(a)
Drilling unit.
Permittee.
Person.
Well.
For
the purpose of this article, the following words and terms shall have
the scope and meaning defined and set out in connection with each:
One contiguous body or block of land composed of one or more
tracts or lots of land, comprising a total surface area of twenty
(20) acres of land subject to a tolerance of five percent (5%), more
or less, provided that the separation of such tracts or lots by streets
or alleys shall not serve to render such tracts or lots not contiguous
for purposes of this article.
The person to whom is issued a permit for the drilling and
operation of a well under this article.
Shall include both the singular and the plural, and shall
mean and include any person, individual, firm, partnership, association,
corporation, club, society, corporation, or political subdivision
whatsoever.
Any hole or bore to any sand, formation, strata, or depth
which is drilled, bored, sunk, dug, or put down for the purpose of
either exploring for or ascertaining the existence of any oil, gas,
or liquid hydrocarbons [or] for the purpose of producing and recovering
any oil, gas, or liquid hydrocarbons.
(b)
All
technical or oil and gas industry words or phrases used herein and
not specifically defined herein shall have that meaning customarily
attributable thereto by prudent operators in the oil and gas industry.
(2001 Code, sec. 115.01)
The city council may at any time appoint an oil and gas inspector
and set his compensation. It shall be the duty of the oil and gas
inspector to enforce the provisions of this article.
(2001 Code, sec. 115.02)
No well shall be drilled and no permit shall be issued for any
well to be drilled at any location which is within any of the streets
or alleys of the city, and no street or alley shall be blocked or
encumbered or closed in any drilling or production operation, except
by special permit by order of the city council, and then only temporarily.
(2001 Code, sec. 115.03)
No well shall be drilled and no permit shall be issued for any
well to be drilled at any location which is nearer than two hundred
(200) feet to any residence, building, or structure without the applicant
having first secured the written permission of the owner or owners
thereof.
(2001 Code, sec. 115.04)
The drilling, completion and operation of only one completed
well for oil to each reservoir may be authorized by permit of the
city council, as provided in this article, on each drilling unit shown
and designated on the official map of the city on file in the office
of the city secretary, such map being the representation of the territory
within the entire city and being exhibit A, and it is hereby referred
to and made a part hereof for all purposes. It shall be unlawful to
commence or complete more than one well in each reservoir on each
such unit; provided 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.
(2001 Code, sec. 115.05)
(a)
In
the event a permit be issued by the city council under the terms of
this article for the drilling and operation of a well, no actual drilling
operations shall be commenced until a surety bond, duly executed by
the permittee as principal, and by a reliable surety company authorized
to do business in the state as surety, in the amount and upon the
conditions prescribed in this section, shall be filed with and approved
in writing by the city secretary, or until an instrument executed
by the surety as hereinafter prescribed is filed with and approved,
in writing, by the city secretary, which makes the drilling and operation
of such well subject to the terms and conditions of two surety bonds
totaling two hundred thousand dollars ($200,000.00) in the aggregate,
previously filed by the permittee hereunder. Such bond filed by the
applicant shall be in the sum of not less than one hundred thousand
dollars ($100,000.00) and shall run to 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; 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 conditions,
as near as practicable; 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 grade,
level, and restore such property to the same surface condition, as
near as practicable, as existed when operations for the drilling of
the well were first commenced; and that the permittee will pay to
the owners of any buildings, improvements, goods, or chattels located
on the property any extra cost of insurance of such property imposed
by reason of the granting of the permit or the operations carried
on thereunder and that the permittee will promptly pay and discharge
any liability imposed by law for damages on account of injury to property,
either public or private, or bodily injury, including death suffered
by any person, resulting from the drilling operations, production
and maintenance of such well, equipment, facilities, or appurtenances
thereto; 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. Such bond filed by a permittee hereunder shall become
effective on or before the date filed with the city secretary and
remain in force and effect until the expiration of the term of the
permit issued, subject to the right of the surety company to cancel
same after thirty (30) days’ written notice of such intention
has been given to the city secretary, but the privilege of cancellation
shall not affect any liability which may have arisen hereunder unto
the time the bond is actually cancelled. The permittee, in the event
of cancellation of the surety bond above provided for, shall automatically
suspend his right to operate under his permit until such time as the
permittee shall furnish another bond as required by this article.
Each bond shall accrue to the benefit of any person with reference
to the conditions above stated and may be sued upon by him.
