16 TAC §3.14, §3.78
The Railroad Commission of Texas proposes amendments to §3.14,
relating to plugging and §3.78, relating to fees, performance bonds and
alternate forms of financial security required to be filed.
The Commission proposes changes to the existing regulatory scheme concerning
inactive unplugged wells, commonly referred to as the "W-1X program," to address
concerns regarding the effectiveness of the program. The changes are focused
on assuring that inactive unplugged wells do not cause pollution and that
inactive wells that operators maintain in an unplugged condition for an extended
period are not ultimately abandoned, requiring the state to plug them using
the state's Oil Field Clean-up Fund ("OFCUF"). The current regulatory framework
concerning inactive wells has been in place without significant changes since
1992 and the available data indicates that the program has not been effective
at curbing the increase in inactive and abandoned wells whose plugging is
ultimately paid for by the state's OFCUF.
The number of documented shut-in and inactive wells has increased from
64,000 in 1990 to nearly 102,000. As the gross number of inactive wells has
climbed, the number of wells that are not in compliance with the Commission's
plugging rules has grown as well--from 21,000 known noncompliant wells in
fiscal year 1992 to 25,672 known noncompliant wells in fiscal year 1999. Further,
while the number of inactive wells and number of noncompliant wells has increased,
the number of wells being plugged by industry, both as an absolute number
and as a percentage of pluggings, has declined over the last decade. In 1992,
industry plugged 10,163 wells accounting for 88% of pluggings (the remaining
12% were plugged by the state). By 1999, the number of wells plugged by industry
had declined to 5,912, representing 84% of pluggings. While not all of the
25,000 currently noncompliant wells will ultimately be abandoned and become
state plugging liabilities, history indicates that the majority of these wells
will be "orphaned" to the state. Given current resources, the state's OFCUF
can only plug about 1,100 of these orphaned wells each year.
Inactive, unplugged wells are a problem for two primary reasons: (1) the
potential for pollution of surface and subsurface water due to leaks and/or
the wellbore serving as a conduit between subsurface freshwater and brine
or oil zones; and (2) the likelihood that the state will have to plug the
well using the OFCUF. In view of these potential problems, the only legitimate
reason for delaying the plugging of an inactive well is that it will be returned
to service related to the production of oil and gas. There are clearly individual
instances in which inactive wells are returned to beneficial uses, but this
is a relatively rare occurrence in the case of wells that have been inactive
for an extended period. The available data indicates that less than 1% of
the 250,000 currently active wells in Texas had been granted a plugging extension
within the last two years.
Data from the two-year inactive well program indicates a similarly low
rate of resuscitation for inactive wells. Wells are considered inactive for
purposes of the program even if they have had some limited production during
the two-year period and are certified based on potential to produce, not necessarily
actual production. Even with this liberal approach, only 3,131 of 88,099 wellbores
that had been inactive for two years or more could be certified as potentially
productive under the program. Generally, the longer a well remains inactive,
the less likely it is to be brought back into active service. As of January
25, 2000, 6,430 of the 21,561 wells being held in compliance by W-1X filings
had already been granted five or more annual plugging extensions.
While the likelihood that long-term inactive wells will be returned to
production is relatively low, the possibility that these wells will eventually
become wards of the state and that the state will be required to plug them
is high. Since the Oil Field Clean-Up Program was established in 1991, 99%
of the wells plugged by the OFCUF for which financial assurance was ever filed
were wells owned by operators that elected not to file an organizational bond.
Although the problems associated with unplugged wells are significant,
the Commission also has a statutorily mandated duty to prevent the waste of
resources that could occur if operators were required to plug potentially
productive wells after a set period of inactivity. Accordingly, the proposed
amendments do not require that an inactive well be plugged after the passage
of a set period of time, so long as appropriate safeguards are in place to
assure that the inactive well will not pollute and will not be orphaned to
the state. Under the proposed rule, a basic distinction is made between an
operator that maintains an organizational bond that can be called upon if
its wells are orphaned to the state and an "unbonded operator," an operator
who has elected not to file an organizational bond. The proposed amendments
clarify the requirements that must be met by operators with organizational
bonds in place to maintain inactive wells without plugging them, and clarify
and enhance requirements for well testing of inactive wells to minimize the
possibility of pollution of usable-quality water supplies.
