TLMA ALERT (March 2005):

Good News at the Railroad Commission -- New Inactive Well Fee Proposed (Now it’s up to the Legislature to adopt it!)

As you well know, one of the main objectives of TLMA is to get the inventory of approximately 110,000 inactive wells plugged as soon as possible.  Well, the Railroad Commission just took a big first step to help us achieve that objective.  All three commissioners, Elizabeth A. Jones, Michael L. Williams and Chairman Victor G. Carrillo voted to reinstate the inactive well fee.  While the measure does not go as far as TLMA would have hoped, it is nonetheless a big accomplishment and the Railroad Commission should be applauded.  This shows they are listening to what we have to say, so keep up the good work.  Below are the details of the proposal:

New Inactive Well Fee
Proposed New §85.2022 in Nat. Res. Code

To encourage operators to plug their inactive wells after they have been inactive for an extended period of time, a new fee is proposed to be assessed at the time of each operator’s annual renewal.  The fee would only apply to those operators with five or more wells, and only if the number of wells that have been in inactive status for at least three years is more than 66% of their total number of wells.  If these conditions exist, the operator would be assessed a fee of $100 for each of the wells that has been in inactive status for at least three years.  It is estimated that this fee would generate new revenues of $832,000 over the biennium.

This proposal is part of an effort to cover budget shortfalls at the Railroad Commission.  Other measures being adopted include an increase in current oil and gas permit fees, a new late P-5 penalty, and increase in the pipeline safety fee, the surface mining fee, and the rail safety fee.  The Railroad Commission is also making an effort to limit the amount of money in the Oil Field Clean-up Fund being used for administrative costs.  Hopefully this will ultimately result in more money available for true clean-up costs.

TLMA Position:  The commission estimates that it costs in the neighborhood of $4,500 dollars to plug a well.  TLMA has been pushing for an inactive well fee of $400 annually because it would make an operator choose between paying the fee for an indefinite number of years or finally spending the money to plug the well.  The $100 fee proposed by the Railroad Commission is a move in the right direction.

For this to take effect, the Legislature must approve it.  Please contact your legislators to express your support of this proposed fee.  It is a win-win for generating revenues for the Railroad Commission and to encourage the plugging of historically inactive wells across the State of Texas.