By Brown                                         S.B. No. 638

      75R6405 T                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to the definition of operator of oil and gas wells and to

 1-3     an operator's duty to plug wells.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Section 89.002(a), Natural Resources Code, is

 1-6     amended to read as follows:

 1-7           (a)  In this chapter:

 1-8                 (1)  "Well" means a hole drilled for the purpose of:

 1-9                       (A)  producing oil or gas;

1-10                       (B)  injecting fluid or gas in the ground in

1-11     connection with the exploration or production of oil or gas;

1-12                       (C)  obtaining geological information by taking

1-13     cores or through seismic operations;

1-14                       (D)  producing geothermal energy and associated

1-15     resources that are subject to the jurisdiction of the Railroad

1-16     Commission of Texas.

1-17                 (2)  "Operator" means the [a] person who is  designated

1-18     to and accepted by the Commission as responsible for the physical

1-19     operation and control of a well at the time the well is about to be

1-20     abandoned or ceases operation.  However, in the event of a sale or

1-21     conveyance of an unplugged well or the right to operate an

1-22     unplugged well that [has ceased operation, but that] was in

1-23     compliance with Commission rules applicable to such wells [that

1-24     have ceased operation] at the time of sale or conveyance, the term

 2-1     "operator" for the purpose of determining plugging responsibility

 2-2     shall not mean the person who sells or conveys the well or right to

 2-3     operate the well, if and only if [once] the person who acquires the

 2-4     well or right to operate the well:

 2-5                       (A)  specifically identifies the well as a well

 2-6     for which it assumes plugging responsibility on such forms as may

 2-7     be required by the Commission and such filings are approved by the

 2-8     Commission;

 2-9                       (B)  has a Commission-approved organization

2-10     report as required by Section 91.142 of this code;

2-11                       (C)  has a Commission-approved form of financial

2-12     security pursuant to Sections 91.103-91.107, Natural Resources Code

2-13     [bond] covering the well [or is eligible for a nonrefundable annual

2-14     fee of $100 as provided by Sections 91.104(b)(1)-(3) and Section

2-15     91.107 of this code]; and

2-16                       (D)  places the well in compliance with

2-17     Commission rules.

2-18                 (3)  "Nonoperator" means a person who owns a working

2-19     interest in a well at the time the well is required to be plugged

2-20     pursuant to Commission rules and is not an operator as defined in

2-21     Subdivision (2) of this subsection.

2-22                 (4)  "Commission" means the Railroad Commission of

2-23     Texas.

2-24                 (5)  "Well-site equipment" means any production-related

2-25     equipment or materials specific to the well being plugged,

2-26     including motors, pumps, pump jacks, tanks, tank batteries,

2-27     separators, compressors, casing, tubing, and rods.

 3-1                 (6)  "Lease" means the lease on which a well made the

 3-2     subject of a plugging contract is located.

 3-3                 (7)  "Delinquent inactive well" means an unplugged well

 3-4     that has had no reported production, disposal, injection, or other

 3-5     permitted activity for a period of greater than 12 months and for

 3-6     which, after notice and opportunity for a hearing, the Commission

 3-7     has not extended the plugging deadline.

 3-8                 (8)  "Plugging" includes replugging.

 3-9           (b)  The terms operator and nonoperator as defined in this

3-10     section do not mean a royalty interest owner or an overriding

3-11     royalty interest owner.

3-12           SECTION 2.  Section 89.011(b), Natural Resources Code, is

3-13     amended to read as follows:

3-14           (b)  The duty of a person to plug an unplugged well that has

3-15     ceased operation ends if and only if the person's interest in the

3-16     well is sold or conveyed while the well is in compliance with rules

3-17     of the Commission applicable to wells that have ceased operation

3-18     and the provisions of Sections 89.002(a)(2)(A)-(D) of this code

3-19     have been met.  The person acquiring the seller's interest through

3-20     such a sale or conveyance succeeds the seller as the operator of

3-21     the well for the purpose of plugging responsibility if, and only

3-22     if, [once] the provisions of Sections 89.002(a)(2)(A)-(D) of this

3-23     code have been met.

3-24           SECTION 3.  This act takes effect September 1, 1997.

3-25           SECTION 4.  The importance of this legislation and the

3-26     crowded condition of the calendars in both houses create an

3-27     emergency and an imperative public necessity that the

 4-1     constitutional rule requiring bills to be read on three several

 4-2     days in each house be suspended, and this rule is hereby suspended.