‘DavipPoare. CHARMAN [RYAND. LaRSON, DIRECTOR Cimsrenaooic Cosson Rnwanron cononsarnen RAILROAD COMMISSION OF TEXAS HEARINGS DIVISION Date: August 34, 2015 Oil & Gas Docket No. 09-0296411 NOTICE TO THE PARTIES “The altacied document is a Proposal for Decision and recommended Final Order issued by the examiners) inthis case. Under Section 1.141 of the Commission's General Rules of Practice and Procedure, we are required to circulate the document to each party or its authorized representative. This is only a proposal and is not to be interpreted as a final decision unless an official order adopting the proposal is signed and issued by the ‘Commission. Under Section 1.142 of the General Rules of Practice and Procedure (18 T.A.G. §1.142), you have the right to file a written statement disagreeing with the proposal and Setting out your reasons forthis position. This documentis referred to as "Exceptions" and must be fled wit the Docket Services Section ofthe Hearings Divison (Room 12-123 within 418 days of the date above. You have the right to respond in writing to any exceptions filed by another party. This documents referred to as "Replies to Exceptions” and must be fled with the Docket Services Section of the Office of General Counsel (Room 12-123) within 10 days after the deadline for fling exceptions. Inaddition towritten exceptions and replies, the parties may fle with the Commission aone page summary of the case. The summary shall be filed with the Commission at the time exceptions are due. The summary is specifically ited to one page and shall contain only information of record or argument based on the record. The summary shall not be submitted in reduced print. Ifthe summary contains any material notof record, has reduced print, or exceeds one page (8-1/2" x 11°), the examiner(s) will eject the summary and itwill hot be submitted to the Commissioners for their review. ‘The summary shalcontain the name ofthe party the status ofthe party, thename and docket number ofthe case, the issue(s), the key facts, the legal principles involved (including proposed conclusions of law), and the action requested. (See enclosed form.) ‘it Norm Cove: Aarug, Pont Omcx Box Ue i Tus IAN) & Plow: B/N px UMPOil & Gas Docket No. 09-0296411 Page 2 August 31, 2015 In view ofthe due dates stated above, all parties are reminded that pleadings are ‘considered filed only upon actual receipt by the Docket Services Section of the Hearings Division (Room 12-123). Furthermore, each pleading must be served upon all Parties of Record and statement certifying such and giving complete names and addresses must be included. Exceptions and replies may not be filed by telephonic document transfer Uniess otherwise directed by the examiner(s).. An original plus THIRTEEN copies of exceptions, replies and summaries should be submitted to the Commission. PLEASE DO NOT STAPLE. Further, a copy of these pleadings must be submitted to ‘each party. IN ADDITION, IF PRACTICABLE, PARTIES ARE REQUESTED TO PROVIDE THE EXAMINERS WITH A COPY OF ANY FILINGS IN DIGITAL FORMAT. ‘THE DIGITAL FORMAT SHOULD BE LABELED WITH THE DOCKET NUMBER, THE TITLE OF THE DOCUMENT, AND THE FORMAT OF THE DOCUMENT. The proposal for decision, and all exceptions ard replies will be submitted to the Commissioners for their consideration at one of their regularly scheduled conferences. The agenda for the scheduled conferences willbe published inthe Texas Registerand posted in the office of the Secretary of State. The conferences are cpen meetings; you may attend and listen to the presentation of the case. Via Fax and First Class Mail Via Hand-Delivery and Email Tim George Lindil Fowier Representing XTO Energy, Inc. General Counsel McGinnis, Lochridge & Kilgore RRC - Austin 600 Congress Avenue Suite 2100 ‘Austin TX 78701 Via Hand-Delivery and Email Fax No. 612/495-6093 David Cooney Director, Enforcement Via Fax and First Class Mail General Counsel Division David Gross RRC - Austin Representing XTO Energy, Inc. 12400 Hwy 71 West Suite 350-230 Via Inter-Agency EMail: Austin TX 78738 David Hill, UIC - RRC, Austin Fax No, 512/263-2702 Lori Wratenbery - RRC, Austin Leslie Savage - RRC, AustinCASE SUMMARY PREPARED BY: STATUS EXAMINER(S): DOCKET NO./CASE NAME: ISSUE(S): KEY FACTS: LEGAL PRINCIPLES INVOLVED: ACTION REQUESTED:[DAVID PORTER, CHARMAN [RYAND. LARSON, DIRECTOR ims crapicn, Conssonen ‘vaio, Conmssoen RAILROAD COMMISSION OF TEXAS HEARINGS DIVISION PROPOSAL FOR DECISION OIL AND GAS DOCKET NO. 09-0296411 COMMISSION CALLED HEARING TO CONSIDER WHETHER OPERATION OF THE XTO ENERGY, INC., WEST LAKE SWD, WELL NO. 1 (API NO, 42-367-34693, UIC PERMIT NO. 12872), IN THE NEWARK, EAST (BARNETT SHALE ) FIELD, IS CAUSING