Chapter NR 134

Register March 2011 No. 663

Chapter NR 134

OIL AND GAS EXPLORATION

NR 134.01   Purpose.

NR 134.02   Applicability.

NR 134.03   Definitions.

NR 134.04   Application for an exploration license.

NR 134.05   Issuance.

NR 134.06   Renewals.

NR 134.07   License revocation or suspension.

NR 134.08   Denials.

NR 134.09   Application for approval.

NR 134.10   Notice procedures.

NR 134.11   Reports.

NR 134.12   Inspections.

NR 134.13   Confidentiality.

NR 134.01 NR 134.01 Purpose. The purpose of this chapter is to establish a licensing procedure and minimum standards for oil and gas exploration in this state for the specific protection of waters of the state, both surface and ground, as provided in ss. 281.11 and 281.12, Stats.

NR 134.01 History History: Cr. Register, October, 1985, No. 358, eff. 11-1-85; corrections made under s. 13.93 (2m) (b) 7., Stats., Register, October, 1999, No. 526.

NR 134.02 NR 134.02 Applicability. The provisions of this chapter are applicable to all oil and gas exploration as defined in s. NR 134.03.

NR 134.02 History History: Cr. Register, October, 1985, No. 358, eff. 11-1-85.

NR 134.03 NR 134.03 Definitions. In this chapter:

NR 134.03(1) (1) “Abandonment” means filling or sealing a drillhole in accordance with the procedures specified under s. NR 134.05.

NR 134.03(2) (2) “Department” means department of natural resources.

NR 134.03(3) (3) “Driller” means a person who performs core, rotary, percussion or other drilling involved in exploration for oil and gas.

NR 134.03(4) (4) “Drilling site” means the area disturbed by exploration including the drillhole.

NR 134.03(5) (5) “Explorer” means any person who engages in exploration or who contracts for the services of drillers for the purpose of exploration.

NR 134.03(6) (6) “Exploration” means the onsite geologic examination from the surface of an area by core, rotary, percussion or other drilling for the purpose of searching for oil and gas or establishing the nature and extent of a known oil and gas deposit and includes associated activities such as clearing and preparing sites or constructing roads for drilling. For the purposes of the definition of exploration, geologic examination does not include drillholes constructed for the purpose of collecting soil samples or for determining geologic information by seismic methods.

NR 134.03(7) (7) “Exploration license” means the license required by this chapter, as a condition of engaging in exploration.

NR 134.03(8) (8) “License year” means the period of time commencing on July 1 of any year and ending on the following June 30.

NR 134.03(9) (9) “Oil and gas” means material occurring naturally in the earth composed predominantly of mixtures of chemical components of carbon and hydrogen, including, if present, other nonmetallic elements such as sulfur, hydrogen, oxygen, or nitrogen. Such material may occur in the gaseous, liquid, or solid state.

NR 134.03(10) (10) “Parcel” means a section, fractional section or government lot.

NR 134.03(11) (11) “Termination” means permanent abandonment of drillholes and reclamation and revegetation of drilling sites.

NR 134.03 History History: Cr. Register, October, 1985, No. 358, eff. 11-1-85.

NR 134.04 NR 134.04 Application for an exploration license.

NR 134.04(1) (1) No explorer may engage in exploration in this state without securing an exploration license.

NR 134.04(2) (2) Any explorer wishing to engage in exploration in this state shall file an application for an exploration license with the department on forms prepared and furnished by the department. The application shall be accompanied by the following:

NR 134.04(2)(a) (a) A fee of $300 for the exploration license.

NR 134.04(2)(b) (b) A bond payable to the department in the amount of $50,000 conditioned on faithful performance of the provisions of this chapter.

NR 134.04(2)(b)1. 1. The bond shall be issued by a surety company licensed to do business in Wisconsin. If the surety company’s license to do business is revoked or suspended, the explorer, within 30 days after receiving written notice from the department, shall substitute surety underwritten by a surety company licensed to do business in Wisconsin. Upon failure of the explorer to make a substitution of surety, the department shall suspend the explorer’s exploration license until substitution has been made.

NR 134.04(2)(b)2. 2. Each bond shall provide that the bond may not be canceled by the surety, except after 90 days written notice to the department by registered or certified mail. Not less than 30 days prior to the expiration of the 90 day notice of cancellation, the explorer shall deliver to the department a replacement bond in the absence of which all exploration conducted in this state by the explorer shall cease.

