Loading...
HomeMy WebLinkAboutOrdinance - 2004-O0055 - Amending Chpt. 14; Definitions Of Property; Insurance For Oil & Gas Drilling - 05/06/2004I First Reading I May 6,. 2oo4 · Item No. 21 Second Reading May 25,. 2004 Item No. 17 ORDINANCE NO. 2004-o0055 AN ORDINANCE AMENDING CHAPTER 14 OF THE CODE OF ORDINANCES OF THE CITY OF LUBBOCK, TEXAS, WITH REGARD TO ADDING THE DEFINITIONS OF PROPERTY OR PREMISES, DRILLING, AND OPERATION; ADDING REQUIRED INSURANCE FOR OIL AND GAS DRILLING AND AMOUNTS; PROVIDING APENALTY; PROVIDING A SAVINGS CLAUSE; AND PROVIDING FOR PUBLICATION. WHEREAS, the City Council of the City of Lubbock, Texas deems it in the best interest of the health, safety, and welfare ofthe citizens ofLubbock to make the following amendments to Chapter 14 of the Code of Ordinances with regard to adding the definitions of property or premises, drilling, and operation; adding required insurance for oil and gas drilling and amounts; NOW THEREFORE: BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: SECTION 1. THAT Section 14-126 of the Code of Ordinances of the City of Lubbock, Texas, is hereby amended to read as follows: Sec. 14-126. Definitions. For the purposes of this article the following words and terms wherever and whenever used or appearing herein shall have the scope and meaning hereinafter defined and set out in connection with each. 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: Well shall include and mean any hole or holes, bore or bores, to any sand, formation, strata or depth for the purposes of: (1) Producing and recovering any oil, gas, liquid hydrocarbon, or any ofthem; or (2) Cycling, pressure maintenance, water flood, secondary and/or tertiary operations; (3) Disposal of salt water or other impurities brought to the surface during the operation of any other welL Permittee shall mean the person to whom is issued a permit for the drilling and operation of a well under this chapter, and his administrators, executors, heirs, successors and assigns. ! II I Lease as that term is used herein shall mean any tract of land subject to an oil, gas and mineral lease or other oil and gas development contract, or any unit composed of several tracts and leases, but operated as one lease, and any tract of land in which the minerals are owned by an operator or someone holding under it or him, but which, due to the fee royalty ownership, is developed and operated as a separate tract. The property or premises for purposes of this article shall mean the land concerned or included in an oil or gas lease or leases that is subject to oil and/or gas operations. Drilling shall mean the act of boring a hole through which oil and/or gas may be produced. Operation shall mean any activity leading or which may lead to the production of oil and /or gas. Unitize, pool, and force pool shall refer to the process of incorporating mineral rights for various tracts of land within one instrument (the Declaration of Pooled Unit Agreement) for the purpose of forming the "production unit" defined below. Production unit shall mean the acreage assigned to a unit by the operator of that unit and approved by the City Council, for the drilling of a well. The declaration and approval of a production unit is deemed to unitize, or pool, all mineral rights within the unit. All owners who ratifY or confirm such unit in accordance with this article shall participate on a pro rata basis. The acreage, or tracts of land, to be assigned to a production unit shall be selected at the discretion of the owner or lessee seeking a permit under this section, subject to the following restrictions: (1) A production unit, as defined herein shall be forty (40) acres on contiguous tracts of land. (2) The distance between the two (2) farthest points of the boundary of a production unit shall not exceed three thousand (3,000) feet in length. (3) The location of a well on a production unit shall be upon a tract of land wherein the mineral rights are controlled by voluntary agreement. The Declaration of the Pooled Unit Agreement shall read substantially as follows and shall include Exhibits "A" and "B": (Title ofWell) DECLARATION OF POOLED UNIT AGREEMENT THE STATE OF TEXAS § KNOW ALL MEN BY THESE PRESENTS: COUNTY OF LUBBOCK § That the undersigned, being the owners of certain valid and subsisting Oil, Gas and Mineral Leases listed in Exhibit "A", attached hereto and made a part hereof for all purposes, covering and affecting certain contiguous tracts of land in Lubbock County, Texas, or being the owners of the minerals under certain tracts of land as described in Exhibit "B," do, by virtue of the Authority conferred by the terms of said Oil, Gas and Mineral Leases and all amendments and corrections thereto, hereby pool, consolidate, combine