§88.1. Oilfield site trust accounts for orphaned wells
A. Orphan wells.
(1)For purposes of this Section, an orphan well shall mean an oil
or gas well that is designated as part of an orphaned oilfield site as of August 1, 2016, and
thereafter, and that has had no reported production for a period of greater than two years
immediately prior to the production of oil, gas, or condensate to which this Section applies.
(2)After satisfying the provisions of Article VII, Sections 4, 9(B), 10-A, and 10.2
of the Constitution of Louisiana relative to the allocation and distribution of severance tax
proceeds and as further provided in R.S. 47:645(B), the remaining portion of the monies
credited to the state treasury derived from the severance tax levied on oil, gas, and
condensate from an orphaned w
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§88.1. Oilfield site trust accounts for orphaned wells
A. Orphan wells. (1) For purposes of this Section, an orphan well shall mean an oil
or gas well that is designated as part of an orphaned oilfield site as of August 1, 2016, and
thereafter, and that has had no reported production for a period of greater than two years
immediately prior to the production of oil, gas, or condensate to which this Section applies.
(2) After satisfying the provisions of Article VII, Sections 4, 9(B), 10-A, and 10.2
of the Constitution of Louisiana relative to the allocation and distribution of severance tax
proceeds and as further provided in R.S. 47:645(B), the remaining portion of the monies
credited to the state treasury derived from the severance tax levied on oil, gas, and
condensate from an orphaned well as defined in this Subsection shall be credited to the
associated site-specific trust account in accordance herein.
(3) Upon full funding of the associated site-specific trust account in accordance with
a plan approved by the secretary as provided in this Section, all monies remaining in the
account shall be credited in full to the state treasury as provided by R.S. 47:645(B).
(4) When the conditions of this Subsection are met relative to the funding of the
site-specific trust account, the secretary shall not require additional financial security for the
well associated with that site-specific trust account.
B. New production. In the event of new production from a formerly orphaned well,
a site-specific trust account shall be established to separately account for each such site for
the purpose of providing a source of funds for site restoration of that oilfield site at such time
in the future when restoration of that oilfield site is required. Once established, the site-specific trust account shall remain in effect until completion of site restoration of the
associated oilfield site.
C. Site restoration assessment. When establishing a site-specific trust account under
this Section, the secretary shall require an oilfield site restoration assessment to be made to
determine the site restoration requirements existing at the time the site-specific trust account
is established. The oilfield site restoration assessment shall be conducted by approved site
assessment contractors appearing on a list approved by the trust authority or acceptable to
the trust authority. The oilfield site restoration assessment shall specifically detail the site's
restoration needs and shall provide an estimate of the restoration costs needed to restore the
oilfield site based on the conditions existing at the time the site-specific trust account is
established.
D. Trust account monitoring. The secretary shall monitor each trust account to
assure that it is being properly funded. The funds in each trust account shall remain the
property of the trust authority. In the event that the site-specific trust account is not funded
through the payment of the severance tax due the state for a period of greater than six months
from the date of first production following designation of the well as part of an orphaned
oilfield site, the secretary shall require financial security in accordance with the department's
rules and regulations.
E. Transfers of oilfield sites. When transfers of oilfield sites occur subsequent to the
formation of site-specific trust accounts pursuant to this Section but prior to the end of the
oilfield site's economic life, the secretary and the acquiring party shall, in the manner
provided in this Section, redetermine cost. The balance of any site-specific trust account at
the time of transfer shall remain associated with the oilfield site and shall be a factor in the
redetermination.
F. Good faith disclosure. The failure of a transferring party to make a good-faith
disclosure of all oilfield site conditions existing at the time of the transfer may render that
party liable for the costs of restoration of such undisclosed conditions in excess of the
balance of the site-specific trust account.
G. Unusable oilfield sites. For unusable oilfield sites, after site restoration has been
completed and approved by the secretary, funds from a site-specific trust account shall be
disbursed as follows:
(1) The balance of the funds existing in the site-specific trust account will be
remitted to the state general fund (direct) or in the event the responsible party has personally
funded the site-specific trust account, in whole or part, then to the responsible party in
proportion to their percentage of funding with the remainder being remitted to the state
general fund (direct).
(2) Such account shall thereafter be closed.
H. Rules, regulations, and orders. The secretary shall make, after notice and public
hearings as provided in this Chapter, any reasonable rules, regulations, and orders that are
necessary to implement this Section.