By Craddick H.B. No. 2731
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the Texas Experimental Research and Recovery Activity
1-3 for oil and gas production research.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. The legislature finds that current oil and gas
1-6 production practices will leave unrecovered much of the
1-7 hydrocarbons originally in place under public and private land, and
1-8 that the economic activity flowing from the recovery of a
1-9 significant portion of these hydrocarbons would be of great benefit
1-10 to the future well-being of the people of the state. The
1-11 legislature also finds that the incentives and opportunities
1-12 provided in this act will enhance and encourage development of new
1-13 technologies needed to identify and recover these hydrocarbons.
1-14 The development of these technologies within the state would be of
1-15 benefit to the state's economy. The legislature further finds that
1-16 mechanically sound, non-polluting wells which would otherwise be
1-17 plugged and abandoned are a valuable asset, useful in the
1-18 development of previously overlooked hydrocarbon deposits and new
1-19 recovery technologies, which may lead to a return of the wells to
1-20 commercial production. Mineral interest owners should be
1-21 encouraged voluntarily to preserve and utilize wells toward those
1-22 ends by agreement with the state under this act. The legislature
1-23 finds that the activities provided by this act serve a governmental
2-1 purpose and benefit to the people of this state.
2-2 SECTION 2. Title 3, Natural Resources Code, is amended by
2-3 adding Chapter 93 to read as follows:
2-4 CHAPTER 93. TEXAS EXPERIMENTAL RESEARCH AND RECOVERY ACTIVITY.
2-5 SUBCHAPTER A. GENERAL PROVISIONS
2-6 Sec. 93.001. Definitions. In this subchapter:
2-7 (1) "Terra Fund" means the fund created under Section
2-8 93.003 of this chapter.
2-9 (2) "Licensee" means a person licensed by the
2-10 commission to use a TERRA wellbore.
2-11 (3) "Mineral Interest Owner" means an owner of a
2-12 present possessory mineral interest or vested mineral interest that
2-13 may become present and possessory.
2-14 (4) "Operator" means the person legally responsible
2-15 under law or commission rules for the physical operation of a
2-16 wellbore or lease;
2-17 (5) "Present possessory mineral interest" means a
2-18 mineral interest that includes the present right to use the land
2-19 surface for exploration and production of minerals;
2-20 (6) "Production test" means a test to determine
2-21 whether a given recovery technique will yield production in paying
2-22 quantities.
2-23 (7) "Responsible person" has the meaning given in
2-24 Section 91.113(b) of this code and includes a licensee;
2-25 (8) "Tract" means an oil lease or a gas proration unit
3-1 established under commission rules;
3-2 (9) "Wellbore" means a hole in the ground drilled in
3-3 connection with the exploration, development or production of oil,
3-4 gas, or geothermal resources and includes any tubular goods
3-5 cemented in the hole;
3-6 (10) "Wellsite equipment" means any production-related
3-7 equipment or materials specific to a wellbore including motors,
3-8 pumps, pump jacks, tanks, tank batteries, separators, compressors,
3-9 casing, tubing, and rods.
3-10 Sec. 93.002. Texas Experimental Research and Recovery
3-11 Activity. (a) The Texas Experimental Research and Recovery
3-12 Activity (TERRA) is established within the Railroad Commission of
3-13 Texas.
3-14 (b) The purpose of TERRA is:
3-15 (1) to assemble and hold an inventory of mechanically
3-16 sound and non-polluting wellbores, to be licensed by the commission
3-17 for use in gathering data, performing production tests, and
3-18 developing and testing enhanced or advanced recovery techniques;
3-19 (2) to enable mineral interest owners to realize any
3-20 commercial potential which may be found in such wellbores as
3-21 technology and circumstances change; and
3-22 (3) to protect the environment by ensuring that TERRA
3-23 wellbores posing a pollution threat or determined to be without
3-24 economic value are properly plugged in accordance with state law
3-25 and rules of the commission.
4-1 (c) The commission has broad discretion in administering
4-2 this chapter and may adopt and enforce any appropriate rules or
4-3 orders that the commission finds necessary to administer this
4-4 chapter.
4-5 Sec. 93.003. TERRA Fund. (a) The TERRA Fund is created as
4-6 a special fund in the state treasury dedicated to TERRA purposes.
4-7 (b) The TERRA fund consists of:
4-8 (1) license fees collected under Section 93.030(e) of
4-9 this code;
4-10 (2) monies from the oil-field cleanup fund as provided
4-11 by Section 93.013(b) of this code:
4-12 (3) payments received under Section 93.013(a)(6) of
4-13 this code;
4-14 (4) payments received under Sections 93.032 and 93.052
4-15 of this code;
4-16 (5) interest earned on the funds deposited in the
4-17 TERRA fund;
4-18 (6) an amount which shall be transferred from the
4-19 oil-field cleanup fund to the TERRA fund annually on the first day
4-20 of January equal to the total money received by the oil-field
4-21 cleanup fund as proceeds from the sale of salvaged equipment under
4-22 Sections 89.085(d) and 91.115(f) of this code, less the total money
4-23 paid out to claimants under Section 89.086 of this code, during the
4-24 previous fiscal year; and
4-25 (7) private contributions or grant monies.
5-1 (c) Money in the TERRA fund may be used by the commission
5-2 for:
5-3 (1) the purposes of TERRA, including administrative
5-4 costs; and
5-5 (2) administrative and program costs of the commission
5-6 relating to its oil and gas activities, including those under
5-7 Subchapter M of Chapter 91 of this code, except that the commission
5-8 may use only 75 percent of the annual interest earned on the funds
5-9 for this purpose.