OR CONTRIBUTING TO SEISMIC ACTIVITY IN THE VICINITY OF RENO, PARKER COUNTY, TEXAS. HEARD BY: Paul Dubois - Technical Examiner Marshall Enquist- Administrative Law Judge APPEARANCES: REPRESENTING: RESPONDENT: Tim George XTO Energy, Inc. David Gross Wiliam Duncan ‘Andrée Griffin Timothy Tyrrell INTERVENOR: David Cooney Oil & Gas Division PROCEDURAL HISTORY Notice of Hearing April 24, 2015 Date of Hearing: ‘June 10, 2015 ‘Transcript Received: June 22, 2015 Proposal For Decision Issued: August 31, 2015 17m Noms Cononsas Avenue Pont Orvis Dow 6? Asm, Tana 772067 Pom 58/4804 as 2/4 dbOIL AND GAS DOCKET NO. 09.0296411 PAGE2 ‘STATEMENT OF THE CASE From November 11, 2013, through April 12, 2014, a series of earthquakes were felt by persons in and around the communities of Azle and Reno, in Tarrant and Parker Counties, respectively. Two deep underground injection wells that dispose of water produced from oil & gas production activities are located in the vicinity of the reported earthquakes. One of those wells is the West Lake Salt Water Disposal (SWD) Well No, 1 (API No, 42-367-34893) operated by XTO Energy, Inc. (XTO).’ The West Lake SWD Well No. 1 injects produced salt water into the Ellenburger Formation in the depth interval from 8,084 feet to 9,250 feet. On Apri21, 2015, the results ofa study entitled "Causal Factors for Seismicity Near ‘Azle, Texas" (hereinafter, the “Causal Factors Study") were published in the journal Nature ‘Communications.* The’ authors of the article include scienists from the Huffington Department of Earth Sciences at Southem Methodist University (SMU), the United States Geological Survey (USGS), the Institute for Geophysics at the University of Texas at ‘Austin, and the Department of Petroleum and Geosystems Engineering at the University of Texas at Austin, The Causal Factors Study (elements of which willbe discussed later) concluded: “On the basis of modeling results and the absence of historical earthquakes near ‘Azle, brine production combined with wastewater disposal represented the most likely cause of recent seismicity near Azle.” On April 24, 2015, the Executive Director of the Railroad Commission of Texas directed the Hearings Division to calla hearing to consider whether the operation of XTO's West Lake SWD Well No. 1 is causing or contributing to seismic activity near Azie and Reno, Texas. The Hearings Division was directed to cal the hearing to “ful consider the (Causal Factors) Report, any controverting evidence from the operator of the wells at issue, and any other admissible, relevant evidence offered by any party with standing to participate.” Regulatory Authority Pursuant to the Commission's Statewide Rule 9 (16 Tex. Admin, Code §3.9, hereinafter “Rule 9"), any person who disposes of salt water or other cil and gas waste by injection into a porous formation not productive of oil, gas, or geothermal resources shall * tha sacond wel is the Bir Wt No.1 (AP No, 4249736875) operates by Ene/Vest Operating LG forwniha sla hesring wae eld on June 16, 2095 (Ol Gas Socket No 99686410), “causal Factors for Seismicity near Ade, Texas” Homback Mathow Jet al. Nate Communatons. Natur Publehing Group Ape 21,2018 ‘Memorandum om Miton A ister, Execute Oectr, to Ryan Larson, Director, Hearings Division, dated Ap 24, 2015.OIL AND GAS DOCKET NO. 09-0296411 PAGES be responsible for complying with this section, Texas Water Code, Chapter 27, and Title 3 of the Natural Resources Code. After a permit has been issued under Rule 9, the ‘Commission may take subsequent action as follows: “A pormit for salt water or other oil and gas waste disposal may be modified. suspended, or terminated by the commission for just cause after notice and opportunity for hearing, it: (a material change of conditions occurs in the operation or completion of the disposal well, or there are material changes in the information originally furnished! (i) freshwater: ikely to be polluted as a result of continued operation of the well (ii) there are substantial violations of the terms and provisions of the permit or of commission rules; (iv) the applicant has misrepresented any material facts during the permit issuance process; (¥) injected fluids are escaping from the permitted disposal zone; (vi) injection is likely to be or determined to be contributing to seismic activity; or (vi) waste of oi, gas, or geothermal resources is occurring or is likely fo ‘occur as a result ofthe permitted operations.” (16 Tex. Admin, Code §3.9(6)(A)i- vi)) Notice On April 24, 2015, the Commission issued notice of the hearing by frst class mail, ‘e-mail, and facsimile to XTO, the individual authors of the Causal Factors Study, the ‘mayors of Azie and Reno, Texas, and