Bill Text: IL SB3456 | 2013-2014 | 98th General Assembly | Engrossed

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Bill Title: Amends the Illinois Oil and Gas Act. Establishes the criteria that the Department of Natural Resources may consider when making a determination that the oil and gas leases submitted with an application for a permit or transfer of a permit for a well are operative and that prior oil and gas leases covering the same lands have terminated due to non-development or non-production under the current permittee. Provides that the Department may rely upon affidavits of non-development and non-production from individuals familiar with the history of development and production of such lands in addition to other evidence. Requires that such testimony and evidence reasonably indicate that there has been no development or production of oil or gas on the lands described in the prior leases for at least 24 consecutive months. Further provides that a court order or judgment declaring the prior leases terminated is not required except in extraordinary circumstances where such a determination cannot reasonably be concluded from the testimony and evidence submitted to the Department. Provides that any determination made by the Department shall not diminish the rights of any current permittee of a well that are otherwise provided by statute or regulation of the Department. Effective immediately.

Spectrum: Slight Partisan Bill (Republican 4-2)

Status: (Failed) 2015-01-13 - Session Sine Die [SB3456 Detail]

Download: Illinois-2013-SB3456-Engrossed.html

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AN ACT concerning regulation.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Oil and Gas Act is amended by
changing Section 6 as follows:
(225 ILCS 725/6) (from Ch. 96 1/2, par. 5409)
Sec. 6. The Department shall have the authority to conduct
hearings and to make such reasonable rules as may be necessary
from time to time in the proper administration and enforcement
of this Act, including the adoption of rules and the holding of
hearings for the following purposes:
(1) To require the drilling, casing and plugging of
wells to be done in such a manner as to prevent the
migration of oil or gas from one stratum to another; to
prevent the intrusion of water into oil, gas or coal
strata; to prevent the pollution of fresh water supplies by
oil, gas or salt water.
(2) To require the person desiring or proposing to
drill, deepen or convert any well for the exploration or
production of oil or gas, for injection or water supply in
connection with enhanced recovery projects, for the
disposal of salt water, brine, or other oil or gas field
wastes, or for input, withdrawal, or observation in

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connection with the storage of natural gas or other liquid
or gaseous hydrocarbons before commencing the drilling,
deepening or conversion of any such well, to make
application to the Department upon such form as the
Department may prescribe and to comply with the provisions
of this Section. The drilling, deepening or conversion of
any well is hereby prohibited until such application is
made and the applicant is issued a permit therefor as
provided by this Act. Each application for a well permit
shall include the following: (A) The exact location of the
well, (B) the name and address of the manager, operator,
contractor, driller, or any other person responsible for
the conduct of drilling operations, (C) the proposed depth
of the well, (D) lease ownership information, and (E) such
other relevant information as the Department may deem
necessary or convenient to effectuate the purposes of this
Act.
Additionally, each applicant who has not been issued a
permit that is of record on the effective date of this
amendatory Act of 1991, or who has not thereafter made
payments of assessments under Section 19.7 of this Act for
at least 2 consecutive years preceding the application,
shall execute, as principal, and file with the Department a
bond, executed by a surety authorized to transact business
in this State, in an amount estimated to cover the cost of
plugging the well and restoring the well site, but not to

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exceed $5000, as determined by the Department for each
well, or a blanket bond in an amount not to exceed $100,000
for all wells, before drilling, deepening, converting, or
operating any well for which a permit is required that has
not previously been plugged and abandoned in accordance
with the Act. The Department shall release the bond if the
well, or all wells in the case of a blanket bond, is not
completed but is plugged and the well site restored in
accordance with the Department's rules or is completed in
accordance with the Department's rules and the permittee
pays assessments to the Department in accordance with
Section 19.7 of this Act for 2 consecutive years.
In lieu of a surety bond, the applicant may provide
cash, certificates of deposit, or irrevocable letters of
credit under such terms and conditions as the Department
may provide by rule.
The sureties on all bonds in effect on the effective
date of this amendatory Act of 1991 shall remain liable as
sureties in accordance with their undertakings until
released by the Department from further liability under the
Act. The principal on each bond in effect on the effective
date of this amendatory Act of 1991 shall be released from
the obligation of maintaining the bond if either the well
covered by a surety bond has been plugged and the well site
restored in accordance with the Department's rules or the
principal of the surety has paid the initial assessment in

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accordance with Section 19.7 and no well or well site
covered by the surety bond is in violation of the Act.
No permit shall be issued to a corporation incorporated
outside of Illinois until the corporation has been
authorized to do business in Illinois.
No permit shall be issued to an individual,
partnership, or other unincorporated entity that is not a
resident of Illinois until that individual, partnership,
or other unincorporated entity has irrevocably consented
to be sued in Illinois.
(3) To require the person assigning, transferring, or
selling any well for which a permit is required under this
Act to notify the Department of the change of ownership.
The notification shall be on a form prescribed by the
Department, shall be executed by the current permittee and
by the new permittee, or their authorized representatives,
and shall be filed with the Department within 30 days after
the effective date of the assignment, transfer or sale.
Within the 30 day notification period and prior to
operating the well, the new permittee shall pay the
required well transfer fee and, where applicable, file with
the Department the bond required under subsection (2) of
this Section.
(4) To require the filing with the State Geological
Survey of all geophysical logs, a well drilling report and
drill cuttings or cores, if cores are required, within 90

