Crown Exploration’s Niobrara Wells are Producing Some of the Cleanest Oil in the U.S.

Thanks in part to compliance with Environmental Social Governance 

The Environmental Social Governance (“ESG”) movement started over a decade ago, but has been gaining real steam since 2020. ESG-directed funds have now begun pivoting their portfolios to “dirty” oil and gas investments, likely driven by years of under-performance! Below we have attempted to explain just how environmentally-focused we are when producing oil and gas in the State of Colorado.

ESG affects two areas of our business, (1) Operational Decisions, and (2) Reporting Requirements. One of the major issues with ESG funds has been verification by their analysts and investors alike.  It is easy for an oil and gas Operator to make claims about any one of the three pillars (Environmental, Social or Governance), but it’s much more challenging to verify and compare to alternative investments. This rings true not only in oil and gas, but every sector they invest in when viewed through an ESG lens. Given our regulatory requirements in Colorado, verification is easy to achieve for our specific situation.

Below you will find detailed descriptions of the requirements referenced above that our Operator must adhere to. 

Operational:

Air Quality Monitoring Plan:  Prior to constructing our pad, we must assemble an Air Quality Monitoring Plan which must be approved by the Colorado Department of Health and Environment (“CDPHE”). This is a 24-page permit explaining how we intend to monitor our emissions. The Plan also goes through public comment.

Construction Permit: We must assemble a list of every engine on location with all of its specs laid out; NOx, CO2, VOC, Benzyne, Toluene, Ethylbenzene, Xylenes, n-Hexane, and 2/2/4 Trimethylpentane. We then have an outside consulting firm run our projected hydrocarbon throughput into the model to quantify the total projected emissions. These calculations need to then be approved by CDPHE prior to us paying for the permit. While our goal right now is to remain under 48 metric tons per year (“MTPY”) of volatile organic compounds (“VOCs”), this is likely going toward 25MTPY if the Environmental Protection Agency (“EPA”) has its way. Fortunately, because we are electrifying our location, we will meet the tighter 25MTPY limit without issue.

Drill & Complete Phase – We utilize no open pits during this phase, unlike many other states. We utilize what is referred to as Closed Loop Systems, in which during flowback we send our fluids and gas through the separator, thus capturing vapors that other states allow Operators to send into the atmosphere. Importantly, we do not flare! Within 24 hours of first production, if we do not have a gas sales line to take away our product, we shut the wells in. A great example of us doing this is on the Crown Niobrara #1 Joint Venture and Crown Niobrara #2 Joint Venture padsites.

Production Phase –The major take away here is that ALL crude and water vapors in tanks are captured and sent to our Vapor Recovery Unit (“VRU”), then to the Sterling gas sales line. We would contemplate combusting these vapors with an Emissions Combustion Device (“ECD”) under upset conditions only. If we decided to combust, our three onsite VOC emission sensors will quantify and measure our pollution, which would then be reported monthly/annually.

Reporting:

Monthly

COGCC:  Form 7 - File all Crude, Gas, and Produced Water Volumes with Colorado Oil and Gas Conservation Commission (“COGCC”) for record of throughput.

CDPHE:  Air Quality Monitoring - We have three sensors on location, filed within the Air Quality Monitoring Plan referenced above. These three sensors are monitoring our VOCs every minute of the day. Monthly, we are provided an extract of that data which must be filed with the CDPHE. If throughout the month we break 3ppm and 5ppm, we must annotate it on the report. If we break 5ppm for 12 hours, we must launch a full investigation as to the cause, notifying both CDPHE and COGCC within 48 hours.

CDPHE:  Rolling 12-Month Emissions Workbook – This tracks monthly throughput volumes and ECD down time. Workbook computes our emissions based upon all engines on location, which was filed with CDPHE via a Construction Permit as referenced above.

CDPHE:  Leak Detection and Repair (“LDAR”) Inspection & Reporting - Monthly we have an outside firm visit our location with an infrared camera. They notify us of any leaks we may have, which must be repaired. These leaks are typically non-consequential as the three sensors on location notify us of our emissions immediately. This report is posted online for us and is filed with CDPHE.

COGCC:  Monthly Stormwater Inspections - Every two weeks we visit the pad to inspect the stormwater runoff culverts, specifically looking to see a clean, orderly runoff area to control and minimize erosion.

Annual

EPA:  New Source Performance Standard (“NSPS”) Subpart OOOO - Report regarding all compression, controllers, and batteries on location in the prior 12 months, along with our production volumes reported on Form 7, which is filed with the COGCC.

COGCC:  Stormwater Reporting - We must provide COGCC with a report stating we conducted our stormwater inspections.

CDPHE:  Storage Tank Report - We must provide CDPHE with a report that quantifies the volume of water and crude we send through our tanks.

CDPHE:  LDAR Report - We have a third-party provide a report to CDPHE of the monthly tests they conducted and the outcomes as they utilize an infrared camera.

CDPHE:  Pneumatic Controller Compliance - Provide CDPHE with proof that we inspected any pneumatic controllers on location. These devices have the potential to emit VOCs; however, we have installed what is called “no bleed” pneumatics, thus mitigating this issue.

CDPHE:  Emissions Report - Annually we must quantify EVERY engine’s emissions we had on location, from Drilling to Completion operations to Production. This takes a long time and we must work with a third-party to complete then upload to the CDPHE website.

CDPHE:  ECD Test - We must verify that our ECD is correctly working.