Articles Posted in Texas Railroad Commission

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The Texas Railroad Commission website includes a tool it calls the Public GIS Viewer, that all mineral owners should become familiar with. It can be found at http://wwwgisp.rrc.state.tx.us/GISViewer2/, and it looks like this (click to enlarge):

GIS Viewer

The RRC website also has a page showing you how to use the viewer, found here.

You can locate wells and permits, and find permit plats, P-12’s, and other records in the permit file. Spend a little time playing around on the viewer to become familiar with its tools.

Other data at the RRC can be searched from this page:  http://www.rrc.texas.gov/about-us/resource-center/research/online-research-queries/ . From this page, you can find completion reports, field rules, organization reports, P-4’s and P-‘5’s, production data, and much more. An explanation of the data that can be located from this data queries page can be found here.

Use the viewer to locate the lands where you own interests. Look up your wells. Look for permitting activity in the vicinity of your properties. Have fun.

 

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An article by Jim Malewitz in The Texas Tribune, “As Oil Prices Plunge, Questions about Big Tax Credit,” sheds light on an arcane and technical issue not well understood even by most oil and gas lawyers – classification of wells as “oil wells” or “gas wells” by the Texas Railroad Commission. While most wells produce both oil and gas, under RRC rules a well must be either one or the other. Different rules apply depending on well classification. Why does it matter?

For one thing, oil and gas leases traditionally have allowed larger pooled units for gas wells than oil wells – allowing operators to hold more acreage with a single well. This distinction is based on the theory that gas wells drain a larger area than oil wells – probably true in most conventional reservoirs, where oil and gas migrate through the formation as wells withdraw production. Not so true for new unconventional shale formations, which have very low permeability and porosity, and where oil and gas don’t “flow” through the formation but are produced through artificially induced fractures.

But operators recently are rushing to “reclassify” wells as gas wells that were originally classified as oil wells. According to Malewitz, the RRC granted operator applications to reclassify 844 wells from oil to gas this year – nearly six times the number reclassified in 2013. And Devon Energy has asked the RRC to reclassify more than 200 of its wells from oil to gas. The reason? Tax credits. Continue reading →

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Texas Tribune September 24, 2015 – by Ross Ramsey:

 

What happens when an elected official says “we” is that we think they’re talking about us — the people who elected them. Sometimes, that’s right. In fact, it’s right most of the time.

Not at the Texas Railroad Commission. It’s a three-person state commission elected by Texas voters and seemingly owned and operated by the oil and gas industry it regulates. Go hear one of their speeches at an industry conference sometime and listen for this: Do they call it “your industry” when talking to oil and gas people, or do they call it “our industry.” A recent sampling suggests the latter.

The latest chapter in the remarkably consistent history of the Railroad Commission is about a letter from Chairman David Porter to the Federal Communications Commission.

The FCC is suffering from a case of regulatory constipation, as reported by The Texas Tribune’s Jim Malewitz, that is blocking some oil and gas companies from getting their hands on some wireless frequencies that would help them monitor their pipelines.

The companies want the FCC to free the frequencies, which are licensed to an unrelated outfit that has encountered bankruptcy and other legal challenges.

One of them wrote a letter and got Porter to put it on Railroad Commission of Texas letterhead and sign it himself.

This is all documented in emails, which are surely the greatest thing ever invented for lawyers and others who want to piece a story together after the fact.

Porter’s chief of staff, Caleb Troxclair, traded messages last month with Justin Stegall, a Houston intermediary for Enbridge, one of the companies hoping to get its hands on those wireless frequencies. The company’s Washington, D.C., lawyers drafted a letter that he forwarded to Porter’s office with some suggestions about adding some language of their own.

Troxclair wrote back a couple of days later, saying Porter had agreed to send it. Two days later, he sent along a version on state letterhead that was added to the FCC’s files by the lawyers in Washington.

None of this cost taxpayers much money. There was a little staff time involved, but it’s not like anyone on the state payroll had to write his or her own letter or anything.

It also is not the sort of request that has much effect on anyone but the companies involved. If they get the radio frequencies they want, they can save some money monitoring their pipelines and perhaps even speed up their responses if something goes wrong.

A competent public relations professional could probably make it sound like a small miracle of efficiency and environmental responsibility. Troxclair made a stab at that responding to the original story, saying “Chairman Porter determined that sending the letter was in the best interest of pipeline safety in Texas.”

Pipeline safety was the spin from Enbridge’s spokesman, too. Message discipline is important, and these guys are on the same page.

This does not appear to be a tit-for-tat thing. Enbridge hasn’t contributed to Porter.

But it does seem like a regulator would want the companies that stand to benefit to write their own letters and put their own names on them and print them under their own company letterheads, instead of enlisting the help of a provincial government official who might win some attention in Washington by flashing the state seal.

