SECTION 3.96. Underground Storage of Gas in Productive or Depleted Reservoirs

(a) Definitions. The following terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Affected person--A person who, as a result of actions proposed an application for an underground gas storage project permit or an amendment or modification of an existing underground gas storage project permit, has suffered or may suffer actual injury or economic damage other than as a member of the general public.

(2) Commission--The Railroad Commission of Texas.

(3) Fresh water--Water having bacteriological, physical, and chemical properties that make it suitable and feasible for beneficial use for any lawful purpose.

(4) Leak detector--A device capable of detecting by chemical or physical means the presence of hydrocarbon vapor or the escape of vapor through a small opening.

(5) Gas storage or underground gas storage--Storage of natural gas or other gaseous material in a productive or depleted reservoir, exclusive of gas injection for enhanced recovery.

(6) Gas storage project--All surface and subsurface rights, appurtenances, and improvements necessary for conducting underground gas storage operations in a gas storage reservoir.

(7) Gas storage well or storage well--A well used to inject or withdraw natural gas or other gaseous material stored in a productive or depleted reservoir, exclusive of a well used to inject gas for enhanced recovery.

(8) Operator--The person recognized by the commission as being responsible for the physical operation of a gas storage project, or such person's authorized representative.

(9) Person--A natural person, corporation, organization, government, governmental subdivision or agency, business trust, estate, trust, partnership, association, or any other legal entity.

(10) Pollution--Alteration of the physical, chemical, or biological quality of, or the contamination of, water that makes it harmful, detrimental, or injurious to humans, animal life, vegetation, or property, or to public health, safety, or welfare, or impairs the usefulness or the public enjoyment of the water for any lawful or reasonable purpose.

(11) Productive or depleted reservoir--A subsurface sand, stratum, or formation that is productive of, or has previously produced, oil, gas, or geothermal resources.

(b) Permit required.

(1) General. No person may operate a gas storage project without obtaining a permit from the commission. A permit issued by the commission for operation of a gas storage project before the effective date of this section shall continue in effect until revoked, modified, or suspended by the commission, or until it expires according to its terms. The provisions of this section apply to gas storage projects permitted prior to the effective date of this section, except as otherwise specifically provided.

(2) Conflict with other requirements. If a provision of this section conflicts with any provision or term of a commission order, field rule, or permit, the provision of such order, field rule, or permit shall control.

(c) Application. An application to operate a gas storage project shall be filed with the commission by the owner or operator or proposed owner or operator. The application shall include the following:

(1) compliance with safety requirements--information demonstrating compliance with the provisions of subsection (i) of this section;

(2) request for reservoir designation--a request for designation of a productive or depleted reservoir as a gas storage reservoir, supported by the following:

(A) information demonstrating that the reservoir is suitable for gas storage; and

(B) information demonstrating the amount of recoverable native gas remaining in the reservoir;

(3) compliance with standards for injection wells--information demonstrating compliance with the provisions of subsections (j), (k), and (l) of this section for each gas injection well. The requirements of this paragraph do not apply to wells used for gas withdrawal only;

(4) water protection letter--a letter from the Groundwater Advisory Unit of the Oil and Gas Division stating the depth to which fresh water strata occur in the project area;

(5) public interest--a request that the commission issue an order containing the findings described in the Texas Natural Resources Code, §91.174(a), if such an order is desired by the applicant;

(6) fees--the fees required under §3.78 of this title (relating to Fees and Financial Security Requirements) for each gas storage well in the storage project that will be used for injection.

(d) Permit amendment. An application for amendment of an existing gas storage project permit shall be filed with the commission as specified in paragraphs (1) - (4) of this subsection.

(1) Expansion of reservoir. An application for permit amendment shall be filed prior to expanding the areal extent of the gas storage reservoir.

(2) Increase in pressure. An application for permit amendment shall be filed prior to increasing the gas storage reservoir pressure above the maximum permitted pressure.

(3) Adding storage wells. An application for permit amendment shall be filed prior to adding additional gas storage wells to the project.

(4) Material deviation. An application for permit amendment shall be filed at any time that conditions at the storage project deviate materially from the conditions specified in the permit or permit application.

