WEBVTT 00:00:04.090 --> 00:00:04.923 Good morning, everyone. 00:00:04.923 --> 00:00:06.870 My name is Jennifer Gilmore, 00:00:06.870 --> 00:00:09.440 I'm the Manager of the P-5 Financial Assurance Unit. 00:00:09.440 --> 00:00:10.540 I'm gonna be presenting 00:00:10.540 --> 00:00:13.640 the Inactive Wells: Statewide Rule 15 Compliance 00:00:13.640 --> 00:00:16.590 and Organization Report Renewal presentation for you today. 00:00:20.449 --> 00:00:22.220 Thank you all for being with us, 00:00:22.220 --> 00:00:24.130 looking forward to discussing inactive wells 00:00:24.130 --> 00:00:26.470 with you guys and how they relate to Statewide Rule 15 00:00:26.470 --> 00:00:29.313 compliance and your P-5 Organization Report. 00:00:31.230 --> 00:00:33.840 We'd like to remind everyone that this presentation 00:00:33.840 --> 00:00:36.220 is available for download on the Commission's website 00:00:36.220 --> 00:00:38.030 at the link presented here. 00:00:38.030 --> 00:00:40.500 So if you want to have it pulled up during the presentation, 00:00:40.500 --> 00:00:43.610 all you have to do is go to this link and it's available 00:00:43.610 --> 00:00:45.463 for you guys to follow along with. 00:00:47.870 --> 00:00:49.920 A few of the topics we're gonna be discussing this 00:00:49.920 --> 00:00:52.700 morning are a brief overview of Oil and Gas Statewide 00:00:52.700 --> 00:00:56.840 Rule 15, the process of obtaining a plugging extension, 00:00:56.840 --> 00:01:00.040 filling out forms, W-3C and W-3X, 00:01:00.040 --> 00:01:02.630 Oil and Gas Statewide Rule 15 compliance related 00:01:02.630 --> 00:01:04.680 to acquisitions and mergers, 00:01:04.680 --> 00:01:07.030 and the enforcement process for non-compliance. 00:01:09.620 --> 00:01:13.070 So let's start by going over the definition of an inactive 00:01:13.070 --> 00:01:16.010 well, this is sort of how all of this gets kicked off. 00:01:16.010 --> 00:01:19.860 A well becomes subject to Statewide Rule 14b2 and Rule 15 00:01:19.860 --> 00:01:24.120 requirements once well has reached 12 consecutive months 00:01:24.120 --> 00:01:25.733 of no reported activity. 00:01:26.950 --> 00:01:29.480 It then becomes subject to Statewide Rule 14b2, 00:01:29.480 --> 00:01:32.590 meaning that you've got to commence plugging operations 00:01:32.590 --> 00:01:36.140 unless you have a Commission approved plugging extension 00:01:36.140 --> 00:01:37.833 under Statewide Rule 15. 00:01:41.280 --> 00:01:45.320 So in order for you to obtain a plugging extension, 00:01:45.320 --> 00:01:47.890 your entity has to meet specific criteria. 00:01:47.890 --> 00:01:50.770 This criteria consists of the operator having a current 00:01:50.770 --> 00:01:55.000 organization report, which is your form P-5 and P-50 00:01:55.000 --> 00:01:57.270 and your financial assurance, 00:01:57.270 --> 00:02:00.020 the well also has to be in compliance with all railroad 00:02:00.020 --> 00:02:03.640 Commission rules and orders and the operator has to have 00:02:03.640 --> 00:02:05.640 a good faith claim to operate the wells. 00:02:08.170 --> 00:02:12.220 Do note that this is only for inactive land wells, 00:02:12.220 --> 00:02:14.810 bay and offshore wells are not subject to Rule 15 00:02:14.810 --> 00:02:18.170 requirements, reason being is that they're already required 00:02:18.170 --> 00:02:20.770 to provide additional financial assurance on the wells 00:02:20.770 --> 00:02:23.920 for being category on offshore wells. 00:02:23.920 --> 00:02:26.300 So because of that additional bonding 00:02:26.300 --> 00:02:28.260 they don't have to do additional requirements 00:02:28.260 --> 00:02:31.263 if you've got shuttered or offshore inland waterway wells. 00:02:35.460 --> 00:02:38.180 Now let's move on to inactive well listing. 00:02:38.180 --> 00:02:42.240 This listing is going to be a snapshot of all inactive wells 00:02:42.240 --> 00:02:45.640 operated by your company at the time that your P-5 renewal 00:02:45.640 --> 00:02:47.600 packet is generated. 00:02:47.600 --> 00:02:50.330 So this list is gonna be your guide to explain what 00:02:50.330 --> 00:02:53.400 compliance needs to be met in order for you to be granted 00:02:53.400 --> 00:02:56.130 and unrestricted renewal of your P-5. 00:02:56.130 --> 00:03:00.510 Your renewal packet as you know is generated roughly 85 days 00:03:00.510 --> 00:03:05.170 prior to your P-5 renewal date and this in your packet, 00:03:05.170 --> 00:03:07.900 it's gonna contain a list of any wells that you've got 00:03:07.900 --> 00:03:10.730 that have been inactive for 12 months or longer and subject 00:03:10.730 --> 00:03:12.843 to Rule 14b2 requirements. 00:03:17.030 --> 00:03:20.710 So a lot of times Railroad Commission staff receives 00:03:20.710 --> 00:03:23.880 questions about inactive well listing, 00:03:23.880 --> 00:03:26.110 but they believe that they're producing. 00:03:26.110 --> 00:03:28.340 So I'm gonna walk you guys through what happens when 00:03:28.340 --> 00:03:31.550 we receive calls like that to let you know what we look at 00:03:31.550 --> 00:03:34.820 so you guys can troubleshoot some of your questions 00:03:34.820 --> 00:03:36.233 and issues independently. 00:03:38.260 --> 00:03:40.770 First, we're gonna start by checking to see if the list 00:03:40.770 --> 00:03:41.780 is sever. 00:03:41.780 --> 00:03:44.550 If the list is severed, any production posted under 00:03:44.550 --> 00:03:46.780 severance is considered illegal production 00:03:46.780 --> 00:03:48.680 and it won't count towards your production and making 00:03:48.680 --> 00:03:49.833 the wells show active. 00:03:50.790 --> 00:03:53.150 The second thing we check for is to see if there's a good 00:03:53.150 --> 00:03:54.340 well test on file. 00:03:54.340 --> 00:03:57.830 So if it's an oil well, we're looking for a good W-10 00:03:57.830 --> 00:04:00.670 or if it's a gas well a good G-10 showing that the well's 00:04:00.670 --> 00:04:02.083 capable of production. 00:04:03.460 --> 00:04:07.093 This is also how we tell if an individual well is producing, 00:04:08.040 --> 00:04:11.310 since sometimes for an oil list, all the well is reported 00:04:11.310 --> 00:04:15.090 to one tank, the way we tell if that specific well 00:04:15.090 --> 00:04:16.773 is producing is by the well test. 00:04:19.450 --> 00:04:21.800 We're also gonna be checking shore to make sure 00:04:22.780 --> 00:04:25.900 that you're reporting enough production from the date tested 00:04:25.900 --> 00:04:28.430 of the W-10 or G-10 forward. 00:04:28.430 --> 00:04:32.730 So minimum production requirements for an oil well is five 00:04:32.730 --> 00:04:35.830 barrels consecutively for three months in a row 00:04:35.830 --> 00:04:39.470 or one barrel consecutively for 12 months in a row, 00:04:39.470 --> 00:04:42.860 for gas wells it's 50 MCF consecutively for three months 00:04:42.860 --> 00:04:46.763 in a row or one MCF consecutively for 12 months in a row. 00:04:48.110 --> 00:04:51.850 Also a good thing to remember is that the 14b2 system 00:04:51.850 --> 00:04:55.290 doesn't look at the effective date of your W-10 or G-10, 00:04:55.290 --> 00:04:57.390 only the date tested. 