Regulation of the Minister of Energy and Mineral Resources No. 045/2006 on treatment of drill mud, mud waste and drill cutting in oil and gas drilling activities

Article 1 dure of treatment and handling of the chemical sub- Hereinafter referred to as: stances issued by the manufacturer. 1. Oil and Gas, Upstream Business Activities, Business Enterprise, and Permanent Establishment are as set 11.Directorate General is the Directorate for oil and gas. forth in Government Regulation No. 35/2004 on Oil and Gas Upstream Business Activities as already 12.Director is the Director for development and moni- amended by Government Regulation No. 34/2005. toring of work safety and environmental protection in oil and gas business activities. 2. Oil and Gas Drilling, which is hereinafter called Drill- ing, is an activity of making of well in Oil and Gas CoHAPTER II Upstream Business Activities. TREATMENT PROCEDURE

Article 2 3.: Drill Mud is fluids used in drilling that contains Basic Business enterprises or permanent establish- Substance or Additive, or a mix of Basic Substance ments that operate Drilling must operate treatment of and Additive. Drill Mud, Mud Waste, and Drill Cutting. 4. Basic Substance Is basic fluid of drill mud in form of Article 3 water, oil, and synthetic materials. (l)ln operating treatment of Drill Mud, as meant in Ar- ticle 2, use of environment-friendly Drill Mud is ne- 5. Additive is additional materials for making of mud, in cessary. form of solid or liquid mixed with Basic Substance with a specific function. (2)The BasicSubstances used as the Drill Mud, as meant in paragraph (1), may be in form of: 6. Mud Waste is remains of use of Drill Mud in Drilling a. Water; which is no longer usable. b. Oil; or c. Synthetic materials. 7. Drill Cutting, which is hereinafter called Cutting, is remains and cuttings of waste from formations and (3)Additives used as Drill Mud, as meant in paragraph waste water as a result of DriUing activities. (1), are, among other things: a. BaHast, such as barite, hematite; 8. LCSO Test-96 hours (Lethal Concentration 50% for b. Viscosifter, such as bentonite, polymer; 96 hours), which is hereinafter caned LCSO Test-96 c. pH regulator, such as caustic soda (NaOH), po- Hours, is test into liqUid chemical substance with cal- tassium hydroXide; culation of a specific concentration may result in 50% d. Other additiVes, such as flUid loss control, share death on the tested animals in 96 hours. stabilizer. 9. Toxicity CharacteristicLeaching ProcedureTest, which Article 4 is hereinafter called TCLP Test, is test into Mud Waste (l)Other than basic substances in form of water, the to measure parameter of content or concentration selection of Basic Substance, as meant in Article 3 of polluter in the leach. paragraph (2), and Additive, as meant in Article 3 paragraph (3), for Drill Mud, must be based on the 10.Material Safety Data Sheet, which is hereinafter called information written on MSDS .end on toxicity, Business News 7458-7459/10-1-2007 (2) The . 4A (2)The information, as meant: in paragraph (I), must ArtICle 9 contain indicators, with lC50 Test-96 hours equal to (1) Before operating Drilling activities, business enter- or more than 30,000 ppm and/or TCLPTest. prise or permanent establishment must convey plan for treatment of Waste Mud and Drill Cutting to the (3)If the information, as meant in paragraph (2), is not Directorate General. contained in MSDS, LC50Test-96 hours and/or TCLP Test into Basic Substance and Additive must be op- (2)The plan for treatment of Mud Waste and Drill Cut- erated. ting, as meant in paragraph (I), is submitted along with and is a part inseparable from Environmental Article S Treatment (UKL) and Environmental Monitoring (UPL) In operating treatment of Mud Waste and Drill documents. Cutting, LCSO Test-96 Hours, oil content test, and/or TCLP Test must be operated. (3)Drilling may be operated after the plan for treatment of Mud Waste and Drill Cutting, as meant in para-

Article 6 graph (1), and UKL and UPL documents are ratified LCSO Test·96 hours,Oil content:test, and/orTCLP by the DIrector General. Test, as meant in Article 4 paragraph (3) and Article 5, are operated in accordance with the procedure stipu- CHAPTER III lated in Attachment I to this Regulation. DEVELOPMENT AND MONITORING

Article 10

Article 7 (l)The DIrector General performs development and TCLP Test, as meant in Article 4 paragraphs(2) monitoring of activities of Drilling of Drill Mud, Mud and (3), Article 5, and Article 6, must be in accordance Waste, and Drill Cutting. with standards of quality of TCLP, as specified in At- tachment II to this Regulation. (2)The development and monitoring, as meant in para- graph (1), are performed by the Director.