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days after drilling ceases; and to file a completion report
with the Department within 30 days after the date of first
production following initial drilling or any reworking, or
after the plugging of the well, if a dry hole. A copy of
each completion report submitted to the Department shall be
delivered to the State Geological Survey. The Department
and the State Geological Survey shall keep the reports
confidential, if requested in writing by the permittee, for
2 years after the date the permit is issued by the
Department. This confidentiality requirement shall not
prohibit the use of the report for research purposes,
provided the State Geological Survey does not publish
specific data or identify the well to which the completion
report pertains.
(5) To prevent "blowouts", "caving" and "seepage" in
the same sense that conditions indicated by such terms are
generally understood in the oil and gas business.
(6) To prevent fires.
(7) To ascertain and identify the ownership of all oil
and gas wells, producing leases, refineries, tanks,
plants, structures, and all storage and transportation
equipment and facilities.
(8) To regulate the use of any enhanced recovery method
in oil pools and oil fields.
(9) To regulate or prohibit the use of vacuum.
(10) To regulate the spacing of wells, the issuance of

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permits, and the establishment of drilling units.
(11) To regulate directional drilling of oil or gas
wells.
(12) To regulate the plugging of wells.
(13) To require that wells for which no logs or
unsatisfactory logs are supplied shall be completely
plugged with cement from bottom to top.
(14) To require a description in such form as is
determined by the Department of the method of well plugging
for each well, indicating the character of material used
and the positions and dimensions of each plug.
(15) To prohibit waste, as defined in this Act.
(16) To require the keeping of such records, the
furnishing of such relevant information and the
performance of such tests as the Department may deem
necessary to carry into effect the purposes of this Act.
(17) To regulate the disposal of salt or
sulphur-bearing water and any oil field waste produced in
the operation of any oil or gas well.
(18) To prescribe rules, conduct inspections and
require compliance with health and safety standards for the
protection of persons working underground in connection
with any oil and gas operations. For the purposes of this
paragraph, oil and gas operations include drilling or
excavation, production operations, plugging or filling in
and sealing, or any other work requiring the presence of

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workers in shafts or excavations beneath the surface of the
earth. Rules promulgated by the Department may include
minimum qualifications of persons performing tasks
affecting the health and safety of workers underground,
minimum standards for the operation and maintenance of
equipment, and safety procedures and precautions, and
shall conform, as nearly as practicable, to corresponding
qualifications, standards and procedures prescribed under
The Coal Mining Act.
(19) To deposit the amount of any forfeited surety bond
or other security in the Plugging and Restoration Fund, a
special fund in the State treasury which is hereby created;
to deposit into the Fund any amounts collected, reimbursed
or recovered by the Department under Sections 19.5, 19.6
and 19.7 of this Act; to accept, receive, and deposit into
the Fund any grants, gifts or other funds which may be made
available from public or private sources and all earnings
received from investment of monies in the Fund; and to make
expenditures from the Fund for the purposes of plugging,
replugging or repairing any well, and restoring the site of
any well, determined by the Department to be abandoned or
ordered by the Department to be plugged, replugged,
repaired or restored under Sections 8a, 19 or 19.1 of this
Act, including expenses in administering the Fund.
(20) To determine if oil and gas leases submitted with
an application for a permit or transfer of a permit for a

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well are operative on the basis that prior oil and gas
leases covering the same lands have terminated due to
non-development or non-production. Department
determinations under this paragraph may be based upon
affidavits of non-development or non-production from
knowledgeable individuals familiar with the history of
development and production of oil or gas as to such lands,
together with other evidence, which create a rebuttable
presumption that the prior oil and gas leases have
terminated and are of no further force and effect and that
the submitted oil and gas leases are operative and
effective. To create a rebuttable presumption, such
affidavits, together with other evidence provided to or
available from the Department, shall reasonably indicate
that there has been no development, operations, or
production of oil and gas on the lands described in the
prior leases for at least 24 consecutive months subsequent
to the expiration of the primary term or any extension of
the primary term as set forth in the leases, or the period
of time of no development or production after expiration of
the primary term as provided in the leases. A court order
or judgment declaring the prior leases terminated is not
required for determinations under this paragraph, except
in extraordinary circumstances where such determinations
cannot reasonably be concluded from the affidavits or
evidence submitted to or available from the Department.

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Upon the Department's determination of a rebuttable
presumption under this paragraph, the Department shall
provide the current permittee with notice and a 30-day
opportunity to request a hearing to rebut the presumption
before a final determination on a lease is made. Upon the
Department's determination of a rebuttable presumption
under this paragraph, if the applicant is not requesting a
transfer of any existing permit as to a well located on the
lands, but is requesting a new permit, the permit shall be
issued to the applicant. Any determination made by the
Department under this paragraph shall not diminish the
rights or obligations of any current permittee of a well
that are otherwise provided by statute or regulation of the
Department. Any request for a determination under this
paragraph shall require the payment of a nonrefundable fee
of $1000 by the applicant. All determinations on leases by
the Department under this paragraph shall be made no later
than 90 days after the Department's receipt of a valid
request for such determination.
For the purposes of this Act, the State Geological Survey
shall co-operate with the Department in making available its
scientific and technical information on the oil and gas
resources of the State, and the Department shall in turn
furnish a copy to the State Geological Survey of all drilling
permits as issued, and such other drilling and operating data
received or secured by the Department which are pertinent to

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scientific research on the State's mineral resources.
(Source: P.A. 86-205; 86-364; 86-1177; 87-744.)
Section 99. Effective date. This Act takes effect upon
becoming law.