79R9118 SMH-F

By:  West                                                         H.B. No. 2482



A BILL TO BE ENTITLED

AN ACT

relating to the financial security requirements for certain 
operators of oil and gas wells.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Section 91.1041(a), Natural Resources Code, is 
amended to read as follows:
	(a)  A person required to file a bond, letter of credit, or 
cash deposit under Section 91.103 who operates one or more wells may 
file a bond in an amount equal to $3 [$2] for each foot of well depth 
for each well.
	SECTION 2.  Section 91.1042, Natural Resources Code, is 
amended by adding Subsection (c) to read as follows:
	(c)  Notwithstanding Subsections (a) and (b), the amount of 
the bond otherwise required by this section is increased by the 
amount required by Section 91.107(b), if applicable.
	SECTION 3.  Section 91.107, Natural Resources Code, is 
amended to read as follows:
	Sec. 91.107.  NEW BOND, LETTER OF CREDIT, OR CASH DEPOSIT.  
(a)  If an active or inactive well is transferred, sold, or assigned 
by its operator, the commission shall require the party acquiring 
the well to file a new bond, letter of credit, or cash deposit as 
provided by Section 91.104(b), and the financial security of the 
prior operator shall continue to be required and to remain in 
effect, and the commission may not approve the transfer of 
operatorship, until the new bond, letter of credit, or cash deposit 
is provided or the commission determines that the bond, letter of 
credit, or cash deposit previously submitted to the commission by 
the person acquiring the well complies with this subchapter.  A 
transfer of a well from one entity to another entity under common 
ownership is a transfer for purposes of this section.  A transfer of 
a well from one entity to another entity that the commission 
determines has occurred because of a change in the entity's name and 
does not involve a change in the scope of the entity's operations is 
not considered a transfer for purposes of this section.
	(b)  If an active or inactive well is transferred, sold, or 
assigned to an operator who has filed a blanket bond as provided by 
Section 91.1042 and whose average daily oil and gas production per 
well for all of the wells operated by the operator for the most 
recent three months for which that information is on file with the 
commission is less than 1.5 barrels of oil equivalent, the 
commission shall require the operator, in addition to complying 
with Subsection (a), to increase the amount of the operator's 
blanket bond by an amount equal to $3 for each foot of the lesser of 
the total depth of each well being transferred, sold, or assigned 
or, if applicable, the depth to which each well has been plugged 
back, as shown by the records of the commission, with the aggregate 
amount rounded up to the nearest multiple of $1,000.  If the well 
being transferred, sold, or assigned has previously been 
transferred, sold, or assigned, the commission shall also require 
the operator to increase the amount of the operator's blanket bond 
by an amount equal to any increase previously required by this 
subsection with respect to the well.  The increase in the required 
amount of the blanket bond required by this subsection also applies 
to any blanket bond subsequently filed by the operator.  The 
commission by rule may authorize a reduction in the amount of the 
increase in the required amount of the blanket bond that would 
otherwise be required by this subsection if the commission 
determines such a reduction to be appropriate.  If the commission 
authorizes such a reduction by rule, an operator may request that 
the commission reduce the amount of the increase that is required.  
If the commission denies the request, the operator may request a 
hearing on the request.
	SECTION 4.  This Act takes effect September 1, 2005.