00:04:57.390 --> 00:05:01.570 So sometimes you'll get into gray area with a G-10, 00:05:01.570 --> 00:05:05.660 as you know we can't backdate those further than 15 days. 00:05:05.660 --> 00:05:08.190 So if you get to a situation where you fail to file 00:05:08.190 --> 00:05:11.140 your G-10 but you've got enough production, 00:05:11.140 --> 00:05:14.950 those we have a little bit more leniency on overrides 00:05:14.950 --> 00:05:18.500 because we know that all the production is coming from that 00:05:18.500 --> 00:05:20.560 one well because it's a gas list. 00:05:20.560 --> 00:05:21.710 So if you get into that 00:05:22.867 --> 00:05:25.340 your G-10 it just doesn't cover previous production 00:05:25.340 --> 00:05:27.520 because of that 15 day limit, 00:05:27.520 --> 00:05:30.190 reach out to your P-5 processor and they can take a look 00:05:30.190 --> 00:05:33.360 at what we can do to override your P-5 once that's 00:05:33.360 --> 00:05:34.623 the last remaining issue. 00:05:38.530 --> 00:05:41.620 So this is an example of what your inactive well listing 00:05:41.620 --> 00:05:44.120 will look like from your renewal packet. 00:05:44.120 --> 00:05:46.120 You'll notice that the listing gives you a detailed look 00:05:46.120 --> 00:05:48.880 at the well information, such as the cost calculation 00:05:48.880 --> 00:05:51.330 amount as well as the shut-in date. 00:05:51.330 --> 00:05:54.240 There's also an indicator as to whether or not a W-3C 00:05:54.240 --> 00:05:56.343 is required to be filed at this time. 00:05:57.920 --> 00:05:59.700 This is a good little list. 00:05:59.700 --> 00:06:02.680 So this comes in your P-5 renewal packet, 00:06:02.680 --> 00:06:05.030 it's gonna tell you what you've got to have compliant 00:06:05.030 --> 00:06:06.893 for this specific renewal year. 00:06:08.040 --> 00:06:12.240 And this is also reflected on the P-5 renewal status query 00:06:12.240 --> 00:06:14.910 on our website, which I'll link later on in the presentation 00:06:14.910 --> 00:06:16.880 for your information, 00:06:16.880 --> 00:06:21.880 but this will be your list of what has to be done specific 00:06:22.209 --> 00:06:24.626 (indistinct) 00:06:27.320 --> 00:06:30.790 So moving on to the surface equipment removal requirements, 00:06:30.790 --> 00:06:33.610 this is your form W-3C. 00:06:33.610 --> 00:06:37.640 So the shut-in date determines what you have to do 00:06:37.640 --> 00:06:41.880 at the surface level for an inactive well on the form W-3C. 00:06:41.880 --> 00:06:44.600 If the well's been inactive for 12 months, 00:06:44.600 --> 00:06:47.780 you'll need to certify that electricity's been terminated. 00:06:47.780 --> 00:06:50.820 If the well's been inactive for at least five years 00:06:50.820 --> 00:06:54.190 but less than 10, you'll need to certify that all production 00:06:54.190 --> 00:06:57.170 fluids have been purged from the equipment associated 00:06:57.170 --> 00:07:00.130 specifically to that one inactive well. 00:07:00.130 --> 00:07:03.040 If the well's been shut in for more than 10 years, 00:07:03.040 --> 00:07:05.247 you'll be required to certify that all surface equipment 00:07:05.247 --> 00:07:07.053 has been removed from the well site. 00:07:08.040 --> 00:07:10.160 When you get to that point the only thing that should 00:07:10.160 --> 00:07:13.140 be left is the well head and assign, 00:07:13.140 --> 00:07:15.400 that's all that's needed for proper plugging, 00:07:15.400 --> 00:07:18.083 periodic testing, and identifying the well. 00:07:22.750 --> 00:07:25.720 There are also options on the W-3C form, 00:07:25.720 --> 00:07:28.290 but you as the operator have a hundred percent ownership 00:07:28.290 --> 00:07:32.450 interest in the land where the inactive well is located 00:07:32.450 --> 00:07:35.070 that you can get out of some of the requirements 00:07:35.070 --> 00:07:36.760 of the W-3C. 00:07:36.760 --> 00:07:40.660 So if you have a warranty that you can provide 00:07:40.660 --> 00:07:42.880 to the Commission that shows that the entity listed 00:07:42.880 --> 00:07:46.620 on Commission records is also listed as the surface owner, 00:07:46.620 --> 00:07:49.470 then you'll be exempt from purging fluids and removing 00:07:49.470 --> 00:07:50.543 surface equipment. 00:07:51.450 --> 00:07:53.890 Please keep in mind that you'll still be required 00:07:53.890 --> 00:07:56.450 to terminate electricity for safety purposes. 00:07:56.450 --> 00:07:58.820 So it does get you out of purging fluids and removing 00:07:58.820 --> 00:08:00.260 equipment if you're the surface owner, 00:08:00.260 --> 00:08:03.950 but electricity does still need to be disconnected 00:08:03.950 --> 00:08:04.900 from that one well. 00:08:08.780 --> 00:08:12.440 Another option you'll find on the W-3C form is stating that 00:08:12.440 --> 00:08:14.560 the wells are part of a Commission approved Enhanced Oil 00:08:14.560 --> 00:08:16.170 Recovery project. 00:08:16.170 --> 00:08:17.943 Your well meets this criteria, 00:08:19.306 --> 00:08:21.110 you'll be allowed to leave all surface equipment 00:08:21.110 --> 00:08:24.980 on the well since you may need the equipment for future use 00:08:24.980 --> 00:08:26.490 within the project. 00:08:26.490 --> 00:08:29.310 You will still need to disconnect electricity and purge 00:08:29.310 --> 00:08:31.360 production fluids for this option though. 00:08:37.790 --> 00:08:42.720 So this is an image of the top half of the form W-3C, 00:08:42.720 --> 00:08:46.040 you'll notice a difference in filing for a single well 00:08:46.040 --> 00:08:48.810 or filing for an attached listing of wells. 00:08:48.810 --> 00:08:51.340 So you do have the ability to file an attach listing 00:08:51.340 --> 00:08:55.710 of wells with only one W-3C form as long as all of the wells 00:08:55.710 --> 00:08:58.930 on the attached listing have the same certifications. 00:08:58.930 --> 00:09:03.930 So sometimes staff will receive a W-3C form that will have 00:09:04.140 --> 00:09:08.010 option HX, it'll be signed, everything looks good, 00:09:08.010 --> 00:09:09.440 it'll have the attached listing, 00:09:09.440 --> 00:09:12.120 but when we get to the attached listing it'll have, 00:09:12.120 --> 00:09:15.670 this group of wells is certifying option A, 00:09:15.670 --> 00:09:18.250 this group of wells is certifying A and B1, 00:09:18.250 --> 00:09:23.200 this one is certifying C and it doesn't match receive form 00:09:23.200 --> 00:09:25.660 and that's where the certification and the signature lives. 00:09:25.660 --> 00:09:29.850 So we need the form to match the attachment. 00:09:29.850 --> 00:09:33.080 So that's real important, that's a common issue we see 00:09:33.080 --> 00:09:35.440 in processing and staff will have to return that back 00:09:35.440 --> 00:09:36.893 to you guys for correction. 00:09:37.770 --> 00:09:41.140 We do also have the ability if you've got a large number 00:09:41.140 --> 00:09:43.913 of inactive wells that you need processed. 00:09:44.910 --> 00:09:48.760 If you can provide staff with an Excel spreadsheet, 00:09:48.760 --> 00:09:52.640 so you'll need to submit your W-3C form just like normal, 00:09:52.640 --> 00:09:54.623 your attachment just like normal, 00:09:55.570 --> 00:09:59.200 and then you can also email in the Excel version 00:09:59.200 --> 00:10:01.600 of the attachment that you submitted. 00:10:01.600 --> 00:10:05.180 We have the ability to run a macro to process large numbers 00:10:05.180 --> 00:10:07.790 very quickly, so you know that helps everyone out, 00:10:07.790 --> 00:10:09.950 everyone gets their form process quicker. 00:10:09.950 --> 00:10:12.360 That's down on staff processing time, everyone's happy. 