The original instrument and the following digest, which constitutes no part of the
legislative instrument, were prepared by Jay R. Lueckel.
DIGEST
SB 428 Engrossed 2016 Regular Session Allain
Proposed law creates oilfield site trust accounts for certain orphaned well sites.
Proposed law provides that an orphan well shall mean an oil or gas well that is designated as part
of an orphaned oilfield site as of August 1, 2016, and thereafter and that has had no reported
production for a period of greater than two years immediately prior to the production of oil, gas, or
condensate.
Proposed law provides that after satisfying the provisions of the Constitution of Louisiana relative
to the allocation and distribution of severance tax proceeds and as further provided in statute, the
remaining portion of the monies credited to the state treasury originally derived from the severance
tax levied on oil, gas, and condensate from an orphaned well as defined in proposed law shall be
credited to the associated site-specific trust account.
Proposed law provides that upon full funding of the associated site-specific trust account in
accordance with a plan approved by the assistant secretary as provided in proposed law, all monies
remaining in the account shall again be credited in full to the state treasury. Also provides that so
long as the conditions are met relative to the funding of the site-specific trust account, the assistant
secretary shall not require additional financial security for the well.
Proposed law provides that in the event of new production from a formerly orphaned well, a
site-specific trust account shall be established to separately account for each such site for the purpose
of providing a source of funds for site restoration of that oilfield site at such time in the future when
restoration of that oilfield site is required. Once established, the site-specific trust account shall
survive until completion of site restoration of the associated oilfield site.
Proposed law provides that when establishing a site-specific trust account, the assistant secretary
shall require an oilfield site restoration assessment to be made to determine the site restoration
requirements existing at the time the site-specific trust account is established. The oilfield site
restoration assessment shall be conducted by approved site assessment contractors appearing on a
list approved by the commission or acceptable to the commission. The oilfield restoration assessment
shall specifically detail the site's restoration needs and shall provide an estimate of the restoration
costs needed to restore the oilfield site based on the conditions existing at the time the site-specific
trust account is established. The assistant secretary shall monitor each trust account to assure that
it is being properly funded and the funds in each trust account shall remain the property of the
commission. Further provides that in the event that the site-specific trust account is not funded
through the payment of the severance tax due the state for a period of greater than six months, then
the assistant secretary shall require financial security in accordance with the office of conservation's
rules and regulations. Proposed law provides that for transfers of oilfield sites that occur subsequent to the formation of
site-specific trust accounts pursuant to proposed law but prior to the end of their economic life, the
assistant secretary and the acquiring party shall, in the manner provided in proposed law, again
redetermine cost. The balance of any site-specific trust account at the time of transfer shall remain
associated with the oilfield site and shall be a factor in the redetermination.
Proposed law provisions provide for the distribution of funds associated with the site for unusable
oilfield sites, after site restoration has been completed and approved by the assistant secretary.
Proposed law provides for the distribution of certain collections of severance taxes to site-specific
oilfield site trust accounts for orphaned wells.
Proposed law directs the assistant secretary to make any necessary rules, regulations, and orders to
implement the provisions of the Act.
Effective upon signature of the governor or lapse of time for gubernatorial action.
(Amends R.S. 47:645(B); adds R.S. 30:88.1)
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Finance to the original bill
1. Deletes all provisions relative to inactive wells and limits the Act to orphan wells.
2. Directs the assistant secretary to make any necessary rules, regulations, and orders
to implement the provisions of the Act.