WEBVTT 00:00:14.000 --> 00:00:16.006 This meeting of the Railroad 00:00:16.031 --> 00:00:18.183 Commission of Texas will come to order to consider 00:00:18.208 --> 00:00:22.470 matters which have been duly posted with the Secretary of State for June 4, 2019. 00:00:22.495 --> 00:00:26.665 The Commission will consider items on the agenda as posted on the agenda. Under 00:00:26.690 --> 00:00:30.574 our Public Participation Policy, anyone desiring to offer public testimony 00:00:30.599 --> 00:00:35.081 on any items that are not noticed on today's agenda will need to fill out a testimony 00:00:35.106 --> 00:00:38.990 form, found in the back of the room, and submit it to Commission Secretary 00:00:39.015 --> 00:00:43.132 Kathy Way. Reminder to turn off your cell phones. And, apparently, with all of 00:00:43.156 --> 00:00:47.272 these people in the room, we have service awards first. Let's start with that. 00:00:53.296 --> 00:00:55.296 Good morning, Chairman, Commissioners. 00:00:55.320 --> 00:00:56.590 Wait. Oh. You are doing service awards. 00:00:56.615 --> 00:00:57.644 I'm doing service awards. 00:00:58.644 --> 00:01:02.244 My name is Kathryn Dolan from the Human Resources office. I'm standing in for Robbie. 00:01:06.968 --> 00:01:11.868 Up first, with 5 years of service, Michelle Banks from our Communications division. 00:01:32.500 --> 00:01:36.900 Up next, with also 5 years of service, is Amy Bruce from Oversight and Safety. 00:01:54.150 --> 00:01:58.150 From Information Technology, also with 5 years of service, Rohan Sterling. 00:02:12.000 --> 00:02:15.200 From Oil and Gas, celebrating 5 years of service, David King. 00:02:35.400 --> 00:02:40.900 Also from Oil and Gas, celebrating 5 years of service, Alex Martinez. 00:02:55.350 --> 00:02:59.550 From Oversight and Safety, Jamie Renard, celebrating 5 years of service. 00:03:14.000 --> 00:03:18.700 Celebrating 10 years of service, from Oil and Gas, Tricia Fleming. 00:03:36.000 --> 00:03:40.100 Celebrating 15 years of service, from Oil and Gas, Joe Collins. 00:03:59.400 --> 00:04:03.200 Also celebrating 15 years of service, Sharon Walter from Surface Mining. 00:04:21.500 --> 00:04:24.800 Celebrating 20 years of service, Sharon Frission. 00:04:45.000 --> 00:04:50.000 From Oil and Gas, also celebrating 20 years of service, Martha Romo. 00:05:10.500 --> 00:05:15.300 From Oversight and Safety, celebrating 20 years of service, Kanata Yuzomo. 00:05:41.700 --> 00:05:46.100 Celebrating 25 years of service, from Oil and Gas, Marian Barrego. 00:06:08.700 --> 00:06:12.100 This concludes today's service presentation. Thank you. 00:06:23.200 --> 00:06:26.134 Thank you all for the wonderful service. Nobody can 00:06:26.159 --> 00:06:28.924 retire or leave, by the way, while we're having that conversation. 00:06:36.100 --> 00:06:38.300 Something says they all didn't come to see us. 00:06:42.000 --> 00:06:45.700 Alright. We'll give everybody just a minute to clear out. 00:06:51.200 --> 00:06:53.900 Okay. Item number one. Good morning. How are you? 00:06:53.970 --> 00:06:57.406 Good morning, I'm good. Good 00:06:57.431 --> 00:07:00.767 morning, Chairman and Commissioners. For the 00:07:00.793 --> 00:07:04.142 record, my name is Claudia Joy. I’m with the 00:07:04.166 --> 00:07:07.490 Gas Services department of the Oversight and 00:07:07.515 --> 00:07:10.870 Safety Division. The first agenda item today 00:07:10.895 --> 00:07:14.374 is Gas Utilities Docket 10821, the application 00:07:14.399 --> 00:07:20.637 of Atmos Energy West Texas division for the 2018 annual interim rate adjustment for 00:07:20.662 --> 00:07:24.011 the unincorporated areas. This docket is the 00:07:24.036 --> 00:07:27.434 first interim rate adjustment the company has 00:07:27.459 --> 00:07:33.909 filed since its last rate case, number 10743. The adjustment represents an incremental 00:07:33.934 --> 00:07:37.425 increase of $11,676,074 of which $1,005,221 is 00:07:37.450 --> 00:07:40.916 allocated to unincorporated areas. I recommend 00:07:40.941 --> 00:07:47.379 approval of the interim rate adjustment as revised. I'm available to answer questions. 