Unless the context expressly states otherwise, the following terms, when used in this article, shall have the respective meanings below indicated:

(a)   “Person” shall include persons, firms, corporations, partnerships, or associations.

(b)   “Well” shall mean any well drilled, to be drilled, or used for the intended or actual production of natural gas or petroleum or for the intended or actual disposal of waste liquids (including solutions and liquids containing solids in suspension) produced from such a well.

(c)   “City” shall mean the City of Moundridge, Kansas.

(d)   “Governing body” shall mean the governing body of the City of Moundridge, Kansas.

(e)   “City Clerk” shall mean the City Clerk of Moundridge, Kansas.

(f)   “Permit” as a noun, shall mean a drilling permit issued or sought to be issued under this article, authorizing the drilling of a well as above defined.

(g)   “Drilling unit” shall mean a drilling unit established by Section 5-403(a).

(h)   “Combined units” shall mean two contiguous and adjoining drilling units combined into one production unit as provided in Section 5-403(b).

(i)    “Production unit” shall mean the drilling unit or combined units for which a drilling permit is requested or issued pursuant to this article.

(Ord. 578; Code 2012)

It shall be unlawful for any person to commence operations for the drilling of a well within the corporate limits of the City without first having lawfully obtained from the governing body a permit therefor pursuant to this article and any amendments thereto. The applicant shall file with the City Clerk an application in writing, on a form containing the information and evidence hereinafter specified, and shall at the time of such filing deposit with the City Clerk a fee of $100. If no permit be granted upon said application within thirty (30) days from the date of such filing, $50 of said deposit shall upon the applicant’s request be returned to him and $50 shall be retained by the City Clerk as an application fee and shall be credited to the general operating fund.

(Ord. 578; Code 2012)

(a)   Drilling units are hereby established as shown on the map annexed hereto marked “Exhibit A,” and made a part hereof by this reference; provided, however, that with reference to those drilling units lying partly within and partly without the corporate limits of the City, any such unit shall consist only of the lands lying within the corporate limits of the City unless all of the mineral, royalty, and oil and gas leasehold owners of the lands in such units lying outside the corporate limits have consented or agreed, prior to the filing of an application for a drilling permit for a production unit including such unit, that their interests in such lands may be pooled or unitized with the leases and lands in such production unit lying within the corporate limits of the City. In all cases where the boundary of a drilling unit runs along a street, alley or other right-of-way, such boundary shall be deemed to be running down the center line of such street, alley or right-of-way.

(b)   The applicant for a drilling permit may apply for a permit to drill a well on any single drilling unit as a production unit or may combine and include in such application two contiguous and adjoining drilling units as a production unit and apply for a permit to drill a well on the production unit consisting of the combined units; provided, however, no drilling unit upon which a well has been drilled prior to the filing of an application, whether such well was completed as a producing well or as a dry hole, may be included in a production unit consisting of combined units except by unanimous consent of all mineral, royalty and oil and gas leasehold owners of all of the lands within such production unit.

(c)   Each application for a drilling permit on a production unit shall designate the drilling unit or units to be included in the production unit for which the permit is requested by the drilling unit number or numbers appearing on Exhibit A, and each permit issued for a production unit shall likewise designate by such number or numbers the drilling unit or units covered by such permit.

(Ord. 578; Code 2012)

No well hereafter commenced or drilled in the City shall be drilled within 100 feet of the nearest exterior boundary of a drilling unit or within 100 feet of any house or building used or for use as a place of abode or for the admission of the general public or for manufacturing or processing in existence when the oil or gas lease or leases are recorded in the office of the Register of Deeds of McPherson County, Kansas, but the governing body may at the time of granting a drilling permit authorize such variation therefrom as may be deemed necessary, depending upon the locations of streets, alleys, residences and other buildings with relationship to the proposed drill site and with relationship to geographical and topographical factors and to the size and shape of the drilling unit or units involved.

(Ord. 578; Code 2012)

No drilling permit shall be granted hereunder by the governing body until the applicant submits in connection with such application information and satisfactory evidence as follows:

(a)   That the applicant has valid oil and gas leases covering at least 51 percent of the mineral and royalty interests in the lands in each drilling unit comprising the production unit for which the application is filed and that such leases or agreements related thereto provided that the leases may be pooled or unitized with other lands and leases in the production unit, in which event the royalties payable to the lessors thereunder shall be paid on production from the unit in the proportion that the acreage covered by such leases and included in the production unit bears to the total acreage in the production unit; provided, however, if any drilling unit included in such production unit lies partly outside the corporate limits of the City, the applicant must in addition thereto submit satisfactory evidence that all of the mineral, royalty and oil and gas leasehold owners of the lands lying outside the City have consented or agreed that their interests in such lands lying outside the city limits may be pooled or unitized with the leases and lands in such production unit lying within the corporate limits of the City.

