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Meridian Exploration Corp. - Summary Report, July 27, 1998

Summary Report, July 27, 1998

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION
50 Wolf Road
Albany, New York 12233-1550
(518) 457-3468

In the Matter of the Application of Meridian Exploration Corporation First and Market Building 100 First Avenue, Suite 1100 Pittsburgh, Pennsylvania 15222 Pursuant to Environmental Conservation Law ("ECL") and Title 6 of the Official Compilation of Codes, Rules and Regulations of the State of New York ("6 NYCRR") for well permits and the necessary variances from normal well spacing requirements to drill, equip and produce five natural gas wells located within the Auburn Prospect in the Towns of Aurelius, Fleming and Springport, Cayuga County, New York

DEC Project Number DMN 98-1

SUMMARY REPORT

- by -

/s/
Robert P. O'Connor
Administrative Law Judge
July 27, 1998

PROCEEDINGS

Application and Project Description

Meridian Exploration Corporation (the "Applicant" or "Meridian"), First & Market Building, 100 First Avenue, Suite 1100, Pittsburgh, Pennsylvania 15222, on January 21, 1998, applied to the New York State Department of Environmental Conservation (the "Department" or "DEC") applied for well permits to drill five infill wells An infill well is a well drilled on an irregular pattern disregarding normal target and spacing requirements. Infill wells are designed to increase natural gas recovery in areas where imposition of normal well spacing requirements would cause available natural gas resources to be unrecoverable. in the north-central portion of its leasehold acreage, designated as the Auburn Prospect ("Prospect"), in the Towns of Aurelius, Fleming and Springport, Cayuga County, New York. A variance from the normal well spacing requirements is necessary for the issuance of the requested permits. The proposed infill wells will be located within the West Auburn Field in existing production units which presently include one or more producing wells. Within the field, the applicant presently operates approximately 200 wells.

The Department Staff supports the proposed project and prepared draft permits for the proposal which were available for public review prior to and at the legislative hearing. Should the decision be made to grant the necessary well spacing variance and issue the permits to Meridian to infill drill, equip and produce these five natural gas wells, such approval would include detailed procedures for granting variances for well setback provisions in the Prospect area for any future proposed wells. These procedures were presented at the legislative hearing in the form of a stipulation signed by representatives of the Applicant and the Department Staff.

Pursuant to Environmental Conservation Law ("ECL") Article 8 (Environmental Quality Review) and Title 6 of the Official Compilation of Codes, Rules and Regulations of the State of New York ("6 NYCRR") Part 617 [State Environmental Quality Review ("SEQR")], as lead agency, the New York State Department of Environmental Conservation determined that the proposed action would not have a significant effect on the environment and issued a negative declaration on June 10, 1998. The Final Generic Environmental Impact Statement on the Oil, Gas and Solution Mining Regulatory Program, dated July 1992, provides a detailed description of well drilling and well spacing and establishes the basis for environmental reviews and approvals of Department actions subject to the Oil, Gas and Solution Mining Law.

The Department Staff referred the proposed project to the Department's Office of Hearings and Mediation Services on June 12, 1998, and on June 17, 1998, the case file was assigned to Administrative Law Judge ("ALJ") Robert P. O'Connor.

Legislative Public Hearing

A Notice of Public Hearing was published in the Auburn Citizen on June 28, 1998, and in the Department's Environmental Notice Bulletin on July 1, 1998.

On Wednesday, July 22, 1998, ALJ Robert P. O'Connor conducted a Legislative Public Statement Hearing at 2:00 P.M. in the Aurelius Fire Hall, RD#3, Half Acre Road, Auburn, New York to receive comments on Meridian's proposal. Six people, other than representatives of the Applicant and assigned Department Staff, attended the hearing. Although two persons had questions for the Applicant and Staff, no one presented statements for the record concerning the Applicant's proposals. The public comment period remained open until the close of business on July 22, 1998, the day of the hearing, for the receipt of additional written statements; none were received.

Appearances

The Applicant was represented by Roland P. Keddie, Vice President - Land and Gas Administration, Meridian Exploration Corporation, First and Market Building, 100 First Avenue, Suite 1100, Pittsburgh, Pennsylvania 15222; Ali Rdissi, District Engineer for Meridian, also at the firm's Pittsburgh address; Michael Hahn, New York Operations Manager for Meridian in their office at 1201 Clark Street, Auburn, New York 13021; Joseph H. Frantz, Jr., Eastern Division Manager, S.A. Holditch & Associates, Inc., Pittsburgh, Pennsylvania; and John P. Martin, Ph.D., Project Manager, Energy Resources, New York State Energy Research and Development Authority, Corporate Plaza West, 286 Washington Avenue Extension, Albany, New York 12203-6399.

The Department Staff was represented by Arlene J. Lotters, Esq., Mineral Resources Program Attorney, New York State Department of Environmental Conservation, Division of Legal Affairs, Room 638, 50 Wolf Road, Albany, New York 12233-1500; Bradley J. Field, Acting Director, Bureau of Oil and Gas Regulation in the Department's Division of Mineral Resources, Room 290, 50 Wolf Road, Albany, New York 12233-6500; Thomas E. Noll, Mineral Resources Specialist II, also in the Bureau of Oil and Gas Regulation at the Albany address; and Randall C. Nemecek, Regional Minerals Manager in the Department's Division of Mineral Resources, Region 8 Office, 6274 East Avon-Lima Road, Avon, New York 14414.

Issues Conference/Adjudicatory Hearing

Since no one filed for party status and no issues were raised for adjudication regarding the proposed five infill gas wells, the issues conference scheduled to be held immediately following the legislative public statement hearing was canceled. Additionally, the stipulation signed by the Applicant and the Department Staff resolved all outstanding issues regarding the procedures to be used for future requests by Meridian for well spacing variances in the Auburn Prospect; therefore, no further adjudicatory hearing was necessary.

The record of the proceeding was, therefore, closed on July 27, 1998, upon receipt of the stenographic transcript of the legislative hearing.

Disposition

I have carefully reviewed the draft well permits and the signed stipulation in accordance with the DEC Commissioner's Organization and Delegation Memorandum #94-13, Effect of Stipulations on Decision-Making in Permit and Enforcement Hearings. It is my determination that the draft well permits and the signed stipulation satisfactorily resolve all potential issues regarding the proposed five infill wells sought for this project, as well as the procedures to be used by Meridian and the Department in addressing well spacing variance requests for future potential infill wells in the Auburn Prospect. Accordingly, the project should be approved, the well spacing variances granted and the requested infill well permits issued.

Therefore, I am hereby remanding this matter to the Department Staff for completion of the processing of Meridian's pending applications, including preparation of an Order establishing spacing units for the Commissioner's signature pursuant to ECL 23-0501.

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