For the purpose of this article, the following definitions shall apply unless the context clearly indicates or requires a different meaning:
Person, persons, permittee, operator or purchaser.
Any natural person, corporation, association, partnership, receiver, trustee, guardian, executor, or administrator, and a fiduciary or representative of any kind.
(2002 Code, sec. 112.01)
Any violation of any of the terms of this article, whether herein designated as unlawful or not, shall be deemed a misdemeanor. Any person convicted of any violation shall be fined as provided in section 1.01.009 of this code. Each day of the violation shall be considered a separate offense.
(2002 Code, sec. 112.99)
(a) 
It shall be unlawful for any person to drill for, mine or in any manner engage in operations for the purpose of extracting oil, gas or other petroleum products from the soil within the territorial limits of the city, except in accordance with the expressly designated provisions of this article.
(b) 
(1) 
The drilling, completion and operation of only one completed well for oil or gas may be authorized by permit of the city council, or their duly appointed representative for this purpose, as herein provided, on each drilling block shown and designated on the map attached hereto, the map being the representation of the territory within the entire city.
(2) 
It shall be unlawful to commence or complete more than one well on each block. In the event a well is lost or abandoned as a dry hole, the permittee may relocate the well on the drilling block involved and drill and complete the 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.
(c) 
It shall be unlawful to drill any well for oil or gas within any of the streets or alleys of the city or to block or encumber or close up any street or alley in any drilling or producing operations, except by special permit by order of the city council, and then only temporarily.
(d) 
(1) 
In the event an application for a permit for the drilling, completion and operation of a well for oil or gas shall be made by any person not owning or not holding oil and gas leases or drilling contracts from the owners of all lots, blocks or parcels of land included in or embraced within a drilling block as shown upon the map hereto attached, a permit shall be issued to the applicant, his or her heirs, successors and assigns only upon the following conditions, in addition to other conditions as may be provided in other sections of this article.
(2) 
The applicant shall be free to enter into leases, contracts and agreements with the owners of other lots, blocks or tracts as he or she may be able to make. If agreements are not reached with all owners of lots, tracts and blocks within the drilling block, then the owner or owners of any unleased lot or lots, block or blocks, tract or tracts shall have the right or option, by notice to the permittee given in writing within ten days after the issuance of a permit for a well on the drilling block involved, either:
(A) 
To treat his or her interest as a working interest and contribute his or her share of all costs and expenses allocated to the well in accordance with accepted accounting practice currently each month in the proportion that the number of square feet in area owned by him or her in the drilling block bears to the number of square feet embraced in the block, and thereupon receive the same proportion of the oil and gas produced and saved from the well in said block or its value at the well at his or her option and a like proportion of natural gas produced, saved and utilized or sold, or the value of same at the well, at his or her option; or
(B) 
To treat his or her interest as a royalty interest and receive, delivered free of cost in the pipeline to which the well may be connected, a share of all oil produced and saved from and equal to one-eighth of the proportion of the whole quantity of oil so produced and saved that the number of square feet in the tract owned by him or her bears to the number of square feet in the drilling block, or at his or her election to receive the proportion of the value at the well of the oil so produced, and to receive a like proportion of the gas and casing head gas produced, saved and utilized or sold, or at his or her election to receive the value at the well of the proportion of gas or casing head gas produced, saved and utilized or sold.
(3) 
If any owner does not exercise the right and option above provided and give notice to the permittee within the period above provided, the obligation shall then be upon the permittee, his or her heirs, successors and assigns to make settlement with the owner on the terms provided herein, providing for the payment of a proportionate one-eighth royalty. If the owner of a lot or lots, block or blocks, tract or tracts shall exercise subsection (d)(2)(A) above and treat his or her interest as a part of the working interest, the permittee shall be entitled to reimburse himself or herself for the owner’s proportionate part of the working interest’s costs and expenses incurred in or allocated to the operation and maintenance of the well from the owner’s share of the oil, gas and casing head gas, or the value thereof, before making deliveries of products or settlement for the value thereof.
