Legis - Oil and Gas Conservation Commission - Industry Proposal Final Draft

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LEGISLATUREOF THE STATEOF IDAHO

Sixty-first Legislature Second Regular Session - 2012

This bill draft contains confidential and privileged information exempt

from disclosure under Section 9-340F(1), Idaho Code. If you have received

this message by mistake, please notify us immediately by replying to this

message or telephoning the Legislative Services Office at (208) 334-2475.

ANACT

2 RELATINGTO; AMENDINGECTION47-315, IDAHOCODE,AMENDINGECTION47-317,

3 IDAHOCODE, AMENDINGSECTION 47-319, IDAHOCODE, AMENDINGSECTION

4 47-1602, IDAHOCODE,AMENDINGECTION42-233, IDAHOCODE,AMENDINGEC-

5 TION42-3902, IDAHOCODE,AMENDINGECTION42-4003, IDAHOCODE,

6 Be It Enacted by the Legislature of the State of Idaho:

7 SECTION1. That Section 47-315, Idaho Code, be, and the same is hereby

8 amended to read as follows:

9 47-315. PUBLICINTEREST. It is declared to be in the public interest

10 to foster, encourage and promote the development, production and utiliza-

11 tion of natural resources of oil and gas in the state of Idaho in such a man-

12 ner as will prevent waste; to provide for uniformity and consistency in the

13 regulation of the production of oil and gas throughout the state of Idaho;

14 to authorize and to provide for the operations and development of oil and gas

15 properties in such a manner that a greater ul timate recovery of oil and gas

16 may be obtained and that the correlative rights of all owners be fully pro-

17 tected; to encourage, authorize and provide for voluntary agreements for cy-

18 cling, recycling, pressure maintenance and secondary recovery operations in

19 order that the greatest possible economic recovery of oil and gas may be ob-

20 tained within the state to the end that the land owners, the royalty owners,

21 the producers and the general public may realize and enjoy the greatest pos-22 sible good from these vi tal natural resources.

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SECTION2. That Section 47-317, Idaho Code, be, and the same is hereby

amended to read as follows:

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47-317. OILANDGASCONSERVATIONOMMISSIONREATED- POWERS- LIMIT

ONLOCALRESTRICTIONS-- ATTORNEYGENERAL.(alJ There is hereby created an

oil and gas conservation commission of the state of Idaho which shall consist

of the state board of land commissioners.

(b~) The commission shall have and is hereby given jurisdiction and au-

thority over all persons and property, public and private, necessary to en-

force the provisions of this act, and shall have power and authori ty to make

and enforce rules, regulations and orders, and do whatever may reasonably be

necessary to carry out the provisions of this act. Any delegation of author-

i ty to any other state officer, board or commission to administer any and all

other laws of this state relating to the conservation of oil and gas, or ei

ther of them is hereby rescinded and wi thdrawn and such authori ty is hereby

unqualifiedly conferred upon the commission, as herein provided. Any per-

son, or the attorney general, on behalf of the state, may apply for a hear-

ing before the commission, or the commission may initiate proceedings, upon

any question relating to the administration of this act, and jurisdiction is

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hereby conferred upon the commission to hear and determine the sameand enter

2 its rule, regulation or order with respect thereto.

3 (-e]_) It is the intent of the legislature to occuPYthe field of the reg-

4 ulation of oil and gas exploration and production with the limited exception

5 of the exercise of planning and zoning authori ty granted ci ties and counties

6 pursuant to chapter 65, title 67, Idaho Code.

7 ill To implement the purpose of the oil and gas conservation act, and

8 to advance the public interest in the orderly development of the state's oil

9 and gas resources, while at the same time recognizing the responsibility of

10 local governments to protect the public health, safety and welfare, it is

11 herein provided that:

12 ill The commission will notice the respective city or county with ju-

13 risdiction upon receipt of an application and will remit, electroni-

14 cally, a copy of all application materials.

