HB2256 - Relating to financial security requirements for operators of oil and gas wells.

  89R7992 ANG-D     By: Goodwin H.B. No. 2256       A BILL TO BE ENTITLED   AN ACT   relating to financial security requirements for operators of oil   and gas wells.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 81.067(c), Natural Resources Code, is   amended to read as follows:          (c)  The fund consists of:                (1)  proceeds from bonds and other financial security   required by this chapter and benefits under well-specific plugging   insurance policies described by Section 91.104(c) that are paid to   the state as contingent beneficiary of the policies, subject to the   refund provisions of Section 91.1091, if applicable;                (2)  private contributions, including contributions   made under Section 89.084;                (3)  expenses collected under Section 89.083;                (4)  fees imposed under Section 85.2021;                (5)  costs recovered under Section 91.457 or 91.459;                (6)  proceeds collected under Sections 89.085 and   91.115;                (7)  interest earned on the funds deposited in the   fund;                (8)  oil and gas waste hauler permit application fees   collected under Section 29.015, Water Code;                (9)  costs recovered under Section 91.113(f);                (10)  hazardous oil and gas waste generation fees   collected under Section 91.605;                (11)  oil-field cleanup regulatory fees on oil   collected under Section 81.116;                (12)  oil-field cleanup regulatory fees on gas   collected under Section 81.117;                (13)  fees for a reissued certificate collected under   Section 91.707;                (14)  fees collected under Section 91.1013;                (15)  fees collected under Section 89.088;                (16)  fees collected under Section 91.142;                (17)  fees collected under Section 91.654;                (18)  costs recovered under Sections 91.656 and 91.657;                (19)  fees collected under Section 81.0521;                (20)  fees collected under Sections 89.024 and 89.026;                (21)  legislative appropriations;                (22)  any surcharges collected under Section 81.070;                (23)  fees collected under Section 91.0115;                (24)  fees collected under Subchapter E, Chapter 121,   Utilities Code;                (25)  fees collected under Section 27.0321, Water Code;                (26)  fees collected under Section 81.071; [ and ]                (27)  money collected under Section 81.021 ; and                 (28)     money transferred from a sinking fund under   Section 91.1045(b)(2) .          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 operator has, and on request   will provide, evidence of a good faith claim to a continuing right   to operate the well; [ and ]                (3)  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   and Land Surveyors as an engineer or by 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                       (F)  [ (G) ]  if the operator is a publicly traded   entity , [ :                            [ (i) ]  the following documents:                             (i)  [ (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                             (ii) [ (b) ]  an original, executed Uniform   Commercial Code Form 1 Financing Statement, filed with the   secretary of state, that:                                   (a)  [ (1) ]  names the operator as the   "debtor" and the Railroad Commission of Texas as the "secured   creditor"; and                                   (b)  [ (2) ]  specifies the funds covered   by the documents described by Subparagraph (i) [ Sub-subparagraph   (a) ] in the amount at least equal to the applicable decommissioning   cost estimate established by the commission under Section   91.1041(b) for each well specified in the application; and                   (4)     a supplemental bond, letter of credit, or cash   deposit sufficient for each well specified in the application that:                       (A)     complies with the requirements of Chapter 91;   and                       (B)     is of an amount at least equal to the   applicable decommissioning cost estimate established by the   commission under Section 91.1041(b) for each well specified in the   application [ 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                            &#xA0 [Text truncated for display. Full text available on Congress.gov.]