On November 15, 2016, the Railroad Commission of Texas announced final amendments to Rule 15 (“Surface Equipment Removal Requirements and Inactive Wells”), which will take effect January 1, 2017. Generally, Rule 15 requires that operators who assume responsibility for an inactive oil or natural gas well either plug the well or return it to active operation within six months after the Commission approves an operation designation form.
The final rulemaking modifies the regulatory requirements for returning oil and natural gas wells to active operation. Currently, operators must produce at least 10 barrels of oil or 100 Mcf of natural gas for at least three consecutive months for an inactive well to become active. Under the finalized rules, operators must produce just five barrels of oil or 50 Mcf of natural gas for an inactive well to become active. Alternatively, operators may produce at least one barrel of oil or one Mcf of natural gas for 12 consecutive months.
The Commission stated in the preamble to the final rulemaking that “the amendments discourage the premature plugging of wells that have the potential to produce and, thus, align with the Commission’s responsibility to prevent waste.”