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The article below appeared in the latest newsletter of the Texas Land and Mineral Owners Association. It reviews the Texas Railroad Commission’s recent amendment of its Rule 15, dealing with dormant oil and gas wells. Thanks to TLMA and the author, Trey Scott, for giving me permission to publish his article. TLMA submitted comments on the proposed rule, arguing that the proposed amendments should not be adopted. Abandoned wells are a huge problem for Texas landowners and the public at large. Landowners should consider addressing the problem in their oil and gas leases, since the RRC has failed to do so.

RAILROAD COMMISSION ADOPTS RULE CHANGES AFFECTING
INACTIVE WELLS

As part of Railroad Commissioner Christi Craddick’s Texas Oilfield Relief Initiative, the Railroad Commission has adopted two proposed rulemakings to ease the administrative burden on oil-and-gas companies. The Commissioners amended Statewide Rule §3.15 (“Rule 15”) to relax the production requirements to return a well in active status, and the changes to Statewide Rule §3.28 will minimize the frequency of deliverability testing requirements for gas wells. Continue reading →

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When I last wrote about this case, I reported that the Texas Supreme Court had denied the petition for review of the Corpus Christi Court of Appeals’ decision affirming a $15 million arbitration award against Forest. On motion for rehearing, the Supreme Court granted the petition for review. The case is fully briefed, but no date for oral argument has yet been set. See my earlier posts on the case here and here.

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Every year, the ABA Journal of the American Bar Association publishes a list of its 100 best blogs related to law topics. One of those on this year’s list is the Texas Agriculture Law Blog, published by the Texas A&M AgriLife Extension Service. The author is Tiffany Dowell Lasmet, an Assistant Professor and Extension Specialist in Agricultural Law at A&M. The ABA Journal reports that

Enviromnmental laws, animal safety, real estate and property issues, food safety and fracking are all issues that Texas farmers and ranchers have to contend with, and this blog does a great job of analyzing how recent court decisions or state legislation can affect them. Texas has long been on the cutting edge of energy law, and this blog also offers excellent examinations of how energy companies and agriculturists are dealing with their often-competing interests.

Check it out. Good information about ad valorem tax exemptions, hunting leases, solar leases, hydraulic fracturing, water law and more.

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With OPEC’s announced reduction in crude production, it might be good to take the long view. Below is chart of crude prices since 1985.  The period between 2005 and today has seen a revival of the US oil industry. Companies have now bet that they can make money at $50/bbl, at least in the Permian. While significant, OPEC’s announced reduction (1) has not yet been realized and (2) is a small percentage of total world oil production.  If drilling rigs return to the field in the numbers present in 2008-2014, Opec’s reduction can easily be made up by increased production from US fields. (click on charts to enlarge)

 

EIA crude pricesEIA crude production

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The Dallas Morning News has published an excellent, in-depth investigative report — “Seismic Denial? Why Texas Won’t Admit Fracking Wastewater is Causing Earthquakes,” by Steve Thompson and Anna Kuchment — about the Texas Railroad Commission’s failure to recognize or address the relationship between salt water disposal wells and earthquakes in North Texas, and the industry’s influence on the process. Anyone who wants to know how the Railroad Commission really works should read this article.  In an accompanying editorial, the News said:

Not only has the Texas Railroad Commission consistently denied man-made earthquakes in the face of compelling science, it also worked overtime to protect the oil and gas industry from accountability for its role in an earthquake swarm that rattled Azle and Reno [in North Texas] in late 2013 and early 2014.

The editorial remarks on the substantial campaign contributions received by commissioners, all of whom are elected, from exploration companies. The Commission is under sunset review (again) this session and must be re-authorized by the Legislature next year. The editorial continues:

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The news this week is full of stories about the EIA’s new figures on the amount of recoverable oil in the Permian Basin. Unlike the rest of the country, the rig count in the Permian is rising and is now equal to all other rigs in the country combined. Permian oil production exceeds that from the Eagle Ford and the Bakken. And unlike all other plays, production from the Permian continues to grow. From EIA’s Drilling Productivity Report (click to enlarge):

EIA Permian

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National press have reported that oil tycoon Harold Hamm, billionaire founder and CEO of Continental Resources, is being considered for Energy Secretary in the Trump administration. Last year, it was reported that Hamm pressured the University of Oklahoma to dismiss scientists who were studying links between disposal wells and earthquakes in Oklahoma. (Google Harold Hamm and earthquakes.)  Since that time, the Oklahoma Corporation Commission has been forced to order severe curtailment of salt water disposal to lessen incidence of earthquakes. Most recently, a 5.0 quake hit near Cushing, OK, the site of the largest oil and gas storage facility in the U.S., forcing shutdown of some pipelines and causing significant property damage in the town of Cushing.

Cushing

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The Commonwealth Court of Pennsylvania last month issued its decision in Kiskadden v. Pennsylvania Department of Environmental Protection, copy of opinion here: Kiskadden. Kiskadden claims that chemicals from Range Resources’ Yeager wells, located about a half-mile from Kiskadden’s water well, contaminated his well. One judge dissented. The Commonwealth Court is an intermediate court of appeals in Pennsylvania, so Kiskadden can appeal to the Pennsylvania Supreme Court.

The case began with Kiskadden’s complaint to the Pennsylvania Department of Environmental Protection. The DEP conducted an investigation and held a hearing and concluded that Kiskadden’s well was not contaminated by Range’s operations. Kiskadden appealed to the Board of the DEP. The parties conducted extensive discovery. Kiskadden refused to produce a list of all products and the composition of products used at the Yeager drillsite, but Range refused to produce that information. The Board then ruled that it would grant a “rebuttable presumption” that the chemicals found in Kiskadden’s water well were presumed to be present at the Yeager drillsite. In effect, this shifted the burden of proof to Range to show that it had not contaminated the well. After a hearing before the Board, it issued extensive findings and conclusions and affirmed the conclusion of the Department that chemicals spilled at Range’s site were not the source of the contamination of Kiskadden’s well. Continue reading →

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The Sunset Advisory Commission will meet November 10 to vote on its recommendations to the Texas legislature for legislation to continue the Railroad Commission for another 12 years.  Committee members have proposed modifications to several of the staff report, and also add several additional recommendations. The staff recommendations and proposed modifications submitted by Commission members can be viewed here. Decision Meeting Material_November  Proposed changes/additions of interest to land and mineral owners include:

  • Chairman Gonzales and Representative Flynn propose to eliminate recommendation that the Commission’s name be changed to a name that reflects the agency’s functions.
  • From Representative Raymond:
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“Liberty doesn’t work as well in practice as it does in speeches.”

“Democrats never agree on anything, that’s why they’re Democrats. If they agreed with each other, they would be Republicans.”

“If you ever injected truth into politics you would have no politics.”

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