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The three current Texas Railroad Commissioners and the new incoming Commissioner David Porter all testified before the Texas Sunset Advisory Commission earlier this month, defending the RRC against criticism in the Sunset Commission staff report. The three commissioners are elected by Texas voters, and a position on the commission is often viewed as a steping-stone to higher office.  Two current commission members, Michael Williams and Elizabeth Ames Jones, both considered running for U.S. Senate when Kay Bailey Hutchinson indicated she would step down to run for Texas Governor. State Senator John Whitmire, a member of the Sunset Commission, said that their running for U.S. Senate conflicted with their duties to the Railroad Commission. “You’re running for office, but while you’re doing that and regulating and making decisions, you’re running and actually raising money from the folks that you are regulating.” The criticism mirrors the Sunset staff report, which recommends changing the law to have the RRC run by a five-member appointed board. (For my summary of the Sunset staff report recommendations, go here.) Commissioners Victor Carrillo and Michael Williams said they would support a single elected RRC to replace the three-member commission but would oppose a five-member appointed board. Commissioner Jones said she supported the current three-commissioner governance structure.

The Sunset Advisory Commission is composed of ten members: four members of the Texas House of Representatives, four Texas senators, and two private citizens:

Senate Members:

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Dallas attorney Windle Turley has filed three lawsuits in federal court in Dallas on behalf of landowners alleging contamination of their groundwater by Barnett Shale Wells: one on behalf of Jim and Linda Scoma of Johnson County, against Chesapeake, filed last June; one on behalf of Doug and Diana Harris, against Devon Energy, and one on behalf of Grace Mitchell against Chesapeake and Encana. The suits contend that plaintiffs’ groundwater has been contaminated by drilling and hydraulic fracturing operations. A copy of the Harrises’ suit can be viewed here.  Turley says more such suits will follow. Turley’s website has a page dedicated to such suits, which says that, “when hydro-fracking occurs, it is possible for the property owner’s groundwater to become contaminated and/or for gases to be forced into the groundwater. When this happens, the oil company may be liable to the property owner for property damages and injuries. … The Turley Law Firm is very concerned over the damage done and future risk to property and individuals in the Barnett Shale area, and is filing damage suits on behalf of property owners.” Groundwater contamination lawsuits may become new fertile ground for plaintiffs’ attorneys.

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Range Resources has written to Al Armendariz in EPA’s Dallas office again asserting that it is not responsible for the groundwater contamination in Parker County.  Range’s letter can be viewed here:  12-27 Armendariz letter.pdf  For my previous posts on this controversy, go here and here.

Range met with EPA staff on December 15, and it says that, as a result of the meeting, Range and EPA agree that “hydraulic fracturing in the Barnett Shale cannot be the cause of natural gas occurring in the domestic water wells identified by the EPA.”  Range also made clear in the letter that, while it was complying with the requirements of EPA’s order, it did not believe that the EPA had authority to issue its order, since Range was not responsible for the pollution and the order was issued “without any prior notice or opportunity for Range to present important objective facts.”

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Darell T. Brownlow, Ph.D, has published an article giving his analysis and opinion of the ability of the Carrizo Aquifer to supply water demands caused by fracing of wells in the Eagle Ford play.  The article was published in the newsletter of the Texas Ground Water Association, Fountainhead, and can be found here: Brownlow Article.pdf

Dr. Brownlow, a hydrologist, concludes that there is plenty of water in the Carrizo, in most places, to meet the demands for frac water. His estimates:

  • There are about 6 million acres in the Eagle Ford play, and a possible 20,000 oil and gas wells (one well per 300 acres).
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EPA’s order against Range Resources for allegedly charging groundwater with gas from its Barnett Shale wells has caused quite a stir.

The Texas Railroad Commission has issued two news releases, one on December 7 and one on December 8.  Commission Chairman Victor Carrillo said that he has told EPA Regions 6 Administrator Al Armendariz that “EPA’s actions are premature as the Railroad Commission continues to actively investigate this issue and has not yet determined the cause of the gas. This EPA action is unprecedented in Texas, and commissioners will consider all options as we move forward.” Commissioner Michael Williams said “this is Washington politics of the worst kind.  The EPA’s act is nothing more than grandstanding in an effort to interject the federal government into Texas business.” The December 8 press release said that the Commission has called a hearing for January 10 and “expects both parties, the EPA as well as Range Resources representatives, to appear before Hearings Examiners and testify as to the allegations made yesterday.” Range has said it will attend the hearing, but it understands that the EPA will not.

