Texas Administrative Code
Title 16 - ECONOMIC REGULATION
Part 1 - RAILROAD COMMISSION OF TEXAS
Chapter 3 - OIL AND GAS DIVISION
Section 3.15 - Surface Equipment Removal Requirements and Inactive Wells
Universal Citation: 16 TX Admin Code § 3.15
Current through Reg. 50, No. 13; March 28, 2025
(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise:
(1) Active operation--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 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 reported production of
at least five barrels of oil for oil wells or 50 Mcf of gas for gas wells each
month for at least three consecutive months, or until the well has reported
production of at least one barrel of oil for oil wells or at least one Mcf of
gas for gas wells each month for 12 consecutive months.
(2) Cost calculation for plugging an inactive
well--The cost, calculated by the Commission or its delegate, for each foot of
well depth plugged based on average actual plugging costs for wells plugged by
the Commission for the preceding state fiscal year for the Commission Oil and
Gas Division district in which the inactive well is located.
(3) Delinquent inactive well--An inactive
well for which, after notice and opportunity for a hearing, the Commission or
its delegate has not extended the plugging deadline.
(4) Enhanced oil recovery (EOR) project--A
project that does not include a water disposal project and is:
(A) a Commission-approved EOR project that
uses any process for the displacement of oil or other hydrocarbons from a
reservoir other than primary recovery and includes the use of an immiscible,
miscible, chemical, thermal, or biological process;
(B) a certified project described by Texas
Tax Code, §
202.054; or
(C) any other project approved by the
Commission or its delegate for EOR.
(5) Good faith claim--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.
(6) Inactive well--An unplugged well that has
been spudded or has been equipped with cemented casing and that has had no
reported production, disposal, injection, or other permitted activity for a
period of greater than 12 months.
(7) Operator designation form--A certificate
of compliance and transportation authority or an application to drill,
recomplete, and reenter that has been approved by the Commission or its
delegate.
(8) Physical termination
of electric service to the well's production site--Disconnection of the
electric service to an inactive well site at a point on the electric service
lines most distant from the production site toward the main supply line in a
manner that will not interfere with electrical supply to adjacent operations,
including cathodic protection units.
(b) Plugging of inactive bay and offshore wells required.
(1) An operator of an
existing inactive bay or offshore well as defined in §
3.78 of this title (relating to
Fees and Financial Security Requirements) must:
(A) restore the well to active operation as
defined by Commission rule;
(B)
plug the well in compliance with a Commission rule or order; or
(C) obtain the approval of the Commission or
its delegate of an extension of the deadline for plugging an inactive bay or
offshore well.
(2) The
Commission or its delegate may not approve an extension of the deadline for
plugging an inactive bay or offshore well if the plugging of the well is
otherwise required by Commission rules or orders.
(c) Extension of deadline for plugging an inactive bay or offshore well. The Commission or its delegate may administratively grant an extension of the deadline for plugging an inactive bay or offshore well as defined by Commission rules if:
(1) the operator has a current organization
report;
(2) the operator has, and
on request provides, evidence of a good faith claim to a continuing right to
operate the well;
(3) the well and
associated facilities are otherwise in compliance with all Commission rules and
orders; and
(4) for a well more
than 25 years old, the operator successfully conducts and the Commission or its
delegate approves a fluid level or hydraulic pressure test establishing that
the well does not pose a potential threat of harm to natural resources,
including surface and subsurface water, oil, and gas.
(d) Plugging of inactive land wells required.
(1) An operator that assumes responsibility
for the physical operation and control of an existing inactive land well must
maintain the well and all associated facilities in compliance with all
applicable Commission rules and orders and within six months after the date the
Commission or its delegate approves an operator designation form must either:
(A) restore the well to active operation as
defined by Commission rule;
(B)
plug the well in compliance with a Commission rule or order; or
(C) obtain approval of the Commission or its
delegate of an extension of the deadline for plugging an inactive
well.
(2) The Commission
or its delegate may not approve an extension of the deadline for plugging an
inactive land well if the plugging of the well is otherwise required by
Commission rules or orders.