(e) Standards for storage reservoir. A gas storage project shall be operated only in a productive or depleted reservoir in a manner that will prevent waste of oil, gas, or geothermal resources, uncontrolled escape of gases, pollution of fresh water, and danger to life or property.

(f) Notice and hearing.

(1) Notice requirements. By no later than the date the application is mailed to or filed with the commission, the applicant shall give notice of an application for a permit to operate a gas storage project, or to amend an existing storage project permit, by mailing or delivering a copy of the application to:

(A) each mineral interest owner, other than the applicant, of the proposed gas storage reservoir;

(B) each leaseholder of minerals lying above or below the proposed gas storage reservoir;

(C) each leaseholder of minerals offsetting the proposed gas storage reservoir;

(D) each owner or leaseholder of any portion of the surface overlying the proposed gas storage reservoir;

(E) the clerk of the county or counties where the proposed gas storage reservoir is located; and

(F) the city clerk or other appropriate city official where the proposed gas storage reservoir is located within city limits.

(2) Publication of notice. Notice of the application for an original or amended gas storage project permit, in a form approved by the commission or its designee, shall be published by the applicant once a week for three consecutive weeks in a newspaper of general circulation in the county where the gas storage project is located. The applicant shall file proof of publication of the notice prior to any hearing on the application or administrative approval.

(3) Notice by publication. The applicant shall make diligent efforts to ascertain the name and address of each person identified under paragraph (1)(A) - (D) of this subsection. The exercise of diligent efforts to ascertain the names and addresses of such persons shall require an examination of county records where the facility is located and an investigation of any other information of which the applicant has actual knowledge. If, after diligent efforts, the applicant has been unable to ascertain the name and address of one or more persons required to be notified under paragraph (1)(A) - (D) of this subsection, the notice requirements for those persons are satisfied by the publication of the notice of application as required in paragraph (2) of this subsection. The applicant must submit an affidavit to the commission specifying the efforts that were taken to identify each person whose name and/or address could not be ascertained.

(4) Hearing required for new permits. An application for a new gas storage project permit will be considered for approval only after notice and hearing. The commission will give notice of the hearing to all affected persons, local governments, and other persons who express, in writing, an interest in the application. After hearing, the examiner shall recommend a final action by the commission.

(5) Hearing on permit amendments.

(A) If the commission receives a protest regarding an application for amendment of a gas storage project permit from a person notified pursuant to paragraph (1) of this subsection or from any other affected person within 15 days of the date of receipt of the application by the commission, or of the date of the third publication, whichever is later, or if the commission or its designee determines that a hearing is in the public interest, then the applicant will be notified that the application for amendment cannot be administratively approved. The commission will schedule a hearing on the application upon request of the applicant. The commission will give notice of the hearing to all affected persons, local governments, and other persons who express, in writing, an interest in the application. After hearing, the examiner shall recommend a final action by the commission.

(B) If the commission receives no protest regarding an application for amendment of a gas storage project permit from a person notified pursuant to paragraph (1) of this subsection or from any other affected person, the application may be approved administratively.

(C) If the application for amendment of a gas storage project permit is administratively denied, a hearing will be scheduled upon written request of the applicant. After hearing, the examiner shall recommend a final action by the commission.

(g) Modification, cancellation, or suspension of a permit.

(1) General. A permit may be modified, suspended, or canceled after notice and opportunity for hearing under any of the following circumstances:

(A) a material change in conditions has occurred in the operation of the gas storage project, or there are material deviations from the information originally furnished to the commission. A change in conditions at a facility that does not affect the safe operation of the facility or the ability of the facility to operate without causing waste of hydrocarbons or pollution is not considered to be material;

(B) fresh water is likely to be polluted as a result of the continued operation of the gas storage project;

(C) there are material violations of the terms and provisions of the permit or of applicable commission orders or regulations;

(D) the applicant has misrepresented material facts during the permit issuance process; or

(E) injected fluids are escaping or are likely to escape from the storage project.

(2) Imminent danger. Notwithstanding the provisions of paragraph (1) of this subsection, in the event of an emergency that presents an imminent danger to life or property, or where waste of hydrocarbons, uncontrolled escape of hydrocarbons, or pollution of fresh water is imminent, the commission or its designee may immediately suspend a permit for underground gas storage until a final order is issued pursuant to a hearing, if any, conducted in accordance with the provisions of paragraph (1) of this subsection. All underground gas storage operations shall cease upon suspension of a permit under this paragraph.

