Texas 2009 - 81st Regular

Texas House Bill HB2259 Compare Versions

The same version is selected twice. Please select two different versions to compare.

Version 1 (Old)

Version 2 (New)

Old	New	Differences
1	1	H.B. No. 2259
2	2
3	3
4	4	AN ACT
5	5	relating to the plugging of certain inactive oil or gas wells and to
6	6	standards for electrical power lines serving certain oil and gas
7	7	facilities.
8	8	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	9	SECTION 1. Section 89.002(a), Natural Resources Code, is
10	10	amended by amending Subdivision (7) and adding Subdivisions (9),
11	11	(10), (11), (12), and (13) to read as follows:
12	12	(7) "Delinquent inactive well" means an inactive
13	13	[unplugged] well [that has had no reported production, disposal,
14	14	injection, or other permitted activity for a period of greater than
15	15	12 months and] for which, after notice and opportunity for a
16	16	hearing, the commission has not extended the plugging deadline.
17	17	(9) "Cost calculation for plugging an inactive well"
18	18	means the commission's calculated cost for each foot of well depth
19	19	plugged based on average actual plugging costs for wells reported
20	20	by the commission for the preceding state fiscal year for the
21	21	commission oil and gas division district in which the inactive well
22	22	is located.
23	23	(10) "Enhanced oil recovery project":
24	24	(A) means:
25	25	(i) a commission-approved project that uses
26	26	any process for the displacement of oil or other hydrocarbons from a
27	27	reservoir other than primary recovery and includes the use of an
28	28	immiscible, miscible, chemical, thermal, or biological process;
29	29	(ii) a certified project described by
30	30	Section 202.054, Tax Code; or
31	31	(iii) any other project approved by the
32	32	commission for enhanced oil recovery; and
33	33	(B) does not include a water disposal project.
34	34	(11) "Good faith claim" means a factually supported
35	35	claim based on a recognized legal theory to a continuing possessory
36	36	right in a mineral estate, such as evidence of a currently valid oil
37	37	and gas lease or a recorded deed conveying a fee interest in the
38	38	mineral estate.
39	39	(12) "Inactive well" means an unplugged well that has
40	40	had no reported production, disposal, injection, or other permitted
41	41	activity for a period of greater than 12 months.
42	42	(13) "Physically terminated electric service to the
43	43	well's production site" means that electric service to an inactive
44	44	well site has been disconnected at a point on the electric service
45	45	lines most distant from the production site toward the main supply
46	46	line in a manner that will not interfere with electrical supply to
47	47	adjacent operations, including cathodic protection units.
48	48	SECTION 2. Chapter 89, Natural Resources Code, is amended
49	49	by adding Subchapter B-1 to read as follows:
50	50	SUBCHAPTER B-1. PLUGGING OF CERTAIN INACTIVE WELLS
51	51	Sec. 89.021. APPLICABILITY. This subchapter does not apply
52	52	to a bay or offshore well as defined by commission rules.
53	53	Sec. 89.022. PLUGGING OF INACTIVE WELLS REQUIRED. (a)
54	54	Except as provided by Section 89.023, on or before the date the
55	55	operator is required to renew the operator's organization report
56	56	required by Section 91.142, an operator of an inactive well must
57	57	plug the well in accordance with statutes and commission rules in
58	58	effect at the time of plugging.
59	59	(b) Notwithstanding Subsection (a), a person who assumes
60	60	responsibility for the physical operation and control of an
61	61	existing inactive well must satisfy the requirements of Sections
62	62	89.023(a)(1) and (4) not later than six months after the date the
63	63	commission approves the initial form described by Section
64	64	89.002(a)(2) and filed with the commission under which the person
65	65	assumes responsibility for the well.
66	66	(c) The commission may not renew or approve the organization
67	67	report required by Section 91.142 for an operator that fails to
68	68	comply with the requirements of this subchapter.
