As used in this article:
A tract of land consisting of lots or blocks adjacent or
contiguous to each other, and forming one (1) unit of land. Boundaries
of the drilling blocks are hereby established and adopted as shown
on the map attached hereto and referred to above, which map is hereby
designated as the “drilling district map,” and such map
and all the notations, references and information shown thereon are
hereby made a part of this article as if the same were set forth in
full herein. It shall be the duty of the city secretary to keep on
file in his office the original of such drilling block map and duplicate
copies thereof, showing all of the changes, amendments or additions
thereto.
Any natural person, corporation, association, partnership,
receiver, trustee, guardian, executor, administrator and fiduciary
or representative of any kind.
(2003 Code, sec. 12.16)
In operations under a permit, the permittee or his assigns must
observe the following rules, and the failure to observe same shall
be unlawful, to wit:
(1)
Dikes.
All permanent oil tanks or batteries of tanks
must be surrounded by a dike or ditch of at least the capacity of
the tank or battery of tanks.
(2)
Location of flow tanks.
No flow tank, unless it is entirely
buried, or other tank of any size, shall hereafter be placed nearer
than one hundred and fifty (150) feet to any derrick, rig, building,
power plant or boiler of any description.
(3)
Location of field working tanks.
No field working tank
having a capacity of ten thousand (10,000) barrels or more shall hereafter
be built nearer than two hundred (200) feet (measured from shell to
shell) to any other like tank or tanks.
(4)
“No smoking” signs.
Printed signs reading: “Dangerous,
No Smoking Allowed,” or similar words, shall be posted in conspicuous
places on each producing drilling unit.
(5)
Grass, weed and trash removal.
All permittees’
premises shall be kept clear of high grass, weeds and combustible
trash within a radius of one hundred (100) feet around an oil tank,
tanks or producing wells.
(6)
Open earthen storage.
Open earthen storage for oil is
prohibited.
(7)
Oil tank vents.
All oil tanks, where there is a gas
hazard, shall be gas-tight and provided with proper vents.
(8)
Forges or open lights.
No forge or open light shall
be placed inside the derrick of a well showing oil or gas.
(9)
Boilers to be equipped with steam lines; distance from well.
Boilers must be equipped with steam lines for fighting fire
and must not be set nearer than one hundred (100) feet to any producing
well.
(10)
Oil and gas pipelines crossing public road.
All oil
and gas pipelines laid upon or across a public road or highway must
be buried to a reasonably safe depth.
(11)
Electric lights and power.
Wherever available and practicable,
electric lights and power shall be installed in congested drilling
areas.
(12)
Cementing of annular space.
A minimum of three hundred
(300) feet of surface casing shall be set and cemented with sufficient
cement to fill the annular space back of the casing to the surface.
Cementing shall be by the pump and plug method. Cement shall be allowed
to stand a minimum of forty-eight (48) hours before drilling the plug.
The position of the oil horizon shall be determined by coring or testing
and the producing string swung and cemented at the top thereof.
(13)
Blow-out preventer.
A blow-out preventer, control head
and other connections for keeping the well under control at all times
shall be installed as soon as surface casing is set. The blow-out
preventer on the second string shall be hydraulically controlled.
The blow-out preventer shall be tested against pump pressure at least
once every twenty-four (24) hours; all control equipment shall be
in good working order and condition at all times.
(14)
Bradenheads.
All wells shall be equipped with a bradenhead
with a working pressure sufficient to protect the well under pressures
encountered. The bradenhead shall not be welded, and the same shall
be equipped with the proper pipe connection and valve accessible at
the surface.
(15)
Location of boilers and electric lighting generators.
No boiler or electric lighting generator shall be placed nearer than
one hundred fifty (150) feet to any producing well or oil tank.
(16)
Rubbish and debris.
Any rubbish or debris that might
constitute a fire hazard shall be removed to a distance of at least
one hundred (100) feet from the vicinity of wells, tanks, and pump
stations. All waste shall be burned or disposed of in such manner
as to avoid creating a fire hazard or polluting fresh water strata.
