(a)
It
shall be unlawful for any person, acting either for himself or as
an agent, employee, independent contractor or servant of any other
person, to commence to drill, to drill or to operate any well or to
assist in the drilling, completing or operating of any such well if
a lawful permit therefor has not been obtained. In addition to the
other requirements of this section, a new permit is required to reenter
any well which has been plugged and abandoned as though the plugged
and abandoned well were a new well, and it shall be unlawful for any
person, acting either for himself or as agent, employee, independent
contractor or servant of any other person, to reenter such a well
without first obtaining a permit therefor. The drilling of a relief
well under emergency circumstances arising in connection with an existing
well, to correct or safeguard against hazardous conditions, may be
commenced without first obtaining a permit. No such well drilled as
a relief well shall be completed as a producing well unless a permit
therefor shall have been issued in the same manner as is required
hereunder for the drilling of any other well and [such well] shall
be subject to all other applicable provisions of this article. Any
relief well not completed as a producing well within six months after
commencement of drilling operations, unless an extension is obtained
from the city council, shall be plugged and abandoned.
(b)
Any
permit issued for the drilling of a well shall be deemed to cover
and include all rights, flowlines, structures and equipment used in
drilling, testing and completing such well.
(1998 Code, sec. 4.505)
(a)
Filing of application; fee.
(1)
No permit shall be issued except upon application by the owner or owners of the property right to which the permit relates. No applicant shall apply for more than one permit and no permit shall cover more than one subject matter. All applications for permits shall be in the form prescribed and shall contain the information and exhibits required by this article. All applications for permits shall be signed and sworn to before a notary public by the applicant or some representative of the applicant having due and legal authority to enter into contracts binding upon the applicant. All applications for permits to drill a well shall be accompanied by a filing fee as provided for in the fee schedule in appendix A of this code.
(2)
When the city mayor finds that the application has been properly
submitted and is ready for processing, then the aforementioned filing
fees will be deposited to the city’s account. No refund is thereafter
available to the applicant except in cases where the permit is denied,
in which event $500.00 will be retained by the city as a service charge
and the balance refunded to the applicant.
(b)
Required information and submittals.
Every application
for a permit required pursuant to this article shall be in writing,
signed by the operator or some person duly authorized to sign on his
behalf, and shall be filed with the city secretary. A separate application
shall be made for each well to be drilled, redrilled, reworked, converted
or activated and shall be accompanied by the applicable processing
fee. The applicant shall include the following information:
(1)
The date, name and address of the applicant, including, without being
limited to, the names and addresses of the manager and person or operator
in charge of drilling under and by virtue of the lease.
(2)
Clear identification of the drilling unit, and the exact location
thereon of the proposed well location, on surface and at bottom hole,
together with the certified or photostated copies of all requisite
permissions, including if, and then in the manner required, permission
from the owners of the surface and improvements thereon.
(3)
The name and number of the well and the field name.
(4)
The names and addresses of all owners of working interest in the
well and the names and addresses of all owners or their representatives
of the land surface that is within 300 feet of the well, except that
the distance is reduced to 200 feet for well reentry permits.
(5)
A plat showing the proposed routes of ingress, egress and regress
to the proposed oil operations site together with volumes on such
route, and location of all oil facilities on the oil operation site
including but not limited to wells, tanks, dikes, pipelines, compressors,
separators and storage sheds.
(6)
The location of the nearest city street, public road or alley, occupied
residences and commercial structures within 300 feet of the well;
the location of all churches, hospitals, rest homes, public and parochial
schools, preschools, nurseries and places of public assembly within
300 feet of the well.
(7)
Type of derrick, if any, to be used, including the height thereof.
(8)
Copies of all permits or authorizations for the particular well granted
by other governmental agencies, or applications therefor that are
pending.
(9)
A list of the names and last known addresses of all record owners
of interests in and to oil, gas and other minerals under the property
included within the drilling unit from which the proposed well is
to be produced.
(10)
A certificate from an insurance company that the applicant has in
force insurance complying with the provisions of this article, and
a certificate of insurance complying with the provisions of this article.
(11)
A statement signed by the operator or applicant under penalty of
perjury declaring that, if an applicant, he is duly authorized to
sign on behalf of the operator and file the application and that the
information contained in the application is true and correct.
(12)
The application shall be accompanied by a cashier’s check payable to the city in an amount as provided for in the fee schedule in appendix A of this code plus an amount determined by the city mayor as is necessary to retain the services of a geologist, geophysicist and/or petroleum engineer to study the application for conformity to the highest safety standards in the drilling thereof and for inspections of the well not only during drilling but upon completion of same and installation of storage facilities.
