Current through Register Vol. 50, No. 9, September 20, 2024
A.
Unless otherwise provided by the statutes, rules and regulations of the office
of conservation, financial security shall be required by the operator of record
(operator) pursuant to this Section for each applicable well as further set
forth herein in order to ensure that such well is plugged and abandoned and
associated site restoration is accomplished.
1. Permit to Drill a. On or after the date of
promulgation of this Rule, the applicant for a permit to drill must provide
financial security, in a form acceptable to the commissioner, for such well as
provided below, within 30 days of the completion date as reported on the form
comp or Form WH-1, or from the date the operator is notified that financial
security is required.
2. Amended
Permit to Drill/Change of Operator a. Any application to amend a permit to
drill for change of operator must be accompanied by financial security as
provided below or by establishing a site specific trust account in accordance
with R.S.
30:88, prior to the operator change
3. The financial security
requirements provided herein shall apply to class V wells as defined in LAC
43:XVII.103 for which an application for a permit to drill or amended permit to
drill is submitted on and after July 1, 2000, at the discretion of the
commissioner.
B.
Compliance with this financial security requirement shall be provided by any of
the following or a combination thereof:
1.
certificate of deposit issued in sole favor of the Office of Conservation in a
form prescribed by the commissioner from a financial institution acceptable to
the commissioner. A certificate of deposit may not be withdrawn, canceled,
rolled over or amended in any manner without the approval of the commissioner;
or
2. a performance bond in sole
favor of the office of conservation in a form prescribed by the commissioner
issued by an appropriate institution authorized to do business in the state of
Louisiana; or
3. letter of credit
in sole favor of the office of conservation in a form prescribed by the
commissioner issued by a financial institution acceptable to the
commissioner;
4. a site specific
trust account in accordance with
R.S.
30:88.
C. Financial Security Amount
1. Land Location
a. Individual well financial security shall
be provided in accordance with the following.
|
Measured Depth
|
Amount
|
|
< 3000'
|
$2 per foot
|
|
3001-10000'
|
$5 per foot
|
|
10001'
|
$4 per foot
|
b.
Blanket financial security shall be provided in accordance with the following.
|
Total Number of Wells Per
Operator
|
Amount
|
|
[LESS THAN EQUAL TO] 10
|
$50,000
|
|
11-99
|
$250,000
|
|
[GREATER THAN EQUALS TO] 100
|
$500,000
|
2.
Water
Location-
Inland Lakes and Bays-any water location in
the coastal zone area as defined in
R.S.
49:214.27 except in a field designated as
offshore by the commissioner.
a. Individual
well financial security shall be provided in the amount of $8 per foot of well
depth.
b. Blanket financial
security shall be provided in accordance with the following.
|
Total Number of Wells Per
Operator
|
Amount
|
|
< 10
|
$250,000
|
|
11-99
|
$1,250,000
|
|
>100
|
$2,500,000
|
3.
Water
Location-Offshore-any water location in a field designated as offshore
by the commissioner.
a. Individual well
financial security shall be provided in the amount of $12 per foot of well
depth.
b. Blanket financial
security shall be provided in accordance with the following.
|
Total Number of Wells Per
Operator
|
Amount
|
|
[LESS THAN EQUAL TO] 10
|
$500,000
|
|
11-99
|
$2,500,000
|
|
[GREATER THAN EQUALS TO] 100
|
$5,000,000
|
4. An operator of land location wells and
water location wells who elects to provide blanket financial security shall be
subject to an amount determined by the water location requirements.
5. The amount of the financial security as
specified above may be increased at the discretion of the
commissioner.
6. Financial security
amounts will be periodically reviewed and adjusted to ensure they are
reflective of the costs to plug and clear orphan well sites.
D. All wells exempt from financial
security prior to the promulgation of this rule shall remain exempt so long as
they remain with their current operator. A change of name by an operator of
record through acquisition, merger, or otherwise does not preclude said
successor operator from maintaining the exemption described herein.
E. The commissioner retains the right to
utilize the financial security provided for a well in responding to an
emergency applicable to said well in accordance with
R.S.
30:6.1.
F. Financial security shall remain in effect
until release thereof is granted by the commissioner pursuant to written
request by the operator. Such release shall only be granted after plugging and
abandonment and associated site restoration is completed and inspection thereof
indicates compliance with applicable regulations or upon transfer of such well
to another operator. In the event provider of financial security becomes
insolvent, operator shall provide substitute form of financial security within
30 days of notification thereof.
G.
Plugging and abandonment of a well, associated site restoration, and release of
financial security constitutes a rebuttable presumption of proper closure but
does not relieve the operator from further claim by the commissioner should it
be determined that further remedial action is required.
H. In the event that an operator has
previously provided financial security pursuant to LAC 43:XIX.104, such
operator shall provide increased financial security, if required to remain in
compliance with this Section, within 30 days after notice from the
commissioner.
I. Financial security
shall not be required for the following wells:
1. any well declared to be orphaned by the
commissioner and subsequently transferred to another operator, except as
required by Act 583 of the 2016 Regular Session;
2. any well to be drilled by an operator who
has an agreement with the office of conservation to plug a well that has been
declared to be orphaned by the commissioner and that orphaned well is similar
to the proposed well in terms of depth and location;
3. the provisions hereof shall not alter or
affect the requirements for inactive wells given in LAC 43:XIX.137.A.
J. Plugging Credit
Certificate Program
1. A Plugging Credit may
be applied to any new or existing well in lieu of Financial Security required
by Subsections A-H of this Section, on a 1 for 1 or 2 for 1 basis. Said credits
may be obtained by:
a. one credit shall be
awarded for plugging and site restoration of an orphan well after
8/1/16;
b. one half credit shall be
awarded for plugging and site restoration of an operators existing well that
has been inactive for a minimum of five years on or after 8/1/16.
2. Wells must be plugged and
abandoned and sites restored per Office of Conservation rules and regulations.
All wells/sites must pass a final inspection before a plugging credit
certificate will be issued.
3.
Plugging credit certificates will be granted to operators who plug qualifying
wells under Section 1.a once application is made via Form APCC, within 3 years
of the date plugging occured.
a. Plugging
credit certificate will expire five years from the date issued unless used, in
which case the plugging credit certificate will expire upon the proper plugging
and abandonment of the well for which it is used.
b. Plugging credit certificates are
transferrable to active operators via Form APCCO.
4. Plugging credit certificates can be
applied to an existing or newly drilled well, on a one credit per well basis,
which meet all of the following:
a. is in the
same field as the plugged well;
b.
is the same location type (land, inland water, or offshore) as the plugged
well;
c. has a total depth that
does not exceed 2000 more than the total depth or plug back depth, whichever is
less, of the plugged well. (All depths TVD)
5. Plugging credits may only be utilized by
an operator in good standing. To be considered in good standing, an operator
must not have any outstanding compliance orders at the time the plugging credit
is used.
6. Once applied to a well,
Plugging Credit Certificates cannot be transferred to another well. Plugging
Credit Certificates cannot be combined with Financial Security. Each well must
be fully covered by Financial Security or a Plugging Credit Certificate, not a
combination of both mechanisms. In the event a plugged well approved under
Subparagraphs 1.a. or 1.b. fails, the corresponding plugging credit certificate
will be revoked and Financial Security will be required immediately.
AUTHORITY NOTE:
Promulgated in accordance with
R.S.
30:4 et seq.
