Texas Senate Bill SB1803

Texas 2017 - 85th Regular

Caption

Relating to the financial security requirements for operators of oil and gas wells.

Impact

The bill's changes are significant as they reshape the regulatory landscape for oil and gas operators in Texas. By allowing for insurance policies as a means to satisfy financial security requirements, the bill may reduce the upfront costs and complexities associated with filing bonds. This could lead to an increase in operational efficiency for smaller operators who may have struggled with the financial burden of traditional bonding requirements. However, the amendments also maintain a clear obligation for operators to ensure that wells are properly plugged, safeguarding environmental standards and public safety.

Summary

SB1803 seeks to modify the financial security requirements for operators of oil and gas wells in Texas by amending several sections of the Natural Resources Code. The bill establishes criteria for operators to file bonds, letter of credit, or cash deposits, which serve as a financial guarantee for plugging wells when they are no longer in operation. Notably, the amendments allow operators to meet bonding requirements through well-specific plugging insurance policies, thereby providing a more flexible approach for compliance with state regulations.

Contention

Some points of contention might arise from potential concerns about the adequacy of the insurance policies compared to traditional bonding methods. Critics may argue that reliance on insurance can lead to insufficient funds for well-plugging operations, especially if an operator fails to fulfill their obligations. Additionally, stakeholders in the environmental sector could express apprehension about the effectiveness of this new approach in ensuring that abandoned wells are dealt with appropriately without compromising safety and environmental integrity.