69	69	Sec. 89.023. EXTENSION OF DEADLINE FOR PLUGGING INACTIVE
70	70	WELL. (a) The commission may grant an extension of the deadline
71	71	for plugging an inactive well if the operator maintains a current
72	72	organization report with the commission as required by Section
73	73	91.142 and if, on or before the date of renewal of the operator's
74	74	organization report as required by that section, the operator files
75	75	with the commission an application for an extension that includes:
76	76	(1) an affirmation that complies with Section 89.029;
77	77	(2) a statement that the well and associated
78	78	facilities are in compliance with all commission rules and orders;
79	79	(3) a statement that the operator has, and on request
80	80	will provide, evidence of a good faith claim to a continuing right
81	81	to operate the well; and
82	82	(4) at least one of the following:
83	83	(A) documentation that since the preceding date
84	84	that the operator's organization report was required to be renewed
85	85	the operator has plugged, or restored to active operation as
86	86	defined by commission rule, a number of inactive wells equal to or
87	87	greater than 10 percent of the number of inactive wells operated by
88	88	the operator on that date;
89	89	(B) an abeyance of plugging report on a form
90	90	approved by the commission that:
91	91	(i) is in the form of a certification signed
92	92	by a person licensed by the Texas Board of Professional Engineers or
93	93	the Texas Board of Professional Geoscientists;
94	94	(ii) includes:
95	95	(a) an affirmation by the licensed
96	96	person that the well has:
97	97	(1) a reasonable expectation of
98	98	economic value in excess of the cost of plugging the well for the
99	99	duration of the period covered by the report, based on the cost
100	100	calculation for plugging an inactive well; and
101	101	(2) a reasonable expectation of
102	102	being restored to a beneficial use that will prevent waste of oil or
103	103	gas resources that otherwise would not be produced if the well were
104	104	plugged; and
105	105	(b) appropriate documentation
106	106	demonstrating the basis for the affirmation of the well's future
107	107	utility; and
108	108	(iii) specifies the field and the covered
109	109	wells within that field in a format prescribed by the commission;
110	110	(C) a statement that the well is part of an
111	111	enhanced oil recovery project;
112	112	(D) if the operator of the well is not currently
113	113	otherwise required by commission rule or order to conduct a fluid
114	114	level or hydraulic pressure test of the well, documentation of the
115	115	results of a successful fluid level or hydraulic pressure test of
116	116	the well conducted in accordance with the commission's rules in
117	117	effect at the time the test is conducted;
118	118	(E) a supplemental bond, letter of credit, or
119	119	cash deposit sufficient for each well specified in the application
120	120	that:
121	121	(i) complies with the requirements of
122	122	Chapter 91; and
123	123	(ii) is of an amount at least equal to the
124	124	cost calculation for plugging an inactive well for each well
125	125	specified in the application;
126	126	(F) documentation of the deposit with the
127	127	commission each time the operator files an application of an amount
128	128	of escrow funds as prescribed by commission rule that equal at least
129	129	10 percent of the total cost calculation for plugging an inactive
130	130	well for each well specified in the application; or
131	131	(G) if the operator is a publicly traded entity:
132	132	(i) the following documents:
133	133	(a) a copy of the operator's federal
134	134	documents filed to comply with Financial Accounting Standards Board
135	135	Statement No. 143, Accounting for Asset Retirement Obligations; and
136	136	(b) an original, executed Uniform
137	137	Commercial Code Form 1 Financing Statement, filed with the
138	138	secretary of state, that:
139	139	(1) names the operator as the
140	140	"debtor" and the Railroad Commission of Texas as the "secured
141	141	creditor"; and
142	142	(2) specifies the funds covered
143	143	by the documents described by Sub-subparagraph (a) in the amount of
144	144	the cost calculation for plugging an inactive well for each well
145	145	specified in the application; or
146	146	(ii) a blanket bond in the amount of the
147	147	lesser of:
148	148	(a) the cost calculation for plugging
149	149	any inactive wells; or
150	150	(b) $2 million.
