api well number: 43027500020000

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API Well Number: 43027500020000

STATE OF UTAH DrPARTMfNT or NA lURAI RESOURCrs

DIVISION OF 011 , GAS AND MINING

3, FIELD 011 WILDCAT UNDf~~~NArE'D

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NGLsD

t ,_,+.1vl~;

AIlE ATTACHED IN ACCORDANCE WITH THE UTAH OIL AND GAS CONSERVATION GENERAL RULES

BV UCENSEC SURVEVOR OR ENGINEER ~ COMPUTE OAILUNG PLAN

~ AFFIDAVIT OF STATUS OF SUIlFACE OWNER AGREEMENT OF FEE SURFACE) o FOIlM S. IF OPERATOR IS OTHER THAN THE LEASE O_ER

D DIRECTIONAL SURVEY PLAN ~F DIRECTIONALLY OR HORIZONTALLY DRILLED) ~ TOPOGRAPHCAL MAP

Received: February 03, 2012

Exhibit 2 - Page 43

Exhibit 2 - 4

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MAGNUM NGUD

Application for Permit to Dr~ Magnum Cavern Well 5 '" ~

Drilling Plan It. "

10/31/2011

Prepared by M_gnum 3165 E. Milirock Dr., Suite 330 Holladay, Utah 84121 Tel 801 993 7001 Fax 801 993 7025 www.westernenergyhub.com

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Received: October 31, 2011

Exhibit 2 - Page 45

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NGUD


Table of Contents Section 1 Drilling/Well Construction Plan ....................................................... 1-1

1.1 Plan Summary .......................................................................................... I-I

1.2 16-Inch Drilling/Well Construction Plan ................................................. 1-2

1.3 Welding Protocol ..................................................................................... 1-4

1.4 Specifications for Cementing Services and Materials ........... ~ ...... _ ...... 1-5

1.5 Well c.onditioning...................................................................... . .... .

Section 2 ~.;:.."":;~~~;;,;:;;:~~;.;.;,;;,;,;;;:;.:~ ••• :.:~: 2.1 General Well DesIgn......... .... .......... ........ .~l~.~~:~·.~ ..... 2-1

2.2 Casing Design Calculations ................... . ..: ... ~ ...................... 2-3

2.2.2 IntermedIate Stnng Cas .. . ........................................ 2-4

2.2.3 First Salt Strin~cas. ...... . ................................................. 2-5

2.2.4 Production St . asi..... ..... . ................................................ 2-6

2.2.5 Outer s~. . u .................................................... 2-8

2.2.6 Inner S of g ing ............................................. 2-9

2.3 sources ...... ~~ .......................................................................... 2-9 - . :':'"-~~ ...... ::::::::.::::::~::::::.::::::.::.::::::::::::::::::::::.::::~.~ :::~1:.~:1~~ ~.~ .. ~.e.~~=.~=n~ ~~~:~:::::::::: ':.::::::: :: :~~

Section 4~ and Procedures ....................................................... 4-1

4.1 h Injection Well Operating Plan and Procedures .......................... 4-1

Section 5 PI 9 and ~an.donlnent Pla~ ..................................................... 5-1 r ~ 16-lnch InjectIon Well Pluggmg and Abandonment Plan ....................... 5-1

~~ 16-Inch Injection Well Proposed Casing and C..ernenting Program ................................. 1-7

Table 2-1 Swnmary of Casings for Magnum Gas Storage Well ...................................................... 2-2

Table 2-2 Summary of Calculated Factors of Safety ........................................................... 2-2

Appendices Appendix A Exhibits ._ ........................................................................................................................ A-I

10/31/2011 Ta ble of Contents i


Exhibit 2 - Page 46

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Section 1

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NGLsO

Drilling/Well Construction Plan

1.1 Plan Summary

1. The estimated tops q( important geologie markers:

Important geologic markers are shown in Exhibit A: Map CasinC Deslp. General geologic markers include clay-conti . the shallow unconfined aquifer, the shallow artesian basement artesian aquifer. 'lbe main marker alluvial aquifers and the salt structure which begins

2. The estimated depths at which the top and mineral-bearing formations are expected to for protecting such resources:

nn,ClOare'a water. oil, gas, or other the owners or operator's plans

an approximate depth of 60 feet. Water The shallow water table has been continues to be encountered until Significant decreases in water

which in and of itself is unsaturated. the salt transition zone starting at about 3,000

feet.

Protection of the will be ensured through the casing and cementing as provided on Exhibit A: Macnum Cavern Well 5

Design report, and the Well Drilling/Construction Plan.

ibit A: Mapum Cavern WeD 5 Wellhead Casine Desip. the "16-Inch ell Construction Plan" and the "Conceptual l6-Inch Well Casing Program" for the

descriptions ofthe drilling equipment and casing program.

4. Any supplementary information more completely describing the drilling equipment and casing program as shown on this form:

See the "16-Inch Drilling/Well Construction Plan" and the "Conceptual 16-Inch Well Casing Program" for the descriptions of the drilling equipment and casing program.

10/31/2011 Drilling/Well Construction Plan 1-1

Received: October 31,2011

Exhibit 2 - Page 47

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MAGNUM


Application for Permit II) Drill Magnum Cavern Well 5

5. The type and characteristics of the proposed circulating medium or mediums to be employed in drilling, the quantities and types of mud and weighting material to be maintained. and the monitoring eqUipment to be used on the mud system:

The Fluids Program will be completed by the drilling contractor's mud engineer prior to well drilling. The Reserve Pit will be lined with a 20-mil HDPE liner. See Exhibit B: Magnum Ca'Vem WeD S WeD Pad and Exhibit C: Magnum Canm WellS WeD Pad Cross Sections for details of the Reserve Pit.

6. The anticipated type and amount of testing, logging, and coring:

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2.

3.

or operator deSires to point out

)nll ••• ct'lon Pia n

to drill the Magnum 16-inch injection wells. Lenl.

to approximately 150 feet or refusal.

to ±780 feet and log.

up to 34-inch with hole openers of increasing size.

IIIIjjjjiFnt 750 feet of 30-inch O.D., O.75-inch wall thickness, API 5L Grade B !I'I'Ii'~Ii~',,", to be placed every other casing section.

the cement to set a minimum of 18 hours. Pressure test the casing in accordance rules.

7. After the cement sets, cut off the 30-inch casing and weld on a 30-inch x 20-inch reducer and 21-1I4-inch flange. Nipple-up a 20-inch annular BOP.

8. Drill a 17 -112-inch hole to slightly above top of salt structure estimated to be ± 3,250 feet. Lost circulation may occur over this interval; control as necessary by the use of lost circulation material, cement plugs or drill without returns.

10/31/2011 Drilling!Weli Construction Plan 1-2

NGLaD


Exhibit 2 - Page 48

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Application for Permit to Drill Magnum cavern Well 5

9. Run gamma ray, SP induction and resistivity logs as specified.

10. Open the 17 -1I2-inch hole to 28-inch with hole openers of increasing size.

II. Run X-Y caliperlog.

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12. Run and cement ± 2,500 feet of 24-inch 0.0., I-inch waIl thickness, and 700 feet of 24-inch 0.0. 1.25-inch wall thickness API 5L X-52 or equivalent threaded and coupled pipe to top of salt structure. Use the stab-in cementing method. Centralizen> to be placed every other casing section.

13. After the cement sets, pressure test the casing in accordance with State rule~ 14. Cut off the 24-inch casing and weld on a 24-inch x 20-inch red~ ch

flange. Nipple up a 20-inch annular BOP.

15. Switch to salt saturated mud after 24-inch casing is set at lO~al clUTe or at the depth where salt structure is encountered during drillin~.

16. Drill a I7-1!2-inch hole to ± 3,400 feet.

17. Run _ma "'y. SP ;nduction. noutron ",d ~ dfi'"

~~ g;; ,;;:~::~~t~f::~h ~h w~1 :::, :_~~::~ and 1,550 feet of 20-inch 0.0. - I thickness, X-56. T&C threaded and coupled line pipe. Use the st n cern 'ng ethod. Centralizers to be placed every

other casing section. S 21. Allow the cement to m 2 hours. Pressure test the casing in accordance

with Slate rules.

