Current through Reg. 49, No. 38; September 20, 2024
(a) Any
discontinuance of a leasehold relationship, except for termination, is
effective only upon complete compliance with §§ 9.91-
9.95 of
this subchapter. Terminations are effective according to the terms of the lease
and the laws of the state.
(b) The
leasehold relationship between the state and a lessee of state oil and gas may
be discontinued by any of the following:
(1)
release;
(2) assignment;
(3) termination;
(4) forfeiture.
(c) Effect of discontinuing the leasehold
relationship. When the discontinuance of a leasehold relationship becomes
effective, the lessee shall be relieved of all further obligations to the state
due to the lessee's ownership of the lease except for the following:
(1) those obligations, liabilities,
penalties, or the like owed by the lessee to the state as of the effective date
of the release, termination, forfeiture, or assignment;
(2) the duty to pay all royalty owed by
lessee in the manner set out in the lease and this chapter on all oil or gas
produced under the lease as of the date of the discontinuance of the leasehold
relationship;
(3) the accrual of
penalty and interest, as set out in this chapter on any delinquent royalty or
report owed by the lessee;
(4) the
duty to file with the GLO the reports, applications, and other records required
by the lease, statutes, and/or this chapter regarding any activity by the
lessee or lessee's operator relating to the previously leased premises and/or
production therefrom; and
(5) if
all oil and gas production, drilling, and rework activity has ceased on a well,
the following clean-up duties:
(A) the duty to
comply with all federal and state laws, particularly RRC and GLO statutes and
administrative rules and United States Corps of Engineers regulations relating
to plugging and abandoning wells and cleaning the property;
(B) the duty to remove all oil stored on the
property and clean any residue remaining on the property. If such is not
completed within 120 days of when the discontinuance of the leasehold
relationship becomes effective, the state, at its option, may find that the
lessee has abandoned the oil, and may take possession of the oil and dispose of
it in a manner that is in the state's best interest;
(C) the duty to remove all equipment,
structures, machinery, tools, supplies, and other items on the property and
otherwise restore the property to the condition it was in immediately preceding
issuance of that lease. If such is not completed within 120 days of when the
discontinuance of the leasehold relationship becomes effective, a presumption
shall arise that these items have been abandoned by the lessee or operator and
the commissioner may exercise the states rights pursuant to Natural Resources
Code §
51.302et
seq.;
(D) with regard to
operations in Texas state waters, the duty to remove all equipment, structures,
machinery, tools, supplies, and other items on the property and otherwise
restore the property to the condition it was in immediately preceding issuance
of that lease. This duty will not be fulfilled until:
(i) lessee has examined an area within a
300-foot radius surrounding each wellbore on a given tract using one of the
following means: side-scan sonar, trawler drag, divers, or any other method
approved in writing by the GLO prior to use; and
(ii) a notarized affidavit shall be filed
with the GLO within 120 days of when the discontinuance of the leasehold
relationship becomes effective. It shall be signed by a senior officer of the
company or a principal of any other entity and shall state that the property
has been cleared of all navigational hazards and obstructions and has been
restored as close as practicable to the condition that it was in immediately
preceding issuance of that lease; and
(E) the duty to remove all fills for roads
and drill sites if requested by the commissioner.
(d) Discharge of clean-up duties.
Lessee shall be liable for any damages incurred due to lessee's failure to
comply with subsection (c)(5) of this section. Within the parameters authorized
by state and federal laws and regulations, the commissioner may agree in
writing to excuse lessee from all or part of these duties.
