4-Attachment B Scope of Work.docx

Scope of Work – Solicitation #JH26-23 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 subsurface abandonment of the wells and disposal of related fluids. The well abandonment programs and requirements will be provided by Division of Oil, Gas and Mining personnel.

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 site surface restoration and decommissioning. 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 contractor 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 subsurface abandonment of oil and gas industry wells with no viable operator to State requirements outlined in State rule R649. Each well in the project will have a subsurface abandonment program provided by the Division of Oil, Gas and Mining. As each well is unique and current subsurface conditions indeterminate, it is understood that actual performance of abandonment activities may vary from the prescribed program, based on new data, with the approval of Division personnel. As a general Statement, the following steps will be required for most wells:

· Kill well

· Remove wellhead, nipple up BOP

· Pull and lay down rods and tubing

· Pick up tested and tallied workstring

· Run in hole with bit and scraper of appropriate size for well

· Pull out of hole

· Run in hole and set CIBP

· Pressure test casing, find holes if casing does not test

· Set balanced cement plug above CIBP

· Fill hole with appropriate volume of spacer fluid

· Run CBL if called for

· Set remaining plugs in wellbore as defined on the provided wellbore diagram, these plugs may be:

· Balanced plugs inside the liner or casing

· Inside/outside plugs using perforations and cast-iron cement retainers

· Required cement volumes will be provided on the wellbore diagram

· After surface cement plug is set, cut wellhead off a minimum of 3’ below surface grade and weld on identification plate per R649.

General expectations:

· Minimum 9.7 ppg spacer fluid with biocide and corrosion inhibitor shall be placed between cement plugs

· Minimum 15.8 ppg Class G cement shall be used for all cement plugs

· A fully tested and tallied work string shall be used for setting all cement plugs

· A backhoe shall be available to ensure remediation of minor site access issues, dig emergency returns pits, control any fluid spills on location, support the wellhead during cut-off operations, etc.

· All required downhole tools and equipment required to perform the abandonment procedure specified on the wellbore diagram shall be available on location at the start of the procedure

· All purchased equipment permanently installed in the wellbore shall be manufactured in the USA with steel or iron created in the USA (excepting cement and additives), inclusive of CIBP/CICR/etc. Procurement documents consistent with this requirement shall be provided to the Division. If materials meeting this requirement cannot be sourced, the Division shall be notified and the project will be placed on hold until a waiver can be granted by the Department of the Interior.

· At least one person on location shall be competent to calculate volumetrics for setting balanced plugs

· Rates, pressures and volumes during the setting of cement plugs shall be recorded and provided to the Division for record

· 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 or wellbore conditions are the financial responsibility of the State of Utah

· All fluids 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 invoice

· Appropriate hygiene facilities (port-a-pot or other) shall be provided for the personnel on location

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

The projected schedule for the current inventory of orphan wells is tentative:

2026: 28 wells in Duchesne and Carbon Counties, ~6 months 2027: 25 wells in Carbon, Grand, and San Juan Counties, ~ 6 months 2028: 13 wells in Kane, Millard, Cache, Duchesne, and Uintah counties, ~ 4 months

2029: TBD

2030: TBD

This schedule assumes a single rig program and may change because of the introduction of new inventory as it will be kept evergreen to ensure the most efficient overall plan. Timelines could be shortened if multiple rigs were available. As a general Statement, the current plan has prioritized the highest risk wells and wells near communities first. 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 or well control events

· Performance of safety or well control 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 well abandonment, 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

· Development and delivery of wellbore diagrams specifying abandonment requirements prior to each year’s project planning meetings

· 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 with 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 the well showing cement to surface in the casing and all annuli and a photograph of the welded on cover plate with the information required by R649. This requirement may be superseded by Division personnel on location that perform this task.

Division personnel will be responsible for entering all required plug and abandonment 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. Planning meetings would be scheduled in January of 2026 with the 2026 project schedule developed in conjunction with the participating surface and subsurface contractors. Well locations, historical weather patterns, contractor equipment and crew availability would 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.