(17)
Fencing.
All wellheads, pits and tank batteries shall
be adequately protected with “man proof” fencing.
(18)
Disposal of salt water and other impurities.
The person
so drilling or operating an oil and/or gas well shall make adequate
provision for the disposal of salt water or other impurities which
he may bring to the surface of the earth in such a manner as not to
contaminate the water supply of the city or to destroy vegetation.
(2003 Code, sec. 12.17)
(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 percent (1%)
of production and exact measurements of contents; provided, however,
that the tax herein levied on oil shall be two percent (2%) of the
market value of such 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 semi-annual reports as hereinafter provided.
(c)
The
purchaser of oil shall pay the tax on all oil purchased and deduct
the tax so paid from payment to 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 semi-annual period in which
produced, then the producer shall pay the tax at the same rate and
in the manner as if the oil were sold.
(d)
The
tax levied herein shall be paid semi-annually 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 the same shall have been paid,
and provided, if the amount of the tax herein levied shall be withheld
by a purchaser from payments due a producer and such 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 penalties and interest which may
have otherwise accrued by failure to make payments as hereinafter
stated.
(e)
It
is further provided that, unless such payment of tax on all oil produced
during any six (6) month period shall be made on or before the date
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 the 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, and this lien shall be in addition
to any other liens and methods provided herein or by law for the collection
of taxes.
(2003 Code, sec. 12.18)
(a)
The
drilling, completion and operation of only one (1) well for oil or
gas may be authorized by permit as provided in this article on each
drilling block shown and designated on the attached map, hereby referred
to and made a part hereof for all purposes, and it shall be unlawful
to drill more than one (1) well on each such drilling block; provided,
however, that if 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 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.
(b)
Notwithstanding
anything to the contrary above, the council may authorize and permit
the drilling of more than one (1) well per each drilling block upon
satisfactory proof that each additional well will have a bottom hole
location in a drilling block other than the drilling block containing
the surface hole.
(2003 Code, sec. 12.19)
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 operation
except by special permit by order of the Code of Ordinances board,
and then only temporarily.
(2003 Code, sec. 12.20)
It shall be unlawful for any person to drill or commence to
drill a well for oil or gas within the limits of the city or to work
upon or assist in any way in the prosecution of the drilling of any
such well without a permit for the drilling, completion and operation
of such well having been first issued by authority of the Code of
Ordinances board in accordance with the provisions of this article.
(2003 Code, sec. 12.31)
(a)
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 it on his behalf. It shall be filed
with the city secretary and accompanied with a deposit of five hundred
dollars ($500.00) 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, 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 lot, block,
tract or tracts in such drilling block over which the applicant has
control for oil and gas purposes, together with abstracts of title
or certificates of title satisfactory to the Code of Ordinances board,
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. The applicant may withdraw
the abstracts or certificates of title after they have been examined
by the Code of Ordinances board. The application shall also be accompanied
by a plat or map of the drilling block, showing the designation of
the lots, blocks, and tracts owned or controlled by the applicant
and showing the exact location of the proposed well, which location
shall be as nearly as practicable in the center of the drilling block.
