82R19156 TRH-D
 
  By: Crownover H.B. No. 3134
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the plugging of inactive oil and gas wells.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 89.022, Natural Resources Code, is
  amended by amending Subsection (b) and adding Subsections (d), (e),
  (f), and (g) to read as follows:
         (b)  Notwithstanding Subsection (a), a person who assumes
  responsibility for the physical operation and control of an
  existing inactive well must satisfy the requirements of Sections
  89.023(a)(1) and (3) [(4)] not later than six months after the date
  the commission approves the initial form described by Section
  89.002(a)(2) and filed with the commission under which the person
  assumes responsibility for the well.
         (d)  Before the commission issues an order refusing to renew
  an operator's organization report under Subsection (c), an
  authorized commission employee or a person designated by the
  commission for that purpose must determine whether the operator has
  failed to comply with the requirements of this subchapter. If the
  authorized commission employee or designated person determines
  that the organization report does not qualify for renewal on that
  ground, the authorized commission employee or designated person
  must:
               (1)  notify the operator of the determination;
               (2)  provide the operator with a written statement of
  the reasons the organization report does not qualify for renewal;
  and
               (3)  notify the operator that the operator has 90 days
  to comply with the requirements of this subchapter.
         (e)  The authorized commission employee or designated person
  may grant the operator an additional 45 days to comply with the
  requirements of this subchapter for good cause shown.
         (f)  After the expiration of the period specified by
  Subsection (d)(3) as extended under Subsection (e), if applicable,
  the authorized commission employee or designated person shall
  determine whether the organization report qualifies for renewal and
  notify the operator of the determination. If the authorized
  commission employee or designated person determines that the
  organization report does not qualify for renewal because the
  operator has continued to fail to comply with the requirements of
  this subchapter, the operator, not later than the 30th day after the
  date of the determination, may request a hearing regarding the
  determination.  The operator shall pay the costs associated with a
  hearing requested under this subsection.
         (g)  If the commission determines following the hearing that
  the operator has failed to comply with the requirements of this
  subchapter or the operator fails to file a timely request for a
  hearing, the commission by order shall refuse to renew the
  organization report. The organization report remains in effect
  until the commission's order becomes final.
         SECTION 2.  Section 89.023(a), Natural Resources Code, is
  amended to read as follows:
         (a)  The commission may grant an extension of the deadline
  for plugging an inactive well if the operator maintains a current
  organization report with the commission as required by Section
  91.142 and if, on or before the date of renewal of the operator's
  organization report as required by that section, the operator files
  with the commission an application for an extension that includes:
               (1)  an affirmation that complies with Section 89.029;
               (2)  [a statement that the well and associated
  facilities are in compliance with all commission rules and orders;
               [(3)]  a statement that the operator has, and on
  request will provide, evidence of a good faith claim to a continuing
  right to operate the well; and
               (3) [(4)]  at least one of the following:
                     (A)  documentation that since the preceding date
  that the operator's organization report was required to be renewed
  the operator has plugged, or restored to active operation as
  defined by commission rule, a number of inactive wells equal to or
  greater than 10 percent of the number of inactive wells operated by
  the operator on that date;
                     (B)  an abeyance of plugging report on a form
  approved by the commission that:
                           (i)  is in the form of a certification signed
  by a person licensed by the Texas Board of Professional Engineers or
  the Texas Board of Professional Geoscientists;
                           (ii)  includes:
                                 (a)  an affirmation by the licensed
  person that the well has:
                                       (1)  a reasonable expectation of
  economic value in excess of the cost of plugging the well for the
  duration of the period covered by the report, based on the cost
  calculation for plugging an inactive well; and
                                       (2)  a reasonable expectation of
  being restored to a beneficial use that will prevent waste of oil or