to the Commission's Oil & Gas Division. The notice made specific reference to Rule 9(6)(A)(,v, and vi), as provided above, Parties ‘The hearing was called to order on June 10, 2015. At the call of the hearing, two entities requested party status in the proceeding: XTO and the Railroad Commission's Oil & Gas Division. Several other persons were present to observe the hearing but did not request party status. The Examiners granted XTO's motion to set the parties as XTO and the Commission's Oil & Gas Division.OIL AND GAS DOCKET NO, 09-0296411, PAGE 4 Burden of Proof ‘The Respondent, XTO, has the burden of proof to show that the injected fluids from its West Lake SWD Well No. 1 are not likely to be or determined to be contributing to seismic activity, ‘Standard of Review ‘The standard of review in this case is a preponderance of evdence. This is a case Of frst impression before the Commission. The question before he Examiners in this ‘matter is expressed in Rule 9(6)(A)(vi) Is injection ikely to be or determined to be contributing to seismic activity? (16 Tex. ‘Admin. Code §3.9(6)(A)( vi) The minimum finding necessary for an affimmative answer to this question can be reduced to: Injection is kely contributing to seismic activity. Rule 8 does not further define or provide direction for interpreting the phrase "ikely contributing." The Examiners conclude the term "ikely” represents apreponderance ofthe evidence standard.* That is, simply, it is more likely than not the injection is causing seismic activity ‘The Examiners understand the term "contributing" toindicatethat the subject action (injection) provides at least a part ofthe force necessary to cause or achieve an outcome (seismic activity). A rudimentary overview of the mechanics of induced seismicity is. presented in the Appendic. Thus, the injection stimulus and the consequent seismic fctvity must occur in a mechanically connected system, and the actual operational parameters of the mechanical system must be such to allow fr stress to be transferred to {he location of rupture, and thus "contribute" to an event, Matters Officially Noticed XTO did not offer the Causal Factors Study into evidence. At the hearing the Examiners did, however, take official notice of the study, to which XTO objected. The Examiners believe the claims made in the Causal Factors Study to be essential to establishing the context of XTO's evidence in response to the study. XTO objected as the See Elie County Stte Bank v.Keover, 888 SW 24780, 722 (Tex. 194) (le doce is more ‘imi estaba than tat sues o! oe! ae resolved om a preponderance fhe evince) (qualng Sanders v: Harder, 227 8 W.24 206, 208 (1850)OIL AND GAS DOCKET NO. 09.0296441 PAGES Causal Factors Study was not sponsored by a party or witness who could defend it and be subject to cross-examination. Therefore, XTO argues that the study should be regarded as hearsay and not admissible. The Ex ners overruled XTO's objection.* In addition, the Examiners take official notice of the following: 1 Commission posting of intial seismic rule proposal. 39 Texas Register, ages 6775 to 6779 (August 29, 204). Comments regarding Commission posting. 39 Texas Register, pages 6988 to 9005 (November 14, 2014) ‘Commission records for API No. 42-439-32673, Chesapeake Operating, Inc., DFW Lease, Well No. C1DE, including injection well permitting records, well completion and plugging records, and Form H-10 injection volume summary. Frohlich, C., et al. The Dallas-Fort Worth Earthquake Sequence: October 2008 through May 2009. Bulletin of the Seismological Society of America, Vol. 101, No. 1, pp. 327-340. February, 2011 Murphy, L. M. & Ulrich, F. P, United States Earthquakes, 1950. U.S. Coast and Geodetic Survey, Serial No. 755, pp. 1-9. Washington, D. C., 1952 (pages 1 through 9 only; ‘full document available at http:/digitallibrary.unt.edu/ark:/6783 1/metade40343/m1/1/. Pacific Gas and Electric Company. Desabla-Centerville Hydroelectric Project, FERC Project No. 803. Draft Historic Properties Management Plan. Vol. Pages 1-12. February, 2008 (pages 1 through 12 only; full document available at http:/iwww.buttecreek org/documents/HistoricProperties_DC_ Project.pai) By latter dated July 31, 2018, the Examiners notified the partes oftheir intention to take oficial notice of these documents, incorporate them into the record, and afford the parties an opportunity to contest the materials By letter dated August 14, 2015, XTO reserved the right to object to official notice ofthese documents because the Examiners did not indicate the grounds for taking oficial notice. Staff did not respond tothe iter. S00 Tox. Evis. 108 (Remainder of or Relate Wings or Record Sttements), 