2024 Regular Session ENROLLED
SENATE BILL NO. 285
BY SENATORS CATHEY, BARROW, BASS, BOUIE, FESI AND JENKINS
1 AN ACT
2 To amend and reenact R.S. 30:3(2), (10), (11), (12), (16)(a), 5(C)(2) and (6), 9(B) and (D),
3 10(A)(1)(a), 11, the introductory paragraph of 103.1(A), 103.1(A)(2)(a), and (C), and
4 103.2 and R.S. 31:4 and to enact R.S. 30:2.1, 3(18), (19), and (20) and 4(C)(18),
5 (19), and (20), relative to brine extraction; to provide for definitions; to provide for
6 exclusions; to provide for a multiple mineral development area; to provide for
7 adjudication of conflicts; to provide for unit operations; to provide for pooling of
8 production; to provide for production allocation; to provide for reporting; to provide
9 for penalties; to provide for applicability; and to provide for related matters.
10 Be it enacted by the Legislature of Louisiana:
11 Section 1. R.S. 30:3(2), (10), (11), (12), (16)(a), 5(C)(2) and (6), 9(B) and (D),
12 10(A)(1)(a), 11, the introductory paragraph of 103.1(A), 103.1(A)(2)(a), and (C), and 103.2
13 are hereby amended and reenacted and R.S. 30:2.1, 3(18), (19), and (20) and 4(C)(18), (19),
14 and (20) are hereby enacted to read as follows:
15 §2.1. Ownership of brine produced incident to oil and gas operations
16 Unless expressly provided otherwise by contract, brine produced
17 incident to the production of oil and gas by the person, including operators and
18 producers acting on behalf of the person, who has the right to drill into and to
19 produce from a pool and to appropriate the production, either for himself or for
20 others, belongs to such person, regardless of whether such brine is saved,
21 retained, used, or sold for the purpose of extracting the constituent parts,
22 minerals, elements, compounds, or substances contained in or dissolved in the
23 brine.
24 §3. Definitions
25 Unless the context otherwise requires, the words defined in this Section have
26 the following meaning when found in this Chapter:
27 * * *
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1 (2) "Field" means the general area which is underlaid or appears to be
2 underlaid by at least one pool. It includes the underground reservoir or reservoirs
3 containing crude petroleum oil or, natural gas or both, brine, or any combination
4 thereof. The words "field" and "pool" mean the same thing when only one
5 underground reservoir is involved; however, "field" unlike "pool", may relate to two
6 or more pools.
7 * * *
8 (10) "Pool" means an underground reservoir containing a common
9 accumulation of crude petroleum oil or, natural gas or both, brine, or any
10 combination thereof. Each zone of a general structure which is completely
11 separated from any other zone in the structure is covered by the term "pool" as used
12 in this Chapter. However, to promote the development and production of marginally
13 commercial sands, a zone may contain one or more common accumulations and the
14 overall stratigraphic interval of the zone may be considered and treated as a pool for
15 all purposes of this Chapter.
16 (11) "Producer" means the owner of a well capable of producing oil or, gas
17 or both, brine, or any combination thereof.
18 (12) "Product" means any commodity made from oil or, gas or brine. It
19 includes but is not limited to refined crude oil, crude tops, topped crude, processed
20 crude petroleum, residue from crude petroleum, cracking stock, uncracked fuel oil,
21 fuel oil, treated crude oil, residuum, gas oil, casinghead gasoline, natural gas
22 gasoline, naphtha, distillate, gasoline, kerosene, benzine, wash oil, waste oil, blended
23 gasoline, lubricating oil, blends or mixtures of oil with one or more liquid products
24 or by-products derived from oil or gas, and blends or mixtures of two or more liquid
25 products or by-products derived from oil or gas, lithium carbonate, lithium
26 hydroxide, and any other commodity or product made from the brine or any
27 constituent parts, minerals, elements, compounds, or substances contained in
28 or dissolved in the brine, whether hereinabove enumerated or not.
29 * * *
30 (16) "Waste", in addition to its ordinary meaning, means "physical waste" as
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1 that term is generally understood in the oil and gas industry. It includes:
2 (a) the inefficient, excessive, or improper use or dissipation of a reservoir
3 energy; and the location, spacing, drilling, equipping, operating, or producing of an
4 oil or gas a well in a manner which results, or tends to result, in reducing the quantity
5 of oil or, gas, or brine ultimately recoverable from a pool; and
6 * * *
7 (18) "Brine" means subterranean saltwater, whether contained in or
8 produced from a reservoir, and all of the saltwater's constituent parts, minerals,
9 elements, compounds, or substances contained in or dissolved in the saltwater,
10 including but not limited to lithium, bromine, barium, magnesium, potassium,
11 sodium, iodine, or other constituent parts, minerals, elements, compounds, or
12 substances produced with or separated from the saltwater. "Brine" does not
13 include brine produced as an incident to the production of oil and gas, unless
14 the brine is saved, retained, used, or sold for the purpose of extracting the
15 constituent parts, minerals, elements, compounds, or substances contained or
16 dissolved in the brine. "Brine" also does not include underground sources of
17 drinking water or brine created through solution mining.