5-10 (d) Money in the TERRA fund may not be obligated for the
5-11 purposes described in Subsection (c)(2) of this section unless the
5-12 TERRA fund balance exceeds the total estimated plugging cost of all
5-13 TERRA wells.
5-14 (e) After September 1, 1999, the commission may not accept a
5-15 well into TERRA under Section 93.013(a)(6) unless the TERRA fund
5-16 balance exceeds the total estimated plugging cost of all TERRA
5-17 wells.
5-18 Sec. 93.004. Use of Oil-field Cleanup Fund. Except as
5-19 provided in Section 93.013(b), a well in the TERRA program shall
5-20 not be plugged with funds from the oil-field cleanup fund.
5-21 SUBCHAPTER B. TERRA AGREEMENT
5-22 Sec. 93.011. Agreement between Commission and Mineral
5-23 Interest Owners. (a) A mineral interest owner may designate the
5-24 commission as its agent and grant to the commission an easement for
5-25 the sole purpose of maintaining and licensing a wellbore in TERRA.
6-1 (b) The commission may accept grants of easements from, and
6-2 become the agent of, a mineral interest owner. Easements granted
6-3 to the commission under this chapter are public property held and
6-4 used on behalf of the public solely for the purposes of TERRA as
6-5 provided in this chapter and shall not be subject to taxation.
6-6 (c) The commission shall prepare a form for the "TERRA"
6-7 agreement. The agreement shall include the following provisions,
6-8 which when executed by a mineral interest owner:
6-9 (1) grant the commission an easement for access to the
6-10 wellbore solely for TERRA purposes;
6-11 (2) designate the commission as the mineral interest
6-12 owner's agent for maintaining the wellbore in TERRA and licensing
6-13 the wellbore solely for the uses specified in this subchapter; and
6-14 (3) allow the use of wellsite equipment found at or in
6-15 the wellbore by a licensee for the term of the license.
6-16 (d) The TERRA agreement may incorporate by reference any
6-17 provisions of this chapter.
6-18 (e) The TERRA agreement shall also contain:
6-19 (1) the section, block, survey, and abstract number of
6-20 the land on which a subject wellbore is located;
6-21 (2) the API number for the subject wellbore and the
6-22 commission district and lease number or the commission gas
6-23 identification number for each well in the wellbore;
6-24 (3) the name of the lease as shown on commission
6-25 records; and
7-1 (4) any other provisions deemed necessary by the
7-2 commission.
7-3 (f) The consideration for the granting of the easement and
7-4 the use of any wellsite equipment shall be the forbearance by the
7-5 commission from requiring the mineral interest owners' compliance
7-6 with otherwise applicable rules regarding maintenance and plugging
7-7 of inactive wells, as well as the possibility that participation in
7-8 TERRA may lead to the recovery of hydrocarbons, which otherwise
7-9 would not have been recovered, for the mineral interest owner.
7-10 (g) The commission shall file the agreement in the office of
7-11 the clerk of the county in which the wellbore is located, and the
7-12 clerk shall record it in the real property records without
7-13 collecting a fee.
7-14 Sec. 93.012. Validity of Terra Easements. (a) Easements
7-15 granted in the TERRA agreement run with the land and are valid
7-16 notwithstanding:
7-17 (1) they are not appurtenant to an interest or estate
7-18 in real property;
7-19 (2) they are not of a character traditionally
7-20 recognized under the common law;
7-21 (3) they do not touch and concern the land; and
7-22 (4) there is no privity of estate between the grantor
7-23 and the commission.
7-24 (b) The TERRA agreement, including the designation of the
7-25 commission as agent of the grantor, binds all
8-1 successors-in-interest of the mineral interest owner even though
8-2 the commission does not have a beneficial interest in the mineral
8-3 estate or the wellbores made the subject of a TERRA agreement.
8-4 (c) A vested mineral interest existing at the time a TERRA
8-5 agreement is executed is not affected by the TERRA agreement unless
8-6 the owner of the mineral interest is a party to the agreement or
8-7 ratifies or consents to it.
8-8 (d) A mineral interest in a tract on which a TERRA wellbore
8-9 is located which is acquired by a person after the person has
8-10 signed a TERRA agreement pertaining to the wellbore is bound by the
8-11 TERRA agreement.
8-12 Sec. 93.013. Acceptance of Wellbores into TERRA. (a) An
8-13 inactive wellbore used in connection with the exploration for or
8-14 production of hydrocarbons may, at the discretion of the
8-15 commission, be accepted into TERRA if the commission finds the
8-16 wellbore useful to the accomplishment of the purposes of this
8-17 chapter and if:
8-18 (1) in the case of mineral interests owned by the
8-19 state or by a state agency, or political subdivision of the state,
8-20 the person or governing body authorized by law to lease the mineral
8-21 interest, the person or governing body authorized by law to approve
8-22 a lease of the mineral interest, and the lessee, if the land is
8-23 leased, have signed the TERRA agreement covering the wellbore;
8-24 (2) in the case of mineral interests privately owned,
8-25 the owners of at least fifty percent of the present possessory
9-1 mineral interest in all horizons originally penetrated by the
9-2 wellbore, along with the owners of any other mineral interest
9-3 required by the commission, have signed the TERRA agreement
9-4 covering the wellbore;
9-5 (3) the wellbore and wellsite are in compliance with
9-6 state laws and commission rules, and the wellbore is free of
9-7 obstructions and mechanically sound as shown by a current fluid
9-8 level test or, if the wellbore is at least 25 years old and has
9-9 been inactive at least ten years, or when otherwise required by the
9-10 commission at its discretion, by a current mechanical integrity
9-11 test prescribed by the commission;
9-12 (4) the commission is provided with documentation that
9-13 other than the liens created under Chapter 89 of this code, there
9-14 are no outstanding charges, liens, or obligations of any kind
9-15 secured wholly or in part by the leasehold estate or by any
9-16 wellsite equipment;
9-17 (5) the possessory mineral interest owner or last
9-18 operator provides the commission with a copy of all logs and each
9-19 item of wellbore documentation in its possession or control; and
9-20 (6) the commission receives from the mineral interest
9-21 owner, for deposit into the TERRA fund, payment in an amount to be
9-22 set by the commission, depending on the age and condition of the
9-23 wellbore, not to exceed 75 percent of the commission's estimated
9-24 costs of plugging the wellbore. If the wellbore is not accepted
9-25 into TERRA, the payment shall be returned.