BOP.

23. Drill a 17- ±3,500 feet.

24. Rune' induction, neutron and bulk density logs as specified.

25. Op the 17- -inch hole up to 22-inch using hole openers and under-reamers.

6i erlog.

7. R d cement 2,000 feet of 16-inch O.D. 0.566-inch and 1,450 feet of 16-inch O.D. 0.7 nch wall thickness, API N-80 BT&C casing. Use the stab-in cementing method.

aIizers to be placed every other casing section.

28. Allow the cement to set a minimum of 72 hours. Pressure test the casing in accordance with State rules.

29. Drill out plug and ten feet of salt formation.

30. Pressure test casing shoe in accordance with the State rules and regulations.

31. Drill a 12-1I4-inch hole to +4,800 feet.



Exhibit 2 - Page 49



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MAGNUM NGlsD

32. Log cuttings and check for loss of drilling fluid indicating a porous fonnation is encountered. If so, perfonn a tightness test over this interval.

33. Run gamma ray. neutron and bulk density logs as specified.

34. If logs indicate a porous zone in the salt section, perfonn tightness test over the zone.

35. Under ream the 12-1I4-inch hole to 17-1I2-inch down to a depth of 4,700 feet.

36. Run X-Y caliper log.

37. Run casing inspection and cement bond logs in 16-inch casing from shoe

38. Run in approx. 4,250 feet of 13-3/8-inch, 72lb/ft N-80. BT&C

39. Install and test the upper wellhead assembly (see Exhibit D: Injection Wellhead Design).

40. Run in approx. 4,700 feet of8-5/8-inch, 36lb/ft, K-55,

42. Rig down and move out rig from location.

43. Clean up location.

1.3 Welding Protocol

I. Lift ring welding and 111· lspc~ctlon.". Welding Society) Dl.l on the welds using IIJtr'''~rmi(

interpreted by a NDT CP-189. Standard

accordance with AWS (American Perfonn nondestructive testing (NDT)

pment as specified in AWS DI.l and Technician who is qualified under ASNT

Certification for Nondestructive Testing ASNT Standard Topical Outlines for Qualification

2006 Edition ..

2. be perfonned in accordance with API Standard 1104 Facilities. Pipe base material's carbon equivalency will

composition as written in the Material Test Report (MTR) the pipe is purchased The welding contractor will provide a

Specification (WPS) that matches the base material and Procedure jaal.r.l,enl1l11 (PQR) and welders who are qualified to the WPS with Welders

Report (WQR). lbe welding contractor will provide the WQR for each !''''''' ..... welder prior to begirming production welding. The field supervisor will verify

WQR and welder's photo identification match. Perfonn nondestructive testing on the butt welds using radiography as specified in API Standard 1104 and

interpreted by a NDT Level II or III Certified Technician who is qualified under ASNT CP·189. Standard for Qualification and Certification for Nondestructive Testing Personnel, 2006 Edition and CP-105, ASNT Standard Topical Outlines for Qualification of Nondestructive Testing Personnel, 2006 Edition. Each completed girth, butt weld shall be radiograph tested to API Standard 1104 qualifications. The radiograph methods and qualifications shall comply with API Standard 1104 "Certification of



Exhibit 2 - Page 50

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Nondestructive Testing Personnel" and "Acceptance Methods for Nondestructive Testing Personnel".

3. Casing rig welding shall be perfonned in accordance with API Standard 1104 Welding of Pipelines and Related Facilities. Pipe base material's carbon equivalency will be computed from the material composition as written in the Material Test Report (MTR) that is provided when the pipe is purchased. The welding contractor will provide a Welding Procedure Specification (WPS) that matches the base material and Procedure Qualification Report (PQR) and welders who are qualified to the Welders

1.4

Qualification Report (WQR). The welding contractor will provide the potential welder prior to beginning production welding. The field that the WQR and welder's photo identification match. Perfonn (NDn on the butt welds using radiography as specified interpreted by a NDT Level II or III Certified Technician CP-189, Standard for Qualification and Personnel, 2006 Edition and CP-105, ASNT Stslndalrd

of Nondestructive Testing Personnel, 2006 shall be nondestructively tested to API ''''''''n.!lTn and qualifications shall comply with API Testing Personnel" and "Acceptance

Testing Qualification

girth, butt weld The test methods

;1-WlIl,;llU(;'1I of Nondestructive Testing Personnel".

This specification covers the equipment and services for storage from a land rig. Cement bond logs

well casings proposed for the gas storage larger casings. A review of cement bonding

has confinned that there are no test methods

wells located near Delta, UT. The cannot be used with reliability products wel1s and therefore capabilities with PB currently available to verified at the time annulus to the

Therefore, cementing operations will be visually via the observance of cement rising within the outer well

o -Approx. 150 feet (Driven to refusal)

Casing: 0 - Approx. 750 feet (Approx. 34-inch Open Hole)

.~Iedlate Casing: 0 3,200 feet (Approx. 28-inch Open Hole)

Next to Last Casing: 0 - 3,350 feet (Approx. 24-inch Open Hole)

"~:h Last Cemented Casing: 0 - 3,450 feet (Approx. 22-inch Open Hole)

• Top of Salt: Approx. 3,250 feet

1. Cement specifications for the 30-inch Surface casing. Cement job will be pumped through a stabbed-in 5-inch DP.

a. Cement to surface: Class A (Standard) + Defoamer (if deemed necessary)



NGLsD

Exhibit 2 - Page 51

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Application for Permit to Drill Magnum Cavern Well 5

b. Water Ratio 5.2 gals/sk c. Slurry Weight 15.6lbs/gal. d. Slurry Volume 1.18 cu. ft.lsack e. Excess 50010 Open Hole Volume (4 Ann Caliper Available)

2. Cement specifications for the 24-inch Intermediate. Cement job wiJl be pumped through a stabbed-in 5-inch DP.

a. Cement to surface: Class A (Standard) + Defoamer (if deemed ne~. b. Water Ratio 5.2 gals/sk

d. Slurry Volume 1.18 cu. ft.lsack c. Slurry Weight 15.6lbs/gal. ~

e. Excess 500/0 Open Hole Volume (4 Ann Caliper Avail~ ,

3. Cement specifications for the 20-inch Next to Last C~il..em~ will be pumped

through a stabbed-in 5-inch DP. ~ a. Cement to surface: Class G (Premium 3 Salt Defoamer (if deemed

necessary).

b. Water Ratio 5.0 gals/sk ~ c. Slurry Weight 16.3lbslgal. d. Slurry Volume 1.24 cu. e. aliper Available)

4. Casing. Cement job will be pumped through a

a. (Premium) + 37.2% Salt -+ Defoamer (if deemed

b. lbs/ga\.

.24 cu. ft.lsack Hole Volume (4 Ann Caliper Available)

... ..,.aitioning

cOlll'lllencil1lg drilling operations (spudding the wen), Magnum will provide detailed conditioning the hole prior to cementing casing. The pre-flush procedure will

the wellbore is properly conditioned for cementing operations in accordance with recommendations from the cementing contractor_

The well is conditioned to circulate the drilling fluids, sweep cuttings out of the hole, obtain consistent fluid properties, and adjust the fluid viscosity and density in an attempt to prevent cement channeling through the fluid. Detailed procedures for this process have nol been written at this time as it is a typical task during drilling, but when the drilling fluids contractor is hired his mud engineer win be tasked to write a program for the fluids.


NGLsD


Exhibit 2 - Page 52

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Application ror Permit to Drill Magnum cavern Well 5

1.6 Reporting

During Drilling the casing cement jobs shall be documented by an affidavit from the cementing company showing the amount and type of cementing materials and the method of placement.