(b)
If
in accordance with the provisions of this section a permittee has
filed with the city two (2) one hundred thousand dollar ($100,000.00)
surety bonds to cover the drilling and operation of wells under this
article, the permittee may drill and operate an additional well or
wells hereunder without filing an additional surety bond as specified
above, provided the permittee files with the city secretary an instrument,
approved by the city secretary, duly executed by the surety company
named as surety, in each of the permittee’s bonds on file with
the city, agreeing that such bonds are in full force and effect in
the aggregate sum of two hundred thousand dollars ($200,000.00) and
that the terms and conditions of each bond shall thereafter likewise
apply to the drilling and operation of the additional well or wells
named therein.
(c)
The
city council may waive the requirement for a surety bond as described
in this section as to any permittee when it finds and determines that
such permittee is financially responsible and capable of meeting obligations
for amounts in excess of $200,000.00. Upon such a determination, the
city council may allow the permittee to file with the city secretary,
in lieu of any surety bond, a letter of acceptance and indemnity binding
and obligating such permittee to abide by the conditions prescribed
in this section for surety bonds and to indemnify and hold the city
harmless from any and all liability growing out of or attributable
to the granting of any and all permits held by such permittee.
(2001 Code, sec. 115.06)
It shall be unlawful to drill to each reservoir more than one well on each drilling unit; provided 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 required in section 4.07.061 for the first well by filing a plat and certificate showing the abandonment of the first well and the location of the second well.
(2001 Code, sec. 115.07)
Any operator desiring to rework a well shall give the city council
written notice of his intent prior to the commencement of operations,
except in an emergency, in which event an operator may proceed without
notice.
(2001 Code, sec. 115.08)
It shall be unlawful for any person to use or operate in connection
with the drilling or reworking of any well within the city limits
any wooden derrick or any steam-powered rig, and all engines shall
be equipped with adequate mufflers approved by the city council. It
shall likewise be unlawful to permit any derricks to remain on the
premises or drilling site for a period longer than thirty (30) days
after completion or abandonment of the well. At all times from the
start or erection of a derrick, or a mat, or a gin-pole, until the
well is abandoned and plugged or completed as a producer and enclosed
with a 0fence as provided in this article, the permittee shall keep
a watchman on duty on the premises.
(2001 Code, sec. 115.09)
Only portable slush tanks for mud or water shall be permitted
in connection with the drilling and reworking operation. Such tanks
and their contents shall be removed from the premises and the drilling
site within ten (10) days after completion of the well.
(2001 Code, sec. 115.10)
The productive string shall be new pipe and shall have a mill
test of twenty-one hundred (2,100) pounds for wells six thousand (6,000)
feet or less in depth. The surface casing shall be new pipe and shall
have a mill test of eleven hundred (1,100) pounds.
(2001 Code, sec. 115.11)
No well shall be drilled within the city limits without properly
setting the surface casing to a minimum depth of two thousand (2,000)
feet. No well shall be drilled within the city limits without cementing
the surface casing by the pump-and-plug method with sufficient cement
to completely fill all of the annular space behind such casing to
the surface of the ground. No well shall be drilled within the city
without cementing the production string by the pump-and-plug method
with sufficient cement to completely fill all the annular space behind
the production string to at least six hundred (600) feet above the
highest oil and/or gas bearing horizon. In the event a protection
string of casing is used, no well shall be drilled within the city
without cementing the protection string by the pump-and-plug method
with sufficient cement to completely fill all the annular space behind
the protection string to at least six hundred (600) feet above the
highest oil and/or gas bearing horizon.
(2001 Code, sec. 115.12)
No well shall be drilled within the city limits without properly
equipping the surface casing, when set, with at least two (2) ram
type blowout preventers, one of which shall be equipped with blind
rams and the other pipe rams. On each well drilled, a valve cock or
kelley cock shall be installed on the kelley used. Each blowout preventer
shall be tested at least once every 24-hour period and all control
equipment shall be in good working condition and order at all times.
Drilling fluid return lines shall be equipped with flow valves
where the return line is connected below the top blowout preventer.
(2001 Code, sec. 115.13)
All operators shall be required to drill with fluid of sufficient
weight to exceed the formation pressure anticipated in the Chandler
Townsite.
(2001 Code, sec. 115.14)
It shall be unlawful for any person in connection with the drilling
and reworking operations of any well within the city limits to take
and 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 the
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 drill pipe.
