H₂S Impact on Southwest Kansas Natural Gas Consumers

Minutes

March 1, 2005

The kickoff meeting investigating H2S contamination and low pressure problems in the Hugoton gas field was held in the Corporation Commission's Topeka Office. The attendance list is attached to this document. The meeting was attended by 66 stakeholders representing legislators, gas gatherers, producers, transmission companies, distribution companies, agriculture and residential consumers, and various state agencies.

The scope for the working group is to develop a clear technical understanding of the impact that H2S has/will have on consumers of unprocessed natural gas within the Hugoton field area and alternate means of providing natural gas service to these consumers. During discussion, the scope was expanded to include the impact of low pressure on consumers connected to gas gathering lines.

An agenda, was presented for discussion which attempted to categorize the issues dealing with H2S into six categories. The categories were used as natural subdivisions to form subcommittees for researching and reporting back to the group as a whole. The subcommittees are as follows:

Team 1. DATA ACQUISITION
chair Dave Williams. KCC Conservation

Team 2. DEFINING THE H2S CONTAMINATION
chair Randy Dyer, Aquila

Team 3. PUBLIC AND EMERGENCY RESPONDERS EDUCATION
Chair TBD

Team 4. COMPANY TERMINATION PRACTICES
Chair Gary Wise

Team 5. ALTERNATE MEANS OF SUPPLYING GAS
Co-Chair Bob Muirhead, Midwest; Leo Haynos KCC Utilities

Team 6. HUGOTON FIELD RULES FOR MONITORING H2S LEVELS
Chair Maurice Korphage, KCC Conservation

ITEMS FOR IMMEDIATE ACTION

The committee as a whole discussed the need for immediate information that is required to address the ongoing problem and provide information for the various subcommittees to work with. Gas gathering stakeholders Anadarko, OneOk, BP, Oxy USA, Duke Energy Field Services, and KC-HRC agreed to provide the following as soon as practicable.

1. Company name and contacts for closed gathering systems served by open gathering system.
2. Meter number and meter location (preferably long/lat coordinates) for any consumer, (residential, irrigation, commercial), connected to gathering system. This will include consumers of wellhead gas as well as consumers of gas from gathering line.
3. Known records of maximum H2S concentrations with the following:
   1. Location of sampling point(long/lat coordinates or 1/4 section if available).
   2. Description of sampling point, (eg. compressor inlet, gathering system interconnect, wellhead)
   3. Date of sampling.
   4. Operating pressure of pipeline or well where H2S concentration was measured.
   5. Any unusual conditions associated with sampling such as treatments etc..

DISCUSSION ITEMS FROM MEETING ASSIGNED TO SUBCOMMITTEES

In working through the agenda, the committee as a whole made several additions or comments that pertained to items on the agenda. The additions are listed below for the relevant subcommittees to consider:

Team 1: DATA ACQUISITION

1. required biannual well testing does not necessarily include testing for H2S; so how do we get the info on every well and how long will it take?
2. Any readings should reflect the highest maximum reading.
3. work with other state agencies using existing databases.
4. Inventory of irrigation wells using natural gas to power engines as part of KWO. reporting requirements. GWMD No. 3 may also be a source for this data. Should note if the engine uses processed or unprocessed gas.
5. Need to capture maps of all operators and gatherers in the area including the non profit units for irrigators.
6. In an attempt to develop a comprehensive database of H2S contamination in Hugoton, KCC Conservation division is exploring methods to request the gas producers and gatherers to supply the following:
   1. Sample gas for H2S at all consumer taps.
   2. Conservation will send out letter to producers/gatherers in an attempt to get H2S information on individual wells
   3. Conservation will send separate letter to producers requesting consumer information connected to any facilities they operate.

Team 2: DEFINING THE H2S CONTAMINATION

Team 5: ALTERNATE MEANS OF SUPPLYING GAS

1. Where does any distribution infrastructure currently exist?
2. What are line extension policies?
3. Potential for converting gathering lines to distribution..
4. review existing LDC certificates: location of service territory (metes and bounds parameters), location of existing infrastructure
5. Feasibility of alternative fuel sources (propane, etc.); Who pays?
6. Long term water resources to allow for recovery of installation costs?

Team 6: HUGOTON FIELD RULES FOR MONITORING H2S LEVELS

1. how to determine whether well has been treated?
2. on going forward basis, suggestion that where H2S is detected in the future:
   1. notify KCC;
   2. track back to affected well?

OTHER ISSUES DISCUSSED

Additional points brought up at the meeting of the committee as a whole but not resolved are as follows:

-if, for whatever reason, end users are disconnected from gathering systems, is there now or should there be any requirement for the “disconnector” to seek abandonment authority or some other form of permission from the KCC

Public utilities sell gas through their tariff at a cost of $/MMBTU but the BTU content is variable. How often should the company be monitoring the BTU content and adjusting the price?

Oil and Gas Leases or Right-Of-Way agreements in exchange for domestic tap
-Consumers’ concerns:

• concern with terms of old contracts
• concern that producers/gatherers “change the rules of the road” without input from users/consumers
• performance under the contract vis-à-vis declining pressure and gas depletion (ability of producer/gatherer to provide gas)
• Concern with differences in contractual arrangements (no uniformity or standard terms and conditions of contract/lease agreements)
• If agreements don’t address the issue of contaminated gas, who’s responsible to clean the gas?