Kentucky oil and gas laws can be found in Chapter 353, Title XXVIII of Kentucky Revised Statutes. Pursuant to KRS § 353.500, it is declared to be the public policy of the Commonwealth of Kentucky to foster conservation of all mineral resources, to encourage exploration for such resources, to protect correlative rights of land and mineral owners, to prohibit waste and unnecessary surface loss and damage and to encourage the maximum recovery of oil and gas from all deposits thereof, and to promote safety in the operation thereof.
Powers and Jurisdiction of the Department
The Department of Natural Resources is authorized and it is its duty to administer and enforce the statute, all rules and regulations promulgated and orders issued and to conduct such investigations as it deems necessary[i].
Without limiting its general authority, the department has the specific authority to require of and from all operators of any oil or gas property in the Commonwealth[ii]:
- Identification of producing leases, submitted on the form on which production is required by the department to be reported;
- The making of driller’s logs, and filing of all logs and downhole surveys made;
- The drilling, casing, operation, and plugging of wells in such manner as to prevent:
- The escape of oil or gas from one pool into another, or into mineral bearing stratum;
- The detrimental intrusion of water into an oil or gas pool or into mineral-bearing stratum that is avoidable by efficient operations; and
- Blowouts, cavings, seepages, and fires;
Regulation of Operation
No person should drill or deepen a well, or reopen a plugged well for the production of oil or gas or for the injection of water, gas or other fluid into any oil or gas producing formation, or drill or deepen a water supply well, and geological or structure test holes, until such person obtains a permit from the department[iii].
Any person aggrieved by any order issued by the department or by the commission has the right to bring a civil action for review of the order by filing a complaint in the Circuit Court of the county in which the premises or any portion thereof affected by the order is located, or in the Franklin Circuit Court[iv].
The suit should be brought within thirty days after the order is issued, and in event no suit is filed within the thirty day period, the order is final.
In the suit, the burden of proof is upon the party complaining of the order and the order will be deemed prima facie valid. Any party to the suit may offer in evidence all or any part of the record of the hearing which resulted in the order and any other relevant evidence.
Whenever it appears that any person is violating or threatening to violate any provision of the statute, or any rule, regulation or order promulgated or issued, the department may bring suit against the person in the Circuit Court of the county where the violation occurred or is threatened, or in the county in which the defendant resides or in which any defendant resides if there is more than one defendant, to restrain the person from continuing the violation or from carrying out the threatened violation[v].
Appeals may be taken from all final orders of the department to issue, deny, modify, or revoke any permit under the Underground Injection Control Program. Appeals should be taken to the Circuit Court of the county in which the well is located or proposed to be located[vi].
Pursuant to KRS § 353.020, if a lease or contract of lands for oil and gas purposes provides in substance that actual drilling or development may be postponed by the payment or tender of the rental on or before a certain day, and the rental is not so paid or tendered, the lessor or landowner may avoid the lease or contract unless before executing a new lease or contract s/he has accepted payment of the rental.
[i] KRS § 353.540.
[ii] KRS § 353.550.
[iii] KRS § 353.570.
[iv] KRS § 353.700.
[v] KRS § 353.710.
[vi] KRS § 353.593.