 2013- May 0

2013- June 0

2013- July 0 2013- Aug. 0

2013- Sept. 0 LF Exp 113 (Cells 12-15) established; no material from Pit A moved to cells yet.

Total(s) 4,258

2. *Land Farm tilting; weekly (weather permitting) according to MWS cleanup reports & field inspections.

3. *Land Farm soils sampling/testing & results; new testing conducted .

Sampling/Testing Companies- Souder, Miller & Associates "SMA", Hall Environmental Analysis Laboratory, and Envirotech Analytical Laboratory.

Sample Collection Hydrocarbon Salinity Sa linity Salinity ID Date(s) Content EC ESP SAR

TPH (ppm) (mmho/cm) (%) Utah 1% or 10,000 <4 15 12 Cleanup Levels

Ce ll 1 04/06/11 16,000 2.0 5.6 10.5

07/12/11 20,000 2.6 11.0 9.4

02/21/12 12,000 3.0 16.0 14.0

06/14/12 12,000 3.4 6.9 9.6

12/10/12 10,800 0.857

06/28/13 16,100 0.597

Cell2 04/06/11 56,000 2.1 20.9 18.5

07/12/11 40,000 3.9 19.0 17.0

06/14/12 35,000 3.0 9.3 12

12/10/12 39,700 2.22

06/28/13 40,100 2.31

Cell3 04/06/11 100,000 5.1 14.5 24.2

06/14/12 72,000 4.0 9.9 19

12/10/12 87,400 1.89

06/28/13 76,300 1.94

Cell4 04/06/11 43,000 6.9 9 .7 23.9

07/12/11 68,000 5.9 21 .0 19.0

02/21/12 39,000 4.7 21.0 19.0

06/14/12 51,000 3.4 7.2 17

12/10/12 49,800 2.65

06/28/13 52,700 2.39

CeliS 04/06/11 54,000 6.7 16.2 35.2 06/14/12 74,000 3.4 11.5 25

12/10/12 80,700 3.24

06/28/13 100,000 3.70

Cell6 04/06/11 26,000 4 .9 29.2 38.3

06/14/12 51,000 4.8 20.5 36 12/10/12 53,100 6.68

06/28/13 52,100 7.09

Cell7 06/14/12 57,000 8.0 19.5 45

12/10/12 60,500 8.27

06/28/13 71,100 8.67

CeliS 06/14/12 74,000 8.0 30.5 43

12/10/12 101,000 7.64

06/28/13 114,000 11.8

Cell9 12/10/12 132,000 4.83

06/28/13 110,000 4.94

Cell10 12/10/12 67,200 4.53

06/28/13 55,500 3.61

Cellll No Sampling

OBP 02/21/12 4,700 5.2 28 .0 27.0 East 1/2

OBP 06/14/12 53,000 2.4 9 .9 NA West 1/2

10/11/12 39,100 12.4

MWS will continue to sample/test soils in the cells periodically (including Cell11 & Cells 12-31 when appropriate). When the Divisions' cleanup standards have been met the Division shall grant MWS permission to either; 1)add an additional lift (10" thick) of oily soils from Pit A into the cells, or 2) move & use reclaimed soils to construct facility "secondary containment" in accordance with Division approved Engineering plans. The OBP is reclaimed; east half in July 2012, west half in February 2013 .

4. *Volume of E & P waste water received into Pit B & deposit slip(s) of amount paid into the existing facility bond ($20,836.83) issued by Wells Fargo Bank, Cash/Business Savings Account No. 0361028509, eff. 1/12/99.

Year-Mo. Barrels Deposit (bbts x .25)

*Orig. Facility Bond $20,836.83 (#0361028509) 2010-10 thru 2011-07 50,121 $12,530.25

2011-08 thru 2012-07 65,233 $16,308.25 2012-08 8,640 $2,160.00

2012-09 13,937 $3,484.25

• D.

2012-10 15,505 $3,876.25

2012-11 16,680 $4,170.00

2012-12 8,020 $2,005.00 2013-01 14,880 $3,720.00

2013-02 11,280 $2,820.00

2013-03 5,229 $1,307.25

2013-04 9,661 $2,415.25

2013-05 1,925 $481.25

2013-06 7,645 $1,911.25

2013-07 7,816 $1,954.00 2013-08 6,314 $1,578.50

2013-09 4,115 $1,028.75 2012-08 thru 2013-09 131,647 $32,911.75

Total ( lD/ZDlG-9/ZDBl 247,001 $61,750.25

Interest (lD/ZDlG-9/ZDB) $167.06 •current Facility Bond $82,754.14 (#0361028509}

Pit B Full Bond $46,019.00 (#MS1504258) Totals (bbls & bonding) 247,001 $128,773.14

Increased Division oversight/inspections and technical assistance as needed .