(2001 Code, sec. 115.15)
All tubing used in any well within the city limits, drilling
to a depth of six thousand (6,000) feet or less, shall be J-55.
(2001 Code, sec. 115.16)
Each well drilled within the city limits shall be equipped with
a bradenhead with a test pressure of not less than six thousand (6,000)
pounds per square inch. Bradenheads shall not be welded. The bradenhead
installed on the surface casing shall be equipped with fittings having
a test pressure rating of not less than six thousand (6,000) pounds
per square inch. The bradenhead pressure shall be checked at least
once each calendar month and, if pressure is found to exist, proper
remedial measures shall be immediately taken to eliminate the source
and the existence of the pressure.
(2001 Code, sec. 115.17)
(a)
The
Christmas tree and all well head connections on each well drilled
within the city limits shall be as follows:
(1)
On all wells completed at a depth above four thousand (4,000) feet,
the Christmas tree and well head connections shall have at least a
minimum working pressure of two thousand (2,000) pounds per square
inch and a minimum test pressure of at least four thousand (4,000)
pounds per square inch;
(2)
On all wells completed to a depth of from four thousand and one (4,001)
to seven thousand (7,000) feet, the Christmas tree and well head connections
shall have at least a minimum working pressure of three thousand (3,000)
pounds per square inch and a minimum test pressure of at least six
thousand (6,000) pounds per square inch;
(3)
On all wells completed below a depth of seven thousand (7,000) feet,
the Christmas tree and well head connections shall be [have] at least
a working pressure of five thousand (5,000) pounds per square inch
and a minimum test pressure of at least ten thousand (10,000) pounds
per square inch.
(b)
In
the event the surface shut-in pressure of any well in the city limits
exceeds two thousand (2,000) pounds per square inch, the flow string
of the Christmas tree shall be equipped with an automatic closing
safety valve in addition to the regular control valves.
(2001 Code, sec. 115.18)
The premises shall be kept in a clean and sanitary condition,
free from rubbish of every character, to the satisfaction of the health
officer and the city, at all times drilling operations or reworking
operations are being conducted and as long thereafter as oil and/or
gas is being produced therefrom.
(2001 Code, sec. 115.19)
Motive power for all operations after completion of drilling
operations shall be electric or property muffled gas or gasoline engines,
such mufflers to be approved by the city inspector.
(2001 Code, sec. 115.20)
All pumping wells within the city shall be equipped with electric
motors.
(2001 Code, sec. 115.21)
(a)
All
crude oil storage tanks shall be located outside the city limits.
(b)
In
order to enable the holder of each permit required by this article
to remove oil, gas, water, or other products from each drilling unit
within the city limits to a point or points beyond the city limits,
the holder of each permit issued under this article for the drilling
and operation of a well for oil or gas in the city is hereby granted
rights-of-way and easements on, over, under, along, or across the
city streets, sidewalks, alleys, and other city property in the city
for the purpose of constructing, laying, maintaining, repairing, re-laying
and removing pipelines, so long as production or operations may be
continued under any permit issued pursuant to this article.
Permittees shall not interfere with or damage existing water,
sewer, or gas lines or the facilities of public utilities located
on, under, or across the course of such rights-of-way. All crossings
for pipelines under all paved or blacktopped streets shall be bored
or jacked.
(2001 Code, sec. 115.22)
Any person who completes any well as a producer shall have the
obligation to enclose such well, together with its surface facilities,
by a substantial smooth net wire fence sufficiently high and properly
built so as to ordinarily keep persons and animals out of the enclosure,
with all gates thereto to be kept locked when the permittee or his
employees are not within the enclosure.
(2001 Code, sec. 115.23)
Printed signs reading “DANGEROUS - NO SMOKING ALLOWED”
or similar wording shall be posted in conspicuous places on each producing
drilling unit.
(2001 Code, sec. 115.24)
No person engaged in drilling or operating any well shall permit
gas to escape or be vented into the air within the city limits.
(2001 Code, sec. 115.25)
Every permittee shall make adequate provisions for the disposal
of all saltwater or other impurities which he may bring to the surface,
such disposal to be made in such manner as to not contaminate the
water supply, present or prospective, or to injure surface vegetation.