Article 8 (1)Mud Waste and Drill Cutting may not be finally dis- Article 11 posed into Sensitive Areas. (1) Businessenterprise or permanent establishment must convey report on Operation of Treatment of Drill Mud, (2)Sensitive Areas, as meant in paragraph (1), consist Mud Waste; and Drill Cutting to the Directorate Ge- of areas that include protected areas, probected for- neral. est areas, turf areas, water absorption areas, coastal side, river side, areas around lakes/dams, areas (2)The report, as meant In paragraph (1), is submitted around spring water, natural preserve areas and other along with report of operation of UKL and UPL. water areas, coastal areas with mangrove forests, national parks, forest areas, natural recreational ar- (3)Format of the report, as meant in paragraph (I), is eas, cultural and science preserve areas, and disas- as specified in Attachment III to this Regulation. ter-sensitive areas, as set forth in Presidential Dec- ree No. 32/1990 on Treatment of Protected Areas. CHAPTER IV TRANSITORY PROVISIONS (3)Final disposal, as meant in paragraph (1), is oper- Article 12 ated in accordance with the procedure set forth in When this Regulatlon comes into force, for Treat- Attachment I to this Regulation. ment of Drill Mud, Mud Waste, and Drill Cutting which is Business News 7458-7459/10-1-2007 not .... . . SA not in accordance with the conditions as set forth in this cessary, but if heavy metal is found in the Regulation, the business enterprise or permanent es- mud, Drill Cutting must be treated in a safe tablishment concerned must comply with this Regula- manner. If using oil and synthetic mud, test tion within not later than one (1) year sincedate of into oil content in Drill Cutting should be stipulation of this Regulation. conducted at least onceas long as oil mud is used. CHAPTER V b. On offshore Drilling using oil and synthetic CLOSING PROVISIONS mud, test into oil content in Drill Cutting