'Three samples of the cement slurry for each of the intermediate and salt casings shaH be collected in suitable sized and shaped containers so that the hardened cement can be tested for compressive strength,

Table 1-1: 16-lnch Injection Well Proposed Casing and Cementl

1.18cu N/A ftlsk

10/31/2011 orilling/Well Construction Plan 1-7


Exhibit 2 - Page 53

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Section 2

Conceptual 16-lnch Injection Well Casing Program

2.1 General Well Design

The 16-inch injection wells for the Magnum salt storage caverns will be drilled more than a thousand feet into the salt. The wells will have a water DfC)te<:tII casing and two casing strings (intermediate and production section of the salt. The casing string will be run in a wellbore of casing and cemented into place. The drilling and cementing nr(]'PI'~11llll>

The surface casing is sized to allow for a second contingent problem zone is encountered during drilling that requires a general is sized to allow product injection into and 2,500 gpm with a velocity of less than 20 feet per tubing strings for mining that will maintain fluid acceptable range for mining operations.

MAGNUM NGUD

The various casing strings are sized to that might act upon the casing. The allow a safety factor of about 1.0

collapse, burst and tensile forces specify casing sizes and grades that and 1.6 for tensile forces based on

published strength data.

are greatest during cementing of the casing string when the inside of the c s ed drilling mud and the annulus is filled with heavier cement slurry. lnpO ns, the collapse forces resulting from the weight difference between cement an ril e low. At 4,000 feet this can amount to about 1,000 psi. However, in keep' Jy accepted practices (such as ERCB Directive 10) the collapse pressures are~ I assumption that the annulus is filled with cement and the inside of the casi a

In the cas the er mining tubing string, the collapse pressures resuh from the use of ni a material. The nitrogen roof blanket pressures will be greatest at the start of

ng wh e nitrogen roof blanket is at its deepest location. At the worst case (for collapse c tions e largest pressures occur during reverse mining when the cavern is shut-in. In this ins er is in the outer tubing string, and the brine in the cavern is unsaturated and continues to dissolve salt. The continued dissolution increases space in the cavern so that the wellhead fluid pressures fall to a vacuum. If at the same time the borehole has closed around the hanging tubing, the nitrogen pressure will be locked in at its normal operating pressure. The full nitrogen pressure of about 2,000 psi will be acting against the 13-3/8-inch tubing with a vacuum on the inside. The tubing has been sized to withstand this type of worst-case event to mitigate the low potential for occurrence.

10/31/2011 Conceptual 16-Inch Injection Well Casing Program 2-1

Received: October 31 r 2011

Exhibit 2 - Page 54

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Burst forces again are generally greatest during cementing operations but are normally very low during normal operations. The worst case occurs if the casing has been run in the well, the float shoe/collar gets stuck shut and a gas blowout occurs at the bottom of the hole. In this event the full hydrostatic pressure of the drilling mud in the casing would be acting against a low-pressure gas-tilled annulus. The pressure ofthe annulus was conservatively assumed to be "0" psi.

In the case of the final cemented casing. significant burst forces occur during mining operations due to the use of nitrogen as the blanket material. After mining is completed. lesser pressures will act inside the final cemented casing as a result of normal liquid storage

The casing program designed for the Magnum 16-inch injection wells are 2-1. In the event that these casing and pipe sizes are not available. the increased wall thickness should be chosen. Calculations for forces are shown in Appendix A. The safety factors for the various Table 2-2.


Received: October 31 r 2011

NGLsD

Exhibit 2 - Page 55



2.2 Casing Design Calculations

2.2.1 Conductor pipe 36-inch. Wall thickness I-inch, Grade B. Plain end, welded pipe from 0 feet to approximately ISO feet. Pipe is to be driven by pile driver to refusal.

2,2,1.1 Surface casing

2,2.1.2 Collapse calculations Assume that the bottom hole depth of the 30-inch surface casing is at with a welded float shoe located at the bottom of the casing string. . for collapse pressure would be a fuJI column of cement in the gas inside the 30-inch surface casing.

• (7S0 feet) (0.OS2 psi/ft) (lS.6Ib/gai cement) = 608 exterior of the 30-inch casing. at 7S0 feet.

• 0 psi hydrostatic pressure exerted on the .

• Differential pressure, (collapse nr.·,,,,,.r,,,' inch casing equals: 608 psi - 0 psi

The 30-inch surface casing has a calculations, the proposed 30-inch any outside pressure that will be

According to the above differential used has a collapse rating greater than

ex1erior of the casing.

2.2.1.3 "-"J-II'''''' surface casing is at ±7S0 feet from surface,

the bottom of the casing string. The 30-inch surface casing drilling mud_ The worst case for burst is if the float shoe

occurs at the shoe. In this case there would be a column full column of drilling mud inside the casing.

(9_5 Ib/gal drilling mud) = 371 psi hydrostatic pressure terior of the 30-inch casing, at 750 feet.

essure, (burst pressure) inside pressure verses annulus pressure on the of the 30-inch casing equals 371 psi - 0 psi 371 psi.

API Bulletin 51., the 30-inch surface casing has a minimum test pressure of 2,100 psi. A iding to the above differential calculations, the proposed 30-inch surface casing to be used has a minimum test pressure greater than any inside pressure that will be exerted against the interior of the casing.

2.2.1.4 Tensile cakulations 'The proposed 30-inch surface casing weighs 234.29 lbift and will be set at approximately 750 feet, for a total string weight of 175,717.5 Ibs. The 30-inch, welded surface casing proposed



Exhibit 2 - Page 56

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has a tensile rating of 2,730,000 Ibs, which is greater than tensile weight exerted hy the weight of the casing.

2.2.2 Intermediate String Casing 24-inch, 245.64 Ib/ft., Wall Thickness 1.0-inch, X-52 Grade, Plain end fitted with threaded connections from 0 feet to 2,500 feet. 24-inch, 303.71 Iblft., WaH Thickness 1.25-inch, X-52 Grade, Plain end fitted with threaded connections from 2,500 feet to 3,200 feet.

2.2.2.1 Collapse cakuiations ~ Assume that the hottom hole depth of the 24-inch 234.29 lb/fi casing (pipe) at ±3, eet 1

surface, with a welded float shoe located at the hottom of the casing s . e ase scenario for collapse pressure would be a full column of cement in the casr s, and an empty column inside the 24-inch surface casing. ~

exerted on the exterior of the 24-inch casing, at 2,500 . • (2,500 feet) (0.052 psi/fi/lh/gal) (15.6 lh/gal cement~~ 28 atic pressure

- (3,200 feet) (0.052 psi/ft/lb/gal) (IS.6Ib/gal cem = 2,5 i hydrostatic pressure exerted on the ell.1erior of the 24-inch casin et.

• Differential pressure, (collapse pressure) inch casing at 2,500 feet equals: 2,028 Il

erses pressure inside the 24-8 psi.

• Differential pressure, (collapse pressur inch casing at 3,200 feet equals:

ssure verses pressure inside the 24-2,5% psi.

·n casing at 2,500 feet has a collapse rating 3,130 psi. According to the above differential

the 24-inch surface casing is at ±3,200 feet from surface, the bottom of the casing string. The 24-inch surface ca~ing

on drilling mud. The actual cement process will be down drill the float shoe at 3,200 feet so that the casing is not filled with

for burst is if the float shoe becomes stuck closed and a gas blowout case there would be a column of gas outside the outside of the casing

drilling mud inside the casing.

feet) (0.052 psi/ftllh/gal) (10.2 Ih/gal drilling mud) 1,326 psi hydrostatic exerted on the interior of the 24-inch casing, at 2,500 feet.

- (3,200 feet) (0.052 psi/ft/lh/gal) (10.2 Jb/gal driHing mud) ~ 1,697 psi hydrostatic pressure exerted on the interior of the 24-inch casing, at 3,200 feet.

• Differential pressure, (burst pressure) inside pressure verses annulus pressure on the outside of the 24-inch casing at 2,500 feet equals: 1,326 psi - 0 psi 1,326 psi.

10/31/2011 Conceptual 16-Inch Injection Well CaSing Program 2,4


Exhibit 2 - Page 57

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Application for Permit to Drill MlIgnum OIvern Well 5

• Differential pressure, (burst pressure) inside pressure verses annulus pressure on the outside of the 24-inch casing at 3,200 feet equals: 1,803 psi - 0 psi - 1,803 psi.