00:10:12.360 --> 00:10:14.880 So if that's something that you come across and you've got 00:10:14.880 --> 00:10:17.960 a large number that you'd like a process like that, 00:10:17.960 --> 00:10:20.220 just reach out to your processor and we can let you know 00:10:20.220 --> 00:10:21.053 what we need. 00:10:25.090 --> 00:10:28.040 So this is the bottom half of the form W-3C. 00:10:28.040 --> 00:10:30.480 You'll notice that the form is broken up into sections 00:10:30.480 --> 00:10:32.790 showing the different options depending on how long 00:10:32.790 --> 00:10:34.240 your wells have been shut in. 00:10:36.370 --> 00:10:39.520 So you can see your option A and it says it's required 00:10:39.520 --> 00:10:43.430 for wells that have been inactive for 12 months or longer, 00:10:43.430 --> 00:10:47.343 and you've got your B1, your B2 and so on. 00:10:48.780 --> 00:10:53.170 You also notice that there is option D on here, 00:10:53.170 --> 00:10:55.350 option D is your exception option. 00:10:55.350 --> 00:10:58.000 So if for some reason you feel like you can't 00:10:59.490 --> 00:11:01.840 comply with any of the above requirements, 00:11:01.840 --> 00:11:04.470 you can't terminate electricity, can't purge fluid, 00:11:04.470 --> 00:11:06.440 you can't remove surface equipment, 00:11:06.440 --> 00:11:09.960 you can submit in an exception request. 00:11:09.960 --> 00:11:14.330 Now this option does get scrutinized and we wanna make sure 00:11:14.330 --> 00:11:18.710 that it is a valid safety concern or you've got something 00:11:18.710 --> 00:11:20.830 really big going that 00:11:20.830 --> 00:11:24.870 a good reason from complying with the rules. 00:11:24.870 --> 00:11:27.460 This exception would cover you for one year, 00:11:27.460 --> 00:11:29.810 so you would be exempt from your requirements 00:11:29.810 --> 00:11:34.810 for the one-year timeframe to help you get back on track. 00:11:35.120 --> 00:11:39.037 A lot of times we see this option used for wells that 00:11:39.037 --> 00:11:42.530 are just now beginning to produce. 00:11:42.530 --> 00:11:45.010 So say you just turn the well on, 00:11:45.010 --> 00:11:47.260 you got all the equipment on, you don't wanna 00:11:48.470 --> 00:11:50.320 terminate electricity 'cause you're trying to pump it, 00:11:50.320 --> 00:11:52.300 you're trying to get it back going. 00:11:52.300 --> 00:11:55.410 If you submit in an exception request for that and state 00:11:55.410 --> 00:11:57.930 that the well is producing but it's not meeting minimum 00:11:57.930 --> 00:12:00.850 production requirements to be considered active 00:12:00.850 --> 00:12:05.210 along with your required filing fee of $375 per well, 00:12:05.210 --> 00:12:08.300 staff is able to approve an exception for that reason. 00:12:08.300 --> 00:12:12.130 We also can approve things like if you've got a rig on site, 00:12:12.130 --> 00:12:14.970 you're on currently working on the well, 00:12:14.970 --> 00:12:17.720 again a valid safety concern, 00:12:17.720 --> 00:12:21.230 something that you can prove up and provide documentation 00:12:22.690 --> 00:12:26.113 or you point that you shouldn't be required to do this. 00:12:28.380 --> 00:12:31.840 Another thing to note about the form W-3C is that this form 00:12:31.840 --> 00:12:34.000 must be signed by someone with personal knowledge 00:12:34.000 --> 00:12:35.510 of the wells site. 00:12:35.510 --> 00:12:38.240 Staff will question and delay processing and forms that 00:12:38.240 --> 00:12:41.800 are signed by someone whose title does not reflect that they 00:12:41.800 --> 00:12:45.400 have personal knowledge such as an agent or filing agent. 00:12:45.400 --> 00:12:48.440 So if for some reason you do have an agent or filing agent 00:12:48.440 --> 00:12:50.240 signing these forms for you, 00:12:50.240 --> 00:12:54.510 make sure you include an affidavit or a letter 00:12:54.510 --> 00:12:57.250 of explanation explaining that they do have personal 00:12:57.250 --> 00:13:00.670 knowledge, they'll need to be signed and we'll keep that 00:13:00.670 --> 00:13:03.210 associated with the forms submitted 00:13:04.280 --> 00:13:06.960 just for future reference in case for whatever reason 00:13:07.953 --> 00:13:11.970 the validity of the form and the options chosen 00:13:11.970 --> 00:13:13.033 come into question. 00:13:19.760 --> 00:13:22.620 So before we move on to the export, 00:13:22.620 --> 00:13:24.440 got some terminology that's gonna be used 00:13:24.440 --> 00:13:26.550 in the remainder of the presentation. 00:13:26.550 --> 00:13:29.580 So cost calculation is something that I'm going to be 00:13:29.580 --> 00:13:33.770 referencing on the Form W-3X and the way the cost 00:13:33.770 --> 00:13:36.270 calculation for an inactive well is determined 00:13:36.270 --> 00:13:40.150 is it's an estimated plugging costs based on the average 00:13:40.150 --> 00:13:44.100 per-foot cost, by district for state funded plugging 00:13:44.100 --> 00:13:46.770 operations in the previous fiscal year. 00:13:46.770 --> 00:13:48.920 So you're gonna multiply that per-foot cost 00:13:49.800 --> 00:13:52.850 times the well depth according to Commission records. 00:13:52.850 --> 00:13:55.420 So the way the cost calculation is figured, 00:13:55.420 --> 00:13:57.580 we get a lot of questions about, well, 00:13:57.580 --> 00:14:00.100 I could get it plugged for cheaper, 00:14:00.100 --> 00:14:02.823 it shouldn't cost that much, why is it so expensive? 00:14:04.478 --> 00:14:08.490 And rule specifically points to how we have to calculate 00:14:08.490 --> 00:14:10.820 the cost calculation per an inactive well and it's very 00:14:10.820 --> 00:14:12.110 black and white. 00:14:12.110 --> 00:14:16.030 It wants us to use the per district costs from state funded 00:14:16.030 --> 00:14:19.140 plugging operations and as you know, 00:14:19.140 --> 00:14:21.890 anything that we inherit sometimes could be a big mess. 00:14:22.950 --> 00:14:27.240 You can see big influxes of price, things can go up, 00:14:27.240 --> 00:14:30.100 things can go down every fiscal year. 00:14:30.100 --> 00:14:32.370 The fiscal year starts over in September for us 00:14:32.370 --> 00:14:37.080 and we do update the website to reflect the new cost 00:14:37.080 --> 00:14:40.570 calculation amounts per district around September, October, 00:14:40.570 --> 00:14:42.570 depending on when the figures get to us. 00:14:49.720 --> 00:14:52.330 So here's the inactive well listing again, 00:14:52.330 --> 00:14:54.760 I wanted to highlight this insert that's found within 00:14:54.760 --> 00:14:57.270 your P-5 renewal packet once more before we talk about 00:14:57.270 --> 00:15:00.300 plugging extensions to mention one thing. 00:15:00.300 --> 00:15:03.680 This list doesn't mention the requirements of needing 00:15:03.680 --> 00:15:05.043 to file a W-3X. 00:15:06.060 --> 00:15:08.870 The reason being is because the W-3X is an annual 00:15:08.870 --> 00:15:12.030 filing and it's always due upon renewal anytime you operate 00:15:12.030 --> 00:15:13.580 inactive wells. 00:15:13.580 --> 00:15:16.770 The only thing extra that shows up on this list is if a form 00:15:16.770 --> 00:15:20.060 W-3C is required, 'cause that can be relevant 00:15:20.060 --> 00:15:23.803 or not relevant from year to year violations. 00:15:28.270 --> 00:15:31.010 So we've spoken about operating inactive wells and what you 00:15:31.010 --> 00:15:33.030 have to do at the surface level, 00:15:33.030 --> 00:15:35.700 so now let's talk about what's needed in order to obtain 00:15:35.700 --> 00:15:38.910 your plugging extension for your inactive wells. 