(4) 
If subsection (d)(2)(A) above is exercised by the owner of any lot or lots, block or blocks, tract or tracts, the owner shall, within the time provided for notice of his or her election above set forth, file with the city secretary a bond of sufficient value to cover his or her proportionate part of development costs, based on a cost rate of $10 for each foot of total drilling depth, the bond to be executed by the owner as principal and by an authorized surety company as surety, in which the principal and surety agree, bind and obligate themselves to pay promptly to the permittee, his or her heirs, successors or assigns, his or her part of all costs and expenses incurred in or allocated to the drilling, testing and completing of the well in the proportion that the number of square feet embraced within the lot or lots, block or blocks, tract or tracts of the owner bears to the total number of square feet in the drilling block, the bond to be approved by the mayor and held by the city secretary for the benefit of the beneficiaries therein.
(5) 
Failure to post a bond within the time provided shall be deemed an election by the owner to exercise subsection (d)(2)(B) above, and to participate as a part of the royalty interest in the well.
(e) 
(1) 
No application shall be accepted by the city secretary or acted on by the city council except on the verified representation of the applicant that he or she holds within the drilling block involved, by lease for oil and gas or other contract authorizing the drilling and operation for oil and gas, more than one-half of the acreage within the drilling block that is then under lease for oil and gas or covered by contract of similar provisions.
(2) 
No application shall be accepted or acted upon until more than one-half of the total acreage within any given drilling block is under lease for oil and gas or covered by equivalent contracts or owned by the applicant in fee.
(2002 Code, sec. 112.02)
(a) 
(1) 
Every application for a permit to drill, complete and operate a well for oil or gas shall be in writing, signed by the applicant or by some person duly authorized to sign same on his or her behalf. The application shall be properly sworn to and be in the form as set out. It shall be filed in duplicate with the city secretary at least two weeks prior to the date on which the applicant shall commence drilling and shall be accompanied with a deposit of $500 cash as a fee to the city. The application shall state the drilling block and the particular lot and location in the block where the proposed well is to be located, provided that no well shall be located nearer than 160 feet to the boundary lines of the drilling block, and shall have attached to it certified or photostatic copies of the deed, oil and gas lease or drilling contract with the owners of land covering the lots, blocks or tracts in the drilling block over which the applicant has control for oil and gas purposes or other evidence of title satisfactory to the city council to the end that the application will show what proportion and what parts of the drilling block the applicant owns in fee or holds under lease or drilling contract from the owners.
(2) 
The application shall also be accompanied by a plat or map of the drilling block showing the designation of the lots, blocks or tracts owned or controlled by the applicant and showing the exact location of the proposed wells together with designation of the leasehold interests outstanding and held by others than the applicant and of record in the county oil and gas lease records.
(b) 
(1) 
The application shall also be accompanied by a duly executed bond given by the applicant as principal and a surety company authorized to do business in the state as surety. The bond shall run to the city, for the benefit of the city and all persons concerned, conditioned that, if the permit be granted and if drilling operations be commenced thereunder, the permittee will comply with the terms and conditions of this article in the drilling and operation of the well. The permittee will restore the streets and sidewalks and other places of the city which may be disturbed in the operations to their former condition. The permittee will clear the block and lots of all litter, machinery, derricks and buildings erected or used in the drilling or operation of the well whenever the well shall be abandoned or the operation thereof discontinued. The permittee will pay any and all damages resulting from liability as a result of injury or damages to any person or property in the city caused by or originating from the operations connected with such well, and all taxes due the city shall be paid. The bond shall be in the amount of $100,000 and shall be maintained in that amount during the drilling and completing of a well and 30 days thereafter. At that time the amount of the bond shall be automatically reduced to $10,000.
(2) 
It is specifically provided that, in lieu of the surety bond required to be given hereunder, the applicant may file with the city secretary his or her personal undertaking, which shall be in the same amount and shall contain the same conditions as hereinbefore provided with respect to the surety bond and which undertaking shall be secured by United States government securities or securities of the state or of counties or municipalities in the state, being satisfactory and at all times remaining satisfactory to the city council, and having a value equal to the amount of the surety bond in lieu of which the undertaking is given, which securities shall be deposited in escrow in some depository designated by the city council, along with and attached to a copy of the written undertaking for which they are to be held by the depository as security.
(c) 
It is provided also that, once a person has posted and maintains this bond in the amount of $100,000, it shall be sufficient to cover all subsequent drilling and completing operations conducted under the terms of this article. In all subsequent applications for a permit to drill filed by the person, he or she shall present therewith a certificate that a bond in the full amount of $100,000 is presently maintained in effect in the name of the applicant, and that it will be continued for a period as required by this article.
