ENROLLED
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
A CONCURRENT RESOL UTION
To urge and request the Department of Natural Resources, office of conservation, to develop
an alternate method of contracting with operators and other qualified bidders for
services to plug orphaned oil and gas wells, to implement the alternative method as
a pilot program for three years, and to report to the House Committee on Natural
Resources and Environment and the Senate Committee on Natural Resources.
WHEREAS, orphaned wells are abandoned oil and gas wells for which no
responsible operator can be located or such operator has failed to maintain the well site in
accordance with state regulations; and
WHEREAS, the Louisiana Oilfield Site Restoration Program was created in 1993
within the Department of Natural Resources to address the growing problem of orphaned
oilfield sites; and
WHEREAS, the focus of the program is to properly plug and abandon orphan wells
in addition to properly restoring the site to approximate pre-well site conditions suitable for
redevelopment; and
WHEREAS, revenue for the program is generated from a fee on oil and gas
production in the state which is paid quarterly by Louisiana oil and gas operators; and
WHEREAS, since 1993, the program has plugged two thousand six hundred six
wells at a cost of sixty-four million dollars with an additional two thousand eight hundred
thirty-three waiting restoration; and
WHEREAS, the current number of orphaned wells is three thousand sixty-six, of
those over two-thirds, two thousand one hundred ninety-seven, are located in the Shreveport
and Monroe districts of the office of conservation, covering the central and northern part of
the state; and
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WHEREAS, the current prioritization of restoring orphan well sites is based on the
higher potential environmental impact, which are more expensive wells to plug, without
consideration of the possibility of plugging many low priority wells for the cost of one high
priority well; and
WHEREAS, a less expensive and more efficient means to plugging these wells,
currently considered low priority, is necessary if the goal of reducing and eventually
eliminating orphan wells is to be reached; and
WHEREAS, R.S. 30:92 authorizes the commissioner of conservation to conduct
orphan site restoration and to promulgate rules and regulations, in accordance with the
Administrative Procedure Act, providing for procedures for letting contracts for site
assessment or site restoration of these sites through a formal bidding process outside the
Public Bid Law and Procurement Code; and
WHEREAS, through this rulemaking, the commissioner has the authority to create
a pilot program to contract with current operators or other qualified bidders with reduced
requirements with the goal of reduced costs and an efficient means to reducing a large
number of orphaned wells.
THEREFORE, BE IT RESOLVED that the Legislature of Louisiana does hereby
urge and request the Department of Natural Resources, office of conservation, through the
Administrative Procedure Act to develop an alternate method of contracting with operators
or other qualified bidders for services to plug orphaned oil and gas well sites, to implement
the alternative method as a pilot program for three years beginning Fiscal Year 2016-2017,
and 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.
BE IT FURTHER RESOLVED 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.
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(3) Require a performance bond or letter of credit to an amount below fifty percent
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 of 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 to 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.
BE IT FURTHER RESOLVED that when the Department of Natural Resources,
office of conservation implements the pilot program, from the monies appropriated by the
legislature to the Oilfield Site Restoration Fund, the department is hereby requested to fund
the pilot program in an amount not less than one million dollars or twenty percent of the
amount appropriated to the Oilfield Site Restoration Fund, whichever is less, to plug
orphaned wells drilled to a depth less than three thousand feet in the Shreveport and Monroe
districts of the office of conservation beginning Fiscal Year 2016-2017 and through the end
of Fiscal Year 2018-2019.
BE IT FURTHER RESOLVED that a suitable copy of this Resolution be transmitted
to the commissioner of conservation and the secretary of the Department of Natural
Resources.
SPEAKER OF THE HOUSE OF REPRESENTATIVES
PRESIDENT OF THE SENATE
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