Come to think of it, this could increase Porter’s own suspicions about letters sent to the Railroad Commission from mayors, county commissioners and other local officials. It becomes harder and harder to distinguish logrolling from heartfelt testimonials, cheapening the regulatory process.

Porter is not doing anything illegal or even unusual, and that’s the trouble. He’s just helping his constituents — the oil and gas people. That’s who Texas Railroad Commissioners talk about when they use the word “we.”

This article originally appeared in The Texas Tribune at http://www.texastribune.org/2015/09/23/analysis-texas-railroad-commission-letter/

See also http://www.texastribune.org/2015/09/22/pipeline-company-ghostwrote-texas-regulators-letter/

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The Texas Railroad Commission has submitted its “Self-Evaluation Report” to the Texas Sunset Commission, in anticipation of Sunset Commission review of the RRC in the next legislative session in 2017.

Under Texas’ sunset law, every Texas agency must periodically undergo review by the Sunset Commission and be re-authorized by legislative action. The Sunset Commission reviews and recommends changes to legislation governing the agency – or may recommend abolishment of the agency.

Initially reviewed in 2011, the Railroad Commission’s Sunset bill did not pass in the 2011 legislative session. Instead, the 82nd Legislature continued the Railroad Commission under Sunset review for another two years. In 2013, the Sunset Commission again reviewed the RRC and recommended significant changes, including changing the agency’s name, limiting when Commissioners could solicit and receive campaign contributions, and requiring the automatic resignation of a Commissioner running for another elected office. The Sunset Commission also recommended several funding changes, including eliminating the statutory cap on the Oil and Gas Regulation and Cleanup Fund and creating a new pipeline permit fee to help support the agency’s pipeline safety program.

The Sunset recommendations were incorporated into Senate Bill 212. The Senate passed this bill in 2013, but ultimately the bill was left pending in the House Energy Resources Committee. The only significant legislation that did pass was a requirement that commissioners resign to run for another office – a bill vetoed by the Governor. The legislature required the RRC to undergo sunset review again in 2017.

The RRC’s Self-Evaluation Report, required by the Sunset Commission, can be found here. Largely self-laudatory, it does contain lots of data about RRC activities. Excerpts: Continue reading →

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Representative Drew Darby, Chair of the Texas House Committee on Energy Resources, wrote the members of the committee to ask their input on issues that should be addressed by the committee during the interim between legislative sessions. A copy of the letter can be viewed here: Darby letter.

Of the 33 energy-related bills referred to the committee, it reported 22 favorably, nine were passed by the legislature, and two of those were vetoed by the governor – so seven became law. They are described in Darby’s letter.

Darby mentions two issues he believes should be suggested to the Speaker of the House as “Interim Charges” for the committee to study:  allocation wells and oil equipment theft. The legislature passed House Bill 3291, which would have increased penalties for oil-field theft, but the governor vetoed it, declaring it “overly broad.” Darby also reminds the committee that the Texas Sunset Commission will be reviewing the Texas Railroad Commission during the interim, and he expects the Sunset report to be a “significant focus of the Committee next session.”

Rep. Tom Craddick’s bill on allocation wells, House Bill 1552, did not make it out of the House Energy Committee, but lobbyists for the industry strenuously lobbied for the bill. Representatives of the University of Texas System and the Texas General Land Office testified that the bill would have cost UT and the State hundreds of millions of dollars a year in lost revenue. Representatives of the Texas Land & Mineral Owners’ Association, the Texas Cattle Raisers’ Association, the National Association of Royalty Owners – Texas, and others testified against the bill as unnecessary and contrary to established legal precedent.

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Yesterday the Texas Railroad Commission held the first of two scheduled show cause hearings called by the RRC to determine whether two salt water disposal wells near Azle, Texas should be shut down because they caused earthquakes in the area. The earthquakes in that region of Parker County are the subject of a recently published study by scientists at Southern Methodist University, which concluded that the quakes were probably caused by the injection wells. One of the wells is owned by XTO Energy, the other by Enervest. Enervest’s show cause hearing is scheduled for next week.

The XTO hearing was before two hearings examiners, Marshall Enquist and Paul Dubois. Hearings examiners act as administrative law judges in RRC hearings; they then propose a decision to the three commissioners, who can either accept or reject their proposed decision.

Only XTO appeared at the hearing, represented by their attorney Tim George, who called three witnesses and introduced more than 30 exhibits. XTO argued that the earthquakes were natural phenomena not caused by their injection activities. No witnesses appeared to oppose XTO’s position. A staff attorney at the RRC did ask some questions of XTO’s witnesses and offered the SMU study as evidence, over XTO’s objection. Tim George argued that the study was hearsay and that the scientists were not available to be cross-examined on the study. Marshall Enquist admitted the study as evidence over George’s objection, saying “in a way, [the SMU study] is why we’re here today.”

