Sequestration site unitization.

WORKING DRAFT

ORIGINAL HOUSE

BILL

NO.
0080

ENROLLED ACT NO. 42, HOUSE OF REPRESENTATIVES

SIXTIETH LEGISLATURE OF THE STATE OF
WYOMING
2009 GENERAL SESSION

AN ACT relating to the unitization of carbon sequestration sites; providing purposes and definitions; specifying requirements for agreements, applications and hearings; requiring orders; providing for modification of orders; providing for liens;
specifying limitations of the act;
and providing for an effective date.

Be It Enacted by the Legislature of the State of
Wyoming
:

Section 1.

W.S. 35
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314 through 35
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317 are created to read:

35
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11
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314.

Unitization of geologic sequestration sites; purposes; definitions
.

(a)

Th
e purpose of
W.S. 35
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314 through 35
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317
is declared by the
Wyoming
legislature to be the protection of
corresponding
rights, compliance with environmental requirements and to facilitate the use and production of
Wyoming
energy resources.

(b)

Except when context otherwise requires or when otherwise defined in this subsection, the terms used or defined in W.S. 35
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103, shall have the same meaning when used in
W.S. 35
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11
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314 through 35
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317
. When used in
W.S. 35
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314 through 35
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11
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317
:

(i)

"
Corresponding
rights" means the right of all pore space owners in a unit area who will be affected by unit operations, either now or in the future, to concurrently share in the economic benefits generated by using
the pore space in the unit area.

35
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315.

Unitization of geologic sequestration sites; agreements; application for permit; contents.

(a)

Any interested person may file an application with the Wyoming oil and gas conservation commission requesting an order providing for the operation and organization of a unit of one (1) or more parts as a geolo
gic sequestration site and for the pooling of interests in pore space in the proposed unit area for the purpose of conducting
the
unit operation. The application shall contain:

(i)

A copy of any permit or draft permit issued by the department allowing geologic sequestration or any application for such permit;

(ii)

A description of the pore space and surface lands proposed to be so operated, termed the "unit area";

(iii)

The names, as disclosed by the conveyance records of the county or counties in which the proposed unit area is situated, and the status records of the district office of the bureau of land management of:

(A)

All persons owning
or having an interest in the surface estate and pore space in
the
unit area including mortgages and the owners of other liens or encumbrances;
and

(B)

All owners of the surface estate and pore space not included within but which immediately adjoins the proposed unit area or a corner thereof
.

(iv)

The addresses of all persons and owners identified in subparagraphs (iii)(A) and (B) of this subsection, if known. If the name or address of any person or owner is unknown, the application shall so indicate;

(v)

A statement of the type of operations
contemplated in order to effectuate the purposes specified in
W.S. 35
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314
to comply with environmental requirements and to facilitate the use and production of
Wyoming
energy resources;

(vi)

A proposed plan of unitization applicable to the proposed unit area which the applicant considers fair, reasonable and equitable and which shall include provisions for determining the pore space to be used within
the
area, the appointment of a unit operator and the time when the plan is to become effective;

(vii)

A proposed plan for determining the quantity of pore space storage capacity to be assigned to each separately owned
tract within the unit and the
formula or
method by which pore space will be allocated the economic benefits generated by
use of pore space in the unit area;

(viii)

A proposed plan for generating economic benefits for the use of pore space within the unit area;

(ix)

A proposed operating plan providing the manner in which the unit area will be supervised and managed and, if applicable, costs allocated and paid, unless all owners within the proposed unit area have joined in executing an operating agreement or plan providing for such supervision, management and allocation and, if applicable, payment of costs.

All operating plans shall comply with all applicable environmental requirements.

35
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316.

Unitization of geologic sequestration sites; hearings on application, order; modifications.

(a)

Upon receipt of an application under W.S. 35
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315, the Wyoming oil and gas conservation commission shall promptly set the matter for hearing, and in addition to any notice otherwise required by law or the commission's rules, shall cause
the applicant to give
notice of
the
hearing, specifying the time and place of hearing, and describing briefly its purpose and the land and pore space affected, to be mailed by certified mail at least thirty (30) days prior to the hearing to all persons whose names and addresses are required to be listed in the application.

(b)

After considering the application and hearing the evidence offered in connection therewith, the
Wyoming
oil and gas conservation commission shall enter an order setting forth the following findings and approving the proposed plan of unitization and proposed operating plan, if any, if the commission finds that:

(i)

The material allegations of the application are substantially true;

(ii)

The purposes specified in
W.S. 35
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314
will be served by granting the application;

(iii)

The application outlines operations that will comply with environmental requirements;

(iv)

Granting the application will facilitate the use and production of
Wyoming
energy resources;

(v)

The quantity of pore space
storage capacity,
and method used to determine the quantity of pore space
storage capacity
allocated to each separately owned tract within the unit area represents, so far as can be practically determined, each tract's actual share of the pore space to be used in the sequestration activity;

(vi)

The method
by which
the allocation of economic benefits generated from use of pore space within the unit area between pore space owners; and between pore space owners and the unit operator or others
is fair and reasonable, taking into consideration the costs required to capture, transport and sequester the carbon dioxide
;

(vii)

The method of
generating economic benefits from the use of pore space in the unit area
is fair and equitable and is reasonably designed to maximize the value of such use;

(
viii
)

Other requirements specified by rules or regulations adopted by the oil and gas conservation commission have been met.

