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HomeMy WebLinkAboutOrd 089-2006 Regulating Petroleum Drilling & Production in City.pdfORDINANCE NO. 89-2003 PETROLEUM DRILLING AND PRODUCTION AN ORDINANCE OF THE ClTY OF ANNA, TEXAS, REGULATING PETROLEUM DRILLING AND PRODUCTION; DEFINING TERMS; ESTABLISHING LIABILITY OF THE CITY; REQUIRING ClTY AND STATE PERMIT; MAKING VIOLATIONS OF FEDERAL AND/OR STATE LAWS AND REGULATIONS ALSO VIOLATIONS OF THIS ORDINANCE; REQUIRING SANITARY MAINTENANCE OF WELL SITES; REQUIRING WATCHMAN; REGULATING DRILLING WITHIN FIRE ZONES; REGULATING REWORKING OF WELLS; REGULATING LOCATION OF WELLS; RESTRICTING DRILLING UNITS TO ONLY ONE WELL; REGULATION ABANDONMENT AND PLUGGING OF WELLS; REGULATING SETTING OF CASING; REGULATING CHRISTMAS TREE AND WELLHEAD CONNECTIONS; REGULATING DERRICKS AND RIGS; REGULATING DISPOSAL OF SALT WATER; REGULATING DRILLING FLUIDS; REGULATING TAKlNGlCOMPLETlNG OF DRILL STEM TESTS; REQUIRING FENCES AND FIREWALLS; REQUIRING MUFFLERS; REGULATING SLUSH PITS; REQUIRING NO SMOKING SIGNS; REGULATING LOCATION OF STORAGE TANKS AND PIPELINES; REGULATING TYPE OF TUBING; REQUIRING VALVES AND BLOWOUT PREVENTERS; PROHIBITING VENTING AND/OR FLARING OF GAS; REQUIRING A DRILLING PERMIT; ESTABLISHING A DRILLING PERMIT FEE; PROVIDING FOR REFUSAL OF PERMIT APPLICATION; ESTABLISHING CONTENT OF PERMIT; ESTABLISHING CONDITIONS FOR REFUSAL OF OR WITHDRAWAL FROM PERMIT; REQUIRING THAT PERMITTEE BE LEASEHOLDER; PROHIBITING TRANSFER OF PERMIT; PROVIDING FOR PERMIT TERMINATION; REQUIRING FINANCIAL GUARANTEES; ESTABLISHING A PENALTY FOR VIOLATION; PROVIDING A REPEAL CLAUSE; PROVIDING A SEVERABILITY CLAUSE; AND ESTABLISHING AND EFFECTIVE DATE. Section 1. Purpose These regulations are established for the purpose of promoting and protecting the public health, safety, and general welfare of the community and in the furtherance of conserving the value of property and establishing a community desirable to reside therein. Section 2. Definitions As pertaining to this ordinance the following words shall have the meanings hereby ascribed to them: Generally, all technical or oil and gas industry words or phrases used herein and not specifically defined herein shall have that meaning customarily attributed to them by the oil and gas industry. Drillinq unit: means one contiguous body or block of land composed of one or more tracts complying with the spacing regulations promulgated by the State Railroad Commission or its successor. Fire zone: means any area within the corporate limits of the city designated as a fire zone by any provision of this ordinance or in any ordinance duly passed and approved by the City Council. Permittee: means the person to whom the city issues a permit to drill and operate a well under the provisions of this ordinance, or its administrators, executors, heirs, successors, and assigns. Well: means any hole or holes, bore or bores, which is, or are, drilled, bored, dug, sunk, or put down to any depth, strata, sand, or formation for the purpose of exploring for or ascertaining the existence of any oil, gas, or liquid hydrocarbon, or for the purpose of producing and recovering any oil, gas, or liquid hydrocarbon. General Regulations Section 3. Liability Of City Under This Ordinance Neither the city nor any authorized agent acting under the terms of this ordinance shall be liable or have any liability by reason of orders issued, or not issued, or work done, or not done, in compliance with the terms of this ordinance. Section 4. State Certification And City Permit Required Every person, firm, corporation, association, or other legal entity desiring to drill andlor operate any gas or oil well of any kind in the city limits must obtain the proper permit from the City Secretary before proceeding. To obtain said permit the person, firm, corporation, association, or other legal entity shall submit to the City Secretary proof of valid State Certification and compliance with the rules and regulations as promulgated by the State Railroad Commission, or its successor. In addition, a permit fee of five thousand dollars ($5,000.00) shall be required before any such permit may be issued. Section 5. Violation Of State AndlOr Federal Laws, Rules, And Regulations Any violation of the state laws or any rules, regulations, or requirement of any state or federal regulatory body having jurisdiction in reference to drilling, completing, equipping, operating, producing, maintaining, or abandoning an oil or gas well, or related appurtenances, equipment or facilities, fire protection, blow- out protection, safety protection, or convenience of persons or property, shall also be a violation of this ordinance and shall be punishable in accordance with the provisions hereof. Section 6. Sanitary Maintenance Of Wells The premises of each well shall be kept clean and sanitary, free from rubbish of every character, to the satisfaction of the City Health Officer at all times drilling operations or reworking operations are being conducted and as long thereafter as oil or gas is being produced from the well. Section 7. When Watchman Required At all times from the start of erection of a derrick, a mast, or a gin pole until the well is completed as a producer and enclosed with a fence or until the well is abandoned and plugged, the permittee shall keep a watchman on duty on the premises. Section 8. Drilling Within Fire Zones The drilling of a well within the fire zone of the city will be permitted only under the following conditions and restrictions: (1) By first securing the written