10-1 (b) The commission, at its discretion, may place an
10-2 abandoned wellbore scheduled for plugging with state funds under
10-3 Chapter 89 of this code in TERRA if it meets the requirements of
10-4 Subdivisions (1) through (4) of this section. Upon placement of
10-5 the wellbore in TERRA, the commission shall transfer from the
10-6 oil-field cleanup fund to the TERRA fund an amount equal to 100
10-7 percent of the commission's estimated plugging costs. If, after
10-8 such a transfer of funds, the well must be plugged with state funds
10-9 while it remains in TERRA, it shall be plugged with money from the
10-10 TERRA fund; the oil-field cleanup fund may not be used to plug a
10-11 TERRA well.
10-12 (c) If a well transferred to the TERRA program under
10-13 Subsection (b) of this section is subsequently released under
10-14 Subchapter D of this chapter, the amount received into the TERRA
10-15 fund under Subsection (b) shall be transferred back to the
10-16 oil-field cleanup fund.
10-17 (d) The offer of a wellbore into TERRA or its acceptance by
10-18 the commission is not to be construed as an abandonment of the
10-19 wellbore or of the lease or the lease purposes by the mineral
10-20 interest owner.
10-21 Sec. 93.014. Effect of Acceptance of Wellbore into TERRA.
10-22 (a) Upon acceptance of a wellbore into TERRA, the commission shall
10-23 assume the well plugging duties imposed on the last operator by
10-24 Chapter 89 of this code until the wellbore is released from TERRA
10-25 under Subchapter D of this chapter.
11-1 (b) A licensee or the commission is not responsible for any
11-2 discharge of oil and gas waste or other substances or materials
11-3 regulated by the commission under Section 91.101 of this code
11-4 occurring before the wellbore was accepted into TERRA.
11-5 (c) If a mineral interest owner has materially misstated the
11-6 condition of a wellbore or wellsite and its compliance with
11-7 Subsections (a)(3) or (a)(4) of Section 93.013 in connection with
11-8 the acceptance of the wellbore into TERRA, the commission, after
11-9 notice and opportunity for a hearing, may:
11-10 (1) order restoration of all plugging and cleanup
11-11 responsibility to the mineral interest owner and require the
11-12 mineral interest owner to plug the wellbore and to cleanup the
11-13 wellsite; or
11-14 (2) plug the wellbore and cleanup the wellsite.
11-15 (d) In an action under Subsection (c) of this section, the
11-16 commission may retain, as an administrative penalty or a portion
11-17 thereof, the payment made under Section 93.013(a)(6) and order
11-18 reimbursement of any plugging or cleanup costs incurred by the
11-19 commission.
11-20 (e) Acceptance of a wellbore into TERRA or transfer of funds
11-21 from the oil-field cleanup fund to the TERRA fund does not bar the
11-22 commencement or continuation of administrative or judicial
11-23 proceedings, including collection suits, against an operator or
11-24 other responsible person for violations of commission rules or
11-25 orders or state law.
12-1 (f) Acceptance by the commission of a wellbore into TERRA
12-2 creates a rebuttable presumption that the well was in compliance
12-3 with commission rules at the time of acceptance.
12-4 (g) For the purposes of this section, mineral interest
12-5 owners who have signed a TERRA agreement and who are not licensees
12-6 are not "responsible persons" as defined in Section 91.113(b) of
12-7 this code for a well covered by the agreement and, except as
12-8 provided by Subsection (c) of this section, shall not be
12-9 responsible under commission rules for plugging, cleaning up, or
12-10 remediating a TERRA well or TERRA wellsite.
12-11 (h) Neither the commission nor a licensee shall be held to
12-12 exercise any fiduciary or similar duties for the benefit of a
12-13 mineral interest owner in the tract on which a TERRA wellbore is
12-14 located, and no express or implied lease covenants shall apply to
12-15 the commission or a licensee in the use or non-use of a TERRA
12-16 wellbore.
12-17 SUBCHAPTER C. LICENSES FOR TERRA WELLBORES
12-18 Sec. 93.030. Application for License and Fees. (a) An
12-19 applicant for a license shall comply with Subchapters D and E of
12-20 Chapter 91 before the commission may issue a license.
12-21 (b) A separate application must be submitted for each oil
12-22 lease and each gas wellbore.
12-23 (c) An application for a license shall be on a form
12-24 prescribed by the commission.
