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Rule Revisions for Admincode R 324.101

2017-017 EQ

Oil and Gas Operations
(Environmental Quality , Oil, Gas, & Minerals Division)

R 324.208 mandates that oil and gas well permits shall terminate two years after the date of issuance unless drilling has begun or the well is in operation. In recent years, there has been an increasing number of legal challenges and economic factors that have delayed the start of drilling beyond two years after permit issuance. Many states and the federal government allow for extension of a permit for such reasons; whereas, Michigan’s current oil and gas rules do not. The inability to extend a permit can pose a problem for permittees. R 324.212 sets the amounts of single-well and blanket bonds for oil and gas exploration and production wells, gas storage wells, and associated injection wells and facilities. Part 615, Supervisor of Wells, of the Natural Resources and Environmental Protection Act, 1994 PA 451, as amended (NREPA) provides for the Supervisor of Wells (Supervisor) to claim a bond to cover costs incurred by the Supervisor to case, plug, or repair a well. The bond amounts were last set in 1996. Since that time, the costs to plug wells have risen by approximately 100 percent. A 2013 audit contained a finding by the Auditor General that “OOGM [since renamed OGMD, the Oil, Gas, and Minerals Division] had not pursued changes in legislation to update current well drilling laws related to surety bonds. Current bond amounts allowed by statute are not sufficient to cover OOGM’s cost of plugging a well. An increase in the required amount of the surety bond would help reduce OOGM’s costs to plug nonproductive wells.” R 324.1002(8) contains an obvious error. The rule was revised as part of a larger rule revision effective March 11, 2015. The revision changed subdivision numbering and R 324.1002(8) did not reflect that change. Specifically, the sub rule states in part “If sampling indicates a possible problem, then additional sampling for the water quality parameters established in R 324.201(2)(j)(vi) may be required.” The cross-reference should be to R 324.201(2)(k)(vi).