approval of the City Council; (2) By complying with all of the terms and provisions of this ordinance; (3) No butane or propane gas shall be used in any such drilling or producing operation; and (4) No tank batteries shall be located or situated within the fire zone. General Regulations Section 9. Reworking The Well Any operator desiring to rework a well shall give the City Council written notice of this intent prior to the commencement of reworking operations; provided, however, in the event of an emergency an operator may proceed with such reworking without notice. Section 10. Well Location- Generally No well shall be drilled and no permit shall be issued for any well to be drilled at any location which is nearer than five hundred feet (500') to any residence, building or structure without the applicant for a permit having first secured the written permission of the owner or owners thereof. Section 11. Well Location- Streets, Alleys, And Public Ways It shall be unlawful to drill any well and no permit shall be issued for any well to be drilled at any location which is within fifty feet (50') of the boundary line of any of the streets, alleys, public ways, and water wells of the city. No street, alley or public way shall be blocked, encumbered or closed in any drilling or production operation, except on a temporary basis and then only by special permit issued by the City Council. Every oil and gas well drilled within fifteen hundred feet (1500') of the site of any existing or designated future municipal water well of the city shall have casing set and cemented down to the first impervious stratum below the Trinity sand formation; and similar casing shall be set and cemented on wells located at greater distances from such water wells when requested by the City Council. Such requirements may be waived by the City Council for good cause shown after due hearing; but, if not waived by the City Council, may be enforced by injunction, or any other available remedy. No drilling permit shall ever be issued to any person for the drilling or operation of any well, when such person is in default hereunder; and any such permit inadvertently issued shall be deemed wholly void from the beginning. It shall be unlawful to drill any well and no permit shall be issued for anv well to be drilled at any location that is within or within fifty feet (50') of the boundary line of a public park or a park owned and maintained by a homeowner's association. Section 12. Drilling Unit To Have Only One Well No permit shall authorize the drilling, completion, and operation of more than one (1) well to each reservoir on each drilling unit, as provided by the State Railroad Commission, or its successor, on such unit, and it shall be unlawful to drill on each reservoir more than one (1) well on each unit; provided, however, that in the event a well is lost or abandoned as a dry hole, the permittee may relocate the well on the drilling unit involved and drill and complete such relocated well under the permit for the first well by filing a plat and certificate showing the abandonment of the first well and the location of the second well. Section 13 Abandonment And Plugging Whenever any well is abandoned, it shall be the obligation of the permittee and the operator of the well to set a cement plug in the casing from the base of the Wilcox formation to the specifications as set forth by the State Railroad Commission, or its successor. Section 14. Casing - Generally General Regulations The productive string shall have a mill test of eighteen hundred (1,800) pounds for wells six thousand feet (6,000') or less in depth. The surface casing shall be new pipe and shall have a mill test of eleven hundred (1,100) pounds. Section 15. Casing - Setting And Cementing No well shall be drilled within the city without properly setting the surface casing. No well shall be drilled within the city without cementing the surface casing by the pump and plug method with sufficient cement to completely fill all the annular space behind such casing to the surface of the ground, and without cementing the production string by the pump and plug method with sufficient cement to completely fill the annular space behind the production string to the surface of the ground. The production string shall be centralized from one thousand feet (1,000') to the surface with the use of five (5) centralizers to be placed at depths of one hundred (100') feet, three hundred (300') feet, five hundred (500'), seven hundred (700') and nine hundred fifty feet (950'). Sufficient cement shall be used so as to insure the circulation of cement from the bottom of the oil string to the surface. Section 16. Christmas Tree And Well Head Connections The christmas tree and all well head connections on each well head shall be as follows: On all wells completed at a depth above four thousand feet (4,000t), the christmas tree and well head connections shall be at least a minimum working pressure of one thousand (1,000) pounds per square inch (psi) at a minimum test pressure of at least four thousand (4,000) psi; and on all wells completed to a depth of from four thousand one (4,001') to seven thousand feet (7,000'), the christmas tree and well connections shall have at least a minimum working pressure of three thousand (3,000) psi and a minimum test pressure of at least six thousand (6,000) psi; and on all well head connections there shall be at least a minimum working pressure of five thousand (5,000) psi and a minimum test pressure of at least ten thousand (10,000) psi. In the event