7 LONG TITLE
8 General Description:
9 This bill deals with the state preemption of local regulation of oil and gas operations.
10 Highlighted Provisions:
11 This bill:
12 ▸ states that the Board of Oil, Gas, and Mining has exclusive authority to regulate oil
13 and gas operations; and
14 ▸ makes technical changes.
15 Money Appropriated in this Bill:
17 Other Special Clauses:
18 This bill provides a special effective date.
19 Utah Code Sections Affected:
21 40-6-5, as last amended by Laws of Utah 2012, Chapter 342
23 Be it enacted by the Legislature of the state of Utah:
24 Section 1. Section 40-6-5 is amended to read:
25 40-6-5. Jurisdiction of board -- Rules.
26 (1) The board has jurisdiction over all persons and property necessary to enforce this
27 chapter. The board shall enact rules in accordance with the Utah Administrative Rulemaking
29 (2) The board shall adopt rules and make orders as necessary to administer the
30 following provisions:
31 (a) Ownership of all facilities for the production, storage, treatment, transportation,
32 refining, or processing of oil and gas shall be identified.
33 (b) Well logs, directional surveys, and reports on well location, drilling, and production
34 shall be made and filed with the division. Logs of wells marked "confidential" shall be kept
35 confidential for one year after the date on which the log is required to be filed, unless the
36 operator gives written permission to release the log at an earlier date. Production reports shall
38 (i) filed monthly;
39 (ii) accurate; and
40 (iii) in a form that reasonably serves the needs of state agencies and private fee owners.
41 (c) Monthly reports from gas processing plants shall be filed with the division.
42 (d) Wells shall be drilled, cased, operated, and plugged in such manner as to prevent:
43 (i) the escape of oil, gas, or water out of the reservoir in which they are found into
44 another formation;
45 (ii) the detrimental intrusion of water into an oil or gas reservoir;
46 (iii) the pollution of fresh water supplies by oil, gas, or salt water;
47 (iv) blowouts;
48 (v) cavings;
49 (vi) seepages;
50 (vii) fires; and
51 (viii) unreasonable:
52 (A) loss of a surface land owner's crops on surface land;
53 (B) loss of value of existing improvements owned by a surface land owner on surface
54 land; and
55 (C) permanent damage to surface land.
56 (e) The drilling of wells shall not commence without an adequate and approved supply
57 of water as required by Title 73, Chapter 3, Appropriation. This provision is not intended to
58 impose any additional legal requirements, but to assure that existing legal requirements
59 concerning the use of water have been met prior to the commencement of drilling.
60 (f) The operator shall furnish a reasonable performance bond or other good and
61 sufficient surety, conditioned for the performance of the duty to:
62 (i) plug each dry or abandoned well;
63 (ii) repair each well causing waste or pollution;
64 (iii) maintain and restore the well site; and
65 (iv) except as provided in Subsection (8), protect a surface land owner against
67 (A) loss of a surface land owner's crops on surface land;
68 (B) loss of value of existing improvements owned by a surface land owner on surface
69 land; and
70 (C) permanent damage to surface land.
71 (g) Production from wells shall be separated into oil and gas and measured by means
72 and upon standards that will be prescribed by the board and will reflect current industry
74 (h) Crude oil obtained from any reserve pit, disposal pond or pit, or similar facility, and
75 any accumulation of nonmerchantable waste crude oil shall be treated and processed, as
76 prescribed by the board.
77 (i) Any person who produces, sells, purchases, acquires, stores, transports, refines, or
78 processes oil or gas or injects fluids for cycling, pressure maintenance, secondary or enhanced
79 recovery, or salt water disposal in this state shall maintain complete and accurate records of the
80 quantities produced, sold, purchased, acquired, stored, transported, refined, processed, or
81 injected for a period of at least six years. The records shall be available for examination by the
82 board or its agents at any reasonable time. Rules enacted to administer this subsection shall be
83 consistent with applicable federal requirements.
84 (j) Any person with an interest in a lease shall be notified when all or part of that
85 interest in the lease is sold or transferred.
86 (3) [
87 provision of state law, the board has the exclusive authority to regulate:
88 (a) all operations for and related to the production of oil or gas including:
89 (i) drilling, testing, equipping, completing, performing hydraulic fracturing or other
90 stimulation techniques, operating, producing, and plugging of wells; and
91 (ii) reclamation of sites;
92 (b) the spacing and location of wells;
93 (c) operations to increase ultimate recovery, such as:
94 (i) cycling of gas;
95 (ii) the maintenance of pressure; and
96 (iii) the introduction of gas, water, or other substances into a reservoir;
97 (d) the disposal of salt water and oil-field wastes;
98 (e) the underground and surface storage of oil, gas, or products; and
99 (f) the flaring of gas from an oil well.
100 (4) For the purposes of administering this chapter, the board may designate:
101 (a) wells as:
102 (i) oil wells; or
103 (ii) gas wells; and
104 (b) pools as:
105 (i) oil pools; or
106 (ii) gas pools.
107 (5) The board has exclusive jurisdiction over:
108 (a) class II injection wells, as defined by the federal Environmental Protection Agency
109 or any successor agency; and
110 (b) pits and ponds in relation to these injection wells.
111 (6) The board has jurisdiction:
112 (a) to hear any questions regarding multiple mineral development conflicts with oil and
113 gas operations if there:
114 (i) is potential injury to other mineral deposits on the same lands; or
115 (ii) are simultaneous or concurrent operations conducted by other mineral owners or
116 lessees affecting the same lands; and
117 (b) to enter its order or rule with respect to those questions.
118 (7) The board has enforcement powers with respect to operators of minerals other than
119 oil and gas as are set forth in Section 40-6-11, for the sole purpose of enforcing multiple
120 mineral development issues.
121 (8) The provisions of Subsection (2)(f)(iv) do not apply if the surface land owner is a
122 party to, or a successor of a party to:
123 (a) a lease of the underlying privately owned oil and gas;
124 (b) a surface use agreement applicable to the surface land owner's surface land; or
125 (c) a contract, waiver, or release addressing an owner's or operator's use of the surface
126 land owner's surface land.
127 Section 2. Effective date.
128 If approved by two-thirds of all the members elected to each house, this bill takes effect
129 upon approval by the governor, or the day following the constitutional time limit of Utah
130 Constitution, Article VII, Section 8, without the governor's signature, or in the case of a veto,
131 the date of veto override.