(d) 
During the period the bond is required to be held, it shall be reimbursed for the amount of any and all claims paid out under the terms of this article, under penalty that if, for any reason, the bond is not so retained in full, the city council shall have the power to order shut down all operations of the permittee until the bond is reinstated in the proper amount as required by this article.
(2002 Code, sec. 112.03)
(a) 
The application shall be accompanied by the following:
(1) 
A copy of a policy of public liability insurance in the sum of not less than $250,000, showing the city as an additional insured, with the city to be notified prior to cancellation. Cancellation of the policy shall constitute grounds for immediate cancellation of the permit after a hearing before the city council;
(2) 
A duly executed bond showing the applicant as principal and issued by a surety company authorized to do business in the state. The bond shall indemnify the city and be conditioned as follows:
(A) 
The permittee will comply with the provisions of this article;
(B) 
The permittee will restore any damage to streets and sidewalks attributable to the permittee’s drilling operations; and
(C) 
The permittee will clear the drilling site of all litter, debris, drilling machinery, derricks and buildings used in the drilling operations.
(b) 
The bond shall be in the sum of $100,000. After completion of drilling, and the clearance of the drilling site, the permittee may request a reduction in the value of the bond. In lieu of the surety bond, the permittee may pledge a certificate of deposit in the amount of not less than $100,000 or may file his or her personal undertaking, in the same amount and on the same conditions. The personal undertaking shall be secured by United States government securities deposited in escrow with the city.
(c) 
Once a permittee has posted a bond, it shall cover all subsequent applications if the application contains verification that the bond remains in effect and extends to the new site.
(d) 
During the period of the bond, it shall be reimbursed for the full amount of all claims paid. Should it remain in default more than 60 days, the permittee shall discontinue all operations until fully reinstated.
(e) 
(1) 
Upon receipt of the application, a copy of the policy of liability insurance, and the bond or certificates of deposit, the city secretary shall schedule a public hearing before the city council no later than ten days nor more than 40 days.
(2) 
The city secretary shall publish notice of the hearing one time in a newspaper of general circulation and shall mail a copy of the notice to each residence and business address within 600 feet of the proposed location.
(f) 
The city council, after a public hearing, may grant the application or may deny upon a finding that the location of a well would depreciate the value of surrounding property or pose a public safety hazard. The council shall, if the application is granted, have authority to impose, as conditions, any one or more of the following:
(1) 
The location, following the removal of the derrick, be restored completely to its original condition;
(2) 
The location, if a pumas jack, tank battery or any other equipment, be erected on the premises and be landscaped to reasonably screen such from public view;
(3) 
Certain standards be established to assure maintenance of the location in a clean and well-kept condition; and
(4) 
Any conditions or requirements recommended by the fire marshal, as mandated by considerations of safety.
(2002 Code, sec. 112.04)
(a) 
The city council shall have the power and reserve 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 improvements already erected on the drilling block in question or adjacent thereto, and the use to which the land and surroundings are adapted for civic purposes, or for sanitary reasons, the drilling of an oil or gas well will be a serious disadvantage to either the health, safety, morals or welfare of the city and its inhabitants; but when a permit shall be refused for any of these reasons, but not otherwise, the deposit in cash as a fee made with the application shall be returned to the applicant. Except as hereinbefore provided, if an application be found by the city council or their representatives to comply in all respects with the terms of this article, the city secretary may be authorized by them or their representatives to issue a permit for the drilling, completion and operation of the well applied for.
(b) 
The granting and issuance of a permit for a well on a drilling block, as provided in this article, shall automatically operate as a rejection and denial of all other pending applications for a well upon the drilling block involved, and a rebate of $75 shall be returned to each rejected applicant.
(2002 Code, sec. 112.05)
(a) 
(1) 
No permit shall be granted or issued for the drilling of a well except upon ground owned by the applicant or held by him or her under oil and gas lease or equivalent contract from the owner, and having the owner’s permission to drill the well. After a permit shall have been issued, the same shall terminate and become inoperative without any action on the part of the city council unless within 90 days from the date of issue actual drilling of the well shall have been commenced. After the drilling of the well shall have been commenced, the permittee shall continue drilling operations with all reasonable diligence as would be expected of a careful and reasonably diligent operator until the well is completed as provided herein. If the operator fails to use reasonable diligence in continuing operations and completing the well, the permit granted for the drilling of the well shall automatically terminate and be canceled and the well shall be considered as abandoned for all purposes of this article, and it shall be unlawful thereafter to continue the operation or drilling of the well without the issuance of another permit. If the well shall be completed as a producer and shall thereafter cease to produce, the permittee shall have the right to conduct deepening or reworking operations on the well within six months after cessation of production without having to procure a new permit. If and when any permit shall terminate and become inoperative as in this section provided, or if and when the permittee or his or her assigns shall file with the city council written notice of his, her or their election to surrender his, her or their permit and abandon the premises covered thereby, then if no claims under the bond or undertaking shall have been filed within 30 days thereafter the city secretary shall return the bond, undertaking and/or security or securities theretofore furnished by the permittee in connection with the permit.