the surface shut-in pressure of any well exceeds two-thousand (2,000) psi, the flow string of the christmas tree shall be equipped with an automatic closing safety valve in addition to the regular control valves. Section 17. Derrick And Rig It shall be unlawful for any person to use or operate any wooden derrick(s) or any steam-powered rig in connection with the drilling or reworking of any well, or to permit any derrick or derricks to remain on the premises or drilling site for a period longer than thirty (30) days after completion of abandonment of the well. Section 18. Disposal Of Salt Water Permittee shall make adequate provisions for the disposal of all salt water or other impurities which may be brought to the surface from the depth of the well. No salt water pits, vats, or other open storage of salt water shall be permitted within the city. All movement of salt water from within or without the city shall be by enclosed lines with no leakage. Section 19. Drilling Fluid All operators shall be required to drill all wells with mud through the process commonly referred to as muddrilling. Drilling with air and/or gas shall be prohibited. General Regulations Section 20. Drill Stem Tests It shall be unlawful for any person to take or to complete any drill stem test or tests except during daylight hours and then only if the well effluent during the test is produced through an adequate oil and gas separator to storage tanks, and effluent remaining in the drill pipe at the time the tool is closed is flushed to the surface by circulating drilling fluid down the annulus and up the pipe. Section 21. Fence And Firewall Any person who completes a well as a producer shall have the obligation to enclose said well, tank battery and any other surface facilities by a substantially smooth net wire fence sufficiently high and properly built so as to ordinarily keep persons and animals out of the enclosure. All gates thereto shall be kept locked when the permittee or employees are not within the enclosure. Tank batteries shall be enclosed by earthen firewalls arranged so that the capacity of the enclosure will be sufficient to contain the full volume of oil in the tanks. Section 22. Injection Wells No water, gas, air or chemicals shall be injected into any oil well for the purpose of forcing oil out of the producing formation or for any other purpose. In applying for such approval, the permittee shall include in the application a detailed statement of the method to be used in injecting said water, gas, air or chemicals. Section 23. Mufflers (a) All engines used in the drilling of any well, derrick or rig shall be equipped with mufflers and approved by the City Council. (b) Motive power for all operations after completion of drilling operations shall be electric or properly muffled gas or gasoline engines. Such mufflers shall be approved by the City Engineer. All pumping wells shall be equipped with electric motors. Section 24. Pits All slush pits or other means of storing mud or water for use in drilling or reworking operations shall be constructed, dug or placed at the location and in the manner specified by the State Railroad Commission, or its successor. Section 25. Signs Printed signs reading, "Dangerous, No Smoking Allowed", shall be posted in conspicuous places on each producing unit. Section 26. Storage Tanks And Pipelines All crude oil storage tanks shall be located at the place designated by and in the manner recommended by the State Railroad Commission, or its successor. No oil, gas, salt water or other pipelines shall be installed in the streets, alleys, public ways or on property owned by the city without prior consent of the City Council. Use of such streets, alleys, public ways or municipality owned property for such purpose General Regulations shall be subject to the terms and conditions imposed by the City Council. The depth and location at which such lines shall be laid shall be specified by the City Council or its duly designated representative. Section 27. Tubing All tubing used in any well drilled to a depth of six thousand feet (6,000') or less shall be J-55 mill tested to three thousand (3,000) psi. Section 28. Valves And Blow-out Preventers Valves and blow-out preventers shall be installed when deemed necessary. Section 29. Venting, Flaring Of Gas No person engaged in drilling or operating any well shall permit gas to escape or be vented into the air within the city. Flaring of gas within the city is prohibited. Section 30. Permit Required It shall be unlawful for any person acting either for himself or herself, or acting as the agent, servant, employee or independent contractor of any other person to commence to drill or to operate any well within the city or to work upon or assist in any way in the prosecution or operation of any such well without a permit for the drilling and operation of such well having first been issued by authority of the City Council. Section 31. Permit Application (1) Every application for a permit to drill and operate a well shall be in writing and signed by the applicant or by some person duly authorized to sign the same on his or her behalf; which such application shall be filed with the City Secretary. No application shall request a permit to drill and operate more than one (I) well. (2) The application shall contain full information, including the following: (1 ) Date of application; (2) Name and address of applicant; (3) Proposed site of the well, accompanied by a plat of the drilling unit showing the descriptions of the lots, blocks or tracts