The Louisiana Department of Natural Resources, Office of Conservation, signed an emergency rule on April 13, 2016 that, in effect, for a period of 120 days beginning on April 13th, revises the new financial security rules promulgated last May. Effective September 1, 2015 the amounts required for financial security were dramatically increased in response to a report by the Louisiana Legislative Auditor. In light of the fact that the price of oil has dropped to historically low levels, and the costs of the increased financial security standards are adding an additional burden to operators who are already struggling financially, this emergency rule has been signed returning the amounts to their pre-audit levels. The blanket amounts for land location wells are returning to $25K (up to 10 wells), $125K (11-99 wells), and $250K (100 or more wells) for their respective categories, and the per-foot amounts are likewise being lowered for this 120-day period. The emergency rule does not affect offshore or inland water location wells; their required security will remain at the increased amounts. Unfortunately, operators who have already complied and raised their blanket amounts following last year's ruling will not be allowed to return to the lower amounts for this short period of time. However, any operators who have wells that are not currently covered by financial security have an opportunity now to secure those wells at the lower amounts.  Read More

In addition to the other changes that were made effective in August and September 2015, there was also a new rule established regarding wells that have been inactive for an extended period of time. In said rule it was stated that all wells which have been inactive for four or more years as of May 20, 2015 shall have one year, until May 20, 2016, to either be plugged, to be added to a schedule to be plugged, or to comply with the financial security requirements. The emergency rule does not affect this date; May 20, 2016 remains the deadline to address inactive wells. If an operator does not have plans to plug their inactive wells and needs to provide security for them, again, this is an opportune time to do so at the temporarily lowered amounts. Operators will also be required to a pay a per-well fee of $250 on each inactive well-that has been inactive for four or more years-that is not scheduled to be plugged. 

If Brammer Engineering can assist you with these or any other state regulatory matters, please contact Adonya Dryden at [email protected].