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House Bill 2259 |
House Author: Crownover et al. |
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Effective: 9-1-09 |
Senate Sponsor: Duncan |
Current law includes provisions on an oil or gas well operator's duty to plug inactive oil and gas wells. House Bill 2259 amends the Natural Resources Code to establish mandatory surface equipment removal requirements and a process through which an operator can qualify for a deadline extension for plugging an inactive well. The bill requires an operator to plug an inactive well, excluding bay or offshore wells, on or before the due date for the annual renewal of the operator's organization report submitted to the Railroad Commission of Texas. The commission may grant an extension of the well-plugging deadline if the report includes an affirmation that the organization has complied with surface requirements, including the termination of electrical service, the emptying and purging of all pipes, tanks, and vessels for inactive wells more than 5 years old but less than 10 years old, and removal of all surface equipment for inactive wells more than 10 years old, subject to exceptions for safety and required maintenance; a statement that the well and associated facilities are in compliance with all commission rules and orders; a statement that the operator has evidence of a good faith claim to a continuing right to operate the well; and one of the following financial assurances:
· documentation that since the last renewal of its organization report the operator has plugged or restored to active operation at least 10 percent of the inactive wells identified at the time of the operator’s last renewal;
· an abeyance of plugging report that is signed by a licensed engineer or geoscientist stating the well can reasonably be expected to have an economic value in excess of the cost of plugging the well and be restored to a beneficial use that will prevent waste of oil or gas resources if the well were otherwise plugged and includes documentation demonstrating the basis for the well's future utility and a $100 fee for each well covered by the report for deposit in the oil-field cleanup fund;
· a statement that the well is part of an enhanced oil recovery project;
· if the operator of the well is not required by commission rule or order to conduct a fluid level or hydraulic pressure test of the well, documentation that the well has passed a sanctioned fluid level test or hydraulic pressure test and a $50 fee per well for deposit in the oil-field cleanup fund;
· a supplemental bond, letter of credit, or cash deposit in an amount at least equal to the cost calculation of plugging each well specified in the application;
· documentation of an amount of escrow funds equal to at least 10 percent of the total cost calculation for plugging each well specified in the application; or
· for a publicly traded company, certain financial documents related to asset retirement obligations and naming the commission as a "secured creditor" with respect to the funds or a blanket bond in the amount of the lesser of the cost calculation for plugging any inactive wells or $2 million.
The commission can revoke a deadline extension for plugging inactive wells if it determines, after notice and an opportunity for a hearing, that the applicant was ineligible for the extension under its rules or orders.