Signed by Governor Susana Martinez

Vote Smart's Synopsis:

Vote to pass a bill that establishes assurances for plugging oil and gas wells.

Highlights:

• Authorizes the oil conservation division of the energy, minerals and natural resources department to do the following (Sec. 1):

• Collect data;

• Make investigations and inspections;

• Examine properties, leases, papers, books, and records;

• Examine, check, test, and gauge oil and gas wells, tanks, plants, refineries and all means and modes of transportation and equipment;

• Hold hearings;

• Provide for the keeping of records and the making of reports and for the checking of the accuracy of the records and reports;

• Limit and prorate production of crude petroleum oil or natural gas or both as provided in the Oil and Gas Act; and

• Require either generally or in particular areas certificates of clearance or tenders in connection with the transportation of crude petroleum oil or natural gas or any products of either or both oil and products or both natural gas and products.

• Authorizes the oil conservation division to make rules and orders for the following purposes (Sec. 1):

• To require dry or abandoned wells to be plugged in a way to confine the crude petroleum oil, natural gas, or water in the strata in which it was found and to prevent it from escaping into other strata, and the division shall require financial assurance conditioned for the performance of the rules;

• To prevent crude petroleum oil, natural gas or water from escaping from strata in which it is found into other strata;

• To require reports showing locations of all oil or gas wells and for the filing of logs and drilling records or reports;

• To prevent the drowning by water of any stratum or part thereof capable of producing oil or gas or both oil and gas in paying quantities and to prevent the premature and irregular encroachment of water or any other kind of water encroachment that reduces or tends to reduce the total ultimate recovery of crude petroleum oil or gas or both oil and gas from any pool;

• To prevent fires;

• To prevent “blow-ups” and “caving” in the sense that the conditions indicated by such terms are generally understood in the oil and gas business;

• To require wells to be drilled, operated and produced in such manner as to prevent injury to neighboring leases or properties;

• To identify the ownership of oil or gas producing leases, properties, wells, tanks, refineries, pipelines, plants, structures, and all transportation equipment and facilities;

• To require the operation of wells with efficient gas-oil ratios and to fix such ratios;

• To fix the spacing of wells;

• To determine whether a particular well or pool is a gas or oil well or gas or oil pool as the case may be and from time to time to classify and reclassify wells and pools accordingly;

• To regulate the methods and devices employed for storage in this state of oil or natural gas or any product of either, including subsurface storage;

• To determine the limits of any area containing commercial potash deposits and from time to time redetermine the limits;

• To spend the oil and gas reclamation fund and do all acts necessary and proper to plug dry and abandoned oil and gas wells and to restore and remediate abandoned well sites and associated production facilities in accordance with the provisions of the Oil and Gas Act, the rules adopted under that act and the Procurement Code, including disposing of salvageable equipment and material removed from oil and gas wells being plugged by the state; and

• To regulate the construction and operation of oil treating plants and to require the posting of bonds for the reclamation of treating plant sites after cessation of operations.

• Requires each person, firm, corporation or association who operates any oil, gas, or service well within the state to furnish financial assurance in the form of an irrevocable letter of credit, a cash or surety bond, or a well-specific plugging insurance policy, to the oil conservation division running to the benefit of the state and conditioned that the well be plugged and abandoned in compliance with established rules (Sec. 2).

• Authorizes the oil conservation division to order any well plugged and abandoned by the operator or surety or both in accordance with division rules if the requirements of the Oil and Gas Act or the rules promulgated pursuant to that act haven’t been complied with, and if that order is not complied within the time period set out in the order, the financial assurance will be forfeited (Sec. 2).

• Requires all forfeitures to be deposited in the state treasury in the oil and gas reclamation fund (Sec. 2).

Full Bill Text