According to API Bulletin 5L, the I-inch 24-inch outer string casing has a minimum test pressure of 3,000 psi and the 1.25-inch outer string has a minimum test pressure of 3,902. According to the above differential calculations, the proposed 24-inch surface casing to be used has a minimum test pressure greater than any inside pressure that will be exerted against the interior of the casing.

2.2.2.3 Tensile Calculations ~ The proposed 24-inch outer string casing weighs 245.64 lb/ft or 303'71~b/fj and t approximately 3,200 feet, for a total string weight of 826,697Ibs. The pr inc ded intermediate casing has a tensile rating of 3.757,000 Ibs, which is great an . weight exerted by the weight of the casing. "- ,

2.2.3 First Salt String Casjng II. "'

20-lnch.. 133 lb/ft, Wall Thickness O.635-inch, N-80 Grade nnechon, Casing from 0 to 1,800 feet. 20-Inch.. 190.96 lb/ft, Wall Thickness 0.9 de, Threaded pipe, from 1,800 to 3,350 feet.

- At 3,350 feet, the differential pressure equals: 2,839 psi - 0 psi 2,839 psi. The 20-inch 190.96 Ib/fi pipe has a collapse rating of 3.080 psi. According to the above differential calculations, the proposed 20-inch first salt string casing to be used has a collapse rating greater than any outside pressure that will be exerted against the exterior of the casing.


NGLsD


Exhibit 2 - Page 58

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"GUD API Well Number: 43027500020000

Application for Permit to 0 rill Magnum Cavern Well 5

2.2.3.2 Burst calculations Assume that the bottom hole depth of the 20-inch surface casing is at ±3,350 feet from surface, with a welded float shoe located at the bottom of the casing string. The 20-inch surface casing will be loaded with 10.2 Ib per gallon drilling mud. The actual cement process will be down drill pipe, which will be stung into the float shoe at 3,350 feet so the casing will not be filled with cement. The worst case for burst considerations would be if there was a gas blowout in the salt after the casing was set but before it was cemented. This could potentially leave a column of gas along the outside of the casing and a full column of drilling mud inside the casing.

• (1.800 feet) (0.052 psi/ft./lh/gal) (10.2 lh/gal drilling mud) = 955 psi hydro

•

exerted on the interior of the 20-inch casing, at 1800 feet .

casing.

ulus pressure on the psi.

00 feet and 3,500 psi for the s, the proposed 20-inch casing to essure that will be exerted against

O.566-inch, buttress connection. casing from 0 to 2,000 wall thickness 0.715-inch, buttress connection, casing from 2,000

~~r1a,.,se calculations hole depth of the 16-inch production string of casing is at ±3,450 feet

swta(.1w11th a welded float shoe located at the bottom of the casing string. This string will connections. The worst-case scenario for coJlapse pressure would be a full column

the casing/hole annulus, and gas (from a blowout) inside the 16-inch sutface casing.

• (2,000 feet) (0.052 psi/ft/lb/gal) (16,3 Ibigal cement) = 1,695 psi hydrostatic pressure exerted on the exterior of the 16-inch casing, at 2,000 feet.

- (3,450 feet) (0.052 psi/ft/lb/gal) (16.3Ib/gal cement) = 2,924 psi hydrostatic pressure exerted on the ex1erior ofthe 16-inch casing, at 3,450 feet.



Exhibit 2 - Page 59

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• Differential pressure, collapse pressure), annulus pressure verses pressure inside the 16-inch casing equals: 1,695 psi - 0 psi ~ 1,695 psi. According to Lone Star Steel, the 16-inch N-80 95 lb/ft casing has a collapse rating of2,180 psi.

- Differential pressure, collapse pressure), annulus pressure verses pressure inside the 16-inch casing equals: 2,924 psi - 0 psi ~ 2,924 psi. According to Lonestar, the 16-inch N-80, 118-lb/ft casing has a collapse rating of 3,680 psi.

Burst calculations Assume that the bottom hole depth of the 16-inch surface casing is with a welded float shoe located at the bottom of the casing strin will be loaded with 10.2 lb per gallon drilling mud. The actual c pipe, which will be stung into the float shoe at 3,450 feet so filled with cement The worst case for burst consideratio

•

•

about 2,028 psi I (e" (0.00003347· 0.58 • depth) '" 1,900 psi. The wellhead gas pressure is below the rated burst pressure of 4,950 psi of the 16-inch casing at the surface.

2.2.4.3 Tensile calculations The 16-inch surface casing will be set at approximately 3,450 feet, for a total string weight of 361,100 lbs. Lone Star Steel provides a tensile strength for buttress end casing of 1,326,000 pounds; which greatly exceeds the above-calculated weight of the 16-inch casing.


NGuO


Exhibit 2 - Page 60

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•

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•

::::=::::::::: ~ -:: =:::;:::: ~ --:::::::--



2.2.5 Outer String of Mining Tybing

MAGNUM NGLsD

13-3i8-inch, 72 Ib/ft, wall thickness 0.514-inch, N-80 grade, buttress connection, casing from 0 to 4,250 feet.

2.2.5.1 Collapse calculations Assume that the nitrogen roof blanket will be at a depth of ±3,900 feet from surface, the maximum differential pressure exerted against the 13-3/8-inch casing will be at the surface.

The worst-case scenario for collapse pressure would be a column of freshw (during the rust steps of mining) that goes on a vacuum when the well is shut-in an the cavern continues to dissolve salt; and nitrogen is in the annulus.

• (3,900 feet) (0.052 psi/ft/lb/gal) (10.0 Ib/gal brine) =

exerted on the exterior of the 13-3/8-inch casing, at 3,900 the outside of the string and the brine pressure in the

- Pressure outside the 13-3/8-inch at the surface is (1.000316 A blanket level depth) = 2,028 ! (1

• (3,900 feet) (0.052 psi/ft/lb/gal) (10.0 exerted on the interior of the 13-3/8-inch

• Differential pressure, collapse 13-3/8-inch casing at the According to API Bulletin 2,670 psi. According to the casing to be used has a against the e}.1erior

verses pressure inside the

2.2.5.2

surface, with an 10.0 Ib per would be if the the 16-inch

(-100 psi) (vacuum) = 2,002 psi. casing has a collapse rating of

calculations, the proposed 13-3/8-inch than the pressure that will be exerted

of 13-3/8-inch surface casing is at ±4,250 feet from string. The 13-3/8-inch surface casing will be loaded with

mining steps. The worst case for burst considerations off and the bottom of the 13-3/8-inch tubing was salted into normal operations. This could potentially leave a colwnn of

outside of the tubing and high-pressure brine on the inside of the

"''''r/,,,h,ti,, pressure exerted on the exterior of the 13-3!8-inch casing, at the 16-

pressure (Value unknown but assumed) 1,200 psi exerted on the 13-3/8-inch casing.

• Fluid pressure at 3,900 feet of (3,900 feet) (0.052 psi/ftllb/gal) (10.0 Ib/gal brine) 2,028 psi exerted on the interior of the 13-3/8-inch casing at 3,900 feet.

• Ditl'erential pressure (burst pressure), inside pressure verses annulus pressure on the outside of the 13-3/8-inch casing equals: 2,028 psi + 1,200 psi (assumed pump pressure)

o psi = 3,228 psi. According to API Bulletin 5C2, the 13-3/8-inch casing has a

10131/2011 Conceptual 16-Inch Injection Well Casing Program 2-8


Exhibit 2 - Page 61

:::: ~=;: :::=~=~

~:::::::::.-

MAGNUM



minimum test pressure of 5,380 psi. According to the above differential calculations, the proposed 13-3/8-inch surface casing to be used has a minimum test pressure greater than any inside pressure that will be exerted against the interior of the casing.

2.2.5.3 Tensile Strength At this time, the depth for the outer string tubing is 72 Ib/ft casing to 4,250 feet. Based on these depths, the maximum string weight will be 306,000 Ibs. This is well below the maximum tensile strength at the surface of 1,693,000 100.