00:15:38.910 --> 00:15:43.320 So an operator who has any inactive land wells has to apply 00:15:43.320 --> 00:15:47.030 for a plugging extension by filing the form W-3X, 00:15:47.030 --> 00:15:49.690 they've got to qualify for an extension under one of several 00:15:49.690 --> 00:15:51.000 options. 00:15:51.000 --> 00:15:54.340 There's three blanket options and five individual 00:15:54.340 --> 00:15:55.483 well options. 00:15:58.860 --> 00:16:01.970 So we're gonna spend some time on the first blanket 00:16:01.970 --> 00:16:04.580 option because it is the most popular, 00:16:04.580 --> 00:16:07.330 the most misunderstood, 00:16:07.330 --> 00:16:12.123 the most asked questions on option on the Form W-3X. 00:16:13.030 --> 00:16:17.290 So one of the options that you can achieve a plugging 00:16:17.290 --> 00:16:18.800 extension with it's a blanket option, 00:16:18.800 --> 00:16:22.620 it's gonna cover all of your inactive wells is 00:16:22.620 --> 00:16:24.293 plugging or restoring option. 00:16:25.987 --> 00:16:29.093 So when your renewal packet is generated, 00:16:30.090 --> 00:16:32.480 say you're a June renewal, 00:16:32.480 --> 00:16:35.490 your renewal package generated roughly 85 days before that 00:16:35.490 --> 00:16:39.800 due date, you have a list of your inactive wells on that. 00:16:39.800 --> 00:16:43.770 That's going to be your rough estimate of what you need 00:16:43.770 --> 00:16:48.770 to achieve the 10% for the next P-5 renewal year. 00:16:50.786 --> 00:16:52.980 So the best way to do it 00:16:55.183 --> 00:16:59.180 is use that list up until your renewal date. 00:16:59.180 --> 00:17:03.350 Once your renewal date comes on, that's your drop dead 00:17:03.350 --> 00:17:06.260 inactive well count that determines your 10% number. 00:17:06.260 --> 00:17:09.450 So keep in mind if from the time your renewal packet 00:17:09.450 --> 00:17:13.110 is generated to your actual renewal date, 00:17:13.110 --> 00:17:17.010 if you transferred any inactive wells into or out of your 00:17:17.010 --> 00:17:21.130 name, if you flipped any wells from 00:17:22.940 --> 00:17:25.620 active to inactive or vice versa, 00:17:25.620 --> 00:17:27.490 you've plugged any inactive wells, 00:17:27.490 --> 00:17:32.190 anything like that will adjust your 10% number. 00:17:32.190 --> 00:17:35.030 A lot of times people are really stuck on using the list 00:17:35.030 --> 00:17:36.393 from last year, 00:17:39.010 --> 00:17:41.420 eight times out of 10 it's probably accurate, 00:17:41.420 --> 00:17:43.617 but there is that 85 day window from when your renewal 00:17:43.617 --> 00:17:45.540 package's generated. 00:17:45.540 --> 00:17:49.870 If anything changes that can be a game changer for your 10% 00:17:49.870 --> 00:17:52.210 number, you've got to take that into account. 00:17:52.210 --> 00:17:57.210 So staff recommends that you run the inactive well query 00:17:58.330 --> 00:18:02.530 on the Commission's website on your renewal date, 00:18:02.530 --> 00:18:04.800 and I'll keep in mind, there are two inactive well queries, 00:18:04.800 --> 00:18:07.500 there's the inactive well query 00:18:07.500 --> 00:18:11.070 and the inactive well aging report query. 00:18:11.070 --> 00:18:14.800 The aging report query is only updated once a month around 00:18:14.800 --> 00:18:18.510 the 10th, so that is not your best bet when you're pulling 00:18:18.510 --> 00:18:19.860 this list, 00:18:19.860 --> 00:18:21.883 the inactive well query is updated once. 00:18:23.470 --> 00:18:26.940 So you're gonna wanna make sure you use that query 00:18:26.940 --> 00:18:27.920 on your renewal date. 00:18:27.920 --> 00:18:30.790 If you're a June renewal, it's gonna be June 1st, 00:18:30.790 --> 00:18:32.300 August renewable, August 1st, 00:18:32.300 --> 00:18:34.250 it's always the first day of the month. 00:18:35.190 --> 00:18:38.140 That is going to be your list, 00:18:38.140 --> 00:18:42.200 your holy grill list of what needs done for your next year's 00:18:42.200 --> 00:18:43.203 renewal cycle. 00:18:44.150 --> 00:18:49.150 So now when you're working on your 10% list, 00:18:49.160 --> 00:18:51.410 you're gonna have your entire P-5-year. 00:18:51.410 --> 00:18:54.383 So you're on your renewal date, it's June 1st, 2020, 00:18:56.580 --> 00:18:59.720 you're working towards your 10% for 2021. 00:18:59.720 --> 00:19:02.670 You've got your list and you know your window starts 00:19:02.670 --> 00:19:07.670 from June 1st, 2020 to the last day of May, 2021. 00:19:08.120 --> 00:19:11.020 You have that entire year 00:19:11.020 --> 00:19:14.980 to either plug or restore to active status by Commission 00:19:14.980 --> 00:19:18.053 definition 10% of your inactive wells. 00:19:19.663 --> 00:19:22.560 So plugging required 00:19:22.560 --> 00:19:26.343 approved W-3 at the district office in order for that 00:19:26.343 --> 00:19:30.100 well to count within that timeframe. 00:19:30.100 --> 00:19:34.390 For restoring a well, you've got to have the third month 00:19:34.390 --> 00:19:38.330 or the 12 months of minimum reported production requirements 00:19:38.330 --> 00:19:40.810 within that year as well. 00:19:40.810 --> 00:19:44.580 So like I mentioned before, making sure the list 00:19:44.580 --> 00:19:48.380 isn't severed, making sure it's got a good well test, 00:19:48.380 --> 00:19:51.690 and then from that date tested on the well test forward, 00:19:51.690 --> 00:19:54.590 you meet minimum production requirements within that year. 00:19:56.674 --> 00:19:58.757 (coughs) 00:20:00.490 --> 00:20:05.360 Option B on the W-3X form, that's where you state that 00:20:05.360 --> 00:20:10.040 you're a publicly traded entity and you are listing 00:20:10.930 --> 00:20:13.203 the Commission as a secured creditor. 00:20:14.040 --> 00:20:17.090 There's also the option for blanket financial assurance, 00:20:17.090 --> 00:20:20.770 that's your third blanket option on the W-3X form 00:20:21.744 --> 00:20:25.830 that require that you provide an additional bond letter 00:20:25.830 --> 00:20:29.670 of credit or cash deposit to cover the cost calculation 00:20:29.670 --> 00:20:31.140 for your inactive wells. 00:20:31.140 --> 00:20:34.890 So in addition to your P-5 requirements for your bonding, 00:20:34.890 --> 00:20:37.670 you'd have to have a separate instrument to cover the cost 00:20:37.670 --> 00:20:38.603 calculation. 00:20:39.760 --> 00:20:42.350 And we spoke about how those figures are calculated 00:20:42.350 --> 00:20:45.600 by state funded plugging operations per-foot. 00:20:45.600 --> 00:20:47.340 There is a cap on this. 00:20:47.340 --> 00:20:50.100 So if you choose to file additional financial assurance, 00:20:50.100 --> 00:20:52.323 there is a $2 million cap, 00:20:52.323 --> 00:20:56.120 so if your company exceeds $2 million in cost calculation 00:20:56.120 --> 00:20:59.210 requirements, then the most you have to come up with 00:20:59.210 --> 00:21:00.440 is a $2 million. 00:21:02.540 --> 00:21:05.720 Moving on to the individual well options. 00:21:05.720 --> 00:21:09.090 First options, this is another very popular option, 00:21:09.090 --> 00:21:12.230 is the abeyance of plugging report option. 00:21:12.230 --> 00:21:16.790 So this option consists of you filing a W-3X for each 00:21:16.790 --> 00:21:21.740 inactive well, you submit an abeyance of plugging 00:21:23.070 --> 00:21:25.900 which the guidelines for the letter can be found 00:21:25.900 --> 00:21:27.923 on the instruction sheet for this form. 00:21:30.280 --> 00:21:32.480 So it's really a statement saying that you've got 00:21:32.480 --> 00:21:36.600 a professional engineer or geoscientist that is certified 00:21:36.600 --> 00:21:40.080 in Texas, state that the well has economic 00:21:41.780 --> 00:21:45.990 value outside of the cost of plugging the well. 00:21:45.990 --> 00:21:49.590 So it makes more sense to keep the well on instead 00:21:49.590 --> 00:21:52.230 of plugging it, because it's gonna make money in the future, 00:21:52.230 --> 00:21:53.930 it's gonna be economically viable. 