H₂S Impact on Southwest Kansas Natural Gas Consumers

Agenda

March 1, 2005

DATA ACQUISITION

• Identify closed gathering systems that tie into open gathering systems.
  -- Responsible parties: Producers, gatherers, data receipt point =KCC_cons.
• Inventory of all gas gathering operators and producers to provide list of any residence, commercial, or irrigation well currently receiving natural gas from piping connected to gathering or production facilities. Inventory should include quarter section location or longitude/latitude coordinates.
  -- Responsible parties: Producers, gatherers, data receipt point=KCC_util.
• Producer data showing H₂S concentrations since January 2004 at individual wells.
  -- Responsible parties: Producers, gatherers, data receipt point=KCC_util.
• Gatherer data showing H₂S concentrations as measured at closed/open system interconnects.
  -- Responsible parties: Gatherers, data receipt point = KCC_util.
• H₂S trend analyses from transmission pipelines or anyplace continuous monitoring data is recorded.
  -- Responsible parties: Gatherers, transmission companies, data receipt point = KCC_util.
• Producer data of wellhead pressure as of January 2005 for individual wells.
  -- Responsible parties: Producers, gatherers, data receipt point=KCC_util.
• Maps of gathering systems provided to KCC in electronic format.
  -- Responsible Parties: Producer, Gatherer, data receipt point =KCC_cons.
• Inventory of irrigation wells using natural gas to power engines.
  --Responsible parties: KWO, data receipt point= KCC_util.
• Inventory of Producer/Gatherer unprocessed gas consumption used in existing equipment and facilities.
  -- Responsible Parties: Producer, Gatherer, Transmission,
• Hugoton Field study group? to develop map of current Hugoton, Ponoma, and Greenwood fields flow configurations and working wellhead pressures.
  -- Responsible Parties: Producer, Gatherer, Transmission, KCC_cons.

SHORT TERM: DEFINING THE H₂S CONTAMINATION PROBLEM

INDUSTRY GAS QUALITY SPECIFICATIONS

• Gathering industry standard for producer gas quality specifications.
• Transmission industry standard for gas quality specifications.
• Monitoring and enforcement of contractual gas quality specifications.

IS 10 PPM THE CORRECT THRESHOLD LEVEL?

• Investigate level (ppm or partial pressure) where H₂S becomes corrosive to steel in a wet gas system.
  --Responsible parties
• Investigate level where H₂S combustion products become toxic inside residences.
  --Responsible parties KDHE, data receipt point= KCC_util.
• Level of H₂S concentration at which combustion will cause corrosion to brass, copper, or steel.
  -- Responsible parties
• Level of H₂S concentration at which corrosion will become detrimental to irrigation engines.
  -- Responsible parties
• Level of H₂S concentration at which corrosion will become detrimental to steam boilers used in processing grain for feedlots.
  -- Responsible parties
• Correlation using dispersion modeling between H₂S concentration in gas stream to concentration in ambient air.
  -- Responsible parties

End Result: Reach a Technical Consensus on:

• Acceptable levels of H₂S in ambient air to prevent safety hazards to health.
• Acceptable levels of H₂S in gas stream to prevent safety hazards to piping and to health.

SHORT TERM: EDUCATING PUBLIC AND EMERGENCY RESPONDERS ON THE CHARACTERISTICS OF H₂S

• Industry (Producer, Gatherer, Transmission, LDC) training on working with H₂S and the use of personal monitoring equipment.
  -- Responsible Parties: Producer, Gatherer, Transmission, LDC
• Educating public/public officials/emergency responders on the dangers of H₂S.
  -- Responsible Parties: Producer, Gatherer, LDC
• Educating the agricultural industry on working around engines or pipelines that may contain H₂S.
  -- Responsible Parties: Producer, Gatherer, LDC
• Hazards of pipeline leaks close to dwellings on gathering system where H₂S is present.
  -- Responsible Parties: Producer, Gatherer

SHORT TERM: COMPANY PRACTICES WHEN TERMINATION OF SERVICE BECOMES NECESSARY

• Best practices in planning, and communicating any termination of service in order to avoid gas cutoffs during cold weather.
  -- Responsible Parties: Producer, Gatherer, LDC
• Preplanning to avoid crisis mentality.
  -- Responsible Parties: Producer, Gatherer, LDC
• H₂S monitoring at city gates by suppliers and LDC's.
  -- Responsible Parties: Transmission, LDC
• Establishing communications between entities when H₂S alarms occur.
  -- Responsible Parties: Producer, Gatherer, Transmission, LDC
• Customer conversions to alternative fuel sources. Propane usage in basement furncaces, etc…
  -- Responsible Parties: Gatherer, LDC

LONG TERM: ALTERNATE MEANS OF SUPPLYING GAS FOR RURAL CONSUMERS

Developing a Distribution Piping Network

• Estimated cost, ($/mile) of installing distribution network to serve domestic and irrigation customers.
  -- Responsible Parties: LDC
• Economy of scale… How many domestic/ commercial/ irrigation customers necessary to provide service.
  -- Responsible Parties: LDC
• Use of rural self help rule to build systems
  -- Responsible Parties: LDC, irrigators, landowners
• LDC operation of systems built using self help rule.
  -- Responsible Parties: LDC, irrigators, landowners
• Possible synergies or incentives to improve gas gathering and potentially release unneeded piping for use as distribution piping for domestic/ commercial/ irrigation customers.
  -- Responsible Parties: LDC, irrigators, Gatherers, KCC_util.

Acquisition of taps on transmission lines

• Availability of taps on interstate transmission lines.
• Minimum volume necessary to apply for a tap on transmission lines
• FERC tariffs regarding cost and availability of transmission line taps.
• Incentives to take over gathering line piping for use as distribution piping.
• LDC certification issues and optimizing supply to customers
  -- Responsible Parties: Transmission, LDC, KCC_util.

HUGOTON FIELD RULES NECESSARY FOR MONITORING H₂S LEVELS

• Trend analysis on gathering lines using continuous monitors placed at strategic points.
• Requirement to install continuous monitors at strategic points once H₂S levels reach a certain level.
• Field rules restricting flowback of stimulation treatments into gathering system.
• H₂S concentration measurement required as part of biannual shut in tests.
• Requirements for monitoring and reporting H₂S content.
• Best practices and treatment options to minimize H₂S production at the wellhead.
• Requirement for signage noting the presence of H₂S.

Regulatory and/or Legislative Solutions to Identified Problems

• Pipeline Safety
• Health and Environment
• Cost recovery