Project and Pipeline Risk Requirements Based on the Operator Agreement and Associated Comprehensive Drilling Plan There still remains uncertainty by some as to whether or not Extraction Oil and Gas Inc (Extraction) is required to fulfill the risk analysis requirement. The following information is from the Operator Agreement (OA) between the City and County of Broomfield (CCOB) and Extraction; the required Comprehensive Drilling Plan (CDP); and subsequent exchanges of letters between Extraction and CCOB regarding conditions of approval and final approval. Extraction submitted five versions of the CDP to the City from Dec 2017 through July 2018 with the final re-submitted and approved version being the one dated July 27, 2018. OPERATOR AGREEMENT Extraction and CCOB signed an Operator Agreement which can be viewed online at: https://www.broomfield.org/DocumentCenter/View/25064/Resolution-2017-186-and-Agreement The Operator Agreement (OA) requires a Comprehensive Drilling Plan (CDP) and defines the basic requirements on Page 6 (of 114) and includes a list of 23 plans that must be completed prior to submitting their Form 2/2A Permits to Drill to the Colorado Oil and Gas Conservation Commission (COGCC). These plans shall comply with the requirements set forth in Exhibit B which lists the Best Management Practices (page 23 of 114). It should be noted that despite the final CDP not being available until July 27, 2018, Extraction submitted their COGCC Form 2/2A Permits to the City back in December 2017. Operator Agreement Requirements Regarding “Risk”: ● Risk Management Plan - Section (R) ● Alternative Site Analysis - Section (W) In every version of the CDP submitted by Extraction, there is a statement that they agreed to do the risk analysis (see details below). Exhibit B - Best Management Practices Regarding “Risk” (page 23): ● Item 3. Use of Pipelines. The Operator agrees to build pipelines... If requested by the City, Operator will conduct a risk analysis to identify potential risks associated with pipelines and the measures implemented that are intended to mitigate such risks. (Note: Broomfield requests this analysis on 08/20/2019 and Extraction notes they received the request and will do the pipeline risk analysis before commencing drilling operations.) ● Item 55. Risk Assessment. As part of Operator's application to the City, Operator agrees to provide a risk management plan, which will include the identification of potential risks, methods of risk avoidance and controls that implement techniques to prevent accidents and losses and reduce the impact or cost after the occurrence of identified potential events. 1
COMPREHENSIVE DRILLING PLAN (CDP) - Dated July 27, 2018 This Operator Agreement requires a Comprehensive Drilling Plan (CDP). The final version of the CDP which was re-submitted by Extraction and approved by the Broomfield City Manager can be downloaded in its entirety or by sections at this link: https://drive.google.com/drive/folders/1zNNQfxxjZ7wvsZ6SAk_7UuF5990U0uGk The two plans of particular interest in the CDP with regard to risk are Section (R) Risk Management and Section (W) Alternative Site Analysis: Section (R) Risk Management Plan: This section of the CDP on risk management includes an introduction in which Extraction makes strong statements about how safe of a company it is and then goes on to explain what a Risk Management plan entails. This section of the approved July 26, 2018 version of the CDP can be viewed at: https://drive.google.com/file/d/1cLZJJjY184LPvcX02nfUY7p1BBwWhv6l/view?usp=sharing This Preamble to Risk Management includes the following statements about the company’s safety, yet evidence from the COGCC and other sources states otherwise: Statement 1: "Extraction has never experienced a spill or incident of any kind that left our pad location" However, per a search of COGCC records and relevant information: ■ Certainly VOCs, NOx, and air pollutants have left their sites. ■ Per Form 19 - Facility No. 454028 (Operated by XOG subsidiary 8 North) on 03/08/2018, “A gasket failure on the heater treater was identified as the cause of the release, causing at releasing at least 5 bbls (barrels) of crude oil outside containment and off the site.” ■ Per Form 19 - Facility No. 453075 (Operated by Extraction) on 04/13/2018, “A very thin mist was carried by the extreme wind a short distance into the adjacent agricultural field to the south.” Statement 2: "Extraction has experienced only one significant event in our company’s history... no harm was done to the public whatsoev er..." This event is the Stromberger 22-e fire and explosion in Windsor in which the benzene levels were so high that a significant spike in Benzene was detected at the Boulder Reservoir over 30 miles away which was traced back to this site through analysis of wind direction and speed. It is up to interpretation as to whether or not any harm was done to the public, if air quality impacts are taken into account. Statement 3: “ The “Charles Taylor” risk matrix... is solely a product of Broomfield’s Task Force. ” 2
The Charles Taylor Risk Matrix which was a product of the Task Force was included in every edition of the CDP until this final version. Extraction stated that they disagree with the risk numbers, but do not provide an alternative. Rather they replace the risk matrix with a list of “Operator Risk Mitigations” which is a list of BMPs that are intended to “minimize risk”, but not substantiated with analysis to show the effectiveness. Statement 4: "We are not aware of any neighborhood or community evacuations in the history of Front Range oil and gas." Evacuations are typically 1/2 to 1 mile for oil and gas related accidents including fires, explosions, and well blowouts. However, until recently operations were done on a smaller scale and conducted away from residential communities. In a 2016 study which reviewed oil and gas accidents in Colorado, the average number of residents living within 1 mile of each accident on average was just 31 residents with a median of 3 residents. There are thousands of residents living within 1 mile of the Livingston Site so if there was an accident on any of these sites, the evacuation would be quite different and much more significant. Statement 5: “ our Broomfield project is very safe” Liberty Oilfield Services will be conducting the completion activities on these sites. This is the same company that experienced the truck fires on the Noble site on 11/07/2018 in which the COGCC report indicates that workers noticed a fire between pump 9 and 10 which quickly spread to additional pumps in the area and was eventually extinguished by emergency responders by deployment of AFFF (Aqueous Film Forming Foam). Total damage was eight frac pumps and ancillary equipment. See also the Stromberger 22-e fire and explosion info above. Risk Management This section then goes on to describe "Risk Management" in Extraction's own words: " Risk management i s an ongoing process that continues through the life of a project. It includes processes for risk management planning, identification, analysis, monitoring and control. Many of these processes are updated throughout the project lifecycle, as new risks can be identified at any time. The objective of risk management is to decrease the probability and impact of events adverse to the project... The probability of occurrence , number of categories impacted and the degree (high, medium, low) to which they impact the project will be the basis for assigning the risk priority . All identifiable risks should be entered into a risk register, and documented as a risk statement. " The above Risk Management plan sounds comprehensive, but they include no information to support that they actually conducted the analysis that they outlined in the approved CDP. Rather, they list a series of risks and some BMPs that are often not 3
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