A Message from Todd Staples…
Many Texans read the headlines this week from the U.S. Army Corps of Engineers (“USACE”) about a study conducted by Dr. Jon Olson, Dr. Cliff Frohlich, and Ms. Kim Gordon on the dam safety implications of drilling, hydraulic fracturing and extraction at Joe Pool Dam in Grand Prairie. The USACE used this study to increase the exclusion zone around the dam from 3,000 to 4,000 feet, within which no drilling will be allowed, regardless of depth. Unfortunately, the media did not (shock!) elevate the important science based findings from the study that demonstrate oil and gas extraction is being performed safely and in an environmentally sound manner.
Specifically, the study found, “A 3,000 ft. exclusion zone seems reasonable for protecting from the surface events such as spill and explosions.” It also noted:
- “There is no geomechanically plausible mechanism for aquifer contamination directly from the Barnett shale via hydraulic fracturing…”
- “It is clear that a single isolated well cluster estimated to have a depletion radius of 2500 ft. would have no impact on surface elevations…”
- “Hydraulic fracturing surface wellhead pressures can be in the thousands of PSIs but proper planning should make such pressures safe…It is not apparent that setting limits on pressures or rates to be allowed for hydraulic fracturing would be productive…”
- “There is no documented case of a fracture treatment propagating from Barnett depth toward the surface to contaminate an aquifer”
- “There is no documented case of gas extraction related earthquakes in the Barnett shale…”
It is clear that even though the science suggests that the current regulations in place to protect the public are sufficient, USACE issued recommendations they said “are more conservative than the subject study recommends.” This is just another example of regulations and recommendations imposed on our industry that are not based on scientific data but are instead in response to political pressures. As an industry we must continue to push for sound, science-based regulations that not only protect the public and the environment, but ensure we are able to continue to produce affordable energy in our great state and nation.
TXOGA staff met with members of the Sunset Commission staff to brief them on TXOGA’s position on Railroad Commission Sunset. The name change of the Railroad Commission will likely be recommended once again by Sunset Staff. It is TXOGA’s position that the name change and other controversial measures not be included in a Railroad Commission Sunset bill and instead be filed as separate bills.
The Texas Comptroller’s office (“CPA”) hosted two conference calls this week for the Steering and Policy Advisory Committees for the Texas Conservation Plan for the Dunes Sagebrush Lizard.
After a year of review of the TCP program, the CPA has re-engaged the committees which originally assisted with the program to ensure active engagement and coordination of the TCP. The third committee, the Science Committee is currently evaluating any issues that might need to be addressed or evaluated by the Policy and Steering Committees. The Science Committee has met once and will likely meet again in the coming weeks.
The biggest change in the program resulting from the year-long review, was the CPA determined that, as the Permit Holder, it needed to be more directly involved in the oversight of the program. Accordingly, on February 10, 2016, the CPA ended the contract with the Texas Habitat Conservation Foundation (THCF), and the CPA is assuming an increased role in the oversight of the implementation of the TCP.
The CPA anticipates a reconstituted foundation may be the next step for the long term management of the program and conveyed that the committees will be actively involved in this discussion.
Emission Reduction Credit Program
On March 16, TXOGA staff and members attended a meeting with EPA and TCEQ at EPA Region 6 offices in Dallas to discuss expanding the emission reduction credits program to area and mobile sources. The ERC program provides a method to generate credits by creating permanent emission reductions in nonattainment areas in the state.
TXOGA and associated Texas trade groups have been engaged with TCEQ since the agency proposed to remove the option of ERC generation for area and mobile sources in May 2015. We emphasized the program’s importance (which will increase in importance with new designations under the updated ozone NAAQS), and the state’s need for flexibility and availability in the ERC program. After demonstrating area sources, i.e., O&G exploration and production, and mobile sources present an opportunity to reduce emissions further and inject new credits into the program, the EPA and TCEQ are now exploring implementing a formal program to facilitate area and mobile source credit generation.
We will continue to actively participate in this effort and are encouraged a real solution appears to be attainable with continued broad stakeholder coordination.
TXOGA hosted a meeting on low producing wells on Friday, March 18. As you will recall, the Texas Comptroller’s office announced that the low-producing oil well credit is about to kick in because of low prices. A similar credit for natural gas production has been in effect for over a year, but this will be the first time in history that the oil credit will turn on. It will likely be 25% for the first month of effectiveness, and could rise to 50% in subsequent months. Both the oil and gas credits are triggered by low prices. However, as you know, administratively, the two taxes are different in operation. Most gas tax is paid directly by producers, and each gas well is a separately tracked unit. With oil, the lease is the basic unit of production and small producers often have their tax paid by the “first purchaser”, who may be affiliated more fundamentally with midstream or downstream operations. The credit will undoubtedly have value to producers, but could create first-purchaser administrative issues for that have not yet been fully thought out.