18 (19) "Brine production operations" means the exploration for,
19 development of, or production of brine through the use of a well or wells.
20 "Brine production operations" may include the reinjection of the brine,
21 including after possible extraction of any constituent parts, minerals, elements,
22 compounds, or substances contained in or dissolved in the brine.
23 (20) "Multiple mineral development area" means an area designated by
24 the commissioner for the management and development of various concurrent
25 surface and sub-surface mineral or resource production or extraction
26 operations, including exploratory activities, for the purpose of efficient and
27 effective development of minerals or resources in the area without unreasonable
28 interference.
29 §4. Jurisdiction, duties, and powers of the assistant secretary; rules and regulations
30 * * *
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1 C. The commissioner has authority to make, after notice and hearings as
2 provided in this Chapter, any reasonable rules, regulations, and orders that are
3 necessary from time to time in the proper administration and enforcement of this
4 Chapter, including rules, regulations, or orders for the following purposes:
5 * * *
6 (18) To regulate brine production operations.
7 (19) To designate an area within the state as a multiple mineral
8 development area for purposes of brine production operations.
9 (20) To adjudicate and determine multiple mineral development conflicts
10 among brine production operations if any of the following circumstances exist:
11 (a) There is potential injury to other mineral deposits or mineral
12 development in or beneath the property affected.
13 (b) There are simultaneous or concurrent operations conducted by other
14 mineral owners or lessees affecting the property.
15 * * *
16 §5. Permission to convert gas into carbon black; recycling gas; unit operations
17 * * *
18 C.(1) * * *
19 (2) In connection with such an order of unit operation, the assistant secretary
20 of the office of conservation shall have the right to unitize, pool, and consolidate all
21 separately owned tracts and other property ownerships. Any order for such a unit
22 operation shall be issued only after notice and hearing and shall be based on all the
23 following findings that:
24 (a) The order is reasonably necessary for the prevention of waste and the
25 drilling of unnecessary wells, and will appreciably increase the ultimate recovery of
26 oil or, gas, or brine from the affected pool or combination of two pools,.
27 (b) The proposed unit operation is economically feasible,.
28 (c) The order will provide for the allocation to each separate tract within the
29 unit of a proportionate share of the unit production which shall insure the recovery
30 by the owners of that tract of their just and equitable share of the recoverable oil or,
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1 gas, or brine in the unitized pool or combination of two pools, and.
2 (d) At least three-fourths of the owners and three-fourths of the royalty
3 owners, as to a particular interest, as hereinafter defined, such three-fourths to be in
4 interest as determined under Subparagraph (c) hereof of this Paragraph, shall have
5 approved the plan and terms of unit operation, such approval to be evidenced by a
6 written contract or contracts covering the terms and operation of the unitization
7 signed and executed by the three-fourths in interest of the owners and three-fourths
8 in interest of the said royalty owners and filed with the assistant secretary of the
9 office of conservation on or before the day set for the hearing. Notwithstanding any
10 other provision of this Subparagraph to the contrary, with respect to an order
11 for unit operation for the production of brine, such approval shall only be
12 required from at least three-fourths of the owners as to the particular interest,
13 such approval to be evidenced by a written contract or contracts covering the
14 terms and operation of the unitization signed and executed by the three-fourths
15 in interest of the owners and filed with the assistant secretary of the office of
16 conservation on or before the day set for the hearing.
17 * * *
18 (6) No order of the commissioner entered pursuant hereto shall have the
19 effect of enlarging, displacing, varying, altering, or in anywise whatsoever modifying
20 or changing contracts in existence on the effective date of this Act concerning the
21 unitization of any pool (reservoir) or pools (reservoirs) or field (as defined in the
22 contract) for the production of oil or, gas, or both brine, or any combination
23 thereof.
24 * * *
25 §9. Production from pool; drilling units; equitable share; rules and regulations
26 A. * * *
27 B. For the prevention of waste and to avoid the drilling of unnecessary wells,
28 the commissioner shall establish a drilling unit or units for each pool, except for
29 those pools which, prior to July 31, 1940, had been developed to an extent and where
30 conditions exist making it impracticable or unreasonable to use a drilling unit at the
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1 present stage of development. A drilling unit, as contemplated herein, means the
2 maximum area which may be efficiently and economically drained by the well or
3 wells designated to serve the drilling unit as the unit well, substitute unit well, or
4 alternate unit well. This unit shall constitute a developed area as long as a well is
5 located thereon which is capable of producing oil or, gas, or brine in paying
6 quantities.