(13)
The agreement by the applicant to pay an annual inspection fee, as provided for in the fee schedule in appendix A of this code, per well, each year such well is producing oil and/or gas, which sum shall be payable on the anniversary date of the application.
(14)
A statement by the applicant relieving the city of any liability
for damages which may result from such well or operations pertinent
to such well.
(1998 Code, sec. 4.506)
(a)
When
the application provided for in this article is filed with the city
secretary, the city secretary shall publish a notice in a newspaper
within seven days from the date of such application, addressed to
“TO ALL INTERESTED PERSONS,” which notice shall state
as follows:
|
This the _____ day of _____, 20_____, notice is hereby given
that acting under and pursuant to the terms and provisions of AN ORDINANCE
REGULATING THE DRILLING, COMPLETION AND OPERATION OF OIL AND/OR GAS
WELLS WITHIN THE LIMITS OF THE CITY OF KRUM, TEXAS, [an application
has been filed] dated the _____ day of _____,20_____, filed with the
City Secretary of the City of Krum, Texas, [and] a copy of such application
is available for public inspection in the office of the City Secretary,
Krum, Texas. A hearing upon such application before the Mayor and
the City Council will be held in the Council Chambers of the City
of Krum, Texas, on the _____ day of _____, 20_____, at _____ o’clock
_____ .M.
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(b)
This
notice shall bear the signature of the city secretary and the seal
of the city. This notice shall be also served by posting one copy
thereof on the public bulletin board at the city hall for not less
than ten days before the day of hearing therein set forth.
(1998 Code, sec. 4.507)
(a)
At
the time fixed in the notice provided for in this article, a hearing
on such application for permit shall be held in accordance with such
notice. If a majority of the members of the city council are not present
at the hearing, or at the discretion of the members of the city council
if a majority of the members thereof are present at the hearing, the
hearing may be recessed, continued or postponed from time to time
until final disposition of the application. In no event shall final
decision on the application be postponed for a longer period than
30 days from the original date of hearing fixed for such application
unless a final decision within such time be waived in writing by the
applicant.
(b)
The
city council shall have the power to refuse any application for a
permit to drill and operate any well at any particular location where
by reason of such particular location and the character and value
of the permanent improvements already erected on or approximately
adjacent to the particular location in question, and the use to which
the land and surroundings are adapted for school, college, university,
hospital, park or civic purpose, or for health or safety reasons,
or any of them, the drilling or operation of such well on the particular
location might be injurious or a disadvantage to the city or to its
inhabitants as a whole, or to a substantial number of its inhabitants
or visitors as a group; or the city council may grant a permit, as
it may deem necessary, on such reasonable conditions as to protect
all persons who, and property which, may be affected by the drilling
and production operations.
(1998 Code, sec. 4.508)
(a)
If,
after the hearing provided for in this article, an application filed
pursuant to this article is found by the city council to comply in
all respects with the terms of this article, and the drilling and
operation of a well on such drilling unit is not prohibited by the
terms of this article, then the city mayor shall issue a permit for
the drilling and operation of the well applied for. Each permit issued
under this article shall:
(1)
By reference have incorporated therein all provisions of this article
with the same force and effect as if this article were copied verbatim
in the permit;
(2)
Specify the well location with particularity as to lot number, block
number, name of addition or subdivision or the available correct legal
description;
(3)
Contain and specify that the term of such permit shall be for a period
of 180 days from the date of the permit and as long thereafter as
the permittee is engaged in continuous drilling operations, or oil
or gas is produced in commercial quantities from the well drilled
pursuant to such permit, provided that, if at any time after discovery
of oil or gas the production thereof in commercial quantities should
cease, the term shall not terminate if the permittee commences additional
reworking operations within 90 days thereafter, and if they result
in the production of oil or gas, so long thereafter as oil or gas
is produced in commercial quantities from the well;
(4)
Contain and specify such conditions as are by this article authorized
and as required by the geologists, geophysicists and/or petroleum
engineers retained by the city to review the application;
(5)
Specify the total depth to which the well may be drilled, not exceeding
the projected depth;
(6)
Obligate the permittee in accordance with the leases and contracts
held by him, and in accordance with this article, to pay to the owners
thereof their portion of the royalties and other payments on oil and
gas produced from the drilling unit.