(b)   A map or plat of the drilling unit or combined units comprising the production unit for which the permit is requested, the location of the proposed well, and the location of the nearest house or building to the proposed well used or held or maintained for use as a place of abode or for the admission of the general public or for manufacturing or processing which was in evidence when the oil and gas lease or leases covering such land on which such house or building is located was recorded in the office of the Register of Deeds of McPherson County, Kansas. Slant drilling of a well shall be permissible subject to the requirement that upon completion of drilling a survey be filed by permittee in the office of the City Clerk showing the deviation of the bottom of the hole from the surface.

(c)   That the owner or owners of the surface rights of the land on which the proposed well is to be drilled have consented in writing to the drilling of a well on such land.

(d)   Agreements or statements showing reasonable and adequate plans for the handling and disposal of all drilling fluids, basic sediment, brines and other deleterious substances and wastes that may be produced in connection with the drilling and operation of the proposed well, these proposals to be in accordance with the provisions in this chapter.

(e)   Plans and drawings showing the facilities for the handling or storing of production of the proposed wells and written permission from the owner of the land, these plans and drawings to be in accordance with provisions in this chapter.

(f)   A written undertaking of applicant that in the event the well is either nonproductive or permanently abandoned upon cessation of production, then within 90 days after the determination thereof, all tools, equipment and machinery used in connection with the drilling of the well shall be removed, and the premises shall be fully restored to their original condition as soon as practicable and in no case more than 90 days after such determination.

(g)   That applicant has complied with the insurance requirements hereafter provided.

(Ord. 578; Code 2012)

The applicant for a drilling permit shall obtain a policy of indemnity or casualty insurance, issued by some responsible insurance company authorized to do business in the state, and naming the City as coinsured, insuring against injuries, loss or damage for which the applicant may be liable as the result of the drilling, operation or maintenance of any well or any structure or machinery appurtenant thereto drilled pursuant to a permit issued hereunder. Such insurance coverage shall be in the following minimum amounts:

(a)   $100,000 for injury to any one person in any occurrence.

(b)   $300,000 for injury to more than one person in any occurrence.

(c)   $100,000 for loss or damage to property in any one occurrence.  A copy of certificate of the policy shall be deposited with the City Clerk as a part of the drilling permit application, together with a certificate by the insurance company that such insurance is in force and shall not be cancelled without 30 days’ written notice thereof to the City. Such insurance shall be renewed immediately prior to the end of the term thereof and shall be maintained during the entire period of drilling or operation of a well drilled pursuant to a permit issued hereunder.

(Ord. 578; Code 2012)

Upon the filing of an application for a drilling permit and the information and evidence as provided herein, the governing body shall promptly determine whether such application and such information and evidence filed in connection therewith meets the requirements of this article, and upon determining that such requirements have been met shall promptly issue a drilling permit for the well proposed by such application and the production unit covered by such application. Upon the issuance of such permit all of the mineral, royalty and oil and gas leasehold interests in the lands included in the production unit for which such permit is issued shall be deemed pooled and unitized and the production from such production unit shall be allocated to the separately owned tracts therein in the proportion that the acreage contained in each such separate tract bears to the total acreage contained in the production unit and the production so allocated shall belong to the mineral, royalty and oil and gas leasehold owners of such tracts in accordance with their interests therein and as otherwise provided herein. Only one well shall be allowed to produce on such production unit and only one tank battery may be maintained for such production unit.

(Ord. 578; Code 2012)

At the time of the granting of any permit under the provisions of this article, the governing body may make such additional reasonable requirements or variances of requirements under this article as it may deem necessary for the protection and safety of persons and property likely to be affected by the drilling of the well for which such permit is issued.

(Ord. 578; Code 2012)

The issuance and continued validity of a permit and the authorization for the drilling or operation of a well authorized thereby shall be conditioned upon compliance by the permittee with the following rules and regulations and any departure therefrom shall constitute a violation of this article:

(a)   The well must be drilled at the location and in accordance with the terms and requirements of the permit.

(b)   The surface pipe must be run and set to depths and in compliance with the rules and regulations of the Kansas State Department of Health and the Kansas Corporation Commission.

(c)   The surface pipe must be solidly cemented from top to bottom on the outside of the pipe.

(d)   Adequate precautions shall be taken and necessary well head safety devices be used at all times during the drilling and completion of the well; and all drill stem tests shall be reverse circulated to confine fluids to pits in accordance with the most acceptable practices.

(e)   Locations and equipment shall at all times during drilling operations be fenced by either a temporary portable-type snow fencing at least four feet high or other fencing equally acceptable.

(f)   Upon completion of a well site, tank battery and other production equipment shall be enclosed within a chain or wire mesh fence six feet in height supported by steel posts set in concrete to the depth of at least 18 inches; and on top of such fence, there shall be placed and maintained a protruding extension of three barbed wires, the lowest of which shall be at least seven feet aboveground, extended on bars at an angle of 45 degrees to the outside, and all gates forming a part of such fence shall be kept closed and locked at all times except when in active use by operator.

(g)   No slush ponds (also known as reserve pits) shall be located within the city limits but enclosed tanks will be used in lieu of slush ponds within the city limits and all installations will be enclosed by a fence of the type described in subsection (f) hereof.

