2 Colo. Code Regs. § 404-1-1316

Current through Register Vol. 47, No. 20, October 25, 2024

Section 2 CCR 404-1-1316 - FINANCIAL ASSURANCE FOR DEEP GEOTHERMAL OPERATIONS

a.Applicability.

(1)All Deep Geothermal Wells. This Rule 1316 applies to every Deep Geothermal Well and its associated Deep Geothermal Location and Deep Geothermal Facilities, in Colorado, except for those Deep Geothermal Operators who have an approved "Option 6" Financial Assurance Plan, pursuant to Rule 702.d.(6), and who are in compliance with their obligations to provide such Financial Assurance.

(2)Approved Wells Not Yet Spud. All references to Wells in this Rule 1316 include Deep Geothermal Wells subject to an approved but not yet expired Form 2 that have not yet been Spud.

(3)Wells Subject to Federal Financial Assurance. Notwithstanding the provisions of Rule 1316.a.(1) and (2), an Operator may demonstrate in its Financial Assurance Plan that it has already provided or will provide Financial Assurance for the same Deep Geothermal Well, Deep Geothermal Location, or Deep Geothermal Facilities to the federal government at the time it files a Form 2G. All Operators with Deep Geothermal Wells subject to federal bonding requirements will so indicate in its Financial Assurance Plan. The Commission or Director will determine whether the Financial Assurance required by the federal government is substantially equivalent to the Commission's 700-Series Financial Assurance obligations and, if not, what additional Financial Assurance is required, so long as the additional Financial Assurance does not duplicate Financial Assurance imposed by the federal government.

b.Form 3, Financial Assurance Plan. Operators of 1 or more Wells subject to this Rule 1316 will file Financial Assurance Plans as required by this Rule 1316.b. Each Financial Assurance Plan will demonstrate how the Operator is financially capable of fulfilling its obligations under the Geothermal Act and the Commission's Rules.

(1)Initial Financial Assurance Plan Submissions.

A.Wells Approved Before the Effective Date of this Rule. Operators who operate Deep Geothermal Wells approved by the Commission, Director, or DWR prior to the effective date of this Rule 1316 will submit an initial Financial Assurance plan by January 1, 2025.

B.All Other Wells for Deep Geothermal Operations. Operators who submit permit applications for Deep Geothermal Operations pursuant to Rule 1305 will include a Financial Assurance Plan in the permit application for Deep Geothermal Operations.

(2)Review of Initial Financial Assurance Plan. Review of initial Financial Assurance Plans for Deep Geothermal Operations will occur according to the procedures described in Rules 702.b.(1).C. & 702.e.(1). If the Director denies the Operator's proposed initial Financial Assurance Plan for Deep Geothermal Operations, the denial is subject to Commission review pursuant to the procedures described at Rules 702.b.(1).C. & 702.e.(2). Only CDPHE, CPW, or a Relevant Local Government with jurisdiction over Deep Geothermal Wells subject to the Deep Geothermal Operator's initial Financial Assurance Plan may file a petition pursuant to Rule 507 to participate formally as a party in the Financial Assurance Hearing. If the Director denies the Operator's proposed initial Financial Assurance Plan, either the Operator or the Director may file an application for Commission review under Rule 702.b.(1).C.i.

(3)Revised Financial Assurance Plans. A Deep Geothermal Operator will file a revised Financial Assurance Plan if the Deep Geothermal Operator believes that a change to its approved Financial Assurance Plan is warranted due to a change in circumstance. Revised Financial Assurance Plans will be reviewed, approved, or denied according to the procedures described at Rules 702.b.(2) & 702.e.(1). Only CDPHE, CPW, or a Relevant Local Government with jurisdiction over Deep Geothermal Wells subject to the Deep Geothermal Operator's revised Financial Assurance Plan may file a petition pursuant to Rule 507 to participate formally as a party in the Financial Assurance Hearing. If the Director denies the Operator's proposed revised Financial Assurance Plan, either the Operator or the Director may file an application for Commission review under Rules 702.b.(2).A.

(4)Director's Annual Review. The Director will conduct a review of every registered Deep Geothermal Operator's Financial Assurance at least once every fiscal year pursuant to Rule 707.a.(1). The Director may require an Operator to file a revised Financial Assurance Plan and file an application for a Financial Assurance hearing pursuant to Rule 503.g.(11) based on the Director's annual review pursuant to this Rule 1316.b.(4).

(5)Discretionary Review. If the Director has reasonable cause to believe that the Commission may become burdened with the costs of fulfilling an Operator's plugging and abandonment, reclamation, or remediation obligations under the Geothermal Act or the Commission's Rules because the Operator has demonstrated a pattern of non-compliance with the Commission's Rules or other unique circumstances, the Director may file an application for a Financial Assurance hearing pursuant to Rule 503.g.(11) to obtain the Commission's approval of a plan for the Operator to provide additional Financial Assurance beyond what would otherwise be required under the Commission's Rules.

(6)Consolidation of Related Operators. Where a registered Operator owns, holds, or controls 50% or more of one or more other registered Operators, that parent company Operator and its subsidiary Operators may be consolidated, at their discretion, for purposes of determining the applicable amount of required Financial Assurance, provided the parent Operator guarantees all Financial Assurance obligations for itself and the consolidated subsidiary entities. Consolidation under this Rule will include all of a parent Operator's subsidiary Operators.

c.Contents of Financial Assurance Plans for Deep Geothermal Operations. Financial Assurance Plans for Deep Geothermal Operations will meet the following informational criteria:

(1)Information Requirements.

A.Well Status, Designation, and Depth Data. A summary table accounting for all Wells subject this Rule 1316, including the number of Wells that fall within each operational status and designation as of the date the Financial Assurance Plan is submitted, and the true vertical depth of such Wells.

B.Asset Retirement Planning. A demonstration of how the Operator is planning for the retirement of its Deep Geothermal Operations and Deep Geothermal Facilities based on the projected life of the Deep Geothermal Operations, age of the infrastructure, and related information.

(2)Financial Assurance Amount. The amount of Financial Assurance the Operator will provide to the Commission as soon as practicable but no later than 90 days from the Commission's approval of the Financial Assurance Plan, which will be:

A.Single Well Plugging and Abandonment Cost. The Single Well Plugging and Abandonment Cost, as defined in these Rules;

B.Location Reclamation Costs. The Location Reclamation Cost, as defined in these Rules;

C.Other Financial Assurance. The amount of Financial Assurance required by Rules 703.b, 703.c., and 703.e.

(3)Type of Financial Assurance. The Operator will indicate the type of Financial Assurance the Operator proposes to provide, pursuant to Rule 701.

(4)Certification of Financial Capability. An Operator will provide a certification of financial capability signed by an Operator's corporate officer to ensure it is financially capable of meeting all of the obligations imposed by the Geothermal Act and Commission's Rules.

d.General Liability Insurance. Deep Geothermal Operators will comply with general liability insurance obligations pursuant to Rule 705.

e.Release or Claim of Financial Assurance. Financial Assurance provided under this Rule 1316 is subject to the release and/or claim provisions of Rule 706.

2 CCR 404-1-1316

47 CR 17, September 10, 2024, effective 9/30/2024