00:21:56.180 --> 00:21:59.940 There's also a $250 filing fee associated with this well 00:21:59.940 --> 00:22:04.014 and we do need the professional engineer or geoscientist 00:22:04.014 --> 00:22:08.470 to submit attachments showing how they came to this 00:22:08.470 --> 00:22:10.423 determination, anything they reviewed, 00:22:12.460 --> 00:22:15.490 anything that they use to make the determination about 00:22:15.490 --> 00:22:18.970 the viability of the well and that attached documentation 00:22:18.970 --> 00:22:20.910 does need initialed or signed by them 00:22:20.910 --> 00:22:24.820 so we are clear that the documentation came from 00:22:24.820 --> 00:22:26.623 the engineer geoscientist. 00:22:29.200 --> 00:22:33.230 We've also got the EOR option on the W-3X form. 00:22:33.230 --> 00:22:36.590 So if you've got a well that's part of an enhanced oil 00:22:36.590 --> 00:22:39.490 recovery project, you can choose that option 00:22:39.490 --> 00:22:42.553 and that covers your plugging extension requirements. 00:22:44.710 --> 00:22:46.210 There's also the H-15 option. 00:22:46.210 --> 00:22:50.170 This is another misunderstood option, 00:22:50.170 --> 00:22:52.810 it's really popular but the thing you need to know about 00:22:52.810 --> 00:22:57.390 the H-15 option is that if you're already required 00:22:57.390 --> 00:23:00.720 by Commission rule or order to conduct the fluid level 00:23:00.720 --> 00:23:02.970 or hydraulic pressure tests, 00:23:02.970 --> 00:23:04.733 then you can't choose this option. 00:23:05.836 --> 00:23:10.590 So for example, if you've got a UIC permit on a well, 00:23:10.590 --> 00:23:13.610 part of your permit conditions state that you have to run 00:23:13.610 --> 00:23:14.443 an H-5. 00:23:15.350 --> 00:23:18.950 So because of that permit condition you're already required 00:23:18.950 --> 00:23:22.490 by Commission rule or order to conduct that 00:23:22.490 --> 00:23:25.653 you're not eligible to use this option on the W-3X. 00:23:27.280 --> 00:23:31.220 Another example is if a well is 25 years or older, 00:23:31.220 --> 00:23:33.690 an H-15 test is already required. 00:23:33.690 --> 00:23:36.220 So that would be another example of a time that you would 00:23:36.220 --> 00:23:40.400 not be able to choose this option on the W-3X form. 00:23:40.400 --> 00:23:44.710 So do make sure that you verify your eligibility by reaching 00:23:44.710 --> 00:23:48.340 out to UIC or reaching out to field operations 00:23:48.340 --> 00:23:51.290 to see if you're already required to run testing like that. 00:23:52.410 --> 00:23:55.797 If for some reason P-5 staff receives the form, 00:23:55.797 --> 00:23:58.580 we don't verify, we just key it in and it either accepts it 00:23:58.580 --> 00:24:00.130 or rejects it. 00:24:00.130 --> 00:24:03.260 If it does reject the options, then you know the filing fee 00:24:03.260 --> 00:24:05.030 has been used and it's non-refundable, 00:24:05.030 --> 00:24:08.870 so make sure before you submit it that you're clear 00:24:08.870 --> 00:24:11.193 on whether you're required or not. 00:24:12.820 --> 00:24:17.740 If you're not required, then you would shoot your test, 00:24:17.740 --> 00:24:20.950 it's got to pass, it's got to be a successful test, 00:24:20.950 --> 00:24:22.150 you'll file your results 00:24:23.400 --> 00:24:26.900 and once that's filed you'll file your W-3X and your filing 00:24:26.900 --> 00:24:29.023 fee of $125 per well. 00:24:31.720 --> 00:24:34.840 There's also an additional financial security option 00:24:34.840 --> 00:24:36.230 for individual wells. 00:24:36.230 --> 00:24:39.830 So similar to option C on the blanket options, 00:24:39.830 --> 00:24:42.870 this would just cover one well at a time 00:24:42.870 --> 00:24:44.343 however you choose see fit. 00:24:45.560 --> 00:24:49.600 The escrow deposit is your final option on the W-3X. 00:24:49.600 --> 00:24:52.670 There's a couple important things to remember about 00:24:52.670 --> 00:24:53.923 the escrow fund option. 00:24:55.160 --> 00:24:59.390 So the escrow fund deposit has to be paid with a cashier's 00:24:59.390 --> 00:25:02.193 cheque, it specifically states that in rule, 00:25:03.120 --> 00:25:06.060 and then it's going to be 10% of that cost calculation 00:25:06.060 --> 00:25:08.110 amount figure that we spoke about before. 00:25:09.120 --> 00:25:12.933 So the escrow will cover you for one year, 00:25:14.280 --> 00:25:16.700 come the following year if you've still got this inactive 00:25:16.700 --> 00:25:17.533 well 00:25:18.780 --> 00:25:21.853 in your inventory and it's not been brought back to act, 00:25:22.940 --> 00:25:27.020 then you'll need to file an additional 10% or a different 00:25:27.020 --> 00:25:28.433 option on the form W-3X. 00:25:32.010 --> 00:25:35.900 One thing to remember about the escrow fund deposit 00:25:35.900 --> 00:25:40.370 is if the well transfers to another operator 00:25:40.370 --> 00:25:41.660 the money stays with the well. 00:25:41.660 --> 00:25:43.270 So you're gonna want to take that into account 00:25:43.270 --> 00:25:44.303 in the bill of sale, 00:25:45.300 --> 00:25:47.600 let the new acquiring operator know that, hey, 00:25:47.600 --> 00:25:51.520 this money has this much in escrow on file. 00:25:51.520 --> 00:25:54.270 If you guys plug it or restore it to active status 00:25:54.270 --> 00:25:56.420 you can request that that money be refunded 00:25:57.750 --> 00:26:00.240 and that's another point to make on the escrow. 00:26:00.240 --> 00:26:04.120 Whoever the operator of record is that has an escrow fund 00:26:04.120 --> 00:26:06.270 deposit on file for the well, 00:26:06.270 --> 00:26:09.740 once they plug it or restore the active status by Commission 00:26:09.740 --> 00:26:12.790 definition, then that money is refundable. 00:26:12.790 --> 00:26:15.180 So essentially it's a no-cost option, 00:26:15.180 --> 00:26:18.400 you do have to put money up front, but if you plan on 00:26:19.890 --> 00:26:22.040 plugging or restoring the wells sooner than 00:26:23.400 --> 00:26:25.750 can throw a little money at it and then eventually just get 00:26:25.750 --> 00:26:27.800 the money refunded once the work is done. 00:26:32.350 --> 00:26:35.870 So this is the top half of the form W-3X, 00:26:35.870 --> 00:26:39.490 this form collects similar information as to what the W-3C 00:26:39.490 --> 00:26:41.050 form collects. 00:26:41.050 --> 00:26:43.170 You'll note that the operator name number and address 00:26:43.170 --> 00:26:44.530 are required. 00:26:44.530 --> 00:26:46.990 The next portion of the form highlights the blanket 00:26:46.990 --> 00:26:49.140 extension options that you can choose from. 00:26:50.010 --> 00:26:52.120 Alternatively, if you're choosing an individual well 00:26:52.120 --> 00:26:54.820 extension option you'll wanna list the well information 00:26:54.820 --> 00:26:58.513 in the chart represented here prior to choosing your option. 00:27:03.610 --> 00:27:06.160 This is the bottom half of the form W-3X 00:27:06.160 --> 00:27:08.960 where you can find individual while extension options that 00:27:08.960 --> 00:27:10.173 we spoke about before. 