Texas 2023 - 88th Regular

Texas House Bill HB3840 Compare Versions

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1	1	88R7367 ANG-D
2	2	By: Goodwin H.B. No. 3840
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the extension of the deadline for plugging certain
8	8	inactive wells under the jurisdiction of the Railroad Commission of
9	9	Texas.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Section 89.023, Natural Resources Code, is
12	12	amended by amending Subsection (a) and adding Subsections (a-1),
13	13	(a-2), (c), (d), and (e) to read as follows:
14	14	(a) Subject to Subsection (c), the [The] commission may
15	15	grant an extension of not more than five years of the deadline for
16	16	plugging an inactive well if the operator maintains a current
17	17	organization report with the commission as required by Section
18	18	91.142 and if, on or before the date of renewal of the operator's
19	19	organization report as required by that section, the operator files
20	20	with the commission an application for an extension that includes:
21	21	(1) an affirmation that complies with Section 89.029;
22	22	(2) a statement that the operator has, and on request
23	23	will provide, evidence of a good faith claim to a continuing right
24	24	to operate the well; [and]
25	25	(3) at least one of the following:
26	26	(A) documentation that since the preceding date
27	27	that the operator's organization report was required to be renewed
28	28	the operator has plugged, or restored to active operation as
29	29	defined by commission rule, a number of inactive wells equal to or
30	30	greater than 10 percent of the number of inactive wells operated by
31	31	the operator on that date;
32	32	(B) an abeyance of plugging report on a form
33	33	approved by the commission that:
34	34	(i) is in the form of a certification signed
35	35	by a person licensed by the Texas Board of Professional Engineers
36	36	and Land Surveyors as an engineer or by the Texas Board of
37	37	Professional Geoscientists;
38	38	(ii) includes:
39	39	(a) an affirmation by the licensed
40	40	person that the well has:
41	41	(1) a reasonable expectation of
42	42	economic value in excess of the cost of plugging the well for the
43	43	duration of the period covered by the report, based on the cost
44	44	calculation for plugging an inactive well; and
45	45	(2) a reasonable expectation of
46	46	being restored to a beneficial use that will prevent waste of oil or
47	47	gas resources that otherwise would not be produced if the well were
48	48	plugged; and
49	49	(b) appropriate documentation
50	50	demonstrating the basis for the affirmation of the well's future
51	51	utility; and
52	52	(iii) specifies the field and the covered
53	53	wells within that field in a format prescribed by the commission;
54	54	(C) a statement that the well is part of an
55	55	enhanced oil recovery project;
56	56	(D) if the operator of the well is not currently
57	57	otherwise required by commission rule or order to conduct a fluid
58	58	level or hydraulic pressure test of the well, documentation of the
59	59	results of a successful fluid level or hydraulic pressure test of
60	60	the well conducted in accordance with the commission's rules in
61	61	effect at the time the test is conducted;
62	62	(E) [a supplemental bond, letter of credit, or
63	63	cash deposit sufficient for each well specified in the application
64	64	that:
65	65	[(i) complies with the requirements of
66	66	Chapter 91; and
67	67	[(ii) is of an amount at least equal to the
68	68	cost calculation for plugging an inactive well for each well
69	69	specified in the application;
70	70	[(F)] documentation of the deposit with the
71	71	commission each time the operator files an application of an amount
72	72	of escrow funds as prescribed by commission rule that equal at least
73	73	10 percent of the total cost calculation for plugging an inactive
74	74	well for each well specified in the application; or
75	75	(F) [(G)] if the operator is a publicly traded
76	76	entity,[:
77	77	[(i)] the following documents:
78	78	(i) [(a)] a copy of the operator's federal
79	79	documents filed to comply with Financial Accounting Standards Board
80	80	Statement No. 143, Accounting for Asset Retirement Obligations;
81	81	and
82	82	(ii) [(b)] an original, executed Uniform
83	83	Commercial Code Form 1 Financing Statement, filed with the
84	84	secretary of state, that:
85	85	(a) [(1)] names the operator as the
86	86	"debtor" and the Railroad Commission of Texas as the "secured
87	87	creditor"; and
88	88	(b) [(2)] specifies the funds covered
89	89	by the documents described by Subparagraph (i) [Sub-subparagraph
90	90	(a)] in the amount at least equal to the applicable decommissioning
91	91	cost estimate established by the commission under Subsection (a-1)
92	92	for each well specified in the application; and
93	93	(4) a supplemental bond, letter of credit, or cash
94	94	deposit sufficient for each well specified in the application that:
95	95	(A) complies with the requirements of Chapter 91;
96	96	and
97	97	(B) is of an amount at least equal to the
98	98	applicable decommissioning cost estimate established by the
99	99	commission under Subsection (a-1) for each well specified in the
100	100	application [of the cost calculation for plugging an inactive well
101	101	for each well specified in the application; or
102	102	[(ii) a blanket bond in the amount of the
103	103	lesser of:
104	104	[(a) the cost calculation for
105	105	plugging any inactive wells; or
106	106	[(b) $2 million].