15 ill Noordinance, resolution, requirement or standard of a ci ty, county

16 or political subdivision, except a state agency with authority, shall17 actually or operationally prohibit the extraction of oil and gas,

18 provided, however, that extraction may be subject to reasonable lo-

19 cal ordinance provisions, not repugnant to law, which protect public

20 health, public safety, public order or which prevent harm to public

21 infrastructure or degradation of the value, use and enjoyment of pri-

22 vate property. Any ordinance regulating extraction enacted pursuant

23 to chapter 65, title 67, Idaho Code, shall provide for administrative

24 permitting under conditions established by ordinance, not to exceed

25 twenty-one (21) days, unless extended by agreement of the parties or

26 upon good cause shown.

27 _ _ ( _ _ t l Noordinance, resolution, requirement or standard of a ci ty, county

28 or political subdivision, except a state agency with authority, shall

29 actually or operationally prohibi t construction or operation of facil-

30 i ties and infrastructure needed for the post-extraction processing and

31 transport of gas and oil. However, such facilities and infrastructure

32 shall be subject to local ordinances, regulations and permitting re-

33 quirements, not repugnant to law, as provided in chapter 65, title 67,

34 Idaho Code.

35 ill The commission maysue and be sued in its administration of this act

36 in any state or federal district court in the state of Idaho having jurisdic-

37 tion of the parties or of the subj ect matter.

38 ( - E l : _ § _ ) The attorney general shall act as the legal advisor of the commis-

39 sion and represent the commission in all court proceedings and in all pro-

40 ceedings before it, and in any proceeding to which the commission maybe a

41 party before any department of the federal government.



44 47-319. LANDSUBJECTTOACT-- AUTHORITYFCOMMISSION.al) This act

45 shall apply to all lands located in the state, however owned, including any

46 lands ownedor administered by any government or any agency or poli tical sub-

47 division thereof, over which the state under its police power, has jurisdic-

48 tion.




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(b~) The commission is authorized and it is its duty to regulate the ex-

2 ploration for and production of oil and gas, prevent waste of oil and gas and

3 to protect correlative rights, and otherwise to administer and enforce this

4 act. It has jurisdiction over all persons and property necessary for ~

5 such purposes . In the event of a conflict, the duty to prevent waste is para-

6 mount.

7 (el) The commission is authorized to make such investigations as it

8 deems proper to determine whether action by the commission in discharging

9 its duties is necessary.

10 ( - E l & ) Without limi ting its general authori ty, the commission shall have

11 the specific authority !f.!o require:-;-

12 (±~) ±ldentification of ownership of oil or gas wells, producing

13 leases, tanks, plants, structures, and facilities for the transporta-

14 tion or refining of oil and gas;

15 ( ~ ; Q ) tlhe taking and preservation of samples and the making and filing

16 with the commission of true and correct copies of well logs and direc-17 tional surveys both in form and content as prescribed by the commission;

18 provided, however, that logs of exploratory or wildcat wells marked

19 confidential shall be subj ect to disclosure according to chapter 3, ti-

20 t.Le 9, Idaho Code. Andprovided further, that after four (4) months from

21 the effective date of this act, the commission mayrequire the owner of a

22 well theretofore drilled for oil or gas to file within four (4) months of

23 such order a true and correct copy of the log or logs of such well;

24 (~~) tlhe drilling, casing, operation and plugging of wells in such

25 manner as to prevent (a) the escape of oil or gas out of one (1) pool into

26 another, (b) the detrimental intrusion of water into an oil or gas pool

27 that is avoidable by efficient operations, (c) the pollution of fresh

28 water supplies by oil, gas, or salt water, (d) blow-outs, cavings, seep-

29 ages, and fires, and (e) waste as hereinabove defined;

30 (420) tlhe taking of tests of oil or gas wells;

31 (~~) tlhe furnishing of a reasonable performance bond with good and

32 sufficient surety, conditioned upon the performance of the duty to

33 comply with the requirements of this law and the regulations of the

34 commission with respect to the drilling, maintaining, operating and

35 plugging of each well drilled for oil or gas;

36 (-61) tlhat the production fromwells be separated into gaseous and liq-

37 uid hydrocarbons, and that each be measured by means and upon standards

38 that maybe prescribed by the commission;

39 (+.9) tlhat wells not be operated with inefficient gas-oil or water-oil

40 ratios, and to fix these ratios, and to limi t production fromwells with

41 inefficient gas-oil or water-oil ratios;

42 ( -&.0) mt!etering or other measuring of oil, gas, or product;

43 ( - 9 - i J tlhat every person whoproduces oil -e-r and gas in the state keep and

44 maintain for a period of five (5) years complete and accurate records

45 of the quanti ties thereof, which records, or certified copies thereof,

46 shall be available for examination by the commission or its agents at

47 all reasonable times within said period, and that every such person file

48 with the commission such reasonable reports as it mayprescribe with re-

49 spect to such oil or gas production; and




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(+&i) tlhe filing of reports of plats with the commission that it may

2 prescribe.