00:27:11.140 --> 00:27:14.310 Finally, you'll note that the signature section on this 00:27:14.310 --> 00:27:18.210 form, we do need an original signature on this form 00:27:18.210 --> 00:27:21.383 for processing, but unlike the W-3C form, 00:27:22.580 --> 00:27:24.930 signing this form doesn't have to have personal knowledge 00:27:24.930 --> 00:27:26.050 of the well. 00:27:26.050 --> 00:27:29.070 We're able to accept a signature from an officer, 00:27:29.070 --> 00:27:33.640 an employee, filing agent, consultant, or a hired attorney. 00:27:33.640 --> 00:27:35.963 Anybody can sign this form for the company. 00:27:45.480 --> 00:27:47.920 So moving on to well transfers 00:27:50.790 --> 00:27:53.863 and how they affect your inactive wells. 00:27:55.914 --> 00:27:59.810 So if you've got an inactive well that you transfer 00:27:59.810 --> 00:28:03.320 to a new operator, the acquiring operator's gonna have six 00:28:03.320 --> 00:28:05.360 months to bring the well into compliance 00:28:05.360 --> 00:28:06.963 with Rule 15 requirements. 00:28:07.890 --> 00:28:10.980 So if for some reason they fail to bring the well 00:28:10.980 --> 00:28:12.920 into compliance within that six months, 00:28:12.920 --> 00:28:16.500 it could prevent the approval of their P-5 in the future 00:28:16.500 --> 00:28:19.493 and eventually result in revocation of the current P-5. 00:28:20.490 --> 00:28:21.850 Another thing to note 00:28:23.270 --> 00:28:26.580 that until the well is brought into compliance 00:28:26.580 --> 00:28:29.400 it can't be transferred to another operator. 00:28:29.400 --> 00:28:32.370 So these are some things to keep in mind 00:28:32.370 --> 00:28:35.400 when you're transferring wells from company to company, 00:28:35.400 --> 00:28:38.340 if it's a short transfer and you don't plan on it, 00:28:38.340 --> 00:28:40.093 keeping it for a long time or you're just trying to move it 00:28:40.093 --> 00:28:43.240 from one to another, you're gonna have to comply 00:28:43.240 --> 00:28:46.840 with Rule 15 requirements before it's gonna be eligible 00:28:46.840 --> 00:28:48.260 to transfer again. 00:28:48.260 --> 00:28:51.240 The mechanism was put into place to ensure that operators 00:28:51.240 --> 00:28:54.520 were gaining compliance with the rule without bouncing 00:28:54.520 --> 00:28:57.140 the wells around for operator to operator to avoid 00:28:57.140 --> 00:28:58.243 compliance. 00:29:02.950 --> 00:29:05.948 Another thing to note regarding transferring of inactive 00:29:05.948 --> 00:29:10.020 wells is that it will not reduce your 10% requirement. 00:29:10.020 --> 00:29:12.390 So I've put together a little explanation to further 00:29:12.390 --> 00:29:17.390 explain, say that at the time of your last P-5 renewal 00:29:17.460 --> 00:29:19.800 your inactive well count was 56. 00:29:19.800 --> 00:29:23.283 You transfer 36 of those wells to operator. 00:29:24.400 --> 00:29:26.120 Now the transfer happens 00:29:27.030 --> 00:29:29.033 after your P-5 renewal date. 00:29:30.210 --> 00:29:33.540 Your 10% number is a stagnant number. 00:29:33.540 --> 00:29:38.130 As of your renewal date you had 56, 00:29:38.130 --> 00:29:40.680 even though throughout the year you transferred a majority 00:29:40.680 --> 00:29:44.120 of those wells, your 10% requirement is still going 00:29:44.120 --> 00:29:45.950 to be six. 00:29:45.950 --> 00:29:48.600 So that's another point to bring up about the 10% 00:29:48.600 --> 00:29:50.040 as we round up. 00:29:50.040 --> 00:29:54.700 Even if you have 51 wells, you still need six. 00:29:54.700 --> 00:29:59.700 Even if, we always round up, you can't plug or restore 00:30:01.680 --> 00:30:04.067 0.1 of a well (laughs) 00:30:04.067 --> 00:30:06.880 So that's another thing that's real important. 00:30:06.880 --> 00:30:10.610 Even if you transfer, it doesn't count towards your 10% 00:30:10.610 --> 00:30:13.123 and it doesn't reduce your 10% number. 00:30:17.300 --> 00:30:20.500 So this is just a little informational chart that explains 00:30:20.500 --> 00:30:24.874 the filing fees and associates related to the forms W-3C 00:30:24.874 --> 00:30:28.390 and W-3X, also provided a link with the presentation 00:30:28.390 --> 00:30:31.100 to where you can see this chart as a whole and find some 00:30:31.100 --> 00:30:34.370 further details about the surcharge and where it came from 00:30:34.370 --> 00:30:35.680 and which fees it affects. 00:30:35.680 --> 00:30:38.970 So specifically the W-3C form, 00:30:38.970 --> 00:30:42.910 it affects the exception fee for option D, 00:30:42.910 --> 00:30:44.753 so it makes the total $375. 00:30:46.680 --> 00:30:49.920 For the form W-3X, it affects the abeyance and plugging 00:30:49.920 --> 00:30:53.200 report option which is $250 00:30:53.200 --> 00:30:56.923 and the H-15 option which is $125. 00:31:01.890 --> 00:31:05.540 So now that we've talked about the forms and the definition 00:31:05.540 --> 00:31:07.933 and sort of where Rule 15 comes from, 00:31:09.070 --> 00:31:11.730 let's move on to what it looks like if for some reason 00:31:11.730 --> 00:31:15.240 you remain non-compliant with Statewide Rule 15 00:31:15.240 --> 00:31:17.283 after your P-5 renewal timeframe. 00:31:18.540 --> 00:31:22.480 So in order to be granted active extension status, 00:31:22.480 --> 00:31:27.320 we need to start by filing your P-5, P-5O, filing fee, 00:31:27.320 --> 00:31:28.893 and financial assurance. 00:31:30.880 --> 00:31:33.080 One thing to note here is that you will not receive 00:31:33.080 --> 00:31:36.500 additional time if you file your P-5 late. 00:31:36.500 --> 00:31:37.900 So if you're a June renewal 00:31:39.061 --> 00:31:41.950 and you don't file your P-5 until June 15th, 00:31:41.950 --> 00:31:44.830 your 90 day extension will still start on your original 00:31:44.830 --> 00:31:46.143 deadline of June 1st. 00:31:51.730 --> 00:31:54.030 Once your 90 day extension passes, 00:31:54.030 --> 00:31:56.750 you'll be sent a certified letter stating that you still 00:31:56.750 --> 00:32:00.070 have wells that remain noncompliant with Statewide Rule 15 00:32:00.070 --> 00:32:02.100 and it'll let you know that you also have the ability 00:32:02.100 --> 00:32:03.910 to request a hearing. 00:32:03.910 --> 00:32:05.380 If you'd like to request a hearing, 00:32:05.380 --> 00:32:08.530 you've got to complete this request within the 30 days 00:32:09.430 --> 00:32:13.610 and submitting the written request and pay a non-refundable 00:32:13.610 --> 00:32:16.073 fee of $4,500. 00:32:17.800 --> 00:32:20.000 This hearing request should be submitted into the Austin 00:32:20.000 --> 00:32:21.710 office and it will be logged in 00:32:22.670 --> 00:32:25.100 created within our cases system, 00:32:25.100 --> 00:32:27.700 you'll then be contacted by our docket service division 00:32:27.700 --> 00:32:29.603 for a hearing schedule availability. 00:32:31.280 --> 00:32:35.260 Keep in mind the $4,500 is a non-refundable fee, 00:32:35.260 --> 00:32:39.470 so if you end up making that request and paying the fee, 00:32:39.470 --> 00:32:43.870 even if you choose to cancel the hearing where you gain 00:32:43.870 --> 00:32:45.400 compliance before the hearing happens 00:32:45.400 --> 00:32:47.113 the fee is still non-refundable. 