00:07:47.379 --> 00:07:50.851 - Thank you. Are there any questions? I move we approve the 00:07:50.876 --> 00:07:54.091 examiner's recommendation. Is there a second? Second by 00:07:54.116 --> 00:07:57.374 Commissioner Sitton. All those in favor, say aye. Motion 00:07:57.398 --> 00:08:00.860 passes, item is approved. Thank you, Claudia. Item number 2. 00:08:00.860 --> 00:08:02.332 - Good morning, Chairman and Commissioners. 00:08:02.332 --> 00:08:04.273 For the record, my name is Christina Pullen. 00:08:04.298 --> 00:08:06.170 I'm with the Oversight and Safety Division. 00:08:06.170 --> 00:08:08.391 With your permission, I'll be presenting items 00:08:08.416 --> 00:08:10.470 number two and number four. Upon conclusion 00:08:10.470 --> 00:08:17.090 of item number four, I will present both orders. Agenda item number two is Gas Utility 00:08:17.090 --> 00:08:23.250 Docket Number 10822. The application of Atmos Energy Corporation for the Test 00:08:23.250 --> 00:08:27.940 Year 2018 Annual Interim Rate Adjustment for the unincorporated portion of the MidTex 00:08:27.940 --> 00:08:33.560 This is the first interim rate adjustment Atmos has filed for this area since 00:08:33.560 --> 00:08:37.130 the company's last rate case, GUD Number 10742. 00:08:37.155 --> 00:08:40.180 This adjustment represents an incremental 00:08:40.180 --> 00:08:45.653 increase of $67,126,072 of which $2,435,430 00:08:45.678 --> 00:08:51.250 will be recovered from the customers subject 00:08:51.250 --> 00:08:53.829 to the order of this docket. Staff recommends 00:08:53.854 --> 00:08:56.240 approval of the interim rate adjustment as 00:08:56.240 --> 00:08:58.875 revised. I'm available to answer questions. 00:08:58.900 --> 00:09:03.684 - Any questions? I move we approve the examiner's recommendation. Is 00:09:03.709 --> 00:09:08.330 there a second? Second by Commissioner Christian. All in favor say 00:09:08.355 --> 00:09:13.023 aye. Motion passes, that item's approved. Oh, you're not gonna stay 00:09:13.048 --> 00:09:17.760 up there for four. I was gonna skip. That's fine. Item number three. 00:09:17.760 --> 00:09:23.012 Morning, Commissioners. For the record, my name is Amy Bruce. I'm representing the 00:09:23.037 --> 00:09:28.075 Market Oversight section of the Oversight and Safety division. Before you today 00:09:28.100 --> 00:09:33.087 is Gas Utilities Docket Number 10824, the application of Texas Gas Service for 00:09:33.112 --> 00:09:38.200 the test year 2018 annual interim rate adjustment for the unincorporated portion 00:09:38.200 --> 00:09:42.610 of the Central Texas service area. This docket is the third interim rate adjustment the 00:09:42.610 --> 00:09:47.160 company has filed for the environs of the Central Texas Service Area since the final 00:09:47.160 --> 00:09:52.910 order was issued in Gas Utilities Docket Number 10526. This adjustment represents 00:09:52.910 --> 00:09:58.604 an incremental increase of $5,545,677 of which 00:09:58.629 --> 00:10:04.420 $431,895 is allocated to the environ's customers. 00:10:04.420 --> 00:10:07.070 I recommend approval of the interim rate adjustment. 00:10:07.095 --> 00:10:09.020 I'm available to answer any questions. 00:10:09.020 --> 00:10:12.023 - Thank you. There any questions? I move we approve 00:10:12.048 --> 00:10:14.910 the examiner's recommendation. Is there a second? 