12-25 (d) The commission may require an applicant for a license to
13-1 provide any information relating to a tract that is the subject of
13-2 a license, including a legal description of the mineral ownership
13-3 of the tract and identification and location of wells. If an
13-4 applicant intends to claim that any of the information submitted is
13-5 confidential under Section 552.110, Government Code, relating to
13-6 trade secrets or Section 552.113, Government Code, relating to
13-7 geological or geophysical information, the applicant must request,
13-8 in writing, confidential treatment and clearly mark such documents
13-9 as confidential.
13-10 (e) With each application for a license, an applicant shall
13-11 submit to the commission a non-refundable administrative fee equal
13-12 to the lesser of $50.00 per well or $500.00 per tract. All fees
13-13 collected under this section shall be deposited in the TERRA fund.
13-14 (f) The commission may require an applicant to provide the
13-15 commission with TERRA agreements executed by owners of reversionary
13-16 and other mineral interests before the license may be issued.
13-17 (g) A license may be renewed or amended as provided by
13-18 commission rules. An application for release of a TERRA wellbore
13-19 submitted to the commission under Section 93.052 or Section 93.053
13-20 has priority over a new license for a TERRA wellbore or an
13-21 amendment or renewal of an existing license.
13-22 Sec. 93.031. Licenses under TERRA. (a) A license entitles
13-23 the licensee to use the wellbore named in the license for the
13-24 duration of the license, solely for the purposes of TERRA and in
13-25 accordance with the license, this chapter and other applicable
14-1 state law. A licensee shall comply with all commission rules
14-2 governing the licensed use, including rules that require a permit
14-3 be issued or an exception to a commission rule be granted. A
14-4 licensee is the "responsible person" as defined in Section
14-5 91.113(b) of this code for the licensed wellbores for the duration
14-6 of the license, and until any violations of commission rules or
14-7 orders committed by the licensee have been corrected.
14-8 (b) A license shall state its duration, the specific uses to
14-9 which the listed wellbore may be put, and any conditions imposed by
14-10 the commission.
14-11 (c) All licenses must be approved by the commission by
14-12 adoption of a final order and may be in the form of a commission
14-13 order or in some other form prescribed by the commission.
14-14 (d) The commission may hold a hearing on an application for
14-15 a license and a proposed use in accordance with commission rules.
14-16 Sec. 93.032. Violation of License. If a licensee violates a
14-17 license or a commission rule or order, the commission may revoke
14-18 the license. If the violation is of a license condition, rule or
14-19 order pertaining to safety or the prevention or control of
14-20 pollution, the commission may seek reimbursement of its costs and
14-21 administrative penalties under Chapters 81 or 85 of this code or
14-22 proceed against a bond or letter of credit, or both. Any penalties
14-23 or reimbursement shall be deposited into the TERRA fund.
14-24 Sec. 93.033. Licensed Uses. TERRA wellbores may be licensed
14-25 for the collection of data, for production testing, or for
15-1 developmental research on recovery techniques, each of which must
15-2 have a reasonable potential to increase the recovery of
15-3 hydrocarbons from the tract on which the wellbores are located.
15-4 The commission may by rule or as a part of the license establish
15-5 terms and conditions for licensed uses.
15-6 Sec. 93.034. Expiration of License. At the end of a
15-7 license, if not renewed, the commission may release a wellbore
15-8 under the license as provided in Subchapter D of this chapter,
15-9 maintain the wellbore in TERRA, or license the wellbore to another
15-10 person.
15-11 Sec. 93.035. Wellsite Equipment. (a) A licensee may use,
15-12 or may remove and safeguard, wellsite equipment in which it has no
15-13 legal interest. A licensee shall return and properly reinstall all
15-14 equipment removed, no later than 30 days after the license expires
15-15 unless:
15-16 (1) the equipment has been lawfully claimed by a
15-17 person with an ownership or security interest in the equipment; or
15-18 (2) a possessory mineral interest owner or the owner
15-19 of the equipment has requested otherwise.
15-20 (b) If the wellbore has been plugged, the licensee is not
15-21 required to reinstall any wellsite equipment taken from the
15-22 wellbore or wellhead.
15-23 (c) Any person who removes wellsite or production equipment
15-24 from a licensed or unlicensed TERRA wellbore is subject to the
15-25 regulatory jurisdiction of the commission under Subchapter C,
16-1 Chapter 81 of this code. Any reimbursement of commission costs or
16-2 administrative penalties assessed or civil penalties adjudged in an
16-3 action against such person for violation of commission rules shall
16-4 be deposited into the TERRA fund.
16-5 Sec. 93.036. Restoration of Land Surface. Within a
16-6 reasonable time not to exceed 30 days after the end of a licensed
16-7 use, a licensee shall restore the surface of the land, as nearly as
16-8 reasonably possible, to the condition of the land when the licensed
16-9 use commenced. This section shall not apply if, before the end of
16-10 the 30-day period, the licensee, acting under a lease, obtains
16-11 release of the wellbore from TERRA and assumes responsibility for
16-12 the wellbore under state law and commission rules.
16-13 Sec. 93.037. Produced Hydrocarbons. (a) Hydrocarbons
16-14 produced during a commission-approved production test from a TERRA
16-15 wellbore may be sold by the licensee without complying with
16-16 Subchapter E, Chapter 85 of this code. No allowable is required in
16-17 order to produce hydrocarbons except that the licensee shall report
16-18 all production in accordance with commission rules.
