HLS 16RS-617 ORIGINAL
2016 Regular Session
HOUSE BILL NO. 632
BY REPRESENTATIVES JIM MORRIS, BISHOP, AND TERRY BROWN
CONSERVATION: Provides for financial security required by applicants for drilling
permits
1 AN ACT
2To enact R.S. 30:3(18) and 4.3, relative to financial security required by the commissioner
3 of conservation; to provide for financial security required to conduct certain oil and
4 gas activity; to provide for required amounts; to provide for exemptions; to provide
5 for an effective date; and to provide for related matters.
6Be it enacted by the Legislature of Louisiana:
7 Section 1. R.S. 30:3(18) and 4.3 are hereby enacted to read as follows:
8 §3. Definitions
9 Unless the context otherwise requires, the words defined in this Section have
10 the following meaning when found in this Chapter:
11 * * *
12 (18) "Operator in good standing" means an operator who has no outstanding
13 violations and who has a record of compliance with applicable statutory
14 requirements and the rules and regulations of the office of conservation for a period
15 of forty-eight months immediately prior to the date an application for a permit to
16 drill or an amendment to such permit is filed with the office.
17 * * *
18 §4.3. Financial Security
19 A. As required by R.S. 30:4, an applicant for a permit to drill or to amend
20 a permit to drill for change of operator shall provide financial security as provided
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HB NO. 632
1 in this Section in a form acceptable to the commissioner. For an application for a
2 permit to drill, the security shall be provided within thirty days of the completion
3 date or from the date the operator is notified that financial security is required. For
4 an application to amend a permit to drill for a change of operator, the security shall
5 be provided as required by this Section or by establishing a site specific trust account
6 in accordance with R.S. 30:88 prior to the operator change.
7 B. The amount of financial security required may be provided for an
8 individual well based on drilling depth or on multiple wells based on the number of
9 wells.
10 (1) For wells located on land the amount of financial security required shall
11 be the following:
12 (a) For an individual well, one dollar per foot for wells of a depth less than
13 three thousand feet, two dollars per foot for wells of a depth between three thousand
14 one feet and ten thousand feet, and three dollars per foot for wells greater than ten
15 thousand feet.
16 (b) For multiple wells, twenty-five thousand for ten or less wells, one-
17 hundred twenty-five thousand dollars for eleven to ninety-nine wells, or two-hundred
18 fifty thousand dollars for one-hundred or more wells.
19 (2) For wells located in water in the coastal zone as defined in R.S.
20 49:214.23, except those located in a field designated as offshore by the
21 commissioner, the amount of financial security required shall be the following:
22 (a) For an individual well, eight dollars per foot of well depth.
23 (b) For multiple wells, one-hundred twenty-five thousand dollars for ten or
24 less wells, six-hundred twenty-five thousand dollars for eleven to ninety-nine wells,
25 or one-million two-hundred fifty thousand dollars for one-hundred or more wells.
26 (3) For wells located offshore in a field designated by the commissioner the
27 amount of financial security required shall be the following:
28 (a) For an individual well, twelve dollars per foot of well depth.
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HB NO. 632
1 (b) For multiple wells, two-hundred fifty thousand dollars for ten or less
2 wells, one-million two-hundred fifty thousand dollars for eleven to ninety-nine wells,
3 or two-million five-hundred thousand dollars for one-hundred or more wells.
4 C. No financial security shall be required from an operator in good standing.
5 In order for a new owner or an operator to retain the status of an operator in good
6 standing, the new owner shall meet the requirements of R.S. 30:3(18) as determined
7 by the commissioner.
8 Section 2. This Act shall become effective upon signature by the governor or, if not
9signed by the governor, upon expiration of the time for bills to become law without signature
10by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If
11vetoed by the governor and subsequently approved by the legislature, this Act shall become
12effective on the day following such approval.
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
HB 632 Original 2016 Regular Session Jim Morris
Abstract: Provides for financial security requirements of certain drilling permit applicants.
Proposed law defines an "operator in good standing" as an operator who has no outstanding
violations and who has a record of compliance with applicable statutory requirements and
the rules and regulations of the office of conservation for a period of 48 months immediately
prior to the date an application for a permit to drill or an amendment to such permit is filed
with the office.
Proposed law exempts an operator in good standing from the financial security requirements
in proposed law. In order for a new owner or an operator to retain the status of an operator
in good standing, the new owner shall meet the requirement of proposed law as determined
by the commissioner.
Proposed law requires an applicant provide financial security for a permit to drill or to
amend a permit to drill for a change of operator in a form acceptable to the commissioner.
Proposed law requires that an applicant for a permit to drill provide security within 30 days
of the completion date or from the date the operator is notified that financial security is
required.
Proposed law requires that an applicant to amend a permit to drill for a change of operator
provide the security as required by proposed law or by establishing a site specific trust
account prior to the operator change.
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HB NO. 632
Proposed law provides that the amount of financial security required may be provided by an
individual well based on drilling depth or on multiple wells based on the number of wells
as follows:
(1) Land based wells based on depth of individual well:
Measured Depth Amount
<3,000 ft. $1 per ft.
3,001ft. - 10,000 ft. $2 per ft.
>10,001 ft. $3 per ft.
(2) Land based on number of wells:
Number of Wells Amount
<10 $ 25,000
11 - 99 $125,000
>100 $250,000
(3) For individual wells located in water in the coastal zone, except those located in a field
designated as offshore, the amount shall be $8 per foot of well depth.
(4) For multiple wells located in water in the coastal zone, except those located in a field
designated as offshore, based on the number of wells:
Measured Depth Amount
<10 $ 125,000
11 - 99 $ 625,000
>100 $1,250,000
(5) For individual wells locate offshore as designated by the commissioner, the amount shall
be $12 per foot of well depth.
(6) For multiple wells locate offshore as designated by the commissioner, based on the
number of wells:
Measured Depth Amount
<10 $ 250,000
11 - 99 $1,250,000
>100 $2,500,000
Effective upon signature of governor or lapse of time for gubernatorial action.
(Adds R.S. 30:3(18) and 4.3)
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