The application shall also be accompanied by two (2) duly executed
bonds, each given by the applicant as principal and a surety company
authorized to do business in the state as surety. One (1) of these
bonds shall run to the city, for the benefit of the city and all persons,
firms and corporations concerned, conditioned that, if the permit
is granted and if drilling operations be commenced thereunder the
applicant and his assigns will comply with the terms and conditions
of this article in the drilling and operation of a well; that the
applicant will restore the streets and sidewalks and other public
places of the city which may be disturbed in the operation to their
former condition, and will clear the block and lots of all litter,
machinery, derricks and building erected or used in the drilling or
operation of such well whenever the well shall be abandoned or the
operation thereof discontinued; and that the applicant or his assigns
shall pay any and all damages recoverable at law against him or them
suffered by any person or corporation as to property in the city from
fire or from oil, gas or water caused by or originating from the operations
connected with such well. Such bond shall be in the sum of twenty-five
thousand dollars ($25,000.00); provided, however, that if within thirty
(30) days after the drilling and completion of such well no claims
have been presented against the applicant or his assigns under the
terms and conditions of such bond, then the sum of same shall be automatically
reduced to five thousand dollars ($5,000.00). The other bond above
provided for shall run to the city, for the benefit of all persons,
firms, or corporations owning lots, blocks or tracts of land in such
drilling block who have not executed at the time of the filing of
such bond or who shall not execute during the term of such bond and
prior to the accrual of liability thereunder leases, drilling contracts,
waivers, or other form of contract under which the applicant or his
assigns is or are authorized to operate the premises of such owner
for the development and production of oil and gas, and shall be conditioned
upon the settlement or payment by the applicant or his assigns for
oil and gas in accordance with the provisions of this article. The
bond shall be in the sum of twenty thousand dollars ($20,000.00);
provided, however, that the sum of the bond shall be automatically
reduced by an amount in proportion to the difference between the total
area of the drilling block and the total area owned by the applicant
in fee or covering which he has leases from or drilling contracts
with or waivers from the owners authorizing operations for development
and production of oil or gas. It is specifically provided that, in
lieu of any surety bond or bonds required to be given hereunder, the
applicant may file with the city secretary his personal undertaking
or undertakings, which shall be in the same amount and shall contain
the same conditions as hereinbefore provided with respect to surety
bonds, and which undertaking or undertakings shall be secured by United
States government securities or securities of the state or of counties
or municipalities or bonds in lieu of which such undertaking or undertakings
is or are given, which securities shall be deposited in escrow in
a state or national bank jointly selected by the city secretary and
the applicant or his assigns along with and attached to a copy of
the written undertaking for which they are to be held as security.
(b)
The
Code of Ordinances board may elect to make an exception to the requirements
of this section when, in its opinion, the intent and purpose for the
requirements of bonds can be assured by any of the following means:
(1)
Acceptance of a guaranty of indemnity to the city in lieu of bonds
in the case of financially responsible operators, as approved by the
city council and conditioned as stated herein; or
(2)
Acceptance of a blanket bond to cover all operations of the permittee
within the city limits.
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The Code of Ordinances board may, for good cause, cancel any
guaranty of indemnity as set out above, ten (10) days after written
notice to the operator, and require the operator to fulfill the bond
requirements set out herein.
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(2003 Code, sec. 12.32)
In case there should be filed with the city secretary and pending
at the same time applications for permits to drill on any single drilling
block within the limits of the city made by more than one (1) applicant,
that application shall be granted, if otherwise sufficient, which
shall be made by the person holding the greater area of ground within
the drilling block by ownership in fee or by lease or other contract
authorizing the drilling and operation on land for oil or gas.
(2003 Code, sec. 12.33)
(a)
Notice
of filing of each application for a permit required by the city shall
be given by the applicant as follows: At least ten (10) days prior
to the date of hearing on the application, a copy of notice in the
form hereinafter prescribed shall be sent by registered mail to each
owner and lessee of lots, blocks and tracts in such drilling block
not owned by or under lease to the applicant, addressed to the last
known address of such land and lease owners if known to the applicant,
and a copy of such notice shall likewise be published at the cost
of the applicant in every issue of the official paper of the city
for ten (10) days prior to the date of such hearing. If the official
paper is published weekly, the publication shall be made in one issue
thereof for the period of time prescribed. 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:
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Notice is hereby given that __________, acting under and pursuant
to the terms and provisions of an Ordinance Regulating the Drilling
of Oil and Gas Wells within the Limits of the City of Littlefield
Texas, and Providing for the Public Safety in connection therewith,
being Ordinance No. 132, did on the __________day of __________, 20__________,
file with the City Secretary of the City of Littlefield, Texas, an
application for a permit to drill a well for oil and/or gas upon Lot
No. __________, Block No. __________, in Drilling District No. __________,
as defined by Ordinance No. 132. A Hearing upon such application will
be held in the office of the City Secretary of the City of Littlefield,
Texas, on the __________day of __________, 20__________at _____.m.
