New 500 Foot Wyoming Drilling Setback and Notification Rules To Go into Effect on June 28, 2015

On April 14, 2015, the Wyoming Oil and Gas Conservation Commission unanimously approved several changes to its drilling regulations, which will go into effect on June 28, 2015 (i.e. 75 days after approval). The Commission increased the minimum distance between drilling operations and homes or other occupied structures from 350 feet to 500 feet. The rule places the obligation on operators to distance themselves further from such structures if possible, stating that “[i]t is preferable that Production Facilities are located at a greater distance from Occupied Structure(s) where technically feasible.”

The updated regulations also require operators working within 1,000 feet of any such structures to provide at least 30 days notice to surface owners and to submit mitigation plans describing how the operators plan “to mitigate reasonably foreseeable impacts” of noise, light, dust, orientation of the drilling pad and traffic from the production facilities. Additionally, the setback distance will now be measured from the outermost edge of the production facilities instead of the wellhead, as was done previously.

The increase to a 500 foot setback brings Wyoming in line with other oil and gas producing states such as North Dakota and Colorado, which both require a 500 foot setback (subject to various exceptions). The rule is a compromise for both landowner advocates and industry groups. Landowner advocates, such as the Powder River Basin Resource Council, initially requested an increase to 1,320 feet, while industry groups, such as the Petroleum Association of Wyoming, requested that the 500 foot setback be measured from the wellhead, and not from the edge of the production facilities (i.e. the wellpad). While Wyoming Governor Matt Mead has acknowledged that the new setback rule will not satisfy everyone, he has publicly supported the compromise as an improvement, as it increases the setback distance and provides for notification to the surface owners for the first time in Wyoming.

Chapter 3, Section 47 of the Wyoming Oil and Gas Conservation Commission Rules, filed on June 3, 2015, sets forth the new rule and is available at http://soswy.state.wy.us/Rules/RULES/9860.pdf.