16-19 (b) Unless otherwise provided in a lease or other legal
16-20 document, proceeds of any hydrocarbons produced during a
16-21 commission-approved production from a TERRA wellbore and sold by a
16-22 licensee shall be paid as follows:
16-23 (1) on Relinquishment Act lands, one-half of the
16-24 proceeds shall be paid as royalty as required by law, to be
16-25 apportioned between the owner of the soil and the state, and
17-1 one-half to the licensee;
17-2 (2) on other lands in which the state owns the
17-3 minerals, one-half to the state fund into which royalties from the
17-4 well would be deposited, and one half to the licensee;
17-5 (3) on lands in which the mineral interest is
17-6 privately held, one-half to the mineral owners according to their
17-7 interests and one-half to the licensee; and
17-8 (4) on lands in which the mineral interest falls into
17-9 more than one of the preceding categories, paid ratably according
17-10 to the percentage of the interest in each category.
17-11 (c) Unless otherwise provided in a lease or other legal
17-12 document, prompt payment shall be made by the licensee in
17-13 accordance with Subchapter J, Chapter 91 of this code.
17-14 (d) A mineral interest owner accepting payment of a share of
17-15 the proceeds under this section ratifies and consents to the terms
17-16 of and becomes bound by the TERRA agreement which covers such
17-17 proceeds.
17-18 (e) The production of a reasonable amount of hydrocarbons,
17-19 to be determined by the commission, from a TERRA wellbore during a
17-20 commission-approved production test shall not be considered waste
17-21 of the corpus or remainder of a mineral estate, and Section 64.092,
17-22 Civil Practice and Remedies Code, shall not apply.
17-23 (f) Hydrocarbons produced from a TERRA wellbore during a
17-24 commission-approved production test shall be treated as ordinary
17-25 production in any determination that a lease requirement for
18-1 production to be continued in paying quantities has or has not been
18-2 met.
18-3 Sec. 93.038. Tax Exemption for TERRA Production. Production
18-4 from a TERRA wellbore and production from a former TERRA wellbore
18-5 that resumes production after at least two years' participation in
18-6 TERRA shall be exempt from severance taxes.
18-7 Sec. 93.039. Prevention of Pollution. Nothing in this
18-8 subchapter is to be construed to limit the commission's authority
18-9 under this title to prevent pollution, to plug wells, and to
18-10 control or cleanup oil and gas wastes or other substances or
18-11 material.
18-12 SUBCHAPTER D. RELEASE OF WELLBORES FROM TERRA
18-13 Sec. 93.051. Plugging of Wellbore. A wellbore may be
18-14 released from TERRA when it is plugged and abandoned in accordance
18-15 with commission rules. A person may not plug a TERRA wellbore
18-16 without permission of the commission.
18-17 Sec. 93.052. Request by Possessory Mineral Interest Owners
18-18 Bound by TERRA Agreement. (a) An owner of a present possessory
18-19 mineral interest in the tract on which the wellbore is located who
18-20 is bound by the TERRA agreement on the wellbore may file an
18-21 application to release the wellbore from TERRA.
18-22 (b) The commission shall not approve an application or
18-23 release a wellbore under this section until the mineral interest
18-24 owner:
18-25 (1) is in full compliance with all applicable state
19-1 laws and commission rules relating to oil and gas, including
19-2 obtaining all permits or other authorization required under
19-3 commission rules before the wellbore may be operated or plugged;
19-4 and
19-5 (2) submits to the commission an amount to be set by
19-6 the commission not greater than twice the reasonable plugging cost
19-7 estimated by the commission as of the date of release.
19-8 (c) If the wellbore to be released has been in TERRA for one
19-9 year or less, the payment required under Subsection (b)(2) shall be
19-10 no greater than the reasonable plugging costs estimated by the
19-11 commission as of the date of release. No payment shall be required
19-12 under this section if the applicant agrees to plug the wellbore and
19-13 complies with all commission plugging rules.
19-14 (d) Any payments required under Subsections (b)(2) and (c)
19-15 shall be reduced by the amount of payments by a person under
19-16 Section 93.013(a)(6) if:
19-17 (1) the wellbore is released to the person, or to a
19-18 lessee or assignee of the person;
19-19 (2) the person owned at least fifty percent of the
19-20 present possessory mineral interest in the tract on which the
19-21 wellbore is located when the wellbore was last accepted into TERRA;
19-22 and
19-23 (3) if the TERRA agreement executed at that time by
19-24 the person remains in effect as of the date of release of the
19-25 wellbore.
20-1 (e) If the license on a wellbore sought to be released under
20-2 this section has not expired, the commission may approve the
20-3 application for release, effective no earlier than the day after
20-4 the expiration date of the license unless the applicant submits a
20-5 written release from the licensee which allows for an earlier
20-6 release date.
20-7 (f) The person to whom a wellbore is released assumes
20-8 responsibility for plugging of the wellbore and cleanup of the
20-9 site, including all associated costs in accordance with state law
20-10 and commission rules, except that the licensee must still comply
20-11 with Sections 93.035 and 93.036.
20-12 Sec. 93.053. Request by Possessory Mineral Interest Owner
20-13 Not Bound by TERRA Agreement. (a) An owner of a present
20-14 possessory mineral interest in the tract on which the wellbore is
20-15 located who is not bound by the TERRA agreement on the wellbore may
20-16 request that the wellbore be released from TERRA.
20-17 (b) The commission shall not release a wellbore under this
20-18 section until the mineral interest owner is in full compliance with
20-19 all applicable state laws and commission rules relating to oil and
20-20 gas, including obtaining all permits or other authorization
20-21 required under commission rules before the wellbore may be operated
20-22 or plugged.
20-23 (c) If the license on a wellbore sought to be released under
20-24 this section has not expired, the commission may approve the
20-25 application for release, effective no earlier than the day after
21-1 the expiration date of the license unless the applicant submits a
21-2 written release from the licensee which allows for an earlier
21-3 release date.
