| (a) Definitions. The following words and terms, when
used in this section, shall have the following meanings, unless the
context clearly indicates otherwise:
(1) Active operation--Regular and continuing activities
related to the production of oil and gas for which the operator has
all necessary permits. In the case of a well that has been inactive
for 12 consecutive months or longer and that is not permitted as a
disposal or injection well, the well remains inactive for purposes
of this section, regardless of any minimal activity, until the well
has reported production of at least five barrels of oil for oil wells
or 50 Mcf of gas for gas wells each month for at least three consecutive
months, or until the well has reported production of at least one
barrel of oil for oil wells or at least one Mcf of gas for gas wells
each month for 12 consecutive months.
(2) Cost calculation for plugging an inactive well--The
cost, calculated by the Commission or its delegate, for each foot
of well depth plugged based on average actual plugging costs for wells
plugged by the Commission for the preceding state fiscal year for
the Commission Oil and Gas Division district in which the inactive
well is located.
(3) Delinquent inactive well--An inactive well for
which, after notice and opportunity for a hearing, the Commission
or its delegate has not extended the plugging deadline.
(4) Enhanced oil recovery (EOR) project--A project
that does not include a water disposal project and is:
(A) a Commission-approved EOR project that uses any
process for the displacement of oil or other hydrocarbons from a reservoir
other than primary recovery and includes the use of an immiscible,
miscible, chemical, thermal, or biological process;
(B) a certified project described by Texas Tax Code, §202.054;
or
(C) any other project approved by the Commission or
its delegate for EOR.
(5) Good faith claim--A factually supported claim based
on a recognized legal theory to a continuing possessory right in a
mineral estate, such as evidence of a currently valid oil and gas
lease or a recorded deed conveying a fee interest in the mineral estate.
(6) Inactive well--An unplugged well that has been
spudded or has been equipped with cemented casing and that has had
no reported production, disposal, injection, or other permitted activity
for a period of greater than 12 months.
(7) Operator designation form--A certificate of compliance
and transportation authority or an application to drill, recomplete,
and reenter that has been approved by the Commission or its delegate.
(8) Physical termination of electric service to the
well's production site--Disconnection of the electric service to an
inactive well site at a point on the electric service lines most distant
from the production site toward the main supply line in a manner that
will not interfere with electrical supply to adjacent operations,
including cathodic protection units.
(b) Plugging of inactive bay and offshore wells required.
(1) An operator of an existing inactive bay or offshore
well as defined in §3.78 of this title (relating to Fees and
Financial Security Requirements) must:
(A) restore the well to active operation as defined
by Commission rule;
(B) plug the well in compliance with a Commission rule
or order; or
(C) obtain the approval of the Commission or its delegate
of an extension of the deadline for plugging an inactive bay or offshore
well.
(2) The Commission or its delegate may not approve
an extension of the deadline for plugging an inactive bay or offshore
well if the plugging of the well is otherwise required by Commission
rules or orders.
(c) Extension of deadline for plugging an inactive
bay or offshore well. The Commission or its delegate may administratively
grant an extension of the deadline for plugging an inactive bay or
offshore well as defined by Commission rules if:
(1) the operator has a current organization report;
(2) the operator has, and on request provides, evidence
of a good faith claim to a continuing right to operate the well;
(3) the well and associated facilities are otherwise
in compliance with all Commission rules and orders; and
(4) for a well more than 25 years old, the operator
successfully conducts and the Commission or its delegate approves
a fluid level or hydraulic pressure test establishing that the well
does not pose a potential threat of harm to natural resources, including
surface and subsurface water, oil, and gas.
(d) Plugging of inactive land wells required.
(1) An operator that assumes responsibility for the
physical operation and control of an existing inactive land well must
maintain the well and all associated facilities in compliance with
all applicable Commission rules and orders and within six months after
the date the Commission or its delegate approves an operator designation
form must either:
(A) restore the well to active operation as defined
by Commission rule;
(B) plug the well in compliance with a Commission rule
or order; or
(C) obtain approval of the Commission or its delegate
of an extension of the deadline for plugging an inactive well.
(2) The Commission or its delegate may not approve
an extension of the deadline for plugging an inactive land well if
the plugging of the well is otherwise required by Commission rules
or orders.
(3) Except for an operator designation form filed for
the purpose of a name change, the Commission or its delegate may not
approve an operator designation form for an inactive land well until
the operator satisfies the requirements of paragraph (1)(C) of this
subsection.
(4) If an operator fails to restore the well to active
operation as defined by Commission rule, plug the well in compliance
with a Commission rule or order, or obtain an extension of the deadline
for plugging an inactive well within six months after acquiring an
inactive well, the Commission or its delegate may, after notice and
opportunity for hearing, revoke the operator's organization report.
(5) The Commission or its delegate may approve an organization
report that is delinquent or has been revoked if the Commission or
its delegate simultaneously approves extensions of the deadline for
plugging the operator's inactive wells.