402 (Test for -Rolvant Evidence), 803 (Excopton fo Rule Against Hears). ‘An axamner on riser ar own motion may propose fo aks ai note of tes, materials, feeord, or documents. Seo 18 Tex Aan. Code 1102 (Oftcal Notes), Tex. Govt Code 2004060 (Ofte Notce; State Agency Evaluation of Evisece)‘IL AND GAS DOCKET NO. 09-0296411 PAGE 6 Limitations ‘The purpose of the present matter is to evaluate the evidence in the record to determine whether XTO's West Lake SWD Well No. 1 is likely contributing to the specific earthquakes detected in and near Azle and Reno, Texas, which were first observed on November 11, 2013. The term “likely contributing” given the preponderance of the evidence in the record forms the standard by which the Examiners have formed a recommendation for Commission consideration, TO was the only party offering direct evidence into the record inthis case-several hours of expert witness testimony and 38 exhibits, including late-filed supplements. XTO's ‘evidence challenged the findings of the Causal Factors Study. The Commission's Oil & ‘Gas Division cross-examined XTO's witnesses and offered one exhibit into the record-the injection permit file for the subject well-but did not otherwise offer a direct case or take a Position on the matter. The Commission's seismologist did not participate in the hearing No evidence was offered in support of the Causal Factors Study. JHE CAUSAL FACTORS STUDY ‘This hearing was called in response to the publication of the article “Causal Faciors {for Seismicity Near Azle, Texas” in the journal Nature Communications on April 21, 2016. ‘The Causal Factors Study implicated the XTO West Lake SWD Well No. 1 as a cause of the recent earthquakes in the Azie-Reno area, The authors of the Causal Factors Study ‘and mayors of Azle and Reno, Texas were given notice, but did not appear at the heating to participate in the proceedings. What follows is a brief summary of salient aspects and findings of the Causal Factors Study. ‘The Causal Factors Study was undertaken to consider several regional factors that. ‘might have caused the recent seismic activity in the Azle-Reno area. The study's seismic: analysis of the observed earthquake activity is consistent with two steeply dipring ‘conjugate normal faults—a primary fault and an antitheticfault-an interpretation that isin. agreement with industry interpretations based on 3-dimensional seismic data.’ The faults {ollow the southwest to northeast strike of the Newark East fault zone. The parent nornal ‘fault dips about 60° to 70° to the northwest, and the antithetic normal fault dips about 70° t0.80° tothe southeast. The primary fault (identified as the Azle Fault by XTO's witnesses) is about2 miles east-southeast ofthe injection well, 2 to 3 miles long and extends into the crystalline basement rock that underlies the sedimentary Ellenburger Formation. The antithetic fault is about 1.2 kilometers southeast of the West Lake SWD well and is less [feu pana fracture in bite rock across which theres observable displacement. Anormel fous fut ncn tangy wa eBook ave he a Pas Moves ew {eiave' me foal (me Dock ot rock us te et). At rl au a io fo {esocited wiv a pimayorparont a ha pein the oppose aecton.OIL AND GAS DOCKET NO. 09.0296441 PAGE7 than ammile long. The antithetic fault cuts across the Ellenburger Formation and penetrates into the crystalline basement rock (see Attachment 1).° ‘The study identifies several natural and anthropogenic (originating inhuman activity) factors that may reactivate faults and cause earthquakes. These factors alter the stress. regime of the subsurface and may include: (1) natural tectonic processes,” (2) water table fluctuations; and (3) the removal and the injection of fluids in the deep subsurface. Causal Factors Study - Natural Tectonic Processes Most naturaly-occurring seismic activity occurs along inter-plate boundaries, often concontinental margins. Although uncommon, earthquakes may occurinintra-plate regions in stable continental interior areas far from known seismic zones. The Causal Factors ‘Study notes the following: + The Fort Worth Basin has been permanently settled for about 150 years. + Before 2008, only one report of a felt earthquake was documented in the Fort Worth Basin, an area of about 140,000 square kilometers (54,000 square miles)."