21-4 (d) The person to whom a wellbore is released assumes
21-5 responsibility for plugging of the wellbore and cleanup of the
21-6 site, including all associated costs in accordance with state law
21-7 and commission rules, except that licensee must still comply with
21-8 Sections 93.035 and 93.036.
21-9 Sec. 93.054. Release of TERRA Easements. (a) When the last
21-10 TERRA wellbore on a tract has been released, the commission shall
21-11 file a release of all TERRA easements on the tract in the office of
21-12 the clerk of the county in which the tract is located.
21-13 (b) The release need not be acknowledged, and shall contain:
21-14 (1) the section, block, survey, and abstract number of
21-15 the tract on which a subject wellbore is located;
21-16 (2) the API number for the subject wellbore and the
21-17 commission district and lease number or the commission gas
21-18 identification number for each well in the wellbore;
21-19 (3) the volume and page number in the county real
21-20 property records at which each TERRA agreement relating to the
21-21 tract may be found.
21-22 (c) The clerk shall record the release in the real property
21-23 records without collecting a fee.
21-24 Sec. 93.055. Liability of Commission and TERRA Licensees;
21-25 Judicial Review. (a) Notwithstanding any other provision of law,
22-1 the commission, its employees, agents, and TERRA licensees, and the
22-2 State of Texas are immune from suit and from liability under any
22-3 cause of action alleging:
22-4 (1) that a wellbore plugged under this chapter should
22-5 not have been plugged; or
22-6 (2) that a TERRA wellbore used in compliance with
22-7 license conditions and commission rules has decreased the value of
22-8 the mineral estate in the tract on which the wellbore is located.
22-9 (b) Notwithstanding any other provision of law, the
22-10 commission and its employees and agents are immune from suit and
22-11 from liability under any cause of action arising from the
22-12 participation of a wellbore in TERRA and alleging wrongful death or
22-13 injury or harm to persons, property or interests caused by or
22-14 suffered by a TERRA licensee.
22-15 (c) Under this chapter, a decision by the commission to
22-16 accept or to decline to accept a wellbore into TERRA, on the amount
22-17 of payment required under Section 93.013(a)(6), on the issuance of
22-18 a TERRA license, and on license conditions, is not subject to
22-19 judicial review, and the provisions of Chapter 2001, Government
22-20 Code, do not apply.
22-21 (d) Proceedings to revoke TERRA licenses and to assess
22-22 administrative penalties against or require reimbursement from
22-23 TERRA licensees, proceedings under Section 93.014(c), and hearings
22-24 required by commission rules on proposed uses shall be governed by
22-25 Chapters 2001, Government Code.
23-1 SECTION 3. Subchapter B, 201, Tax Code, is amended by adding
23-2 Section 201.056 to read as follows:
23-3 Sec. 201.056. TAX EXEMPTIONS. The exemptions described by
23-4 Sections 202.056 and Section 202.059 apply to the taxes imposed by
23-5 this chapter as authorized by and subject to the certifications and
23-6 approvals required by those sections.
23-7 SECTION 4. Section 202.052(c), Tax Code, is amended to read
23-8 as follows:
23-9 (c) The exemptions described by Sections 202.056 and 202.059
23-10 apply to <For> oil produced in this state from a well that
23-11 qualifies under Section 202.056 or Section 202.059, subject to the
23-12 certifications and approvals required by those sections. <the rate
23-13 of tax imposed by this chapter shall be reduced to zero>.
23-14 SECTION 5. Subchapter B, Chapter 202, Tax Code is amended by
23-15 adding Section 202.059 to read as follows:
23-16 Section 202.059. Exemption for Hydrocarbons from Terra
23-17 Wells. (a) In this section:
23-18 (1) "Commission" means the Railroad Commission of
23-19 Texas;
23-20 (2) "Hydrocarbon" means any oil, gas, condensate, and
23-21 other liquid hydrocarbons produced from a well; and
23-22 (3) "TERRA" means the Texas Experimental Research and
23-23 Recovery Activity under Chapter 93, Natural Resources Code.
23-24 (b) Hydrocarbons produced from a TERRA well under a TERRA
23-25 license qualify for an exemption from the taxes imposed by this
24-1 chapter and Chapter 201 if the comptroller has approved the tax
24-2 exemption under Subsection (h).
24-3 (c) Hydrocarbons produced from a former TERRA well resuming
24-4 production after two years' participation in TERRA qualify for an
24-5 exemption from the taxes imposed by this chapter and Chapter 201 if
24-6 the comptroller has approved the tax exemption under Subsection
24-7 (h).
24-8 (d) The commission may certify a well eligible for a tax
24-9 exemption or an application may be made to the commission for
24-10 certification under this section. The commission may require an
24-11 applicant to provide the commission with any relevant information
24-12 required to administer this section. The commission shall issue a
24-13 certificate to each operator of such well. The certificate must:
24-14 (1) include identification of the well; and
24-15 (2) state the date on which the tax exemption takes
24-16 effect subject to the comptroller's approval of the exemption under
24-17 Subsection (h).
24-18 (e) The commission shall furnish to the comptroller a copy
24-19 of a certificate of exemption for each well qualifying under this
24-20 section.
24-21 (f) The commission may revoke a certificate for a tax
24-22 exemption if information indicates that a well was not eligible for
24-23 that designation at the time of certification or if a TERRA license
24-24 in revoked by the commission. The commission shall notify the
24-25 operator and the comptroller that a certificate has been revoked.