(2001 Code, sec. 115.26)
Whenever any well is abandoned it shall be the obligation of
the permittee and the operator of the well to set a cast iron bridge
plug in the top of all the remaining completion and protection casing
sections and a one-hundred-foot cement plug pumped below and above
each such bridge plug, and to set a cast iron bridge plug as low as
possible in the surface casing and a one-hundred-foot cement plug
pumped below and above such bridge plug. No surface string or conductor
string of casing may be pulled and removed from a well. The production
string of casing may be removed from a point one hundred (100) feet
or more above the shoe of the protection string. The protection string
of casing may be removed from a point one hundred (100) feet or more
above the shoe of the surface string of casing. Whenever any such
well is abandoned and plugged, it shall be the further obligation
of the permittee and the operator of the well to cut the surface casing
off at least six (6) feet below the surface of the ground, to place
at least a twenty-five-foot cement plug in the top of the casing,
and to weld the top of the casing completely shut with the resulting
hole being completely filled to the surface of the ground and duly
tamped. Any additional provisions or precautionary measures prescribed
by the state or the railroad commission of the state in connection
with abandonment and plugging of a well shall be complied with by
the permittee.
(2001 Code, sec. 115.27)
(a)
In
addition to all other taxes provided by law, there is hereby levied
a tax on oil produced within the city of two cents ($0.02) per barrel
of forty-two (42) standard gallons. Such tax shall be computed upon
the total barrels of oil produced or salvaged through the earth within
the city and shall be based upon tank tables showing one hundred percent
(100%) of production and exact measurements of contents. The tax herein
levied on oil shall be two percent (2%) of the market value of said
oil whenever the market value thereof is below one dollar ($1.00)
per barrel of forty-two (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 any other things of value paid
therefor or which such oil will reasonably bring if produced in accordance
with the laws of the United States, the state, and the city.
(b)
The
tax hereby levied shall be a liability of the producer of oil and
it shall be the duty of such producer to keep accurate records of
all oil produced, making semiannual reports as required by this article.
(c)
The
purchaser of oil shall pay the tax on all oil purchased and deduct
tax so paid from payment due the producer or other interest holder,
making such payments so deducted to the city secretary by legal tender
or cashier’s check payable to the city secretary; provided that,
if the oil produced is not sold during the semiannual period in which
produced, then the producer shall pay the tax at the same rate and
in the same manner as if the oil were sold.
(d)
The
tax levied herein shall be paid semiannually on or before the thirty-first
(31st) day of each August on oil produced during the preceding first
six (6) months of the calendar year and on or before the thirty-first
(31st) day of each January on oil produced during the preceding last
six (6) months of the preceding calendar year by the purchaser or
producer as the case may be, but in no event shall a producer be relieved
of responsibility for the tax until same shall have been paid, and
provided, in the event the amount of the tax herein levied shall be
withheld by a purchaser from payments due a producer and the purchaser
fails to make payment of the tax to the city, as provided herein,
the producer, upon paying such tax, shall be subrogated to the right
of the city to collect from the purchaser the tax, penalties, and
interest which may have otherwise accrued by failure to make payments
as required by this section.
(e)
It
is further provided that, unless such payment of tax on all oil produced
during any six-month period shall be made on or before the dates specified
above, such payment shall become delinquent and a penalty of five
percent (5%) of the amount of the tax shall be added, whereupon such
tax and penalty shall bear interest at the rate of three percent (3%)
per annum from the date due until date paid.
(f)
The
tax herein levied shall be borne ratably by all interested parties,
including royalty interests, and producers and/or purchasers of oil
are hereby authorized and required to withhold from any payment due
interested parties the proportionate tax due.
(g)
The
city shall have a lien in and upon each oil well and the equipment
incident thereto, together with the respective interest of all parties
therein, to secure the payment to the city of all taxes due hereunder
on oil produced from such oil wells. This lien shall be in addition
to any other liens and methods provided herein or by law for the collection
of taxes.
(2001 Code, sec. 115.28)
Any violation of the law of the state or any rules, regulations, or requirements 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, blowout protection, safety protection, or convenience of persons or property shall also be a violation of this article and shall be punishable in accordance with the provisions of section 1.01.009 of this code.
(2001 Code, sec. 115.29)
It shall be unlawful and an offense for any person, acting either
for himself or acting as agent, employee, independent contractor,
or servant of any other person, to commence to drill, to drill or
to operate any well within the city limits, 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 the authority of the city council in accordance with
the terms and provisions of this article.