(c)

No order of the
Wyoming
oil and gas conservation commission authorizing the commencement of unit operations shall become effective until the plan of unitization has been
signed or in writing ratified or approved by those persons who
own
at least eighty percent (80%)
of the pore space storage capacity within the unit area. If such consent has not been obtained at the time the commissioner's order is made, the commission shall, upon application, hold supplemental hearings and make findings as may be required to determine when and if
the
consent will be obtained.
The commission shall require the applicant to give notice of a supplemental hearing
by regular mail at least thirty (30) days prior to the hearing to each person owning interests in the pore space in the proposed unit area whose name and address was required by W.S. 35
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315(a) to be listed in the application for the unit operations. If the required percentages of consent have not been obtained within a period of six (6) months from and after the date on which the order of approval is made,
the
order shall be ineffective and revoked by the commission, unless, for good cause shown, the commission extends that time. Any interested person may file an application with the Wyoming oil and gas conservation commission requesting an order applicable only to the proposed unit area described in the application which shall provide for the percentage of approval or ratification to be reduced from eighty percent (80%) to seventy-five percent (75%). The application shall contain the information required by W.S. 35
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315(a) and any order of the commission entered pursuant to the application shall comply with
subsection (b) of this section
. Notice of the hearing on the application shall be given in the same manner and to the same persons as required by subsection (a) of this section. If the commission finds that negotiations were being
conducted since
July 1, 2009,
or have been conducted for a period of at least nine (9) months prior to the filing of the application, that the applicant has participated in the negotiations diligently and in good faith, and that the percentage of approval or ratification required by this subsection cannot be obtained, the commission may reduce any percentage of approval or ratification required by this section from eighty percent (80%) to seventy-five percent (75%).

The
order shall affect only the unit area described in the application and shall operate only to approve the proposed plan of unitization and proposed operating plan and to reduce the required percentage of approval or ratification thereof and shall not change any other requirement contained in this section.

(d)

From
and after the effective date of an order of the Wyoming oil and gas conservation commission entered under the provisions of this section, the operation of the unit area defined in the order by persons other than the unit operator or persons acting under the unit operator's authority, or except in the manner and to the extent provided in the plan of unitization approved by the order, shall be unlawful and is hereby prohibited.

(e)

Unless otherwise provided in this section, an order entered by the Wyoming oil and gas conservation commission under this section may be amended in the same manner and subject to the same conditions as an original order or previous agreement: provided, no amendatory order shall change the assignments of pore space storage capacity between existing pore space owners in the unit area as established by the original order or previo
us agreement, except with the written consent of those persons who
own
at least eighty percent (80%) of the pore space
storage capacity
in the unit
area
, nor change any allocation of costs as established by the original order or previous agreement, except with the written consent of those persons who
own
at least eighty percent (80%) of the unit pore space
storage capacity
. If consent has not been obtained at the time the commission order is made, the commission shall, upon application, hold supplemental hearings and make findings as may be required to determine when and if such consent will be obtained.

The commission shall require the applicant to give notice of a supplement
al
hearing
by regular mail at least
thirty
(
30
) days prior to
the
hearing to each person owning interests in the unit area whose name and address was required by the provisions of
W.S. 35
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315
(
a
)(iii) to be listed in the application for
the
unit operations.

If the required percentages of consent have not been obtained within a period of six (6) months from and after the date on which the order of approval is made,
the
order
shall be ineffective and revoked by the commission, unless, for good cause shown, the commission extends that time.

Any interested person may file an application with the Wyoming oil and gas conservation commission requesting an order applicable only to the unit area described in the application which shall provide for the percentage of approval or ratification to be reduced from eighty percent (80%) to seventy-five percent (75%). The application shall contain the information required by
W.S. 35
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315(a)
and any order of the commission entered pursuant to the application
shall
comply with subsection (
b
) of this section.

Notice of the hearing on the application shall be given in the same manner and to the same persons as required by subsection (
a
) of this section. If the commission finds that negotiations were being conducted since
July 1, 2009
or have been conducted for a period of at least nine (9) months prior to the filing of the application, that the applicant has participated in the negotiations diligently and in good faith, and that the percentage of approval or ratification required by this subsection cannot be obtained, the commission may reduce any percentage of approval or ratification required by this section from eighty percent (80%) to seventy-five percent (75%).
The
order shall affect only the unit area described in the application and operate only to reduce the required percentage of approval or ratification necessary for amending the
assignment
of pore space and shall not change any other requirement contained in this section.

