Illinois General Assembly - Full Text of SB1095
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Full Text of SB1095  102nd General Assembly


Sen. Rachelle Crowe

Filed: 4/16/2021





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2    AMENDMENT NO. ______. Amend Senate Bill 1095 by replacing
3everything after the enacting clause with the following:
4    "Section 5. The Illinois Oil and Gas Act is amended by
5changing Sections 1 and 6 as follows:
6    (225 ILCS 725/1)  (from Ch. 96 1/2, par. 5401)
7    Sec. 1. Unless the context otherwise requires, the words
8defined in this Section have the following meanings as used in
9this Act.
10    "Person" means any natural person, corporation,
11association, partnership, governmental agency or other legal
12entity, receiver, trustee, guardian, executor, administrator,
13fiduciary or representative of any kind.
14    "Oil" means natural crude oil or petroleum and other
15hydrocarbons, regardless of gravity, which are produced at the
16well in liquid form by ordinary production methods or by the



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1use of an oil and gas separator and which are not the result of
2condensation of gas after it leaves the underground reservoir.
3    "Gas" means all natural gas, including casinghead gas, and
4all other natural hydrocarbons not defined above as oil.
5    "Pool" means a natural, underground reservoir containing
6in whole or in part, a natural accumulation of oil or gas, or
7both. Each productive zone or stratum of a general structure,
8which is completely separated from any other zone or stratum
9in the structure, is deemed a separate "pool" as used herein.
10    "Field" means the same general surface area which is
11underlaid or appears to be underlaid by one or more pools.
12    "Permit" means the Department's written authorization
13allowing a well to be drilled, deepened, converted, or
14operated by an owner.
15    "Permittee" means the owner holding or required to hold
16the permit, and who is also responsible for paying assessments
17in accordance with Section 19.7 of this Act and, where
18applicable, executing and filing the bond associated with the
19well as principal and who is responsible for compliance with
20all statutory and regulatory requirements pertaining to the
22    When the right and responsibility for operating a well is
23vested in a receiver or trustee appointed by a court of
24competent jurisdiction, the permit shall be issued to the
25receiver or trustee.
26    "Orphan Well" means a well for which: (1) no fee



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1assessment under Section 19.7 of this Act has been paid or no
2other bond coverage has been provided for 2 consecutive years;
3(2) no oil or gas has been produced from the well or from the
4lease or unit on which the well is located for 2 consecutive
5years; and (3) no permittee or owner can be identified or
6located by the Department. Orphaned wells include wells that
7may have been drilled for purposes other than those for which a
8permit is required under this Act if the well is a conduit for
9oil or salt water intrusions into fresh water zones or onto the
10surface which may be caused by oil and gas operations.
11    "Owner" means the person who has the right to drill into
12and produce from any pool, and to appropriate the production
13either for the person or for the person and another, or others,
14or solely for others, excluding the mineral owner's royalty if
15the right to drill and produce has been granted under an oil
16and gas lease. An owner may also be a person granted the right
17to drill and operate an injection (Class II UIC) well
18independent of the right to drill for and produce oil or gas.
19When the right to drill, produce, and appropriate production
20is held by more than one person, then all persons holding these
21rights may designate the owner by a written operating
22agreement or similar written agreement. In the absence of such
23an agreement, and subject to the provisions of Sections 22.2
24and 23.1 through 23.16 of this Act, the owner shall be the
25person designated in writing by a majority in interest of the
26persons holding these rights.