As to unbonded operators, who have historically been the operators of 99%
of orphaned wells plugged by the OFCUF, the proposed amendments make more
significant alterations to the existing rules concerning unplugged wells.
Under the proposal, the current initial one-year period to plug or restart
production or other beneficial use on an inactive well is retained. After
that initial grace period, up to two extensions of the deadline for plugging
a well, authorizing a maximum period of inactivity of not more than 36 months,
may be obtained if annual fluid level tests or a mechanical integrity test
demonstrates that the well does not pose a pollution threat. After 36 months
of inactivity, additional extensions may be obtained if annual fluid level
or current mechanical integrity tests demonstrate that the well is not a pollution
threat and the operator posts an individual well bond in an amount equal to
the estimated plugging cost for the well.
Under the proposed rule, presumptive plugging costs based on historical
average costs and trends are set for three broad categories of wells: land
wells, bay/inland waterway wells, and offshore wells. The necessary individual
well bond must be in the face amount of these average plugging costs unless
a higher or lower prospective plugging cost is established at a hearing called
for that purpose. No hearing is required unless an interested party contests
the presumptive bond amount. An operator's right to request a hearing regarding
any of the testing and/or bonding requirements of the rule is retained under
the proposed amendments.
In order to address the problem of the transfer of inactive wells from
financially sound operators to operators that are financially unable to meet
their plugging obligations, the amendments also require that a plugging extension
be obtained and an individual well bond posted when an unbonded operator seeks
to acquire a well that has been inactive for 12 months or more. A well that
has been inactive for one year or more, and therefore is likely at the end
of its productive life, will only rarely be brought back on line with sufficient
production to pay for plugging costs. Accordingly, the amendment requires
that unbonded operators who choose to acquire an inactive well provide financial
assurance, in the form of an individual well bond, so that the well will be
plugged by the operator and not become a ward of the state. There is a corresponding
change to §3.78 of this title (relating to fees, performance bonds and
alternate forms of financial security required to be filed) (Statewide Rule
78), referencing the requirement in this section that unbonded operators seeking
to acquire inactive wells post an individual well bond.
Finally, amendments are proposed to the definition of "active operation."
Under the newly-proposed definition, once a well has been inactive for one
year, the well will remain designated as inactive and subject to the requirements
for inactive wells, regardless of any minimal activity, until the well has
reported production of 10 barrels of oil or 100 mcf of gas per month for at
least three consecutive months. This definition change is proposed to alleviate
the problem of operators filing "paper production" or taking
de minimis
actions, not truly intended to restore the well to continuous
active operation, and claiming this minimal activity relieves them from the
obligation of complying with the rules for maintenance and transfer of inactive
wells.
Rita E. Percival, Oil and Gas Division planner, has determined that for
each year of the first five years the rules as proposed will be in effect,
the fiscal implications as a result of enforcing or administering the rules
will be a cost to the state of $503,479 in fiscal year 2001, $376,738 in fiscal
year 2002, $83,643 in fiscal year 2003, $69,703 in fiscal year 2004, and $69,703
in fiscal year 2005.
The fiscal year 2001 costs include $8,800 for staff involved with document
revision and process analysis; $97,584 for staff processing additional documents
(individual well bonds/letters of credit and test reports); $104,000 for computer
programming (to implement the changes regarding bay and offshore well identification
data base; factors determining a return to activity of a well previously inactive
more than 12 months and monthly processing; H-15 fluid level and mechanical
integrity testing program to include all W-1X extension wells; the plugging
extension program on when extension is required; count of consecutive extensions;
identification of when the bond/letter of credit is required; P-5 fax sheet
and P-4 transfer programs to consider bay/offshore well identifications; and
expansion of data bases to include more than 26 months of history); $293,095
for field staff to respond to complaints resulting from anticipated initial,
short-term increase in noncompliance.
The fiscal year 2002 costs include $83,643 for staff processing additional
documents (individual well bonds/letters of credit and test reports) and $293,095
for field staff to respond to complaints resulting from anticipated initial,
short-term increase in noncompliance.
The fiscal years 2003 through 2005 costs are for staff processing additional
documents (individual well bonds/letters of credit and test reports).
