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Program A: Oil and Gas Regulatory

Program Authorization: La. Const.: Article IX, Sec.1; R.S. 36:351; 30:1

PROGRAM DESCRIPTION

Mineral property rights are important to the economy of Louisiana. A system of regulations is required to ensure that the rights of all parties in the exploration and production of oil and gas can be respected. To this end, this program pursues its mission of regulating the exploration and production of oil and gas under the guidance of and in support of the Commissioner of Conservation. This effort requires extensive geological and engineering study of requests for new wells, unitization requests and other activities related to mineral exploration and production as well as the maintenance of a depository of records. The goal of this program is to protect the correlative rights of all parties involved in the exploration and production of oil and gas resources while minimizing the waste of these mineral resources and of capital investments to acquire them. This program contains three activities: Oil and Gas Regulation, Remote Site Services, and Plug and Abandoned. The one activity of this program is: Oil and Gas Regulatory.

OBJECTIVES AND PERFORMANCE INDICATORS

1. This program provides a system to protect the rights of all parties involved in the exploration and production of oil and gas resources which also minimizes the waste of these resources. To demonstrate the strength of this system, this program will ensure that, out of the hundreds of decisions made, no more than three legal challenges will be initiated against the system during FY 1998-99.

1 Includes cases before Administrative Law Judges and court cases.

2. This program will ensure that the net number of oil field pits out of compliance with state regulations for closure and liner requirements will not increase during FY 1998-99.

3. This program will restore 300 orphaned well sites (as identified in Act 404 of 1993) during FY 1998-99.

RESOURCE ALLOCATION FOR THE PROGRAM

SOURCE OF FUNDING

This program is funded with General Fund Direct, Interagency Transfers, Fees and Self-generated Revenues and Statutory Dedications.  The Interagency Transfers are from the Oil Spill Contingency Fund (Act 7 of the First Extraordinary Session of 1991) for abatement of certain unauthorized discharges or the threat of discharges in cases in which the commissioner certifies that a viable responsible party cannot be located. Fees and Self-generated Revenues are derived from application fees, regulatory fees and the sale of publications. The Statutory Dedications are derived from: (1) the Oil Spill Contingency Fund for continuation of an inventory of all well facilities, sump pits, and reservoirs in the state and for planning and assistance in the development of an oil spill emergency plan; (2) the Oil and Gas Regulatory Fund (Act 826 of 1997) is for the deposit of the collection of Capable Oil and Capable Gas Production, Class I and Class II Injection Wells fees. (Per R.S. 39:32B. (8), see table below for a listing of expenditures out of each statutory dedicated fund.)

ANALYSIS OF RECOMMENDATION

GENERAL FUND

TOTAL

T.O.

 

DESCRIPTION

 

 

 

 

 

$1,633,327

$8,832,655

105

 

ACT 18 FISCAL YEAR 1997-1998

 

 

 

 

 

 

 

 

 

BA-7 TRANSACTIONS:

$0

$228,898

7

 

This BA-7 increased IAT for related expenses in the Oil and Gas Regulatory Program and T.O. by 7 per language in Act 18

$0

$1,220,568

22

 

Act 826 of the 1997 Regular Session restructures the fee system in the Office of Conservation and creates the Oil and Gas Regulatory Fund and authorized 22 positions per language in Act 18

 

 

 

 

 

$1,633,327

$10,282,121

134

 

EXISTING OPERATING BUDGET - December 10, 1997

 

 

 

 

 

$0

($714,816)

0

 

Equipment/Major Repairs Adjustment(s)

$14,537

$58,148

0

 

Annualization of 1997 -'98 Merit Pay Adjustment(s)

$22,919

$91,674

0

 

1998 -'99 Merit Pay Adjustment(s)

($6,705)

($26,821)

(1)

 

Personnel Reduction(s)

$59,458

$237,831

0

 

Attrition Adjustment(s)

($22,505)

($22,505)

0

 

Retirement Rate Adjustment(s)

$137,397

$153,307

0

 

Risk Management Adjustment(s)

($613)

($613)

0

 

Rent in State-owned Buildings Adjustment(s)

$309

$309

0

 

Maintenance of State-owned Buildings Adjustment(s)

$0

$0

0

 

Means of Financing Substitution(s) - Replace Interagency Transfers with Fees and Self-Generated Revenues per the LA Oil Spill Coordinator's Office for Liaison position

$0

$0

0

 

Means of Financing Substitution(s) - Replace General Fund with Fees and Self-Generated Revenues to fully fund salaries

$0

$45,364

0

 

Retirees Group Insurance Adjustment(s)

$0

$4,989

0

 

Funding provided in Interagency Transfers from the Office of the Governor to bring the funding level up to $2M for the Oil Spill Contingency Fund

$0

$0

0

 

Means of Financing Substitution(s) - Replace Fees and Self-Generated revenues with Statutory Dedications for the implementation of ACT 826 that restructures the fee system and creates the Oil and Gas Regulatory Fund

 

 

 

 

 

$1,684,828

          $10,108,988

133

 

TOTAL RECOMMENDED

 

 

 

 

 

$51,501

($173,133)

(1)

 

DIFFERENCE (TOTAL RECOMMENDED AND EXISTING OPERATING BUDGET)

The total means of financing for this program is recommended at 98.3% of the existing operating budget. It represents 99.3% of the total request ($10,181,100) for this program. The 1.7% decrease is due to the non-recurring of acquisitions and major repairs. This program does not have any positions that have been vacant for 1 year or more.

PROFESSIONAL SERVICES

This program does not have funding for Professional Services for Fiscal Year 1998-1999.

OTHER CHARGES

$45,000

 

Contracts for plugging abandoned wells when the landowner is unknown and the well poses a possible health hazard

$18,000

 

Insurance recovery for equipment damaged by water

$2,000,000

 

Statutory Dedication for an Inventory of all well facilities, sump pits, and reservoirs in the State

$2,000,000

 

Interagency Transfer for the abatement of certain unauthorized discharges or the threat of discharges in cases in which the Commissioner certifies that a viable responsible party cannot be immediately located and provided that such funds shall only be used in the amounts for the specific purpose authorized by the Governor's Oil Spill Coordinator in accordance with procedures provided by the Oil Spill Coordinator

$4,989

 

Interagency Transfer for the LA Oil Spill Coordinator position

 

 

 

$4,067,989

 

TOTAL OTHER CHARGES

 

 

 

 

 

Interagency Transfers:

$110,156

 

DNR - Office of the Secretary for support of data processing and legal sections

$1,235

 

Division of Administration - State Register for publishing rules, etc.

$105,294

 

Division of Administration - Rent in State-Owned buildings (Lafayette District Office)

$37,997

 

Division of Administration - Maintenance on State-owned buildings (Monroe and Shreveport District Offices)

$200,000

 

DNR - Office of the Secretary for indirect costs for assistance

 

 

 

$454,682

 

TOTAL INTERAGENCY TRANSFERS

ACQUISITIONS AND MAJOR REPAIRS

This program does not have funding for Acquisitions and Major Repairs for Fiscal Year 1998-1999.


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