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1    "Department" means the Department of Natural Resources.
2    "Director" means the Director of Natural Resources.
3    "Mining Board" means the State Mining Board in the
4Department of Natural Resources, Office of Mines and Minerals.
5    "Mineral Owner's Royalty" means the share of oil and gas
6production reserved in an oil and gas lease free of all costs
7by an owner of the minerals whether denominated royalty or
8overriding royalty.
9    "Coal mine gas well" means a well drilled into a mine void
10for the production of gas from an abandoned coal mine.
11    "Waste" means "physical waste" as that term is generally
12understood in the oil and gas industry, and further includes:
13        (1) the locating, drilling, and producing of any oil
14    or gas well or wells drilled contrary to the valid order,
15    rules and regulations adopted by the Department under the
16    provisions of this Act;
17        (2) permitting the migration of oil, gas, or water
18    from the stratum in which it is found, into other strata,
19    thereby ultimately resulting in the loss of recoverable
20    oil, gas or both;
21        (3) the drowning with water of any stratum or part
22    thereof capable of producing oil or gas, except for
23    secondary recovery purposes;
24        (4) the unreasonable damage to underground, fresh or
25    mineral water supply, workable coal seams, or other
26    mineral deposits in the operations for the discovery,



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1    development, production, or handling of oil and gas;
2        (5) the unnecessary or excessive surface loss or
3    destruction of oil or gas resulting from evaporation,
4    seepage, leakage or fire, especially such loss or
5    destruction incident to or resulting from the escape of
6    gas into the open air in excessive or unreasonable
7    amounts, provided, however, it shall not be unlawful for
8    the operator or owner of any well producing both oil and
9    gas to burn such gas in flares when such gas is, under the
10    other provisions of this Act, lawfully produced, and where
11    there is no market at the well for such escaping gas; and
12    where the same is used for the extraction of casinghead
13    gas, it shall not be unlawful for the operator of the plant
14    after the process of extraction is completed, to burn such
15    residue in flares when there is no market at such plant for
16    such residue gas;
17        (6) permitting unnecessary fire hazards;
18        (7) permitting unnecessary damage to or destruction of
19    the surface, soil, animal, fish or aquatic life or
20    property from oil or gas operations.
21    "Drilling Unit" means the surface area allocated by an
22order or regulation of the Department to the drilling of a
23single well for the production of oil or gas from an individual
25    "Enhanced Recovery Method" means any method used in an
26effort to recover hydrocarbons from a pool by injection of



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1fluids, gases or other substances to maintain, restore or
2augment natural reservoir energy, or by introducing immiscible
3or miscible gases, chemicals, other substances or heat or by
4in-situ combustion, or by any combination thereof.
5    "Well-Site Equipment" means any production-related
6equipment or materials specific to the well, including motors,
7pumps, pump jacks, tanks, tank batteries, separators,
8compressors, casing, tubing, and rods.
9(Source: P.A. 99-78, eff. 7-20-15.)
10    (225 ILCS 725/6)  (from Ch. 96 1/2, par. 5409)
11    Sec. 6. The Department shall have the authority to conduct
12hearings and to make such reasonable rules as may be necessary
13from time to time in the proper administration and enforcement
14of this Act, including the adoption of rules and the holding of
15hearings for the following purposes:
16        (1) To require the drilling, casing and plugging of
17    wells to be done in such a manner as to prevent the
18    migration of oil or gas from one stratum to another; to
19    prevent the intrusion of water into oil, gas or coal
20    strata; to prevent the pollution of fresh water supplies
21    by oil, gas or salt water.
22        (2) To require the person desiring or proposing to
23    drill, deepen or convert any well for the exploration or
24    production of oil or gas, for injection or water supply in
25    connection with enhanced recovery projects, for the



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



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



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



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1    of this Section.
2        (4) To require the filing with the State Geological
3    Survey of all geophysical logs, a well drilling report and
4    drill cuttings or cores, if cores are required, within 90
5    days after drilling ceases; and to file a completion
6    report with the Department within 30 days after the date
7    of first production following initial drilling or any
8    reworking, or after the plugging of the well, if a dry
9    hole. A copy of each completion report submitted to the
10    Department shall be delivered to the State Geological
11    Survey. The Department and the State Geological Survey
12    shall keep the reports confidential, if requested in
13    writing by the permittee, for 2 years after the date the
14    permit is issued by the Department. This confidentiality
15    requirement shall not prohibit the use of the report for
16    research purposes, provided the State Geological Survey
17    does not publish specific data or identify the well to
18    which the completion report pertains.
19        (5) To prevent "blowouts", "caving" and "seepage" in
20    the same sense that conditions indicated by such terms are
21    generally understood in the oil and gas business.
22        (6) To prevent fires.
23        (7) To ascertain and identify the ownership of all oil
24    and gas wells, producing leases, refineries, tanks,
25    plants, structures, and all storage and transportation
26    equipment and facilities.