The Commission anticipates that the operators of a certain portion of the
approximately 15,600 wells that currently have two or more W-1X extensions
will not secure the required bonds and will orphan these wells. The Commission
is not able to estimate what percentage of these wells will be orphaned. However,
the number of noncompliant wells is expected initially to increase above the
current number of approximately 25,000 wells.
However, the number of wells plugged with state funds is not expected to
increase as a result of the increase in the number of noncompliant wells.
It may, in fact, decrease. The number of wells plugged with state funds is
a function of the revenues deposited into the OFCUF. With the anticipated
increase in noncompliance as a result of the new requirements, and of operators
choosing other compliance alternatives (organizational bonds/letters of credit,
plugging, return to production), the Commission anticipates that there will
be a proportionate decrease in revenues from the W-1X $100 fees which go to
the OFCUF. It is not possible, however, to quantify this revenue change or
to project the number of wells that could be plugged with state funds.
Some of the additional wells that are expected to become noncompliant as
a result of this rulemaking may be evaluated for plugging with state funds.
If the wells are determined to be eligible for state-funded plugging, they
will be prioritized along with other candidates for plugging in order to determine
which wells are plugged with the limited funds available. The Commission cannot
estimate how many wells could become noncompliant and eligible for plugging,
or what priority they could have.
There will likely be an increase in complaints and enforcement referrals
during implementation of the changes as certain operators fail to meet their
regulatory responsibility and discontinue operations. The Commission expects
increases in these areas would occur in at least the first two years of the
program, after which there should be a decrease, or at least a leveling of
the number of noncompliant wells and associated complaints and enforcement
referrals. Again, the Commission cannot quantify the number of complaints
or referrals.
At this time, approximately 17,000 wells belong to operators with delinquent
Form P-5 Organization Reports. This is the pool of wells from which the majority
of the state-funded plugging candidates are drawn. The Commission anticipates
that over three to five years, the number of noncompliant wells will level
off. However, considering the 17,000 wells that currently require compliance,
this rulemaking may result in a reduction in the number of wells that require
plugging with state funds over the longer term of five to ten years due to
the anticipated increase in the number of inactive wells that are covered
by either an individual well bond or an organizational bond.
There will be no effect on local government.
The cost of compliance with the amendments for the small business and micro-business
operator will vary according to the number of the operator's wells that remain
inactive for more than 12 months. However, each well holding a W-1X plugging
extension will require an annual fluid level test which costs approximately
$150 to conduct. Additionally, if the operator chooses to request more than
two consecutive W-1X plugging extensions, the $21,000 bond for an average
land-based well of 7,000 feet will cost the operator approximately 4% of the
bond value or $840 annually. The actual per well cost will vary according
to its location (land, bay, or offshore), its depth (if land-based), and the
rate being charged for the individual well bond or the temporary loss of use
of those funds securing a letter of credit.
Colin Lineberry, Assistant Director, Oil and Gas Section, Office of General
Counsel, has determined that for each year of the first five years that the
amended sections will be in effect, there will be a public benefit in that
the possibility of pollution of surface or subsurface water will be lessened
by the more frequent testing of inactive wells. There will also be a public
benefit in that, ultimately, the posting of bonds for the most troublesome
class of inactive wells will significantly reduce the instances in which wells
are "orphaned" and subsequently plugged by the state with funds from the OFCUF.
Members of the oil and gas industry and other interested persons have contributed
substantially to the formulation of this proposed rulemaking through the work
of the Visions Committee work group that prepared and presented a report on
this subject matter for Chairman Williams of the Commission. Participants
in the work group advising Chairman Williams included representatives of each
of the major operator and royalty owner trade associations as well as representatives
of landowners and numerous individual oil and gas operators and other interested
parties.
Comments may be submitted to Colin Lineberry, Assistant Director, Oil and
Gas Section, Office of General Counsel, Railroad Commission of Texas, P. O.
Box 12967, Austin, Texas 78711-2967 or via electronic mail to colin.lineberry@rrc.state.tx.us.