00:32:51.000 --> 00:32:54.960 So finally, if for some reason you exceed your 90 day 00:32:54.960 --> 00:32:58.693 extension you go past the 30 day period, 00:32:59.840 --> 00:33:03.710 you don't request a hearing that initiates the process 00:33:03.710 --> 00:33:06.390 to eventually deny the P-5 renewal, 00:33:06.390 --> 00:33:08.980 issue a severance and seal order on all your wells 00:33:08.980 --> 00:33:10.980 and collect financial assurance. 00:33:10.980 --> 00:33:14.040 So it does get pretty serious the further 00:33:14.040 --> 00:33:15.733 out of compliance you go. 00:33:17.910 --> 00:33:21.743 This portion of the enforcement action is handled at, 00:33:23.870 --> 00:33:26.260 we send a list of operators who are non-compliant, 00:33:26.260 --> 00:33:29.750 the Commissioners vote on whether to deny their P-5 or not. 00:33:29.750 --> 00:33:32.500 Once that order is signed and becomes final, 00:33:32.500 --> 00:33:35.413 that's when the rest of this part kicks off. 00:33:44.261 --> 00:33:47.520 So we do have a couple of places I wanted to show you 00:33:47.520 --> 00:33:50.150 in the online system that provides information 00:33:50.150 --> 00:33:51.663 on the renewal process. 00:33:54.184 --> 00:33:57.980 The P-5 renewal status query is a great option, 00:33:57.980 --> 00:34:01.740 it shows you in real time updated nightly 00:34:02.650 --> 00:34:06.010 specifically when you're in your renewal cycle, 00:34:06.010 --> 00:34:09.533 what's been processed, what's due, and what's outstanding. 00:34:15.270 --> 00:34:19.240 And I mentioned the inactive well aging report query earlier 00:34:19.240 --> 00:34:20.480 in the presentation. 00:34:20.480 --> 00:34:23.560 This is something, it's only updated once a month 00:34:23.560 --> 00:34:26.040 but it's gonna have more in depth information 00:34:26.040 --> 00:34:27.200 on your inactive wells. 00:34:27.200 --> 00:34:30.160 It's gonna have a cost calculation about the current 00:34:30.160 --> 00:34:34.900 extension status, all of it's downloadable data. 00:34:34.900 --> 00:34:38.020 It's a pretty useful tool, 00:34:38.020 --> 00:34:40.320 just need to remember that it's only updated once a month, 00:34:40.320 --> 00:34:42.900 so it's not a nightly thing. 00:34:42.900 --> 00:34:45.410 If you've got something new, it's not gonna show up until 00:34:45.410 --> 00:34:46.710 the date has been updated. 00:34:54.734 --> 00:34:56.920 Here are just a few useful links for your reference. 00:34:56.920 --> 00:34:59.893 The Commission's website, EWA query, 00:35:01.530 --> 00:35:03.030 boiling gas directory, 00:35:03.030 --> 00:35:06.450 and then any information regarding House Bill 2259 00:35:06.450 --> 00:35:10.560 and active well requirements and the origin of those things, 00:35:10.560 --> 00:35:11.653 things like that. 00:35:14.470 --> 00:35:17.680 So if you have any other questions outside of this 00:35:17.680 --> 00:35:20.530 presentation, please feel free to reach out to me directly 00:35:20.530 --> 00:35:22.750 or to the P-5 Department. 00:35:22.750 --> 00:35:25.220 I've listed our general information, phone number here, 00:35:25.220 --> 00:35:27.150 as well as our email address. 00:35:27.150 --> 00:35:29.850 We are available Monday through Friday 8:00 to 5:00 00:35:29.850 --> 00:35:31.593 to answer any questions. 00:35:35.430 --> 00:35:38.710 And then I do wanna remind everyone to please complete 00:35:38.710 --> 00:35:40.420 the evaluation. 00:35:40.420 --> 00:35:43.870 We use the data from these evaluations to help make sure 00:35:43.870 --> 00:35:47.050 that information we're providing you guys as relevant, 00:35:47.050 --> 00:35:48.770 it's useful. 00:35:48.770 --> 00:35:50.720 We really do look at all of the answers 00:35:51.840 --> 00:35:53.970 and sort of troubleshoot how we can make these better 00:35:53.970 --> 00:35:55.663 in the future to help you guys, 00:35:57.459 --> 00:36:00.703 let's see, let's go to the questions. 00:36:05.800 --> 00:36:09.100 So the first question in the transfer within six months 00:36:09.100 --> 00:36:12.390 scenario, what makes a well out of compliance 00:36:12.390 --> 00:36:15.173 if it was compliant prior to being transferred? 00:36:16.440 --> 00:36:17.490 Okay, good questions. 00:36:18.719 --> 00:36:21.983 So once a well transfers to a new, 00:36:22.970 --> 00:36:26.440 the new operator has to have its own plugging extension. 00:36:26.440 --> 00:36:29.210 So that means the new operator has six months to file 00:36:29.210 --> 00:36:30.543 their own W-3X. 00:36:31.740 --> 00:36:36.210 So it's not necessarily out of compliance at that point, 00:36:36.210 --> 00:36:39.970 but you have that six months to file your W-3X. 00:36:39.970 --> 00:36:44.276 Occasionally there could be a violation assessed on the well 00:36:44.276 --> 00:36:48.320 that once the well transfers the new operator is required 00:36:48.320 --> 00:36:51.780 to assume all responsibility for those violations 00:36:51.780 --> 00:36:53.359 as you know. 00:36:53.359 --> 00:36:55.890 So if it's one of the violations that could prevent you 00:36:55.890 --> 00:36:58.090 from obtaining a plugging extension, 00:36:58.090 --> 00:37:01.703 that would also need filed within the six month timeframe. 00:37:02.570 --> 00:37:07.570 There's also instances where if an operator has 00:37:07.870 --> 00:37:11.900 a well that flipped to a new category on the W-3C 00:37:11.900 --> 00:37:15.290 and it needs to certify a new requirement like option B 00:37:15.290 --> 00:37:20.290 or option C but it hasn't been done by the prior operator, 00:37:20.410 --> 00:37:24.110 once the new operator assumes do the new operator 00:37:24.110 --> 00:37:26.473 has to file that within the six months as well. 00:37:33.000 --> 00:37:36.140 Okay. So the next question, 00:37:36.140 --> 00:37:39.090 will you please clarify how many times that inactive well 00:37:39.090 --> 00:37:41.520 can be transferred between operators? 00:37:41.520 --> 00:37:44.410 If an operator has the $2 million financial security 00:37:44.410 --> 00:37:47.113 in place, are these transfers unlimited? 00:37:48.380 --> 00:37:51.090 So assuming that 00:37:52.230 --> 00:37:54.070 you transfer the well to an operator 00:37:54.070 --> 00:37:55.800 who's got a blanket option, 00:37:55.800 --> 00:37:58.580 yes, the well is covered because it rolls into that blanket 00:37:58.580 --> 00:38:00.490 option that they previously have filed 00:38:02.745 --> 00:38:04.720 and it would be considered compliant and eligible 00:38:04.720 --> 00:38:06.560 for transfer again. 00:38:06.560 --> 00:38:09.530 If it transfers to another operator who also has a blanket 00:38:09.530 --> 00:38:12.230 option filed, it's considered compliant. 00:38:12.230 --> 00:38:16.960 So the blanket options do cover any transfer wells as well. 00:38:16.960 --> 00:38:20.670 So as long as you're in compliance with Commission rules 00:38:20.670 --> 00:38:25.440 regarding 15 requirements, then the well is eligible 00:38:25.440 --> 00:38:26.273 for transfer. 00:38:26.273 --> 00:38:30.140 So that's a silver lining to having the blanket option 00:38:30.140 --> 00:38:33.403 is any new wells are automatically rolled into compliance. 00:38:39.280 --> 00:38:40.113 All right. 00:38:42.172 --> 00:38:44.839 (clears throat) 00:38:46.060 --> 00:38:50.060 So this question, I have multiple wells showing as inactive, 00:38:50.060 --> 00:38:53.740 however on the inactive well aging only one has the date 00:38:53.740 --> 00:38:55.833 under the compliance due date column. 00:38:57.100 --> 00:39:00.670 They are all inactive and roughly the same date. 00:39:00.670 --> 00:39:04.320 What is the compliance due date and why does it only show, 00:39:04.320 --> 00:39:06.023 why does only one well show it? 00:39:07.220 --> 00:39:11.763 That might be something that I need to look at specifically. 