(2) 
If claims are filed within such time, upon the satisfaction or final defeat of the claims, the unappropriated bond, undertaking and/or security or securities shall thereupon be returned to the permittee or his or her assigns.
(b) 
(1) 
The permittee in any drilling block, or his or her assigns, shall be known as the operator thereof for oil and gas, and shall be held primarily accountable under the provisions of this article. The interests of persons other than the operator who hold oil and gas leases or equivalent contracts in any drilling block shall be treated as part of the total working interest of the block and other persons holding the interests shall each make the following election with the operator prior to the time a well is commenced on the blocks either:
(A) 
To agree in writing with the operator to contribute their share of all costs and expenses, properly allocated to the well and drilling block by the operator in accordance with accepted accounting practice, currently each month in the proportion that the number of square feet in area held by them or each of them in the drilling block bears to the total number of square feet embraced in the block; and to execute a bond or deposit securities to be held in escrow by the depository as the city council may designate to secure the agreement. The bond or securities shall be in an amount at any given time sufficient reasonably to protect the interests of the operator under the agreement. The persons so acting shall be entitled to participate in the total working interest under the block. Other persons shall have the right, upon reasonable notice given to the operator, upon the furnishing of storage tanks or facilities for handling the same, and upon the payment of, or securing the payment of, their share of the royalty interests and any overriding royalty or oil payment interests thereon, to receive in kind their proportionate share of oil or gas produced and saved from the well in the drilling block and allocated to the working interest of the well.
(B) 
If other persons, or any one of them, fail to elect under subsection (b)(1)(A) above prior to the time the operator commences drilling the well, then he, she or they shall be deemed to have elected to agree that the operator shall be entitled to reimburse himself or herself currently each month from the other persons’ proportionate share of the proceeds of sale or production in kind for twice the amount of the other persons’ proportionate part of the costs and expenses as set out herein. The operator and other persons, or any one of them, shall be able to alter the obligations as set out in this section by an agreement in writing, provided the agreement is not repugnant to other rules and regulations set out in this article.
(2) 
Other persons, as described in this section, shall have at least ten days after receiving written notice of intention of operation to commence drilling operations, within which to make the election set out in this section; and other persons may advise the operator as to drilling or operating the well on the drilling block, but final authority and responsibility therefor shall rest solely on the operator.
(c) 
In operations under a permit, the permittee or his or her assigns must observe the following rules, and the failure to observe same shall be unlawful, to wit:
(1) 
All tanks used for the storage of oil either temporarily or permanently shall be located outside the city limits, and no tank shall be placed within the city limits.
(2) 
Printed signs readings “Dangerous, No Smoking Allowed” or similar words shall be posted in conspicuous places on each drilling block.
(3) 
Lots on which are located an oil well or equipment engaged in the drilling of a well shall be kept clear of high grass, weeds and combustible material in the vicinity of the well or equipment.
(4) 
No open light shall be placed inside the derrick of a well showing oil or gas.
(5) 
All pipelines laid upon or across a public road or highway must be buried to a reasonably safe depth.
(6) 
Whenever available, electric light and power shall be used for pumping wells.
(7) 
Not less than 150 sacks of cement shall be used to set the producing string of casing. Cement shall be allowed to stand a minimum of 48 hours before drilling the plug.
(8) 
All wells shall be equipped with a casing head having a working pressure of not less than 500 pounds per square inch, and the same shall be equipped with a proper pipe connection and valve accessible at the surface.
(9) 
No electric lighting generator shall be placed or kept nearer than 50 feet to any producing well.
(10) 
Residue and waste oil and other waste and refuse shall not be burned within the city limits, but shall be transported outside the city limits for disposal.
(11) 
All producing wells and equipment used in connection therewith shall be protected with woven wire fencing not less than six feet in height, and any gate or opening through the fence shall be kept securely locked.