owned or controlled by the applicant. Such plats shall be prepared by a registered public surveyor of the state; (4) Name(s) of the fee owner(s); (5) Names(s) of the lease owner(s) and a copy of the lease agreement; (6) A brief description of the land; (7) Type of derrick to be used; (8) Whether the well shall be drilled as an oil or gas well; General Regulations (9) Proposed depth of well; and (10) Motive power of the rig that is to be used. (c) The application must contain proof of a valid certification from the State Railroad Commission, or its successor. Section 32. Permit Fee Every application for a permit to drill and operate a well shall be accompanied by a filing fee of five thousand dollars ($5,000.00) in cash. Section 33. Refusal Of Permit Application The City Council shall have the authority to refuse any application for a permit when by reason of the location of the proposed well and the character and value of the permanent improvement already erected on the drilling unit in question or adjacent thereto, or the use to which the land and surroundings are adapted for public or civic purposes, or for sanitary reasons, the drilling of an oil or gas well would be injurious or a disadvantage to the health, safety, morals or welfare of the city or its inhabitants. Section 34, Permit Issuance (a) Within thirty (30) days after the filing of the application for a permit to drill and operate a well, the City Council shall determine whether the application complies with the provisions of this ordinance and, if it does, shall fix the amount of the principal of the bond required by this ordinance. After such determination, the City Council shall issue a permit for the drilling and operation of the well described in said permit. (b) Each permit issued under this ordinance shall: (1) Have incorporated therein by reference all the provisions of this ordinance with the same force and effect as if this ordinance were copied verbatim in said permit; (2) Specify the location of the well with particularity as to lot number, block number, name of addition or subdivision or other available correct legal description; (3) Specify that the terms of such permit shall be for a period of six (6) months from the date of the permit and for as long thereafter as the permittee is engaged in contiguous drilling reworking operations, or oil and gas is produced from the well in commercial quantities. Provided, however, if at any time after discovery of oil or gas the production thereof in commercial quantities shall cease, the term of the permit shall not terminate if the permittee commences additional reworking operations within six (6) months thereafter, and if such reworking operations result in the production of oil or gas from said well in commercial quantities; (4) Specify such conditions as are by this ordinance authorized; (5) Specify the total depth to which the well may be drilled; and (6) Specify that no actual drilling operations shall be commenced until the permittees shall file and have approved an indemnity bond in the designated principle amount as determined by the City Council and conditions as specified in § 116.41. General Regulations Section 35. Constitute Contractual Obligations Each permit shall be prepared in duplicate originals and shall be signed by the City Secretary and by the permittee prior to the delivery of such permit to the permittee. One (1) original shall be retained by the city and the other delivered to the permittee. When such permit is signed by both parties, it shall constitute the permittee's drilling and operating license. Section 36. Refusal Of Or Withdrawal From Permit; Partial Refund Of Fee If the permit for the well shall be refused by the applicant and notifies the City Council in writing that helshe does not elect to accept the permit as tendered and wishes to withdraw the application, or if the bond of the applicant is not approved, or if the applicant notifies the City Council in writing that he or she wishes to withdraw the application, then upon the happening of any said events the cash deposit together with the application shall be returned to the applicant, except that there shall be retained therefrom by the city one hundred dollars ($100.00) as a processing fee. Section 37. Permittee Must Be Leaseholder A permit to drill and operate a well shall be issued only to the holder of a valid oil, gas and mining lease. Section 38. Permit Nontransferable Any permit for the purpose of drilling and operating a well granted by the city shall not be transferable. Section 39. Permit Termination When a permit to drill and operate a well is issued, the same shall terminate and become inoperative without action on the part of the city unless within six (6) months from the date of the issuance of such permit actual drilling of the well designated therein shall have commenced. The cessation for a like period of the drilling or reworking operations, or the cessation of the production of oil or gas from the well after production shall have commenced, shall operate to terminate and cancel the permit, and the well shall be considered as abandoned for all purposes under this ordinance. It shall be unlawful to continue the operation or drilling of such well without the issuance of another permit. Section 40. Financial Guarantees - Required In the event a permit is issued by the City Council for the drilling and operation of a well, no actual drilling operations shall be commenced until the permittee shall file with the City Secretary a bond and a Certificate of Insurance. Section 