*Division staff has conducted 12 site inspections since the Board Hearing on 8/22/12 and is working closely with MWS & SITLA staff to ensure that cleanup of Pit A & OBP, land farm/soils remediation, and other facility operations are being conducted in compliance with the Board Order of Continuance issued on 10/24/12 & 2011 Stipulation, and in accordance with permits issued by the Division & SITLA {SULA No. 656).

Division lnspection(s)

09/05/12 (BK)

10/09/12 (BK)

11/20/12 (BK)

12/19/12 (BK)

Met with Eugene, Melvin & Ellison at the site. Discussed plans for the next 3 months. Melvin has prepared a time sheet outlining goals to install sprinkler system, add organic materials, and remove fluids from Pit A. Plans are being made to accurately profile the west side of the burn pit but equipment has not been located at time of inspection. Pump for fluid removal from Pit A has been repaired and should be delivered to the site in the coming days. LF cells are being turned weekly and organic materials have been added to Cells #3, 5 & 6. A fresh water tank has been set up at Cell #1 and has been filled with raw water. Sprinklers, pipe and a pump are being located at time of inspection.

Facility inspection conducted with Chris Fausett/SITLA, and Melvin Capitan & Eugene Guerito/MWS. LF cells continue to be turned on a weekly basis, now including Cells #9 & 10. Irrigation system has been installed on Cells 1-6 and is currently in use. A 400 bbl steel tank holds raw water, small centrifuge pump supplies up to 40 psi to end of line; water is delivered through 2" pvc to two 3 gpm nozzles on 24" stands. Estimate 300 bbls per week are being applied to LF cells at 30 minute intervals per setting. Manure has been added to all cells and alfalfa has been added to Cells #3, 5 & 6, and straw has been added to Cells 1-6 at a rate of Y:z ton per cell. Straw has been placed in Cells 7 & 8 but hasn't been spread at the time of inspection. Fluids in Pit A have set up with cooler temperatures, making skimming questionable this fall. West side of OBP has had 3 36" test holes dug into the Bluff sandstone; initial results indicate eastern hole has 159 ppm oil, center hole has 184 ppm oil and western hole has 1850 ppm oil at 36". Samples will be collected and sent off for analysis. Onsite review of LF3 proposed area.

Additional18 tons of hay has been hauled into facil ity for spreading on LF cells. Estimate 150 cu yds of manure has also been delivered for spreading onto cells over winter. Lease expansion application has been submitted to SITLA, application for DOGM is being prepared. Plan is to apply 1-1/2 ton of hay per acre over the winter to LF cells. Sprinkling has been discontinued until ambient so il temperature of 40 degrees is seen in the spring. Sampling will be completed the first week of Dec. & first week in June for baseline data. Winter plans include adding organic materials to cells, till weekly, prepare expansion area to receive materials from Pit A once approval is granted form DOGM & SITLA, and repair existing fence & fence expansion area.

Activity has slowed with the onset of winter weather. LF cells are being turned on a weekly basis. Majority of oil accumulation has been removed from Pit B. Lease expansion has not been approved by SITLA at time

01/23/13 {BK)

03/05/13 {BK)

04/02/13 {BK}

05/17/13 {BK)

07/2013 {BK}

of inspection, but approval is anticipated in the coming days. Substantial volume of manure has been hauled to the site, & is stockpiled for use in the expansion area.

Ground activity has slowed with the recent extreme cold weather. Planning for spring activity continues. LF cells are being turned to the extent that frozen soils will allow. LF extension has been approved by SITLA & land is being stripped of vegetation . As soon as frozen soils will allow, berms will be constructed along with fencing. DOGM has received a request for expansion and it is in the review process; no E&P materials will be placed into expansion area until DOGM approval is granted . Organic materials in the form of straw & manure are on site ready for application to LF cells. Oil is being removed from Pit B, and a new boom has been ordered to help contain oil when windy conditions exist, previous wave action has allowed oil onto the pond surface. OBP proposal has been submitted to DOGM and is being evaluated. Fluids are being received into Pit Bat a reduced rate of several loads per week.

