2024 Regular Session ENROLLED
SENATE BILL NO. 285
BY SENATORS CATHEY, BARROW, BASS, BOUIE, FESI AND JENKINS
1
2 AN ACT
3 To amend and reenact R.S. 30:3(2), (10), (11), (12), (16)(a), 5(C)(2) and (6), 9(B) and (D),
4 10(A)(1)(a), 11, the introductory paragraph of 103.1(A), 103.1(A)(2)(a), and (C), and
5 103.2 and R.S. 31:4 and to enact R.S. 30:2.1, 3(18), (19), and (20) and 4(C)(18),
6 (19), and (20), relative to brine extraction; to provide for definitions; to provide for
7 exclusions; to provide for a multiple mineral development area; to provide for
8 adjudication of conflicts; to provide for unit operations; to provide for pooling of
9 production; to provide for production allocation; to provide for reporting; to provide
10 for penalties; to provide for applicability; and to provide for related matters.
11 Be it enacted by the Legislature of Louisiana:
12 Section 1. R.S. 30:3(2), (10), (11), (12), (16)(a), 5(C)(2) and (6), 9(B) and (D),
13 10(A)(1)(a), 11, the introductory paragraph of 103.1(A), 103.1(A)(2)(a), and (C), and 103.2
14 are hereby amended and reenacted and R.S. 30:2.1, 3(18), (19), and (20) and 4(C)(18), (19),
15 and (20) are hereby enacted to read as follows:
16 §2.1. Ownership of brine produced incident to oil and gas operations
17 Unless expressly provided otherwise by contract, brine produced
18 incident to the production of oil and gas by the person, including operators and
19 producers acting on behalf of the person, who has the right to drill into and to
20 produce from a pool and to appropriate the production, either for himself or for
21 others, belongs to such person, regardless of whether such brine is saved,
22 retained, used, or sold for the purpose of extracting the constituent parts,
23 minerals, elements, compounds, or substances contained in or dissolved in the
24 brine.
25 §3. Definitions
26 Unless the context otherwise requires, the words defined in this Section have
27 the following meaning when found in this Chapter:
ACT No. 126
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1 * * *
2 (2) "Field" means the general area which is underlaid or appears to be
3 underlaid by at least one pool. It includes the underground reservoir or reservoirs
4 containing crude petroleum oil or, natural gas or both, brine, or any combination
5 thereof. The words "field" and "pool" mean the same thing when only one
6 underground reservoir is involved; however, "field" unlike "pool", may relate to two
7 or more pools.
8 * * *
9 (10) "Pool" means an underground reservoir containing a common
10 accumulation of crude petroleum oil or, natural gas or both, brine, or any
11 combination thereof. Each zone of a general structure which is completely
12 separated from any other zone in the structure is covered by the term "pool" as used
13 in this Chapter. However, to promote the development and production of marginally
14 commercial sands, a zone may contain one or more common accumulations and the
15 overall stratigraphic interval of the zone may be considered and treated as a pool for
16 all purposes of this Chapter.
17 (11) "Producer" means the owner of a well capable of producing oil or, gas
18 or both, brine, or any combination thereof.
19 (12) "Product" means any commodity made from oil or, gas or brine. It
20 includes but is not limited to refined crude oil, crude tops, topped crude, processed
21 crude petroleum, residue from crude petroleum, cracking stock, uncracked fuel oil,
22 fuel oil, treated crude oil, residuum, gas oil, casinghead gasoline, natural gas
23 gasoline, naphtha, distillate, gasoline, kerosene, benzine, wash oil, waste oil, blended
24 gasoline, lubricating oil, blends or mixtures of oil with one or more liquid products
25 or by-products derived from oil or gas, and blends or mixtures of two or more liquid
26 products or by-products derived from oil or gas, lithium carbonate, lithium
27 hydroxide, and any other commodity or product made from the brine or any
28 constituent parts, minerals, elements, compounds, or substances contained in
29 or dissolved in the brine, whether hereinabove enumerated or not.
30 * * *
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1 (16) "Waste", in addition to its ordinary meaning, means "physical waste" as
2 that term is generally understood in the oil and gas industry. It includes:
3 (a) the inefficient, excessive, or improper use or dissipation of a reservoir
4 energy; and the location, spacing, drilling, equipping, operating, or producing of an
5 oil or gas a well in a manner which results, or tends to result, in reducing the quantity
6 of oil or, gas, or brine ultimately recoverable from a pool; and
7 * * *
8 (18) "Brine" means subterranean saltwater, whether contained in or
9 produced from a reservoir, and all of the saltwater's constituent parts, minerals,
10 elements, compounds, or substances contained in or dissolved in the saltwater,
11 including but not limited to lithium, bromine, barium, magnesium, potassium,
12 sodium, iodine, or other constituent parts, minerals, elements, compounds, or
13 substances produced with or separated from the saltwater. "Brine" does not
14 include brine produced as an incident to the production of oil and gas, unless
15 the brine is saved, retained, used, or sold for the purpose of extracting the
16 constituent parts, minerals, elements, compounds, or substances contained or
17 dissolved in the brine. "Brine" also does not include underground sources of
18 drinking water or brine created through solution mining.