When the commissioners voted on whether to call the show cause hearings for XTO and Enervest, Ryan Sitton, the newest commissioner, opposed the order. Sitton organized a panel discussion on the SMU study at the RRC that took place last Friday, at which the SMU scientists, as well as scientists from UT, the RRC seismologist, and representatives of Enervest appeared. Sitton acted as moderator, but the other two commissioners did not attend. Enervest also argued in that panel discussion that its disposal well did not induce seismic activity, and that the SMU study is flawed.

Following the show cause hearing, the two examiners will write a proposal for decision that will be submitted to the commissioners.

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Beginning in 2013, the town of Azle, in the heart of the Barnett Shale, experienced a “swarm” of earthquakes. Its citizens complained to the Texas Railroad Commission, blaming injection wells for the quakes. When the RRC held a meeting in Azle, refusing to link the quakes to the injection wells, the citizens decided to protest in Austin. They bussed themselves to a RRC open meeting, where they serenaded the commissioners with a song from Elvis, “All Shook Up.”

Southern Methodist University scientists have now published a paper concluding that the Azle quakes were “most likely” caused by the injection wells, together with withdrawals of produced water by the seventy-plus producing wells in the area. SMU installed monitors around Azle after the quakes began,and identified a fault running through the area. The scientists developed a model showing that the changes in pressure caused by the withdrawals on one side of the fault and the injections on the other were the likely cause of the quakes. Heather DeShon, one of the SMU researchers, said that “What we refer to as induced seismicity – earthquakes caused by something other than strictly natural forces – is often associated with subsurface pressure changes. We can rule out stress changes induced by local water table changes. While some uncertainties remain, it is unlikely that natural increases to tectonic stresses led to these events.”

SMU quake study picture

The Texas Railroad Commission website stills says that  “Texas has a long history of safe injection, and staff has not identified a significant correlation between faulting and injection practices.” After Azle’s visit to the RRC, it hired its own seismologist, David Pearson. In response to the SMU report,  Pearson said that “We will not be suspending activity at the two wells, especially given the fact that we have not seen any continuation of large-scale earthquakes in the Azle area that would give us any cause for alarm. The swarm has died out and has been quiet for some time.” Milton Rister, the Railroad Commission’s executive director, wrote a letter requesting a meeting with the SMU researchers.

The earliest quakes blamed on oil and gas activity occurred in 2008 around the Dallas-Fort Worth Airport. More recently there has been a swarm of quakes in the Dallas area.

The SMU study can be found here.

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Struggles over fracking bans have been in the news for some time in Pennsylvania, Colorado, Ohio, New Mexico and other states. The State of New York has had a moratorium on fracking for several years. But until recently, cities and oil and gas companies in Texas had been able to get along. Until, that is, the City of Denton, Texas passed a referendum banning fracking with in its city limits. Since then, as we say in Texas, all hell has broken loose.

The day after Denton’s referendum passed, two suits were filed challenging its ordinance, one by the Texas General Land Office and one by the Texas Oil and Gas Association. In the Legislature, several bills were filed to limit municipal authority to regulate drilling. One bill would require cities to reimburse the state for lost revenue from any drilling ban.  Another would require cities to get approval from the Attorney General before putting any referendum on the ballot.

The two bills that appear to have the most legs are HB 2855, introduced by Drew Darby, and SB 1165, introduced by Troy Fraser. SB 1165 has been favorably reported out of the Senate Natural Resources Committee. HB 2855 remains pending in the House Energy Resources Committee after a lengthy hearing at which representatives of the industry and municipalities testified late into the night.

HB 2855 would prohibit a city from enacting an ordinance that “prohibits or has the effect of prohibiting an operation under the jurisdiction of the” Texas Railroad Commission. And it delegates to the RRC “exclusive jurisdiction to determine whether the adoption or enforcement of an … ordinance … prohibits or has the effect of prohibiting an operation under the jurisdiction of” the RRC.

SB 1165 prohibits ordinances that “ban, limit or otherwise regulate an oil or gas operation” except for ordinances that “regulate only surface activity that is incident to an oil and gas operation, is commercially reasonable, does not effectively prohibit an oil and gas operation, and is not otherwise preempted by state or federal law.”

Cities claim that both bills would effectively eliminate the ordinances that they have carefully crafted, with input from industry, to regulate drilling within their municipal limits.