151	151	(b) Notwithstanding Subsection (a), an operator may not
152	152	obtain an extension of the deadline for plugging an inactive well by
153	153	complying with that subsection if the plugging of the well is
154	154	otherwise required by commission rules or orders.
155	155	Sec. 89.024. ABEYANCE OF PLUGGING REPORT. (a) An abeyance
156	156	of plugging report filed under Section 89.023(a)(4)(B) is valid for
157	157	a period of not more than five years.
158	158	(b) An abeyance of plugging report may cover more than one
159	159	well in a field but may not cover more than one field.
160	160	(c) An abeyance of plugging report may not be transferred to
161	161	a new operator of an existing inactive well. A new operator of an
162	162	existing inactive well must file a new abeyance of plugging report
163	163	or otherwise comply with the requirements of this subchapter on or
164	164	before the deadline provided by Section 89.022(b). This subsection
165	165	does not prohibit the transfer of an abeyance of plugging report in
166	166	the event of a change of name of an operator.
167	167	(d) An operator who files an abeyance of plugging report
168	168	must pay an annual fee of $100 for each well covered by the report.
169	169	A fee collected under this section shall be deposited in the
170	170	oil-field cleanup fund.
171	171	Sec. 89.025. ENHANCED OIL RECOVERY PROJECT. (a) For
172	172	purposes of Section 89.023(a)(4)(C), an inactive well is considered
173	173	to be part of an enhanced oil recovery project if the well is
174	174	located on a unit or lease or in a field associated with such a
175	175	project.
176	176	(b) A statement that an inactive well is part of an enhanced
177	177	oil recovery project may not be transferred to a new operator of an
178	178	existing inactive well. A new operator of an existing inactive well
179	179	must file a new statement that the well is part of such a project or
180	180	otherwise comply with the requirements of this subchapter on or
181	181	before the deadline provided by Section 89.022(b). This subsection
182	182	does not prohibit the transfer of a statement that a well is part of
183	183	an enhanced oil recovery project in the event of a change of name of
184	184	an operator.
185	185	Sec. 89.026. FLUID LEVEL OR HYDRAULIC PRESSURE TEST. (a)
186	186	Documentation filed under Section 89.023(a)(4)(D) of the results of
187	187	a successful fluid level test is valid for a period of one year from
188	188	the date of the test. Documentation filed under that section of the
189	189	results of a successful hydraulic pressure test is valid for a
190	190	period of not more than five years from the date of the test.
191	191	(b) The operator must notify the office of the commission
192	192	oil and gas division district in which an inactive well is located
193	193	at least three days before the date the operator conducts a fluid
194	194	level or hydraulic pressure test of the well and may not conduct the
195	195	test without the approval of the office. The commission may require
196	196	that a test be witnessed by a commission employee.
197	197	(c) Documentation of the results of a successful fluid level
198	198	or hydraulic pressure test may be transferred to a new operator of
199	199	an existing inactive well.
200	200	(d) An operator who files documentation described by
201	201	Subsection (a) must pay an annual fee of $50 for each well covered
202	202	by the documentation. A fee collected under this section shall be
203	203	deposited in the oil-field cleanup fund.
204	204	Sec. 89.027. SUPPLEMENTAL FINANCIAL ASSURANCE. (a) A
205	205	supplemental bond, letter of credit, or cash deposit filed under
206	206	Section 89.023(a)(4)(E) is in addition to any other financial
207	207	assurance otherwise required of the operator or for the well.
208	208	(b) A supplemental bond, letter of credit, or cash deposit
209	209	may not be transferred to a new operator of an existing inactive
210	210	well. A new operator of an existing inactive well must file a new
211	211	supplemental bond, letter of credit, or cash deposit or otherwise
212	212	comply with the requirements of this subchapter by the deadline
213	213	provided by Section 89.022(b).