LF Cell 5 being tilled at time of inspection. Soils within Cell1 are slightly darker than native soils, but aside from color seem to function similarly. Moisture distribution is even through soil profile & compaction is normal for time of year. Cell 2 soils are still slightly hydrophobic & are prone to forming a light powder dusty matrix. Soils in Cells 3-6 are absorbing most of the storm water, but still display a slight amount of light fluffy powder. Good amounts of manure & hay have been added to Cells 1-6. Cells 7 & 8 are shedding a majority of the storm water to theSE corners; soils are very light & fluffy where dry and exhibit higher salinity levels. Cells 9 & 10 are dark black, with higher oil concentrations, manure has been added to the cells, but no hay has been added. Soils in Cellll contain limited amounts of hydrocarbons. Plans to start irrigating Cells 1-6 around the end of March are underway. It is unlikely water will be delivered to Cells 7-10 this year. New expansion area has been stripped; fencing is anticipated in the coming weeks. Cells in the expansion area will be constructed one at a time {north to south) as materials are removed from Pit A, and berms will be constructed on three sides with the western edge being left open until cell is filled with materials. Plans are underway to construct an irrigation system for these cells by June or July. Western portion of the OBP has been back filled and is considered fully remediated. Vac truck removing fluids from the western portion of Pit A, estimate 2000 bbls of storm water is contained in Pit A. Pit B is being filled at a reduced rate. Evaporation system is now being used on calm days. Secondary containment berm construction is anticipated in the coming months of native silty sand materials. MWS is currently exploring options for chlorides in Pit C; sampling is anticipated in the coming weeks.

Most of fluids have been removed from Pit A, a total of 46 loads estimated to equal 2760 bbls. Fluids have been run through acceptance system & deposited in Pit B which is nearly filled to capacity & contains some oil on the NE corner. I requested that fluids no longer be accepted into Pit B & that oily materials be removed . Pit C contains an estimated 4" of fluids. LF cells continue to be turned on a weekly basis. Water application is not expected for another 30 days, given that soil moisture is falling quickly it is requested that cells not be turned every week to maintain what soil moisture is present until fresh water application can be continued . Soils in Cell11ook & function like normal soils. Soils in Cells 2 & 6 are dark & clumpy. Soils in Cell 3-5 & 7-8 are very dry & form a light powder matrix. Soils in Cells 9-10 are still oil saturated & form a play­dough type material. Limited oil is seen in Cell11. New LF expansion area is being leveled out. Corner braces for fencing are on location but fence construction has not started at time of inspection. Expansion area is expected to be ready for use within the next 30 days. Soils are being stock piled for construction of the secondary containment berm, expected to be constructed in June or July.

Crews have leveled & fenced the new expansion area. Per conversation, as soon as equipment is rented berms will be constructed & removal of materials from Pit A will start. Ample organic materials are on-site to incorporate into the expansion area in the form of a large manure pile estimated to be in the area of 1000 cu/yds & 25 tons of straw. Fluids have been removed from the surface of Pit A but with the recent rain events in the area some fluid still remains; a majority of it is oil free. Pit B has been evaporated several feet since the last inspection & oil has been removed from the surface. Pit Cis holding about 10" of fluids from winter/spring storm events. Land farm cells are being turned on a weekly basis & progress appears to have been positive over the spring. Cell1 appears as normal soils, Cells 2 & 5 are light in color but still remain hydrophobic & are powder like in nature. Cells 3, 4 & 6 still contain high enough hydrocarbon concentrations to bind soil particles together. Cells 7 & 8 are dropping in TPH concentrations but remain hydrophobic & are powder like in nature. Cells 9 & 10 contain high enough TPH concentrations to bind soil particles together. Cellll contains limited contaminated materials & functions very near to native soils. Secondary containment berms are still slated for construction this summer with two large soil windrows being prepared for berm construction.

