| TO: | Honorable Kip Averitt, Chair, Senate Committee on Natural Resources |
| FROM: | John S. O'Brien, Director, Legislative Budget Board |
| IN RE: | SB1574 by Duncan (Relating to the regulation by the Railroad Commission of Texas of the use of the surface of land in connection with certain activities associated with the exploration, development, or production of oil or gas, including the gathering of oil or gas by pipeline. ), Committee Report 1st House, Substituted |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2008 | ($248,547) |
| 2009 | ($173,547) |
| 2010 | ($173,547) |
| 2011 | ($173,547) |
| 2012 | ($173,547) |
| Fiscal Year | Probable Savings/(Cost) from GENERAL REVENUE FUND 1 |
Change in Number of State Employees from FY 2007 |
|---|---|---|
| 2008 | ($248,547) | 3.0 |
| 2009 | ($173,547) | 3.0 |
| 2010 | ($173,547) | 3.0 |
| 2011 | ($173,547) | 3.0 |
| 2012 | ($173,547) | 3.0 |
The bill would require an oil or gas operator to transfer or remove well-site equipment associated with a well has been inactive for more than 12 months. The operator could move the equipment to another well-site on the leased premises for use in connection with another well or remove the well-site equipment from the leased premises, unless the lease or other agreement with the lessor provides otherwise. If an operator transfers well-site equipment to another well-site on the leased premises for use in connection with another well, the operator must begin using the equipment in connection with the well within the next 12 months or remove all transferred equipment from the leased premises.
The bill also would require that the Railroad Commission adopt rules to: establish minimum standards for the construction, operation, and maintenance of any gathering line on leased premises that lies beneath a road; and, establish minimum standards for the construction, operation, and maintenance of any electrical power lines that are located or to be located on leased premises and are used or to be used by the operator in connection with oil and gas-related activities on the leased premises.
In addition, the bill provides for a lessor to bring action against an operator for damages or injunctive relief, and it requires the court to refer the matter to mediation among all parties involved and for those parties to share the mediation fee equally.
The Railroad Commission would require additional staff to: establish and adopt minimum standards for construction, operation, and maintenance of any gathering line on leased premises that lies beneath a road; establish and adopt by rule minimum standards for construction, operation, and maintenance of any electrical power lines that are located or are to be located on leased premises and are used or to be used by an oil and gas operator on the leased premises; and perform related inspections. The Railroad Commission would require 3 FTEs to implement the provisions of the bill at a cost of $248,547 in fiscal year 2008 and $173,547 in subsequent fiscal years. Costs would be paid out of the General Revenue Fund.
| Source Agencies: | 455 Railroad Commission
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| LBB Staff: | JOB, WK, ZS, TL
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