° + Im2008, a sequence of earthquakes occurred in the Dallas-Fort Worth area, + On July 11, 2010, while the Earthscope Transportable Array was deployed in the region, one small unfelt (magnitude [M] less than 2.5) earthquake was detected in the Azle area."" + The increase in seismic activity in North Texas since 2008 is unusual ‘The Causal Factors Study attributes most ofthe faulting inthe area tokarst-collapse features in the Ellenburger that date to about 300 milion years ago. The faults in the area do not present surface expressions as evidence of recent significant movement. The (couse Factors Sudy, Figures 23 and 2b “The term "econ elt othe structure ofthe ear’ rst andthe lrge-scalo process that {ake place with norbwret ct Rene-Aaie The overt wi be cisco or “The Moment Magnite Seale’ o snply Magne’ Me a measure of eathauske size in {erm ofthe energy released. Typical, te esha for human fo sense esas overs bout 2 and greater. Event of en han Ma usualy peseunnctoea hough nda ena vanesOIL AND GAS DOCKET NO. 09.0296441 PAGES: Causal Factors Study concludes that naturally-occurring intra-plate tectonic stress changes. are an unlikely cause of seismicity in the region, Causal Factors Study ~ Water Table Fluctuations Eagle Mountain Lake is a large reservoir located about 5 kilometers (3.1 miles) west of the subject area. Drought conditions have lowered the lake level about 2.1 meters (m) (6.9 feet) from April 2012 to November 2013. This reduction of mass would reduce the: stress on the Ellenburger Formation (the injection zone) by about 0.0006 mega Pascals. (mPa), or about 0.09 pounds per square inch (psi). The Causal Factors Study does not. attribute the seismic activity to changes in the lake level Similarly, the Causal Factors Study evaluated the potential for water levels in the shallow Trinity Aquifer (at a depth of about 100 meters, or 328 feet) to contribute to seismic: activity. The study identified no significant changes in aquifer water levels in the last six to eight years, and therefore concluded the aquifer water level has not affected seismicity in the area, Causal Factors Study Oil and Gas Activity A significant portion of the Causal Factors Study attended to modeling changes in {uid pressure in the Ellenburger Formation (the disposal zone) as a result of oil and gas activitiesin particular, the injection of waste fluids and the withdrawal of salt water that is produced concurrently with oll and gas."? Much of this salt water is flowback from the fracture treatment process. The model calculated variations in subsurface pressure on the nearby antithetic fault caused by two waste disposal injection wells and 70 gas wells that. also produce brine. A very brief summary of the madel construction is as follows: + Single-phase liquid flow was modeled through the nearly flatdying Ellenburger Formation. The model domain was limited to the Ellenburger Formation only, not adjacent strata, + Modeled Ellenburger permeability values ranged from 3x19" mito 10x10 1 (about 30 mildarcies [md] to 100 md). The mean formation permeability. Was used; the formation was modeled with homogenous isotropic properties. without spatial variation due to karst structures or other fectors. + The faults in the Ellenburger were modeled with permeability values that were reduced by 50 percent (1.5x10" m? to 5x10 m). That is, the faults. Were modeled as less permeable than the formation itsel, ‘The Causal Factors Study refers oth salt wate a “brine”OIL AND GAS DOCKET NO. 09.0296441 PAGES + Vertical flow constraints were provided by significantly lower parmeabilty values of 1x10" m? (about 0.001 md) above and below the Ellenburger Formation, + Injection volumes and injection pressures for both the XTO West Lake SWD Well No. 1 and EnerVest Operating LLC's Briar Well No. 1 were obtained from Commission records and based on monthly averages. + Saltwater production volumes from 70 nearby gas wells were obtained from Commission records. + The modeled period was 10 years. Saltwater production began in 2004, and the injection began in 2009. ‘A series of model runs were performed varying certain parameters: bottom hole pressure; permeability; thickness of the permeable interval; specific storage; with and without salt water production; and open and closed boundary conditions. The modeling analysis indicated subsurface pressure increases along the antithetic fault ranging from 0.01 mPa to 0.14 mPa (1.45 psi to 20.3 psi)" The study states, “Although uncertainty exists, model-predieted pressure changes are consistent with values that are known to trigger earthquakes on critically stressed faults." The study further provides references for this assertion. ‘The Causal Factors Study identified some temporal correlation between: (1) a period of increased injection volume and pressure; and (2) modeled pressure increases: ‘on the antithetic fault and subsequent felt earthquake activity (Attachment 2)."