Orphan Well Reduction Program

House Bill 2161, enacted by the 79th Texas Legislature (2005), established an Orphaned Well Reduction
Program (Section 89.047, Texas Natural Resources Code). This new program, which became effective on
January 1, 2006, includes procedures, requirements, and incentives for a person to assume operatorship and
regulatory responsibility for orphaned oil or gas wells. An "orphaned well" is a well for which the Railroad
Commission (Commission or RRC) has issued a permit, for which production of oil or gas or another activity
under Commission jurisdiction has not been reported to the Commission for the preceding 12 months, and
whose operator's RRC-approved P-5 Organizational Report has lapsed.
An operator adopting such wells from January 1, 2006, to December 31, 2007, may be eligible to receive
certain benefits, such as a payment from the Oil Field Cleanup Fund and/or an exemption from severance
taxes and Oil Field Cleanup Regulatory fees on future production from the wells.

• An orphan well, is a well for which the TRRC has issued a permit for production of oil and gas that has not had proper reporting to the TRRC for the preceding twelve months.
• Orphan wells concern a concentration of producing gas wells abandoned by an operator that went bankrupt in 1991. Wells were producing in economic amounts at the time of bankruptcy, and were simply shut-in. Program is to reopen these wells, concentrating on those wells that still have surface facilities, economic production at the time of shut-in, and potential up hole potential for additional gas.
• Average well depth – 4000’
• Average well cost - $50,000
• Initial production estimate – 125 MCFE/D
• Average recovery – 10,000 BOE
• Exemption from State Revenue Severance Taxes