a) The owner or operator must prepare a
written estimate, in current dollars, of the cost of plugging the injection
well in accordance with the plugging and abandonment plan, as specified in
Sections
704.150
and
704.181(f).
The cost estimate must equal the cost of plugging and abandonment at the point
in the facility's operating life when the extent and manner of its operation
would making plugging and abandonment the most expensive, as indicated by its
plan.
b) The owner or operator must
adjust the cost estimate for inflation within 30 days after each anniversary of
the date on which the first cost estimate was prepared. The adjustment must be
made as specified in subsections (b)(1) and (b)(2), using an inflation factor
derived from the annual update to "Oil and Gas Lease Equipment and Operating
Costs 1987 to [Date]" published by the U.S. Department of Treasury. The
inflation factor is the result of dividing the latest published annual Index by
the Index for the previous years.
1) The first
adjustment is made by multiplying the cost estimate by the inflation factor.
The result is the adjusted cost estimate.
2) Subsequent adjustments are made by
multiplying the latest adjusted cost estimate by the latest inflation factor.
BOARD NOTE: Corresponding
40 CFR
144.62(b) cites "Oil and Gas
Field Equipment Cost Index" without attribution of its source. The Board has
located a publication entitled "Oil and Gas Lease Equipment and Operating Costs
1987 to [Date]". It is assembled by the U.S. Department of Energy, Energy
Information Administration. It is available only on the Internet at
www.eia.doe.gov. The Board replaced the
federally cited reference with this document. The full link for the document
(in March 2006) is as follows: http://www.eia.doe.gov/pub/oil_gas
/natural_gas/data_publications/cost_indices_equipment_production/current/coststudy.html.
c) The owner or operator must
review the cost estimate whenever a change in the plan increases the cost of
plugging and abandonment. The revised cost estimate must be adjusted for
inflation as specified in subsection (b).
d) The owner or operator must keep the
following at the facility during the operating life of the facility: the latest
cost estimate prepared in accordance with subsections (a) and (c) and, when
this estimate has been adjusted in accordance with subsection (b), the latest
adjusted cost estimate.