Texas 2021 - 87th Regular

Texas House Bill HB3409 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	87R10225 ANG-F
2	2	By: Goldman H.B. No. 3409
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the duty of a lessee or other agent in control of
8	8	certain state land to drill an offset well, pay compensatory
9	9	royalty, or otherwise protect the land from drainage of oil or gas
10	10	by a horizontal drainhole well located on certain land.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	SECTION 1. Section 66.75, Education Code, is amended by
13	13	amending Subsection (a) and adding Subsections (a-1) and (g) to
14	14	read as follows:
15	15	(a) In this section:
16	16	(1) "Horizontal drainhole well" means a well with a
17	17	horizontal drainhole that may produce oil or gas along at least 100
18	18	feet of the drainhole.
19	19	(2) "Take point" means any point in a horizontal
20	20	drainhole well where oil and gas can be produced from the reservoir
21	21	or field interval recognized by the Railroad Commission of Texas.
22	22	(3) "Unconventional fracture treated field" means an
23	23	oil or gas field in which horizontal well development and hydraulic
24	24	fracture treatment must be used to recover resources from all or
25	25	part of the field.
26	26	(a-1) The lessee shall protect the leased premises from
27	27	drainage. The lease may contain express terms regarding drainage
28	28	as the board may adopt.
29	29	(g) Notwithstanding any other provision of this section, a
30	30	lease or other agreement relating to university lands may not
31	31	require a lessee to drill an offset well, pay compensatory royalty,
32	32	or otherwise protect the leased premises or acreage pooled with the
33	33	leased premises from drainage by a horizontal drainhole well
34	34	located in an unconventional fracture treated field if no take
35	35	point of the horizontal drainhole well is located closer to the
36	36	leased premises or acreage pooled with the leased premises than the
37	37	applicable lease-line spacing distance requirement of the Railroad
38	38	Commission of Texas.
39	39	SECTION 2. Section 52.034, Natural Resources Code, is
40	40	amended by amending Subsections (a) and (d) and adding Subsections
41	41	(a-1) and (a-2) to read as follows:
42	42	(a) In this section:
43	43	(1) "Horizontal drainhole well" means a well with a
44	44	horizontal drainhole that may produce oil or gas along at least 100
45	45	feet of the drainhole.
46	46	(2) "Take point" means any point in a horizontal
47	47	drainhole well where oil and gas can be produced from the reservoir
48	48	or field interval recognized by the Railroad Commission of Texas.
49	49	(3) "Unconventional fracture treated field" means an
50	50	oil or gas field in which horizontal well development and hydraulic
51	51	fracture treatment must be used to recover resources from all or
52	52	part of the field.
53	53	(a-1) Except as provided by Subsection (a-2), if [If] oil or
54	54	gas is produced in commercial quantities from a well located on a
55	55	privately owned area or areas of state land leased at a lesser
56	56	royalty and the well is located within 1,000 feet of an area leased
57	57	under this subchapter[,] or [in any case where such an area] is
58	58	draining an area leased under this subchapter [being drained by
59	59	such a well or wells], the lessee of the state area shall begin in
60	60	good faith and prosecute diligently the drilling of an offset well
61	61	or wells on the area leased from the state within 60 days after the
62	62	initial production from the draining well or the well located
63	63	within 1,000 feet of the leased state area.
64	64	(a-2) If the well producing oil or gas in commercial
65	65	quantities under Subsection (a-1) is a horizontal drainhole well
66	66	located in an unconventional fracture treated field, a lessee of a
67	67	state area is not required to drill an offset well as provided by
68	68	Subsection (a-1) unless any take point in the horizontal drainhole
69	69	well is located closer to the leased state area than the minimum
70	70	distance established by the applicable lease-line spacing
71	71	requirement of the Railroad Commission of Texas.
72	72	(d) At the determination of the commissioner and with the
73	73	commissioner's [his] written approval, the payment of a
74	74	compensatory royalty shall satisfy the obligation to drill an
75	75	offset well or wells required by Subsection (a-1) [Subsection (a)
76	76	of this section]. Such compensatory royalty shall be paid at the
77	77	royalty rate provided by the state lease issued under this
78	78	subchapter and shall be paid on the market value at the well of
79	79	production from the [draining] well producing oil or gas in
80	80	commercial quantities described by Subsection (a-1) [or the well
81	81	located within 1,000 feet of the leased state area].
82	82	SECTION 3. Section 52.173, Natural Resources Code, is
83	83	amended by amending Subsections (a) and (d) and adding Subsections
84	84	(a-1) and (a-2) to read as follows:
85	85	(a) In this section:
86	86	(1) "Horizontal drainhole well" means a well with a
87	87	horizontal drainhole that may produce oil or gas along at least 100
88	88	feet of the drainhole.
89	89	(2) "Take point" means any point in a horizontal
90	90	drainhole well where oil or gas can be produced from the reservoir
91	91	or field interval recognized by the Railroad Commission of Texas.
92	92	(3) "Unconventional fracture treated field" means an
93	93	oil or gas field in which horizontal well development and hydraulic
94	94	fracture treatment must be used to recover resources from all or
95	95	part of the field.
96	96	(a-1) Except as provided by Subsection (a-2), if [If] oil or
97	97	[and/or] gas is [should be] produced in commercial quantities
98	98	within 1,000 feet of land subject to this subchapter[,] or if
99	99	production of oil or gas is draining [in any case where] land
100	100	subject to this subchapter, [is being drained by production of oil
101	101	or gas] the owner, lessee, sublessee, receiver, or other agent in
102	102	control of land subject to this subchapter shall in good faith begin
103	103	the drilling of a well or wells upon such state land within 100 days
104	104	after the draining well or wells or the well or wells completed
105	105	within 1,000 feet of the state land commence to produce in
106	106	commercial quantities[,] and shall prosecute such drilling with
107	107	diligence to reasonably develop the state land and to protect such
108	108	state land against drainage.
109	109	(a-2) If the well producing oil or gas in commercial
110	110	quantities under Subsection (a-1) is a horizontal drainhole well
111	111	located in an unconventional fracture treated field, the owner,
112	112	lessee, sublessee, receiver, or other agent in control of land
113	113	subject to this subchapter is not required to drill an offset well
114	114	as provided by Subsection (a-1) unless any take point in the
115	115	horizontal drainhole well is located closer to the state land than
116	116	the minimum distance established by the applicable lease-line
117	117	spacing requirement of the Railroad Commission of Texas.
118	118	(d) At the determination of the commissioner and with the
119	119	commissioner's [his] written approval, the payment of a
120	120	compensatory royalty shall satisfy the obligation to drill an
121	121	offset well or wells required by Subsection (a-1). Such
122	122	compensatory royalty shall be paid at a royalty rate established by
123	123	the commissioner if the land is unleased, or at the royalty rate
124	124	provided by the state lease, if the land is leased. Such
125	125	compensatory royalty shall be paid on the market value at the well
126	126	of production from the [draining] well producing oil or gas in
127	127	commercial quantities described by Subsection (a-1) [or the well
128	128	located within 1,000 feet of the state land].
129	129	SECTION 4. This Act takes effect September 1, 2021.