(b)
The permit shall not be issued until the provisions of section 4.09.042(b) are complied with. The permit, in duplicate originals, shall be signed by the city mayor and prior to the delivery to the permittee shall be signed by the permittee, with one original to be retained by the city and one by the permittee, and when so signed shall constitute the permittee’s drilling and operating license and the contractual obligation of the permittee to comply with the terms of such permit and of the certificate of insurance mentioned in this article.
(1998 Code, sec. 4.509)
(a)
In
addition to the fines and penalties provided for in this article,
the city mayor may in writing suspend or revoke the permit under which
a well for oil or gas is being drilled, produced or operated, upon
proof and evidence that any provision of this article is being violated
after the issuance of the permit by the city mayor. Notice of revocation
shall be in writing and shall be mailed by registered mail to the
permittee’s address shown in his application. Any permittee
whose permit or license has been revoked or suspended may, within
15 days from and after the date of the order of revocation or suspension,
appeal to the city council from such order.
(b)
No
person shall carry on any operations performed under the terms of
any permit during any period of permit suspension or revocation, or
pending judgment of the court upon any application for writ taken
to review the decision or order of the city in suspending or revoking
such permit. However, nothing herein contained shall be construed
to prevent the performance of such operation as may be necessary in
connection with a diligent and bona fide effort to cure and remedy
the default or violation for which the suspension or revocation of
the permit was ordered, or such operation as necessary for the safety
of persons or as required by the commission.
(c)
In
addition to the hearings provided for by this article, any person
or entity whose drilling, redrilling, reworking, activating, converting
or annual renewal inspection permit is revoked, or whose well or equipment
is deemed by the city mayor to be idle, may within 30 days of the
decision of the city mayor file a written appeal to the city council
in accordance with the following procedure:
(1)
The city council shall have and exercise the power to hear and determine
appeals where it is alleged there is error or abuse of discretion
regarding the revocation of any permits issued hereunder or determination
of existence of an idle well as provided by this article.
(2)
An appeal shall be in writing and shall be filed in triplicate with
the city secretary. The grounds for appeal must be set forth specifically
and the error described by the appellant.
(3)
Within ten days from and after the filing of the appeal, the city
secretary shall transmit to the city council all papers involved in
the proceedings and copies of the appeal. In addition, the city secretary
shall make and transmit to the city council such supplementary reports
as he may deem necessary to present the facts and circumstances of
the case. Copies shall be mailed to the appellant ten days prior to
the hearing.
(4)
Upon receipt of the records, the city secretary shall place the matter
on the city council agenda for hearing and give notice by mail of
the time, place and purpose thereof to the appellant and any other
party who has requested in writing to be so notified. No other notice
need be given.
(5)
Upon the date for the hearing, the city council shall hear the appeal
unless, for cause, the city council shall on that date continue the
matter. No notice on continuance need be given if the order therefor
is announced at the time for which the hearing was set.
(1998 Code, sec. 4.510)
(a)
The
holder of any well permit issued hereunder shall obtain and maintain
in force a policy or policies of comprehensive general liability insurance,
including explosion, collapse, underground and environmental pollution
endorsements, or comprehensive well control insurance, issued by a
reliable insurance company or companies authorized to do business
in the state and having a policyholder rating of “excellent”
or better and a financial rating of “BBBB” or better according
to the ratings issued by the Best Insurance Guide. The insurance shall
provide coverage for the permittee and the city as an additional named
insured against claims for bodily injury or property damages which
might be sustained by any member of the public or by the city by reason
of any operations conducted under the well permit, with minimum limits
of $1,000,000.00 for bodily injury per person and in the aggregate,
and $1,000,000.00 property damage per occurrence. The aforesaid limits
may be obtained through any combination of specific, excess or umbrella
coverages. All of the policies shall require that the insurers provide
the city written notice of cancellation of any such policies no less
than 30 days prior to the date of cancellation.
(b)
In
the event such insurance policy or policies are canceled, the permit
granted shall terminate on such date of cancellation and the operator’s
right to operate under such permit shall cease until the operator
files additional insurance as provided herein.
(c)
In
the sole discretion of the city, a permittee may be allowed to operate,
but not drill, with the foregoing minimum insurance limits reduced
to $500,000.00 if the permittee substantially meets the following
criteria:
(1)
The permittee has no more than two producing wells under permit from
the city.
(2)
All well and tank battery locations are remote from developed areas.
(3)
All wells are operating by artificial lift or have a shut-in pressure
of 50 pounds per square inch or less.
(4)
Fences, firewall capacity and other safety features of all wells
are acceptable.
(5)
The permittee can show that the pumper/gauger can be readily available
in cases of emergency.