00:39:12.890 --> 00:39:15.980 It could be for numerous reasons really, 00:39:15.980 --> 00:39:20.130 it could be when the wells flip the shut-in status, 00:39:20.130 --> 00:39:21.860 when things were reported 00:39:22.920 --> 00:39:26.280 'cause everything for Statewide Rule 15 is based off 00:39:26.280 --> 00:39:28.720 of what you guys have reported the Commission. 00:39:28.720 --> 00:39:33.470 So when you file W-10, G-10 production reports, 00:39:33.470 --> 00:39:38.470 when P-4 are approved, when system does roll, 00:39:39.020 --> 00:39:40.800 all of those factors can come into play. 00:39:40.800 --> 00:39:42.760 If something is filed out of order or late, 00:39:42.760 --> 00:39:45.750 that can affect the 14b2 system and whether a wells shows 00:39:45.750 --> 00:39:48.570 inactive or not and the timing of it all. 00:39:48.570 --> 00:39:50.980 So if you'd like to reach out to me directly, 00:39:50.980 --> 00:39:54.263 I can take a look at this specific issue for you 00:39:54.263 --> 00:39:56.723 and we can take a look and see what we can come up with. 00:40:01.650 --> 00:40:03.800 Okay. So a good question. 00:40:03.800 --> 00:40:06.750 So what do you do if you know you will not be able to meet 00:40:06.750 --> 00:40:07.783 your renewal date? 00:40:09.100 --> 00:40:13.530 So as we discussed, make sure you file your P-5 stuff first. 00:40:13.530 --> 00:40:17.240 You don't have to wait until you have all of your W-3Cs 00:40:17.240 --> 00:40:21.060 and Xs violations cleared before you file your P-5 00:40:21.060 --> 00:40:23.753 renewal dates, so 90 day extension. 00:40:26.550 --> 00:40:29.810 So once you file your P-5, P-50 filing fee and financial 00:40:29.810 --> 00:40:32.460 assurance, you have your 90 day extension from the renewal 00:40:32.460 --> 00:40:37.460 date, and then after that you've got another 30 days. 00:40:37.890 --> 00:40:41.170 So at that point, if you feel like 00:40:42.670 --> 00:40:44.630 you're not gonna be able to meet your requirements 00:40:44.630 --> 00:40:48.150 by that time, but you're gonna want to think about 00:40:49.320 --> 00:40:51.300 requesting a hearing, 00:40:51.300 --> 00:40:53.440 now, the thing with that is the rules are very black 00:40:53.440 --> 00:40:55.890 and white, you're either compliant or you're not. 00:40:57.935 --> 00:41:01.590 So you can request the hearing, plead your case, 00:41:01.590 --> 00:41:05.790 but really the ultimate end goal is to gain compliance. 00:41:05.790 --> 00:41:09.313 So that process will buy you a little time. 00:41:11.090 --> 00:41:12.880 It's got to go through the hearing process, 00:41:12.880 --> 00:41:14.040 the decision has to be made, 00:41:14.040 --> 00:41:16.140 it's gotta be presented at conference. 00:41:16.140 --> 00:41:18.030 So that does kind of kick the can down the road a little 00:41:18.030 --> 00:41:18.863 bit. 00:41:19.970 --> 00:41:22.730 If you choose to not request a hearing 00:41:22.730 --> 00:41:25.760 Commission conference, keep in mind that we've got to wait 00:41:25.760 --> 00:41:28.233 until there's an available conference. 00:41:30.610 --> 00:41:33.320 Once the order is signed, once it's presented at conference 00:41:33.320 --> 00:41:37.640 and it's voted on, you do have 25 days before that order 00:41:37.640 --> 00:41:41.560 becomes final and unappealable before any official action 00:41:41.560 --> 00:41:42.810 is taken on the P-5. 00:41:42.810 --> 00:41:47.050 So you do have wiggle room outside of the 90 and the 30 days 00:41:49.680 --> 00:41:50.890 within that timeframe. 00:41:50.890 --> 00:41:53.513 There's a whole legal process, 00:41:53.513 --> 00:41:57.630 I would recommend looking into things like that, 00:41:57.630 --> 00:42:00.800 maybe consultant oil and gas attorney or a consultant 00:42:00.800 --> 00:42:03.860 to help you if you got to that process. 00:42:03.860 --> 00:42:07.240 But it's not an immediate thing at your renewal date, 00:42:07.240 --> 00:42:09.780 you do have a little bit of wiggle room depending 00:42:09.780 --> 00:42:13.970 on conference availability and the path you choose 00:42:13.970 --> 00:42:16.170 requesting hearing or not, things like that. 00:42:22.770 --> 00:42:23.760 Okay, good question. 00:42:23.760 --> 00:42:27.730 So if a well is 24 years old when the packet is generated 00:42:27.730 --> 00:42:29.650 85 days prior to the due date 00:42:30.960 --> 00:42:33.520 and turns 25 years old at the time of the renewal, 00:42:33.520 --> 00:42:35.240 how is this handled? 00:42:35.240 --> 00:42:39.670 So we've gotta have a stopping point at some point 00:42:39.670 --> 00:42:42.220 or otherwise your inactive well listing would be a constant 00:42:42.220 --> 00:42:43.123 moving target. 00:42:44.597 --> 00:42:47.940 So we only hold you accountable on your renewal for what's 00:42:47.940 --> 00:42:51.140 generated at your renewal packet time. 00:42:51.140 --> 00:42:54.700 So even if it flips to the new requirement, 00:42:54.700 --> 00:42:57.120 we're not going to hold you accountable for that 00:42:59.630 --> 00:43:01.410 until the following year. 00:43:01.410 --> 00:43:04.420 So whatever is at your as of your renewal packet 00:43:04.420 --> 00:43:06.923 is what we can hold you accountable for. 00:43:11.650 --> 00:43:14.553 All right. And I think that answers all of the questions. 00:43:15.730 --> 00:43:17.850 I really appreciate you guys coming out and spending time 00:43:17.850 --> 00:43:20.990 with us today, I hope this information was helpful 00:43:20.990 --> 00:43:22.340 and it'll be useful to you. 00:43:24.040 --> 00:43:26.400 Please feel free to reach out to P-5 staff, 00:43:26.400 --> 00:43:29.630 we're here to help you guys along the way. 00:43:29.630 --> 00:43:33.000 It's been a rough year, so we are looking forward 00:43:33.000 --> 00:43:35.947 to hearing from you guys and working with you. 00:43:37.680 --> 00:43:39.130 Oh, we got one more question. 00:43:40.190 --> 00:43:44.500 Okay. If the abeyance of plugging option is approved, 00:43:44.500 --> 00:43:46.973 is the feed due the next year? Yes. 00:43:48.328 --> 00:43:51.460 So the abeyance option, if you choose to refile it 00:43:51.460 --> 00:43:55.410 the next year, a lot of times the letters 00:43:55.410 --> 00:43:56.820 have an expiration date on them, 00:43:56.820 --> 00:43:58.630 that's really up to the professional engineer 00:43:58.630 --> 00:44:01.950 or geoscientists who certified the letters. 00:44:01.950 --> 00:44:04.480 They could give them an expiration date of one year, 00:44:04.480 --> 00:44:09.260 three years, but if no expiration date is referenced, 00:44:09.260 --> 00:44:11.650 the Commission assumes it's good for five years as pointed 00:44:11.650 --> 00:44:12.483 out in the rule. 00:44:14.090 --> 00:44:17.110 If you choose to refile that letter because it's still 00:44:17.110 --> 00:44:19.260 not expired the following year, 00:44:19.260 --> 00:44:20.883 you'll submit your W-3X, 00:44:22.260 --> 00:44:25.183 a copy of that letter and the filing fee again. 00:44:27.920 --> 00:44:30.433 It's something that you've got to file every year. 00:44:37.810 --> 00:44:39.730 All right. Well, I think that's it. 00:44:39.730 --> 00:44:42.000 If you guys have any further questions, like I said, 00:44:42.000 --> 00:44:43.770 please reach out, we're here for ya. 00:44:43.770 --> 00:44:46.290 And it was awesome spending the morning with everyone. 00:44:46.290 --> 00:44:47.123 Thank you.