State of Illinois
2013 and 2014


Introduced 2/14/2014, by Sen. David S. Luechtefeld


225 ILCS 725/6  from Ch. 96 1/2, par. 5409

    Amends the Illinois Oil and Gas Act. Establishes the criteria that the Department of Natural Resources may consider when making a determination that the oil and gas leases submitted with an application for a permit or transfer of a permit for a well are operative and that prior oil and gas leases covering the same lands have terminated due to non-development or non-production under the current permittee. Provides that the Department may rely upon affidavits of non-development and non-production from individuals familiar with the history of development and production of such lands in addition to other evidence. Requires that such testimony and evidence reasonably indicate that there has been no development or production of oil or gas on the lands described in the prior leases for at least 24 consecutive months. Further provides that a court order or judgment declaring the prior leases terminated is not required except in extraordinary circumstances where such a determination cannot reasonably be concluded from the testimony and evidence submitted to the Department. Provides that any determination made by the Department shall not diminish the rights of any current permittee of a well that are otherwise provided by statute or regulation of the Department. Effective immediately.

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1    AN ACT concerning regulation.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Illinois Oil and Gas Act is amended by
5changing Section 6 as follows:
6    (225 ILCS 725/6)  (from Ch. 96 1/2, par. 5409)
7    Sec. 6. The Department shall have the authority to conduct
8hearings and to make such reasonable rules as may be necessary
9from time to time in the proper administration and enforcement
10of this Act, including the adoption of rules and the holding of
11hearings for the following purposes:
12        (1) To require the drilling, casing and plugging of
13    wells to be done in such a manner as to prevent the
14    migration of oil or gas from one stratum to another; to
15    prevent the intrusion of water into oil, gas or coal
16    strata; to prevent the pollution of fresh water supplies by
17    oil, gas or salt water.
18        (2) To require the person desiring or proposing to
19    drill, deepen or convert any well for the exploration or
20    production of oil or gas, for injection or water supply in
21    connection with enhanced recovery projects, for the
22    disposal of salt water, brine, or other oil or gas field
23    wastes, or for input, withdrawal, or observation in



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1    connection with the storage of natural gas or other liquid
2    or gaseous hydrocarbons before commencing the drilling,
3    deepening or conversion of any such well, to make
4    application to the Department upon such form as the
5    Department may prescribe and to comply with the provisions
6    of this Section. The drilling, deepening or conversion of
7    any well is hereby prohibited until such application is
8    made and the applicant is issued a permit therefor as
9    provided by this Act. Each application for a well permit
10    shall include the following: (A) The exact location of the
11    well, (B) the name and address of the manager, operator,
12    contractor, driller, or any other person responsible for
13    the conduct of drilling operations, (C) the proposed depth
14    of the well, (D) lease ownership information, and (E) such
15    other relevant information as the Department may deem
16    necessary or convenient to effectuate the purposes of this
17    Act.
18        Additionally, each applicant who has not been issued a
19    permit that is of record on the effective date of this
20    amendatory Act of 1991, or who has not thereafter made
21    payments of assessments under Section 19.7 of this Act for
22    at least 2 consecutive years preceding the application,
23    shall execute, as principal, and file with the Department a
24    bond, executed by a surety authorized to transact business
25    in this State, in an amount estimated to cover the cost of
26    plugging the well and restoring the well site, but not to



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1    exceed $5000, as determined by the Department for each
2    well, or a blanket bond in an amount not to exceed $100,000
3    for all wells, before drilling, deepening, converting, or
4    operating any well for which a permit is required that has
5    not previously been plugged and abandoned in accordance
6    with the Act. The Department shall release the bond if the
7    well, or all wells in the case of a blanket bond, is not
8    completed but is plugged and the well site restored in
9    accordance with the Department's rules or is completed in
10    accordance with the Department's rules and the permittee
11    pays assessments to the Department in accordance with
12    Section 19.7 of this Act for 2 consecutive years.
13        In lieu of a surety bond, the applicant may provide
14    cash, certificates of deposit, or irrevocable letters of
15    credit under such terms and conditions as the Department
16    may provide by rule.
17        The sureties on all bonds in effect on the effective
18    date of this amendatory Act of 1991 shall remain liable as
19    sureties in accordance with their undertakings until
20    released by the Department from further liability under the
21    Act. The principal on each bond in effect on the effective
22    date of this amendatory Act of 1991 shall be released from
23    the obligation of maintaining the bond if either the well
24    covered by a surety bond has been plugged and the well site
25    restored in accordance with the Department's rules or the
26    principal of the surety has paid the initial assessment in



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1    accordance with Section 19.7 and no well or well site
2    covered by the surety bond is in violation of the Act.
3        No permit shall be issued to a corporation incorporated
4    outside of Illinois until the corporation has been
5    authorized to do business in Illinois.
6        No permit shall be issued to an individual,
7    partnership, or other unincorporated entity that is not a
8    resident of Illinois until that individual, partnership,
9    or other unincorporated entity has irrevocably consented
10    to be sued in Illinois.
11        (3) To require the person assigning, transferring, or
12    selling any well for which a permit is required under this
13    Act to notify the Department of the change of ownership.
14    The notification shall be on a form prescribed by the
15    Department, shall be executed by the current permittee and
16    by the new permittee, or their authorized representatives,
17    and shall be filed with the Department within 30 days after
18    the effective date of the assignment, transfer or sale.
19    Within the 30 day notification period and prior to
20    operating the well, the new permittee shall pay the
21    required well transfer fee and, where applicable, file with
22    the Department the bond required under subsection (2) of
23    this Section.
24        (4) To require the filing with the State Geological
25    Survey of all geophysical logs, a well drilling report and
26    drill cuttings or cores, if cores are required, within 90