Following inspection a brief coordination meeting was held with Melvin & Eugene. Compliance items discussed included use of Pit C for fluids disposal & use of Pit A for solids disposal. Per observation collected, acceptance vaults have been cleaned out with a pump & pressure washer. Fluids & solids removed from vaults are hauled in a vac truck to the NE corner of Pit A. No materials are allowed into Pit A. Personnel from MWS & the Division agreed such activity will cease. Per inspection observation it is estimated that upwards of 70 loads of fluids {70 bbls/per load) may be contained in Pit A. It appears, but is not confirmed, in the clean-up operations some incoming loads of fluids may have been dumped into Pit A. Future operations will

08/2013 (BK)

08/2013 (BK)

09/2013 (BK)

LC

focus on removal of fluids & free standing oil from Pit A. Removed fluids will be processed through vault handling system & evaporated in Pit B. Pit B contains oil on the surface of fluids that requires immediate removal. LD sum for Pit B was observed to contain some fluids in the bottom. Pit C was used in the month of May for fluids disposal, both the Division & MWS personnel agree such actions will permanently cease. LF cells have been tested & awaiting results. Status is as follows; Cell 1 is not being turned or watered, soils appear to function like background soils; Cell 2 is being turned, has not been irrigated this summer & are a mixture of dry powdery soils that repel water & dark brown soils that are bonded together with oil; Cell 3 soils are being turned, have not been irrigated this summer & are a mixture of dry powdery soils that repel water & dark brown soils that are bonded together with oil; Cell 4 soils were being irrigated at inspection, soils are hydrophobic & powder like; Cell 5 soils have been turned & irrigated, soils are a mixture of powdery soils hydrophobic in nature & soils bonded together with oil; Cell 6 soils have been turned & irrigated, soils appear to have started to function with some normal soil properties including some percolation of irrigation water; Cells 7 & 8 are powder like in nature, hydrophobic, & are being turned, SE corner of both cells are crusted materials bound together from storm water accumulations; Cells 9 & 10 are being turned but not irrigated, soils are bonded together with oil; Cell 11 contains limited hydrocarbon materials. Plans going forward are as follows; remove fluids & oil from Pit A, remove oil from Pit B, irrigate LF cells. Late fall or early winter, remove solids from Pit A & start LF Exp. 3 ops. Following spring, construct facility secondary containment for Pit's A, B & C.

LF Cell 1 has been recently turned after being allowed to sit dormant for previous month(s). Soils within the cell appear to function like normal soils. Cells 2-8 are being turned on a regular basis, soils are light powder materials with hydrocarbon materials bonded to soil particles causing soils to be hydrophobic & remain in a rather dry state despite recent attempts to irrigate with two small impact sprinklers. Cells 9-11 have not been turned for the previous month, soil particles are bound together with hydrocarbons. Some fluids have been removed from Pit A however it's estimated that over 3000 bbls of free standing fluids remain in the pit. Removal of free standing oil from the pit should be priority of clean up operations. Majority of oil has been removed from Pit B but small amount of free standing oil remains on surface & will require continued skimming. LD sump contains fluids & requires removal & monitoring. Pit Cis inactive with fluid evaporated.

LF Cell 1 has been recently turned after allowed to sit dormant for previous months. Soils within the cell appear to function like normal soils. Cells 2-8 are being turned on a regular basis, soils are a light powder material with hydrocarbon materials bonded to soil particles causing soils to be hydrophobic and remain in a rather dry state despite recent attempts to irrigate with two small impact sprinklers. Cells 9-11 have not been turned for the previous month, soil particles are bound together with hydrocarbons. Some fluids have been removed from Pit A, however is estimated that over 3000 bbls of free standing fluids remain in the pit. Removal of free standing oil from the pit should be priority of clean up operations. Majority of oil has been removed from Pit B, but small amount of free standing oil remains on fluids surface and will require continued skimming. LD sump contains fluids and requires removal & monitoring. Pit Cis inactive with fluid evaporated.

MWS crew on location rebuilding fence around the perimeter of the facility. One supervisor & three crew members are assigned to facility clean up at time of inspection. GM pump is back on location with plans being made to pump fluids from Pit A into facility acceptance system for separation. Appears a Y," of oil has separated out of fluids over the summer. Estimate 400-600 bbls of fluids are contained in Pit A. Pit B is 5' below FB with oil removed from surface of fluids. LD sump contains fluid to within 1' of ground level. Crews are instructed to measure and suck fluids out. Pit C has several inches of water with recent rain up to 3-4 events in the past ten days. LF Cells 2-6 are being irrigated with 300-400 bbls of raw fresh water each week. All LF cells are being turned on a regular basis.

cc: Steve Alder, Assistant Attorney General John Rogers, Associate Director, Oil & Gas Clint Dworshak, Compliance & Public Outreach Manager Brad Hill, Permitting Manager Dan Jarvis, Operations Manager Bart Kettle, Price Office Facility File

N:\Oil & Gas Permits\Disposal Facilities (Pits, LF, etc)\Montezuma Well Services\Recapture Brine Disposal/Board Hearings/2013

-

Written Report By:

Montezuma Well Services, Inc. Recapture Brine Disposal Facility

Sec. 14, T.40S, R.22E San Juan County, Utah

Oct. 21, 2013

Board Order Docket No. 2009-015

Cause No. WD-04-2009

l

( RECEIVED .. ~ : .. '.