7 * * *
8 D. Subject to the reasonable necessities for the prevention of waste, and to
9 reasonable adjustment because of structural position, a producer's just and equitable
10 share of the oil and, gas, or brine in the pool, also referred to as a tract's just and
11 equitable share, is that part of the authorized production of the pool, whether it be the
12 total which could be produced without any restriction on the amount of production,
13 or whether it be an amount less than that which the pool could produce if no
14 restriction on amount were imposed, which is substantially in the proportion that the
15 quantity of recoverable oil and, gas, or brine in the developed area of his tract or
16 tracts in the pool bears to the recoverable oil and, gas, or brine in the total developed
17 area of the pool, in so far as these amounts can be practically ascertained. To that
18 end, the rules, regulations, and orders of the commissioner shall be such as will
19 prevent or minimize reasonably avoidable net drainage from each developed area,
20 that is, drainage not equalized by counter drainage, and will give to each producer
21 the opportunity to use his just and equitable share of the reservoir energy
22 production. In determining each producer's just and equitable share of the
23 production authorized for the pool, the commissioner is authorized to give due
24 consideration to the productivity of the well or wells located thereon, as determined
25 by flow tests, bottom hole pressure tests, or any other practical method of testing
26 wells and producing structures, and to consider other factors and geological and
27 engineering tests and data as may be determined by the commissioner to be pertinent
28 or relevant to ascertaining each producer's just and equitable share of the production
29 and reservoir energy of the field or pool.
30 §10. Agreements for drilling units; pooling interests; terms and conditions; expenses
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1 A. * * *
2 (1) * * *
3 (a) All orders requiring pooling shall be made after notice and hearing. They
4 shall be upon terms and conditions that are just and reasonable and that will afford
5 the owner of each tract the opportunity to recover or receive his just and equitable
6 share of the oil and, gas, or brine in the pool without unnecessary expense. They
7 shall prevent or minimize reasonable avoidable drainage from each developed tract
8 which is not equalized by counter drainage.
9 * * *
10 §11. Allocation of allowable production
11 A. Whenever the commissioner limits the total amount of oil or, gas, or brine
12 which may be produced, he shall allocate the allowable production among the fields.
13 This allocation shall be made on a reasonable basis, giving, to each field with small
14 wells of settled production, an amount which will prevent a general premature
15 abandonment of the wells in the field.
16 B. The commissioner may limit the production of a pool to an amount less
17 than that which the pool could produce if no restriction were imposed. This
18 limitation may be imposed either as an incident to or without a limitation of the total
19 amount of oil or, gas, or brine which may be produced in this state. The
20 commissioner shall prorate the allowable production among the producers in the pool
21 on a reasonable basis so as to prevent or minimize avoidable drainage from each
22 developed area which is not equalized by counter drainage, and so that each producer
23 will have the opportunity to produce or receive his just and equitable share, subject
24 to the reasonable necessities for the prevention of waste.
25 C. After the effective date of a rule, regulation, or order of the commissioner
26 fixing the allowable production of oil or, gas, or both brine, for a pool, no person
27 shall produce from a well, lease, or property more than the allowable production
28 which is applicable, nor shall the amount be produced in a different manner than that
29 authorized.
30 * * *
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1 §103.1. Operators and producers to report to owners of unleased oil and, gas or
2 brine interests
3 A. Whenever there is included within a drilling unit, as authorized by the
4 commissioner of conservation, lands producing oil or, gas, or both brine, or any
5 combination thereof, upon which the operator or producer has no valid oil, gas, or
6 mineral lease, said the operator or producer shall issue the following reports to the
7 owners of said the interests by a sworn, detailed, itemized statement:
8 * * *
9 (2) After establishment of production from the unit well, quarterly reports
10 which shall contain the following:
11 (a) The total amount of oil, gas, brine, or other hydrocarbons produced from
12 the lands during the previous quarter.
13 * * *
14 C. Reports shall be sent by certified mail to each owner of an unleased oil or,
15 gas, or brine interest who has requested such reports in writing, by certified mail
16 addressed to the operator or producer. The written request shall contain the unleased
17 interest owner's name and address. Initial reports shall be sent no later than ninety
18 calendar days after the completion of the well. The operator or producer shall begin
19 sending quarterly reports within ninety calendar days after receiving the written
20 request, whichever is later, and shall continue sending quarterly reports until
21 cessation of production.
22 * * *
23 §103.2. Failure to report; penalty
24 Whenever the operator or producer permits ninety calendar days to elapse
25 from completion of the well and thirty additional calendar days to elapse from date
26 of receipt of written notice by certified mail from the owner or owners of unleased
27 oil and, gas, or brine interests calling attention to failure to comply with the
28 provisions of R.S. 30:103.1, such operator or producer shall forfeit his right to
29 demand contribution from the owner or owners of the unleased oil and, gas, or brine
30 interests for the costs of the drilling operations of the well.
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1 Section 2. R.S. 31:4 is hereby amended and reenacted to read as follows:
2 §4. Substances to which Code applicable
3 The provisions of this Code are applicable to all forms of minerals, including
4 oil and gas. They are also applicable to rights to explore for or mine or remove from
5 land the soil itself, gravel, shells, subterranean water including brine, or other
6 substances occurring naturally in or as a part of the soil or geological formations on
7 or underlying the land.
PRESIDENT OF THE SENATE
SPEAKER OF THE HOUSE OF REPRESENTATIVES
GOVERNOR OF THE STATE OF LOUISIANA
APPROVED:
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