Legacy Issues Associated with Oil and Gas Development

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Air permits and reporting NPDES discharges Out of date SPCC plans OSHA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 Corporationdcloutier@trihydro.com307/745-7474