3 ~ Without limitinq its qeneral authority, and without limiting the

4 authori ty of other state agencies or local government as provided by law, the

5 commission shall have the specific authori ty !f.!_o regulate:

6 (-±-~) tlhe drilling and plugging of wells and the compression or dehy-

7 dration of produced oil and gas, and all other operations for the pro-

8 duction of oil e-r and gas;

9 ( ~ ; Q _ ) tlhe shooting and treatment of wells;

10 ( -3-~) tlhe spacing or locating of wells;

11 (420) e-Qperations to increase ul timate recovery, such as cycling of gas,

12 the maintenance of pressure, and the introduction of gas, water, or

13 other substances into a producing formation; and

14 (.§..§.) tlhe disposal of sal t water and oil-field wastes.

15 ill The commission is authorized !f.!_o classify and reclassify pools as

16 oil, gas, or condensate pools, or wells as oil, gas, or condensate wells.17 ill The commission is authorized !f.!_o make and enforce rules, regula-

18 tions, and orders reasonably necessary to prevent waste, protect correla-

19 tive rights, to govern the practice and procedure before the commission, and

20 otherwise to administer this act.



23 42-233. LOWTEMPERATUREEOTHERMALESOURCE.1) The right to the use

24 of low temperature geothermal resources of this state shall be acquired by

25 appropriation, except as provided in subsection (2) of this section. The

26 appropriation maybe perfected by means of the application, permit and li-

27 cense procedure as provided in this chapter for ground water, provided that28 low temperature geothermal resources shall be utilized primarily for heat

29 value and secondarily for the value as water. Usage of a low temperature

30 geothermal resource primarily for reasons other than heat value is not a ben-

31 eficial use of the resource, unless the director of the department of water

32 resources exempts the proposed use. The director mayexempt a proposed use

33 if the director finds that the proposed use satisfies the following crite-

34 ria: (i) there is no feasible alternative use of the resource; (ii) there

35 is no economically viable source of water having a bottom hole temperature of

36 eighty-fi ve (85) degrees or less in a well available; and (iii) the exemp-

37 tion is in the public interest.

38 (2) Theuse of low temperature geothermal resources for the development

39 and operation of oil and gas wells permitted under section 47-320, Idaho

40 Code, shall not be subj ect to the provisions of this chapter. However, the

41 director of the department of water resources mayinitiate a contested case

42 in accordance with the provisions of chapter 52, title 67, Idaho Code, and

43 the rules of procedure promulgated by the department, if the department

44 has reason to believe that an oil and gas well will cause, is causing or has

45 caused, significant negative impacts to pressure, temperature, quality

46 necessary for beneficial use or quanti ty of water available to water rights

47 existing at the time of the development of the oil and gas well or to a wa-

48 ter resource that can be beneficially used. The evidence of causation must




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come from the department or be credible information from a water right or a

2 geothermal resource permit holder existing at the time of the development

3 of the oil and gas well. It shall be the burden of the entity operating the

4 oil and gas well to establish that it will not, is not or has not caused

5 significant negative impacts to pressure, temperature, quality necessary

6 for beneficial use or quantity of water available to existing water rights

7 existing at the time of the development of the oil and gas well or to a water

8 resource that can be beneficially used. If the director determines that

9 the well will, is or has caused significant negative impacts to pressure,

10 temperature, quality necessary for beneficial use or quantity of water

11 available to water right existing at the time of the development of the oil

12 and gas well or to a water resource that can be beneficially used, the direc-

13 tor mayorder the operator to take measures to mitigate those impacts.