= An increase in injection activity in the Summer and Fall of 2013 resulted ina modeled pressure increase on the antithetic fault from 1 to 3 months later. The felt seismic activity begat November of 2013." These pressure changes were modeled within the Ellenburger Formation, not the underlying Precambrian crystalline basement rock. Acknowiedging that ‘many of the earthquakes (larger magnitude events, especially) occurred in the basement rock along the primary fault, the Causal Factors Study "hypothesize(s) that the deeper earthquakes are due to downward pressure transfer within the fault system.” This hypothesis was not explored. (Causa Factors Stuy, Tab 1 ‘Causa Factors Study, p. 8 (emphatis ade. “The Causal Factors Study ot ths locaized increase, 7a higher nection pressure and volumes were reported iro Causal Factors Sty, Figure 4 Causal Factors Sty .7 (emphasis added).OIL AND GAS DOCKET NO. 09.0296411 PAGE 10 ‘The Causal Factors Study concludes: “On the basis of modeling results and the absence of historical earthquakes near Azle, brine production combined with wastewater disposal represented the most likely cause of recent seismicity near Azle." The Causal Factors Study acknowledges that certain aspects of this work represent “irst-order estimates.” The study describes a number of areas in which further study is nesded, ‘XTO'S EVIDENCE ‘Three witnesses testified for XTO. William Duncan is a reservoir engineer who currently serves as an environmental and regulatory advisor for XTO. Mr. Duncan's testimony focused on the West Lake SWD Well No. 1, including the injection permit, well ‘construction, and operational history. The testimony of Andrée Grifin, XTO's Vice President of Geology and Geophysics, focused on the geology of the Fort Worth Basin in general, the geology of the Azie-Reno area (within the Fort Worth Basin) in particular, and ‘on the regional Barnett-Paleozoic total petroleum system. Timothy Tyrrell, a geoscience and technical manager for XTO, testified about his analysis of the earthquakes inthe Azle- Reno and Irving, Texas, areas. XT0's Evidence - West Lake SWD Well No. 1 (On February 19, 2009, the Commission issued Permit No. 12872 to XTO for its West Lake SWD Well No. 1 to dispose of non-hazardous oil and gas waste by injection into a porous formation not productive of oil and gas. The permit authorizes disposal of salt ‘water into the Ellenburger Formation in the subsurface depth interval from 8,064 feet to 9,329 feet. The maximum permitted injection volume is 25,000 barrels per day (bpd), and ‘the maximum operating surface injection pressure is 2,600 psi. The permit application was initially protested by the Upper Trinity Groundwater Conservation District and Devon Energy Production Company, L.P. XTO reduced its intial requested maximum surface injection pressure from 3,800 psi to 2,600 psi, and the protests were withdrawn, Absent protests, Commission staff administratively approved the application and issued the permit, ‘The well was completed toa total depth of 9,334 feet on May 23, 2009. XTO stated € show of natural gas in the Ellenburger Formation was observed while the West Lake ‘SWD Well No. 1 was being drilled. XTO reports the base of usable quality ground water is at a depth of 620 feet. Surface casing (9 5/8-inch) was set at a depth of 756 feet with cement circulated to the surface. The production casing (7-inch) was set to a depth of 9,328 feet. A differential valve (DV) tool at 7,991 feet was used to cement the production casing from 9,329 feet to 5,730 feet, which was confirmed by a cement bond log. The production casing was perforated from 8,064 feet to 9,250 feet in the Elienburger Formation. The original Form W.-14 indicated 4 1/2-inch injection tubing would be used in ‘the well, but a Form G-1 fled after well completion in 2009 indicated 2 3/8-inch injection causal Factors Sty, p. 1 (emphass added}.OIL AND GAS DOCKET NO. 09-0296411 PAGE 14 tubing set with a packer at a depth of 7,964 feet. A Form G-1 filed on June 3, 2015, corrected the well completion to indicate 4 1/2-inch tubing set at 7,967 feet. Injection began in June 2009. The maximum daily average injection volume was 16,977 bpdin September 2008. The maximum average monthly surface injection pressure ‘was 1,198 psi in August 2010. In July and August, 2010, the maximum surface injection Pressure was measured at 1,740 psi, Through May 2016, the wellhas injected 22,622,904 barrels of salt water into the Ellenburger Formation."