19 (19) "Brine production operations" means the exploration for,
20 development of, or production of brine through the use of a well or wells.
21 "Brine production operations" may include the reinjection of the brine,
22 including after possible extraction of any constituent parts, minerals, elements,
23 compounds, or substances contained in or dissolved in the brine.
24 (20) "Multiple mineral development area" means an area designated by
25 the commissioner for the management and development of various concurrent
26 surface and sub-surface mineral or resource production or extraction
27 operations, including exploratory activities, for the purpose of efficient and
28 effective development of minerals or resources in the area without unreasonable
29 interference.
30 §4. Jurisdiction, duties, and powers of the assistant secretary; rules and regulations
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2 C. The commissioner has authority to make, after notice and hearings as
3 provided in this Chapter, any reasonable rules, regulations, and orders that are
4 necessary from time to time in the proper administration and enforcement of this
5 Chapter, including rules, regulations, or orders for the following purposes:
6 * * *
7 (18) To regulate brine production operations.
8 (19) To designate an area within the state as a multiple mineral
9 development area for purposes of brine production operations.
10 (20) To adjudicate and determine multiple mineral development conflicts
11 among brine production operations if any of the following circumstances exist:
12 (a) There is potential injury to other mineral deposits or mineral
13 development in or beneath the property affected.
14 (b) There are simultaneous or concurrent operations conducted by other
15 mineral owners or lessees affecting the property.
16 * * *
17 §5. Permission to convert gas into carbon black; recycling gas; unit operations
18 * * *
19 C.(1) * * *
20 (2) In connection with such an order of unit operation, the assistant secretary
21 of the office of conservation shall have the right to unitize, pool, and consolidate all
22 separately owned tracts and other property ownerships. Any order for such a unit
23 operation shall be issued only after notice and hearing and shall be based on all the
24 following findings that:
25 (a) The order is reasonably necessary for the prevention of waste and the
26 drilling of unnecessary wells, and will appreciably increase the ultimate recovery of
27 oil or, gas, or brine from the affected pool or combination of two pools,.
28 (b) The proposed unit operation is economically feasible,.
29 (c) The order will provide for the allocation to each separate tract within the
30 unit of a proportionate share of the unit production which shall insure the recovery
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1 by the owners of that tract of their just and equitable share of the recoverable oil or,
2 gas, or brine in the unitized pool or combination of two pools, and.
3 (d) At least three-fourths of the owners and three-fourths of the royalty
4 owners, as to a particular interest, as hereinafter defined, such three-fourths to be in
5 interest as determined under Subparagraph (c) hereof of this Paragraph, shall have
6 approved the plan and terms of unit operation, such approval to be evidenced by a
7 written contract or contracts covering the terms and operation of the unitization
8 signed and executed by the three-fourths in interest of the owners and three-fourths
9 in interest of the said royalty owners and filed with the assistant secretary of the
10 office of conservation on or before the day set for the hearing. Notwithstanding any
11 other provision of this Subparagraph to the contrary, with respect to an order
12 for unit operation for the production of brine, such approval shall only be
13 required from at least three-fourths of the owners as to the particular interest,
14 such approval to be evidenced by a written contract or contracts covering the
15 terms and operation of the unitization signed and executed by the three-fourths
16 in interest of the owners and filed with the assistant secretary of the office of
17 conservation on or before the day set for the hearing.
18 * * *
19 (6) No order of the commissioner entered pursuant hereto shall have the
20 effect of enlarging, displacing, varying, altering, or in anywise whatsoever modifying
21 or changing contracts in existence on the effective date of this Act concerning the
22 unitization of any pool (reservoir) or pools (reservoirs) or field (as defined in the
23 contract) for the production of oil or, gas, or both brine, or any combination
24 thereof.
25 * * *
26 §9. Production from pool; drilling units; equitable share; rules and regulations
27 A. * * *
28 B. For the prevention of waste and to avoid the drilling of unnecessary wells,
29 the commissioner shall establish a drilling unit or units for each pool, except for
30 those pools which, prior to July 31, 1940, had been developed to an extent and where
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1 conditions exist making it impracticable or unreasonable to use a drilling unit at the
2 present stage of development. A drilling unit, as contemplated herein, means the
3 maximum area which may be efficiently and economically drained by the well or
4 wells designated to serve the drilling unit as the unit well, substitute unit well, or
5 alternate unit well. This unit shall constitute a developed area as long as a well is
6 located thereon which is capable of producing oil or, gas, or brine in paying
7 quantities.
