Req. No. 6122 Page 1 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
STATE OF OKLAHOMA
1st Session of the 58th Legislature (2021)
HOUSE BILL 2230 By: Moore
AS INTRODUCED
An Act relating to oil and gas; enacting the Royalty
Standardization Act; defining terms; providing for
uniformity, standardization and si mplification of
royalty payments; supplementing the Production
Revenue Standards Act and the Energy Litigation
Reform Act; providing rights to royalty owners owed
proceeds pursuant to the Production Revenue Standards
Act and derived from or attributable to the
production from oil or gas wells; providing that the
Royalty Standardization Act applies to all owners and
production; and declaring an emergency .
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 571.1 of Title 52, unless there
is created a duplication in numbering, reads as follows:
This act shall be known and may be cited as the "Royalty
Standardization Act".
SECTION 2. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 571.2 of Title 52, unless there
is created a duplication in numbering, reads as follows:
As used in the Royalty Standardization Act:
Req. No. 6122 Page 2 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
1. "Working interest" means the interest granted under an oil
and gas lease or a pooling order, giving the owner the right to work
on the property to search for, develop and produce oil and gas, and
the obligation to pay all costs of production and to receive a
portion of the production proceeds;
2. "Royalty" means the mineral owner 's share of production or
production proceeds, free of the costs of production;
3. "Overriding royalty" means a share of production or
production proceeds, other than a working interest, but carv ed out
of the interest of the working interest owner;
4. "Costs of production" means all costs incurred for
exploration, development, primary or enhanced recovery, production
and abandonment operations including, but not limited to , lease
acquisition, drilling and completion , pumping or lifting, operating
and all costs incurred to obtain a marketable product;
5. "Costs incurred to obtain a marketable product " means all
gathering charges, processing charges and costs incurred either
directly or indirectly for moving oil to the storage tanks and
storing the oil located at or near the lease location; costs
incurred to obtain a marketable product do not include
transportation costs or the reasonable and actual direct costs
associated with transporting the oil from the storage tanks to
market;
Req. No. 6122 Page 3 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
6. "Gathering charges" shall mean all types of fees, charges,
and volumetric or price adjustments reflecting the consideration for
services performed by the owner of a gathering system to move
natural gas from the custody transfer meter on or near the well
location to the inlet of a gas processing facility, or if the gas is
not processed at a gas processing facility, to the inlet of an
intrastate or interstate pipeline, including any consideration for
gathering, fuel, comp ression, dehydration, and treating services
performed upstream of the inl et to the gas processing plant, or
upstream of the inlet to the intrastate or interstate pipeline for
gas not processed at a gas processing plant ;
7. "Processing charges" shall mean all types of fees, charges,
price adjustments, reductions in value, reductions in volume, in -
kind fuel, percentage of proceeds, percentage of index, and any
other consideration related to the processing and movement of
natural gas from the gas plant inlet meter to custody transfer meter
on or near the tailgate of the processing facility into a mainline
transmission pipeline, including, but not limited to, processing,
compression, dehydration, treating, blending, fuel, line loss, and
any other services occur ring inside the gas processing plant;
8. "Transportation charges" shall mean all types of fees,
charges, price adjustments, reductions in value, reductions in
volume, in-kind fuel, percentage of proceeds, percentage of index,
and any other consideration r elated to movement of natural gas on a
Req. No. 6122 Page 4 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
mainline transmission pip eline, including, but not limited to,
compression, dehydration, treating, blending, fuel, line loss, and
any other services occurring on the mainline transmission line; and
9. "Mainline transmission pipeline" means a pipeline or
pipeline system that is:
a. downstream of the tailgate of a field processing plant
where the raw natural gas is processed and separated
into natural gas liquids and dry methane gas,
b. an interstate pipeline subject to regulation by the
Federal Energy Regulatory Commission, or
c. an intrastate common carrier transm ission pipeline, as
defined by Section 24 of Title 52 of the Oklahoma
Statutes.
SECTION 3. NEW LAW A new section of law to be codifi ed
in the Oklahoma Statutes as Section 571.3 of Title 52, unless there
is created a duplication in numbering, reads as follows:
To promote uniformity, standardization and simplification of
royalty payments in this state, to encourage a more cooperative
relationship between Oklahoma 's producers and royalty owners, and to
decrease the volume of litigation over royalty disputes, the
provisions of the Royalty Standardization Act shall be considered a
supplement to the Production Revenue Standards Act and the En ergy
Litigation Reform Act, and the terms defined in Section 570.2 of
Req. No. 6122 Page 5 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Title 52 of the Oklahoma Statutes shall have the same meaning in
this act and shall be further supplemented by this act.
SECTION 4. NEW LAW A new section of law t o be codified
in the Oklahoma Statutes as Section 571.4 of Title 52, unless there
is created a duplication in numbering, reads as follows:
For purposes of determining the respective rights of the owners
to the proceeds due pursuant to the Production Revenu e Standards Act
and derived from or attributable to the production from an oil or
gas well located in this state:
1. The working interest owners shall be responsible for the
costs of production; and
2. The proceeds due owners of a royalty interest shall not be
decreased, either directly or indirectly, by any costs of
production.
SECTION 5. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 571.5 of Title 52, unless there
is created a duplication in numb ering, reads as follows:
The Royalty Standardization Act shall apply to all owners and
shall apply to all production occurring on or af ter the effective
date of this act, from all producing wells in the State of Oklahoma,
regardless of the date pooled, dri lled or of the date of the
underlying leases.
SECTION 6. It being immediately necessary for the preservation
of the public peace, health or safety, an emergency is hereby
Req. No. 6122 Page 6 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
declared to exist, by reason whereof this act shall take effect and
be in full force from and after its passage and approval.
58-1-6122 JL 01/11/21