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(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 of which and period of time during which the notice was published,
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 to which the notice was mailed by the
applicant [sic], 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 at the office of the city secretary.
(2003 Code, sec. 12.34)
The Code of Ordinances board shall have the power and reserves
the authority to refuse any application for a permit required by the
city where 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 is found by the
Code of Ordinances board to comply in all respects with the terms
of this article, the city shall be authorized to issue a permit for
drilling, completion and operation of the well applied for. 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 application or applications for a well or wells
upon the drilling block involved, or any portion or portions thereof.
(2003 Code, sec. 12.35)
No permits shall be granted or issued for the drilling of a
well except upon ground owned by the applicant or held by him under
oil and gas lease or drilling contract from the owner, giving the
owner’s permission or authority to drill the well; and when
a permit shall have been issued, the same shall terminate and become
inoperative without any action on the part of the Code of Ordinances
board unless within ninety (90) days from the date of issuance actual
drilling of the well shall have commenced; and after the drilling
of the well shall have commenced, the cessation of drilling operations
prior to the completion of the well for a period of six (6) months
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; provided that,
if such 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 such well within six (6) months after cessation
of production without having to procure a new license. If and when
any permit shall terminate and become inoperative as in this section
provided, or if and when the permittee or his assigns shall file with
the Code of Ordinances board written notice of his or their election
to surrender his or their permit and abandon the premises covered
thereby, then if no claims under the bond or bonds, undertaking or
undertakings shall have been filed within thirty (30) days, the city
secretary shall return the bond or bonds, undertaking or undertakings
and/or the securities theretofore furnished by the permittee in connection
with such permit, and if claims are filed within such time, upon the
satisfaction or defeat of such claims, such bond or bonds, undertaking
or undertakings and/or security or securities shall thereupon be returned
to the permittee or his assigns.
(2003 Code, sec. 12.36)
(a)
If
any 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 contracts for the owners of all lots, blocks
or parcels of land included or embraced within a drilling block as
shown upon the map hereto attached, a permit shall be issued to such
applicant, his heirs, successors and assigns only upon the following
condition in addition to such other sections of this article, to wit:
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 block, then the owner of an
oil and/or gas lease and/or owner of the right to lease oil and/or
gas of any given lot, block or tract shall have the right of option,
by notice to the permittee given in writing thirty (30) days after
the issuance of a permit for a well on the drilling block involved,
either:
(1)
To treat his interest as a working interest and to contribute toward
the actual cost and expense of drilling, completing and operating
such well with all necessary appurtenances currently each month in
the proportion to the interest owned and in the proportion that the
number of square feet in area owned by him in the drilling block bears
to the number of square feet embraced in such block, and thereupon
receive the same proportion of the oil produced and saved from such
well or the 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 this interest as a royalty interest and receive, delivered
free of cost in the pipeline to which the well is connected, a share
of all oil produced and saved from such well, 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 area owned by him bears to the
number of square feet in such drilling block, or at the election of
the permittee to receive such proportion of the value at the well
of 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 permittee the value at the well of such proportion of gas or casinghead
gas, produced, saved and utilized or sold.
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If any owner does not exercise the right and option above provided
and give notice to the permittee within the period 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 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 oil, gas and casinghead gas or
the value thereof, making deliveries of products or settlement for
the value thereof. If Option (1) is exercised by the owner of any
lot or 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 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 number of
square feet in such drilling block, 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.
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(b)
In
determining the total number of square feet in a drilling block there
shall be included the area in streets and alleys within the drilling
block. In determining the total number of square feet embraced within
a lot or lots, block or blocks, tract or tracts, there shall be included
that portion of streets and alleys which the owner of the lot, block
or tract owns, but no part of any street or alley shall be so included
where title to the street or alley involved (subject only to easement
for public use) is not in the owner of the lot, block or tract.
(2003 Code, sec. 12.37)
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 own land or other
consideration therefor, or for damages, rights or privileges with
respect thereto.
(2003 Code, sec. 12.38)