8 * * *
9 D. Subject to the reasonable necessities for the prevention of waste, and to
10 reasonable adjustment because of structural position, a producer's just and equitable
11 share of the oil and, gas, or brine in the pool, also referred to as a tract's just and
12 equitable share, is that part of the authorized production of the pool, whether it be the
13 total which could be produced without any restriction on the amount of production,
14 or whether it be an amount less than that which the pool could produce if no
15 restriction on amount were imposed, which is substantially in the proportion that the
16 quantity of recoverable oil and, gas, or brine in the developed area of his tract or
17 tracts in the pool bears to the recoverable oil and, gas, or brine in the total developed
18 area of the pool, in so far as these amounts can be practically ascertained. To that
19 end, the rules, regulations, and orders of the commissioner shall be such as will
20 prevent or minimize reasonably avoidable net drainage from each developed area,
21 that is, drainage not equalized by counter drainage, and will give to each producer
22 the opportunity to use his just and equitable share of the reservoir energy
23 production. In determining each producer's just and equitable share of the
24 production authorized for the pool, the commissioner is authorized to give due
25 consideration to the productivity of the well or wells located thereon, as determined
26 by flow tests, bottom hole pressure tests, or any other practical method of testing
27 wells and producing structures, and to consider other factors and geological and
28 engineering tests and data as may be determined by the commissioner to be pertinent
29 or relevant to ascertaining each producer's just and equitable share of the production
30 and reservoir energy of the field or pool.
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1 §10. Agreements for drilling units; pooling interests; terms and conditions; expenses
2 A. * * *
3 (1) * * *
4 (a) All orders requiring pooling shall be made after notice and hearing. They
5 shall be upon terms and conditions that are just and reasonable and that will afford
6 the owner of each tract the opportunity to recover or receive his just and equitable
7 share of the oil and, gas, or brine in the pool without unnecessary expense. They
8 shall prevent or minimize reasonable avoidable drainage from each developed tract
9 which is not equalized by counter drainage.
10 * * *
11 §11. Allocation of allowable production
12 A. Whenever the commissioner limits the total amount of oil or, gas, or brine
13 which may be produced, he shall allocate the allowable production among the fields.
14 This allocation shall be made on a reasonable basis, giving, to each field with small
15 wells of settled production, an amount which will prevent a general premature
16 abandonment of the wells in the field.
17 B. The commissioner may limit the production of a pool to an amount less
18 than that which the pool could produce if no restriction were imposed. This
19 limitation may be imposed either as an incident to or without a limitation of the total
20 amount of oil or, gas, or brine which may be produced in this state. The
21 commissioner shall prorate the allowable production among the producers in the pool
22 on a reasonable basis so as to prevent or minimize avoidable drainage from each
23 developed area which is not equalized by counter drainage, and so that each producer
24 will have the opportunity to produce or receive his just and equitable share, subject
25 to the reasonable necessities for the prevention of waste.
26 C. After the effective date of a rule, regulation, or order of the commissioner
27 fixing the allowable production of oil or, gas, or both brine, for a pool, no person
28 shall produce from a well, lease, or property more than the allowable production
29 which is applicable, nor shall the amount be produced in a different manner than that
30 authorized.
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2 §103.1. Operators and producers to report to owners of unleased oil and, gas or
3 brine interests
4 A. Whenever there is included within a drilling unit, as authorized by the
5 commissioner of conservation, lands producing oil or, gas, or both brine, or any
6 combination thereof, upon which the operator or producer has no valid oil, gas, or
7 mineral lease, said the operator or producer shall issue the following reports to the
8 owners of said the interests by a sworn, detailed, itemized statement:
9 * * *
10 (2) After establishment of production from the unit well, quarterly reports
11 which shall contain the following:
12 (a) The total amount of oil, gas, brine, or other hydrocarbons produced from
13 the lands during the previous quarter.
14 * * *
15 C. Reports shall be sent by certified mail to each owner of an unleased oil or,
16 gas, or brine interest who has requested such reports in writing, by certified mail
17 addressed to the operator or producer. The written request shall contain the unleased
18 interest owner's name and address. Initial reports shall be sent no later than ninety
19 calendar days after the completion of the well. The operator or producer shall begin
20 sending quarterly reports within ninety calendar days after receiving the written
21 request, whichever is later, and shall continue sending quarterly reports until
22 cessation of production.
23 * * *
24 §103.2. Failure to report; penalty
25 Whenever the operator or producer permits ninety calendar days to elapse
26 from completion of the well and thirty additional calendar days to elapse from date
27 of receipt of written notice by certified mail from the owner or owners of unleased
28 oil and, gas, or brine interests calling attention to failure to comply with the
29 provisions of R.S. 30:103.1, such operator or producer shall forfeit his right to
30 demand contribution from the owner or owners of the unleased oil and, gas, or brine
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1 interests for the costs of the drilling operations of the well.
2 Section 2. R.S. 31:4 is hereby amended and reenacted to read as follows:
3 §4. Substances to which Code applicable
4 The provisions of this Code are applicable to all forms of minerals, including
5 oil and gas. They are also applicable to rights to explore for or mine or remove from
6 land the soil itself, gravel, shells, subterranean water including brine, or other
7 substances occurring naturally in or as a part of the soil or geological formations on
8 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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