214	214	Sec. 89.028. ESCROW FUNDS. (a) Escrow funds described by
215	215	Section 89.023(a)(4)(F) must be deposited with the commission each
216	216	time an operator files an application for an extension of the
217	217	deadline for plugging an inactive well.
218	218	(b) Escrow funds deposited with the commission may be
219	219	released only with the approval of the commission as prescribed by
220	220	commission rule.
221	221	Sec. 89.029. AFFIRMATION REGARDING SURFACE REQUIREMENTS.
222	222	(a) An application for an extension of the deadline for plugging an
223	223	inactive well must include a written affirmation by the operator:
224	224	(1) that the operator has physically terminated
225	225	electric service to the well's production site; and
226	226	(2) stating the following, as applicable, if the
227	227	operator does not own the surface of the land on which the well is
228	228	located:
229	229	(A) if the well has been inactive for at least
230	230	five years but for less than 10 years as of the date of renewal of
231	231	the operator's organization report, that the operator has emptied
232	232	or purged of production fluids all piping, tanks, vessels, and
233	233	equipment associated with and exclusive to the well; or
234	234	(B) if the well has been inactive for at least 10
235	235	years as of the date of renewal of the operator's organization
236	236	report, that the operator has removed all surface process equipment
237	237	and related piping, tanks, tank batteries, pump jacks, headers, and
238	238	fences, as well as junk and trash as defined by commission rule,
239	239	associated with and exclusive to the well.
240	240	(b) An operator of an inactive well shall leave a clearly
241	241	visible marker at the wellhead of the well.
242	242	(c) The commission shall adopt rules regulating the
243	243	transfer of material described by Subsection (a)(2)(B) and
244	244	restricting its accumulation on an active lease.
245	245	(d) Notwithstanding Subsection (a), an operator may be
246	246	eligible for a temporary extension of the deadline for plugging an
247	247	inactive well or a temporary exemption from the requirements of
248	248	Subsection (a) as provided by commission rule if the operator is
249	249	unable to comply with the requirements of that subsection because
250	250	of safety concerns or required maintenance of the well site and the
251	251	operator includes with the application a written affirmation of the
252	252	facts regarding the safety concerns or maintenance.
253	253	(e) An operator may be eligible for an extension of the
254	254	deadline for plugging a well without complying with Subsection
255	255	(a)(2)(B) if the well is located on a unit or lease or in a field
256	256	associated with an enhanced oil recovery project and the operator
257	257	includes a statement in the written affirmation that the well is
258	258	part of such a project. The exemption provided by this subsection
259	259	applies only to the equipment required for the project.
260	260	(f) Notwithstanding the other provisions of this
261	261	subchapter, the commission shall adopt rules providing for the
262	262	phase-in of the duty to comply with Subsection (a)(2)(B) over a
263	263	period of five years beginning September 1, 2010. The rules must
264	264	require the operators of one-fifth of the wells that are subject to
265	265	that subsection in each year during the phase-in period to comply
266	266	with that subsection.
267	267	Sec. 89.030. REVOCATION OF EXTENSION OF DEADLINE FOR
268	268	PLUGGING INACTIVE WELL. The commission may revoke an extension of
269	269	the deadline for plugging an inactive well granted under this
270	270	subchapter if the commission determines, after notice and an
271	271	opportunity for a hearing, that the applicant is ineligible for the
272	272	extension under the commission's rules or orders.
273	273	SECTION 3. Subchapter B, Chapter 91, Natural Resources
274	274	Code, is amended by adding Section 91.019 to read as follows:
275	275	Sec. 91.019. STANDARDS FOR CONSTRUCTION, OPERATION, AND
276	276	MAINTENANCE OF ELECTRICAL POWER LINES. An operator shall
277	277	construct, operate, and maintain an electrical power line serving a
278	278	well site or other surface facility employed in operations incident
279	279	to oil and gas development and production in accordance with the
280	280	National Electrical Code published by the National Fire Protection
281	281	Association and adopted by the Texas Commission of Licensing and
282	282	Regulation under Chapter 1305, Occupations Code.