(3)
Except for an operator designation form filed for the purpose of a name change,
the Commission or its delegate may not approve an operator designation form for
an inactive land well until the operator satisfies the requirements of
paragraph (1)(C) of this subsection.
(4) If an operator fails to restore the well
to active operation as defined by Commission rule, plug the well in compliance
with a Commission rule or order, or obtain an extension of the deadline for
plugging an inactive well within six months after acquiring an inactive well,
the Commission or its delegate may, after notice and opportunity for hearing,
revoke the operator's organization report.
(5) The Commission or its delegate may
approve an organization report that is delinquent or has been revoked if the
Commission or its delegate simultaneously approves extensions of the deadline
for plugging the operator's inactive wells.
(e) Extension of deadline for plugging an inactive land well. The Commission or its delegate may administratively grant an extension of the deadline for plugging an inactive land well if:
(1) the Commission or its delegate approves
the operator's Application for an Extension of Deadline for Plugging an
Inactive Well (Commission Form W-3X);
(2) the operator has a current organization
report;
(3) the operator has, and
on request provides evidence of, a good faith claim to a continuing right to
operate the well;
(4) the well and
associated facilities are otherwise in compliance with all Commission rules and
orders; and
(5) for a well more
than 25 years old, the operator successfully conducts and the Commission or its
delegate approves a fluid level or hydraulic pressure test establishing that
the well does not pose a potential threat of harm to natural resources,
including surface and subsurface water, oil, and gas.
(f) Application for an extension of deadline for plugging an inactive land well.
(1) This
subsection does not apply to a bay well or an offshore well as those terms are
defined in §
3.78 of this title.
(2) An operator must include the following in
an application for an extension of the deadline for plugging an inactive well:
(A) an affirmation made by an individual with
personal knowledge of the physical condition of the inactive well pursuant to
the provisions of Texas Natural Resources Code, §
91.143,
stating the following: that the operator has physically terminated electric
service to the well's production site; and either:
(i) if the operator does not own the surface
of the land where the well is located and the well has been inactive for at
least five years but for less than 10 years as of the date of renewal of the
operator's organization report, that the operator has emptied or purged of
production fluids all piping, tanks, vessels, and equipment associated with and
exclusive to the well; or
(ii) if
the operator does not own the surface of the land where the well is located,
and the well has been inactive for at least 10 years as of the date of renewal
of the operator's organization report, that the operator has removed all
surface equipment and related piping, tanks, tank batteries, pump jacks,
headers, fences, and firewalls; has closed all open pits; and has removed all
junk and trash, as defined by Commission rule, associated with and exclusive to
the well; and
(B)
documentation that the operator has satisfied at least one of the following
requirements:
(i) for all inactive land wells
that an operator has operated for more than 12 months, the operator has plugged
or restored to active operation, as defined by Commission rule, 10% of the
number of inactive land wells operated at the time of the last annual renewal
of the operator's organization report;
(ii) if the operator is a publicly traded
entity, for all inactive land wells, the operator has filed with the Commission
a copy of the operator's federal documents filed to comply with Financial
Accounting Standards Board Statement No. 143, Accounting for Asset Retirement
Obligations, and an original executed Uniform Commercial Code Form 1 Financing
Statement, filed with the Secretary of State, that names the operator as the
"debtor" and the Railroad Commission of Texas as the "secured creditor" and
specifies the funds covered by the documents in the amount of the cost
calculation for plugging all inactive wells;
(iii) the filing of a blanket bond on
Commission Form P-5PB(2), Blanket Performance Bond, a letter of credit on
Commission Form P-5LC, Irrevocable Documentary Blanket Letter of Credit, or a
cash deposit, in the amount of either the lesser of the cost calculation for
plugging all inactive wells or $2 million;
(iv) for each inactive land well identified
in the application, the Commission has approved an abeyance of plugging report
and the operator has paid the required filing fee;
(v) for each inactive land well identified in
the application, the operator has filed a statement that the well is part of a
Commission-approved EOR project;
(vi) for each inactive land well identified
in the application that is not otherwise required by Commission rule or order
to conduct a fluid level or hydraulic pressure test of the well, the operator
has conducted a successful fluid level test or hydraulic pressure test of the
well and the operator has paid the required filing fee;
(vii) for each inactive land well identified
in the application, the operator has filed Commission Form W-3X and the
Commission or its delegate has approved a supplemental bond, letter of credit,
or cash deposit in an amount at least equal to the cost calculation for
plugging an inactive land well for each well specified in the application;
or
(viii) for each time an operator
files an application for a plugging extension and for each inactive land well
identified in the application, the operator has filed Commission Form W-3X and
the Commission or its delegate has approved an escrow fund deposit in an amount
at least equal to 10% of the total cost calculation for plugging an inactive
land well.