(h) Transfer of permit. A gas storage project permit may be transferred from one operator to another operator if both of the following requirements are met.

(1) Notice. Written notice of intended permit transfer is submitted to the commission at least 15 days prior to the date the transfer takes place.

(2) No objection. The commission or its designee does not notify the present permit holder of an objection to the transfer prior to the transfer date stated in the notification in paragraph (1) of this subsection.

(i) Safety requirements for gas storage projects.

(1) Leak detectors.

(A) Within two years of the effective date of this section, leak detectors shall be installed and in operation at each gas storage well that is located 100 yards or less from a residence, commercial establishment, church, school, or small, well-defined outside area, and at each structurally enclosed compressor site. For purposes of this section, the term "small, well-defined outside area" means an area such as a playground, recreation area, outdoor theater, or other place of public assembly that is occupied by 20 or more persons on at least five days a week for 10 weeks in any 12-month period. The days and weeks need not be consecutive.

(B) Each leak detector required under this paragraph shall be tested twice each calendar year at intervals not to exceed 7-1/2 months and, when defective, repaired or replaced within 10 days.

(2) Warning systems. Within two years of the effective date of this section, all leak detectors required in paragraph (1) of this subsection shall be integrated with warning systems that are audible and visible in the control room and at any remote control center. The circuitry shall be designed so that failure of a detector or pressure monitor to function will activate the warning.

(3) Emergency response plan. Within six months of the effective date of this section, each operator shall submit to the commission a safety plan that includes emergency response procedures, provisions to provide security against unauthorized activity, and gas release detection and prevention measures. The plan shall include a description of and be designed for the residential, commercial, and public land use in the proximity of the gas storage project. The initial plan must be designed based upon the existing safety measures at the facility. The plan shall be updated as changes in safety features at the facility occur, or as the commission or its designee requires. Copies of the plan shall be available at the storage facility and at the company headquarters.

(4) Safety training. Within six months of the effective date of this section, each operator shall prepare and implement a plan to train and test each employee at each gas storage project on operational safety and emergency response procedures to the extent applicable to the employee's duties and responsibilities. The plan shall be incorporated into the plan addressing the requirements of the United States Department of Transportation and Occupational Safety and Health Administration. Each operator shall hold a safety meeting with each contractor prior to the commencement of any new contract work at a gas storage project. Emergency measures specific to the contractor's work shall be explained in the contractor safety meeting.

(5) Gas withdrawal wells exempt. Gas storage wells that will be used only for gas withdrawal are exempt from the requirements of paragraphs (1) and (2) of this subsection.

(j) Area of review. The applicant shall review the data of public record for wells that penetrate the portion of the gas reservoir that falls within the area proposed to be designated as the gas storage reservoir, and those wells that penetrate the gas reservoir within 1/4 mile of the outer boundary of the proposed gas storage reservoir, to determine if all abandoned wells have been plugged in a manner that will prevent the movement of fluids from the gas storage reservoir. The applicant shall identify in the application any wells which appear from such review of public records to be unplugged or improperly plugged, and any other unplugged or improperly plugged wells of which the applicant has actual knowledge.

(k) Casing. Gas storage wells shall be cased and the casing cemented in compliance with §3.13 of this title (relating to Casing, Cementing, Drilling, and Completion Requirements).

(l) Special equipment.

(1) Tubing and packer. New wells drilled or converted for injection of gases after April 1, 1982, shall be equipped with tubing set on a mechanical packer. Packers shall be set no higher than 200 feet below the known top of cement behind the long string casing but in no case higher than 150 feet below the base of fresh water.

(2) Pressure observation valve. The wellhead shall be equipped with a pressure observation valve on the tubing and each annulus of the well.

(3) Exceptions. An exception to any provision of this subsection may be granted administratively upon a showing of good cause. If a request for an exception is administratively denied, the operator shall have a right to a hearing upon request. After hearing, the examiner shall recommend a final action by the commission.

(m) Well record. Within 30 days after the completion, conversion, or recompletion of a gas storage well, the operator shall file in duplicate in the district office a complete record of the well on the appropriate form which shows the current completion.