14 ill Anyowner of a well whoengages in the drilling, redrilling, mod-

15 ifying or deepening of any low temperature geothermal well shall file with

16 the director of the department of water resources a surety bond or cash bond17 in the penal sumof not less than five thousand dollars ($5,000) or more than

18 twenty thousand dollars ($20,000) as determined by the director of the de-

19 partment of water resources based on the temperature, depth and pressure of

20 the resource, the size and depth of the well, and any other relevant factors.

21 The surety or cash bond shall be conditioned upon the proper compliance with

22 the provisions of this chapter and chapter 40, title 42, Idaho Code, and

23 rules and regulations promulgated pursuant thereto. The bond shall remain

24 in effect for one (1) year following completion of drilling, redrilling,

25 modifying or deepening of the well or until released in wri ting by the direc-

26 tor, whichever occurs first.

27 (-3-.1) All permits, licenses, decreed rights and valid claims to a right

28 to the use of ground water which would be classified as a low temperature

29 geothermal resource having a priority date prior to July 1, 1987, remain

30 valid and the bond provisions of subsection (~l) of this section are not

31 applicable unless the well from which the right diverts water is modified

32 or deepened. The provisions of this section shall not be applicable to all

33 permi ts, licenses and rights to the use of geothermal resources as defined in

34 chapter 40, title 42, Idaho Code, which would be classified as a low temper-

35 ature geothermal resource under this section, issued or proclaimed prior to

36 July 1, 1987, and the bond provisions of subsection (~l) of this section are

37 not applicable to such wells.



40 42-3902. DEFINITIONS.Whenever used in this chapter:

41 (1) "Aquifer" means any geologic formation that will yield water to a

42 well in sufficient quantities to makeproduction of water from the formation

43 feasible for beneficial use, except whenthe water in such formation results

44 solely from inj ection through a deep or shallow inj ection well.

45 (2) "Deep injection well" means an injection well which is more than

46 eighteen (18) feet in vertical depth below land surface.

47 (3) "Director" means the director of the department of water resources.




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(4) "Drinking water source" means an aquifer which contains water hav-

ing less than 10,000 mg/l total dissolved solids and has not been exempted

from this designation by the director of the department of water resources.

(5) "Fluid" means any material or substance which flows or moves

whether in a semisolid, liquid, sludge, gaseous or any other formor state.

(6) "Formation" means a body of consolidated or unconsolidated rock

characterized by a degree of lithologic homogeneity which is mappable at the

earth's surface or traceable in the subsurface.

(7) "Hazardous waste" means any fluid or combination of fluids, exclud-

ing radioactive wastes, which because of quanti ty, concentration or charac-

teristics (physical, chemical or biological) may:

(a) Cause or significantly contribute to an increase in deaths or an in-

crease in serious, irreversible or incapacitating reversible illness;

or

(b) Pose a substantial threat to human health or to the environment

if improperly treated, stored, disposed of, or managed. Such wastesinclude, but are not limited to, materials which are toxic, corro-

sive, ignitable, or reactive, or materials which mayhave mutagenic,

teratogenic, or carcinogenic properties, but do not include solid or

dissolved material in domestic sewage or solid or dissolved material in

irrigation return flows.

(8) "Injection" means the subsurface emplacement of fluids through an

inj ection well, but excludes the following:

ill The underground injection of natural gas for purposes of storage;

and

ill The underground injection of fluids or propping agents, other than

diesel fuels, pursuant to hydraulic fracturing operations related to

oil, gas or geothermal production acti vi ties.

(9) "Inj ection well" means any feature that is operated to allow inj ec-

tion which also meets at least one (1) of the following cri teria:

(a) Abored, drilled or driven shaft whose depth is greater than the

largest surface dimension;

(b) Adug hole whose depth is greater than the largest surface dimen-

sion;

(c) Animproved sinkhole; or

(d) Asubsurface fluid distribution system.

Provided, however, that "injection well" does not mean or include any well

drilled for oil, gas or geothermal production activities, other than one

into which diesel fuels are injected pursuant to hydraulic fracturing opera-

tions.

(10) "Irrigation waste water" means excess surface water from agricul-

tural fields generated during any agricultural operation, including runoff

of irrigation tailwater, as well as natural drainage resulting fromprecipi-

tation, snowmelt and floodwaters.

(11) "Licensed driller" means any person holding a valid license to

drill water wells in Idaho as provided and defined in section 42-238, Idaho

Code.