25-1 A tax exemption granted under this section is automatically revoked
25-2 on the date the certificate is revoked and hydrocarbons produced
25-3 from such well after the date of revocation are not eligible for
25-4 the tax exemption.
25-5 (g) The commission has broad discretion in administering
25-6 this section and may adopt and enforce any appropriate rules or
25-7 orders that the commission finds necessary to administer this
25-8 section.
25-9 (h) To qualify for the tax exemption, the person responsible
25-10 for paying the tax must apply to the comptroller for the exemption
25-11 and include with the application the certificate issued by the
25-12 commission under Subsection (d). The comptroller shall approve the
25-13 application of a person if the hydrocarbons are eligible for the
25-14 tax exemption. The comptroller may require a person applying for
25-15 the tax exemption to provide any relevant information necessary to
25-16 administer this section. The comptroller may establish procedures
25-17 as necessary to comply with this subsection and Subsection (i).
25-18 (i) If the tax is paid at the full rate provided by this
25-19 chapter and Chapter 201 on hydrocarbons produced on or after the
25-20 effective date of the tax exemption but before the date the
25-21 comptroller approves an application for the tax exemption, the
25-22 operator is entitled to a credit on taxes due under Chapter 201 or
25-23 this chapter in the amount equal to the tax paid during that
25-24 period. To receive a credit, the operator must apply to the
25-25 comptroller for the credit not later than one year after the date
26-1 the commission certifies the well for a tax exemption.
26-2 (j) A person is subject to the penalties that may be imposed
26-3 under Chapters 85 and 91, Natural Resources Code, if the person
26-4 makes and submits to the commission or comptroller an application,
26-5 report, or other document used or intended to be used for a
26-6 certification, tax exemption or a tax credit under this section and
26-7 the person knows that the application, report, or other document
26-8 contains a false or untrue material fact.
26-9 (k) A person is liable to the state for a civil penalty if
26-10 the person, after receiving notice from the commission that the
26-11 person's tax exemption certificate for a TERRA well or a former
26-12 TERRA well has been revoked, applies or attempts to apply for a tax
26-13 exemption for hydrocarbons produced from such well under the
26-14 revoked certificate. The amount of the penalty may not exceed the
26-15 sum of:
26-16 (A) $10,000; and
26-17 (B) the difference between the amount of taxes
26-18 paid or attempted to be paid and the amount of taxes due.
26-19 (l) The attorney general may recover a penalty under
26-20 Subdivision (k) in a suit brought on behalf of the state. Venue
26-21 for the suit is in Travis County.
26-22 SECTION 6. Subchapter M, Chapter 91, Natural Resources Code
26-23 is amended to read as follows:
26-24 SUBCHAPTER M. LOGS
26-25 Sec. 91.551. Definitions. In this subchapter:
27-1 (1) "Well" means a well being drilled for oil or gas
27-2 or both oil and gas.
27-3 (2) "Log" means any conventional, commercially
27-4 available lithology or porosity wireline survey, including
27-5 electrical, acoustic, and nuclear surveys.
27-6 Sec. 91.552. Logs Required to be Filed. (a) An operator
27-7 shall file one copy of every log that is run on a well between the
27-8 date of the permit to drill or deepen and the completion date of
27-9 such well or date of plugging of such well if the well is a dry
27-10 hole.
27-11 (b) A log required to be filed under this section must be
27-12 filed not later than the 30th day after the completion or plugging
27-13 date for the well.
27-14 (c) A log may be filed in digital or paper format. If filed
27-15 in paper format, the copy must legible and in unaltered final form.
27-16 (d) This section shall not be construed to require that a
27-17 log be run on any well.
27-18 (e) Prototype, experimental or research logs are not subject
27-19 to this subchapter.
27-20 (f) The commission by rule shall define the types and kinds
27-21 of logs required to filed under this subchapter.
27-22 Sec. 991.553. Availability of Logs. (a) Except as
27-23 specifically provided by this section, each log filed with the
27-24 commission under this subchapter is not confidential and is public
27-25 information under Chapter 552, Government Code.
28-1 (b) At the time a log is required to be filed with the
28-2 commission under Section 91.552 of this code, the operator may file
28-3 a written request with the commission asking that the log remain
28-4 confidential and not be made available as public information. The
28-5 operator shall request that the log remain confidential for a
28-6 specific period of time, not to exceed four years from the date of
28-7 filing the log.
28-8 (c) On filing of the request for confidentiality, the log
28-9 becomes confidential and remains confidential for the period
28-10 requested, unless the operator file a written release of
28-11 confidentiality with the commission.
28-12 Sec. 91.554. Availability of Confidential Logs. The
28-13 commission shall make a confidential log available for inspection
28-14 during the period of confidentiality only to:
28-15 (1) a person authorized in writing by the operator who
28-16 filed the log with the commission; and
28-17 (2) members of the commission and its employees in the
28-18 exercise of their powers and duties under this code if authorized
28-19 in writing by the operator who filed the log with the commission.
28-20 Sec. 91.555. Management and Storage of Logs. The commission
28-21 may contract with any person for the management and storage of the
28-22 logs filed with the commission. The commission may accept gifts of
28-23 money or grants from any source for use in administering this
28-24 subchapter.
28-25 Sec. 91.556. Denial of Allowable. If an operator fails to
29-1 file a log as required by this subchapter, the commission may
29-2 refuse to assign an allowable or a change in allowable for
29-3 production from the well for which the log is required until that
29-4 operator files the log with the commission.