(g) Commission action on application for plugging extension.
(1) The Commission or its
delegate shall administratively grant all applications for plugging extensions
that meet the requirements of Commission rules.
(2) The Commission or its delegate may
administratively deny an application for a plugging extension for an inactive
well if the Commission or its delegate determines that:
(A) the applicant does not have an active
organization report at the time the plugging extension application is
filed;
(B) the applicant has not
submitted all required filing fees and financial assurance for the requested
plugging extension and for renewal of its organization report; or
(C) the applicant has not submitted a signed
organization report for the applied-for extension year that qualifies for
approval regardless of whether the applicant has complied with the inactive
well requirements of this section.
(3) Except as provided in paragraph (2) of
this subsection, if the Commission or its delegate determines that an
organization report should be denied renewal solely because it does not meet
the inactive well requirements of this section, a Commission delegate shall,
within a reasonable time of not more than 14 days after receipt of the
applicant's administratively complete organization report renewal packet,
including all statutorily required fees and financial assurance:
(A) notify the operator of the
determination;
(B) provide the
operator with a written statement of the reasons for the determination;
and
(C) notify the operator that it
has 90 days from the expiration of its most recently approved organization
report to comply with the requirements of this section.
(4) If, after the expiration of the 90-day
period specified in paragraph (3)(C) of this subsection, the Commission or its
delegate determines that the operator remains out of compliance with the
requirements of this section, the Commission delegate shall mail the operator a
written notice of this determination. The operator may request a hearing. If
the operator fails to timely file a request for hearing and the required
hearing fee, the Commission shall enter an order denying the plugging extension
request and denying renewal of the operator's organization report without
further notice or opportunity for hearing.
(5) To request a hearing, the operator must
file a written request for hearing and the hearing fee of $4,500 with the
Hearings Division, no later than 30 days from the date the written notice was
mailed to the operator. In the request for hearing, the operator must identify
by its assigned American Petroleum Institute (API) number each inactive well
for which the operator is seeking a hearing to contest the determination that
the well remains out of compliance. At the time an operator files a request for
hearing under this subsection, the operator shall provide a list of affected
persons to be given notice of the hearing. Affected persons shall include the
owners of the surface estate of each tract on which a well that is the subject
of the hearing request is located, the director of the Commission's Enforcement
Section, and the district director of each Commission district in which the
wells are located. The applicant's failure to diligently prosecute a hearing
requested under this subsection may result in the application being
involuntarily dismissed for want of prosecution on the motion of any affected
person or on the Commission's own motion.
(6) If an operator files a timely plugging
extension application that is not properly administratively denied for the
reasons specified in paragraph (2) of this subsection, then the operator's
previously approved organization report shall remain in effect until the
Commission approves its plugging extension application or enters a final order
denying the application.
(h) Revocation of extension. The Commission or its delegate may revoke an extension of the deadline for plugging an inactive well if the Commission or its delegate determines, after notice and an opportunity for a hearing, that the applicant is ineligible for the extension under the Commission's rules or orders.
(i) Removal of surface equipment for land wells inactive more than 10 years. Requirements to remove surface equipment for land wells inactive more than 10 years do not excuse an operator from compliance with all other applicable Commission rules and orders including the requirements in Chapter 4 of this title (relating to Environmental Protection).
