HLS 16RS-1351 ENGROSSED
2016 Regular Session
HOUSE CONCURRENT RESOL UTION NO. 72
BY REPRESENTATIVES JIM MORRIS, ARMES, BISHOP, TERRY BROWN,
CHANEY, COUSSAN, DEVILLIER, MIGUEZ, MONTOUCET, WHITE, AND
ZERINGUE
CONSERVATION: Urges and requests the commissioner of conservation to develop and
implement a pilot program to reduce the cost of plugging orphaned wells and
decrease the number of wells on the orphan wells list
1 A CONCURRENT RESOL UTION
2To urge and request the Department of Natural Resources, office of conservation, to develop
3 an alternate method of contracting with operators and other qualified bidders for
4 services to plug orphaned oil and gas wells, to implement the alternative method as
5 a pilot program for three years, and to report to the House Committee on Natural
6 Resources and Environment and the Senate Committee on Natural Resources.
7 WHEREAS, orphaned wells are abandoned oil and gas wells for which no
8responsible operator can be located or such operator has failed to maintain the well site in
9accordance with state regulations; and
10 WHEREAS, the Louisiana Oilfield Site Restoration Program was created in 1993
11within the Department of Natural Resources to address the growing problem of orphaned
12oilfield sites; and
13 WHEREAS, the focus of the program is to properly plug and abandon orphan wells
14in addition to properly restoring the site to approximate pre-well site conditions suitable for
15redevelopment; and
16 WHEREAS, revenue for the program is generated from a fee on oil and gas
17production in the state which is paid quarterly by Louisiana oil and gas operators; and
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CODING: Words in struck through type are deletions from existing law; words underscored
are additions. HLS 16RS-1351 ENGROSSED
HCR NO. 72
1 WHEREAS, since 1993, the program has plugged two thousand six hundred six
2wells at a cost of sixty-four million dollars with an additional two thousand eight hundred
3thirty-three waiting restoration; and
4 WHEREAS, the current number of orphaned wells is three thousand sixty-six, of
5those over two-thirds, two thousand one hundred ninety-seven, are located in the Shreveport
6and Monroe districts of the office of conservation, covering the central and northern part of
7the state; and
8 WHEREAS, the current prioritization of restoring orphan well sites is based on the
9higher potential environmental impact, which are more expensive wells to plug, without
10consideration of the possibility of plugging many low priority wells for the cost of one high
11priority well; and
12 WHEREAS, a less expensive and more efficient means to plugging these wells,
13currently considered low priority, is necessary if the goal of reducing and eventually
14eliminating orphan wells is to be reached; and
15 WHEREAS, R.S. 30:92 authorizes the commissioner of conservation to conduct
16orphan site restoration and to promulgate rules and regulations providing for procedures for
17letting contracts for site assessment or site restoration of these sites through a formal bidding
18process outside the Public Bid Law and Procurement Code; and
19 WHEREAS, through this rulemaking, the commissioner has the authority to create
20a pilot program to contract with current operators or other qualified bidders with reduced
21requirements with the goal of reduced costs and an efficient means to reducing a large
22number of orphaned wells.
23 THEREFORE, BE IT RESOLVED that the Legislature of Louisiana does hereby
24urge and request the Department of Natural Resources, office of conservation, to develop
25an alternate method of contracting with operators or other qualified bidders for services to
26plug orphaned oil and gas well sites, to implement the alternative method as a pilot program
27for three years beginning Fiscal Year 2016-2017, and to report annually on the status of the
28pilot program to the House Committee on Natural Resources and Environment and the
29Senate Committee on Natural Resources beginning no later than March 1, 2017.
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HCR NO. 72
1 BE IT FURTHER RESOLVED that the alternative method of contracting shall
2include but not be limited to the following:
3 (1) Require that the operators in the program have a good record of compliance, in
4lieu of holding a contractor's license, with the office of conservation with no outstanding
5violations.
6 (2) Develop criteria for qualified bidders that are not a current operator.
7 (3) Require a performance bond or letter of credit to an amount below fifty percent
8of the contract.
9 (4) Provide for a completion date in the contract in lieu of providing for penalties
10for lapse in work resulting from equipment failure or inclement weather.
11 (5) Provide for weekly, or less frequently, reporting of work performed by the
12contractor in lieu of daily reporting.
13 (6) Require that the type equipment used by the contractor be based on the physical
14characteristics of the well to be plugged.
15 (7) Require any pit used during the restoration process be properly lined and
16properly disposed of after work is completed and limit reporting requirements for such pit.
17 (8) Consider payment for the contract to be on a cost plus a prenegotiated
18percentage.
19 (9) Prioritize the focus of the pilot program on a large number of land based
20orphaned wells that would otherwise not be a priority under the current method of
21contracting.
22 BE IT FURTHER RESOLVED that when the Department of Natural Resources,
23office of conservation implements the pilot program, from the monies appropriated to the
24office by the legislature from the Oilfield Site Restoration Fund, the department is hereby
25directed to fund the pilot program in an amount not less than one million dollars to plug
26orphaned wells drilled to a depth less than three thousand feet in the Shreveport and Monroe
27districts of the office of conservation beginning Fiscal Year 2016-2017 and through the end
28of Fiscal Year 2018-2019.
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CODING: Words in struck through type are deletions from existing law; words underscored
are additions. HLS 16RS-1351 ENGROSSED
HCR NO. 72
1 BE IT FURTHER RESOLVED that a suitable copy of this Resolution be transmitted
2to the commissioner of conservation and the secretary of the Department of Natural
3Resources.
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)]
HCR 72 Engrossed 2016 Regular Session Jim Morris
Urges and requests the Dept. of Natural Resources, office of conservation, to develop an
alternate method of contracting for services to plug orphaned oil and gas well sites and to
implement the alternative method as a pilot program for three years beginning FY 2016-
2017. Also urges and requests the office of conservation to report annually on the status of
the pilot program to the House Committee on Natural Resources and Environment and the
Senate Committee on Natural Resources beginning no later than March 1, 2017.
Provides that the alternative method of contracting shall include, but not be limited to the
following:
(1)Require that the operators in the program have a good record of compliance, in lieu
of holding a contractor's license, with the office of conservation with no outstanding
violations.
(2)Develop criteria for qualified bidders that are not a current operator.
(3)Require a performance bond or letter of credit to amount below 50% of the contract.
(4)Provide for a completion date in the contract in lieu of providing for penalties for
lapse in work resulting from equipment failure or inclement weather.
(5)Provide for weekly, or less frequently, reporting of work performed by the contractor
in lieu of daily reporting.
(6)Require that the type equipment used by the contractor be based on the physical
characteristics of the well to be plugged.
(7)Require any pit used during the restoration process be properly lined and properly
disposed of after work is completed and limit reporting requirements for such pit.
(8)Consider payment for the contract be on a cost plus a prenegotiated percentage.
(9) Prioritize the focus of the pilot program on a large number of land based orphaned
wells that would otherwise not be a priority under the current method of contracting.
Directs the Dept. of Natural Resources, office of conservation when the pilot program is
implemented, from the monies appropriated to the office to fund the pilot program in an
amount not less than $1,000,000 to plug orphaned wells drilled to a depth less than 3,000
feet in the office of conservation's Shreveport and Monroe districts beginning FY 2016-2017
and through the end of FY 2018-2019.
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CODING: Words in struck through type are deletions from existing law; words underscored
are additions.