2/19/16 TXOGA Voice

A Message from Todd Staples…

Some may think this low price environment, when activity is as at a critically low level and our economy is suffering mightily because of it, would be a time when the anti-oil and gas organizations would take a break and not be as aggressive in their misinformation campaigns designed to undermine the public confidence in the sound and ever-improving methods used to produce, transport and refine oil and gas. The recent, well-organized and extensive attack on the BLM-proposed lease of federal lands only proved the naysayers have no boundaries in attempting to halt fossil fuel production.  Please know, this is not an effort of promoting safe practices while protecting the energy security of our nation. This is an all-out-blitz to end fossil fuels as this excerpt from a recent news article so blatantly conveys:

“We’re very pleased that the Forest Service pulled these lands to allow time to notify the public and address our concerns, but the reality is that no public oil and gas leases should be sold,” said Wendy Park, an attorney with the Center for Biological Diversity. “Oil and gas drilling results in the clearing of valuable public forests for well pads, roads and pipelines, while fracking threatens watersheds and public water supplies. Public fossil fuels must remain in the ground if we are to avert the worst impacts of climate change.” (bold emphasis added)

To read the entire article, click here.

Keep in mind, a thorough environmental assessment process has already been undertaken by agencies headed by the Obama administration and they concluded it was safe to proceed. Although the official comment period was closed for this proposed BLM lease, a protest period was open and this is the mechanism the anti-fossil fuels groups used to try and stop the lease. TXOGA was contacted earlier this week to join in submitting a letter of support during this protest period (the deadline is today, Feb. 19).  A copy of our letter for the Lake Lewisville acreage can be found here. TXOGA submitted letters of support for all lease acreage in Texas and the Joint Association Education Initiative worked with all trades to accomplish the same.

On a personal note, I grew up in and around some public lands and represented areas where some of these “valuable public forests” are located.  There is no question energy production and these important public forests can mutually, successfully and beneficially co-exist. The use of the word “valuable” by the attorney with the Center for Biological Diversity is outrageously disingenuous in the sense that these areas are some of the poorest and job-challenged areas of our state when considering per-capita income, job opportunities, school funding competitiveness, property valuations and a host of other indicators. The absolutely BEST thing that could happen in and around these valuable public forests is to enable these communities to benefit from the infusion of capital and jobs that would come with sound, safe and environmentally responsible energy production. To deprive these areas of economic activity to accomplish a politically motivated agenda is a damaging, elitist mentality that is a cruel form of economic discrimination and such reasoning must be utterly rejected.


TXOGA REPORTS

LEGISLATIVE 

The TXOGA conference room was near capacity as we rearranged seating and brought in extra tables for our first “Lunch & Learn” of the year. These lunch settings are used to host legislative staff from the capitol to have a quick bite to eat and hear from industry experts on topics that will enable their offices be responsive to their constituents and be fully informed on policy issues. Greg Mathews, Senior Counsel, Chevron North America Exploration and Production Company, was our guest speaker covering Oil & Gas Leases 101 and provided important facts and information regarding the basic process for mineral owners and operators to successfully develop the mineral estate.  Our guests were reminded that it is this process that results in Texas being the number one oil and gas producing state in the nation, and the resulting tax revenues from the industry have an enormous impact on the state budget they will work on next year. “Lunch & Learns” are an integral part of the TXOGA 2016 communications plan and outreach strategy.

REGULATORY 

The TXOGA Regulatory Practices Committee held its regular monthly meeting on Wednesday, February 17th. Chair Weldon Pierson and Gil Bujano updated the committee on the Statewide Rule (SWR) 28 revision initiative to provide an alternative method of the deliverability determination. Brent Sonnier reminded the group that pursuant to a notice in June, the Railroad Commission (RRC) Districts 1 and 2 will begin charging a tubing exception fee and will be charging retroactively back to March. Chair Pierson lead a discussion regarding the RRC Cementing Report – (Form W-15) and the calculation of “top of cement” that has become an issue for some oil well operators in Districts 1 and 2 and noted that discussions are on-going with the Commission. The committee also briefly discussed the recently announced decision by the Bureau of Land Management to sell a 10-year mineral rights lease for a section of Lake Lewisville at an auction in Santa Fe, New Mexico on April 20th. Additionally, Bill Duncan provided the committee with an updated Unconventional Fracture Treated (UFT) Fields list. The next meeting of the RPC is planned for March 23rd at 10am and the TXOGA Disposal Well Workgroup will meet the same day at 9am.

