March Legislative Affairs

The deadline for bills to pass out of committee has now passed. Many bills did not make the cut this session. However, there are still many significant bills that are still active.

SB284 & HB1613, which are known as the Oklahoma Energy Jobs Act, is shaping up to be the major legislative push in the oil & gas industry this session. These companion bills would make several changes to the 2011 Shale Reservoir Development Act, most notably by expanding the use of extended lateral horizontal units beyond just shale reservoirs to any reservoir deemed by the Corporation Commission to be suitable for development by an extended lateral horizontal. This could therefore allow extended lateral wells to be drilled in sand formations and other non-shale formations. Similar bills have been introduced in previous sessions, but they consistently failed due to pushback from smaller operators. See “Oil CEOs lobby for longer laterals,” NewsOK, March 8, 2017.

HB1890 states that no OCC order establishing a horizontal well unit that overlies any existing well or producing lease or any portion of any existing well spacing and drilling unit with an existing well producing from the same common source of supply will become effective until at lease 50% of the working interest ownership in each such well and unit consents to the establishment of the horizontal well unit.

SB669 would make changes to the plan of development requirements to now require conditions upon which the unit will terminate.

SB731 would make changes to the procedures for payment of proceeds when there are title defects.

HB2151 would create the Oklahoma Oil and Gas Regulation Modernization Task Force. This Task Force would be charged with studying oil and gas regulations and identifying opportunities for making oil and gas regulations more efficient while also preserving the interests of owners of oil and gas rights. This bill received a do pass recommendation from the Energy and Natural Resources Committee.

HB1366 would make numerous significant changes to the laws relating to notaries public. The bill would permit documents to be notarized electronically using “audio-video communication.” It would also increase the notary bond from $1,000.00 to $10,000.00 and increase the allowable fee for each notarial act.

HB1902 states that when municipal regulations of oil and gas development substantially impair the development of minerals it is considered a taking, which could result in payment to the mineral owners. This bill passed the House Rules Committee on March 1.

HB2303 originally would have removed the requirement that an Oklahoma attorney examine an abstract in order to obtain title insurance and allow title insurance companies to decide what title evidence they deem adequate for issuing title insurance. However, after significant pushback from abstracters and surface title examiners, this bill was heavily amended and now no longer eliminates the requirement for attorney examination of an abstract. It now simply places penalties on abstracters who fail to timely release abstracts in their possession. This bill passed the Banking, Financial Services, and Pensions Committee.

HB1356 makes changes to the statute governing acceptable distances between wells and structures.

Regarding the proposed sales tax expansion, we have not noted any legislative progress. We will continue to monitor any developments in this area.

If you know of legislative or regulatory activity that you would like the Legislative Affairs Committee to analyze and discuss, please let us know by contacting Aaron Meek at meek@hampton-milligan.com or (405) 235-5620.