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David CloutierSenior ConsultantJuly 8, 2014
Legacy Issues Associated with Oil and Gas Development
Types of Legacy Issues Associated
with Oil & Gas Development
Best Practices to Address Legacy
Environmental Issues
Emerging Issues
Affecting Legacy Liability
Questions and Discussion
Presentation Outline
What is Legacy Liability and Why Do We Care?
Typical Sources of Legacy Impacts Historic drilling pits Historic releases and spills Improper materials management Waste disposal Leaking tank batteries Junkyards/boneyard/landfills Abandoned pipelines Legacy compressor stations and
gas plants Damaged well casing Non-compliant operations
Air permits and reporting NPDES discharges Out of date SPCC plans OSHA
Why a Concern?
Older fields were likely 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
Typical Legacy Issues and Costs Soil and groundwater
impacts NORM Landfills/boneyards Compliance Safety/OSHA
Best Management Practices (BMPs) to Reduce Risk
Know what you are buying, selling, shipping, or developing
Negotiation of liability with buyer, seller, NOD, etc.
Use of environmental pollution liability insurance
BMPs for Legacy Issues– Due Diligence
DEFINE OBJECTIVES
DATA ROOM SEARCH
REGULATORY & RECORDS REVIEW
SITE ASSESSMENTS
AND INTERVIEWS
INTRUSIVE ASSESSMENTS AND SAMPLING
QUANTIFICATION OF LIABILITIES
CONCLUSION AND PATH FORWARD
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
Exclusions manage “high‐risk” elements
Manage liability reserves (Sarbanes‐Oxley / Financial Accounting Standards)
Emerging Issues Affecting Legacy Liability
Key Emerging Issues Affecting Environmental Liability & Risk
Regulatory Changes / Uncertainty
Increasing Acquisition / Divestiture
Development of Legacy Sites
Contact Information:David CloutierSenior Consultant Trihydro [email protected]/745-7474