TXOGA participated in a webinar hosted by the Agriculture & Food Law Consortium of The National Agriculture Law Center entitled “Induced Seismicity in Shale Development: Overview & Current Legal Issues” presented by Professor Ross Pifer J.D., LL.M., Director for Agriculture & Shale Law, Penn State Law https://pennstatelaw.psu.edu/academics/research-centers/center-agricultural-and-shale-law

Professor Pifer discussed the following: the concept of induced seismicity; seismic events in the eastern and central United States since 2008; recent scientific literature regarding potential cause of increased seismic events; federal and state regulatory actions; and landowner issues and legal response.

The presentation was concise and objective with Professor Pifer saying several times that just because a seismic event occurs in an area with oil and gas operations that does not mean there is a causal relationship. Further, he emphasized that monitoring and additional research is appropriate response at this time. However, Professor Pifer made the following notable recommendations to landowners:

  • Exclude underground injection wells from a general oil and gas lease;
  • Assess potential risks of induced seismicity;
  • Negotiate protective clauses addressing the risks of induced seismicity;
  • Discuss earthquake insurance; and
  • Negotiate implementation of preventative infrastructure reinforcement.

A copy of the presentation and a recording of the webinar can be found at: http://nationalaglawcenter.org/consortium/webinars/seismicity/

Additional information regarding state regulatory actions and legal cases can be found at: https://pennstatelaw.psu.edu/induced-seismicity

JUDICIAL

The TXOGA E&P Law Committee approved TXOGA to participate as an amicus curiae in BP America Production Company v. Red Deer Resources, LLC, a Texas Supreme Court case that involves a lease termination and interpretation of the lease’s shut-in clause. TXOGA will engage former Texas Supreme Court Justice Scott Brister to serve as outside amicus counsel.

The brief will solely focus on supporting the following proposition:

Under Clifton v. Koontz, the requirement that a well be capable of producing in paying quantities is met if: 1a) revenue exceeds costs over a reasonable period of time; or 1b) a reasonably prudent operator would continue to operate the well for purposes other than speculation; and 2) if a well meets that test at the time it is shut-in, it meets the requirement that a well must be capable of producing in paying quantities in order for it to be maintained by shut-in royalty payments.

Party briefing on the merits does not conclude until the end of April. TXOGA will plan to review that briefing prior to drafting and finalizing its amicus brief for submission in May or June.

COMMUNICATIONS & MEDIA

This week, the Austin American-Statesman and the Houston Chronicle published op-eds by TXOGA president Todd Staples. You can click the links above or visit the NEWS section of TXOGA’s website to read the op-eds and share them with your colleagues. Todd also participated in an interview with SHALE Magazine’s “In the Oil Patch” and will air Saturday, February 20, 2016, and will also be made available on the TXOGA website.

The TXOGA Communications Committee will meet via conference call on Tuesday, February 23, from 3–4pm. If you did not receive an invite and feel that you should have, please contact Kate Zaykowski at kate@txoga.org.

The TXOGA Facebook page recently surpassed 60,000 Likes and the Twitter account has over 3,300 followers. If you haven’t already, please like and follow TXOGA’s Facebook and Twitter accounts and share them within your companies.

TEXAS OIL AND GAS ASSOCIATION GOOD GOVERNMENT COMMITTEE (TXOGA PAC)

TXOGA staff delivered a contribution from the TXOGA PAC to state Representative Gene Wu for his primary race. Representative Wu was very appreciative of the recognition and described a favorable environment for success in his upcoming race.  TXOGA staff also participated in a campaign event for House Speaker Joe Straus in his district.  Speaker Straus and Mrs. Straus expressed their appreciation to the volunteers who participated. #teamstraus 

 

Republican Primary Early Voting Update
February 16th- Early Voting Begins
February 26th- Last Day of Early Voting
March 1st- Primary Election Day

MEMBERSHIP 

In an effort to have a truly unified industry voice in Texas, TXOGA is working to recruit new members. If you know of industry counterparts that are not involved in the work of the Association or are former TXOGA members, please contact Neal Carlton at ncarlton@txoga.org.