Article 13 should be conducted at least once as long This Regulation comes into force since the date as oil mud is used. it is stipulated. B. Test into Toxicity, Heavy Metal, and Oil Content Stipulated in Jakarta Test into toxldty, heavy metal, and oil content in On July 20, 2,006 Mud Waste and Drill Cutting is conducted based THE MINISTER OF on location of activities as follows: ENERGY AND MINERAL RESOURCES 1. Offshore Sgd For offshore actiVities, the kind of test con- PURNOMO YUSGIANTORO ducted is toxicity test on Mud Waste and test of 01/ content In Drill Cutting. ATTACHMENT I a. Toxicity test into Mud Waste 1) LC50 Test-96 hours must be conducted PROCEDURE OF TESTAND DISPOSAL OF at least once into similar system of Mud MUD WASTE AND DRILL CUTTING Waste on the samestructure in offshore drilling activities. I. TEST Limit of LC50 Test-96 hours into Mud A. Procedure of Test Waste disposable to the sea is over or 1. Treatment of Mud Waste equal to 30,000 ppm of Suspended Par- a. On on-shore explorations wells, TCLP Test ticulate Phase '(SPP). should be conducted when reaching total 2) Rateof toxicity of LC 50 is based on time depth for each kind of mud. This is needed of treatment during 96 hours of SPP on to ensure the existence of heavy metal in tested animals. the drilled structured. b. Test into Oil Content in Drill Cutting b. On offshore explorations well, LeSO Test- 1) On offshore treatment, hydrocarbon 96 hours should be conducted before mud concentrate in drill cutting is lesserthan is disposed to the offshore area, for each or equal to ten percent (10%), so Drill kind of mud, as material for evaluation in Cutting is disposable to Drilling location, the next explorations proqram. excapt to Sensitive Areas. c. On development wells, LCSO Test-96 hours 2) If hydrocarbon concentrate in drill cut- and TCLP Test during use of the same kind ting is over ten percent (10%), treat- of mud With the one at the time of Drilling ment musl be conducted in accordance at exploration stage are unnecessary. with the laws. d. If the Basic Substance and Additive used are different, a repeat test is unnecessary. 2. Onshore For onshore activities, the kind of test con- 2. Treatment of Drill Cutting ducted is TCLP test into heavy metal in Waste a. On on-shore drilling, TCLP Test is unne- Mud and test into oil content in Drill Cutting Business News 7458-7459/10-1-2007 a. TCLP 6A a. TCLP Test into Heavy Metal Mud Waste IS disposable to offshore, and if 1) TCLP Test is conducted into Mud Waste result of LC50 Test-96 hours into Mud Waste and Drill Cutting to determine criteria is lesser than 30,000 ppm, further treatment of place of disposal of Mud Waste and of Mud Waste must be conducted in accor- Drill Cutting onshore. dance with the laws. 2) If TCLP rate for each parameter Is lesser than the standards of quality as speci- 2. Disposal of Mud Waste from Drill Mud with oil fied in Attachment II to this Regulation, and synthetic materials as basic substances Drill Cutting Is disposable to the Drilling Mud Waste from Drill Mud With oil and syn- location, except to sensitive areas. thetic materials as basic substances are reus- 3) IfTCLP rate is over or equal to the stan- able, and if disposal is conducted, it must be dards of quality as specified in Attach- implemented in accordance with the laws. ment II to this Regulation, Drill Cutting must be disposed to a special place hav- 3. Disposal of Dritl Cutting ing permeability over or equal to 105 Drill CUtting with oil content of lesser than or em/second. ~ual to ten percent (10%) is disposable to b. Drill Waste/Waste Water offshore, and if oil content is over ten percent Waste water from process of separation of (10%), further treatment must be conducted Mud Waste and water as its basic substance in accordance With the laws. is disposable to the water body if the result of laboratory test is in ac.rnrdance with the B. Final Disposal of Mud Waste and Drill Cutting On- provisions of decree of. the Minister of En- shore vironment No. 42/MENLH/10/1996 on Stan- Treatment and disposal of Mud Waste and Drill dards Of Quality of waste water in Oil and Cutting onshore include: Gas Activities. 1. DIspos~1 of Mud Waste and Drill Mud with water c. Oil Content in Drill Cutting as basic substance. 1) On onshore treatment, hydrocarbon con- a. Preparing and designing waste accommo- centrate in Drill Cutting of lesser or equal dating places in accordance with type of to one percent (1 %) is disposable to Drill- waste treated and condition of drilling lo- ing location, except to Sensitive Areas. cation. 2) If hydrocarbon concentrate in Drill Cut- b. Implementing treatment at waste accom- ting is over one percent (1 %), treatment modating places that includes: is conducted in accordance with the 1) separation of solid and liquid waste; laws. 2) Separation of oil from liQuid waste; 3} Separation of soluble solids. II. FINAL DISPOSAL c. Separation of liquid waste and solid waste A. Final Disposal of Mud Waste and Drill Cutting Off- by devices. shore Treatment and disposal of Mud Waste from Drill 2. Disposal of Mud Waste from Drill Mud with oil Cutting offshore include: and synthetic materials as basic substances 1. Disposal of Mud Waste and Drill Mud with water and disposal of Drill CUtting as basic SUbstance. a. Mud Waste from Drill Mud with oil as basic In drilling activities at explorations stage, If substance is reusable, and if it is disposed, result of lCSO Test-96 hours of fresh mud in- disposal must be conducted in accordance dicates a rate over or equal to 30,000 ppm, with the laws. Business News 7458-7459/10-1-2007 b. Treatment ..•.. 7A b. Treatment of Drill Cutting from Drill 'Mud THE MINISTER OF with oil as bastc substance is started by ENERGY AND MINERAL RESOURCES separating of oil and soUds (de-oiling). The Sgd Drill Mud with oil as basic substance is reus- PURNOMO YUSGIANTORO able or recyclable. The solids are further treated until they are in accordance with the ATTACHMENT III standards of quality as set forth in the laws. FORMAT OF REPORT OF TREATMENT OF C. Alternative Disposal of Mud Waste and Drill Cut- DRILL MUD, MUD WASTE, AND DRILL CUTTING IN ting OILAND GAS DRIWNG ACfIVffiES Disposal of Mud Waste and Drill Cutting may be conducted by injection into formation or annulus 1. Name of Company or by other means of technology. 2. Full address THE MINISTER OF Phone ENERGY AND MINEAAl RESOURCES Fax Sgd 3. Party in charge PURNOMO YUSGlANTORO (name and title) ATTACHMIH'f'D 4. Location of activity a. Onshore/offshore STANDARD OF QUAutYOF TCLP INTO b. Name of welt HEAVY METAL IN MUD WASTE c. Wen's sub cavity d. Well's coordinate Chemical e. Well's status No Symbol Standard of quality, mgjl Name 5. Type of mud 1 Arsen As 5.0 6. Result of analysis of mud 2 Barium Ba 100.0 a. Drill cutting b. Drill mud waste 3 Cadmium Cd 1.0 (TCLP/LC-50) 4 Chromium Cr 5.0 7. Volume of drill mud waste ... m3 8. Volume of drill cutting ... m3 5 Copper Cu 10.0 9. Treatment system 6 Lead Pb 5.0 10.Schedule of treatment of waste: 7 Mercury Hg 0.2 THE MINISTER OF 8 Selenium Se 1.0 ENERGY AND MINERAL RESOURCES 9 Silver Ag 5.0 Sgd PURNOMO YUSGIANTORO 10 Zinc Zn 50.0 -===(E)===-- Business News 7458-7459/10-1-2007