There are at least 150,000 unplugged inactive oil and gas wells in Texas, and the number is growing. Of these, almost 9,000 are “orphan wells,” having no active operator because the owner has gone out of business or gone bankrupt. Senate Bill 1150, passed by the Legislature, is the Legislature’s effort to address the problem–“a rare example of the Texas Legislature regulating the state’s oil and gas industry,” according to the Texas Tribune. In my opinion it is a weak effort.
Prior to SB 1150 operators could avoid plugging wells indefinitely, as long as they held a lease on the property where the well is located. Operators could obtain extensions of plugging obligations as long as the held the lease and they filed the necessary paperwork.
SB 1150 amends Section 89.023 of the Natural Resources Code. The amendment provides that an operator cannot obtain a plugging extension if the well was completed more than 25 years ago and has been inactive “for more than 15 years.” But there are exceptions. An operator doesn’t have plug a well even if it is more than 25 years old and has been inactive for more than 15 years if the commission finds that “the operator’s demonstrated history of returning inactive wells to operation warrants the granting of the extension,” or “the operator’s financial hardship in complying [the plugging requirement] warrants the granting of the extension.” The operator must submit a compliance plan committing to plug the well or bring it back into production by September 1, 2042 (not a typo). The operator must also provide a performance bond in an amount not less than the full cost for plugging the inactive well, “as established by the commission, that runs with and covers the lifetime of the well, regardless of a change in the operator.”