H₂S Impact on Southwest Kansas Natural Gas Consumers

Minutes

September 14, 2005

UNRESOLVED ISSUES: COMMENTS ARE DUE BY NOVEMBER 10, 2005

The following summarizes the unresolved issues discussed in Meeting 3 that are discussed in more detail in these minutes. Comments from all task force participants are requested. Please submit all comments to Leo Haynos on the applicable issues by November 10, 2005. Also note reports from all teams are due on October 31, 2005.

1. Provide comments on pros/cons of requiring the installation of continuous H₂S monitors on the gas gathering systems.
2. Provide comments on the need for and the frequency of mandatory reporting of H₂S concentrations from producers.
3. Provide comments on whether or not the Corporation Commission should formally set the level for the maximum amount of H₂S in gas provided to consumers.
4. Provide comments on what safety factor controls the safety threshold: internal corrosion or concentration in ambient air.
5. Provide comments on the necessity of developing a database of internal corrosion failures to track the affects of H₂S on the integrity of the gathering system.
6. Gas providers to take steps to educate first responders and emergency management on the dangers of H₂S; possibly use Kansas One Call meetings to achieve this goal.
7. Provide comments on what other groups that should be made aware of H₂S.
8. KCC Staff to request providers of unprocessed natural gas to notify end-use consumers of the potential dangers of H₂S by December, 2005.
9. Provide comments on whether or not electronic versions of gas gathering maps should be available to the public.
10. Provide comments on a proposed requirement that all wells be sampled for H₂S at least annually and the results reported to KCC.
11. Provide comments on the need for regulations to mandate action similar to that contained in RP 55 should H₂S contamination reach 100 ppm.
12. Provide comments on the impact of sampling for H₂S contamination and the impact complying with RP55 would have on small producers.

DISCUSSION

The third meeting investigating H₂S contamination and low pressure problems in the Hugoton gas field was held in the Seward County Exposition Center in Liberal, Kansas. The attendance list is attached to this document. The meeting was attended by 38 stakeholders representing legislators, gas gatherers, producers, transmission companies, distribution companies, agriculture and residential consumers, and various state agencies. The purpose of this meeting was to update the group on the progress of the various teams, to provide an opportunity for the group to address outstanding issues, and to set a timeline for completion of the task force's work.

The meeting was chaired by Leo Haynos from the KCC staff. Mr. Haynos reminded the group that the task force is expected to prepare a report that addresses the seven categories listed in the team headings. Mr. Haynos then presented a PowerPoint presentation of the overall status of the task force. This presentation, titled Status Report is available on the KCC Website under the September 14 Meeting subheading. He also presented a list of questions that are outstanding issues for each team to resolve, (please see PowerPoint presentation titled Outstanding Issues). Mr. Haynos discussed the initiation of a docket before the Commission to address the policy questions that were compiled for Team 7. After the introduction, Dave Williams presented an update on data acquisition. The database compiled by Team 1 represents 11,499 wells and 15,364 H₂S sampling points. The vast majority of the wells reported H₂S concentrations below 30 ppm. However, there were a significant number of wells in the database that did not report a H₂S concentration. Of the 9,300 wells reporting H₂S contamination, only 8% reported the wells were under some form of H₂S treatment program. The update from Team 1 is on the KCC website. After the Team 1 update, Mr. Haynos asked the each team to discuss the outstanding issues and then report to the group. A summary of the group discussion is as follows:

Team 1 -- Data Acquisition:

Although Team 1 has gathered an unprecedented amount of data on Southwest Kansas gas production, there are significant unknowns that lead to reduced confidence in conclusions drawn from the data. The most pressing unknown parameter is the lack of knowledge regarding measurements for H₂S upstream of any treatment program. The other significant parameter that can not be quantified is the fluctuation of H₂S contamination in the gathering systems with respect to time. It was noted there are no continuous monitors on gathering system and only a few monitors at the points where gas is sold to the transmission lines. The question was raised as to what benefit would be obtained from additional monitors on the gathering system. There was speculation that additional monitors would result in quicker response to system upsets; however, the need for monitoring was left unresolved. Team 1 also discussed the need for additional reporting.