2.2.6 Inner String of Mining Tubing ~

4.700 feet. 8-5/8-inch, 36 Ib/ft, wall thickness O.4-inch. K-55 Grade. buttress connect~' casin to

2.2.6.1 Burst and Collapse Cakulations N The 8-5/8-inch inner wash string has the similar circumstance 8 h outer string tubing, in that the tubing will have equal weight of fluids on utside as well as the inside, internal and external pressures will be equal. there will not be any differential pressures exerted externally or internally, calculations are not necessary. The 8-5/8-inch tubing will not have nih''''''-''''

2.2.6.2 Tensile Strength At this time, the deepest depth for the approximately 4,700 feet. Based on this This is well below the maximum

36 Ib/ft) is estimated at string weight will be 169,200 Ibs.

2.3 Sources

OCTO Products. 23rd

ItlltlclltJofn for Line Pipe, API Specification 5L

on Performance Properties of Casing. Tubing and Drill

Technical Report on Equations and Calculations for Casing, as Casing or Tubing; and Performance Properties Tables for Casing

Report 5C3

"'-'-I1!:,~rvatj'ln Board, 2008. Minimum Casing Design Requirements, Directive o

10/31/2011 Concept1lal 16-Inch Injection Well Casing Program 2-9

NGUO


Exhibit 2 - Page 62

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•

•

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•

::: ;::::::::::3 ~ -~=::

MAGNUM


Section 3

Mechanical Integrity Testing

Several testing methods will be employed to demonstrate mechanical integrity ofthe well/cavern system. These methods vary depending upon the stage of development of the well or cavern.

3.1 During Drilling

After drilling out the ccment plug and drilling about 10 hydraulic pressure test of casing seat and cement in surface test pressure will be 80% of the lithostatic the hydrostatic pressure of the test fluid, or abo will be considered good if the pressure loss is

3.2

ow the casing shoe, a tion casing will be run. The

ed at the casing seat minus test will last 60 minutes. The test

y test technique essentially involves pressuring the well, and esired test pressure, and injecting nitrogen in the outer annulus ofthe

n e cemented 16-inch casing and the hanging 13-3i8-inch tubing) to a et below the casing shoe.

be shut-in for 24 to 48 hours to allow the nitrogen temperature to equalize temperature. The initial depth of the nitrogenibrine interface below the casing

temperature of the wellbore will then be measured with a wire line tool. After a peno nne, not less than 24 hours, determined by the size of the borehole below the casing shoe. a second interface and temperature survey will be run. The pressure at the wellhead will be monitored and recorded continuously during testing.

The change in the calculated volume of the nitrogen between the two interface measurements will be determined from the surface nitrogen pressure. the well temperature logs and the change in the

10/31/2011 Mechanical Integrity Testing 3-1

NGLsIJ


Exhibit 2 - Page 63

::::==3 ::: =~::::: ,_::::::-MAGNUM


Application for Permit to Drill Magnum CIIvern Well 5

level of the nitrogenibrine interface. The change in the nitrogen volume will then be converted to an equivalent fluid loss.

'The temperature stabilil.ation period, the duration of the test and the desired depth of the initial nitrogenibrine interface level will be detennined from logs run during and after well construction. The selection of these features will be made so as to ensure that the test has a minimum detectable leak rate (test sensitivity) of no more than 500 barrels per year of nitrogen. An acceptable test will be a demonstration that the calculated leak rate is less than the minimum detectable leak rate.

All pressure monitoring instruments will be calibrated in accordance with recommendations. Testing will be performed under the supervision Of~gr . experienced in salt cavern testing. The report will be submitted to the Executi _ days of completion of the test.

3.3 Storage Operations ~'- ,

Following the post-completion mechanical integrity test, the ~il~ted on a periodic

"";, ",;ng mot""'" "'" pro"d ..... ;n 0<"'",,,,,, w~ forth by the State of Utah.

~

G

10/31/2011 Mechanical Integrity testing 3-2

NGLsD


Exhibit 2 - Page 64

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•

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•


Section 4

Operating Plan and Procedures

4.1 16-lnch Injection Well Operating Plan and Procedures

::: =::::$ ::=~ MAGNUM

NGLsD

10/31/2011 Operating Plan and Procedures 4-1


Exhibit 2 - Page 65


Section 5

Plugging and Abandonment Plan

5.1 16-lnch Injection Well Plugging and Abandonment Plan

The following procedures are provided as a general guideline. Actual plugging measures will be submitted in advance to DWQ (prior to commencement of product storage) or.~(after commencement of storage operations) for approvaL

1. Form DOGM-9 will be submitted (after commencement of ~ for procedural approval. ~

2. All stored product will be removed and the cavern will I WI aturated brine water.

3. All free hanging tubing will be pulled from the

4. The exact depth to the bottom of the cemented

5. A drillable plug capable of supporting a casing with the bottom of the plug

6.

7.

8.

,. ... ;n~~·m be determined.

installed in the cemented

will be Class G cement with no

plug at the bottom of the production

n of e plugging operation, all reports will be filed in accordance with DWQ or ICable.

10/31/2011 Plugging and Abandonment Plan 5-1


Exhibit 2 - Page 66

•

•

•

• API W II e Number" 43 " 027500020000

Appendix A

Exhibits

•

10/31/2011

• Plugging and Aba d

::::: ;:::::: =:; :: = ::::=: =:; -::::::--MAGNUM

NGLsD

eceived" 0 n Plan 5·1 R n onme t

" ctober 31, 2011

Exhibit 2 P • age 67


:::=== :::~~

MAGNUM NGLsD

AI! mea'!iurements from Ground lev,,":,.' r-T"-,r-"Trr-''T'lr-"T-r-T"'

0' - 250' Unconfined W at ll'lf Table Aq.iIffr

25Il'. 750' _M_ AquIIw]

750' p 1400' Deep Art ...... AquHar

14011' · _ --,.... Tap af S~U 32tIOt.

24~ Borehole

22" Borehole

17-1/"Z' Borehole

Connedion

ermann

TO@4110cr

ConckJ a orPipe 150' - 38", 1 O~ Willi , 282 35 Ib/ft , Grad@! B. PE BT&C" Surfooo Casing 34· Baoholo 750'· 3(]", D 750" Wd, 234.29 Ib/II , Grad. B, BTae" Cern.,led 10 Suface calling Centl"llliz.-s ewry ether joinl

__ Calling 28"_ 2SIO' · 24·, 1 J1' -. 24IUMM, Tac" 71111' . 24·, 1.211' _ , 3113,7IM, Tac" c-adto_ Caojng_

Suspftl1ded Leaching string

4700' - 8 518", 36 Ib/ft . K55 BTC'

n

Exhibit A: Magnum Cavern Well 5 Wellhead Casing Design

10/ 3 1/ 2011 Appendix A-2


Exhibit 2 - Page 68

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::: == -:: ~=:: --:::::::::--MAGNUM

NGUD

WELL PAD - CAVERN

! j

1DI'(MIY

CONI'AINIIENT DIltH 0.51 .... SUl'E

LEGEND

-----~ ~

RAIl WAlER WELL

o I

NOTES:

100' !

t 1II.L ___ ._~1U1IE

_IllS

2fXf I

2 _1E~1I ___ _

DAlE.. to/25IIt

Exhibit B: Magnum Cavern Well 5 Well Pad

10/31/2011 Appendix A-3


Exhibit 2 - Page 69


WELL PAD - CAVERN WELL CW-5

4810

4800~----------------------------~ 1+00 SECTION A-A

4810 I--~'-'=---------"Ai--I

4800 '----1+00 5+00

SCAL! o 100' 2«1

VER. l'~\o' I ! ! HOR. 1'-\00' t: ==:::i, ••• , ~3'15 ~ DR. sum: 330 --=-= HOI.LADAY. UTAH 14121 MAGNUM PHONE: (101) 113-7001