(12) "Operate" means to allow fluids to enter an injection well by ac-

tion or by inaction of the operator.




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(13) "Operator" means any individual, group of individuals, partner-

2 ship, company, corporation, municipality, county, state agency, taxing dis-

3 trict or federal agency who operates or proposes to operate any injection

4 well.

5 (14) "Owner" means any individual, group of individuals, partnership,

6 company, corporation, municipality, county, state agency, taxing district,

7 or federal agency owning land on which any injection well exists or is pro-

8 posed to be constructed.

9 (15) "Radioactive material" means any material, solid, liquid or gas

10 which emits radiation spontaneously.

11 (16) "Radioactive waste" means any fluid which contains radioactive ma-

12 terial in concentrations which exceed those established for discharges to

13 water by 10 CFR20.

14 (17) "Shallow inj ection well" means an inj ection well which is less than

15 or equal to eighteen (18) feet in vertical depth below land surface.

16 (18) "Sanitary waste" means any fluid generated through residential17 (domestic) acti vi ties, such as food preparation, cleaning and personal hy-

18 giene. The term does not include industrial, municipal, commercial or other

19 nonresidential process fluids.

20 (19) "Surface runoff water" means runoff water from the natural ground

21 surface and cropland. Runoff from urbanized areas, such as streets, park-

22 ing lots, airports, and runoff from animal feedlots, agricultural process-

23 ing facilities and similar facilities are not included within the scope of

24 this term.



27 42-4003. PERMITS- APPLICATION- FEE-- EXCEPTIONS.(al) Anyperson28 who, as owner or operator, proposes to construct a well or to alter a well or

29 to construct or to al ter an inj ection well shall first apply to the director

30 for a geothermal resource well permit, except as provided in subsection (2)

31 of this section.

32 ill The use of ground water classified as a qeothermal resource or ma-

33 terial mediumfor the development and operation of oil and gas wells permit-

34 ted under section 47-320, Idaho Code, shall not be subject to the provisions

35 of this chapter. However, the director of the department of water resources

36 may initiate a contested case in accordance with the provisions of chapter

37 52, title 67, Idaho Code, and the rules of procedure promulgated by the de-

38 partment, if the department has reason to believe that an oil and gas well

39 will cause, is causing or has caused, significant negative impacts to pres-

40 sure, temperature, quality necessary for beneficial use or quantity of wa-

41 ter available to water rights existing at the time of the development of the

42 oil and gas well or to a geothermal resource that can be beneficially used.

43 The evidence of causation must come from the department or be credible in-

44 formation from a water right holder or a geothermal resource permit holder

45 existing at the time of the development of the oil and gas well. It shall

46 be the burden of the enti ty operating the oil and gas well to establish that

47 it will not, is not or has not caused significant negative impacts to pres-

48 sure, temperature, quality necessary for beneficial use or quanti ty of water




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available to existing water rights existing at the time of the development of

2 the oil and gas well or to geothermal resource that can be beneficially used.

3 If the director determines that the well will, is or has caused significant

4 negative impacts to pressure, temperature, quality necessary for beneficial

5 use or quantity of water available to water right existing at the time of the

6 development of the oil and gas well or to a geothermal resource that can be

7 beneficially used, the director mayorder the operator to take measures to

8 mitigate those impacts.

9 ill Such application required pursuant to subsection (1) of this sec-

10 tion shall set out the following information on a formor forms prescribed by

11 the department:

12 (-±-~) The nameof any person making the application; if such person is

13 a partnership, joint-venture, association, or other unincorporated

14 group of corporate or natural persons, the names and places of domicile

15 of each of the constituent persons whohave general partnership respon-

16 sibili ty and authori ty for and in such unincorporated group of persons;17 if any person namedon a permit application is a corporation, its place

18 of domicile, the names and places of domicile of its principal executive

19 officers, and the names and places of domicile of any person or persons

20 owning a thirty percent (30%)or greater interest, whether legal, bene-

21 ficial, or a combined legal and beneficial interest, in such corporate

22 person; if the applicant is making an application as an agent for any

23 other person, it shall be clearly so stated and any person who is the

24 applicant's principal shall be subj ect to each and all of the disclosure

25 requirements of this subsection; for purposes of this subsection, the

26 domicile of a corporation is at all of the following:

27 tt-;-J..il Theplace of incorporation;

28 f :7-,- (ii) Theprincipal place of business;

29 €-;-(iii) Theplace, by city and state, of the homeoffice, and in any

30 instance where domicile is required to be disclosed all of these

31 places shall be specified.

