31 Tex. Admin. Code § 9.32 - General Responsibilities of State Lessees

(a) Purpose and Scope. This section sets out some of the general responsibilities which lessees on properties leased under this chapter owe the state. Operations on state lands are subject to all applicable state and federal laws and regulations. The provisions of this chapter do not alter, amend, or replace such state and federal laws and regulations, and compliance with the requirements of this chapter does not relieve the operator of the duty to comply with such laws and regulations. The requirements of this chapter are in addition to the requirements of any other applicable state or federal law or regulation.

(b) Minimum Standards of Lessee Conduct.

(1) As expressly required in state leases, lessee shall use the highest degree of care in conducting operations on state leases and shall take all proper safeguards to prevent pollution. To satisfy these requirements, lessee must conduct operations as a reasonably prudent operator using standard industry practices and procedures, must satisfy all other express lease provisions, must satisfy implied lease obligations, and must comply with all valid, applicable federal and state laws, regulations and rules.

(2) Operations or activities requiring such care and safeguards shall include, but are not limited to, the following:

(A) Drilling, reworking, testing, producing, and maintaining a well;

(B) Designing, constructing, treating, testing, maintaining and repairing pipelines;

(C) Producing, storing, transporting or otherwise handling hydrocarbons;

(D) Containing and recapturing discharged hydrocarbons, pollutants, or other hazardous substances and restoring public and private property damaged by such discharges;

(E) Transporting and disposing of solid waste, pollutants or hazardous substances, including all materials associated with drilling and producing hydrocarbons;

(F) Plugging abandoned well sites, removing structures and equipment and restoring the surface after operations have ceased. See also § 9.91(c)(5) of this title, (relating to General Provisions);

(G) Installing, testing and maintaining signal lights at or near wells and structures that are located on submerged state tracts;

(H) Conducting any activities that could be destructive to marine life or its habitat on submerged state tracts;

(I) Conducting activities on upland tracts so as to prevent damage to livestock, crops and the surface, including adequately fencing or enclosing equipment and pits.

(J) Installing all necessary equipment, seals, locks or other protective devices to prevent theft of hydrocarbons and personal injury; and

(3) No provision in a state lease or in these rules shall relieve a lessee of the obligation to act as a reasonably prudent operator would under the circumstances. This obligation includes, but is not limited to, the drilling of such additional well or wells as may be reasonably necessary for the proper development of a state lease after a lease well capable of producing in paying quantities has been completed.

(4) No discharge of garbage or solid waste in violation of MARPOL Protocol, Title 33, Chapter 33 of the United States Code or Title 33, Part 151 of the Code of Federal Regulations shall be allowed into state waters from any drilling or support vessel, production platform, crew or supply boat, barge, jack-up rig, or other equipment located on state submerged tracts.

(c) Required Activities/Lessee Responsibilities:

(1) Posting Signs and Identifying State Wells.

(A) Any well drilled on property leased under § 9.21(1)(2)(3)(a) and (4) of this title, (relating to Leasing Guide) shall be identified as a state well in RRC records by using "State" as the first word in its designated RRC name.

(B) All well locations and other structures, including drilling barges and platforms on submerged lands, shall be legibly marked and maintained to identify the state tract number, RRC well name, well number and the name of the company operating the lease.

(C) In a prominent location on each vessel and manned platform on a submerged state tract, lessee must display and maintain a sign as required in an express state lease provision.

(2) Allowing access to leased state tracts. The commissioner of the GLO, the attorney general, and the governor or their representatives shall at all times have access to property leased under this chapter to make inspections for any reason deemed necessary to protect the state's property or minerals, including, but not limited to, any exploration, drilling, producing, gathering, and processing activities or any other operations on the state tract. This provision does not impair or limit the authority of any other state or federal agency to perform inspections of property leased under this chapter.

(3) Providing materials, records, reports and other information or items relating to lease operations.

(A) General Reporting Requirements. Unless otherwise indicated, lessee shall mail all materials, records, reports and other information or items required to be submitted to the GLO under this section to the following address: Texas General Land Office; Attention: Minerals Leasing; 1700 North Congress, Room 640; Austin, Texas, 78701-1495. Materials, records, reports and other information or items may also be simultaneously faxed to (512)475-1543 (Attention: Minerals Leasing) to insure that the GLO receives them by the due date as long as they are legible to the GLO staff. All materials, records, reports and other information or items submitted to the GLO must include the state mineral file number assigned to the affected state lease, a plat or description which shows the location of the affected state well or wells, and all appropriate attachments. Incomplete filings will not be recognized as received by the GLO.

(B) Timely Filing of Information or Items.

(i) Due Dates. This section sets out the due dates when certain information or items relating to lease operations and activities must be received by the GLO. Whenever GLO staff requests additional information or items, it must receive such information or items within the due date set in the request or if the request does not establish a due date, within 60 days of the date of the request. GLO staff may grant a written extension of a due date.

(ii) Evidence of Date of Receipt. Under the standard business practices and/or procedures of the GLO, the date that the GLO stamps, punches, or otherwise marks on the delay rental payment, check, draft, stub, or envelope establishes the date of actual receipt by the GLO.