Comments will be accepted for 30 days after publication in the
Texas Register
and should refer to the docket number of this rulemaking
proceeding: 20-0225084. For further information, call Mr. Lineberry at (512)
463-7051. In addition to the opportunity to submit comments during the period
following publication in the
Texas Register
,
the Commission will hold a public hearing from 8:00 a.m. to 12:00 p.m. on
August 4, 2000, to receive public comments concerning these proposed rule
amendments. The hearing will be held at the Commission's offices in the William
B. Travis Building, 1701 N. Congress Ave., Austin, Texas.
The Commission proposes amendments to §§3.14 and 3.78
pursuant to Texas Natural Resources Code, §§81.051 and 81.052, which
provide the Commission with jurisdiction over all persons owning or engaged
in drilling or operating oil or gas wells in Texas and the authority to adopt
all necessary rules for governing and regulating persons and their operations
under the jurisdiction of the Commission and pursuant to Texas Natural Resources
Code §§85.202(a) and 91.101(a)(3) which require the Commission to
adopt rules requiring the proper plugging of wells, preventing injury to adjoining
property, preventing pollution of surface and subsurface water, and confining
oil, gas, and water to the strata in which they are found.
The Texas Natural Resources Code, §§81.051, 81.052, 85.202(a)(2),
85.2021(c), 91.101(3), and 91.103-91.107 are affected by the proposed amended
rules.
Issued in Austin, Texas on June 20, 2000.
§3.14.Plugging.
(a)
Definitions and application to plug.
(1)
As used in this section:
(A)
"Active operation" means 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 [
delinquent inactive
] 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
[
active operation requires
] reported production
of at least 10 barrels of oil for oil wells or 100 mcf of gas for gas wells
each month for at least three consecutive months.
[
or other commission-approved
operations, such as recompletion attempts, conducted downhole in a bona fide
attempt to re-establish production.
]
(B)
"Bay well" means any well under
the jurisdiction of the commission for which the surface location is either:
(i)
located in or on a lake, river, stream, canal,
estuary, bayou or other inland navigable waters of the state; or,
(ii)
located on state lands seaward of the mean
high tide line of the Gulf of Mexico in water of a depth at mean high tide
of not more than 100 feet that is sheltered from the direct action of the
open seas of the Gulf of Mexico.
(C)
[
(B)
] "Delinquent inactive well"
means an unplugged well that has had no reported production, disposal, injection,
or other permitted activity for a period of greater than 12 months and for
which, after notice and opportunity for hearing, the commission has not extended
the plugging deadline.
(D)
[
(C)
] "Funnel viscosity" means viscosity
as measured by the Marsh funnel, based on the number of seconds required for
1,000 cubic centimeters of fluid to flow through the funnel.
(E)
[
(D)
] "Good faith claim" means 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.
(F)
"Individual well bond" means
a bond or letter of credit issued on a commission-approved form, with a third
party surety, insurance company or financial institution as principal, that
has been approved by the Commission and is conditioned on the timely and proper
plugging of a specified well or wells and remediation of the well site(s),
in accordance with Commission rules.
(G)
"Land well" means any well
subject to Commission jurisdiction for which the surface location is not in
or on inland or coastal waters.
(H)
"Offshore well" means any well
subject to Commission jurisdiction for which the surface location is on state
lands in or on the Gulf of Mexico, that is not a bay well.
(I)
[
(E)
] "Operator designation form"
means a certificate of transportation authority and compliance or an application
to drill, deepen, recomplete, plug back, or reenter which has been completed,
signed and filed with the commission.
(J)
[
(F)
] "Productive horizon" means
any stratum known to contain oil, gas, or geothermal resources in producible
quantities in the vicinity of an unplugged well.
(K)
[
(G)
] "Reported production" means
production of oil or gas, excluding production attributable to well tests,
accurately reported to the commission on a monthly producer's report.
(L)
[
(H)
] To "serve surface notice"
means to hand deliver a written notice identifying the well to be plugged
and the projected date the well will be plugged to the intended recipient
at least three days prior to the day of plugging or to mail the notice by
first class mail, postage pre-paid, to the last known address of the intended
recipient at least seven days prior to the day of plugging.
(M)
"Unbonded operator" means an
operator that has a current and active organization report on file with the
Commission but that does not have a current individual performance bond, blanket
performance bond, or letter of credit as its organizational financial security
under §3.78 of this title (relating to Fees, Performance Bonds, and Alternate
Forms of Financial Security Required to be filed) (Statewide Rule 78).
(N)
[
(I)
] "Usable quality water strata"
means all strata determined by the Texas Natural Resource Conservation Commission
to contain usable quality water
(O)
"Written notice" means notice
actually received by the intended recipient in tangible or retrievable form,
including notice set out on paper and hand-delivered, facsimile transmissions,
and electronic mail transmissions.
