3-Attachment B Scope of Work.docx

Scope of Work for JH26-48 Attachment :B

1. Introduction

The State of Utah has ~68 oil and gas wells with no viable operator and expects that inventory to increase over the next five years. The State of Utah is required to perform subsurface abandonment, equipment decommissioning, and site surface restoration for these wells. The scope of this contract will only include the decommissioning of equipment on location, disposal of related wastes, surface restoration to original grade, and reseeding of the locations.

The duration of this project is expected to be five years. The current inventory of ~68 wells should be completed by 2029 with new inventory extending the project into 2030, budget permitting. $5MM of federal grant money under the Bipartisan Infrastructure Law (BIL) will provide the initial funding. Compliance with the Davis Bacon Act will be required during the portion of the project that uses these funds. The federal grant will be used to pay for subsurface abandonment costs, site surface restoration, and equipment decommissioning. A separate contract is being set up for subsurface well abandonment work. Companies may respond to both contract offerings if they are positioned to do so.

The work is expected to take place 6-8 months/year with geographic scheduling by year, though alternative scheduling arrangements could be considered based on contractor and State resource availability once contract is finalized. Weather and other force majeure events may also impact the schedule.

1.1 Background

The State is applying for a Federal Grant of $5MM under the Bipartisan Infrastructure Law (BIL) to plug and abandon oil and gas industry wells, decommission associated surface equipment, and restore surface locations in accordance with the requirements of State rules outlined in R649. The grant requires that all awarded funds be committed 100% within 1 year of funding, and any funds not expended by 9/30/2030 be returned to the federal government. The State of Utah does not currently have $5MM in orphan well inventory but expects to exceed this amount with new inventory through 9/30/2030. To commit 100% of the funds within a year of receipt, the State will be entering master service agreements for the duration of the award period. This does not ensure any one company will receive $5MM in contract work, as the subsurface and surface work scopes will likely be awarded to different companies. It is also likely that the total scope of work completed during this 5-year period will exceed $5MM, as additional State funding becomes available to complete work during this period.

The current orphan well inventory is geographically distributed across most of the State, with the southernmost well near the Arizona border, and the northernmost near the Idaho border. Many of these wells are in remote areas, far from core industry facilities. Successful companies will need to demonstrate how they plan to manage these challenging logistics, from communication protocols to equipment mobilization, repair, and replacement plans. Each year’s abandonment schedule will be planned to take place during the best weather for the geographic area in that year’s scope. The awarded contractors will be expected to prioritize this project work above other opportunities for the duration of the contract.

1.2 Scope of Work

This project requires the decommissioning of all surface equipment, disposal of associated fluids, and site surface restoration for well locations with no viable operator to state requirements as outlined in State Rule R649. As a general Statement, the following steps will be required for most well locations:

· Preparation of site access for subsurface abandonment rig and associated equipment when requirements exceed what the rig company can accomplish with a backhoe

· Disposal of all wastes in facilities on location

· Removal and transport of all location facilities to an appropriate salvage or disposal location

· Removal of all lines to the edge of the location and transport of pipe to an appropriate salvage or disposal facility

· Grading of well pad to original contour per cut and fill diagrams from pad construction with following exceptions:

· Division provided guidance when no cut and fill diagrams are available

· Division provided guidance when not return to original grade not possible

· Landowner waiver of well pad restoration requirements

· Spreading of surface dirt on final contour where available

· Furrowing of final grade and spreading of seed mix per State Trust Lands guidance for Seed Mix for Small Acreage Reclamation

General expectations:

· Field supervision shall be proficient in the English language and competent to translate for crew members that are not proficient in the English language

· Industry standard safety protocols shall be adhered to at all times

· Loss of work time associated with safety standdowns, equipment failures, or personnel issues are the financial responsibility of the contractor

· Additional costs resulting from unforeseen site conditions are the financial responsibility of the State of Utah

· All wastes that are removed from location shall be disposed of at an appropriate disposal facility and invoices provided to the Division

· Salvage value of any equipment removed from the well site shall be credited to that well’s invoice with accompanying salvage invoices

· The Division may select sub-contractor vendors based on safety, cost or quality concerns with contractor’s selection

Surface decommissioning and restoration work will be scheduled for efficiency following the subsurface abandonment of the wells. The selected contract companies will be consulted on scheduling, and the schedule may change based on that feedback.

1.3 Requirements

Throughout the course of the project, the following will be required of the contractor:

· Participation in project planning sessions and kick-off meetings

· Daily project updates via phone with the Division project manager unless project manager is on location or has approved of another method

· Immediate project manager notification of any safety events

· Performance of safety or event investigation as required by the Division project manager and development of countermeasures to prevent future occurrences.

· Invoice submittal with attached daily reports to be submitted to the Division within one week of completion of each site restoration, or similar process as agreed upon between the contractor and Division project manager.

· Daily work reports detailing the specific activities that took place, when they took place, and what equipment was required to perform those activities to be submitted with invoices, or similar, to be agreed upon between Division project manager and contractor

Throughout the course of the project, the following will be required of the Utah Division of Oil, Gas and Mining:

· Scheduling of project planning sessions and kick-off meetings

· Delivery of original well pad cut and fill diagrams when available

· On-site consultation sessions with the contractor when cut and fill diagrams not available

· Creation and filing of sundries for permanent abandonment of wells with Division wellbore diagram attached

· Review and approval or denial of submitted invoices within one week of submittal, or similar, to be agreed upon between the Division project manager and contractor

· Creation and filing subsequent reports for permanent abandonment of wells with daily reports attached

· Payment of invoices within two weeks of approval, or similar, to be agreed upon between the Division project manager and contractor

· Scheduling surface construction equipment to ensure location access if scope of work exceeds what a backhoe can perform

2. Compliance Contractor responses to the Request for Qualifications shall set the minimum expectations for contractor performance in the field. Additionally, all expectations set forth in this Scope of Work document shall be met. Failure to meet any of these expectations may result in a 10-day remediation period. If at the end of that 10-day period, expectations are still not being met, the Division Project Manager may initiate a cessation of the contract through the State Division of Purchasing. More than two 10-day remediation periods may also result in a cessation of the contract.

3. Project Deliverables

In addition to the specifics already provided above, the contractor shall provide the Division a photograph of each well pad after surface restoration is completed. This requirement may be superseded by Division personnel on location that perform this task.

Division personnel will be responsible for entering all required site restoration records into State data systems and updating the well status to reflect the new well State. This will ensure transparency of project progress to all interested parties.

4. Project Timeline

As referenced in 1.2 Scope of Work, the project is expected to start in 2026, though surface restoration work may not be initiated the first year. Planning meetings will be scheduled in January of each project year with that year’s schedule developed in conjunction with the participating surface and subsurface contractors. Well locations, historical weather patterns, contractor equipment and crew availability will all be considerations in setting that year’s schedule. As there is always uncertainty in timelines for well-plugging due to unforeseen downhole conditions, there will not be set deadlines for deliverables. However, the expectation will be that contractors resource the project sufficiently to ensure continuous progress throughout the duration of the project.

5. Project Budget

As previously referenced, there will initially be $5MM of federal funds available to perform subsurface abandonment, site restoration, and equipment decommissioning activities. Additional funds should become available through State sources during the course of the project. Additional wells are expected to be added to the project as they become orphan wells increasing expected project cost. It is also possible that some wells currently identified as in-scope may drop out of scope if a responsible operator is identified to assume the associated leases and adopt the wells.