(1) An operator of an inactive land well must
leave a clearly visible sign as required by §
3.3 of this title (relating to
Identification of Properties, Wells, and Tanks) at the wellhead of the well and
must maintain wellhead control as required by §
3.13 of this title (relating to
Casing, Cementing, Drilling, and Completion Requirements).
(2) An operator may not store surface
equipment removed from an inactive land well on an active lease.
(3) An operator may be eligible for a
temporary extension of the deadline for plugging an inactive land well or a
temporary exemption from the surface equipment removal requirements if the
operator is unable to comply with the requirements of subsection (f)(2)(A) of
this section because of safety concerns or required maintenance of the well
site and the operator includes with the application a written affirmation of
the facts regarding the safety concerns or maintenance.
(4) An operator may be eligible for an
extension of the deadline for plugging a well without complying with the
surface equipment removal requirements for inactive land wells if the well is
located on a unit or lease or in a field associated with an EOR project and the
operator includes a statement in the written affirmation that the well is part
of such a project. The exemption provided by this subsection applies only to
the equipment associated with current and future operations of the
project.
(j) Abeyance of plugging report.
(1) An operator that files
an abeyance of plugging report must:
(A) pay
an annual fee of $100 for each inactive land well covered by the
report;
(B) use Commission Form
W-3X on which the operator must specify the field and the covered wells within
that field; and
(C) for each well,
include a certification signed and sealed by a person licensed by the Texas
Board of Professional Engineers or the Texas Board of Professional
Geoscientists stating that the well has:
(i)
a reasonable expectation of economic value in excess of the cost of plugging
the well for the duration of the period covered by the report, based on the
cost calculation for plugging an inactive well;
(ii) a reasonable expectation of being
restored to a beneficial use that will prevent waste of oil or gas resources
that otherwise would not be produced if the well were plugged; and
(iii) documentation demonstrating the basis
for the affirmation of the well's future utility.
(2) Except as provided in
paragraph (3) of this subsection, the Commission or its delegate may not
transfer an abeyance of plugging report to a new operator of an existing
inactive land well. The new operator of an existing inactive land well must
file a new abeyance of plugging report or otherwise comply with the
requirements of this subchapter not later than six months after the date the
Commission or its delegate approves the new operator's request to be recognized
as the operator of the well.
(3)
The Commission or its delegate may transfer an abeyance of plugging report in
the event of a change of name of an operator.
(k) Enhanced oil recovery (EOR) project.
(1) An inactive well is considered to be part
of an EOR project if the well is located on a unit or lease or in a field
associated with a Commission-approved EOR project.
(2) Except as provided in paragraph (3) of
this subsection, the Commission and its delegate may not transfer a statement
that an inactive well is part of an EOR project to a new operator of an
existing inactive well. A new operator of an existing inactive well must file a
new statement stating that the well is part of such an EOR project or otherwise
comply with the provisions of this section not later than six months after the
date the Commission or its delegate approves the new operator's request to be
recognized as the operator of the well.
(3) The Commission or its delegate may
transfer a statement that a well is part of an EOR project in the event of a
change of name of an operator.
(l) Fluid level or hydraulic pressure test for inactive wells more than 25 years old.
(1)
At least three days prior to the test, the operator must give the district
office notice of the date and approximate time the operator intends to conduct
a fluid level or hydraulic pressure test. The district office may require that
a test be witnessed by a Commission employee. The district office may allow an
operator to conduct a test even if notice of the test is provided to the
district office fewer than three days prior to the test.
(2) No operator may conduct a test other than
a fluid level or hydraulic pressure test without prior approval from the
district director or the director's delegate.
(3) For each inactive well that is more than
25 years old and that has been inactive more than 10 years, the operator must
perform either a fluid level test once every 12 months or a hydraulic pressure
test once every five years and obtain the approval of the Commission or its
delegate of the results of said tests.
(4) Notwithstanding the provisions of
paragraph (1) of this subsection, an operator may conduct a hydraulic pressure
test without prior approval from the district director or the director's
delegate, provided that the operator gives the district office written notice
of the date and approximate time for the test at least three days prior to the
time the test will be conducted; 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.