In 2011, the Texas Supreme Court decided Railroad Commission of Texas and Pioneer Exploration, Ltd. v. Texas Citizens for a Safe Future and Clean Water and James G. Popp, No. 08-0497. It held that the RRC’s authority to issue permits for injection wells, which requires the RRC to find that the permit will be “in the public interest,” does not give the RRC authority to consider traffic safety in deciding whether to grant the permit. The RRC strenuously argued that it had no jurisdiction to consider public safety issues in granting injection well permits. I was reminded of this case in relation to the debate over municipal authority, because, like injection wells, the RRC never considers public safety issues in deciding whether to grant drilling permits. Indeed, I suspect that the RRC would say, as it did in Popp, that it has no jurisdiction to consider such issues when granting a drilling permit. In municipal jurisdictions, issues of public safety are principally delegated to the municipality. City drilling ordinances address those issues – traffic, noise, emissions, etc. The City of Fort Worth’s drilling ordinance, considered a model for other cities, addresses those issues in great detail.

The proposed bills will leave a lot of open questions. When does a municipal ordinance “have the effect of prohibiting an operation”? When is a municipal ordinance “commercially reasonable”? Senate bill 1165 defines “commercially reasonable” as “a condition that permits a reasonably prudent operator to fully, effectively, and economically exploit, develop, produce, process and transport oil and gas.” It appears to me that these bills are licenses for operators to litigate with cities over their ordinances, in expensive litigation that some cities will be unable or unwilling to fight.

These bills were filed in response to Denton’s drilling ban. It seems to me that the most reasonable response, if any is needed, is simply to prohibit cities from enacting a drilling ban. The industry appears to be using the drilling ban as an opportunity to try to severely limit municipal authority over drilling.

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Earthquakes linked to oil and gas activity are in the news.  A recent study in Ohio linked a rash of small earthquakes to fracing of wells in the area. Earthquakes in Oklahoma have increased tenfold since 2009. A swarm of small earthquakes hit the Dallas-Fort Worth area recently. The US Geological Survey is raising its evaluation of earthquake hazard risk in Texas as a result. 

In Texas, the spate of small earthquakes is tentatively tied to injection wells rather than fracing of new wells. The theory is that the injected water lubricates lithologic layers, allowing them to slip and causing quakes.

The Environmental Protection Agency estimates that there are 144,000 Class II injection wells in the US. The RRC has permitted more than 50,000 Class II injection wells in Texas since the 1930’s. These injection wells are used to dispose of water and waste produced from wells, both that from the fracing process and water produced with oil and gas in the production phase. Many oil wells produce hundreds of barrels of water for each barrel of oil produced. Without injection wells, the Texas oil and gas industry would screech to a halt.

In response to the increased seismic activity in Texas, the Texas Railroad Commission hired its own seismologist
and proposed new rules for those applying for permits to drill disposal
wells. The RRC’s proposed rules originally were drafted to require applications for injection well permits to provide a calculation of the estimated “five pounds per square inch, 10-year pressure front boundary,” as a way to determine whether or not the well would likely cause seismic activity in the area. When water is injected into a formation underground, it increases the pressure in the formation, and that pressure spreads through the formation over time. The five-psi, 10-year pressure front is the distance from the injection well to which pressures will increase by five psi if the well is operated at the permitted rate and pressure over a 10-year period.

The RRC published the proposed rule for comments and received 36 comments, including comments from the Environmental Defense Fund, the Sierra Club, the Texas Alliance of Energy Producers, some groundwater conservation districts, the EPA, the US Geological Survey, and Chevron USA. In response to comments, the RRC changed its proposed rule. Instead of requiring the five-psi, 10-year pressure front study, the RRC will require each applicant to provide copy of a USGS map showing all recorded seismic events within 9 kilometers of the proposed well location (about 6.1 miles).  The pressure-front study will be required “only in certain limited circumstances where additional information is necessary to demonstrate that fluids will be confined if the well is to be located in an area where conditions exist that may increase the risk that fluids will not be confined to the injection interval.”

The original proposed rule also said that the RRC could modify, suspend or terminate a permit “if injection is suspected of or shown to be causing seismic activity.” The final rule modifies this language to read “if injection is likely to be or determined to be causing seismic activity.”

The RRC’s discussion of comments, and the final rule, can be found here. rrc earthquake rule.pdf

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The Colorado Oil and Gas Conservation Commission now allows landowners with complaints against operators to file their complaint online. Go to http://cogcc.state.co.us/ and click on “Complaints” in the left-hand column.If you’re a surface owner with no mineral rights and you have objections to a proposed well location, you can also get the COGCC to inspect the site and consider your objections and require the operator to accommodate your concerns.

The online portal is very user-friendly and a real effort to make it easier for the public to participate in the process. The Texas Railroad Commission should take note.  The COGCC has also significantly increased its oversight staff, increased its collaboration with local governmental entities, sponsored studies on air and water impacts, and adopted policies on health and safety issues.

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