32 (~Q) The location of the proposed well; and/or the inj ection well de-

33 scribed particularly by the quarter-quarter section according to the

34 township and range system of the United States public lands survey.

35 (~.g_) The length, size, type, and thickness of casing proposed to be used

36 in such well and/or such injection well and any other devices or tech-

37 niques to be used in the drilling, operation, and maintenance of such

38 well and/ or inj ection well for the purpose of conserving geothermal re-

~ sources and their availability, avoiding waste and for the protection

40 of other subsurface natural resources.

41 (420) The character and composition of the material expected to be de-

42 rived from such well.

43 (.§.~) The means proposed to be used to contain and manage the material

44 expected to be derived from such well or injected into such injection

45 well in order to avoid unreasonable damageto life, property, or surface

46 and atmospheric natural resources.

47 (~!)Whether such well or such injection well is proposed to be con-

48 structed as a part of a program for exploration or for development of an

49 already explored geothermal resource area.




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(-+.9 .) Such other information as the director maydetermine to be neces-

2 sary for the administration of this chapter.

3 (b_i) Anyapplication for a permit to construct a well which is madepur-

4 suant to this section, if the construction or operation of such well will in-

5 volve the use of water, or if such well maybe expected to yield water to be

6 used, for any beneficial purpose, other than as a mineral source, an energy

7 source, or otherwise as a material medium, shall be accompanied by an appli-

8 cation to appropriate the public waters of this state in the formprescribed

9 in chapter 2, title 42, Idaho Code, and by rules adopted pursuant thereto,

10 and such application to appropriate the public waters shall be governed in

11 all respects by that chapter.

12 (-e~) Anyapplication for a permi t madepursuant to this section shall be

13 accompanied by a filing fee of:

14 (-±-~) Twohundred dollars ($200) if for a well; or

15 ( ~ ; Q _ ) Onehundred dollars ($100) for an injection well;

16 and no application shall be accepted and filed by the director until such17 filing fee has been deposi ted with him. All moneys received under provisions

18 of this chapter shall be deposi ted with the state treasurer in the water ad-

19 ministration fund as provided in section 42-238a, Idaho Code.

20 (e~) Noperson shall construct or alter a well or an injection well

21 without having first secured a permi t therefor; provided however, that the

22 director may, by general rule adopted pursuant to chapter 52, title 67, Idaho

23 Code, exempt specific categories of wells or injection wells otherwise em-

24 braced by this chapter upon a finding that the purposes of this chapter do not

25 require that such wells be subject to the permit requirement of this section.

26 (-e]_) Nothing in this chapter shall be construed as affecting any valid,

27 vested water rights for water in use on or before July 1, 1987.

28 ( . f - . § _ ) Thedirector shall have the authori ty to and maydesignate any area

29 of the state a "geothermal area" whenthe director finds or has reason to be-

30 lieve that such designation is necessary to protect the geothermal resource

31 fromwaste and to protect other resources of the state from contamination or

32 waste.

33 (~~) Noperson shall drill a well for any purpose to a depth of three

34 thousand (3,000) feet or morebelow land surface in a designated "geothermal

35 area" without first obtaining a permi t under the provisions of this section.

36 Such permit shall be in addi tion to any permi t required by other provisions

37 of law.

38 (filQ) The owner of any well constructed or being constructed pursuant

39 to section 47-320, Idaho Code, whoencounters a geothermal resource, and who

40 intends or desires to utilize such resource, shall make application for a

41 geothermal permi t as required under this section, provided however, that no

42 additional filing fee shall be required.

43 (±ll) Ageothermal resource shall be utilized primarily for its heat

44 value. Usage of a geothermal resource primarily for somereason other than

45 its heat value shall not be deemeda beneficial use of the resource.


Legis - Oil and Gas Conservation Commission - Industry Proposal Final Draft

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