00:10:14.910 --> 00:10:19.490 Second by Commissioner Sitton. All those in favor say, aye. Mission passes, items 00:10:19.490 --> 00:10:26.620 approved. Thank you. Number four. - Good morning. For the record, my name is Christina Pullen, 00:10:26.620 --> 00:10:29.466 I'm with the Oversight and Safety division. 00:10:29.491 --> 00:10:32.571 Agenda Item number four is Gas Utilities Docket 00:10:32.571 --> 00:10:38.690 Number 10829. The application of Impulsora Pipeline LLC, pursuant to the 00:10:38.690 --> 00:10:41.613 Natural Gas Policy Act, Section 311, for review 00:10:41.638 --> 00:10:44.170 of the reasonableness of a transportation 00:10:44.170 --> 00:10:49.610 rate. This is an existing tariff rate with the Commission. Impulsora provided testimony 00:10:49.610 --> 00:10:54.540 and supporting information to demonstrate that the requested rate does not exceed a 00:10:54.540 --> 00:10:57.399 cost-base rate. Staff is recommending approval 00:10:57.424 --> 00:11:00.380 of the application. I can address any questions. 00:11:00.380 --> 00:11:05.190 - Thank you. Are there any questions? I move we approve the examiner's recommendation. 00:11:05.190 --> 00:11:08.565 Is there a second? Second by Commissioner Christian. 00:11:08.590 --> 00:11:11.430 All in favor, say aye. Motion passes, item's 00:11:11.430 --> 00:11:16.026 approved. Thank you, Christina. Item number five. 00:11:16.051 --> 00:11:20.530 - Good morning, Chairman and Commissioners. For the 00:11:20.530 --> 00:11:23.157 record, my name is Robert Music, Technical Examiner 00:11:23.182 --> 00:11:25.330 for the Hearings division. Also with me is 00:11:25.330 --> 00:11:27.968 Austin Gascamp, Technical Examiner for the Hearings 00:11:27.993 --> 00:11:30.250 division who participated in the development 00:11:30.250 --> 00:11:33.540 of the recommendation. Item number five is the 00:11:33.565 --> 00:11:36.550 application of Apache Corporation to amend 00:11:36.550 --> 00:11:41.459 the current oil and gas field rules in effect for the Alpine High Cons Field, located in 00:11:41.459 --> 00:11:44.967 Reeves, Culberson and Pecos County, Texas. 00:11:44.992 --> 00:11:48.720 Apache request to add a field rule making all 00:11:48.720 --> 00:11:52.225 wells completed with a gas-oil ratio of 3000 00:11:52.250 --> 00:11:55.730 cubic feet per barrel and above, permanently 00:11:55.730 --> 00:11:59.160 classified as gas wells without additional 00:11:59.185 --> 00:12:02.830 administrative review. Apache stated it would 00:12:02.830 --> 00:12:12.000 not consider adverse a GOR of 3200. The application is not protested. 99 wells were 00:12:12.000 --> 00:12:18.720 producing in the field at the time of the hearing on October 17, 2018. The Alpine High 00:12:18.720 --> 00:12:21.563 Field is a separate, distinct high pressure and 00:12:21.588 --> 00:12:24.170 high temperature field compared to adjacent 00:12:24.170 --> 00:12:27.538 fields in the vicinity. Based on the hearing 00:12:27.563 --> 00:12:31.130 record, 1% of the lateral extent and only three 00:12:31.130 --> 00:12:38.110 of the five producing horizons have been assessed. A lot of uncertainty exists within 00:12:38.110 --> 00:12:42.084 this field. Compositional analysis data was 00:12:42.109 --> 00:12:46.420 submitted for 12 of the 99 wells. The heptanes 00:12:46.420 --> 00:12:53.880 plus values are all below seven, with the majority of the values below four mole percent, 00:12:53.880 --> 00:12:59.390 which correlates to an initial GOR that approaches the top into the gas condensate 00:12:59.390 --> 00:13:07.670 range, which equates to an initial GOR of 10,000 to 15,000 cubic feet per barrel. 00:13:07.670 --> 00:13:16.731 Apache provided GORs for the 12 wells ranging from 10,065 to over 100,000. Based 00:13:16.731 --> 00:13:21.580 on these submissions, the examiners found sufficient evidence to support a field rule 00:13:21.580 --> 00:13:25.977 with a GOR of 10,065 above. This methodology is 00:13:26.002 --> 00:13:30.190 consistent with the prior Commission practice 00:13:30.190 --> 00:13:33.532 in determining GORs for gas classifications. 