Presentation for 2013 EORI CO2 Conference in Casper, WY July 9, 2013.

1. Legacy Environmental Issues
Craig Smith, P.G.
Senior Geologist
July 9, 2013

2. What are Legacy Environmental Risks?
 Improperly closed or reclaimed
drilling pits
 Leaking tank batteries, either active
or out of service
 Junkyards/Boneyards/Abandoned
Drums
 Abandoned pipelines
 Damaged well casing
 Non‐compliant operations
 Air permits and reporting
 NPDES discharges
 Out of date SPCC plans
 OSHA

3. Why a Concern to EOR Operators
 Developed prior to
current regulations and
BMPs
 Mature field often
operated by smaller
firms with limited staff
and resources
 Priority is production
not environmental
 Often overlooked by
regulators and
inspectors until notice
of the transaction is
public

4. Acquisitions and Divestiture Trends
 2011
 Projections were high for 2011
 698 transaction
 $300.6B
 2012
 Projections for steady growth
 576 transactions
 $321.5B
 2013
 Projected to moderate to 2011
levels
Sources: Deloitte Oil and Gas
Mergers and Acquisitions
Report, 2011 & 2012 and RR
Donnelley, 2013 M&A Outlook.

5. Typical Legacy Issues and Costs
 Soil and groundwater
impacts
 NORM
 Landfills/Boneyards
 Compliance
 Safety/OSHA

6. Best Management Practices to
Reduce Risk
 Know what you
are buying
 Negotiation of
liability with seller
 Use of
environmental
pollution liability
insurance
 More capital for
drilling and EOR

7. Advantages of Knowing Legacy Risk
Conditions
 Reduces risk by managing financial and
business exposures
 Eliminates or reduces unknown legacy
conditions
 Allows risk to be managed proactively
 Negotiated with seller as environment defect
 Environmental liability insurance bridges gap
between buyer‐seller

8. Contact Information:
Craig Smith, P.G./George Mathes, P.E.
csmith@trihydro.com/gmathes@trihydro.com
307/745‐7474