Midland Reporter-Telegram

By Mella McEwen

Texas oil and natural gas producers and regulators are watching to see if Gov. Greg Abbot signs Senate Bill 1150. Passed by both house of the Texas Legislature, SB 1150 focuses on management and regulation of inactive oil and gas wells under the jurisdiction of the Railroad Commission.

The legislation, written by State Sen. Mayes Middleton, R-Galveston, has drawn industry support.

“SB 1150, for the first time, places a limit on the number of years that a well can be kept in inactive status before an operator is required to either plug or bring back to production,” Ben Shepperd, president of the Permian Basin Petroleum Association, told the Reporter-Telegram. “PBPA was supportive of this effort this session, and we had multiple meetings over the last year to reach consensus on the best path forward."

Beginning in 2027, the limit that a well can be kept in inactive status is 15 years. Additionally, operators will have to seek approval of a compliance plan from the commission specifying how the operator will address his inventory of inactive wells.

“Some of our members argued for a shorter limit of 10 years of inactivity, yet we needed to be sensitive to the business practices of those operators who purchase inactive wells with the intention of bringing them back to production,” Shepperd said.

He explained that the bill was brought about to address the growing problem in Texas with the growth of the inactive well population. The population in 2024 was over 150,000. Operators plug thousands of wells each year, and the commission typically plugs about 1,300 or so, he noted, with the industry providing the funds that enable the state plugging.

“While there are numerous legitimate reasons that operators may have inactive wells, the current population is excessive. In addition, wells that have been inactive for a lengthy period of time have the potential to become orphaned if the operator walks away from their plugging liability. The Texas orphaned well population is about 8,500,” Shepperd said.

Todd Staples, president of the Texas Oil & Gas Association, commented: “SB 1150 recognizes that once a well has reached the end of its economic life and there is no useful purpose, the owner should be responsible for the plugging, and makes this the law in Texas. We applaud Sen. Middleton and Rep. Geren’s leadership in passing this important legislation and look forward to Gov. Abbott signing it into law so that the oil and natural gas industry can continue to safeguard our environment and natural resources, while ensuring that Texas remains the national and global energy leader.”

According to Texas Policy Research, SB 1150:

• Limits the ability of operators to repeatedly extend the deadline for plugging wells that have been inactive for more than 15 years and were completed over 25 years ago.
• Requires operators seeking to transfer an inactive well to another party to certify compliance and prohibit transferring extension rights to the new operator.
• Mandates the Railroad Commission to produce an annual report to the Legislature and executive branch detailing the number, age and status of inactive wells across the state.

Texas Policy Research also estimates the cost to the Railroad Commission to implement the legislation is over $60 million across five fiscal years, beginning in FY 2026, funded through the Oil and Gas Regulation and Cleanup Account. Much of that cost is from the need to hire new personnel. The commission would require 54 new full-time employees in FY 2026, rising to 86 in FY 2028 and beyond. These positions would support a newly formed team responsible for reviewing inactive well compliance plans, conducting field inspections to assess well conditions and determining bonding requirements based on well-specific plugging cost estimates. Field engineers, compliance analysts and support staff will all be needed to handle the increased workload, with annual salary and benefits costs rising accordingly.

The commission also must undertake significant upgrades to legacy IT systems that manage compliance and well-plugging data.

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