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TITLE 31NATURAL RESOURCES AND CONSERVATION
PART 1GENERAL LAND OFFICE
CHAPTER 9EXPLORATION AND LEASING OF STATE OIL AND GAS
SUBCHAPTER FDISCONTINUING THE LEASEHOLD RELATIONSHIP
RULE §9.91General Provisions

(a) Any discontinuance of a leasehold relationship, except for termination, is effective only upon complete compliance with §§9.91 - 9.95 of this subchapter. Terminations are effective according to the terms of the lease and the laws of the state.

(b) The leasehold relationship between the state and a lessee of state oil and gas may be discontinued by any of the following:

  (1) release;

  (2) assignment;

  (3) termination;

  (4) forfeiture.

(c) Effect of discontinuing the leasehold relationship. When the discontinuance of a leasehold relationship becomes effective, the lessee shall be relieved of all further obligations to the state due to the lessee's ownership of the lease except for the following:

  (1) those obligations, liabilities, penalties, or the like owed by the lessee to the state as of the effective date of the release, termination, forfeiture, or assignment;

  (2) the duty to pay all royalty owed by lessee in the manner set out in the lease and this chapter on all oil or gas produced under the lease as of the date of the discontinuance of the leasehold relationship;

  (3) the accrual of penalty and interest, as set out in this chapter on any delinquent royalty or report owed by the lessee;

  (4) the duty to file with the GLO the reports, applications, and other records required by the lease, statutes, and/or this chapter regarding any activity by the lessee or lessee's operator relating to the previously leased premises and/or production therefrom; and

  (5) if all oil and gas production, drilling, and rework activity has ceased on a well, the following clean-up duties:

    (A) the duty to comply with all federal and state laws, particularly RRC and GLO statutes and administrative rules and United States Corps of Engineers regulations relating to plugging and abandoning wells and cleaning the property;

    (B) the duty to remove all oil stored on the property and clean any residue remaining on the property. If such is not completed within 120 days of when the discontinuance of the leasehold relationship becomes effective, the state, at its option, may find that the lessee has abandoned the oil, and may take possession of the oil and dispose of it in a manner that is in the state's best interest;

    (C) the duty to remove all equipment, structures, machinery, tools, supplies, and other items on the property and otherwise restore the property to the condition it was in immediately preceding issuance of that lease. If such is not completed within 120 days of when the discontinuance of the leasehold relationship becomes effective, a presumption shall arise that these items have been abandoned by the lessee or operator and the commissioner may exercise the states rights pursuant to Natural Resources Code §51.302 et seq.;

    (D) with regard to operations in Texas state waters, the duty to remove all equipment, structures, machinery, tools, supplies, and other items on the property and otherwise restore the property to the condition it was in immediately preceding issuance of that lease. This duty will not be fulfilled until:

      (i) lessee has examined an area within a 300-foot radius surrounding each wellbore on a given tract using one of the following means: side-scan sonar, trawler drag, divers, or any other method approved in writing by the GLO prior to use; and

      (ii) a notarized affidavit shall be filed with the GLO within 120 days of when the discontinuance of the leasehold relationship becomes effective. It shall be signed by a senior officer of the company or a principal of any other entity and shall state that the property has been cleared of all navigational hazards and obstructions and has been restored as close as practicable to the condition that it was in immediately preceding issuance of that lease; and

    (E) the duty to remove all fills for roads and drill sites if requested by the commissioner.

(d) Discharge of clean-up duties. Lessee shall be liable for any damages incurred due to lessee's failure to comply with subsection (c)(5) of this section. Within the parameters authorized by state and federal laws and regulations, the commissioner may agree in writing to excuse lessee from all or part of these duties.


Source Note: The provisions of this §9.91 adopted to be effective January 7, 1999, 24 TexReg 146; amended to be effective August 9, 2009, 34 TexReg 5379

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