(h)   All waters produced from any well shall be disposed of underground in accordance with regulations of the Kansas Corporation Commission or the Kansas State Board of Health.

(i)    At no time shall fluids of any kind be run into or stored in earthen pits.

(j)    The surface of the ground around the well site shall be graded to surrounding ground.

(k)   All pumping units must be electrically driven.

(l)    All petroleum storage tanks shall be of a vaportight construction. No gas or fumes from any storage tank, oil separator of casing head shall be allowed to escape without burning or other acceptable method of disposal to be approved by the governing body.

(m)  All storage tanks shall be located within a diked area not less than two feet in height covering an area sufficient to contain and hold one and one-half times the entire liquid capacity of all tanks therein.

(n)   All production equipment shall be enclosed, structures and premises shall be at all times maintained and kept in a clean, sanitary and tidy condition; and all structures shall be of incombustible materials.

(o)   No crude oil will be applied to any lease roads within the city limits.

(p)   All oil or gas or other substances produced or arising from the operations of a permit shall be piped or otherwise conveyed or removed from the limits of the City except temporary storage of not to exceed 900 barrels of oil for each well, including gun barrel, wash tank and separator. The laying of any pipe lines by the permittee shall be done under the supervision of an appropriate person designated by the governing body.

(Ord. 578; Code 2012)

Within 10 days after a permit is issued hereunder, the permittee shall cause notice of the granting of such permit and of the right of owners of unleased lands and oil and gas lessees other than permittee to participate in the drilling of a well authorized by such permit to be published in the official City newspaper designated by the City to publish its legal notices and shall cause such to be mailed to all of the owners then of record in the office of the Register of Deeds of McPherson County, Kansas, and other owners known by permittee of

(1)   mineral and royalty interests in the production unit for which the permit was issued which are unleased for oil and gas purposes; and

(2)   working interests in oil and gas leases which are not owned by permittee, the names and addresses of whom are known to permittee or can be obtained by permittee with reasonable diligence and effort.

Each such owner shall have 12 days from the date of mailing or publication of such notice, whichever is the later, to elect to participate as a working interest owner in the drilling, completion, equipping and operating of the well authorized by such permit by posting with the City Clerk a good and sufficient bond with corporate surety satisfactory to the permittee guaranteeing the proportionate share of such owner of the total cost of drilling, completing and equipping of such well in the proportion that the acreage owned by such mineral, royalty or leasehold owner in the production unit for which the permit was issued, or his interest therein, bears to the total acreage in the production unit. If the owner of an unleased mineral or royalty interest shall post such bond within the time permitted herein, such owner shall then be obligated to pay his proportionate share of all costs of drilling, completing, equipping and operating such well as a working interest owner therein and shall be entitled to receive all of the acreage owned by such owner as provided in Section 5-407 in accordance with his interest in such acreage. If the owner of a working interest in an oil and gas lease other than permittee posts such bond within the time permitted herein, such owner shall likewise be obligated  to pay his proportionate share of all such costs and shall be entitled to receive all of the production allocated to the acreage in the production unit covered by his lease in accordance with his interest therein; subject, however, to the payment by such owner of the lessors’ royalties or other burdens on production under such lease or interest therein in accordance with the terms of such lease or other instruments creating such burdens. If the owner of an unleased mineral or royalty interest or the owner of a working interest in an oil and gas lease having the right to participate as set forth herein fails to exercise such right as permitted hereunder, then the unleased mineral or royalty interest or the mineral or royalty interest covered by the leasehold interest of such nonparticipating working interest owner shall be deemed to be leased to the permittee who shall pay such costs which the nonparticipating owners would have paid had they elected to participate in such well, and the owners of such unleased mineral or royalty interests and of the mineral or royalty interests whose working interest lessees fail to participate hereunder shall be entitled to receive their proportionate parts of a 1/8 royalty on the production allocated to the tracts in which they own such mineral or royalty interests in accordance with their fractional mineral or royalty interests therein.

(Ord. 578; Code 2012)

When a drilling permit shall have been issued, the same shall terminate and become inoperative without any action on the part of the governing body, unless within 60 days from the date of issue of such permit actual drilling of the well shall have been commenced, and after the drilling of a well shall have been commenced the cessation for a like period of the drilling operations shall cancel the permit, and the wel0.l shall be considered terminated for all purposes of this article and it shall be unlawful thereafter to continue drilling of such well without the issuance of another permit.

(Ord. 578; Code 2012)

Any person, firm or corporation hereafter drilling or commencing the operation for the drilling of any oil or gas well in violation of the provisions of this article shall, upon conviction thereof, be punished by a fine of not less than $25 or more than $100, or by imprisonment in the City Jail for not more than 30 days, or by both such fine and imprisonment, and each day’s violation of said article shall be deemed a separate offense.

(Ord. 578; Code 2012)

If any section, subsection, sentence or clause, or any other part of this article shall be held invalid, or inoperative for any reason, such invalidity shall not be deemed to affect the remaining provisions of this article.

(Ord. 578; Code 2012)