107	107	(a-1) Based on the information provided to the commission
108	108	under Subsection (a-2), the commission shall establish
109	109	decommissioning cost estimates for each oil and gas producing
110	110	region of the state, as determined by the commission, annually and
111	111	post the estimates on the commission's publicly accessible Internet
112	112	website.
113	113	(a-2) The commission shall require each operator to provide
114	114	decommissioning cost information to the commission on an annual
115	115	basis, including, for each well site:
116	116	(1) the depth of the well;
117	117	(2) the age of the well bore;
118	118	(3) a summary explaining factors or complications
119	119	related to the well or well site that may influence the cost of
120	120	plugging or cleanup at the well site;
121	121	(4) an estimated cost of materials and equipment
122	122	necessary to plug the well bore and clean up the well site;
123	123	(5) an estimated cost of labor necessary to plug the
124	124	well bore, clean up the well site, and remove any equipment;
125	125	(6) overhead expenses; and
126	126	(7) whether the well bore or site has undergone
127	127	reworking operations during the preceding year.
128	128	(c) If an operator has previously obtained an extension of
129	129	the deadline for plugging an inactive well of five years or more,
130	130	the commission may only grant two additional one-year extensions.
131	131	(d) The commission may deny a request for an extension of
132	132	the deadline for plugging an inactive well if the operator has not
133	133	demonstrated financial solvency.
134	134	(e) Notwithstanding Section 89.021, this section applies to
135	135	bay and offshore wells.
136	136	SECTION 2. Section 89.027(a), Natural Resources Code, is
137	137	amended to read as follows:
138	138	(a) A supplemental bond, letter of credit, or cash deposit
139	139	filed under Section 89.023(a)(4) [89.023(a)(3)(E)] is in addition
140	140	to any other financial assurance otherwise required of the operator
141	141	or for the well.
142	142	SECTION 3. Section 89.028(a), Natural Resources Code, is
143	143	amended to read as follows:
144	144	(a) Escrow funds described by Section 89.023(a)(3)(E)
145	145	[89.023(a)(3)(F)] must be deposited with the commission each time
146	146	an operator files an application for an extension of the deadline
147	147	for plugging an inactive well.
148	148	SECTION 4. (a) The changes in law made by this Act apply
149	149	only to a person required to file a bond, letter of credit, or cash
150	150	deposit under Section 89.023, Natural Resources Code, on or after
151	151	the effective date of this Act. A person required to file a bond,
152	152	letter of credit, or cash deposit under Section 89.023, Natural
153	153	Resources Code, before the effective date of this Act is governed by
154	154	the law as it existed immediately before the effective date of this
155	155	Act, and that law is continued in effect for that purpose.
156	156	(b) Notwithstanding Subsection (a), an operator of a well in
157	157	existence on the effective date of this Act is not required to hold
158	158	an individual bond that meets the requirements of Section 89.023,
159	159	Natural Resources Code, as amended by this Act, until September 1,
160	160	2026. The law as it existed immediately before the effective date
161	161	of this Act is continued in effect for that purpose.
162	162	SECTION 5. This Act takes effect September 1, 2023.