00:13:33.557 --> 00:13:36.800 While Apache provided literature discussing 00:13:36.800 --> 00:13:46.090 GORs, Apache did not provide data showing the field has an initial GOR of 3000 or 3200. 00:13:46.090 --> 00:13:54.470 With the 10,065 cubic feet per barrel GOR, all 99 wells producing the field will 00:13:54.470 --> 00:13:58.755 meet criteria for gas classifications within the 00:13:58.780 --> 00:14:02.690 first 180 days of production. The Examiner's 00:14:02.690 --> 00:14:10.399 recommended denial Apache's request for a 3000 or 3200 initial GOR for the reservoir, 00:14:10.399 --> 00:14:15.860 but however, based on Apache's evidence, the examiners recommend an initial GOR for 00:14:15.860 --> 00:14:19.873 the reservoir at 10,065 or greater. Exceptions 00:14:19.898 --> 00:14:23.630 were filed. We are available for questions. 00:14:23.630 --> 00:14:25.759 - Thank you. Are there any questions? 00:14:25.784 --> 00:14:31.520 - I have some questions. Robert, thanks for your your explanation. Walking 00:14:32.120 --> 00:14:37.780 through the logic here. Want to make sure I'm following, just to the process. 00:14:37.780 --> 00:14:39.578 In evaluating whether or not this field is a gas 00:14:39.603 --> 00:14:41.450 field or not, we said, all right, we're gonna look 00:14:41.450 --> 00:14:46.149 at your mole percent ratios. You said they're anywhere from, I think I heard 0.8, 00:14:46.149 --> 00:14:48.525 always up to seven or eight, which is below 00:14:48.550 --> 00:14:51.010 the 11% standard that we have that identifies 00:14:51.010 --> 00:14:58.250 a field as a gas field. The issue becomes in what the future GOR ratio is to set, GOR, 00:14:58.250 --> 00:15:01.650 gas-to-liquid ratio, is to set. In that, whether 00:15:01.675 --> 00:15:05.050 it's 3,000 or 10,000, you base the 10,000 simply 00:15:05.050 --> 00:15:08.074 on what they have produced so far. So in looking 00:15:08.099 --> 00:15:10.790 at their records, you say, yeah, it's a gas 00:15:10.790 --> 00:15:13.694 field, that's all agreed on. They've only produced 00:15:13.719 --> 00:15:16.200 a 10,000 or 10,065 to 1 ratio. So we 00:15:16.200 --> 00:15:23.790 set that. So I understand all that. My question is more around our administrative 00:15:23.790 --> 00:15:28.910 standards, and so our philosophy in setting the gas oil ratios going forward. So, for 00:15:28.910 --> 00:15:37.290 example, on page 13 of the PFD, you list another, or y'all list another, 10 fields, 11 00:15:37.290 --> 00:15:41.631 fields, that had all been established as gas fields 00:15:41.656 --> 00:15:45.639 and G O R ratios had been set at 3000 to 1. Now 00:15:45.639 --> 00:15:48.623 I'm assuming, not seeing it in the record, that 00:15:48.648 --> 00:15:51.420 not all of those had an exact minimum ratio 00:15:51.420 --> 00:15:54.656 of 3000 to 1. In other words, our logic seems to 00:15:54.681 --> 00:15:57.760 have been, once we identify that we're convinced 00:15:57.760 --> 00:16:02.135 it's a gas field, then we set the gas to liquid or gas 00:16:02.160 --> 00:16:06.510 to oil ratio at 3000 to 1 to expedite administratively 00:16:06.510 --> 00:16:08.965 their ability to classify these wells in the future. 