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1        (8) To regulate the use of any enhanced recovery
2    method in oil pools and oil fields.
3        (9) To regulate or prohibit the use of vacuum. The
4    rules shall, at a minimum, ensure that an applicant for a
5    permit for use of a vacuum on a coal mine gas well, prior
6    to the issuance of any such permit: (A) provides a mine map
7    of the abandoned coal mine to which the vacuum is to be
8    applied; (B) demonstrates that notice of the proposed
9    vacuum has been provided to all owners and permittees of
10    the abandoned coal mine; (C) demonstrates that owners and
11    permittees have had an opportunity to object to the use of
12    the proposed vacuum; and (D) demonstrates that the
13    applicant is the owner of a minimum of 51% of the mapped
14    surface area of the abandoned coal mine into which the
15    coal mine gas well is drilled.
16        (10) To regulate the spacing of wells, the issuance of
17    permits, and the establishment of drilling units.
18        (11) To regulate directional drilling of oil or gas
19    wells.
20        (12) To regulate the plugging of wells.
21        (13) To require that wells for which no logs or
22    unsatisfactory logs are supplied shall be completely
23    plugged with cement from bottom to top.
24        (14) To require a description in such form as is
25    determined by the Department of the method of well
26    plugging for each well, indicating the character of



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1    material used and the positions and dimensions of each
2    plug.
3        (15) To prohibit waste, as defined in this Act.
4        (16) To require the keeping of such records, the
5    furnishing of such relevant information and the
6    performance of such tests as the Department may deem
7    necessary to carry into effect the purposes of this Act.
8        (17) To regulate the disposal of salt or
9    sulphur-bearing water and any oil field waste produced in
10    the operation of any oil or gas well.
11        (18) To prescribe rules, conduct inspections and
12    require compliance with health and safety standards for
13    the protection of persons working underground in
14    connection with any oil and gas operations. For the
15    purposes of this paragraph, oil and gas operations include
16    drilling or excavation, production operations, plugging or
17    filling in and sealing, or any other work requiring the
18    presence of workers in shafts or excavations beneath the
19    surface of the earth. Rules promulgated by the Department
20    may include minimum qualifications of persons performing
21    tasks affecting the health and safety of workers
22    underground, minimum standards for the operation and
23    maintenance of equipment, and safety procedures and
24    precautions, and shall conform, as nearly as practicable,
25    to corresponding qualifications, standards and procedures
26    prescribed under the Coal Mining Act.



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1        (19) To deposit the amount of any forfeited surety
2    bond or other security in the Plugging and Restoration
3    Fund, a special fund in the State treasury which is hereby
4    created; to deposit into the Fund any amounts collected,
5    reimbursed or recovered by the Department under Sections
6    19.5, 19.6 and 19.7 of this Act; to accept, receive, and
7    deposit into the Fund any grants, gifts or other funds
8    which may be made available from public or private sources
9    and all earnings received from investment of monies in the
10    Fund; and to make expenditures from the Fund for the
11    purposes of plugging, replugging or repairing any well,
12    and restoring the site of any well, determined by the
13    Department to be abandoned or ordered by the Department to
14    be plugged, replugged, repaired or restored under Sections
15    8a, 19 or 19.1 of this Act, including expenses in
16    administering the Fund.
17    For the purposes of this Act, the State Geological Survey
18shall co-operate with the Department in making available its
19scientific and technical information on the oil and gas
20resources of the State, and the Department shall in turn
21furnish a copy to the State Geological Survey of all drilling
22permits as issued, and such other drilling and operating data
23received or secured by the Department which are pertinent to
24scientific research on the State's mineral resources.
25(Source: P.A. 86-205; 86-364; 86-1177; 87-744.)".