NR 134.04(2)(b)3. 3. The department may require that the amount of the bond be increased at any time, if the department determines that the explorer’s current level of activity makes it likely that the bond may be inadequate to fund the termination of all holes drilled for which the explorer is responsible.

NR 134.04(2)(b)4. 4. One year after the issuance of the last certificate of completion, and provided that the explorer is not holding an exploration license, the department shall release the bond if the department determines that the explorer has complied with provisions of this chapter.

NR 134.04(2)(c) (c) A certificate of insurance certifying that the explorer has in force a liability insurance policy issued by an insurance company authorized to do business in this state covering all exploration of the explorer in this state and affording personal injury and property damage protection in a total amount deemed adequate by the department but not less than $50,000.

NR 134.04(2)(d) (d) A copy of the applicant’s most recent annual report and Form 10K as filed with the securities and exchange commission. If these are not available, the applicant shall submit a report of the applicant’s current assets and liabilities and other necessary data to establish that the applicant is competent to conduct exploration in this state.

NR 134.04 History History: Cr. Register, October, 1985, No. 358, eff. 11-1-85.

NR 134.05 NR 134.05 Issuance. Upon satisfactory completion of all conditions contained in this chapter, the department shall issue an exploration license to the explorer. Licenses shall be issued within 10 business days after the department receives a complete application unless the application is for the immediately forthcoming license year. If the application is for the immediately forthcoming license year, the license shall be issued either within 10 business days after the department receives a complete application or on the following July 1, whichever is later. The issuance of an exploration license is subject to the following conditions:

NR 134.05(1) (1) No oil and gas exploration drillhole may be constructed unless the explorer receives prior written approval from the department, pursuant to s. NR 134.09.

NR 134.05(2) (2) Oil and gas exploration drillholes shall be abandoned as follows:

NR 134.05(2)(a) (a) Permanent abandonment.

NR 134.05(2)(a)1. 1. All oil, gas, brine, and fresh water shall be confined to the strata in which they occur by the use of mud-laden fluid, cement, other suitable material, or combination thereof. The amount, type, and kind of material and the method of placement shall be approved by the department. If a drillhole penetrates an aquifer under artesian pressure such that groundwater flows at the ground surface, the explorer shall contact the department immediately to obtain approval to implement the approved method of containment of such flow.

NR 134.05(2)(a)2. 2. No person may begin permanent abandonment of any drillhole before first notifying and receiving approval from the department’s regional office in Rhinelander. The explorer’s notification shall include the date abandonment is to be commenced, by whom the drillhole is to be abandoned, and the equipment to be used in abandoning the drillhole. It shall also include the present condition of the drillhole, such as the sizes and lengths of all casing strings, the depths to the top of all principal formations, the depths where oil, gas, and water were encountered, and the proposed method of abandonment. The proposed method of abandonment shall specify the type and amount of material to be used, the depths at which bridges are to be set, the depths and lengths of cement plugs, and any special requirements which may be necessary for the proper abandonment of the drillhole.

NR 134.05(2)(a)3. 3. The department’s regional office in Rhinelander shall respond within 5 days of receipt of explorer’s notification either:

NR 134.05(2)(a)3.a. a. Granting approval for the proposed abandonment procedure,

NR 134.05(2)(a)3.b. b. Prescribing a modified abandonment procedure, or

NR 134.05(2)(a)3.c. c. Requesting additional pertinent information.

NR 134.05(2)(a)4. 4. Surface or drive pipe may not be pulled at any location unless it is determined by the department to be necessary.

NR 134.05(2)(a)5. 5. A surface pipe or drive pipe abandoned with the hole shall be cut off at a point 4 feet below ground level and a cement plug, welded plate, or other seal approved by the department shall be placed at or near the top of the pipe.

NR 134.05(2)(a)6. 6. The explorer shall be allowed to recover uncemented casing below surface pipe, which does not directly protect ground waters.

NR 134.05(2)(b) (b) Temporary abandonment. If the explorer wants to retain a drillhole for further exploration and/or production, the casing shall be left in place, and the upper terminal of the casing shall be sealed by utilizing practices and methods approved by the department. The department may require temporary cement or bridge plugs in the drillhole, if necessary to protect aquifers or for safety reasons. All drillholes shall be permanently abandoned within 2 years after expiration of an exploration license.