(
f
)

The

Wyoming oil and gas conservation commission, upon its own motion or upon application, and with notice and hearing, may modify its order
regarding the operation, size or other characteristic of the unit area in order to prevent or assist in preventing a substantial inequity resulting from operation of the unit
, provided that no such modification may amend any permit issued under W.S. 35
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313
.

(g)

Any
owner of pore space within a geologic sequestration site who has not been included within a unitization application or order authorizing a unit under this section, may petition for inclusion in the unit area. The petition shall be filed with the Wyoming oil and gas conservation commission and shall describe the petitioner's legal entitlement to the pore space, the location of the pore space, whether the pore space is included within any permitting area applicable to the unit area and the bases for inclusion in the unit area. The petition shall be accompanied by a deposit of money sufficient to pay all costs of the inclusion proceedings. The commission shall
require the petitioner to publish
a notice of filing of the petition which notice shall state the filing of the petition, the name of the petitioner, the location of the pore space and the prayer of the petitioner. The notice shall notify all interested persons to appear at a specified time and place and to show cause, in writing, if any they have, why the petition should not be granted. The commission at the time and place mentioned in the notice shall proceed to hear the petition and all objections thereto and shall thereafter grant or deny the petition. The filing of the petition shall be deemed and taken as an assent by each and all petitioners to the inclusion in the unit of the pore space mentioned in the petition or any part thereof. If the petition is granted, the petitioner shall be considered to have been a member of the unit since its inception and, upon the payment of any costs paid by unit members, shall be entitled to all economic benefits received by unit members since the inception of the unit provided that no unit modification affects any permit issued under W.S. 35
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313. The oil and gas conservation commission shall adopt rules providing for the fair and equitable determination of pore space storage capacity for each successful petitioner and the means by which successful petitioners shall be paid the economic benefits to which they are entitled under this subsection, including, if necessary, a reallocation of economic benefits among unit members.

(h)

A certified copy of any order of the Wyoming oil and gas conservation commission entered under the provisions of this section shall be entitled to be recorded in the land records of the county clerk for the counties where all or any portion of the unit area is located, and the recordation shall constitute notice thereof to all persons.

(j)

No provision of W.S. 35
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314 through 35
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317 shall be construed to confer on any person the right of eminent domain and no order for unitization issued under this section shall act so as to grant to any person the right of eminent domain.

(k)

No order for unitization issued under this section shall act so as to grant any person a right of use or access to a surface estate if that person would not otherwise have such a right.

35
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317.

Unitization of geologic sequestration sites; economic benefits; liens.

(a)

No order of the Wyoming oil and gas conservation commission or other contract relating to a separ
ately owned tract within the unit area shall be termi
nated by the order providing for unit operations, but shall remain in force and apply to that tract, its benefits, burdens and obligations, until terminated in accordance with the provisions thereof.

(b)

Except to the extent that the parties affected agree, no order providing for unit operations shall be construed to result in a transfer of all or any part of the title to pore space or other rights in any tract in the unit area and no agreement or order shall operate to violate the terms and requirements of any permit applicable to pore space within the unit area.

Section 2.

W.S. 30
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104(d) by creating new paragraph (viii) and 35
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313(f)
(intro) and
(ii)(F) are amended to read:

30
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104.

Oil and gas conservation commission; powers and duties; investigations; rules and regulations
.

(d)

The commission has authority:

(viii)

To issue orders allowing the unitization of pore space associated with geologic sequestration sites pursuant to W.S. 35
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314 through 35
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317 and adopt such rules and regulations as necessary to effectuate the purposes of W.S. 35
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314.

35
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313.

Carbon sequestration; permit requirements
.

(f)

The administrator of the water quality division of the department of environmental quality, after receiving public comment and after consultation with the state geologist
, the
Wyoming
oil and gas conservation commission
and the advisory board created under this act, shall recommend to the director rules, regulations and standards for:

(ii)

Requirements for the content of applications for geologic sequestration permits. Such applications shall include:

(F)

A site and facilities description, including a description of the proposed geologic sequestration facilities and documentation sufficient to demonstrate that the applicant has all legal rights, including but not limited to the right to surface use, necessary to sequester carbon dioxide and associated constituents into the proposed geologic sequestration site
. The department may issue a draft permit contingent on obtaining a unitization order pursuant to W.S. 35
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314 through 35
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317
;

Section 3.

This act is effective July 1, 2009.

(END)

Speaker of the House

President of the Senate

Governor

TIME APPROVED: _________

DATE APPROVED: _________

I hereby certify that this act originated in the House.

Chief Clerk

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