(12) 
No drilling or well equipment or facilities shall operate or be located closer than 60 feet to any insurable building without written consent of the owner of the building.
(2002 Code, sec. 112.06; Ordinance adopting Code)
Neither this article nor any permit issued hereunder shall be interpreted to grant any right or license to the permittee to enter upon or occupy in any respect, in drilling or production operations, any land except by the written consent of the owner; nor shall it limit or prevent the free right of any lot owner to contract for the amount of royalty to be paid with respect to his or her own land or other consideration therefor, or for damages, rights or privileges with respect thereto. This article shall not, nor any permit issued hereunder, prevent one or more permittees from pooling drilling blocks when the action has been approved by written consent of all lot owners directly involved.
(2002 Code, sec. 112.07)
(a) 
In addition to all other taxes provided by law, there is hereby levied a tax on oil produced within the corporate limits of the city of two and three-tenths cents per barrel of 42 standard gallons. The tax shall be based upon the total barrels of oil produced or salvaged from the earth without any deductions and shall be computed by either:
(1) 
Tank tables showing 100% of production and exact measurements of contents; or
(2) 
A meter or other measuring device which accurately determines the volume of production or total oil produced.
(b) 
The occupation tax herein levied on oil shall be 2% of the market value of the oil whenever the market value thereof is in excess of $1.00 per barrel of 42 standard gallons. The market value of oil, as that term is used herein, shall be the actual market value thereof, plus any bonus or premiums or other things of value paid therefor or which the oil will reasonably bring if produced in accordance with the laws, rules and regulations of the state.
(2002 Code, sec. 112.08; Ordinance 582A adopted 9/4/07)
(a) 
(1) 
During the time that a well is being drilled on any of the drilling blocks within the city or at any time after the completion of the well from one or more beds, an application may be filed for a special permit to drill an additional well on the drilling block, which application shall not be granted unless and until the city council shall have heard the application at either a regular or special meeting, and it shall have been specifically ruled thereon. The procedure for notice on the filing of the application shall be governed by the same rule as governed original applications.
(2) 
At the time of the hearing on the application the city council shall hear the arguments for or against the granting of the application, and it shall be sufficient for the denial thereof that the city shall find the granting of the permit shall constitute a hazard or shall be detrimental to the health, safety and welfare of the inhabitants of the city.
(b) 
(1) 
The city council shall hear said application at the earliest time practicable and shall promptly rule on the granting or denial of the permit. The meeting may be adjourned not to exceed one time for the presentation of further evidence.
(2) 
When an application is filed prior to the completion of any well, the applicant shall not be entitled to commence any additional well, whether dry holes or not, in the drilling block without filing a new application with the city council for the drilling of additional wells.
(2002 Code, sec. 112.09)
(a) 
No petroleum storage tanks, drilling operations, petroleum pipelines or other petroleum-related production or transmission facilities shall be located or otherwise placed on any lot, tract or parcel of land, or within 300 feet of any building located thereon, occupied or proposed to be improved with a building that is used for a public purpose and is designed to be occupied by 20 or more persons.
(b) 
Should it appear that any person, partnership, corporation or association by his, her or its activities has violated or threatens to violate any of the restrictions set forth in subsection (a) above, the city and/or any landowner within the city, on which the impermissible conditions exist, shall be authorized to file suit in a court of competent jurisdiction against the person, partnership, corporation or association to enjoin or otherwise remedy the violation or threatened violation.
(2002 Code, sec. 112.11)
(a) 
All forms of drilling and mining are permanently prohibited within, on, or beneath public park, street, alley or other public right-of-way located within the territorial limits of the city.
(b) 
No previously drilled and abandoned well or mine may be reopened in any public park located within the territorial limits of the city.
(c) 
The prohibition on mining and drilling does not prohibit:
(1) 
The use of shallow horizontal boring or open ditching for utility work performed in the public right-of-way in compliance with any applicable ordinance governing the use of the city’s right-of-way; or
(2) 
Typical construction, reconstruction, maintenance, repair or improvements to any public building or facility in a park, including but not limited to, picnic pads, restrooms, light poles, gazebos, or swimming pools.
(d) 
Penalty.
Any person found in violation of any provision of this section shall be shall be guilty of a misdemeanor and upon conviction thereof shall be fined in accordance with the general penalty provision found in section 1.01.009 of this code of the city.
(Ordinance 682 adopted 11/12/19)