(2) - (5)
(No change.)
(b)
Commencement of plugging operations and extensions.
(1)
(No change.)
(2)
Plugging operations on each dry or inactive well shall
be commenced within a period of one year after drilling or operations cease
and shall proceed with due diligence until completed. Plugging operations
on delinquent inactive wells shall be commenced immediately unless the well
is restored to active operation. For good cause, a reasonable extension of
time in which to start the plugging operations may be granted pursuant to
the following procedures.
(A)
Wells that have been inactive
for less than 36 months.
(i)
The commission or its delegate may administratively
grant an extension of up to one year of the deadline for plugging a well that
is operated by an unbonded operator and has been inactive, without a return
to active operation, for a period of less than 36 months if the following
criteria are met:
(I)
The well and associated facilities are in compliance
with all other laws and Commission rules;
(II)
The operator's organization report is current
and active;
(III)
The operator has, and upon request provides
evidence of, a good faith claim to a continuing right to operate the well;
(IV)
The operator has paid the proper fee as provided
in §3.78 of this title (relating to Fees, Performance Bonds, and Alternative
Forms of Financial Security Required To Be Filed) (Statewide Rule 78);
(V)
The operator has tested the well in accordance
with the provisions of subparagraph (E) of this section and files with its
application proof of either:
(-a-)
a fluid level test conducted within 90 days
prior to the application for a plugging extension demonstrating that any fluid
in the wellbore is at least 250 feet below the base of the deepest usable
quality water strata; or,
(-b-)
a hydraulic pressure test conducted during
the period the well has been inactive demonstrating the mechanical integrity
of the well; and,
(VI)
The requested plugging extension will not extend
beyond the thirty-sixth month of inactivity
(ii)
A plugging extension granted under this subparagraph
may not extend the period of inactivity beyond 36 months.
(B)
Wells that have been inactive
for 36 months or longer and transfer wells.
(i)
The Commission or its delegate may administratively
grant an extension of up to one year of the deadline for plugging a well that
is being transferred to an unbonded operator or that is operated by an unbonded
operator and has been inactive, without a return to active operation, for
a period of 36 months or longer if the criteria set out in subclauses (I)-(IV)
of subsection (b)(2)(A)(i) of this section are met, and, in addition:
(I)
The operator has tested the well in accordance
with the provisions of subparagraph (E) of this paragraph and files with its
application proof of either:
(-a-)
a fluid level test conducted within 90 days
prior to the application for a plugging extension demonstrating that any fluid
in the wellbore is at least 250 feet below the base of the deepest usable
quality water strata, or,
(-b-)
a hydraulic pressure test conducted during
the period the well has been inactive and not more than four years prior to
the date of application demonstrating the mechanical integrity of the well;
and,
(II)
The operator files an individual well bond
in the face amount of the estimated plugging cost of the well for which a
plugging extension is requested. The estimated plugging cost for wells for
which a plugging extension is sought will be presumed to be as follows:
(-a-)
for land wells, the product of the total depth
of the well multiplied by $3 per foot;
(-b-)
for bay wells, $60,000; and,
(-c-)
for offshore wells, $250,000.
(ii)
The presumptive estimated
plugging costs for a specific well for which a plugging extension is sought
may be rebutted at hearing by clear and convincing evidence establishing a
higher or lower prospective plugging cost for the well. A hearing concerning
the prospective plugging cost for a well for purposes of setting the amount
of an individual well bond may be initiated by the operator, Commission staff,
or any owner of the surface or mineral estate on which the well is located.
(iii)
Once an individual well bond
is required for a well under the terms of this subparagraph, an individual
well bond must be continuously maintained for the well until it is plugged
or returned to active operation, unless the operator posts a valid, Commission-approved
individual performance bond, blanket performance bond, or letter of credit
as provided in §3.78 of this title (relating to Fees, Performance Bonds,
and Alternate Forms of Financial Security Required to be Filed) (Statewide
Rule 78) as its organizational financial assurance.