283	283	SECTION 4. Section 91.111(c), Natural Resources Code, is
284	284	amended to read as follows:
285	285	(c) The fund consists of:
286	286	(1) penalties imposed under Section 85.381 for
287	287	violation of a law, order, or rule relating to well plugging
288	288	requirements;
289	289	(2) proceeds from bonds and other financial security
290	290	required by this chapter and benefits under well-specific plugging
291	291	insurance policies described by Section 91.104(c) that are paid to
292	292	the state as contingent beneficiary of the policies, subject to the
293	293	refund provisions of Section 91.1091, if applicable;
294	294	(3) private contributions, including contributions
295	295	made under Section 89.084;
296	296	(4) expenses collected under Section 89.083;
297	297	(5) fees imposed under Section 85.2021;
298	298	(6) civil penalties collected for violations of
299	299	Chapter 89 or of rules or orders relating to plugging that are
300	300	adopted under this code;
301	301	(7) proceeds collected under Sections 89.085 and
302	302	91.115;
303	303	(8) interest earned on the funds deposited in the
304	304	fund;
305	305	(9) civil penalties or costs recovered under Section
306	306	91.457 or 91.459;
307	307	(10) oil and gas waste hauler permit application fees
308	308	collected under Section 29.015, Water Code;
309	309	(11) costs recovered under Section 91.113(f);
310	310	(12) hazardous oil and gas waste generation fees
311	311	collected under Section 91.605;
312	312	(13) oil-field cleanup regulatory fees on oil
313	313	collected under Section 81.116;
314	314	(14) oil-field cleanup regulatory fees on gas
315	315	collected under Section 81.117;
316	316	(15) fees for a reissued certificate collected under
317	317	Section 91.707;
318	318	(16) fees collected under Section 91.1013;
319	319	(17) fees collected under Section 89.088;
320	320	(18) penalties collected under Section 81.0531;
321	321	(19) fees collected under Section 91.142;
322	322	(20) fees collected under Section 91.654;
323	323	(21) costs recovered under Sections 91.656 and 91.657;
324	324	(22) two-thirds of the fees collected under Section
325	325	81.0521; [and]
326	326	(23) fees collected under Sections 89.024 and 89.026;
327	327	and
328	328	(24) legislative appropriations.
329	329	SECTION 5. (a) Not later than September 1, 2010, the
330	330	Railroad Commission of Texas shall be prepared to grant extensions
331	331	of the deadline for plugging an inactive well under Subchapter B-1,
332	332	Chapter 89, Natural Resources Code, as added by this Act.
333	333	(b) The change in law made by this Act applies only to the
334	334	renewal or approval of an organization report on or after September
335	335	1, 2010. The renewal or approval of an organization report before
336	336	September 1, 2010, is governed by the law as it existed immediately
337	337	before the effective date of this Act, and that law is continued in
338	338	effect for that purpose.
339	339	SECTION 6. This Act takes effect September 1, 2009.
340	340	______________________________ ______________________________
341	341	President of the Senate Speaker of the House
342	342	I certify that H.B. No. 2259 was passed by the House on April
343	343	29, 2009, by the following vote: Yeas 144, Nays 0, 1 present, not
344	344	voting; and that the House concurred in Senate amendments to H.B.
345	345	No. 2259 on May 20, 2009, by the following vote: Yeas 138, Nays 0,
346	346	1 present, not voting.
347	347	______________________________
348	348	Chief Clerk of the House
349	349	I certify that H.B. No. 2259 was passed by the Senate, with
350	350	amendments, on May 18, 2009, by the following vote: Yeas 31, Nays
351	351	0.
352	352	______________________________
353	353	Secretary of the Senate
354	354	APPROVED: __________________
355	355	Date
356	356	__________________
357	357	Governor