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A BILL TO BE ENTITLED
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AN ACT
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relating to the plugging of inactive oil and gas wells. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 89.022, Natural Resources Code, is |
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amended by amending Subsection (b) and adding Subsections (d), (e), |
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(f), and (g) to read as follows: |
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(b) Notwithstanding Subsection (a), a person who assumes |
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responsibility for the physical operation and control of an |
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existing inactive well must satisfy the requirements of Sections |
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89.023(a)(1) and (3) [(4)] not later than six months after the date |
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the commission approves the initial form described by Section |
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89.002(a)(2) and filed with the commission under which the person |
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assumes responsibility for the well. |
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(d) Before the commission issues an order refusing to renew |
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an operator's organization report under Subsection (c), an |
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authorized commission employee or a person designated by the |
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commission for that purpose must determine whether the operator has |
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failed to comply with the requirements of this subchapter. If the |
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authorized commission employee or designated person determines |
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that the organization report does not qualify for renewal on that |
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ground, the authorized commission employee or designated person |
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must: |
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(1) notify the operator of the determination; |
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(2) provide the operator with a written statement of |
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the reasons the organization report does not qualify for renewal; |
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and |
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(3) notify the operator that the operator has 90 days |
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to comply with the requirements of this subchapter. |
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(e) The authorized commission employee or designated person |
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may grant the operator an additional 45 days to comply with the |
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requirements of this subchapter for good cause shown. |
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(f) After the expiration of the period specified by |
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Subsection (d)(3) as extended under Subsection (e), if applicable, |
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the authorized commission employee or designated person shall |
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determine whether the organization report qualifies for renewal and |
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notify the operator of the determination. If the authorized |
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commission employee or designated person determines that the |
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organization report does not qualify for renewal because the |
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operator has continued to fail to comply with the requirements of |
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this subchapter, the operator, not later than the 30th day after the |
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date of the determination, may request a hearing regarding the |
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determination. The operator shall pay the costs associated with a |
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hearing requested under this subsection. |
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(g) If the commission determines following the hearing that |
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the operator has failed to comply with the requirements of this |
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subchapter or the operator fails to file a timely request for a |
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hearing, the commission by order shall refuse to renew the |
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organization report. The organization report remains in effect |
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until the commission's order becomes final. |
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SECTION 2. Section 89.023(a), Natural Resources Code, is |
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amended to read as follows: |
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(a) The commission may grant an extension of the deadline |
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for plugging an inactive well if the operator maintains a current |
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organization report with the commission as required by Section |
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91.142 and if, on or before the date of renewal of the operator's |
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organization report as required by that section, the operator files |
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with the commission an application for an extension that includes: |
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(1) an affirmation that complies with Section 89.029; |
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(2) [a statement that the well and associated
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facilities are in compliance with all commission rules and orders;
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[(3)] a statement that the operator has, and on |
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request will provide, evidence of a good faith claim to a continuing |
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right to operate the well; and |
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(3) [(4)] at least one of the following: |
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(A) documentation that since the preceding date |
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that the operator's organization report was required to be renewed |
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the operator has plugged, or restored to active operation as |
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defined by commission rule, a number of inactive wells equal to or |
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greater than 10 percent of the number of inactive wells operated by |
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the operator on that date; |
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(B) an abeyance of plugging report on a form |
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approved by the commission that: |
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(i) is in the form of a certification signed |
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by a person licensed by the Texas Board of Professional Engineers or |
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the Texas Board of Professional Geoscientists; |
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(ii) includes: |
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(a) an affirmation by the licensed |
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person that the well has: |
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(1) a reasonable expectation of |
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economic value in excess of the cost of plugging the well for the |
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duration of the period covered by the report, based on the cost |
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calculation for plugging an inactive well; and |
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(2) a reasonable expectation of |