(2001 Code, sec. 115.40)
(a)
Every
application for a permit to drill and operate a well upon a drilling
unit shall be in writing, signed by the applicant or by some person
duly authorized to sign same on his behalf, and it shall be filed
with the city secretary.
(b)
No
application shall request a permit to drill or operate but one well
to each reservoir on a drilling unit, and the application shall contain
full information, including the following:
(1)
The date of the application.
(2)
Name of the applicant.
(3)
Address of the applicant.
(4)
Proposed site of the well accompanied by a plat of the drilling unit
showing the description of the lots, blocks or tracts owned or controlled
by the applicant.
(5)
Name of the fee owner or owners.
(6)
Name of the lease owner or owners.
(7)
Brief description of the land.
(8)
The application shall have attached to it a certified or photostatic
copy of the deed, oil and gas lease, or drilling contract with the
owners of land covering the lot, block, or tracts in said drilling
unit over which the applicant has control, together with abstracts
of title or certificates of title satisfactory to the city council,
to the end that the application will show what proportion and what
parts of the drilling unit the applicant owns in fee, or holds under
lease or drilling contract from the owners, and the applicant must
own in fee or hold under lease or drilling contract from the owners
over fifty percent (50%) of the acreage within a drilling unit before
a permit may be issued.
(9)
Type of derrick to be used.
(10)
Whether the well shall be drilled as an oil or gas well.
(11)
The proposed depth of the well.
(12)
Motive power of the rig that is to be used.
(c)
Within
thirty (30) days after the completion of a well within the city limits,
the operator shall submit to the city council copies of state railroad
commission Forms 2 and 3, and an electric log. This data shall be
classified as “secret” by the city council for a period
of six (6) months.
(2001 Code, sec. 115.41)
(a)
At
least ten (10) days prior to the date of hearing on the application,
a copy of notice in the form herein prescribed shall be sent by registered
mail to each owner and lessee of lots, blocks, and tracts in said
drilling unit not owned by or under lease to the applicant, addressed
to the last known address of such land/or lease owners, if known to
the applicant. A copy of such notice shall likewise be published at
the cost of the applicant in every issue of an official paper of the
city for ten (10) days prior to the date of such hearing, or for two
consecutive weeks if the paper is published weekly. If the official
paper be published weekly, the publication shall be made in one issue
thereof before the date of hearing. Such notice shall state the lot
and block number on which the applicant is asking for a permit to
drill and the date and place of hearing, and shall be in words and
figures as follows:
|
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 WELLS WITHIN THE LIMITS OF THE CITY
OF CHANDLER, TEXAS, AND PROVIDING FOR THE PUBLIC SAFETY IN CONNECTION
THEREWITH, being Ordinance No. _______, did, on the _______day of
_______, _______, file with the City Secretary of the City of Chandler
an application for a permit to drill a well for oil and/or gas upon
Lot No. _______, Block No. _______, Chandler Townsite, in a drilling
unit of _______acres described as follows:
|
|
(Description)
|
|
A hearing upon such application will be held in the office of
the City Secretary of the City of Chandler, Texas, at _______on the
_______day of _______, _______at .M.
|
(b)
Proof
of notice shall be made by the applicant by filing with the city secretary
an affidavit of the printer or publisher of the paper in which the
notice is published containing a copy of the notice, and stating the
issue in which and period of time during which the notice was published,
and an affidavit of the applicant showing the date and persons to
whom and the addresses to which the notice was mailed by the applicant,
and proof that such addresses are the last addresses of the persons
involved known to the applicant.
(c)
At
the time fixed in such notice, a hearing on such application shall
be held in the office of the city secretary.
(2001 Code, sec. 115.42)
(b)
If
the permit [applied] for under this article be refused or if the applicant
has notified the city council in writing that he does not elect to
accept the permit as tendered and wishes to withdraw his application
or if the bond or surety instrument of the applicant be not approved
and the applicant notifies the city council in writing that he wishes
to withdraw his application, then, upon the happening of any of these
events, the fee filed with the application shall be returned to the
applicant, except there shall be retained therefrom by the city the
sum of one hundred dollars ($100.00) as a processing fee.
(2001 Code, sec. 115.43)
(a)
The city council, within thirty (30) days after the filing of the application for a permit to drill and operate a well, shall determine whether or not the application complies in all respects with the provisions of this article, and if it does, the city council shall issue a permit for the drilling and operation of the well applied for, conditioned upon applicant filing, before commencement of drilling operations thereunder, the surety bond or surety instrument prescribed in section 4.07.006.
