PowerPoint Presentation

RAILROAD COMMISSION OF TEXAS

P-5 FILINGS AND FINANCIAL SECURITYPRESENTERS: MARIA CASTRO / JENNIFER GILMORE1TOPICSP-5 Organization Report Revised September 2011Financial Assurance RequirementsP-5 Filing Fees and Surcharge Surcharge effective May 2012

22P5 ORGANIZATION REPORTRequirements:

Oil & Gas & Pipeline Operators: Natural Resources Code, Sec. 91.142Oil & Gas Statewide Rules 1 & 78 Master Meter & Distribution Systems (Safety Division):Utilities Code, Sec. 121.201Pipeline Safety Rule 51/Oil & Gas Rules 1 & 78

33SUPPLEMENTAL FORMSP-5O: Officer Listing

P-5A: Non-Employee Agent Listing

P-5PB(1): Individual Performance BondP-5PB(2): Blanket Performance BondP-5LC: Letter of Credit

44P-5 Form

55Form P-5 (Organization Report)

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7P-5O Form

88Form P-5O (Officer Listing)

99P-5A Form

1010 Form P-5A (Non-Employee Agent Listing)

Actual Person name not company1111

Original signature by P-5 officer required1212Key PointsEntities requiring SOS registration must be chartered prior to submitting P-5 application.Organization name must match SOS filings, down to and including punctuation.IF organization name is longer than 32 characters, abbreviation will be required to accommodate RRC spacing limitations. This will not effect the organizations chartered name. Email address is not required, but if provided available to the public.Officer titles must match plan of organization. EX: 1) Corporation President, Secretary, Treasurer 2) Limited Partnership General Partner 3) Limited Liability Company Manager/Member etc..If an officer is a company, must provide officers for listed company.Only acceptable form of ID for a sole proprietor is a SSN.All forms of ID are redacted and not available to the public.P-5 officer signature is required to assign non-employee agent on form P-5A.

13Financial RequirementsFinancial Security required for most organizations.Option 1 - Individual Performance Bond, Letter of Credit or Cash DepositOption 2 - Blanket Performance Bond, Letter of Credit or Cash Deposit

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14Oil & Gas Non-Well Operators Exempt if your only operations are:

Master Meter / Gas Distribution Center PurchaserDirectional SurveyorSalt Water HaulerApproved Well PluggerApproved Cementer for Well Plugging(Well plugging requires Approval by Fld Ops)Service company for well stimulation activities

$25,000 if you have any other activities

1515Individual Performance Bond, Letter of Credit or Cash Deposit

Only available to well operators who have no activity other than wellsAmount determined by multiplying the aggregate depth of all wells (active, inactive, injection, producer, etc.) at $2.00 per foot.Option 1

1616Blanket Performance Bond, Letter of Credit or Cash DepositAvailable to all operatorsAmount determined by the total number of wells (active, inactive, injection, producer, etc.) 1 to 10 wells$25,00011 to 99 wells$50,000100 wells or more$250,000For operators without wells who are required to file FA, $25,000.Option 2

1717Bay and Offshore Wells

Statewide Rule 3.78 amended 9-1-2004 to require additional financial security for operators of Bay and Offshore wells

Calculated by Base amount + Entry Level amount + Non-Producing Amount

Presumed Plugging Cost for Bay Well $60,000.00 / Offshore Well $100,000.001818Example: Operator A has 15 wells, of which 8 are bay wells. 4 of these wells are non-producing. Base:$50,000 Entry Level:$60,000 Non-Producing amount: $180,000Total: $290,000Bay & Offshore Wells

1919Effective 12-19-05 Statewide Rule 78 amended requiring financial security as a condition of the issuance of permit to drill, recomplete or reenter a well.Required amount: Option 1 or Option 2Permits cannot be issued to unbonded operators.Drilling Permits

2020P-5LC (Letter of Credit)

2121P-5LC (back page LOC)

Effective date MUST be current date.2222P-5PB1 and P5PB2(Individual and Blanket Performance Bonds)

2323(Back page of P-5PB1 and P-5PB2)

Date MUST be affixed by principal.2424Filing Fee and Surcharges

Filing fee required for annual P-5 renewals and new P-5 filings

Statewide Rule 78 amended to impose a surcharge of 150% to filing fees

Notification to industry sent out February 2012

Effective May 1, 20122525P-5 Filing FeeAmount based on the following four components:Number of wells operated 1 25 wells $75026 100 wells $1,250101 wells or more $2,500Natural Gas Pipelines (one or more): $562.50Pipelines other than Natural Gas (one or more): $1,562.50Facilities and/or Service Activities: $500 to $750 (One single fee regardless of quantity or variety)

Operator with no activity or a new filer is $750.

2626Facilities & Service ActivitiesOil & Gas Regulated activities other than pipelines or wells.

$750 if the activities include only: Pollution Cleanup Contractor, (CLENUP)Directional Surveyor, (DIRSUR)Approved Cementer for plugging wells, and/or (PLUGGR)Moving/Storing Crude or Condensate. (TRANSP)Approved Cementer for Well Plugging(CEMNTR)

$1,250 if the operator has any other Commission-regulated facilities or service activities, including (but not limited to):Commercial Facility, (COMFAC)Gas Plant, (GASPLT)Reclamation Plant, (RECLPL)Refinery, (REFINE)Saltwater Disposal P18 authority, and/or (SWDP18)Waste Hauler authority. (WHAUL)Service Comp. for Well Stimulation/Hydr. Fracturing Activities (WLSTIM)

2727Filing fee and SurchargesStatewide Rule 78 amended to impose a surcharge of 150% to filing fees

Effective May 1, 2012

Notification to industry sent out February 2012

2828Auto P-4 ChangesName change P-5Large acquisitions of propertySame Operator change

25 or more leasesOperator change Auto - Request letter requires signature of previous P-5 officer and acquiring P-5 officerSame operator change Auto Letter can be signed by company authorized individualQuestions contact: Linda Turk (512) 463-677729RRC Online SystemFile a SAD (Security Administration Designation) Form

Two types of accounts:Security Administrator AccountsFiler Accounts

3030SAD Form (Security Administrator Designation For Electronic Filing)

3131SAD Form (Security Administrator Designation For Electronic Filing)

Complete address3232

Legible and correct6 characters3333Helpful Links

34Railroad Commission Website: http://www.rrc.texas.gov

Expanded Website Access (EWA) P5 Query: http://webapps2.rrc.state.tx.us/EWA/organizationQueryAction.do (data updated nightly)

P-5 Renewal Status Query: http://webapps2.rrc.state.tx.us/EWA/inactiveWellStatusQueryAction.do (data updated nightly)

HB2259/HB3134 Information (Inactive Well requirements):http://www.rrc.texas.gov/oil-gas/compliance-enforcement/hb2259hb3134-inactive-well-requirements/

RCOnline-Security@rrc.state.tx.us

Lost UserID and Password Helphttps://webapps.rrc.state.tx.us/security/loginHelpAction.do?method=Initialize34For any questions the P-5 Unit can be contacted by phone or email.

P-5 Main Line (512) 463-6772

P5@rrc.state.tx.us

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Contact Information35