(d)
In
the event a reduction in the minimum liability limits is granted,
all of the other requirements pertaining to the types of insurance
coverage and policy provisions described above shall remain applicable.
(1998 Code, sec. 4.511)
In the event a permit or certificate of compliance be issued
by the city council or the oil and gas inspector under the terms of
this article for the drilling of a well, or installation of a trunkline
pipeline, water-flooding project or gas injection project, no actual
operations shall be commenced until the permittee shall file with
the city secretary a bond and a certificate of insurance as follows:
(1)
A
bond in the principal sum of such amount as has been determined by
the city council, but not to be less than $50,000.00, and the bond
shall be executed by a reliable insurance company authorized to do
business in the state as surety and the applicant as principal, running
in the city for the benefit of the city and all persons concerned,
conditioned that the permittee will comply with the terms and conditions
of this article in the drilling and operation of the well, water-flooding
project, gas injection or operation of any pipeline.
(2)
Such
bond shall become effective on or before the date filed with the city
secretary and remain in force and effect for at least a period of
six months subsequent to the expiration of the term of the permit
issued; and, in addition, the bond will be conditioned that the permittee
will promptly pay all legally imposed fines, penalties and other assessments
imposed upon the permittee by reason of his breach of any of the terms,
provisions and conditions of this article, and that the permittee
will promptly restore the streets and sidewalks and other public 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 operations, and will, after abandonment
or completion, grade, level and restore such property to the same
surface conditions, as nearly as possible, as existed when operations
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.
(3)
If
after completion of a producing well, gas injection well, water injection
well or any facility or pipeline for which a bond is required by this
article and the permittee has complied with all provisions of this
article, such as removing the derrick, clearing the premises, erection
of fences and the like, he may apply to the city council to have the
bond reduced to a sum not less than $10,000.00 on each well or facility
for the remainder of the time the well produces or facility is operated
without reworking. During major well workover or in-hole remedial
operations requiring the use of a rotary rig and/or high-pressure
injection equipment (deepening, cementing, bracing, re-perforating
and the like), the amount of the bond shall be increased to the original
amount. A trunkline pipeline installation shall not be considered
as completed until the lines have been tested and in operation for
a period of 30 days.
(1998 Code, sec. 4.512)
In addition to the insurance coverage required in section 4.09.047, a certificate of insurance shall be filed with the city, executed by the permittee as principal and by a corporate surety acceptable to the city as obligee, and conditioned that the principal named in the certificate of insurance shall faithfully comply with all of the provisions of this article and of the permit until the permit shall have been released by the principal and the release shall have been approved by the city as provided herein. For each certificate provided hereunder, documentation of the renewal or substitution of a certificate of insurance shall be received by the city mayor no less than ten days prior to expiration of the then-current certificate or letter of credit. Such certificate of insurance shall secure the city against all costs, charges and expenses incurred by it by reason of the failure of the principal to fully comply with the provisions of the permit and of this article. The certificate of insurance for any well permit shall be in an amount to be determined by the council from time to time. No permit holder shall be required to post more than a $200,000.00 certificate of insurance for any number of well permits required by this article.
(1998 Code, sec. 4.513)
(a)
Permit required.
No person shall activate or put into
production any oil well that is an idle well pursuant to this article,
or any well whose drill site has been cleaned and restored in accordance
with this article, unless an activation permit has been first obtained
pursuant to the provisions of this article.
(b)
Application for permit; fee.
An application shall be filed with the city secretary together with the required permit fee as provided for in the fee schedule in appendix A of this code. The application shall include a plot plan and such other information necessary to show that the property and the oil operation will comply with the provisions of this article and this code.
(c)
Issuance or denial of permit.
Within 30 days after such
application is filed, the city mayor shall review the application.
If city mayor finds that activation of the well as requested in the
application and the property on which the oil operation is to be located
meets all of the requirements of this article, then the city mayor
shall issue the activation permit. If the city mayor is unable to
find compliance with the applicable provisions of this article, then
he shall deny the permit and shall give notice to the applicant of
such denial.
(d)
Expiration of permit.
Any activation permit issued under
the provisions of this article shall expire by limitation and become
null and void if the oil operation authorized by such permit is not
commenced within 180 days from the date of issuance of such permit.
(e)
Test permit.
At the request of the applicant and prior
to the issuance of the activation permit, the city mayor may grant
a test permit for a period not to exceed 90 days. This test permit
is to authorize the applicant to operate the well on a test basis.
The test permit shall not be issued unless the drill site and oil
operation is in compliance with all of the provisions of this article
and other applicable provisions of this Code of Ordinances, except
that equipment, materials and operations necessary for the conducting
of the test shall be permitted.