_ t D

Exhibit C: Magnum Cavern Well 5 Well Pad Cross Sections

:::: ==~ =::- :: :::::::::::;:; ---:::::::--MAGNUM

NGLsD

10/31/2011 Appendix A-4


Exhibit 2 - Page 70

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•


5115 IiII.IJIOa( DR, SUITE 15O MAGNUM HOI.I.AD4Y, UTAH 14121 -=0 PIIONE: (101) 815-7001

16-inch Injection Wellhead

~X."JII ---

~

13 "" 311

21.1(" JII

::: =~ :::~-:::s MAGNUM

NGLsD

Exhibit D: Magnum Cavern Well 5 Injection Wellhead Design

10/31/2011 Appendix A-S


Exhibit 2 - Page 71



Certified Section Map and Plat Ma

10/31/2011

G sredbY num

65 E. Millrock Dr., Suite 330 Holladay, Utah 84121 Tel 801 993 7001 Fax 801 993 7025 www.westernenergyhub.com

~~ ~

:::== ;; ~=~ - _.-_.::::::--MAGNUM

NGLsD


Exhibit 2 - Page 72

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•


T15S, R7W, S.L.B. & M. -_.-----------.------4- ------_.-_.--_.-------4

_ sa:. IDUIIII ~ IlOl - 't\.- IlOl _ .. COl. sa:. 23 i sa:. IDUIIII i sa:. IDUIIII n5S. Ill, SIMII i i

166.60' -f-i-/

o

CIIaI EI. CIH -2II5,Je4.J1 E1IS1IG: 5110.111.22 IUWDt 4,114." 1!lr t IOIRIII rs 1Ill

NOTES: ~ ___ 5lI:11D1IaMR

I i I i I I i I i

IlU. RIIJW8 /If[ -..0 AT _ NIUS 10 11£ 5lI:11D1IlJIS _ rs IlNI1OI1 15 _ !DIIIIOl PIIIII 1IIG-CI'-42

; §:=§3165 WILlROCK DR. SUITE 330 =- HOl.J..Al)AY. UTAH 54121 MAGNUM PHONE: (801) 993-7001 •. - D

00\1[: 1O/'IJ/11 Sft'tD) rt. _ H£l1It

00\1[_ 1O/'IJ/11 _rt. Nl CW-5 SCM£: I· -1,D11D' IIE'&lI: "/lJ

Magnum Cavern Well 5 Certified Section Map

:::== :::;: ~=a~ MAGNUM

NGLsD


Exhibit 2 - Page 73


MIllARD COUNlY

SECTION 23, T 15 S, R 7 W S.LB. & M.

N8I'3OW

1-

MA(t6)

',,""CHI

..... -

t z

:::: ==4 ::: :::=::::; === '. :=:::::::::--MAGNUM

NGUD

Magnum Cavern Well 5 Plat Map


Exhibit 2 - Page 74

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::::=~ :;: ~=~=::; -::::::=--MAGNUM

NGLsD


Topographical Maps

10/31/2011

Prepllred by Magnum 3165 E. Millrock Dr., Suite 330 Holladay, Utah 84121 Tel 801 993 7001 Fax 801 993 7025 www.westemenergyhub.com


Exhibit 2 - Page 75


MAGNUM SWISW Section 23, T 155, R 7W

MileS

2

1:100,000

Magnum Cavern Well 5 Regional Topographical Map

::: ==!: ~= ~=:S MAGNUM

NGLsD


Exhibit 2 - Page 76

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•

•

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•


MAGNUM R-=!':.\~D SW/SW Section 23, T 155, R 7W

Mil es

0.5

1 inch equals 2,000 feet

Magnum Cavern Well 5 Location Topographical Map

:::: = ~ ~ = ::::::; 3;: ~

MAGNUM NGLsD


Exhibit 2 - Page 77


Application for Permit to Drill Storage Cavern Well 5

Affidavit of Surface Owner Agree

10/31/2011

G~;~ro'k Dc. ,,; .. '" Holladay, Utah 84121 Tel 801 993 7001F2Ix 8019937025 www.westernenergyhub.com

~~ ~

:::: ~=~ :: ::;::::: 3=

--::::::::---MAGNUM

NGLsD


Exhibit 2 - Page 78

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fiRST AMF."DMF."'T

To

"I'm; S'I \H. Ut' I T·\H. I~ SCHOOl. AND TRIIST J."'NDS

II

:::: ==:; ~ .. =.~ MAGNUM

NGLsD


Exhibit 2 - Page 79

API We" Number: 43027500020000

FIRST ,HIF.NI)MF.NT

To

El\t:RG\' STORt\(;L A.~D DEVILOP)fENT LEASE SlATE 0"- IJTAH I.t.:ASt.: M.I\1St.:R ~L SIS73-0U;\

" I hI'" ~ru~' UVl'" J"j.~'r' 0)'11,- .:-rrr-n::t1 IIlto fMt :.( Uc\'CI.-.pnlClll I o:.~. ~lOtc f : I ·t 1 I cUt;c 'U ithCI 1\11 :-.1;') l ,~OH '\. du-e<t .. Cap,'..:.liled io:nll> _d. "'" "ut other";,, detined al :hlS r.:Sl :\Ultr. ;}~'i.j~~=d u,.~-- rhe I ur,c.

U lta .. ed \111 llie "esult ... ni" tie mitial T'nll..e Lan.:, an.) the I'n .11< Lmds. an.! a> ~ooler.1Jllottjj .IIlC~t S<rtIo. ti.2(a) "AMil'nJ' nfl'n., n .. "I.\dj""'"t I c:rt31r .O\jJ8C~t lanes JI1 ;1'"1" CKt"ri I.and~ a.&, 7"f<wlc1e..1

( . With tk ~ccJltl(ln <'f ; ~lj -;tl'C"llh j ... ,",,,, ar.n .nl I11"nlmum f('ftI;" 1"'.1

f:1~irrt1 ri!?h~ In '"'hr' N1<l"d I.Blli'r, ~JT r(,,"llnir n

-iugs

--1'" .. ,>1. /,";dili.r. ..,f ,'U'~OJI> "f .\JI",,,,,1 l..a."1d,: L .. ,,'r hcrc:b~ . of""":' ,)f'N-Ph ,he,> ,1;.1dilio)ll (If ' ... ',:'flu,'" il L;. hllth, II) Hit' k~I'ooC\.l L1Ul ... I~. :1 .. Jill:.in

c"(i ... in~: teTllO 3-ri ..: ... .,:1itirnF c·" roc 1.:3~ ... '" cormnwC' mnrh-t oo:;.('tI rt'nw:. '~.i th:u rht' u: lhl~ ;ouk.h It: l:a~ Lc:..t~ L. .. n.l!- u:".~r .ht'st' it'rn'.!Io ,,:,)f1."lilUV: oJ :e'Il>;r- 1m Trlyrkrl :"NL...ai l:-n'i

::: -;::::. =# ':::::~E:S MAGNUM

NGLsO


Exhibit 2 - Page 80

•

•

•

• API Well Number: 43027500020000

Trnt1!l!I!In IS Sou!b. & .. 6 Wcs. SI.D&M

s...uuo 19; EJz, SESW SccIion 30: All (ull '(311.991, N/;!, Sv.., lV2St, SWSk

•

•

360.00 6l1l.W

::::: =~ :::=~=::: -=:::::--MAGNUM

NGLsD


Exhibit 2 - Page 81


~ccti<'n 16: I·n, ~/~NW. SWNW. "ESW Sed"'" ~I: N~:"'.