* Three events in the history of the injection well are of note: + In the third quarter of 2012, XTO reported the well developed mechanical problems with one of the injection pumps, resulting in decreased injection Capacity for a period of time—about six to nine months, Dally injection ‘volume during this time was about 8,000 bpd and the average surface injection pressure about 600 pei + Im August 2013, XTO began to produce about seven wells nits Indian Hills nit, increasing the salt water volume sent to the West Lake SWD Well No. 1 for disposal from about 8,000 to 12,000 bpd with a parallel increase in the average surface injection pressure from about 600 to 800 psi + From about mid-December 2014 through mid-February 2016 the well was shut in for tubing replacement. The well resumed service in late February 2015, following a successful Form H-5 mechanical integrity test that was ‘witnessed by Commission staff from the Abilene District (7B) Office. On February 13, 2015, affer the well had been shut in for 53 days for tubing replacement, XTO measured the stabilized bottom hole pressure at the mid-perforation depth (8,856 feet) to be 4,393 psi. Based on an analysis of the driling mud weight records from 2008, XTO estimates the intial reservoir pressure ofthe Ellenburger Formation atthe mmid-perforation depth to be about 4,400 psi. XTO concludes that injection of salt water into the Ellenburger Formation has not resulted in a change in reservoir pressure. The well currently serves 233 XTO gas wells completed in he Newark, East (Barnett Shale) Field. Combined, these gas wells currently produce 6,000 to 10,000 bpd salt water requiring disposal. From March through May 2015, the well injected an average of 6,646 bpd. The average daily surface injection pressure during this time was 442 psi ‘The West Lake SWD Wel No. 1 shares a well pad with XTO's Wilkerson Olsovsky Unit A 1H, a horizontal well completed in the Newark, East (Bamett Shale) Field, which directly overlies the Ellenburger Formation in this area. The Wikerson Olsovsky well entered production service prior to the commencement of injection activities on the West ean 8OIL AND GAS DOCKET NO. 09.0296411 PAGE 12 Lake SWD Well No. 1. Gas and water decline curve analysis from the Wilkerson Olsovsky ‘well indicates there is no fluid communication between the two formations at this location. XTO's Evidence - Geologic Characterization of the Fort Worth Basin Geologically, the Aze-Reno area is located within the Fort Worth Basin. The Fort ‘Worth Basin is bounded to the east by the Ouachita Thrust Fault, to the north by the Muenster and Red River Arches, to the west by the Bend Arch, and to the south by the Liano Uplift. A map illustrating the boundary and major structural features of the basin is included on Attachment 3.* XTO provided extensive testimony and exhibits characterizing the basin in terms time, stratigraphy, tectonics, structure, erosion, and the total petroleum system resulting through the interplay of these combined geologic elements. XTO's. analysis of the Basin was based on 2-D and 3-D seismic data, well data, and published literature. Attachment 4 depicts a portion of the Fort Worth Basin area from Azle in the west to Irving in the east, including mapped faults in the Azie-Reno and Irving areas.”" An associated cross section illustrating the interpreted structure and stratigraphy of the Fort Worth Basin is presented on Attachment 5. 1. Tectonics and Structure Tectonic forces have been at work in the basin throughout geologic time. Two ‘orogenic events, in particular, have shaped and continue to influence basin structure "As ‘mentioned, the Fort Worth Basin is bounded on the east by the Ouachita Thrust Fault. The (Ouachita orogeny and associated structures date to the Pennsylvanian time (~300 million years ago), when a continental collision occurred between the ancestral North and South ‘American plates as the supercontinent of Pangea was forming. This compressional tectonic event thrust strata from southeast of the Ouachita Front over and on top of existing strata tothe northwest. The thrusting top-loaded the existing strata, causing or reactivating ‘movement along normal faults in the basement rock. One result of this activity is a series cf errechefon normal faults down-thrownto the east-soulliewst thal are generally northwest Cf and parallel to the thrust front, as strata closer to the thrust fault system were pushed (o-p)OIL AND GAS DOCKET NO. 09.0296411 PAGE 92 ‘Thus, three independent stress conditions could result in slip: + Anincrease in the shear stress + A docrosse in the normal stress. + An increase in the pore pressure Conversely, stress changes in the opposite directions would tend to inerease stability, Inthe case of induced seismicity from fluid injection, the effective stress (a-p) can bbe reduced by the increase in pore pressure from injection. This is the mechanism-an increase in pore pressure that reduces the effective stress and, consequently, the frictional strength of a fault-by which injection may