Montana Board of Oil & Gas Conservation

High over Billings, on the 22nd floor of the Sheraton Hotel, the Montana Board of Oil & Gas Conservation (MBOGC) makes decisions that guide and regulate a $300-million-per-year industry in Montana.

The MBOGC is a quasi-judicial body that is attached to the DNRC for administrative purposes only. It has the authority to hire its own personnel and to set the salary of several of its professional staff positions. The law is quite specific regarding some of the board's makeup:

Also, one must be an attorney. All members are appointed to four-year terms by the governor - four (the majority) when he or she takes office; the others, two years later (view board members).

The board's regulatory action serve three primary purposes: (1) to prevent waste of oil & gas resources, (2) to conserve oil & gas by encouraging maximum efficient recovery of the resource, and (3) to protect the correlative rights of the mineral owners, i.e., the right of each owner to recover its fair share of the oil & gas underlying its lands. The board also seeks to prevent oil and gas operations from harming nearby land or underground resources. It accomplishes these goals by establishing spacing units, issuing drilling permits, administering bonds (required to guarantee the eventual proper plugging of wells and restoration of the surface), classifying wells, and adopting rules. MBOGC also repairs old, abandoned, problem wells. It maintains a library of well cutting samples and core samples in Billings (the cores, themselves, are stored in the U.S. Geological Survey Depository in Arvada, Colorado). Since 1993, the board has performed the certification required for companies to receive tax incentives available for horizontal wells and enhanced recovery projects. An even newer responsibility is the Underground Injection Control Program.

As described above, the MBOGC is assuming the primary regulatory jurisdiction over a whole new program, the Underground Injection Control (UIC) Program for Class II injection or disposal wells. The purpose of this program is to protect underground sources of drinking water (USDWs). Board rules generally define a USDW a those aquifers containing less than 10,000 mg/L of total dissolved solids.

A Class II injection well is defined, very generally, as one used to inject fluids as part of an oil & gas extraction operation. The injected fluid usually consists of waste water that has been produced along with the oil & gas. Although their quality varies from place to place, these fluids typically contain high concentrations of dissolved minerals (especially salts and sometimes carbonates). In some cases, fresh water may be injected instead of or in addition to the brine, for the same reason - to enable recovery of more of the oil & gas than would otherwise be possible. Class II injection wells can also be used for underground storage of liquid hydrocarbons like propane and butane.

An oil & gas operator must apply for a permit to inject, providing specific data about the company and other required information. Oil and Gas Conservation Division staff perform a technical review of the proposal, which also goes through a public notice and hearing process. MBOGC may then issue, modify, or deny the permit; regulate the volume and characteristics of the fluids to be injected; and impose operational requirements or limitations for the well. OGCD staff will periodically inspect permitted wells, and each well will be tested at least every five years for mechanical integrity. Operators are also required to monitor the wells (using pressure gauges and other equipment), characterize injected fluids, and submit periodic reports.

If a problem is revealed, a well would have to be shut-in immediately and then repaired. In most instances, the potential for contamination is remote because of the requirements pertaining to the wells. If a case of contamination occurs, however, the severity of the impact would depend on the composition of the injected fluid, the amount leaked, the geological conditions, and the proximity of groundwater. The objective is to protect any USDW from becoming contaminated as a result of injection operations.

The Safe Drinking Water Act, which authorized the UIC Program nationally, also established four other classes of injection wells, which can be used for such purposes as solution mining (primarily salt and potash) and disposal of hazardous, industrial, or municipal wastes. The U.S. Environmental Protection Agency (EPA) previously regulated all five classes of wells in Montana. MBOGC sought delegation of the Class II UIC Program for several years, and the Montana Department of Environmental Quality may now be interested in pursuing delegation of the Class V UIC Program.

The rules adopted by the MBOGC became effective on May 10, 1996 (view rules), while program delegation occurred on November 19, 1996. Five current field employees stationed in Shelby, Glendive, Plentywood, and Roundup have been trained to provide monitoring of the UIC Program. The costs of the program will be covered by a fee of $200 per injection well per year and an EPA operating grant of approximately $100,000 per year. The board's jurisdiction applies statewide to all but Indian lands.

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Last updated: September 03, 2002.