  gas resources that otherwise would not be produced if the well were
  plugged; and
                                 (b)  appropriate documentation
  demonstrating the basis for the affirmation of the well's future
  utility; and
                           (iii)  specifies the field and the covered
  wells within that field in a format prescribed by the commission;
                     (C)  a statement that the well is part of an
  enhanced oil recovery project;
                     (D)  if the operator of the well is not currently
  otherwise required by commission rule or order to conduct a fluid
  level or hydraulic pressure test of the well, documentation of the
  results of a successful fluid level or hydraulic pressure test of
  the well conducted in accordance with the commission's rules in
  effect at the time the test is conducted;
                     (E)  a supplemental bond, letter of credit, or
  cash deposit sufficient for each well specified in the application
  that:
                           (i)  complies with the requirements of
  Chapter 91; and
                           (ii)  is of an amount at least equal to the
  cost calculation for plugging an inactive well for each well
  specified in the application;
                     (F)  documentation of the deposit with the
  commission each time the operator files an application of an amount
  of escrow funds as prescribed by commission rule that equal at least
  10 percent of the total cost calculation for plugging an inactive
  well for each well specified in the application; or
                     (G)  if the operator is a publicly traded entity:
                           (i)  the following documents:
                                 (a)  a copy of the operator's federal
  documents filed to comply with Financial Accounting Standards Board
  Statement No. 143, Accounting for Asset Retirement Obligations; and
                                 (b)  an original, executed Uniform
  Commercial Code Form 1 Financing Statement, filed with the
  secretary of state, that:
                                       (1)  names the operator as the
  "debtor" and the Railroad Commission of Texas as the "secured
  creditor"; and
                                       (2)  specifies the funds covered
  by the documents described by Sub-subparagraph (a) in the amount of
  the cost calculation for plugging an inactive well for each well
  specified in the application; or
                           (ii)  a blanket bond in the amount of the
  lesser of:
                                 (a)  the cost calculation for plugging
  any inactive wells; or
                                 (b)  $2 million.
         SECTION 3.  Section 89.024(a), Natural Resources Code, is
  amended to read as follows:
         (a)  An abeyance of plugging report filed under Section
  89.023(a)(3)(B) [89.023(a)(4)(B)] is valid for a period of not more
  than five years.
         SECTION 4.  Section 89.025(a), Natural Resources Code, is
  amended to read as follows:
         (a)  For purposes of Section 89.023(a)(3)(C)
  [89.023(a)(4)(C)], an inactive well is considered to be part of an
  enhanced oil recovery project if the well is located on a unit or
  lease or in a field associated with such a project.
         SECTION 5.  Section 89.026(a), Natural Resources Code, is
  amended to read as follows:
         (a)  Documentation filed under Section 89.023(a)(3)(D)
  [89.023(a)(4)(D)] of the results of a successful fluid level test
  is valid for a period of one year from the date of the
  test.  Documentation filed under that section of the results of a
  successful hydraulic pressure test is valid for a period of not more
  than five years from the date of the test.
         SECTION 6.  Section 89.027(a), Natural Resources Code, is
  amended to read as follows:
         (a)  A supplemental bond, letter of credit, or cash deposit
  filed under Section 89.023(a)(3)(E) [89.023(a)(4)(E)] is in
  addition to any other financial assurance otherwise required of the
  operator or for the well.
         SECTION 7.  Section 89.028(a), Natural Resources Code, is
  amended to read as follows:
         (a)  Escrow funds described by Section 89.023(a)(3)(F)
  [89.023(a)(4)(F)] must be deposited with the commission each time
  an operator files an application for an extension of the deadline
  for plugging an inactive well.
         SECTION 8.  The changes in law made by this Act apply only to
  the renewal of an organization report on or after the effective date
  of this Act. The renewal of an organization report before the
  effective date of this Act is governed by the law as it existed
  immediately before the effective date of this Act, and that law is
  continued in effect for that purpose.
         SECTION 9.  This Act takes effect immediately if it receives
  a vote of two-thirds of all the members elected to each house, as
  provided by Section 39, Article III, Texas Constitution.  If this
  Act does not receive the vote necessary for immediate effect, this
  Act takes effect September 1, 2011.