00:16:08.990 --> 00:16:11.089 In other words to make it easy on everybody, 00:16:11.089 --> 00:16:13.746 we're gonna set it at a fairly low ratio of 3000 00:16:13.771 --> 00:16:16.511 to 1 knowing that it's all a gas field, so we have 00:16:16.511 --> 00:16:20.660 pretty good confidence that that's gonna be adhered to. So at this point, if we were 00:16:20.660 --> 00:16:23.543 to say this one's 10,001, that would be inconsistent 00:16:23.568 --> 00:16:26.100 with our practice in these other fields, which 00:16:26.100 --> 00:16:29.257 is we're confident they were all gas fields, therefore, 00:16:29.282 --> 00:16:32.019 we used a standard 3000 to 1. Is my logic flawed 00:16:32.019 --> 00:16:34.610 there that that had been the prior administrative 00:16:34.635 --> 00:16:36.890 process? In other words, we didn't prove or 00:16:36.890 --> 00:16:39.239 we didn't show that there were 3000 to 1, we 00:16:39.264 --> 00:16:41.640 showed that they were all gas field do to PBT 00:16:41.640 --> 00:16:44.134 tests or gas to oil ratios or mole percent tests, 00:16:44.159 --> 00:16:46.529 and then set that as the kind of administrative 00:16:46.529 --> 00:16:53.399 number to use in those fields. - Okay, first of all, the original field, which was the 00:16:53.399 --> 00:17:03.279 Briscoe Ranch field in 2000, I think, 11, that that was in the part of the hearing. The 00:17:03.279 --> 00:17:10.570 2011 had a heptanes plus of 12.5. Now we recognize that there is a value that 00:17:10.570 --> 00:17:14.792 McCain, which is a leading engineer that developed 00:17:14.817 --> 00:17:18.269 some of the principles, 12.9 is where the 00:17:18.269 --> 00:17:27.490 molecules in the 12.9 heptanes plus, yes, mole percent, is where some of the molecules 00:17:27.490 --> 00:17:31.490 will transition from oil to gas. So you might 00:17:31.515 --> 00:17:35.230 have a 51% molecules of gas at that point 00:17:35.230 --> 00:17:42.429 verus 50, so that's a transition. Well, the problem was, is that, in the initial, 00:17:42.429 --> 00:17:47.002 in the in the PFD, they said that the heptanes 00:17:47.027 --> 00:17:51.770 plus was 12.5. That 12.5 relates, or transitions 00:17:51.770 --> 00:17:55.688 to, or actually equates to, what is equivalent 00:17:55.713 --> 00:17:59.190 to the 3000. So the initial hearing, when 00:17:59.190 --> 00:18:05.000 we really talked about this after the 2006, that value came from, that's how that 3000 00:18:05.000 --> 00:18:09.240 was established by an examiner. And so we kind of moved forward, and the trend, 00:18:09.240 --> 00:18:11.645 it was just haphazard that that actually worked 00:18:11.670 --> 00:18:13.799 out because the only value we really know, 00:18:13.799 --> 00:18:21.730 by McCain, is that the 12.9 heptanes plus is a quick equivalent to 3200 or 3200 cubic 00:18:21.730 --> 00:18:26.052 feet per barrel. We have that standard. Everything 00:18:26.077 --> 00:18:29.780 else requires PBT data to establish where 00:18:29.780 --> 00:18:35.370 it is on that transition, which is a dew point, and we don't have that for this 00:18:35.370 --> 00:18:38.693 case. So the reason we picked 10,065 is because 00:18:38.718 --> 00:18:41.740 we have no data below that. We only have 12 00:18:41.740 --> 00:18:49.910 sets of compositional data. So we had no data to substantiate that the 3000 or the 3200 00:18:49.910 --> 00:18:53.450 would meet the criteria. - Understood. And I don't disagree with the logic around that 00:18:53.450 --> 00:18:58.550 10,000 number. What I'm questioning is, as a practice, so example, you say we got a, in 00:18:58.550 --> 00:19:03.420 this Briscoe Ranch, a 12 and a half mole percent, which equates to 3001, that kind of 00:19:03.420 --> 00:19:07.920 set the bar. Well, if you go to the field we're talking about now, which has got 00:19:07.920 --> 00:19:13.800 in some cases, these wells are one mole percent, 100,000 to 1. This is clearly a higher 00:19:13.800 --> 00:19:20.090 gas to liquid ratio than the Briscoe Ranch is. In the end, from a gas, from 00:19:20.090 --> 00:19:24.730 a well classifications standpoint, I don't care if it's 5001 or 10,001, they're all 00:19:24.730 --> 00:19:30.650 gas wells. And so administratively, if