.:J>mmrrA LEASED LANDS

~""t;':" ~J' L,,,, J(8.6<). 5p~ ?.II, 7fl4.9').R(H,4:1) ~"',f, S'2NW. Sf S«ri" .. 21: I.nt, 2(21.9:1). ·1(K.~2). '(21 '0).1105 111). SI'i. S'ZSI Seer;"" ~4: l.nt. 1('U6). 4(,;~ On. 0(21.6J'~ 8(9JO). SWSW !.cctit.'fl 25: All s...liull 26: All

SectlOll ,'I: ... ~. su, W s.,dHOI JO: All (lol S(39.99~ "'2, S\\'. 'laSE. SWSI:. )

1 ""'nshin 1 ~~!!IIli>. RmQc 7 \\'oL SLD&:~

C)c..::tj~lfll'1 ~W

Scctioo 1~ ~.'~N". '>!:NW. b'~Sy,.. Sl 'ie.:li"" nUll' I(Ml.141, 2(11 11).4CIX 111,(.:11. 'ic.."finn 21 l.nt. 1(111 ':).1(11.27). 'lCW.UI. ((21

:::: :::::;-~ ~ =::::::;; = ~ "-::::::'-

MAGNUM NGUD


Exhibit 2 - Page 82

•

•

•

•

•

•


~I I-

... HIIiITO rRo.m AREA MAP

:::= = ~ ~~~ MAGNUM

NGLsD


Exhibit 2 - Page 83


Appliaotion Checkliat

::: ~ ;: -::=~~ .. -:=:::;::;--

MAGNUM NGLsD

Complet~ Requlrem!':rlt DescriptIOn Application Page

1. A completed and signed Form 3 (application to drill, deepen or reenter). Make sure all blanks are filled and boxes are checked


Exhibit 2 - Page 84

•

•

•

•

•

•

MAGNUM

r rill

Cavern

MAGNUM

" October 31, 2011

lliGuD

Exhibit 2 - Page 85


10/31/2011

Prepared by Magnum 3165 E. Millrock Dr., Suite 330 Holladay, Utah 84121 Tel 801 993 7001 Fax 801 993 7025 www.westemenergyhub.com

::: ==:; ~ -~ MAGNUM

NGUDi


Exhibit 2 - Page 86

•

•

•

• API Well Number: 43027500020000

Table of Contents Section 1 Surface Use Plan ............................................................................. 1-1

1.1 Existing Roads ......................................................................................... 1-1

1.1.1 Directions to location ................................................................... 1-1

1.2 Access Roads ........................................................................................... 1-1

1.3 Location of Existing Wells within One Mile ......................... St ............. 1-1

1.4 Locat~on of Production Facilities............................................... ...... 1

1.5 LocatIOn and Type of Water SUpply ........................... ~...... ...1-2

1.6 Construction ~ate~als ........................................ ~....... .. ............. 1-2

1.7 Methods ofDlsposmg of Waste Matenals... ...... .... .. ............... 1-2

1.8 Ancillary Facilities ................................ ... ........... .. ..................... 1-2

1.9

1.10 Plan for RestoratIon of Surface . .. ...................................... 1-2

• 1.11 Surface OwnershiP .... ~....... ......... .. ................................................. 1-2

1.12 Evidence of Water Ri ... .. ......................................................... 1-3

1.13 Other Infonnat~ .. .. ...................................................... 1-3

APpendi~ .14 Com"""y R""'~ .................................................................... 1-3

""""'ilix A Evidenoe of~ ............................................... m •••••••••••••••••••••••••••• A-I

G

10/31/2011 Ta ble of Contents i


• Exhibit 2 - Page 87

::: -::::::: s:; :::: :: ::;:::: :; ~ --::::::.-MAGNUM


Section 1

Surface Use Plan

1.1 Existi ng Road s

From Delta, Utah, head north on Road N 1000 W for 1.6 miles. Just into Road W 1500 N, tum north onto Jones Road for appro xi mat Magnum Road (to be constructed). approximately 0.5 miles s Wellman Road, south of the Intermountain Power Plant. Tra Magnum Holdings (MH-I) water well. From MH-l, trav well pad (to be constructed).

1.2 Access Roads

well. An additional access road will be co and then 230 feet north to the prop' constructed to Millard County Road ign

prox ately 9.259 feet west to the MH-l -I well approximately 275 feet east

pad. Access roads will generally be s. Construction will use the materials in

m regional commercial pits and hauled to the p.lace and additional material will ~ ed site.

1.3 Location of - 9 lis within One Mile

Gas Storage Loc cal Map):

: ~e",dW'bd 1 ation of Production Facilities G

. irrigation well.

Pr acilities will be installed on newly constructed drilling pad for CW-S (see Magnum Cavern Well 5 Location Topographical Map, Magnum Cavern Well 5 Plat Map and Magnum Cavern Well 5 Certified Section Map). Five utility lines will be constructed:

• Electric supply line;

• Brine discharge/supply line;

• Raw water line;

10/31/2011 Surface Use Plan 1·1

NGLaD


Exhibit 2 - Page 88

•

•

•

•

•

•


Applicabon for Permit to Drill Maonum cavern Well 5

• Well water supply line; and

• Natural gas products line.

All temporary disturbed areas related to production facilities will be reclaimed.

1.5 Location and Type of Water Supply

::: ~~ ::= == ::::::=3 -. -:::::::::::--MAGNUM

NGLsD

Water for drilling will be supplied by Magnum MH-) and MH-2 wells. MH-) well is located to the southwest and MH-2 well is located to the northeast of the proposed CW -S well (See Magnum Cavern WeD 5 Location Topographical Map). ~ ~

1.6 Construction Materials ~ V Soil for construction will come from the site. Gravel will be Purc~d supply

1.7 Methods of Disposing of Waste Mate

vendor. Piping will be purchased from a supply vendor and stO~d

Drill cuttings will settle out in the reserve pit. The reserve be with a 20-mil HDPE liner (see Magnum Cavern WeD 5 WeD Pad). The hauled off and disposed of at an approved facility by contractor. Liquids . Any remaining liquids will be disposed of at an approved Sewage facilities and disposal will be furnished and maintained All garbage will be stored in appropriate containers and regularly hauled facility.

1.8 Ancillary Facilities g After drilling is complete, mOdul~~ . g facilities will be installed in the southwest portion of the CW-S well P&d s;~ g of the storage cavern.

1.9 Well Site a

Magnum Cavern D and Magnum Cavern Wei) 5 Cross Sections depicts the well site layout. nIl rig will be set up in the northwest portion of the pad; the

east of the

1.10 n estoration of Surface

Rfjtion temporarily disturbed areas around the CW -S well pad will be graded and re ed a ding to 'The Utall School and Institutional Trust Lands Administration (SITLA) re .

1.11 Surface Ownership

SITLA is the owner and land administrator for Section 23 TlSS. R7W. Magnum Holdings, LLC cWTently holds an Energy Storage and Development Lease (Number SIS73-0BA) from SITLA to develop the property. A redacted copy of the First Amendment to the Lease Agreement describing the leased land has been provided in the Affidavit of Surface Owner Agreement. SITLA can be reached at:

10131/2011 Surface Use Plan 1-2


Exhibit 2 - Page 89


Application for Permit til Drill Magnum Cavern Well 5

State Institutional Trust Lands Administration 675 East 500 South Suite 500 Salt Lake City, UT 84102 801-538-5100 Attn: La Vonne Garrison

1.12 Evidence of Water Rights

The State Engineer has approved multiple Temporary Change Applicaf existing water rights at the Project site. The Order approves the Temporary of the City of Delta (Number 68-3%). A copy of the Order has bee~i This Order is representative of similar Orders received by M~aor water will be withdrawn from the existing MH-I well an prop

1.13 Other Information

::: ==~ :::=:::::::::=; •.. -:::::::--

MAGNUM NGLsD

Magnum Cavern Well 5 Location Topographical Ma~fO i

• Current vegetation at the site consists ~f s s ith sagebrush, greasewood. rabbitbrush, saltbush, and mixed bunch ses.

• Magnum has received all environmenta c rom Division of Wildlife Resources and Utah State Historic preserv~. .