and unitize said Oil, Gas and Mineral Leases, and other mineral and royalty interests as to production of oil, gas, distillate, condensate and other oil and gas substances, from the lands described in Exhibit "A" (which lands are hereinafter referred to as Unit Acreage), and do hereby pool, consolidate, combine and unitize the royalties, working interests, overriding royalties, production payments, mineral interests, and other interests pertaining to said leases and/or Unit Acreage and the production therefrom insofar, and only insofar, as said Leases and other interests cover and include the oil and gas rights as hereinafter defined in and under such Unit Acreage, to form an operation production unit known as the (hereinafter referred to as "Unit"), containing a total called acreage of 40 acres, more or less, as described in Exhibit "B" for the production from the Unit of oil, gas, distillate, condensate and other oil and gas substances from a well or wells on said Unit. A "well" as used herein means an oil or gas well so classified by the rules and regulations of the Railroad Commission of Texas and this Unit includes all production that is produced from any oil or gas well located on the Unit Acreage. The production of such oil, gas, distillate, condensate and other oil and gas substances from an oil or gas well on any part of said Unit Acreage shall constitute production of such products from all of the leases or lands contained in such Unit. Drilling or reworking operations or other operations conducted on said lands or leases within such Unit for the production of oil, gas, distillate, condensate and other oil and gas substances covered by this Declaration of Pooled Unit Agreement shall constitute such operations for the production of oil, gas, distillate, condensate and other oil and gas substances on all lands and leases included within the Unit. All oil, gas, distillate, condensate and other oil and gas substances produced from any oil or gas well in such Unit shall be allocated proportionately among all of the tracts within such Unit in the proportion that the number of surface acres in each of such tracts which are included in the Unit bears to the total number of surface acres in such Unit, and the share of production to which each interest owner is entitled shall be computed on the basis of such owner's respective interest in each tract within the Unit. It is the intention of the undersigned to include, and they do hereby include, in said Unit all leases and other mineral or royalty interests which the undersigned now owns covering the said Unit and any additional lease or leases or mineral or royalty interests which may be hereinafter acquired by the undersigned, covering all or any part of the Unit during the time said Unit remains effective. This Unit shall remain in effect for 180 days and as long thereafter as (1) there is a well on said Unit producing or capable of producing substances, or (2) operations for drilling or reworking are conducted thereon with no cessation of more than 180 consecutive days. This Unit shall become effective when approved by the City Council for the City of Lubbock pursuant to the terms of the Oil and Gas Drilling Ordinance for the City of Lubbock (Ch. 14, Art. VI). Notwithstanding anything in this Declaration to the contrary, the Unit herein created shall be controlled by the terms and provisions of the Lubbock City Drilling Ordinance, being Chapter 14, Article VI, ofthe Code of Ordinances for the City ofLubbock. This Declaration of Pooled Unit Agreement may be executed in counterparts. ,, II Executed this ____ day of _______ _ Name of Oil Company Agent/Owner THESTATEOFTEXAS § COUNTY OF LUBBOCK § BEFORE ME, the undersigned, on this day personally appeared -------known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that one is of the same. GIVEN UNDER MY HAND AND SEAL THIS THE ___ DAY OF NOTARY PUBLIC, STATE OF TEXAS The model operating agreement shall be contained within the current approved American Association of Petroleum Landmen form. City manager. All references in this chapter to the "city manager" shall mean the city manager or his designee. SECTION 2. THAT Section 14-128 of the Code of Ordinances of the City of Lubbock, Texas, is hereby amended to read as follows: Sec. 14-128. Insurance requiredand amounts; indemnity. (a) In the event a permit is approved by the City Council under the terms of this article for drilling and operation of a well, no permit shall be issued by the city manager until the permittee shall file with the city manager a certificate of insurance in an amount and form as specified below. The permittee shall carry a policy or policies of standard comprehensive public liability insurance, including contractual