we say look, if we're confident it's a gas 00:19:30.650 --> 00:19:35.360 field, then we're going to set, we're going to use the 3001 as the now, as the minimum 00:19:35.360 --> 00:19:40.590 in classifying future wells, that makes it easier on everybody, doesn't change their 00:19:40.590 --> 00:19:44.170 ratios going forward, they are what they are going, they are whatever they're gonna 00:19:44.170 --> 00:19:46.287 be. Fact is, they're still all gas wells. And I 00:19:46.312 --> 00:19:48.360 think, in this case, we're very confident that 00:19:48.360 --> 00:19:53.450 we ought to stick with that practice to make it easier on everybody. Okay 00:19:53.450 --> 00:19:55.230 answered my questions. 00:19:55.255 --> 00:19:57.825 - Do you have any questions? We have people 00:19:57.850 --> 00:20:00.570 from Apache here. Do you have any questions of them? 00:20:00.594 --> 00:20:04.294 - I don't. - Okay. Alright. Do you want to make the motion or do you want me to? 00:20:04.318 --> 00:20:06.189 - Yes, ma'am. My motion is that we 00:20:06.190 --> 00:20:12.700 overrule the examiners, and we grant the field rule with a 3000 to 1 gas to liquids ratio. 00:20:12.700 --> 00:20:22.240 - Second. Any discussion. We have a motion and a second. All those in favor say aye. 00:20:22.240 --> 00:20:33.501 Motion passes. Item is approved. Thank you, guys. Item number six. - Good morning, Commissioners. 00:20:33.501 --> 00:20:35.870 For the record Christie Reeve, Administrative Law 00:20:35.895 --> 00:20:38.049 judge with the Hearings division. Item number 00:20:38.049 --> 00:20:43.480 six is a motion for rehearing. On April, 2019, the Commission entered an order granting 00:20:43.480 --> 00:20:49.260 the commercial disposal permit application of Probity SWD, LLC. The permit application 00:20:49.260 --> 00:20:54.800 was protested by Wagner Oil Company. On May 3, 2019, the Commission received Wagner's 00:20:54.800 --> 00:21:00.490 motion for rehearing. On May 16, 2019, the Commission received 00:21:00.490 --> 00:21:05.419 Probity's reply. Wagner's motion does not raise significant issues of fact or law not 00:21:05.419 --> 00:21:11.990 previously considered by the Commission. On April 29, 2019, Probity filed a motion for 00:21:11.990 --> 00:21:14.779 Order Nunc Pro Tunc, to which Wagner responded. 00:21:14.804 --> 00:21:17.510 The motion points out a clerical error whereby 00:21:17.510 --> 00:21:19.761 the words 'draft permit only' were left in the 00:21:19.786 --> 00:21:21.820 permit attached to and incorporated in the 00:21:21.820 --> 00:21:24.650 final order. A Nunc Pro Tunc is not appropriate 00:21:24.675 --> 00:21:27.480 at this time. However, Commission rules provide 00:21:27.480 --> 00:21:29.818 for modification due to a clerical error. 00:21:29.843 --> 00:21:32.490 It is recommended that the motion for rehearing 00:21:32.490 --> 00:21:37.720 be denied and the permit be modified. The two are included in one order. The motion 00:21:37.720 --> 00:21:43.200 for rehearing will be overruled by Operation of Law on July 18, 2019. I'm available for questions. 00:21:43.200 --> 00:21:50.350 - Thank you. Are there Any questions? - I do have some questions. Christy, thank you. Reading 00:21:50.350 --> 00:21:52.645 through the motion for rehearing, there is a 00:21:52.670 --> 00:21:54.940 question that raises, that this raises in my mind, 00:21:54.940 --> 00:21:59.230 that I want to walk through this a little bit. I wanna make sure that we're, the kind 00:21:59.230 --> 00:22:07.360 of key issue here is we all agree that Wagner has 2,000,000 barrels or they have 00:22:07.360 --> 00:22:09.854 a lot of production. It's a water flood field 00:22:09.879 --> 00:22:12.510 operation. There has been a request for disposal 00:22:12.510 --> 00:22:17.299 in a layer below