2023-09-20_BONDING - M1980047 - Laserfiche WebLink

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Colony Reclamation Cost Estimate, Update to Exhibit L Rev. Sept. 2023 SURETY RELEASE 02 RECLAMATION COSTS This review and revision of the reclamation costs associated with the Colony Shale Oil Project CDRMS permit M1980-047 was undertaken in response to a June 20, 2023 request by CDRMS to allow them to assess the adequacy of Colony's current reclamation bond. This document has been formatted to track with the original Exhibit L "Reclamation Costs" of the 1980 permit application. It supersedes the Surety Release 01 of 2017. In general, costs and earthwork volumes are not discussed in the text portion of this document unless necessary to make a specific point. Rather, the costs and quantities are presented in attached Tables L-1 and L-2. It has been 6 years since the above described bond reduction request was reviewed and approved. CDRMS is required to confirm from time to time that the surety is adequate. This reclamation cost update follows the same general format as SR-1 which was included in Colony's July 3, 2017 request for reduction in reclamation surety, later approved by CDRMS October 31, 2017. The unit costs have been updated, and there are a few other changes in the discussion of some of the currently remaining affected areas. For continuity, the alphanumerical designation system and the individual acreage for all of the affected area that was originally developed for the 1982 Interim Site Plan amendment has been retained for this cost estimate, as it was for the 2007 Area Reduction application and the 2017 Surety Reduction request. The 2017 request for reclamation surety reduction reduced Colony's reclamation liability from $30M to $9.5M. Two major factors went into that 2017 bond reduction, namely the update of the unit costs from 1980 to 2017, and the 2007 release from bond requirements of significant portions of the disturbed area. By way of background, from time to time since 1982 then operator ExxonMobil had developed internal cost estimates for project planning purposes that have always indicated that the existing 1982 $30M bond was more than adequate. Since self bonding was then available, and since the Colony reclamation liability did not materially affect ExxonMobil's balance sheet, reductions in bonded liability were not pursued before 2017, even though it was believed that the unit costs in the reclamation liability had substantially decreased from the 1982 hyper inflated "boom era" costs, Thus, the first major component of that 2017 reclamation liability reduction resulted from the use a more sophisticated method of estimating earthwork and other reclamation costs as compared to the hyper-inflated "boom era" costs that were used hurriedly in summer 1982 to arrive at the $30M reclamation bond. That 1982 bond was based on a June/July 1982 site inventory of all affected areas. The inventory was carried out by Exxon staff following Colony's construction interruption in May 1982. However, the unit costs used in 1982 were based on the hyper- inflated unit costs for that location at that time. Conversely, the method used in the 2017 cost estimate and this 2023 update are based on current unit costs derived from the generally accepted Means Heavy Construction Cost Data, Building Construction Cost Data, Caterpillar Performance Handbook information, quotes from local vendors, and other relevant cost information. Page 1