(C)
Plugging of inactive wells
operated by bonded operators. An operator that maintains valid, Commission-approved
organizational financial assurance in the form of an individual performance
bond, blanket performance bond or letter of credit as provided in §3.78
of this title (relating to Fees, Performance Bonds, and Alternate Forms of
Financial Security Required to be Filed) (Statewide Rule 78) will be granted
a one-year plugging extension for each well it operates that has been inactive
for 12 months or more at the time its annual organizational report is approved
by the Commission if the following criteria are met:
(i)
The well and associated facilities are in compliance
with all laws and Commission rules; and,
(ii)
The operator has, and upon request provides
evidence of, a good faith claim to a continuing right to operate the well.
(D)
Revocation or denial of plugging
extension.
(i)
The Commission or its delegate may revoke a
plugging extension if the operator of the well that is the subject of the
extension fails to maintain the well and all associated facilities in compliance
with Commission rules; fails to maintain a current and accurate organizational
report on file with the Commission; fails to provide the Commission, upon
request, with evidence of a continuing good faith claim to operate the well;
or fails to obtain or maintain a valid individual well bond or organizational
bond or letter of credit as required by this subsection.
(ii)
If the Commission or its delegate declines
to grant or continue a plugging extension or revokes a previously granted
extension, the operator shall either return the well to active operation or
, within 30 days, plug the well or request a hearing on the matter.
[
(A)
The commission or its delegate
may administratively grant an extension of time of one year if the well is
in compliance with all other laws and commission rules; the well and associated
facilities are not a pollution hazard; the operator's organization report
is current and active, the operator has, and upon request provides evidence
of, a good faith claim to operate the well; and]
[
(i)
the operator pays the proper fee as provided
in §3.78 of this title (relating to Fees, Performance Bonds, and Alternate
Forms of Financial Security Required To Be Filed) (Statewide Rule 78), obtains
a permit for this extension, and no more than three extensions have been granted
after June 1, 1992, for the well under the provisions of this clause; or]
[
(ii)
the operator files an individual or blanket
performance bond as provided in §3.78 of this title (relating to Fees,
Performance Bonds, and Alternate Forms of Financial Security Required To Be
Filed) (Statewide Rule 78), or a letter of credit.]
[
(B)
The commission or its delegate
may revoke an administratively granted extension of time if an operator fails
to maintain the well in compliance with commission rules, fails to maintain
a current and accurate organization report on file with the commission, or
fails to provide the commission, upon request, with evidence of a continuing
good faith claim to operate the well.]
[
(C)
If the commission or its delegate
declines administratively to grant or continue an extension of time, or revokes
an extension, the operator shall, within 30 days, return the well to active
operation, plug the well or request a hearing on the matter.]
[
(D)
The commission or its delegate
may allow a well to be the subject of more than four extensions granted after
June 1, 1992, under the provisions of subparagraph (A)(i) of this paragraph,
upon written application, if the operator's organization report is current
and active, the operator has, and upon request provides evidence of, a good
faith claim to operate the well, and the operator demonstrates that no pollution
of surface or subsurface water could occur as a result of granting the extension.
If such application is administratively denied, the commission may subsequently
grant the extension.]
(E)
The operator of any well more than 25 years old that becomes
inactive and subject to the provisions of this paragraph
and the operator
of any well for which a plugging extension is sought under the terms of subparagraph
(A) or (B) of this paragraph
shall plug or test such well to determine
whether the well poses a potential threat of harm to natural resources, including
surface and subsurface water, oil and gas.
(i)
In general, a fluid level test is a sufficient test for
purposes of this subparagraph.
The operator must give the district office
written notice specifying the date and approximate time it intends to conduct
the fluid level test at least 48 hours prior to conducting the test. The
[
However, the
] commission or its delegate may require alternate
methods of testing if the commission deems it necessary to ensure the well
does not pose a potential threat of harm to natural resources. Alternate methods
of testing may be approved by the commission or its delegate by written application
and upon a showing that such a test will provide information sufficient to
determine that the well does not pose a threat to natural resources.
(ii)
No test other than a fluid level test shall be acceptable
without prior approval from the district office. The district office shall
be notified at least 48 hours before any test other than a fluid level test
is conducted. Mechanical integrity test results shall be filed with the district
office and fluid level test results shall be filed with the commission in
Austin. Test results shall be filed on a commission-approved form, within
30 days of the completion of the test.
Upon request, the operator shall
file the actual test data for any mechanical integrity or fluid level test
that it has conducted.