liability covering bodily injuries and property damage, naming the permittee and the city as insureds, with an insurance company authorized to do business in the State of Texas. Such policy or policies shall contain a waiver of any and all of the insurer's rights to subrogation that any II I >I I such insurer or insurers may acquire by virtue of payment of any loss under such insurance and shall specifically cover any and all damage or incidents that may occur in or to the City's right-of-way. Such policy or policies in the aggregate shall provide for the following minimum coverages: Comprehensive Public Liability- per occurrence-Two Hundred Fifty Thousand ($250,000.00); per incident-Five Hundred Thousand ($500,000.00) (b) Permittee shall file with the city manager certificates of such insurance as above stated, and shall obtain the written approval thereofby the city manager, who shall act thereon within ten (10) days from the date of such filing. The insurance policy or policies shall not be cancelled without written notice to the city manager at least thirty (30) days prior to the effective date of such cancellation. In the event such insurance policy or policies are cancelled, the permit granted shall terminate, and permittee's rights to operate under such permit shall cease until permittee files additional insurance as provided herein. Permittee shall maintain said insurance for a period no less than three (3) years after drilling and/or production operations cease at any and all well sites. At the end of such three (3) year term, permittee may apply to the city council to have said insurance requirements removed. The city council shall not remove such insurance requirements if it is found that permittee has failed to comply with any requirements as set forth in this code of ordinances. If the permittee assigns all rights and interests in such permit held and ceases all operations on the property, then permitee shall be relieved of insurance requirements herein so long as assignee of such permit complies fully with all insurance requirements herein. (c) Permittee shall be responsible for any and all damage that arises as a result of permittee's drilling or production activities. Permittee shall promptly restore the streets, sidewalks and other public property of the City, which may be disturbed or damaged in the operations, to their former condition as determined by the City. Permittee shall promptly clear all such streets, sidewalks and other public property of the City of all litter, trash, waste, and other substances used, allowed or occurring in the drilling or production operations, and will, after abandonment, grade, level and restore all such streets, sidewalks and other public property of the City to the same surface condition, as nearly as possible as existed when operations for the drilling of the well or wells were first commenced. If permittee fails to restore or repair any damage resulting from permittee's activities and/or clean all such streets, sidewalks and other public property of the City, the City may conduct any and all repair and/or clean up required to restore all such streets, sidewalks and other public property of the City and/or surrounding property the City finds is necessary. The City shall charge any costs of such clean up or restoration to permittee and permittee shall promptly pay such costs. The City may revoke permittee's permit and/or pursue any remedy available to City by law if permittee fails to provide payment for such costs. Permittee shall indemnify and hold the City harmless from any and all liability resulting from or attributable to the granting of such permit or operations conducted pursuant thereto. (d) Any permit in compliance with the· terms of this ordinance on or before the effective date ofthis ordinance shall be deemed in compliance. SECTION 3. THAT violation of any provision of this ordinance shall be deemed a misdemeanor punishable as provided by Section 1-4 of the Code of Ordinances of the City of Lubbock, Texas. SECTION 4. THAT should any paragraph, section, clause, phrase or word of this I· Ordinance be declared unconstitutional or invalid for any reason, the remainder of the 'I Ordinance shall not be affected thereby. il SECTION 5. THAT the City Secretary of the City of Lubbock, Texas, is hereby authorized and directed to cause publication of the descriptive caption of this Ordinance as an alternative means of publication provided by law. AND IT IS SO ORDERED. Passed by the City Council on first reading this 6th day of _ __;;.Ma.;;.:;.:...L.y __ , 2004. Passed by the City Council on second reading this 25th ATTEST: ~b~ Rebecca Garza, City Secretary ,, II I' APPR9:V:ED AS TO FORM: /· .... / ~s~m; ke:ccdocs/OilWell-def.ins.ord May 11,2004