88R7367 ANG-D
 
  By: Goodwin H.B. No. 3840
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the extension of the deadline for plugging certain
  inactive wells under the jurisdiction of the Railroad Commission of
  Texas.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 89.023, Natural Resources Code, is
  amended by amending Subsection (a) and adding Subsections (a-1),
  (a-2), (c), (d), and (e) to read as follows:
         (a)  Subject to Subsection (c), the [The] commission may
  grant an extension of not more than five years of the deadline for
  plugging an inactive well if the operator maintains a current
  organization report with the commission as required by Section
  91.142 and if, on or before the date of renewal of the operator's
  organization report as required by that section, the operator files
  with the commission an application for an extension that includes:
               (1)  an affirmation that complies with Section 89.029;
               (2)  a statement that the operator has, and on request
  will provide, evidence of a good faith claim to a continuing right
  to operate the well; [and]
               (3)  at least one of the following:
                     (A)  documentation that since the preceding date
  that the operator's organization report was required to be renewed
  the operator has plugged, or restored to active operation as
  defined by commission rule, a number of inactive wells equal to or
  greater than 10 percent of the number of inactive wells operated by
  the operator on that date;
                     (B)  an abeyance of plugging report on a form
  approved by the commission that:
                           (i)  is in the form of a certification signed
  by a person licensed by the Texas Board of Professional Engineers
  and Land Surveyors as an engineer or by the Texas Board of
  Professional Geoscientists;
                           (ii)  includes:
                                 (a)  an affirmation by the licensed
  person that the well has:
                                       (1)  a reasonable expectation of
  economic value in excess of the cost of plugging the well for the
  duration of the period covered by the report, based on the cost
  calculation for plugging an inactive well; and
                                       (2)  a reasonable expectation of
  being restored to a beneficial use that will prevent waste of oil or
  gas resources that otherwise would not be produced if the well were
  plugged; and
                                 (b)  appropriate documentation
  demonstrating the basis for the affirmation of the well's future
  utility; and
                           (iii)  specifies the field and the covered
  wells within that field in a format prescribed by the commission;
                     (C)  a statement that the well is part of an
  enhanced oil recovery project;
                     (D)  if the operator of the well is not currently
  otherwise required by commission rule or order to conduct a fluid
  level or hydraulic pressure test of the well, documentation of the
  results of a successful fluid level or hydraulic pressure test of
  the well conducted in accordance with the commission's rules in
  effect at the time the test is conducted;
                     (E)  [a supplemental bond, letter of credit, or
  cash deposit sufficient for each well specified in the application
  that:
                           [(i)  complies with the requirements of
  Chapter 91; and
                           [(ii)  is of an amount at least equal to the
  cost calculation for plugging an inactive well for each well
  specified in the application;
                     [(F)]  documentation of the deposit with the
  commission each time the operator files an application of an amount
  of escrow funds as prescribed by commission rule that equal at least
  10 percent of the total cost calculation for plugging an inactive
  well for each well specified in the application; or
                     (F) [(G)]  if the operator is a publicly traded
  entity,[:
                           [(i)]  the following documents:
                           (i) [(a)]  a copy of the operator's federal
  documents filed to comply with Financial Accounting Standards Board
  Statement No. 143, Accounting for Asset Retirement Obligations;
  and
                           (ii) [(b)]  an original, executed Uniform
  Commercial Code Form 1 Financing Statement, filed with the
  secretary of state, that:
                                 (a) [(1)]  names the operator as the
  "debtor" and the Railroad Commission of Texas as the "secured
  creditor"; and
                                 (b) [(2)]  specifies the funds covered
  by the documents described by Subparagraph (i) [Sub-subparagraph
  (a)] in the amount at least equal to the applicable decommissioning
  cost estimate established by the commission under Subsection (a-1)
  for each well specified in the application; and
               (4)  a supplemental bond, letter of credit, or cash
  deposit sufficient for each well specified in the application that:
                     (A)  complies with the requirements of Chapter 91;
  and
                     (B)  is of an amount at least equal to the
  applicable decommissioning cost estimate established by the
  commission under Subsection (a-1) for each well specified in the
  application [of the cost calculation for plugging an inactive well
  for each well specified in the application; or
                           [(ii)  a blanket bond in the amount of the
  lesser of:
                                 [(a)  the cost calculation for
  plugging any inactive wells; or
                                 [(b)  $2 million].
         (a-1)  Based on the information provided to the commission
  under Subsection (a-2), the commission shall establish
  decommissioning cost estimates for each oil and gas producing
  region of the state, as determined by the commission, annually and
  post the estimates on the commission's publicly accessible Internet
  website.
         (a-2)  The commission shall require each operator to provide
  decommissioning cost information to the commission on an annual
  basis, including, for each well site:
               (1)  the depth of the well;
               (2)  the age of the well bore;
               (3)  a summary explaining factors or complications
  related to the well or well site that may influence the cost of
  plugging or cleanup at the well site;
               (4)  an estimated cost of materials and equipment
  necessary to plug the well bore and clean up the well site;
               (5)  an estimated cost of labor necessary to plug the
  well bore, clean up the well site, and remove any equipment;
               (6)  overhead expenses; and
               (7)  whether the well bore or site has undergone
  reworking operations during the preceding year.
         (c)  If an operator has previously obtained an extension of
  the deadline for plugging an inactive well of five years or more,
  the commission may only grant two additional one-year extensions.
         (d)  The commission may deny a request for an extension of
  the deadline for plugging an inactive well if the operator has not
  demonstrated financial solvency.
         (e)  Notwithstanding Section 89.021, this section applies to
  bay and offshore wells.
         SECTION 2.  Section 89.027(a), Natural Resources Code, is
  amended to read as follows:
         (a)  A supplemental bond, letter of credit, or cash deposit
  filed under Section 89.023(a)(4) [89.023(a)(3)(E)] is in addition
  to any other financial assurance otherwise required of the operator
  or for the well.
         SECTION 3.  Section 89.028(a), Natural Resources Code, is
  amended to read as follows:
         (a)  Escrow funds described by Section 89.023(a)(3)(E)
  [89.023(a)(3)(F)] must be deposited with the commission each time
  an operator files an application for an extension of the deadline
  for plugging an inactive well.
         SECTION 4.  (a) The changes in law made by this Act apply
  only to a person required to file a bond, letter of credit, or cash
  deposit under Section 89.023, Natural Resources Code, on or after
  the effective date of this Act. A person required to file a bond,
  letter of credit, or cash deposit under Section 89.023, Natural
  Resources Code, before the effective date of this Act is governed by
  the law as it existed immediately before the effective date of this
  Act, and that law is continued in effect for that purpose.
         (b)  Notwithstanding Subsection (a), an operator of a well in
  existence on the effective date of this Act is not required to hold
  an individual bond that meets the requirements of Section 89.023,
  Natural Resources Code, as amended by this Act, until September 1,
  2026. The law as it existed immediately before the effective date
  of this Act is continued in effect for that purpose.
         SECTION 5.  This Act takes effect September 1, 2023.