(5) Using
Commission Form H-15, each operator must file in the Commission's Austin office
the results of a successful fluid level test within 30 days of the date the
test was performed. The results, if approved, are valid for a period of one
year from the date of the test. Upon request by the Commission or its delegate,
the operator must file the actual test data.
(6) Using Commission Form H-5 or Form H-15,
each operator must file in the district office the results of a successful
hydraulic pressure test, including the original pressure recording chart or its
electronic equivalent, within 30 days of the date the test was performed. The
results, if approved, are valid for a period of five years from the date of the
test, unless the Commission or its delegate requires the operator to perform
testing more frequently to ensure that the well does not pose a threat of harm
to natural resources.
(7) An
operator of an inactive well that is more than 25 years old may not return that
inactive well to active operation unless the operator performs either a
successful fluid level test of the well within 12 months prior to the return to
activity or a successful hydraulic pressure test of the well within five years
prior to the return to activity.
(m) Fluid level or hydraulic pressure test for inactive land well less than 25 years old.
(1) At least three days prior to the test,
each operator must give the district office notice of the date and approximate
time the operator intends to conduct a fluid level or hydraulic pressure test.
The district office may require that a test be witnessed by a Commission
employee. The district office may allow an operator to conduct a test even if
notice of the test is provided to the district office fewer than three days
prior to the test.
(2) No operator
may conduct a test other than a fluid level or hydraulic pressure test without
prior approval from the district director or the director's delegate.
(3) Notwithstanding the provisions of
paragraph (1) of this subsection, an operator may conduct a hydraulic pressure
test without prior approval from the district director or the director's
delegate, provided that the operator gives the district office written notice
of the date and approximate time for the test at least three days prior to the
time the test will be conducted; 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.
(4) An
operator that files documentation of a fluid level test or a hydraulic pressure
test for an inactive land well less than 25 years old in order to obtain a
plugging extension must pay an annual fee of $50 for each well covered by the
documentation.
(5) Using Commission
Form H-15, each operator must file in the Commission's Austin office the
results of a successful fluid level test within 30 days of the date the test
was performed. The results, if approved, are valid for a period of one year
from the date of the test. Upon request by the Commission or its delegate, the
operator must file the actual test data.
(6) Using Commission Form H-5 or Form H-15,
each operator must file in the district office the results of a successful
hydraulic pressure test, including the original pressure recording chart or its
electronic equivalent, within 30 days of the date the test was performed. The
results, if approved, are valid for a period of five years from the date of the
test, unless the Commission or its delegate requires the operator to perform
testing more frequently to ensure that the well does not pose a threat of harm
to natural resources.
(7) The
Commission or its delegate may transfer documentation of the results of a fluid
level or hydraulic pressure test to a new operator of an existing inactive land
well that is less than 25 years old.
(n) Supplemental financial assurance.
(1) A supplemental bond, letter of credit, or
cash deposit filed as part of an application for an extension for an inactive
land well is in addition to any other financial assurance otherwise required of
the operator or for the well.
(2)
The Commission or its delegate may not transfer a supplemental bond, letter of
credit, or cash deposit to a new operator of an existing inactive land well. A
new operator of an existing inactive land well must file a new supplemental
bond, letter of credit, or cash deposit or otherwise comply with the provisions
of this section not later than six months after the date the Commission or its
delegate approves an operator designation form.
(o) Escrow funds.
(1) An operator must deposit escrow funds
with the Commission each time the operator files an application for an
extension of the deadline for plugging an inactive well.
(2) The Commission or its delegate may
release escrow funds deposited with the Commission only as prescribed by §
3.78 of this title.
(p) Plugging more than 10% of inactive well inventory. If an operator plugs more than 10% of the number of inactive land wells during a 12-month organization report cycle, the Commission will count the number of plugged wells above 10% toward fulfillment of the 10% blanket option under subsection (f)(2)(B)(i) of this section during the next organization report cycle.
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