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Part 551: Reports and Financial Security

(Statutory authority: Environmental Conservation Law, §§ 23-0305[8] [9])

[Effective date: May 28, 1985]

[page 1 of 1]

Contents:

Sec.

§551.1 Organizational reports

(a) Each person who is a principal or acts as an agent for another in any of the following activities within the State must file with the department an organizational report on a form the department prescribes:

(1) solution mining;

(2) drilling oil, gas, or solution mining wells;

(3) the production in the State oil and gas;

(4) the first purchase of oil and gas produced in the State;

(5) the storage in the State of gas;

(6) the practice of well abandonments and salvage of oil and gas subsurface equipment; or

(7) the first transportation of oil and gas produced in the State.

(b) Except as provided in subdivision (c) of this section, any person required to file an organizational report must file a new organizational report showing the new organizational information within 30 calendar days of the occurrence of the change of any fact stated on the most recent organizational report.

(c) Any corporation listed on the New York or American Stock Exchange must update its organizational report annually no later than March 31st.

(d) Any person required to file an organizational report must notify the department in writing within 30 calendar days of cessation or termination of his activities in the State that necessitated the filing of the report. A person ceasing or terminating activities relating to solution mining or to the production in the State of oil and gas must submit with that notification a list of all wells in the State of which that person at any time had an interest as owner that have not been plugged and abandoned to the satisfaction of the department in accordance with Part 555 of this Title, identifying each by well identification number and production status (e.g., producing, shut-in, injection, disposal, etc.) and providing the name and complete mailing address of each unplugged well's new owner and the date of transfer.

§551.2 Production and purchase reports

(a) Each person who first produces, sells, purchases, acquires, stores or transports oil and gas produced in the State must keep and maintain complete and accurate records of the amounts thereof. These records must be retained for five calendar years after the calendar year to which they pertain. True copies or duplicates must be kept or made available within the State for examination by the department at all reasonable times.

(b) Each person who first produces, sells or purchases oil and gas produced in the State and the operator of each gas storage facility in the State must file with the department on a form the department prescribes a statement of the oil and gas produced, sold, purchased or stored. The information contained in this statement must be compiled on a calendar year basis and must be filed no later than March 31st next following the close of the calendar year, unless the department requires otherwise.

(c) (1) All records or reports and any information obtained under the provisions of this section are only for the confidential use of the department and other departments, agencies, and officers of the State government until six months after the period to which those records or reports apply, unless the person furnishing them expressly agrees to an earlier publication or availability to the general public.

(2) The provisions of this subdivision shall not be construed to prevent the use of those records, reports or information by any department, agency or officer of the State government in compiling or publishing analyses or summaries relating to the general condition of the industry, the economy or the condition of the natural resources of the State, provided that those analyses or summaries do not involve the publication of records, reports or information relating to a single firm or business enterprise.

§551.3 Other reports

The following are other reports an owner or operator may have to file and their location in Subchapter B of Chapter V of this Title:

(a) completion report: 554.7;

(b) gas-oil ratio report: 556.1;

(c) nonroutine incident report: 556.4;

(d) plugging report: 555.5; and

(e) secondary recovery and pressure maintenance report: 557.4.

§551.4 Financial security: generally

(a) The owner of an oil and gas well or of a solution mining well must file with the department and continuously keep in force financial security payable to the department to guarantee the performance of his or her well plugging and abandoning obligations under Part 555 of this Title. The owner may keep in force financial security in excess of that required. Financial security filed and maintained with the department for solution mining wells cannot also be used to satisfy the financial security requirements for oil and gas wells under this Part. A general partner of a partnership or of a limited partnership that is the owner of such a well may, on behalf of that partnership or limited partnership, file and continuously keep in force the financial security to satisfy the financial security requirements pertaining to that partnership or limited partnership.

(b) Financial security requirements must be satisfied by filing:

(1) a surety bond in favor of the State on a form the department prescribes from a corporate surety authorized to do business as such in the State; or

(2) a personal bond in favor of the State accompanied by an irrevocable letter of credit from a financial institution authorized to do business in the State; or (3) any other comparable financial security that the department accepts.

(c) The owner of a well required to file financial security must continuously maintain that financial security with the department until:

(1) a subsequent owner has filed financial security acceptable to the department and the department has approved the transfer to the subsequent owner; or

(2) the well giving rise to the financial security requirement has been plugged and abandoned to the satisfaction of the department in accordance with Part 555 of this Title.

§551.5 Amount of financial security: wells up to 6,000 feet deep

(a) Except for gas wells drilled into lands under the waters of Lake Erie, for wells less than 6,000 feet in depth for which the department issued or is processing for issuance on or after October 1, 1963, permits to drill those wells or issued on or after June 5, 1973 acknowledgments of the notices of intention to drill those wells, the amount of financial security required is:

(1) for wells less than 2,500 feet in depth:

(i) for 1 to 25 wells, $2,500 per well, not exceeding $25,000;

(ii) for 26 to 50 wells, $25,000, plus $2,500 per well in excess of 25 wells, not exceeding $40,000; (iii) for 51 to 100 wells, $40,000, plus $2,500 per well in excess of 50 wells, not exceeding $70,000; or

(iv) for over 100 wells, $70,000, plus $2,500 per well in excess of 100 wells, not exceeding $100,000.

(2) for wells between 2,500 feet and 6,000 feet in depth:

(i) for 1 to 25 wells, $5,000 per well, not exceeding $40,000;

(ii) for 26 to 50 wells, $40,000, plus $5,000 per well in excess of 25 wells, not exceeding $60,000;

(iii) for 51 to 100 wells, $60,000, plus $5,000 per well in excess of 50 wells, not exceeding $100,000; or

(iv) for over 100 wells, $100,000, plus $5,000 per well in excess of 100 wells, not exceeding $150,000.

(b) If an owner has a well or wells that are less than 2,500 feet in depth and has another well or other wells that are between 2,500 feet and 6,000 feet in depth, instead of providing financial security under the provisions of each paragraph in subdivision (a) of this section, that owner may file financial security as if all of those wells were between 2,500 feet and 6,000 feet in depth.

§551.6 Amount of well financial security: wells over 6,000 feet deep

The owner of an oil and gas or solution mining well that exceeds or that is expected to exceed 6,000 feet in depth must file financial security for that well in an amount based upon the anticipated costs of plugging and abandoning that well to the satisfaction of the department in accordance with Part 555 of this Title, up to $250,000. However, the owner is not required to file financial security under this section exceeding $2,000,000, regardless of the number of wells described in this section that the owner may have.

§551.7 Well salvagers

Each person who acts as an agent for another in the practice of well abandonments and salvage of oil and gas field subsurface equipment must file with the department and continuously keep in force financial security in the amount of $15,000 to ensure the satisfactory plugging and abandoning of wells to the satisfaction of the department in accordance with Part 555 of this Title.