Team 1 Unresolved Issues:

1. Provide comments on pros/cons on requiring the installation of additional continuous H₂S monitors on the gas gathering systems.
2. Provide comments on the need for and the frequency of mandatory reporting of H₂S concentrations from producers.

Team 2-- Defining H₂S Contamination Levels

Randy Dyer presented an update of the draft report for Team 2. The research used in the report indicates an internal corrosion threshold level for H₂S at a partial pressure of .001 psia. At this point, research shows that internal corrosion of steel pipe will begin. The team had reached consensus on this value. Mike Cochran also presented the draft research that the threshold level for H₂S in ambient air established by regulations from other states could be as low as .03 ppm. There was considerable discussion over this value, and the team was directed to research the reasoning behind the .03 ppm number.

Team 2 Unresolved Issues:

1. Provide comments on whether or not the Corporation Commission should formally set the level for the maximum amount of H₂S in gas provided to consumers.
2. Provide comments on what factor controls the safety threshold: internal corrosion or concentration in ambient air.
3. Provide comments on the necessity of developing a database of internal corrosion failures to track the affects of H₂S on the integrity of the gathering system.
4. Team 2 to finalize report and provide guidelines on both the internal corrosion threshold level and the level in ambient air.

Team 3 -- Public Awareness of H₂S

Team 3 discussed the efforts to date that have been made to make the public aware of the dangers of H₂S contamination. Team 3 then presented a template of a letter that can be used to educate consumers of unprocessed natural gas. Team 3 proposed that all providers of unprocessed gas send this type of information to consumers connected to their systems This would include gatherers and wellhead operators. KCC Staff will recommend that all providers inform consumers about the dangers of H₂S. The group discussed the scenario of using this type of information to meet the requirements of API RP1162. There was also discussion about the content of the letter. Team 3 noted that their proposal was a template that allowed the gas provider to tailor the message to meet the concerns of consumers connected to his system.

Unresolved Issues:

1. Education of first responders and emergency management on the dangers of H₂S.
2. Other groups that should be made aware of H₂S.
3. KCC Staff to request providers of unprocessed natural gas to notify end-use consumers of the potential dangers of H₂S by December, 2005.

Team 4: Company Termination Practices

Gary Wise commented that Team 4 had completed a report on the items assigned to it. The updated Team 4 report can be found under the September 14 Meeting subheading on the KCC website.

Team 5: Alternate Means of Supplying Gas

Unresolved Issues:

1. Provide comments on whether or not electronic versions of gas gathering maps should be available to the public.

Team 6: Field or Statewide rules regarding H₂S Contamination

Maurice Korphage discussed the need for statewide or field rules regarding production operations in areas where H₂S contamination is present. He noted the data from Team 1 did not offer much support for rulemaking since the vast majority of the H₂S measurements were less than 30 ppm. However, more data was needed to account for gas treatment and its affect on the H₂S contamination level. He discussed the use of API Recommended Practice 55 that provides best practices to be used by the industry when working with H₂S contaminated gas. The question was asked are companies are following the RP55 guidelines. It was determined that most multi state producers use RP55 or similar guidelines in their operation in Hugoton. It was not determined if smaller operators were in compliance with RP55 or similar guidelines.

Unresolved Issues:

1. Provide comments on a proposed requirement that all wells be sampled for H₂S at least annually and the results reported to KCC in conjunction with annual gas testing of the prorated field.
2. Provide comments on the need for regulations to mandate action similar to that contained in RP 55 or in Texas Rule 36 should H₂S contamination reach 100 ppm.
3. Provide comments on the impact of sampling for H₂S contamination and the impact complying with RP55 or other H₂S regulation would have on small producers.

Team 7-- policy and legal issues

Leo Haynos discussed how the open forum proposed in Meeting two had failed to obtain adequate response. He said KCC Staff is proposing to open a docket to bring the policy and legal issues associated with gas gathering before the Commission. This docket was initiated October 19, 2005. The order opening the docket and all future filings will be posted on the KCC website under docket number 06-GIMG-400-GIG.

Mr. Haynos also presented a memo from Prof. David Pierce regarding his review of various right-of-way contracts from the Hugoton area. The memo is available on the KCC website under the September 14 Meeting subheading.