OCT 2 I 28B l • )

DIV. OF OIL, GAS & MINING

~\_ . .:__ ---··. - ~J;

Annua Boa Upda e of Oil, Gas and Mining

Montezuma Well Service, Inc. Operator of the

Recapture Brine Disposal Facility

l '

I '

1st Year Progress

Water- Manure - Straw Hay Implemented int- "- ----- -· • .... "- .. _

:2: 0... 0...

90,000 .scrd.AO "

""'"'· 80,000

70,000

60,000

~(\(\ -' --! ~- ~~

50,000

40,000 ·''" " .J./ f ' VV

30,000

20,000

'" " "" 10,000

41244

LAB RESULTS Q,:.cnn

~

·" !o~rn:r-

.1A1tlA , ..............

ll-:11'1.0.. ~~.

41426

Cell1

Cell2

Cell3

Cell4

Cell5

Cell6

~ a_ a_

140,000

U20flO

120,000

100,000 "'"""

80,000

~A ,v

60,000 ~~~~~

40,000

20,000

0 41244

LAB RESULTS

-

I

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Applied With DWR Water Rights And

DEQ Storm Water Permit ~ 2 Diversion Points Along the San Juan River

~ Temporary Appropriate Water Approval (1 yr)

o Application Number 09-2386 (T79468)

~ Appropriate Water Approval (14 yrs)

o Application Number 09-2387 (F79469)

Application For Dam Not Requiring Submission of Formal

Plans

DWR Site Visit- In Compliance

Applied DEQ Storm Water Discharges Associated With

·on- NOI No. UTR362921 and SWP3 in Place

DEQ Site pliance

Requested and Approval of Additional 10 Acres Land Farm Expansion #3

Thru SITLA

Section 23

Special Use Lease Agreement No. 656- Site Layout Montezuma Well Servke, Inc

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Approved Land Farm Expansion #3

Activities ~ Archaeological Cultural Survey -CASA

~ Leveling and Fenced in 10 Acres

~ Soil Compaction Tes -

1st Mile Stone Completion

Bu ediation

~ 130' X 35' X 12' Pit

Continue to Ti I Cell 1 thru 11 and

Waterina Current Cell 1 thru 6 -------..,

2nd Year Remediation Progress

Additional Land Farm Expansion Cell

Berms 12 thru 16 Built

Nutrient Material for a~ctditional Land

Farm; 10. 0 cu/yds Manure & 36 Tons

2nd Year Mile Stone Commitment

Excavation of

A-PIT

I Montezuma Well Service Disposal Site Progress Report August 2012 thru October 2013

Events Date Comments Applied for Water Rights (DWR) Requests with DWR 8/13/2012 2 Diversion Points Along San Juan River

Water Line and Tank Install for Current Land Farm Cells 1 thru 6 8/27/2012 Complete Straw Hay and Manure Added to Current Land Farm Cells 1 thru 11 9/5/2012 Complete ~dditional 10 Acres Land Farm Adjacent To Site Request thru SITLJl 9/24/2012 To Excavate Pit A and Land Farm On-Site

DWR Temporary Appropriate Water Approval (1 yr) 10/7/2012 09-2386 (T79468) Burnt Pit Analytical Samplings at Depth of 12 Feet 10/11/2012 [contaminant Excavated and Bottom of Pit Sampled

Archaeological Clearance on SITLA Additional Acreage 10/25/2012 U-12-CH-0939s/CASA 12-88 DWR Appropriate Water Approval (14 yrs) 11/6/2012 09-2387 (F79469)

DOGM Burnt Pit Closure Request 11/27/2012 Lab Results-Good, DOGM Cleanup Criteria for TPH Additonal 10 Acres Request Approval thru SITLA 12/18/2012 Amended and Restated SULA No. 656

I Current 1 thru 11 Land Farm Cells Analytical Soil Samplings 12/29/2012 Baseline Samples