The purpose of Friday’s meeting was to surface any questions, options, and recommendations to be brought to the CPA in a subsequent meeting with the agency. A full summary of the meeting will be sent in a separate email.
|COMMUNICATIONS & MEDIA|
We are currently collecting information and/or company anecdotes about how our industry is working to protect and conserve water. If your company has any statistics or positive stories that relate to your use of water, please send them to Kate at firstname.lastname@example.org. Communications Committee members were also solicited to help compile a list of Texas community colleges that provide oil and gas industry workforce training programs and/or degrees. This information was requested by state officials and will be used as a resource on the TXOGA website. TXOGA staff also completed Alex Epstein’s “How to talk to anyone about energy” online course and will be sharing information from that course at the upcoming Communications Committee meeting. Remember, if you haven’t already, please Like TXOGA on Facebook and Follow TXOGA on Twitter and encourage your colleagues to do the same!
|TEXAS OIL AND GAS ASSOCIATION GOOD GOVERNMENT COMMITTEE (TXOGA PAC)|
This week, TXOGA PAC ballots for the May 24 run-off election were finalized and sent out to PAC members who contributed at the $5000 or more level.
The state’s primary voters decided on most of their general election nominees in the March 1 elections, but 22 of those contests will go to runoffs on May 24. The Democrats have six races left, the Republicans 16. Here’s the list, along with the totals each candidate received in the primaries.
It has never been more critical to elect people who already understand the oil and natural gas industry and those who are willing to learn more about the industry and its tremendous contribution to the Texas economy. Your active participation is crucial as our PAC gears up for 2016 fundraising. Please contact Lisa Lucero at email@example.com or click on the DONATE TODAY button below, to learn how you can become a member today!
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 firstname.lastname@example.org. If your company would like to make changes to your representatives who serve on TXOGA committees, please email Neal. We can also send you a current breakdown of those from your company serving on committees, if desired.
Membership dues invoices were sent out in December. If not already processed, please pay your dues immediately and contact Neal with any questions.
|TEXAS OIL & GAS ASSOCIATION WORKER’S 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 email@example.com today to obtain easy information on the best way to access this program.
- Monday, March 21, 2016—The Senate Select Committee on Property Tax Reform and Relief will meet at 11am. The hearing will be held at the following location: Texas Tech University – International Cultural Center, Auditorium located at 601 Indiana Ave, Lubbock, TX 79409. The Committee will hear invited, resource and public testimony on the following interim charges:
- Study the property tax process, including the appraisal system, and recommend ways to promote transparency, simplicity, and accountability by all taxing entities.
- Examine and develop options to further reduce the tax burden on property owners.
- NEW – Wednesday, March 23, 2016 – The TXOGA Regulatory Practices Committee is scheduled to meet at 10am at TXOGA.
- Tuesday, March 29 and Wednesday, March 30, 2016—The TXOGA Board of Directors will meet in Austin. 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 29 dinner would be good to attend as TXOGA will honor both outgoing state Senator Troy Fraser and House Energy Resources Committee Chair, state Representative Drew Darby, for their service to Texas.
- Tuesday, March 29, 2016—The Senate Committee on State Affairs will meet at 9am in the Senate Chamber to take up and consider the following interim charge: Gather and review data on the compensation provided to private property owners for property purchased or taken by entities with eminent domain authority. Examine the variance, if any, between the offers and the fair market values of properties taken through eminent domain. Make recommendations to ensure property owners are fairly compensated.
- Tuesday, March 29, 2016—The Senate Committee on Transportation will meet at 9am in E1.016 to take up and consider the following interim charges:
- Review State Highway Fund grants and loans to Regional Mobility Authorities (RMA) and make recommendations if additional oversight procedures are needed to ensure the RMA’s expenditures are a valid and accountable use of State Highway Funds.
- Review current state and federal regulations, penalties and fines related to oversize and overweight vehicles and make recommendations to minimize impacts on the state’s roadways and bridges.
- Wednesday, March 30, 2016–The Senate Finance Committee will meet at 9:30am in E1.036 to hear invited and public testimony on the following interim charges:
- Study the benefits, including the dynamic effects, of continuing to phase out the franchise tax. Consider alternate approaches to funding the Property Tax Relief Fund.
- Review the state’s current sales tax holiday structure and determine its economic benefit to the state. Evaluate and consider the merits of any potential expansion of the tax holiday either in the application of the sales tax exemption or the timing of the holiday.
- Wednesday, March 30, 2016–The Senate Committee on Business and Commerce will meet at 1pm in E1.016 to discuss the following business: Receive updates from the Public Utility Commission of Texas and the Electric Reliability Council of Texas.
- Friday, April 1, 2016–The Senate Committee on Natural Resources will meet at 9am in E1.012 to hear the following charges:
- Interim Charge 3 – Economic Development: Evaluate the effectiveness and necessity of programs and resources currently used to support economic development in Texas. Make recommendations regarding continuation of effective strategies, modification of existing administrative or regulatory barriers, and the reduction or elimination of ineffective programs.
- Interim Charge 4 – Expedited Permitting: Evaluate the permitting process in Texas and neighboring states and make recommendations for eliminating unnecessary barriers and expediting the process to ensure that the regulatory process is consistent and predictable.
- Interim Charge 7 – Monitoring Charge: Monitor the implementation of legislation addressed by the Senate Committee on Natural Resources and Economic Development during the 84th Legislature, Regular Session, and make recommendations for any legislation needed to improve, enhance, and/or complete implementation. Specifically, monitor the following: 1) Legislation relating to Texas aerospace incentives; 2) Expedited permitting; and 3) Electric utility rate adjustments.
- (The Committee will examine Parts 1 and 2 of Interim Charge 7 at the posted time and date, but will examine Part 3 separately at a later hearing.
- NEW – Wednesday, April 6, 2016 – TXOGA Communications Committee Meeting and Employee Mobilization Workshop will be held at TXOGA from 10:30am – 1:30pm.