(iii) Penalties for untimely filing. If the GLO does not receive appropriate materials, records, reports or other information or items by the due date set in this section or the due date set in a written extension, lessee shall be subjected to a penalty of $25 per day for every day that each material, record, report or other information or item is not filed at the GLO. Assessing this penalty does not prevent the state from pursuing any of its other remedies, including lease forfeiture.

(C) Routine Reports and Data Relating to Lease Operations and Activities. The following materials, records, reports, or other information or items shall be submitted to the GLO by the due dates as set forth:

(i) Information relating to drilling.

(I) RRC W-1 and RRC W-1A (if applicable) with plat and any other supporting documentation: due at least 5 days before spudding a well;

(II) RRC P-12 (if applicable) with plat and any other supporting documentation: due at least 5 days before spudding a well; and

(III) any applicable Corps of Engineers permits: due at least 5 days before spudding a well.

(ii) Information relating to well completion, recompletion or testing.

(I) RRC W-2 (if oil well) with any other supporting documentation: due on the date it is submitted to or due at the RRC (whichever is earlier); or

(II) RRC G-1 (if gas well) and RRC G-5 and Back Pressure Curve (if applicable) with any other supporting documentation: due on the date it is submitted to or due at the RRC (whichever is earlier); and

(III) RRC W-12 with any other supporting documentation, an as-drilled plat and a directional survey (if applicable): due on the date it is submitted to or due at the RRC (whichever is earlier);

(IV) Potential Offset Well. If lessee completes a well within 1,000 feet of another state tract or tracts, on the date the RRC W-2 or RRC G-1 is submitted to or due at the RRC (whichever is earlier), lessee shall mail to the lessee or lessees of the adjacent state tract or tracts the following: a RRC W-2 or a RRC G-l (with any other supporting documentation), a RRC W-12 (with any other supporting documentation and a directional survey, if applicable), and a letter stating that the newly completed well may be a potential offset. A copy of this letter must be mailed to the GLO at the same time.

(V) RRC P-4 with any other supporting documentation: due on the date it is submitted to or due at the RRC (whichever is earlier);

(VI) RRC P-12 (if applicable and not filed before spudding a well) with any other supporting documentation: due on the date it is submitted to or due at the RRC (whichever is earlier);

(VII) RRC P-15 with plat (if applicable) and any other supporting documentation: due on the date it is submitted to or due at the RRC (whichever is earlier);

(VIII) All logs from any type of survey on the bore-hole section (from base of surface casing to total well depth) for each well on a state lease: due within 15 days of completing the survey.

(iii) Information required routinely upon production.

(I) RRC G-10: due on the date it is submitted to or due at the RRC (whichever is earlier); or

(II) RRC W-10: due on the date it is submitted to or due at the RRC (whichever is earlier); and

(III) RRC P-17 (if applicable): due on the date it is submitted to or due at the RRC (whichever is earlier). See also § 9.35(a)(3) of this title, (relating to Producing the State Lease) for requirement to obtain state's permission before commingling state production.

(IV) Division Orders. For any well in which the state owns an interest, including a free royalty interest created under Texas Natural Resources Code, § 51.054, a division order showing all ownership in such well is due at the GLO within 60 days of obtaining initial production from any such well and subsequent division orders are due thereafter within 30 days of any change in any ownership interest. (Note, however, that GLO employees are not authorized to execute such division orders on behalf of the state and that a GLO employee's acts, errors, or omissions in handling a division order cannot bind the state to any terms contained within it.)

(iv) Information required when production ceases (even if temporarily). If a well on a state lease has not produced for a 60-day period, written notice of this fact is due at the GLO within 70 days of cessation of production.

(v) Information required for dry holes or inactive wells.

(I) RRC W-1X with any other supporting documentation: due on the date it is submitted to or due at the RRC (whichever is earlier);

(II) RRC W-3A: due at least five days prior to plugging the well; and

(III) RRC W-3, with any other supporting documentation: due on the date it is submitted to or due at the RRC (whichever is earlier).

(vi) Information related to violations of state and/or federal law. If a violation of state and/or federal law impacts leased state property or the resources found on or under such property or if a requested exemption from state and/or federal law may impact leased state property or the resources found on or under such property, notice of the facts surrounding such violation or exemption is due at the GLO within 24 hours of the violation or the request for an exemption..

(D) Additional Reports and Data Relating to Lease Operations or Activities. The GLO retains the authority to require any additional records, data, information, records, memoranda, materials, or other information or items relating to any aspect of lease operations or activities. The following is a list of the type of information or items the GLO may typically request:

(i) an affidavit detailing all activities involved in any drilling or reworking operation conducted on any state well and the date of such activities;

(ii) any and all documentation necessary to assess whether production is in paying quantities; and

(iii) annual estimates of oil and gas reserves underlying a state lease.

Notes

31 Tex. Admin. Code § 9.32

The provisions of this §9.32 adopted to be effective January 7, 1999, 24 TexReg 146