(f)
Cease and desist order.
If at any time any operator
is in violation of any of the provisions of this article, the city
mayor may order compliance and set a reasonable period of time for
the same. If compliance is not obtained within the time period specified,
the city mayor shall order, in writing, the operator to cease and
desist operation of the well immediately. The operator shall immediately
comply with the order of the city mayor to cease and desist and shall
not resume any operation at the site affected unless and until the
written approval of the city mayor is obtained.
(g)
Nonproducing wells.
Whenever any oil well fails to produce
at the quarterly rate of 20 barrels of crude oil or other hydrocarbon
substances or at a quarterly rate of 100,000 cubic feet of gas for
sale, lease or storage for two successive calendar quarters, such
well shall be classified as idle.
(1998 Code, sec. 4.514)
Regardless of any time period suggested or prescribed in this
article, no inaction or failure to act by the city council shall constitute
its action or approval by default.
(1998 Code, sec. 4.515)
Any permit issued hereunder shall be issued over the signature
of the city mayor or assistant city mayor. The permit shall be in
duplicate, with one counterpart to be delivered to the permittee after
the permittee has executed an acceptance, and the other counterpart
to be retained by the city mayor.
(1998 Code, sec. 4.516)
Any permit except seismic survey permits and test permits shall be termed and referred to as a permanent permit. The term of a permanent permit shall be for a period of days within which to commence work thereunder, and shall continue in force as long thereafter as the use of the facility for which the permit is granted shall not be completely removed or, in the case of a permit to drill a well in search of oil and/or gas, until such time as the well is plugged and abandoned in compliance with the requirements of sections 4.09.094 through 4.09.101 and a release of the permit is issued by the city mayor. Upon written application, the city mayor may grant one extension of time for cause not to exceed 90 days, when drilling will not commence within 180 days from the date a permit is issued.
(1998 Code, sec. 4.517)
Any permit issued hereunder may be transferred, provided that
the transferee meets all of the requirements of this article, including
the posting of the insurance and certificate of insurance required
herein. A notice of transfer shall be filed with the city mayor, and
he/she shall notify the transferor and the transferee whether or not
the transferee meets the requirements of this article. The transferor
shall nevertheless be liable for all obligations under the permit
accruing prior to the effective date of the transfer.
(1998 Code, sec. 4.518)
The issuance of a permit and its acceptance by the permittee
shall ipso facto bond and obligate the permittee and his or its executors,
administrators, successors and assigns for so long as any drilling,
producing, processing, transporting, handling, treating or other operations
are being conducted on or with reference to the permitted well or
other facility as follows:
(1)
To
maintain in force and effect a policy or policies of liability and
property damage insurance with the minimum coverages specified in
this article and to furnish annually to the city mayor current certificates
of insurance and endorsements corresponding to those required herein.
(2)
To
indemnify and save harmless the city, its employees, agents or assigns
and to promptly pay on behalf of same all claims, judgments, awards,
penalties, fees, costs or expenses including cost of defense for any
or all claims of whatever nature arising out of or in connection with
the issuance of or work being performed under this permit. Claims
include but are not limited to those alleged to have arisen out of
personal or bodily injury, property damage, deprivation, inverse condemnation,
death or environmental impairment as well as failing in any way to
comply with the provisions of this article.
(3)
To
fully comply with all of the terms and requirements of the permit
and of this article and all other applicable ordinances of the city,
as any of the same may be amended from time to time, and to fully
comply with all applicable requirements of federal and state laws
and of all federal and state regulatory bodies having jurisdiction.
(4)
To
conduct all operations relative to the purpose for which the permit
is obtained with adequate rigs, tools, machinery and equipment, employing
recognized procedures in a prudent manner so as to provide maximum
protection and safeguard against possible injury to persons or damage
to property, public or private.
(5)
To
prevent blowout, cratering, fire, explosions, surface property damage,
pollution or contamination of the waters of the city.
(1998 Code, sec. 4.519)
(a)
The holder of an unexpired and unused drilling permit may, with payment of a service charge as provided for in the fee schedule in appendix A of this code, apply for an amended drilling permit for the purpose of changing the surface location.
(b)
Any
holder of a permit may, upon application and without charge, obtain
an amended permit from the city mayor for the purpose of changing
bottom hole location, depth or direction of hole from the same surface
location. When the permittee desires to form a production unit as
provided for in this section, an amended permit may be secured from
the city mayor without any fee, upon application and submittal of
the requirements contained in this section.
(1998 Code, sec. 4.520)
