RÉSUMÉ DIGEST
ACT 583 (SB 428) 2016 Regular Session Allain
New law creates oilfield site trust accounts for certain orphaned well sites.
New 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.
New 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 derived from the severance
tax levied on oil, gas, and condensate from an orphaned well as defined in new law shall be
credited to the associated site-specific trust account.
New 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 new 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.
New 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.
New 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 from the date of first
production following designation of the well as part of an orphaned well site, then the
assistant secretary shall require financial security in accordance with the office of
conservation's rules and regulations.
New law provides that for transfers of oilfield sites that occur subsequent to the formation
of site-specific trust accounts pursuant to new law but prior to the end of their economic life,
the assistant secretary and the acquiring party shall, in the manner provided in new 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.
New 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. Provides for disbursement of monies to the state general fund and in the event the
responsible party has personally funded the site-specific trust account, in whole or in part,
then to the responsible party in proportion to their percentage of funding.
New law provides for the distribution of certain collections of severance taxes to site-specific
oilfield site trust accounts for orphaned wells.
New law directs the assistant secretary to make any necessary rules, regulations, and orders
to implement the provisions of new law. Effective upon signature of the governor (June 17, 2016).
(Amends R.S. 47:645(B); adds R.S. 30:88.1)