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1    days after drilling ceases; and to file a completion report
2    with the Department within 30 days after the date of first
3    production following initial drilling or any reworking, or
4    after the plugging of the well, if a dry hole. A copy of
5    each completion report submitted to the Department shall be
6    delivered to the State Geological Survey. The Department
7    and the State Geological Survey shall keep the reports
8    confidential, if requested in writing by the permittee, for
9    2 years after the date the permit is issued by the
10    Department. This confidentiality requirement shall not
11    prohibit the use of the report for research purposes,
12    provided the State Geological Survey does not publish
13    specific data or identify the well to which the completion
14    report pertains.
15        (5) To prevent "blowouts", "caving" and "seepage" in
16    the same sense that conditions indicated by such terms are
17    generally understood in the oil and gas business.
18        (6) To prevent fires.
19        (7) To ascertain and identify the ownership of all oil
20    and gas wells, producing leases, refineries, tanks,
21    plants, structures, and all storage and transportation
22    equipment and facilities.
23        (8) To regulate the use of any enhanced recovery method
24    in oil pools and oil fields.
25        (9) To regulate or prohibit the use of vacuum.
26        (10) To regulate the spacing of wells, the issuance of



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1    permits, and the establishment of drilling units.
2        (11) To regulate directional drilling of oil or gas
3    wells.
4        (12) To regulate the plugging of wells.
5        (13) To require that wells for which no logs or
6    unsatisfactory logs are supplied shall be completely
7    plugged with cement from bottom to top.
8        (14) To require a description in such form as is
9    determined by the Department of the method of well plugging
10    for each well, indicating the character of material used
11    and the positions and dimensions of each plug.
12        (15) To prohibit waste, as defined in this Act.
13        (16) To require the keeping of such records, the
14    furnishing of such relevant information and the
15    performance of such tests as the Department may deem
16    necessary to carry into effect the purposes of this Act.
17        (17) To regulate the disposal of salt or
18    sulphur-bearing water and any oil field waste produced in
19    the operation of any oil or gas well.
20        (18) To prescribe rules, conduct inspections and
21    require compliance with health and safety standards for the
22    protection of persons working underground in connection
23    with any oil and gas operations. For the purposes of this
24    paragraph, oil and gas operations include drilling or
25    excavation, production operations, plugging or filling in
26    and sealing, or any other work requiring the presence of



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1    workers in shafts or excavations beneath the surface of the
2    earth. Rules promulgated by the Department may include
3    minimum qualifications of persons performing tasks
4    affecting the health and safety of workers underground,
5    minimum standards for the operation and maintenance of
6    equipment, and safety procedures and precautions, and
7    shall conform, as nearly as practicable, to corresponding
8    qualifications, standards and procedures prescribed under
9    The Coal Mining Act.
10        (19) To deposit the amount of any forfeited surety bond
11    or other security in the Plugging and Restoration Fund, a
12    special fund in the State treasury which is hereby created;
13    to deposit into the Fund any amounts collected, reimbursed
14    or recovered by the Department under Sections 19.5, 19.6
15    and 19.7 of this Act; to accept, receive, and deposit into
16    the Fund any grants, gifts or other funds which may be made
17    available from public or private sources and all earnings
18    received from investment of monies in the Fund; and to make
19    expenditures from the Fund for the purposes of plugging,
20    replugging or repairing any well, and restoring the site of
21    any well, determined by the Department to be abandoned or
22    ordered by the Department to be plugged, replugged,
23    repaired or restored under Sections 8a, 19 or 19.1 of this
24    Act, including expenses in administering the Fund.
25        (20) To determine if oil and gas leases submitted with
26    an application for a permit or transfer of a permit for a



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1    well are operative and that prior oil and gas leases
2    covering the same lands have terminated. The Department may
3    rely upon affidavits of non-development and non-production
4    from knowledgeable individuals familiar with the history
5    of development and production of oil or gas as to such
6    lands, together with other evidence, in making the
7    determination that the prior oil and gas leases have
8    terminated and are of no further force and effect and that
9    the submitted oil and gas leases shall be operative and
10    effective. Such testimony and evidence shall reasonably
11    indicate that there has been no development or production
12    of oil or gas on the lands described in the prior leases
13    for at least 24 consecutive months. A court order or
14    judgment declaring the prior leases terminated is not
15    required except in extraordinary circumstances where such
16    a determination cannot reasonably be concluded from the
17    testimony and evidence submitted to the Department as
18    provided in this paragraph (20). A determination made by
19    the Department under this paragraph shall not diminish the
20    rights of any current permittee of a well that are
21    otherwise provided by statute or regulation of the
22    Department.
23    For the purposes of this Act, the State Geological Survey
24shall co-operate with the Department in making available its
25scientific and technical information on the oil and gas
26resources of the State, and the Department shall in turn



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1furnish a copy to the State Geological Survey of all drilling
2permits as issued, and such other drilling and operating data
3received or secured by the Department which are pertinent to
4scientific research on the State's mineral resources.
5(Source: P.A. 86-205; 86-364; 86-1177; 87-744.)
6    Section 99. Effective date. This Act takes effect upon
7becoming law.