29-5 Sec. 91.557. Records; Adoption of Rules. The commission
29-6 shall establish and maintain a record of each log filed with the
29-7 commission, dates of confidentiality and release dates. The
29-8 commission may adopt and enforce any appropriate rules or orders
29-9 that the commission finds necessary to administer this subchapter.
29-10 Sec. 91.558. Gifts of Logs. At its discretion, the
29-11 commission may accept other logs from any person. Logs accepted by
29-12 the commission under this section are subject to Section 91.552(c),
29-13 Section 91.553 and Section 91.554 of this code and rules of the
29-14 commission adopted under these sections.
29-15 <SUBCHAPTER M. ELECTRIC LOGS>
29-16 <Sec. 91.551. Definitions. (a) In this subchapter:>
29-17 <(1) "Well" means a well being drilled for exploration
29-18 for oil or gas or both oil and gas.>
29-19 <(2) "Electric log" means a wireline survey, except
29-20 dipmeter surveys and seismic wireline surveys, run in an open hole
29-21 or a cased hole of a well for purposes of obtaining geological
29-22 information.>
29-23 <(b) In this subchapter, "person" includes a successor in
29-24 interest.>
29-25 <Sec. 91.552. Electric Logs Required to be Filed; Criteria>
30-1 <(a) Except as otherwise provided by this subchapter, at the
30-2 time a person files with the commission a completion report for a
30-3 well or, in the case of a dry hole, an application to plug a well,
30-4 the person shall also file with the commission a copy of a basic
30-5 electric log made after September 1, 1985, in conjunction with the
30-6 drilling of the well that meets basic criteria established by the
30-7 commission.>
30-8 <(b) The commission by rule shall establish criteria for
30-9 basic electric logs to be filed with the commission.>
30-10 <Sec. 91.553. Availability of Electric Logs. (a) Except as
30-11 specifically provided by this section, each electric log filed with
30-12 the commission under this subchapter is not confidential and is
30-13 public information under Chapter 424, Acts of the 63rd Legislature,
30-14 Regular Session, 1973 (Article 6252-17a, Vernon's Texas Civil
30-15 Statutes).>
30-16 <(b) At the time an electric log is required to be filed
30-17 with the commission under Section 91.552 of this code, the person
30-18 required to file the electric log may file a written request with
30-19 the commission asking that the electric log remain confidential and
30-20 not be made available as public information. On filing this
30-21 request, the electric log or copy of the electric log required to
30-22 be filed with the commission may be retained by the person required
30-23 to file the electric log, and the electric log may remain in the
30-24 possession of the person for the period of confidentiality and any
30-25 extensions of that period. On filing of the request for
31-1 confidentiality, the electric log becomes confidential and remains
31-2 confidential for a period of one year after the date that the
31-3 electric log is required to be filed with the commission.>
31-4 <(c) If an electric log is made confidential under
31-5 Subsection (b) of this section, the person who is required to file
31-6 the electric log is entitled to have the period of confidentiality
31-7 extended once for an additional period of two years. The
31-8 commission shall grant the two-year extension on written request of
31-9 the person who is required to filed the electric log. The written
31-10 request must be made to the commission before the one-year period
31-11 of confidentiality under Subsection (b) of this section expires.>
31-12 <(d) If an electric log is made confidential under
31-13 Subsection (b) of this section and the log was run in a well
31-14 drilled on land submerged in state water, the person who is
31-15 required to file the electric log is entitled to have the period of
31-16 confidentiality extended for not more than two additional periods
31-17 of two years each. The commission shall grant the extension or
31-18 extensions on written request of the person who is required to file
31-19 the electric log. The written request must be made to the
31-20 commission before the expiration of the one-year period of
31-21 confidentiality under Subsection (b) of this section or the
31-22 expiration of the first extension granted under this subsection.>
31-23 <(e) A person required to file an electric log under this
31-24 section who has held the log during a period of confidentiality or
31-25 any extensions of that period shall file the log with the
32-1 commission within 30 days after the conclusion of the period of
32-2 confidentiality or the period of the last extension.>
32-3 <Sec. 91.554. Availability of Confidential Electric Logs.
32-4 If the commission requires an electric log to be filed before the
32-5 expiration of a period of confidentiality, the commission shall
32-6 make that electric log available for inspection during the period
32-7 of confidentiality only to:>
32-8 <(a) a person authorized in writing by the person who filed
32-9 the electric log with the commission; and>
32-10 <(b) members of the commission and its employees in the
32-11 exercise of their powers and duties under this code.>
32-12 <Sec. 91.555. Management and Storage of Electric Logs. The
32-13 commission may contract with any person for the management and
32-14 storage of the electric logs filed with the commission.>
32-15 <Sec. 91.556. Denial of Allowable. If a person fails to
32-16 file an electric log as required by this subchapter, the commission
32-17 may refuse to assign an allowable or a change in allowable for
32-18 production from the well for which the electric log is required
32-19 until that person files the electric log with the commission.>
32-20 SECTION 7. This Act takes effect January 1, 1996, except
32-21 that SECTION 6 of this Act takes effect September 1, 1995.
32-22 SECTION 8. Section 6 of this Act applies to logs made on or
32-23 after the effective date of this Act. Logs made before the
32-24 effective date of this Act are governed by the law under which they
32-25 were made, and that law is continued in effect for that purpose.
33-1 SECTION 9. The importance of this legislation and the
33-2 crowded condition of the calendars in both houses create an
33-3 emergency and an imperative public necessity that the
33-4 constitutional rule requiring bills to be read on three several
33-5 days in each house be suspended, and this rule is hereby suspended.