Membership dues invoices were sent out in December. If not already processed, please pay your dues immediately and contact Neal Carlton with any questions.

TEXAS OIL & GAS ASSOCIATION WORKERS’ COMPENSATION SAFETY GROUP

If your company is not already maximizing savings by being a part of the industry’s largest workers’ compensation insurance program in Texas, please contact Jim Sierra at jsierra@txoga.org today to obtain easy information on the best way to access this program.

UPCOMING EVENTS

  • On Monday, February 22, and Tuesday, February 23, TXOGA staff will participate in the annual TIPRO convention in San Antonio.
  • On Tuesday, February 23, 2016, the Railroad Commission of Texas is scheduled to meet at 9:30am at the William B. Travis Building, 1701 North Congress, Room 1-111, First Floor, Austin, Texas.
  • The next meeting of TXOGA’s Communication Committee will be a conference call on Tuesday, February 23, from 3-4pm. Calendar invites were sent out this week. If you did not receive an invitation and feel that you should have please contact Kate at kate@txoga.org.
  • The TXOGA Property Tax Representatives Annual Conference will be held February 24th – 25th, 2016, at the Hyatt Regency – San Antonio.
  • TXOGA will host an election night watch party on Tuesday, March 1, from 6:30–10pm in TXOGA’s Conference Room. RSVP is requested, llucero@txoga.org.
  • The Energy Council’s 2016 Federal Energy and Environmental Matters Conference will take place in Washington, D.C., on March 3 – 6, 2016. TXOGA will be coordinating a dinner on March 3. This will be a smaller event than previous Energy Council’s so please contact Lisa Lucero at llucero@txoga.org if you plan to attend so we can plan accordingly.
  • On Monday, March 07, 2016 at 1pm the House Energy Resources Committee will meet in E2.010. The committee will meet to hear testimony on the following charges:
    • Study enforcement policies of the Railroad Commission of Texas. Consider effectiveness of maximum fines as a deterrent of violation, the economic benefit of non-compliance, and greater accessibility to enforcement and complaint data for the public.
    • Conduct legislative oversight and monitoring of the agencies and programs under the committee’s jurisdiction and the implementation of relevant legislation passed by the 84th Legislature. In conducting oversight, the committee should:
      • consider any reforms to state agencies to make them more responsive to Texas taxpayers and citizens;
      • identify issues regarding the agency or its governance that may be appropriate to investigate, improve, remedy, or eliminate;
      • determine whether an agency is operating in a transparent and efficient manner;
      • identify opportunities to streamline programs and services while maintaining the mission of the agency and its programs;
      • monitor the impact of major energy legislation passed by the 84th Legislature including the implementation of regulated surface activity on oil and gas sites; and
      • review seismic research needs for the University of Texas Bureau of Economic Geology and any response to research findings by the Railroad Commission of Texas.
  • On Tuesday, March 8, 2016, at 9am the House Energy Resources Committee will meet in E1.030. The Committee will meet jointly with International Trade & Intergovernmental Affairs to hear invited testimony only on the following charge:
    • review how the Mexican energy transformation has bolstered or diminished the energy economy in Texas. Explore opportunities that would encourage binational exchange and commerce of oil, gas, and oilfield materials. Discuss how a competitive market across the border will affect supply, market price, reliability of Texas oil, gas, and energy markets, pipeline build-out as well as other economic factors such as workforce and local economy sustainability.
  • TXOGA PAC will host a fundraising luncheon for Representative Todd Hunter (R-Corpus Christi), Chair of the House Calendars Committee, on March 9. Please contact Lisa Lucero at lisa@txogapac.org if you are interested in participating in this important event.  Attendees must be donors to TXOGA PAC and/or bring a donation directly to Rep. Hunter.
  • TXOGA Board of Directors will meet in Austin on March 29 and 30. If your company has a board seat, please encourage your board member to attend and RSVP at their earliest convenience. If you do not have a board seat, the March 29th dinner would be good to attend as TXOGA will honor both outgoing state Senator Troy Fraser and House Energy Resources Chair, state Representative Drew Darby, for their service to Texas.

 

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