1.14 Company Repre~- e

Tiffany A. James ~ Director, Government Rei . s and Environmental Serv' es Magnum Gas Storage, r: 3165 East Millroc' 3 Holladay, UT 841 Phone: (801 Cell: (801) f

10/31/2011 Surface Use Plan 1-3

Received: October 31, 20'1

Exhibit 2 - Page 90

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• API Well Number: 43027500020000

Appendix A

Evidence of Water Rights

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10/31/2011

• Appendix A-I

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NGLsD


Exhibit 2 - Page 91

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NGLsD


10/31/2011

GARY R.IIERB~RT a-

GAEGBELL lM_ao..-

State of U tab DEPARTMENT OF NATURAL I:ESOURCES DIvisloD or Water Rights

Ml(''HAHL R. STVUll K&lIIl l~ JONf..s ~ DI7~CIDr s.n. F.nguIur/Dtvts1ott ~

ORDER OF THE STATE ENGINEER For Temporary Chup ApplieatiGa Number 68-396 (67232)

Temporary Change Application Number 68-396 (t37232) in th., name of Delta Marcb 22, 2011, to add additional points of diversion, add an additional change the nature of use of 2.6305 cubic feet per second (cfs) or 1029.29 as evidc:ru:cd by Water Right Numbers 68-2835, 68-2909, and ,;8-396. been diverted from the following points located: (1) Well - Sluth from the EY. Comer of Section 12, Tl7S, R7W, SLB&M (exi! ling (2) Well - North 191 feet and East 916 feet from the SW C. SLB&M (existing 16-inch well, 1000 feet deep); (3) Well - So the NE Comer ofSeclion 17, Tl7S, R6W, SLB&M Well - North 1590 feet and East 719 feet from SLB&M (existing 14-iDch well, 737 feel deep); from the NE Corner ofScctioD 12, Tl7S, R7W, (6) Well - ~orth 2761 feet and West 144 feet SLB&M (existing 12-inch well, 860 feet within the service area of Delta The R6W, SLB&M; Section 34, Tl6S, R6W, 4, Tl7S, R6W, SLB&M.

from deep); (4)

Tl7S, R7W, West 1334 feet 703 feet deep);

12, TI7S, R7W, municipal purposes

of Section 33, Tl6S, R6W, SLB&M; and Section

Hcreaftel-, it is proposed to heretofore and from the SW Corner of South 30 feet and inch well, 1500 feet Section 26. Tl5S, East 2180 feet

of water from the same points as - Nort 1 IS feel and East 2895 feel from

16-inch 'well, 1500 feet deep); (2) Wellof Secti(,n 27, TlSS, R7W, SLB&M (16-

feet and East 2070 feet from the NW Comer of 1500 feel deep); (4) Well- North 555 feet and

23, TlSS, R7W, SLB&M (l6-inch well, 1500 feel deep); (5) R7W, to the

East 1355 feet from the SW Comer of Section 23. Tl SS. feet deep). The nature of LISe of the water is being changed

1 to October 31, !be ir door domestic requirements of 20 1 to December 31, and for industria1 purposes (Industrial

The place of use of tb: water is to remain the same as or portiones) of Section 19, T1SS, R6W, SLB&M; Section 30, Tl5S,

22, Tl5S, R7W, SLB&M; Section 2.1, TISS, R7W, SLB&M; Sectinn , SLB&M; Section 25, T15S, R7W. SLB&M; ~:ection 26, T15S, R7W, SLB&M; Tl5S, R7W, SLB&M.

I". westN«tb TCIIIPIo. s.l1lI12O. P08Ox.l46JOO, sar I...Ib CK)', UT 84114-6300 tdcphone(IOI)S]"'72AO.f~imi1e(1t')1).s1l.'U;1.w-.~1IkIIa.p

Appendix A-2


Exhibit 2 - Page 92

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ORDER OF THE STATE ENGINEER Tempor8l)' Change Application Number 68·396 (07232) Page 2

Raleof Diversion 998.49ac~·feet

AmOWllof ~ 998.49 acre-feet

th: proposed use is as follows:

ORa:. of Q!a;!!!i!!n 100 percent

Amount of Qmls!!iIln 998.49 ..... ·feet

in Utah, csc:an:b Report 14'. Umb ~&ri<uhural I!xperimen, Slalion. Viall S .... • Delta Slalioo.

it appears that the proposed U!e will not exceed the hydrologic with the historical uses, thu; causing an enlargement of the

10/31/2011 Appendix A·3


Exhibit 2 • Page 93



ORDER OF TIlE STATE BNGJNEBR Tel1lPOf8l'Y Change Application Number 68-396 (t37232) Page 3

. . . ricai ,\...,\etion of indusl:r1al use. The depletion sba\\ be \\tm\ed to \be listo -r 998.49 acre-feet.

2) To accommodate the use approved mllier this Ill'plication, the bis1q11 ..... municipal use shall cease.

3) Section 73-54 of the Utah Code provides that "ev in this state shall construCt or install and works ... and measuring device at each point turned out, for the purpose of regulating and water that may be used ... " Adequate shall be installed on the heretofore and hereaft .... l'1 appli()8l1t must maintain a ICIlord and water diverted from each diversion diverted shall be submitted to the 31" of each operational year in an order In cease the use approval.

.. prI)visions of Administrative Rule R6S5-6-17 of the Division of 63G-4-302, 63G-4-402, 8JK 73-3-14 of the Utah Code which

Request for Reconsidenrtion with he State Engineer or an appeal with A Request for Reconsideration must he filed with the Stale

of the date of this Order. Howewr, a Request for Reconsideration is filing a court appeal. A court appeaI II' ust be filed within 30 days after the

or if a Request for Reconsideration bas been filed, within 30 days after the for Reconsideration is denied. A Req= ~ for Reconsideration is considered

no action is taken 20 days after the Request is ned.

.;l.S day of 110 AI ~ , 2011.

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NGLsD

10/31/2011 Appendix A-4


Exhibit 2 - Page 94

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• API Well Number: 43027500020000

Blowout Preventer

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www.westernenergyhub.com

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MAGNUM "GuO


Exhibit 2 - Page 95

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16-Inch Cavern Well Blowout Preventer Equipment

The geology of the area is known from the nearby Magnum MH-l well and the Argonaut Well as well as the nearby industrial water wells. These wells demonstrate that the formations to be drilled above the salt, and the salt itself, arc gas-free. The Argonaut Well penetrated the entire sequence of salt to a depth of 11.266 feet bgs and the Magnum MH-I well penetrated the salt to a depth of 6,420 feet bgs. This is deeper than the intended Cavern Well 5 depth of 5.050 bgs. Additionally, the geophysical lines that run over the area show there are no structures present in the ovedying fonn.';o"" ,hat oould 'mp gw<. Th;,;, I)pk.1 ofth' b,,;o md nm~' have been explored for hydrocarbon production.

Wells drilled into salt generally utilize some kind of blowout control equ' 'In out control equipment almost always includes an annular, bag-type blowout pre er um will follow industry practice and usc an annular blo''''out preventer (BOP d g Cavern Well 5 (sec Blowout Prenntt'r). Additional equipment used in de~:p such as shear and pipe rams. will not be used for drilling Magnum's cavern

Magnum intends to install BOP measures beginning with 750 feet and the BOP will be in place during the

casing at a depth of 20-inch cac;ings. 'Inc

and rated at 5000 psi. exact size of the HOP to be used will he at least Installation of the HOP mea<;ures are rI .. ,.c:rih .. .-l ...... on 1.2 of the Drilling/Well

summarized below. Construction Plan and both the installation

The nop will be installed on the installed on a temporary flange the 16-inch cavern well requires equipment stripped over the

... ,;eIT1Ctlleo in place. Thc nop will be on the 3D-inch casing. TIle size of

assembly be run into the well, the BOP the BOP re-installed on the surface casing. put back ovcr the drilling string wh .. 'I1ever a 'Inc HOP equipment must

bit change is required.

Functionality connected to the picked up and ehelck~l'that BOP will

the equipment will follow oil and gas industry standards. is conducted every time it is installed. The nop will be

high-pressure hydraulic hoscs. A joint of drill pipe will be the BOP. The BOP will then be closed from the control unit

sealed around the drill pipe. If the closing is visually correct, the drill pipe removed and rig activities will continue.

NGLaD


Exhibit 2 - Page 96

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Magnum Cavern Well 5 Blowout Preventer

MAGNUM "GUO

w:e(:enJreo: October 31, 2011

Exhibit 2 - Page 97

16 15

21 22

28

33 34

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CW-1 43021»)43 .

26

35

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24

26

36

API Numb«: 4302750002

Well Nsne: CW-5 Townlhlp T1.G. Rang_ RO.T . Section 23

Meridian: SLBM ~eralDr. MAGNUM SOLUTIOO MINING. LLC

Map Prepared: Map Prolllced by ~iana M ason

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~_~U e-.-*_._--/_._/----e _ . __

.-=::;'-==:::10 ___ "",",',..'.' 1"U,522

Received: December 01,2011

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MAGNUM NGLsD

Exhibit 2 -.8

api well number: 43027500020000

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