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| [ Senate Amendment 001 ] |
90_SB0304ham001
LRB9002358DPcwam
1 AMENDMENT TO SENATE BILL 304
2 AMENDMENT NO. . Amend Senate Bill 304 by inserting
3 immediately after the enacting clause the following:
4 "Section 2. The Oil and Gas Wells on Public Lands Act is
5 amended by changing Sections 2 and 10 as follows:
6 (5 ILCS 615/2) (from Ch. 96 1/2, par. 5002)
7 Sec. 2. State issuance of extraction permits; prohibited
8 activities. The Department of Natural Resources shall be
9 empowered with respect to public lands to grant permits and
10 leases in the name of the State of Illinois, with the
11 approval of the Governor in writing, for the extraction of
12 oil, gas and other petroleum deposits, except that no surface
13 extraction activities shall be performed nor production
14 equipment located on lands owned by the Department of Natural
15 Resources if the State owns 100% of the underlying mineral
16 interests of those lands. Extraction activities underlying
17 lands owned by the Department of Natural Resources that
18 utilize directional drilling techniques may be permitted at
19 the discretion of the Department. However, the Department
20 shall not grant permits on leases for the extraction of oil,
21 gas, and other petroleum deposits from the following
22 classifications of lands if the State owns 100% of the
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1 underlying mineral interests: (1) lands where threatened or
2 endangered species occur, as determined pursuant to the
3 federal Endangered Species Act or the Illinois Endangered
4 Species Protection Act, (2) Illinois Natural Area Inventory
5 sites, (3) nature preserves dedicated under the Illinois
6 Natural Areas Preservation Act, (4) lands containing a wild
7 and scenic river as designated under the Wild and Scenic
8 River Area Act, (5) lands registered under the Register of
9 Land and Water Reserves under Part 4010 of Title 17 of the
10 Illinois Administrative Code, and (6) lands on which federal
11 or State laws or regulations prohibit the surface extraction
12 or production facility activity. The grant of such permits or
13 leases shall be subject to the terms and conditions
14 hereinafter set forth in this Act.
15 (Source: P.A. 89-445, eff. 2-7-96.)
16 (5 ILCS 615/10) (from Ch. 96 1/2, par. 5010)
17 Sec. 10. Proceeds. Except as hereinafter provided, the
18 proceeds derived and bonuses, rentals and royalties from and
19 from other inducements and considerations for the execution
20 and operation of the oil and gas leases provided for in this
21 Act provided shall be disposed of as provided for by the
22 State Officers and Employees Money Disposition Act. However,
23 all bonuses, rentals and royalties received from the
24 permitting or leasing of lands which have been purchased by
25 the Department of Natural Resources (formerly designated the
26 Department of Conservation) from moneys appropriated from the
27 Wildlife and Fish Fund and which at the time of permitting or
28 leasing are under the control of the Department of Natural
29 Resources (formerly designated the Department of
30 Conservation), shall be paid into the Wildlife and Fish Fund
31 of the State Treasury. All proceeds, bonuses, rentals,
32 royalties, and other inducements and considerations received
33 from the permitting or leasing of Department of Natural
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1 Resources lands that have not been purchased by the
2 Department of Natural Resources with moneys appropriated from
3 the Wildlife and Fish Fund shall be deposited as follows: at
4 least 50% of the amounts received shall be deposited into the
5 State Parks Fund and not more than 50% shall be deposited
6 into the Plugging and Restoration Fund.
7 (Source: P.A. 89-445, eff. 2-7-96.)
8 Section 4. The Illinois Oil and Gas Act is amended by
9 changing Section 22.2 as follows:
10 (225 ILCS 725/22.2) (from Ch. 96 1/2, par. 5436)
11 Sec. 22.2. Integration of interests in drilling unit.
12 (a) As used in this Section, "owner" means any person
13 having an interest in the right to drill into and produce oil
14 or gas from any pool, and to appropriate the production for
15 such owner or others.
16 (b) Except as provided in subsection (b-5), when 2 or
17 more separately owned tracts of land are embraced within an
18 established drilling unit, or when there are separately owned
19 interests in all or a part of such units, the owners of all
20 oil and gas interests therein may validly agree to integrate
21 their interests and to develop their lands as a drilling
22 unit. Where, however, such owners have not agreed to
23 integrate their interests and where no action has been
24 commenced seeking permission to drill pursuant to the
25 provisions of "An Act in relation to oil and gas interests in
26 land", approved July 1, 1939, and where at least one of the
27 owners has drilled or has proposed to drill a well on an
28 established drilling unit the Department on the application
29 of an owner shall, for the prevention of waste or to avoid
30 the drilling of unnecessary wells, require such owners to do
31 so and to develop their lands as a drilling unit. The
32 Department, as a part of the order integrating interests, may
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1 prescribe the terms and conditions upon which the royalty
2 interests in the unit or units shall, in the absence of
3 voluntary agreement, be determined to be integrated without
4 the necessity of a subsequent separate order integrating the
5 royalty interests. Each such integration order shall be upon
6 terms and conditions that are just and reasonable.