(b)
The
city council shall have the power, and reserves 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 unit 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.
(c)
Each
permit issued shall:
(1)
By reference have incorporated therein all the 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 other available correct
legal description.
(3)
Contain and specify that the terms of such permit shall be for a
period of six (6) months from the date of the permit and as long thereafter
as the permittee is engaged in continuous drilling or reworking 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 shall
cease, the term shall not terminate if the permittee commences additional
reworking operations within six (6) months 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 such well.
(4)
Contain and specify such conditions as are by this article authorized.
(5)
Specify the total depth to which the well may be drilled.
(6)
Contain and specify that no actual drilling operations shall be commenced until the permittee shall file and have approved an indemnity bond in the designated principal amount and conditioned as specified in section 4.07.006. The permit issued under this section, in duplicate originals, shall be signed by the city secretary, and prior to delivery to the permittee shall be signed by the permittee, with one original to be retained by the city and one by the permittee. When so signed, it shall constitute the permittee’s drilling and operating license and the contractual obligation of the permittee to comply with the terms of this permit and bond, as required in section 4.07.006 of this article.
(2001 Code, sec. 115.44)
When a permit shall have been issued, the same shall terminate
and become inoperative without any action on the part of the city
unless within six (6) months from the date of issuance 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 of
this article, and it shall be unlawful thereafter to continue the
operation or drilling of such well without the issuance of another
permit.
(2001 Code, sec. 115.45)
In the event an application for a permit for 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 unit as shown upon the map referred to in section 4.07.005, a permit shall be issued to such applicant, his heirs, successors, and assigns only upon the following conditions in addition to such other conditions as may be provided in other sections of this article: The applicant shall be free to enter into such contracts and agreements with the owners of such other lots, blocks, or tracts as he may be able to make. If agreements are not reached with all owners of lots, tracts and blocks within the drilling unit, then the owner or owners of any given lot or lots, block or blocks, tract or tracts shall have the right or option, by notice to the permittee given in writing within thirty (30) days after the issuance of a permit for a well on the drilling unit involved, either (1) to treat his interest as a working interest and contribute toward the actual cost and expense of drilling, completing, and operating said well with all necessary appurtenances currently each month in the proportion that the number of square feet in area owned by him in the drilling unit bears to the number of square feet embraced in said unit, and thereupon receive the same proportion of the oil produced and saved from such well or its value at the well at the option of the permittee and a like proportion of natural gas produced, saved and utilized, or sold or the value of same at the well at the option of the permittee; or (2) to treat his 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 such well equal to one-eighth (1/8) of the proportion of the whole quantity of oil so produced and saved that the number of square feet in the area owned by him bears to the number of square feet in such drilling unit, or at the election of the permittee to receive such proportion of the value the well of the oil so produced, and to receive a like proportion of the gas and casinghead gas produced, saved and utilized, or sold, or at the election of the permittee the value at the well of such proportion of gas or casinghead gas produced, saved and utilized, or sold. If any owner does not exercise the right and option above provided, the obligation shall then be upon the permittee, his heirs, successors, and assigns to make settlement with such owner on the terms provided in option 2 above, providing for the payment of a one-eighth (1/8) royalty. If the owner of a lot or lots, block or blocks, tract, or tracts shall exercise option 1 above and treat his interest as a working interest, as therein provided, the permittee shall be entitled to reimburse himself for such owner’s proportionate part of the costs out of such owner’s proportionate part of the oil, gas, and casinghead gas, or the value thereof, before making deliveries of products or settlement for the value thereof, [and] if option 1 is exercised by the owner of any lot of lots, block or blocks, tract or tracts, such owner shall, within the time provided for notice of his election above set forth, file with the city secretary a bond or other obligation executed by such owner as principal and by an authorized surety company as surety, in which such principal and surety agree, bind and obligate themselves to pay to the permittee, his heirs, successors, and assigns, currently each month that proportion of the actual and necessary costs and expenses involved in the drilling, completion, and operation and operation of such well that the number of square feet embraced within the lot or lots, block or blocks, tract, or tracts of such owner bears to the total of square feet in such drilling unit, such bond to be approved by the mayor and held by the city secretary for the benefit of the beneficiaries therein. Permits shall be issued in all such cases upon the condition that the permittee, his heirs, successors, and assigns shall make settlement in accordance with the provisions hereof.
(2001 Code, sec. 115.46)