(e) Extension of deadline for plugging an inactive
land well. The Commission or its delegate may administratively grant
an extension of the deadline for plugging an inactive land well if:
(1) the Commission or its delegate approves the operator's
Application for an Extension of Deadline for Plugging an Inactive
Well (Commission Form W-3X);
(2) the operator has a current organization report;
(3) the operator has, and on request provides evidence
of, a good faith claim to a continuing right to operate the well;
(4) the well and associated facilities are otherwise
in compliance with all Commission rules and orders; and
(5) for a well more than 25 years old, the operator
successfully conducts and the Commission or its delegate approves
a fluid level or hydraulic pressure test establishing that the well
does not pose a potential threat of harm to natural resources, including
surface and subsurface water, oil, and gas.
(f) Application for an extension of deadline for plugging
an inactive land well.
(1) This subsection does not apply to a bay well or
an offshore well as those terms are defined in §3.78 of this
title.
(2) An operator must include the following in an application
for an extension of the deadline for plugging an inactive well:
(A) an affirmation made by an individual with personal
knowledge of the physical condition of the inactive well pursuant
to the provisions of Texas Natural Resources Code, §91.143, stating
the following: that the operator has physically terminated electric
service to the well's production site; and either:
(i) if the operator does not own the surface of the
land where the well is located and the well has been inactive for
at least five years but for less than 10 years as of the date of renewal
of the operator's organization report, that the operator has emptied
or purged of production fluids all piping, tanks, vessels, and equipment
associated with and exclusive to the well; or
(ii) if the operator does not own the surface of the
land where the well is located, and the well has been inactive for
at least 10 years as of the date of renewal of the operator's organization
report, that the operator has removed all surface equipment and related
piping, tanks, tank batteries, pump jacks, headers, fences, and firewalls;
has closed all open pits; and has removed all junk and trash, as defined
by Commission rule, associated with and exclusive to the well; and
(B) documentation that the operator has satisfied at
least one of the following requirements:
(i) for all inactive land wells that an operator has
operated for more than 12 months, the operator has plugged or restored
to active operation, as defined by Commission rule, 10% of the number
of inactive land wells operated at the time of the last annual renewal
of the operator's organization report;
(ii) if the operator is a publicly traded entity, for
all inactive land wells, the operator has filed with the Commission
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 an original executed Uniform Commercial
Code Form 1 Financing Statement, filed with the Secretary of State,
that names the operator as the "debtor" and the Railroad
Commission of Texas as the "secured creditor" and specifies
the funds covered by the documents in the amount of the cost calculation
for plugging all inactive wells;
(iii) the filing of a blanket bond on Commission Form
P-5PB(2), Blanket Performance Bond, a letter of credit on Commission
Form P-5LC, Irrevocable Documentary Blanket Letter of Credit, or a
cash deposit, in the amount of either the lesser of the cost calculation
for plugging all inactive wells or $2 million;
(iv) for each inactive land well identified in the
application, the Commission has approved an abeyance of plugging report
and the operator has paid the required filing fee;
(v) for each inactive land well identified in the application,
the operator has filed a statement that the well is part of a Commission-approved
EOR project;
(vi) for each inactive land well identified in the
application that is not otherwise required by Commission rule or order
to conduct a fluid level or hydraulic pressure test of the well, the
operator has conducted a successful fluid level test or hydraulic
pressure test of the well and the operator has paid the required filing
fee;
(vii) for each inactive land well identified in the
application, the operator has filed Commission Form W-3X and the Commission
or its delegate has approved a supplemental bond, letter of credit,
or cash deposit in an amount at least equal to the cost calculation
for plugging an inactive land well for each well specified in the
application; or
(viii) for each time an operator files an application
for a plugging extension and for each inactive land well identified
in the application, the operator has filed Commission Form W-3X and
the Commission or its delegate has approved an escrow fund deposit
in an amount at least equal to 10% of the total cost calculation for
plugging an inactive land well.
(g) Commission action on application for plugging extension.
(1) The Commission or its delegate shall administratively
grant all applications for plugging extensions that meet the requirements
of Commission rules.
(2) The Commission or its delegate may administratively
deny an application for a plugging extension for an inactive well
if the Commission or its delegate determines that:
(A) the applicant does not have an active organization
report at the time the plugging extension application is filed;
(B) the applicant has not submitted all required filing
fees and financial assurance for the requested plugging extension
and for renewal of its organization report; or
(C) the applicant has not submitted a signed organization
report for the applied-for extension year that qualifies for approval
regardless of whether the applicant has complied with the inactive
well requirements of this section.
(3) Except as provided in paragraph (2) of this subsection,
if the Commission or its delegate determines that an organization
report should be denied renewal solely because it does not meet the
inactive well requirements of this section, a Commission delegate
shall, within a reasonable time of not more than 14 days after receipt
of the applicant's administratively complete organization report renewal
packet, including all statutorily required fees and financial assurance:
(A) notify the operator of the determination;
(B) provide the operator with a written statement of
the reasons for the determination; and
Cont'd... |