41. Financial Guarantees - Bond (a) A bond shall be required in the principal sum of such number of dollars as has been determined by the City Council but not less than twenty-five thousand dollars ($25,000.00) nor more than one million dollars ($1.000,000.00). Said bond shall be executed by a reliable surety company authorized to do business in the state, as surety and by the permittee, as principal, running to the city for the benefit of the city and all persons concerned, conditioned that the permittee will comply with the terms and provisions of this ordinance in the drilling and operation of the well. Said bond shall become effective on or before the date the same is filed with the City Secretary and shall remain in full force and effect for at least six (6) months subsequent to the expiration of the term of the permit issued, and in addition the bond shall be General Regulations conditioned that the permittee will promptly pay off all fines, penalties and other assessments imposed upon permittee by reason of breach of any of the terms, provisions or conditions of this ordinance, and that the permittee will promptly restore the streets, alleys, sidewalks and other public ways and property of the city which may be disturbed or damaged in the operations to their former condition, and that the permittee will promptly clear all premises of all litter, trash, waste and other substances used, allowed or occurring in the drilling or producing operations and will, after abandonment, grade, level and restore said property to the same surface condition, as nearly as possible, as existed when operations for the drilling of the well were first commenced; and that the permittee will indemnify and hold the city harmless from any and all liability growing out of or attributable to the granting of such permit. If at any time the City Council shall deem any permittee's bond to be insufficient for any reason, it may require the permittee to file a new bond. (b) If, after completion of a well, the permittee has complied with all of the provisions of this ordinance such as removing derrick, cleaning premises, et cetera, he may apply to the City Council to have said bond reduced to a sum of not less than ten thousand dollars ($10,000.00) for the remainder of the time said well produces without reworking. During reworking operations, the amount of the bond shall be increased to the original amount. Section 42. Financial Guarantees - Insurance (a) The permittee shall carry a policy or policies of standard comprehensive public liability insurance, including contractual liability covering bodily injuries and property damage, naming the permittee and the city, with an insurance company authorized to do business in the State of Texas, said policy or policies in the aggregate shall provide for an umbrella coverage of at least five million dollars ($5,000,000.00), plus a minimum of one million dollars ($1,000,000.00) coverage for each accident. (b) The permittee shall file with the City Secretary certificates of said insurance and shall obtain the written approval thereof by the City Council, who shall act thereon within ten (10) days from the date of such filing. Said insurance policy or policies shall not be cancelled without written notice to the City Secretary at least ten (10) days prior to the effective date of such cancellation. In the event said insurance policy or policies are cancelled, the permit granted shall terminate and permittee's rights to operate under said permit shall cease until permittee files additional insurance as provided herein. (c) If, after completion of a well, permittee has complied with all the provisions of this ordinance, such as removing derrick, clearing premises, et cetera, he or she may apply to the City Council to have said insurance policy or policies reduced as follows: (1) Bodily injury - five hundred thousand dollars ($500.000.00) one person; one million dollars ($1,000,000.00) one accident; (2) Property damage - one million dollars ($1,000,000.00). For the remainder of the time said well produces without reworking operations. During reworking operations, the amount of the insurance policy or policies shall be increased to the original amounts. Section 43. Penalty Any person who violates any provisions of this ordinance shall, upon conviction, be subjected to a fine of not more than two thousand dollars ($2,000.00) for each offense. Each day that such violation is permitted to continue shall constitute a separate offense. The term "person" as used in this ordinance shall include the owner, occupant, mortgagee or vendor in possession, assignee or rentor, receiver, executor, trustee, or lessee, agent or any other person, firm or corporation directly, or indirectly, in control of a building or tract of land. General Regulations Section 44. Repeal Clause All parts of any ordinance in conflict with the provisions of this ordinance are to the extent of such conflict hereby repealed. Section 45 Severabilitv Clause If any provision of this ordinance shall be held to be invalid or unconstitutional, the remainder of such ordinance shall continue in full force and effect the same as if such invalid or unconstitutional provision had never been a part hereof. Section 46 Effective Date This ordinance shall be effective upon the posting andlor publication of its caption as required by law and the City Secretary is hereby directed to implement such posting andlor publication. PASSED by the City Council of the City of Anna, Texas, this 12th day of August, 2003. APPROVED: ATTESTED: