Bill Text: CA SB665 | 2013-2014 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Oil and gas: drilling: indemnity bonds: wells.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2013-09-20 - Chaptered by Secretary of State. Chapter 315, Statutes of 2013. [SB665 Detail]

Download: California-2013-SB665-Amended.html

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BILL NUMBER: SB 665	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 30, 2013
	AMENDED IN SENATE  APRIL 16, 2013

INTRODUCED BY   Senator Wolk

                        FEBRUARY 22, 2013

   An act to amend Sections 3204, 3205, and 3205.1 of the Public
Resources Code, relating to oil and gas.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 665, as amended, Wolk. Oil and gas: drilling: indemnity bonds.
   Existing law requires an operator of an oil or gas well, or a well
located on submerged lands under ocean waters, who engages in the
drilling, redrilling, deepening, or in any operation altering the
casing, of any well to file with the State Oil and Gas Supervisor an
indemnity bond in an amount based on the depth of the well or a
blanket indemnity bond in a specified amount, but permits the
operator, with the approval of the supervisor, to make certain
deposits in lieu of the bond.
   This bill would instead require the amount of the indemnity bond
for any well to be $100,000  and to be filed with the supervisor
at the time of the filing of the notice of intention to perform work
on a well, as specified  . The bill would authorize an operator
operating 20 or more wells at any time to file a blanket indemnity
bond to cover the operation of all the operator's wells, in lieu of
an individual indemnity bond for each well, in an amount of either
$2,000,000, which would not include bonds or fees required for idled
wells, or $5,000,000, which would include bonds or fees required for
idled wells. The bill would increase the amount of the blanket
indemnity bond required to be filed by an operator operating one or
more wells located on submerged lands under ocean waters to
$1,000,000.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 3204 of the Public Resources Code is amended to
read:
   3204.   (a)    An operator who, on or after
January 1, 2014, engages in the drilling, redrilling, deepening, or
in any operation permanently altering the casing, of a well shall
file with the supervisor an individual indemnity bond in the sum of
one hundred thousand dollars ($100,000) for each well so drilled,
redrilled, deepened, or permanently altered. 
   (b) The bond shall be filed with the supervisor at the time of the
filing of the notice of intention to perform work on the well, as
provided in Section 3203. The bond shall be executed by the operator,
as principal, and by an authorized surety company, as surety, on the
condition that the principal named in the bond shall faithfully
comply with all the provisions of this chapter, in drilling,
redrilling, deepening, or permanently altering the casing in any well
or wells covered by the bond, and shall secure the state against all
losses, charges, and expenses incurred by it to obtain the
compliance by the principal named in the bond.  
   The 
    (c)     The  conditions of the bond
shall be stated in substantially the following language: "If the
____, the above bounden principal, shall well and truly comply with
all the provisions of Division 3 (commencing with Section 3000) of
the Public Resources Code and shall obey all lawful orders of the
State Oil and Gas Supervisor or the district deputy or deputies,
subject to subsequent appeal as provided in that division, and shall
pay all charges, costs, and expenses incurred by the supervisor or
the district deputy or deputies in respect of the well or wells or
the property or properties of the principal, or assessed against the
well or wells or the property or properties of the principal, in
pursuance of the provisions of that division, then this obligation
shall be void; otherwise, it shall remain in full force and effect."
  SEC. 2.  Section 3205 of the Public Resources Code is amended to
read:
   3205.  An operator who engages in the drilling, redrilling,
deepening, or in any operation permanently altering the casing, of 20
or more wells at any time, may file with the supervisor one blanket
indemnity bond to cover all the operations in any of its wells in the
state in lieu of an individual indemnity bond for each operation as
required by Section 3204. The bond shall be executed by the operator,
as principal, and by an authorized surety company, as surety, and
shall be in substantially the same language and upon the same
conditions as provided in Section 3204, except as to the difference
in the amount. The bond shall be provided in one of the following
amounts, as applicable:
   (a) The sum of two million dollars ($2,000,000), which does not
include the bond or fee required in Section 3206. A blanket  cash
bond or blanket  surety bond provided prior to January 1,
 1999,   2014,  shall be increased to
comply with this subdivision on or before January 1,  2014
  2016  .  A blanket cash bond provided
prior to January 1, 2015, shall be increased to comply with this
subdivision on or before January 1, 2016. 
   (b) The sum of five million dollars ($5,000,000), which does
include the bond or fee required in Section 3206.
  SEC. 3.  Section 3205.1 of the Public Resources Code is amended to
read:
   3205.1.  (a) Notwithstanding Sections 3204 and 3205, a person who
engages in the drilling, redrilling, deepening, or in any operation
permanently altering the casing, of one or more wells located on
submerged lands under ocean waters within the jurisdiction of this
state, shall file with the supervisor a blanket indemnity bond for
one million dollars ($1,000,000) to cover all his or her operations
in drilling, redrilling, deepening, or permanently altering the
casing in any of his or her wells located on those submerged lands.
The bond shall be executed by the person, as principal, and by an
authorized surety company, as surety, and the conditions of the bond
shall be the same as the conditions stated in Section 3204, except
for the difference in the amount.
   (b) In addition to providing the bond required by subdivision (a),
a person who operates one or more wells that are located on tide or
submerged lands within the jurisdiction of this state shall provide
an additional amount of security acceptable to the supervisor,
covering the full costs of plugging and abandoning all of the
operator's wells. The supervisor shall determine the amount of the
security required of each operator, based on his or her determination
of the reasonable costs of that plugging and abandonment. The
supervisor may not adjust the amount of security required of each
operator more frequently than once every three years, to reflect
changes in those costs. An operator may self-insure this security
obligation if the supervisor, at his or her discretion, determines
that the operator has sufficient financial resources to plug and
abandon the wells for which the operator is responsible. The security
shall remain in effect until all wells are plugged and abandoned in
accordance with Section 3208, but the supervisor shall reduce the
amount of the security required of an operator to reflect reduced
obligations as wells are plugged and abandoned.
   (c) If the state lease or other agreement that sets forth
obligations or performance requirements under the lease provides
security that is equal to, or greater than, the total of the
additional security required pursuant to subdivision (b), plus all
other liabilities under the lease or other agreement, the supervisor
shall not require the additional security.