(a) In this section:
(1) “Depth of the well” means the vertical depth of a well as measured in linear feet from the surface to the lowest perforation of the casing of the well that is within the commission-designated correlative interval for the field for which the well is issued a permit.
(1-a) “Energy conservation well” means a well used for the retention of energy that may be used to provide dispatchable generation of electricity for the power grid.
(1-b) “Geothermal energy and associated resources” has the meaning assigned by § 141.003.
(2) “Operator in good standing” means an operator who:
(A) has a commission-approved organization report;
(B) is the designated operator of at least one well within the jurisdiction of the commission;
(C) has filed with the commission under § 91.104 a bond, letter of credit, or cash deposit in an amount sufficient to qualify to operate one or more additional wells; and
(D) is not the subject of a commission or court order regarding a violation of a commission rule with which the operator has not complied or a complaint that has been docketed by the commission alleging a violation of a commission rule.
(3) “Orphaned well” means a well:
(A) for which the commission has issued a permit;
(B) for which production of oil or gas or another activity under the jurisdiction of the commission has not been reported to the commission for the preceding 12 months; and
(C) whose operator’s commission-approved organization report has lapsed.
(4) “Producing well” means a well classified by the commission as an oil or gas well in accordance with commission rules.
(5) “Service well” means a well for which the commission has issued a permit that is not a producing well. The term includes an injection, disposal, or brine mining well.
(b) A person who is considering assumption of operatorship and regulatory responsibility for an orphaned well may nominate the well under consideration by filing a request on a form prescribed by the commission notifying the commission that the person seeks authority to conduct a surface inspection of the well to determine whether the person desires to be designated by the commission as the operator of the well.

(c) If the person is an operator in good standing and the well is not already subject to a nomination, the commission shall accept the nomination and issue a written confirmation to the person of the person’s authority to conduct a surface inspection of the nominated well for a stated period not to exceed 30 days.
(d) A person to whom a confirmation is issued under Subsection (c) may conduct a surface inspection of the well. The person must deliver written notice to the owner of record of the surface estate and any occupant of the tract on which the well is located at least three days before the date of the inspection. The notice must:
(1) identify the orphaned well;
(2) state the name, address, and telephone number of the person;
(3) state the date the person intends to conduct the surface inspection;
(4) state the name of at least one representative of the person who will participate in the surface inspection; and
(5) state that the person intends to inspect the orphaned well in accordance with this section for the purpose of assessing the current status and viability of the well.
(e) In conducting a surface inspection of the orphaned well, the person may visually inspect the well and all related equipment, tanks, and other facilities and may conduct noninvasive testing such as using a gauge to determine the pressure present at the wellhead but may not produce oil or gas from the well, reenter the well, pull tubing from or perform any other type of downhole work on the well, conduct a salvage operation on the well, or remove any tangible item from the well site.
(f) The commission shall designate the person as the operator of the well if the person files with the commission:
(1) a factually supported claim based on a recognized legal theory to a continuing possessory right in:
(A) the mineral estate accessed by the well, as established by a current oil and gas lease, a recorded deed conveying a fee interest in the mineral estate, or any other documentation of an interest in the mineral estate;
(B) the geothermal energy and associated resources estate accessed by the well, as established by a current geothermal lease, a recorded deed conveying a fee interest in the geothermal estate, or any other documentation of an interest in the geothermal estate; or
(C) the geologic space accessed by the well for the purpose of an energy conservation well, as established by a recorded deed conveying a fee interest in the space accessed by the well or any other documentation of an interest in that space;
(2) a completed certificate of compliance; and
(3) a nonrefundable fee in the amount of $250.
(g) A fee collected under Subsection (f) shall be deposited to the credit of the general revenue fund and may be appropriated only to the commission to be used to enforce the laws and rules concerning oil and gas conservation and waste and pollution prevention.
(h) A person who is designated as the operator of an orphaned well on or after January 1, 2006, and not later than December 31, 2007, is entitled to receive:
(1) a nontransferable exemption from severance taxes for all future production from the well as provided by § 202.060, Tax Code;
(2) a nontransferable exemption from the fees provided by Sections 81.116 and 81.117 for all future production from the well; and
(3) a payment from the commission in an amount equal to the depth of the well multiplied by 50 cents for each foot of well depth if, not later than the third anniversary of the date the commission designates the person as the operator of the well, the person brings the well back into continuous active operation or plugs the well in accordance with commission rules.
(i) A well is considered to be in continuous active operation for purposes of Subsection (h)(3) if:
(1) the well is a producing well and the well has produced at least 10 barrels of oil or 100 mcf of gas per month for at least three consecutive months as shown in the records of the commission and as authorized by a permit issued by the commission; or
(2) the well is a service well and the well has been used for the disposal or injection of oil and gas wastes or another purpose related to the production of oil or gas for at least three consecutive months as shown in the records of the commission and as authorized by a permit issued by the commission.
(j) The commission shall make payments to operators under Subsection (h)(3) annually in the same order the commission determines the operators to be entitled to the payments. The aggregate amount of payments in a state fiscal year under that subsection may not exceed $500,000. An operator may not receive:
(1) more than one payment under that subsection for the same well; or
(2) cumulative payments in an amount that exceeds the amount of the bond, letter of credit, or cash deposit the operator has filed with the commission under § 91.104.