(n) Monitoring and reporting.

(1) Wellhead pressure. The wellhead pressure of each gas storage well shall be continuously recorded, continuously monitored electronically, or controlled by a preset high-low pressure sensor switch.

(2) Pressure reporting. Information regarding wellhead pressures for each gas storage well shall be reported annually to the commission on the prescribed form.

(3) Gas metering. The total volume of gas injected into and withdrawn from the storage project shall be metered through a master meter.

(4) Record retention. All wellhead pressure records, gas metering records, and leak detector test results shall be retained by the operator for at least five years.

(5) Reporting of leaks. The operator shall report to the appropriate district office the discovery of any pressure changes or other monitoring data that indicate the presence of leaks in the well or the lack of confinement of the injected gases to the gas storage reservoir. Such report shall be made orally as soon as practicable following the discovery of the leak, and shall be confirmed in writing within five working days.

(6) Gas volume reports. On or before the last day of each month, the operator of each gas storage project that stores gas to supply a public utility shall file with the commission a report showing the volume of gas placed into storage and the volume of gas removed from storage at the project during the preceding month. The report shall also state the total volume of gas stored on the first and last days of the preceding month. This report shall be filed in a format acceptable to the commission.

(o) Integrity testing.

(1) Prior to commencing operations. Before beginning gas injection operations, the operator shall pressure test the long string casing, or the tubing-casing annulus if the well is equipped with tubing set in a packer. Gas storage wells in which injection occurs through casing shall be tested at the maximum authorized injection pressure. Gas storage wells in which injection occurs through tubing and packer shall be tested at no less than 500 psig.

(2) Subsequent tests. Each gas storage well shall be pressure tested in the manner provided in paragraph (1) of this subsection at least once every five years to determine if there are leaks in the casing, tubing, or packer. The commission, or its designee, may prescribe a schedule and mail notification to operators to allow for orderly and timely compliance with this requirement.

(3) Alternatives to testing. As an alternative to the testing required in paragraph (2) of this subsection, the tubing-casing annulus pressure may be monitored and monitoring results described in the annual monitoring report required by subsection (n) of this section, provided that there is no indication of problems with the well. The commission, or its designee, may also grant an exception for other viable alternative tests or surveys.

(4) District office notification. The operator shall notify the appropriate district office at least 48 hours prior to conducting the test required in paragraphs (1) or (2) of this subsection. Testing shall not commence before the end of the 48-hour period unless authorized by the district office.

(5) Test records. A complete record of all tests shall be filed in duplicate with the district office within 30 days after the testing.

(6) Gas withdrawal wells exempt. Gas storage wells that shall be used only for gas withdrawal are excluded from the requirements of this subsection.

(p) Plugging. Gas storage wells shall be plugged upon abandonment in accordance with §3.14 of this title (relating to Plugging).

(q) Penalties.

(1) General. Violations of this section may subject the operator to penalties and remedies specified in the Texas Natural Resources Code, Title 3; Texas Civil Statutes, Article 6053-3; and other statutes administered by the commission.

(2) Certificate of compliance. The certificate of compliance for any oil, gas, or geothermal resource well may be revoked in the manner provided in §3.73 of this title (relating to Pipeline Connection; Cancellation of Certificate of Compliance; Severance) for violation of this section.

(r) Applicability of other commission rules.

(1) General. The operator of a gas storage project must comply with the requirements of Chapters 7 and 8 of this title (relating to Gas Services Division, and Pipeline Safety Regulations) for both pipelines and associated facilities, and other applicable commission rules and orders.

(2) Signs. Each location at which gas storage activities take place, including each gas storage well, shall be identified by a sign that meets the requirements specified in §3.3(a)(1), (2), and (5) of this title (relating to Identification of Properties, Wells, and Tanks). In addition, each sign shall include a telephone number where the operator, or a representative of the operator, can be reached in the event of an emergency.

Source Note: The provisions of this §3.96 adopted to be effective January 1, 1994, 18 TexReg 8871; amended to be effective July 10, 2000, 25 TexReg 6487; amended to be effective September 1, 2004, 29 TexReg 8271; amended to be effective July 2, 2012, 37 TexReg 4892