(iii)
Notwithstanding the provisions of clause (ii) of this
subparagraph, a hydraulic pressure test may be conducted without prior approval
from the district office, provided that the operator gives the district office
written notice specifying the date and approximate time for the test
at least
48 hours prior to the time the test will be conducted,
[
48 hours advance notice of the test,
] the production casing is
tested to a depth of at least 250 feet below the base of usable quality water
strata, or 100 feet below the top of cement behind the production casing,
whichever is deeper, and the minimum test pressure is greater than or equal
to 250 psig for a period of at least 30 minutes.
(iv)
[
Except as otherwise provided in this clause, the
operator shall perform annually the test required by this paragraph. In the
event that a well has undergone a fluid level test for two consecutive years
and the fluid level is found in each such test to be at least 250 feet below
the base of the deepest usable quality water strata, the operator may test
the well biennially rather than annually for so long as each fluid level test
conducted shows the fluid level to be at least 250 feet below the base of
the deepest usable quality water strata. If any test conducted on a biennial
schedule shows that the fluid level is within 250 feet of the base of the
deepest usable quality water strata, the operator shall no longer have the
option to biennially test that well and shall resume annual testing.
]
If the operator performs a hydraulic pressure test in accordance with the
provisions of clause (iii) of this subparagraph, the well shall be exempt
from further testing for five years from the date of the test
, except
to the extent compliance with paragraph (2) of subsection (b) of this section
requires more frequent testing. Further, the
[
The
] commission
or its delegate may require the operator to perform testing more frequently
to ensure that the well does not pose a threat of harm to natural resources.
The commission or its delegate may approve less frequent well tests under
this subparagraph upon written request and for good cause shown provided that
less frequent testing will not increase the threat of harm to natural resources.
(v)
Wells that are returned to continuous production, as evidenced
by three consecutive months of reported production
of at least 10 barrels
of oil or 100 mcf of gas
, need not be tested.
(3)
Transfer of operatorship of
inactive wells. An unbonded operator seeking to assume operatorship of a well
that has been inactive for 12 months or longer and has not been returned to
active operation must obtain a plugging extension under the terms of §3.14(b)(2)(B)
before the transfer of operatorship can be approved.
[
(3)
An operator may apply to have
an inactive, mechanically sound and non-polluting wellbore accepted into the
Texas Experimental Research and Recovery Activity (TERRA) program. If the
well is accepted into the TERRA program, the operator is no longer responsible
for plugging the well. An operator is not entitled to a hearing to contest
the administrative denial of an application to accept a well into the TERRA
program.]
(4) - (5)
(No change.)
(c) - (k)
(No change.)
§3.78.Fees, Performance Bonds and Alternate Forms of Financial Security Required To Be Filed.
(a) - (b)
(No change.)
(c)
Financial security. Any person, including any firm, partnership,
joint stock association, corporation, or other organization, required
by Texas Natural Resources Code, §91.142
to file an organization
report with the commission must also file a performance bond or alternate
form of financial security. A person may choose to file:
(1) - (5)
(No change.)
(d) - (n)
(No change.)
(o)
Well transfer. A transfer of
operatorship of
any well is not complete unless the operator acquiring the well has on file
with the commission an approved form of
organizational
financial
security covering
its operations. In addition, if under the terms of §3.14
of this title (relating to Plugging) (Statewide Rule 14), the well has been
inactive for 12 or more months, the well has not been returned to active operation
prior to the proposed transfer, and the proposed acquiring operator is an
unbonded operator, the transfer shall not be approved unless the acquiring
operator files an individual well bond, as defined in §3.14 of this title
(relating to Plugging) (Statewide Rule 14). All existing individual well bonds,
organizational individual bonds, organizational blanket bonds, and letters
of credit covering the well and lease proposed for transfer remain
[
the well. An existing bond or alternate form of financial security remains
] in effect and the prior operator of the well remains responsible for
compliance with all laws and commission rules covering the transferred well
until the commission determines that the well is covered by proper financial
security and the acquiring operator has assumed full responsibility for the
well in accordance with all applicable statutes and commission rules.
(p) - (r)
(No change.)
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State, on July 10, 2000.
TRD-200004750
Mary Ross McDonald
Deputy General Counsel
Railroad Commission of Texas
Earliest possible date of adoption: August 20, 2000
For further information, please call: (512) 475-1295