induce seismic activity. Beyond the apparent ‘simplicity of this criterion, however, the problem of actually determining the in situ state of ‘stress on a particularly-oriented fault to assess the potential for stabilty or instability in the ‘geomechanical system is very complex and fraught with difficulties and uncertainties,ue “mow dew (eu! eave ovay-ay anu suan9 paparep jo apmidew pue vonnqunsp jexedusipueeneds a Bupen 50:08 Apmis OPE ese? “oHON soe TuNaWovLiY‘cote unger eu u seyenbuuee jo 02481: on () UE UN uaiqgue ae ansaid pny Jo Buyppou joduo ayy (1) Buuedun> sendy Apmis 1012 es) smn sseu we Frrg6z060 zanawnoe.iy {i IP JOAN) 1 pasNGEBUsanjen AypGeaLed UO paseg Hre) A Ye aRLEYD azNssOx 2100 pur a5F0:24 te! YARD! VBOIIAG fou yes ay) Augye 9svarsUtsauNssoud BUOY S4NSDA POW PAHEISU SM YEIZY MZ LORE (e2"@4) Va7V sap UoWsIes mO}Re ANDOAP yey InoYARIE 34a Fe 9UR =e-RN 9:PeH0:0 PaTRPOWV “OMA FSOA HmeyIRONANUE 2 VE UNEETAE | OUR (shepyount Obiy Gia Luer LiMeN ze-dog e-Ony plunr SZsdy HE Stuer rice 60 * pecaped °Poyy v0 open (bene. re 29 Se Ue lit - 2f E Lee 3 sf E i SH am 4 pee aE iSengome hese Geologic Framework Map Fort Worth Basin ory beamlines’ Notes: ~ Jeouth 70 Exhibit No. 14. The Fort | worth asin bounce by the *}ovacita Trust Fault othe eas, Muenster and Red River Arches to he north, the Bend Arch tothe west andthe Llano Uplift othe “a. a he EXPLANATION aT ———— Barreti-Paleazoic TPS Extont of Barnett Shale” Napa Bott cot! Gas colt M Mixed oi'gas cal! NN] sg, en a SON LY REPTLAY UolIDas $5019 SHEWIEYDS“suoneojyemenns erage pue vow] f ros soinquaga 959 seireay sre peddew arep sodas pos sre | | vows au a19 dew amon uonewoy Bnqua,3“02'0N HOHE OX | aye uewurow aibez—) 7Uwi/ez/t0 €1/11/1T) £ dais au — squang yoaruanbas, levist/er-er/tftr) € dais aun —stuangyo2ouanbas(soup pera yomeAyeau) syne (adh spuoin) ds. aan yo v0 Bue yy oa eodde ana 9 \SON “B2UapHa o1paXY0| {ou asm sana jo suanbas oun ay Bumous uq} Ue Put sI¥80 Jo vORED| a BumMOYs MoI dew SovEnbes oURYaEY a4 105 a8 ‘Buy -wndop uy vopezo, 1423 “8 ON HEN OLX sHRON HIME Trvsezo0 s.ueWNoWLY wea ee semi 1 \ N ones ss015 eaay Buns,: v U0!1995 SsolD Bay 3/2RAILROAD COMMISSION OF TEXAS HEARINGS DIVISION OIL AND GAS DOCKET COMMISSION CALLED HEARING TO NO. 09-0296411 CONSIDER WHETHER OPERATION OF THE: XTO ENERGY, INC., WEST LAKE SWD, WELL NO. 1 (API NO, 42-367-34693, UIC PERMIT NO. 12872), INTHE NEWARK, EAST (BARNETT SHALE ) FIELD, IS CAUSING OR CONTRIBUTING TO SEISMIC ACTIVITY IN THE VICINITY OF RENO, PARKER COUNTY, TEXAS. FINAL ORDER ‘The Commission finds that after statutory notice the captioned proceeding was. heard by the examiners on June 10,2015. The examiners have dul circulated a Proposal for Decision containing Findings of Fact and Conclusions of Law. Having been duly submitted to the Railroad Commission of Texas at conference held in its offices in Austin, ‘Texas, those Findings of Fact and Conclusions of Law are hereby adopted and made part hereof by reference. ‘The Commission finds that a preponderance of the evidence supports a finding that. the XTO West Lake SWD Well No. 1 was constructed and operated in accordance with its permit. Further, the Commission finds that the preponderance of he evidence does not. ‘support a finding that fuids injected into the Ellenburger Formation trough the XTO West Lake SWD Well No. 1 are *...escaping from the permitted disposal zone" or are ...ikely to be or determined to be contributing to seismic activity” [16 Tex. Admin. Code '§3.9(6)(A)()(v) and (vi)]. Therefore, itis hereby ORDERED by the Railroad Commission of Texas that UIC Permit No. 12872 for the XTO West Lake SWD Well No, 1 remain active and unamended. Itis further ORDERED by the Commission that this order shall not be final and ‘effective until 20 days after a party is notified of the Commission's order. A party is presumed to have been notified of the Commission's order 3 days after the date on which ‘the notice is actually mailed. Ifa timely motion for rehearing of an application is filed by any party at interest, this order shall not become final and effective until such motion is. overruled, or if such motion is granted, this order shall be subject to further action by the: Commission. Pursuantto Tex. Gov't Code §2001.146(e), the time allotted for Commission action on a motion for rehearing inthis case prior to its being overruled by operation of law is hereby extended until 90 days from the date the parties are notified of this order in accordance with Tex. Gov't Code §2001.144Ol & Gas Docket No, 09.0296811 Done this _* day of, ATTEST: ‘SECRETARY 2018. Page 2 RAILROAD COMMISSION OF TEXAS: CHAIRMAN DAVID PORTER ‘COMMISSIONER CHRISTI CRADDICK ‘COMMISSIONER RYAN SITTON