DOGM Approval Burnt Pit Closure 2/6/2013 First Mile Stone Conducted Soil Compaction Test for Secondary Containment Berrr 2/22/2013 Good Results-For Secondary Containment Berm

Re-Certified State of Utah Storm Water Inspector 2/27/2013 Been Renewed And Valid Until 6/30/2015 Submitted DWR Small Dam Applications 3/15/2013 Pit A, Pit B, and Pit C

Leveling of Approved Additional Land Farm Acreage 4/19/2013 Complete Fenced-in Approved Additional 10 Acres Land Farm 5/15/2013 Complete

Inspection by DWR Small Dam Division 6/18/2013 Low Sensitive Area Dam-In Compliance Land Farm Cells 1 thru 11 Second Analytical Soil Samplings 6/28/2013 Complete

c ommence on Draft Revision Storm Water Pollution Prevention Pla n 7/10/2013 2nd Analytical Samples Results 7/12/2013 Complete

Inspection by Department of Environmental Quality-UPDES IES 8/1/2013 Deficiencies (No Plan onsite & Inspection reports) Storm Water Pollution Prevention Plan In-place 8/15/2013 Current August 2013

Installed 2,540' of new 47" Field Fence with two string bar wire 9/26/2013 Complete-Fenced in 30 acre Property Commence Construction of New Land Farm Cells 12 thru 17 10/10/2013 Cell Berms 12 thru 17 has been builted

rommence Excavation of A-Pit into Additional Land Farm Acreage 10/16/2013

I '

-

FILED OCT 2 2 2013

SECRETARY, BOARD OF OIL GAS & MINING

BEFORE THE BOARD OF OIL, GAS & MINING DEPARTMENT OF NATURAL RESOURCES

STATE OF UTAH

IN THE MATTER OF THE REQUEST fOR AGENCY ACTION OF UTAH DIVlSlON OF OIL, GAS, AND MINING FOR A CESSATION ORDER AND CIVIL ORDER TO FILE WRITTEN REPORT PENAL TIES AGAINST MONTEZUl'v1A WELL SERVICES, INC., AND EARL MARTINEZ, OWNER AND OPERATOR OF THE MONTEZUMA CREEK WASTE DISPOSAL FACILITY, SECTION 14, T 40 SO., R. 22 EAST, SAN JUAN COUNTY, UTAH.

Docket No. 2009-015

Cause No. WD-04-2009

The Board of Oil, Gas and Mining, (Board) upon Motion filed by the Division of Oil, Gas

and Mining, (Division) on behalf of itself and on behalf of Montezuma Well Services, Inc. ,

(Montezuma) in which the Division states that Montezuma has continued in compliance with the

original Stipulation filed in this matter without any problems; and in order to accommodate the

Board' s very full agenda for the October 23, 2013 hearing;

Hereby Orders that:

1. The Division and Montezuma shall each submit written reports on the reclamation,

bonding and other activities conducted at the disposal facility during the past year to comply with

the 2010 Stipulation in this matter, by no later than October 21, 2013;

2. If the Board has questions or for any reason desires to have Montezuma and the Division

address the items in the written reports further, it shall schedule a time for such hearing at which

Montezuma and the Division will appear~ and

3. If there is no additional hearing requested by the Board after it bas reviewed the written

reports, the matter will be continued until the August 2014 Board Hearing for a further report on

Montezuma's compliance with the Stipulation.

~ tv() DATED this2_ day of October, 2013.

Utah Board o Oil Gas and Mining

2

CERTIFICATE OF SERVICE

I hereby certify that I caused a true and correct copy of the foregoing Order to File a Written Report for Docket No. 2009-015, Cause No. WD-04-2009 to be mailed with postage prepaid to the address shown and emailed, this ~ay of October, 2013, to the following:

Earl Martinez Personally and as President Montezuma Well Service, Inc. P.O. Box 540 Montezuma Creek, UT 84534

Ernestine Chief Montezuma Well Service, Inc. P.O. Box 540 Montezuma Creek, UT 84534

Sonja F. Wallace Environmental Compliance Manager Utah School and Institutional Trust Lands Administration (SITLA) 67 5 East 5 00 South Salt Lake City, UT 84102

3

Trust Lands Resource Specialist Utah School and Institutional Trust Lands Administration (SITLA) 675 East 500 South Salt Lake City, UT 84102

Michael S. Johnson Assistant Attorney Generals Counsel for the Utah Board of Oil, Gas, and Mining (hand-delivered)