that. And the question is, does this sylvan shale seal off these two 00:22:17.299 --> 00:22:22.220 layers? As I understand the way this, in reading through the motion for rehearing, 00:22:22.220 --> 00:22:28.380 and understanding the previous case, that okay, that was debated, and then as a remedy, 00:22:28.380 --> 00:22:34.480 or we put the special conditions in, which is well, what we'll require is full cement 00:22:34.480 --> 00:22:36.912 job in a cement bond log with the anticipation 00:22:36.937 --> 00:22:39.500 that that would ensure that there was an adequate 00:22:39.500 --> 00:22:43.315 seal, essentially, between what was originally 00:22:43.340 --> 00:22:47.049 an open hole and then the sylvan layer around 00:22:47.049 --> 00:22:50.001 it to make sure that we didn't get water going 00:22:50.026 --> 00:22:52.890 up into the productive later. - Yes, sir. Okay. 00:22:52.890 --> 00:22:57.317 - My concern is that, if I understand right, 00:22:57.342 --> 00:23:01.940 that the first, the way that special condition 00:23:01.940 --> 00:23:04.625 was presented, in other words, Wagner saw it for 00:23:04.650 --> 00:23:07.090 the first time in the PFD, they did in their 00:23:07.090 --> 00:23:09.972 exceptions in the original case, put some 00:23:09.997 --> 00:23:13.540 information in, but there wasn't an opportunity for 00:23:13.540 --> 00:23:19.890 them to test, if you will, do cross examination, to present their own evidence as to 00:23:19.890 --> 00:23:23.103 whether or not that specific special condition 00:23:23.128 --> 00:23:26.179 would actually prevent water from going from 00:23:26.179 --> 00:23:28.678 the disposal area into their water floods. 00:23:28.703 --> 00:23:31.410 Am I correct in that? - At the original hearing, 00:23:31.410 --> 00:23:39.820 it was asked whether or not Probity would consider it adverse if that was done. 00:23:39.820 --> 00:23:47.690 There was some slight discussion there, but no, Wagner did not then go into questioning 00:23:47.690 --> 00:23:53.450 either their witnesses or Probity's, as far as whether or not they thought that would 00:23:53.450 --> 00:23:54.977 satisfy their concerns. 00:23:55.002 --> 00:23:59.559 - Okay, so in terms of whether or not there are new issues of fact or law, 00:23:59.559 --> 00:24:02.610 my concern is that the new issues of fact are ones we haven't seen yet. In other 00:24:02.610 --> 00:24:06.920 words, Wagner hasn't had a chance to present their case. For my part, I've got 00:24:06.920 --> 00:24:11.720 a concern, which is you've got that the cement bond log will show that the cement's 00:24:11.720 --> 00:24:16.290 adequately bonded to the casing. It won't show that the cement is adequately sealing 00:24:16.290 --> 00:24:18.932 off on the sylvan shale next to it. And so I'd 00:24:18.957 --> 00:24:21.350 like to make sure they have an opportunity 00:24:21.350 --> 00:24:26.220 to test this because we're talking about 2,000,000 barrels of production versus another 00:24:26.220 --> 00:24:29.567 disposal well in the area and that, I think, 00:24:29.592 --> 00:24:32.840 merits some, merits further examination and 00:24:32.840 --> 00:24:37.520 Wagner's opportunity to present some evidence specifically on that issue. 00:24:37.520 --> 00:24:40.198 I've got a motion, but any other questions? 00:24:40.223 --> 00:24:43.059 - I do. So I want to clarify though. We have done 00:24:43.059 --> 00:24:46.719 permits with special conditions without having to go back to hearing, correct? 