7 (b-5) When 2 or more separately owned tracts of land are
8 embraced within an established drilling unit, or when there
9 are separately owned interests in all or a part of the unit,
10 and one of the owners is the Department of Natural Resources,
11 integration of the separate tracts shall be allowed only if,
12 following a comprehensive environmental impact review
13 performed by the Department, the Department determines that
14 no substantial or irreversible detrimental harm will occur on
15 Department lands as a result of any proposed activities
16 relating to mineral extraction. The environmental impact
17 review shall include but shall not be limited to an
18 assessment of the potential destruction or depletion of flora
19 and fauna, wildlife and its supporting habitat, surface and
20 subsurface water supplies, aquatic life, and recreational
21 activities located on the land proposed to be integrated.
22 The Department shall adopt rules necessary to implement this
23 subsection.
24 (b-6) All proceeds, bonuses, rentals, royalties, and
25 other inducements and considerations received from the
26 integration of Department of Natural Resources lands that
27 have not been purchased by the Department of Natural
28 Resources with moneys appropriated from the Wildlife and Fish
29 Fund shall be deposited as follows: at least 50% of the
30 amounts received shall be deposited into the State Parks Fund
31 and not more than 50% shall be deposited into the Plugging
32 and Restoration Fund.
33 (c) All orders requiring such integration shall be made
34 after notice and hearing and shall be upon terms and
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1 conditions that are just and reasonable and will afford to
2 the owners of all oil and gas interests in each tract in the
3 drilling unit the opportunity to recover or receive their
4 just and equitable share of oil or gas from the drilling unit
5 without unreasonable expense and will prevent or minimize
6 reasonably avoidable drainage from each integrated drilling
7 unit which is not equalized by counter drainage, but the
8 Department may not limit the production from any well under
9 this provision.
10 (d) All operations, including, but not limited to, the
11 commencement, drilling, or operation of a well upon any
12 portion of a drilling unit shall be deemed for all purposes
13 the conduct of such operations upon each separately owned
14 tract in the drilling unit by the several owners thereof.
15 That portion of the production allocated to a separately
16 owned tract included in a drilling unit shall, when produced,
17 be deemed, for all purposes, to have been actually produced
18 from such tract by a well drilled thereon.
19 (e) In making the determination of integrating
20 separately owned interests, and determining to whom the
21 permit should be issued, the Department may consider:
22 (1) the reasons requiring the integration of
23 separate interests;
24 (2) the respective interests of the parties in the
25 drilling unit sought to be established, and the pool or
26 pools in the field where the proposed drilling unit is
27 located;
28 (3) any parties' prior or present compliance with
29 the Act and the Department's rules; and
30 (4) any other information relevant to protect the
31 correlative rights of the parties sought to be affected
32 by the integration order.
33 (f) Each such integration order shall authorize the
34 drilling, testing, completing, equipping, and operation of a
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1 well on the drilling unit; provide who may drill and operate
2 the well; prescribe the time and manner in which all the
3 owners in the drilling unit may elect to participate therein;
4 and make provision for the payment by all those who elect to
5 participate therein of the reasonable actual cost thereof,
6 plus a reasonable charge for supervision and interest. Should
7 an owner not elect to voluntarily participate in the risk and
8 costs of the drilling, testing, completing and operation of a
9 well as determined by the Department, the integration order
10 shall provide either that:
11 (1) the nonparticipating owner shall surrender a
12 leasehold interest to the participating owners on a basis
13 and for such terms and consideration the Department finds
14 fair and reasonable; or
15 (2) the nonparticipating owner shall share in a
16 proportionate part of the production of oil and gas from
17 the drilling unit determined by the Department, and pay a
18 proportionate part of operation cost after the
19 participating owners have recovered from the production
20 of oil or gas from a well all actual costs in the
21 drilling, testing, completing and operation of the well
22 plus a penalty to be determined by the Department of not
23 less than 100% nor more than 300% of such actual costs.
24 (g) For the purpose of this Section, the owner or owners
25 of oil and gas rights in and under an unleased tract of land
26 shall be regarded as a lessee to the extent of a 7/8 interest
27 in and to said rights and a lessor to the extent of the
28 remaining 1/8 interest therein.
29 (h) In the event of any dispute relative to costs and
30 expenses of drilling, testing, equipping, completing and
31 operating a well, the Department shall determine the proper
32 costs after due notice to interested parties and a hearing
33 thereon. The operator of such unit, in addition to any other
34 right provided by the integration order of the Department,
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1 shall have a lien on the mineral leasehold estate or rights
2 owned by the other owners therein and upon their shares of
3 the production from such unit to the extent that costs
4 incurred in the development and operation upon said unit are
5 a charge against such interest by order of the Department or
6 by operation of law. Such liens shall be separable as to
7 each separate owner within such unit, and shall remain liens
8 until the owner or owners drilling or operating the well have
9 been paid the amount due under the terms of the integration
10 order. The Department is specifically authorized to provide
11 that the owner or owners drilling, or paying for the
12 drilling, or for the operation of a well for the benefit of
13 all shall be entitled to production from such well which
14 would be received by the owner or owners for whose benefit
15 the well was drilled or operated, after payment of royalty,
16 until the owner or owners drilling or operating the well have
17 been paid the amount due under the terms of the integration
18 order settling such dispute.
19 (Source: P.A. 85-1334; 86-1177.)".