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being restored to a beneficial use that will prevent waste of oil or |
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gas resources that otherwise would not be produced if the well were |
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plugged; and |
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(b) appropriate documentation |
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demonstrating the basis for the affirmation of the well's future |
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utility; and |
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(iii) specifies the field and the covered |
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wells within that field in a format prescribed by the commission; |
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(C) a statement that the well is part of an |
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enhanced oil recovery project; |
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(D) if the operator of the well is not currently |
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otherwise required by commission rule or order to conduct a fluid |
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level or hydraulic pressure test of the well, documentation of the |
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results of a successful fluid level or hydraulic pressure test of |
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the well conducted in accordance with the commission's rules in |
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effect at the time the test is conducted; |
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(E) a supplemental bond, letter of credit, or |
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cash deposit sufficient for each well specified in the application |
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that: |
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(i) complies with the requirements of |
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Chapter 91; and |
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(ii) is of an amount at least equal to the |
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cost calculation for plugging an inactive well for each well |
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specified in the application; |
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(F) documentation of the deposit with the |
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commission each time the operator files an application of an amount |
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of escrow funds as prescribed by commission rule that equal at least |
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10 percent of the total cost calculation for plugging an inactive |
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well for each well specified in the application; or |
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(G) if the operator is a publicly traded entity: |
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(i) the following documents: |
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(a) a copy of the operator's federal |
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documents filed to comply with Financial Accounting Standards Board |
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Statement No. 143, Accounting for Asset Retirement Obligations; and |
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(b) an original, executed Uniform |
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Commercial Code Form 1 Financing Statement, filed with the |
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secretary of state, that: |
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(1) names the operator as the |
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"debtor" and the Railroad Commission of Texas as the "secured |
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creditor"; and |
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(2) specifies the funds covered |
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by the documents described by Sub-subparagraph (a) in the amount of |
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the cost calculation for plugging an inactive well for each well |
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specified in the application; or |
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(ii) a blanket bond in the amount of the |
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lesser of: |
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(a) the cost calculation for plugging |
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any inactive wells; or |
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(b) $2 million. |
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SECTION 3. Section 89.024(a), Natural Resources Code, is |
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amended to read as follows: |
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(a) An abeyance of plugging report filed under Section |
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89.023(a)(3)(B) [89.023(a)(4)(B)] is valid for a period of not more |
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than five years. |
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SECTION 4. Section 89.025(a), Natural Resources Code, is |
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amended to read as follows: |
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(a) For purposes of Section 89.023(a)(3)(C) |
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[89.023(a)(4)(C)], an inactive well is considered to be part of an |
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enhanced oil recovery project if the well is located on a unit or |
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lease or in a field associated with such a project. |
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SECTION 5. Section 89.026(a), Natural Resources Code, is |
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amended to read as follows: |
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(a) Documentation filed under Section 89.023(a)(3)(D) |
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[89.023(a)(4)(D)] of the results of a successful fluid level test |
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is valid for a period of one year from the date of the |
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test. Documentation filed under that section of the results of a |
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successful hydraulic pressure test is valid for a period of not more |
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than five years from the date of the test. |
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SECTION 6. Section 89.027(a), Natural Resources Code, is |
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amended to read as follows: |
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(a) A supplemental bond, letter of credit, or cash deposit |
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filed under Section 89.023(a)(3)(E) [89.023(a)(4)(E)] is in |
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addition to any other financial assurance otherwise required of the |
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operator or for the well. |
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SECTION 7. Section 89.028(a), Natural Resources Code, is |
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amended to read as follows: |
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(a) Escrow funds described by Section 89.023(a)(3)(F) |
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[89.023(a)(4)(F)] must be deposited with the commission each time |
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an operator files an application for an extension of the deadline |
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for plugging an inactive well. |
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SECTION 8. The changes in law made by this Act apply only to |
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the renewal of an organization report on or after the effective date |
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of this Act. The renewal of an organization report before the |
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effective date of this Act is governed by the law as it existed |
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immediately before the effective date of this Act, and that law is |
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continued in effect for that purpose. |
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SECTION 9. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2011. |