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Recent news items of interest:

Southwest Energy and Environmental Defense Fund Developing Best Practices for Hydraulic Fracturing.

         Scott Anderson, senior policy advisor for the Environmental Defense Fund, and Mark Boling, Executive Vice President of Southwestern Energy, have begun talks to bring together representatives of energy and environmental groups to propose uniform standards for best practices for hydraulic fracturing, in hopes that such standards will be adopted by states and give the public assurance of the safety of the completion technique.    The talks have resulted in a 40-page draft of proposed model regulations to be presented to state officials, covering public disclosure of frac fluid additivies, standards for casing and cementing wells, and pressure monitoring.  An inverview of Scott Anderson on the efforts can be found here.  “It is our obligation as an industry to let [the public] know what the issues and obstacles are and show them we are willing to work with environmental groups and state regulators to come up with solutions,” said Boling.

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James Fallows is a national correspondent for Atlantic Monthly. ( jamesfallows.theatlantic.com )  In the last few years he has lived in and written about China. He has written the cover article for Atlantic’s December issue, “Dirty Coal, Clean Future.” I am a big fan of James Fallows; he writes clearly about big-picture issues, is a deep thinker, and does not talk down to his readers. Mr. Fallows’ article is about the future of coal as a source of energy in the world, and how China is developing “clean coal” technology.

Much has been made recently of new discoveries of natural gas in the U.S.; it has been touted as a solution to our dependence on foreign oil and as a way to reduce emission of greenhouse gases, by replacing coal-powered electric generating plants. Mr. Fallows does not write about new gas discoveries, but his discussion of the future of coal puts our domestic natural gas discoveries in perspective. Below are some excerpts from and summaries of Mr. Fallows’ discussion. I recommend that you read his article in full.

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The Dallas Office of the Environmental Protection Agency issued the following press release today:

The U.S. Environmental Protection Agency (EPA) has ordered a natural gas company in Forth Worth Texas to take immediate action to protect homeowners living near one of their drilling operations who have complained about flammable and bubbling drinking water coming out of their tap. EPA testing has confirmed that extremely high levels of methane in their water pose an imminent and substantial risk of explosion or fire. EPA has also found other contaminants including benzene, which can cause cancer, in their drinking water.

EPA has determined that natural gas drilling near the homes by Range Resources in Parker County, Texas has caused or contributed to the contamination of at least two residential drinking water wells. Therefore, today, EPA has ordered the company to step in immediately to stop the contamination, provide drinking water and provide methane gas monitors to the homeowners. EPA has issued an imminent and substantial endangerment order under Section 1431 of the Safe Drinking Water Act. Parker County is located west of Fort Worth, Texas.

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Texas’ Sunset Advisory Commission has issued its Staff Reports on review of three of the state’s most important regulatory agencies: the Texas Railroad Commission (RRC), the Texas Commission on Environmental Quality (TCEQ), and the Public Utility Commission (PUC). These reports will frame the debate on legislation to renew the mandates of these regulatory bodies in the coming legislative session. Landowners should be aware of the Sunset Commission’s recommendations and be prepared to weigh in on those issues that affect landowners’ interests. Links to the full staff reports of the Sunset Commission can be found on the Commission’s website at http://www.sunset.state.tx.us/ . Below is a summary of some key facts and recommendations on the RRC.

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Recent news items of interest:

Barnett Shale Well Reaches 5 Bcf

The XTO Energy – TRWD #H2H Well in Tarrant County has produced more than 5 Bcf of gas, the first Barnett Shale well to reach that milestone.  The well was completed in June 2005 with a 3,500-foot lateral. The well was drilled under a reservoir operated by the Tarrant Regional Water District, Eagle Mountain Lake, in northwest Tarrant County.  It still produces more than 1 mmcf per day. The well highlights the difference between community acceptance of horizontal drilling and fracing technology in Texas compared to fears that the technology will cause water contamination in New York State, which so far has banned such wells. The newly elected Attorney General for New York, Eric Schneiderman, has recently said he opposes use of hydraulic fracturing until he is convinced that it is safe: “Neither the state nor the federal government has determined that hydrofracking is a safe practice, and I will sue to make sure that no drilling takes place until those determinations have been made.”

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John McFarland
 Graves, Dougherty, Hearon & Moody, P.C.
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