00:24:46.744 --> 00:24:47.970 - Yes, ma'am, we have. And, 00:24:47.970 --> 00:24:51.194 in fact, these two special conditions have been 00:24:51.219 --> 00:24:54.150 added before. I've never seen them together 00:24:54.150 --> 00:24:57.450 on one permit, but they have been added before 00:24:57.475 --> 00:25:00.539 in various permits, both of them. - So unless 00:25:00.539 --> 00:25:04.503 this had not just said, what was the language, 00:25:04.528 --> 00:25:08.299 that we had a draft permit only, we wouldn't 00:25:08.299 --> 00:25:12.500 have seen this again, correct? - We still would have had the motion for rehearing. 00:25:12.500 --> 00:25:17.740 - But I'm not sure there's a new fact or law. So I appreciate it. If you have a motion. 00:25:17.740 --> 00:25:23.390 Do you have any questions? I'm sorry. All right. You have a motion? 00:25:23.390 --> 00:25:27.638 - Given the 2,000,000 barrels that we're talking 00:25:27.663 --> 00:25:31.280 about here and the specific sensitivities 00:25:31.280 --> 00:25:33.490 around the sylvan layers, why this one caught 00:25:33.515 --> 00:25:35.700 my attention, and Wagner's ability. So I move 00:25:35.700 --> 00:25:39.760 that we deny Probity's motion Nunc Pro Tunc and grant Wagner's motion for rehearing 00:25:39.760 --> 00:25:43.590 and remand the case for the examiners to take testimony and hear evidence regarding the 00:25:43.590 --> 00:25:46.131 sufficiency of the proposed special conditions 00:25:46.156 --> 00:25:48.510 and whether there are sufficient safeguards 00:25:48.510 --> 00:25:51.370 that could be put in place to ensure that 00:25:51.395 --> 00:25:53.068 2,000,000 barrels of oil production are not placed in jeopardy. 00:25:53.092 --> 00:25:57.492 - I'll second. - I have a motion and a second. Any other questions? 00:25:57.493 --> 00:26:06.880 All right, all those in favor say aye. Nay. Motion passes, two to one. Thank you. 00:26:06.880 --> 00:26:14.951 Item number seven. - Good morning, Chairman and Commissioners. For the record, my name 00:26:14.951 --> 00:26:20.530 is Ezra Johnson, Administrative Law Judge with the Hearings division. Item seven is 00:26:20.530 --> 00:26:26.780 a motion for rehearing of a dismissal order issued on April 10, 2019, dismissing the protestant 00:26:26.780 --> 00:26:31.670 of the subject application under Statewide Rule 9 for lack of standing, for failure 00:26:31.670 --> 00:26:36.970 to timely respond to the applicant's motion to dismiss, and remanding the application. 00:26:36.970 --> 00:26:39.623 A timely motion for rehearing was received from 00:26:39.648 --> 00:26:42.110 the protestant NGL Water Solutions Eagleford 00:26:42.110 --> 00:26:49.470 LLC. The applicant NOW Environmental Solutions LLC filed a response in opposition 00:26:49.470 --> 00:26:54.950 to this motion for rehearing. The protestant acknowledges receiving the applicant's 00:26:54.950 --> 00:27:00.700 motion to dismiss sufficiently in advance to timely file a response. The protestant 00:27:00.700 --> 00:27:05.360 claims that the failure to timely respond was inadvertent and seeks a rehearing based 00:27:05.360 --> 00:27:08.379 upon the Craddick test. The protestant's motion 00:27:08.404 --> 00:27:11.020 for rehearing, does not allege that it is 00:27:11.020 --> 00:27:16.539 an affected person under Statewide Rule 9 and thus fails to establish standing under 00:27:16.539 --> 00:27:19.861 that rule to bring a protest to hearing as a 00:27:19.886 --> 00:27:23.110 party in a contested case. For this reason, 00:27:23.110 --> 00:27:25.571 protestant's motion fails to meet the Craddick 00:27:25.596 --> 00:27:27.980 Test. The Examiner's recommend the Commission 00:27:27.980 --> 00:27:35.060 deny the motion. The motion will be overruled by Operation of Law on July 22, 2019, and 00:27:35.060 --> 00:27:40.820 I'm available for questions. - Thank you. Are there any questions? I move we approve the Examiner's 00:27:40.820 --> 00:27:43.176 recommendation. Is there a second? Second, 00:27:43.201 --> 00:27:45.860 Commissioner Sitton. All those in favor say Aye. 00:27:45.860 --> 00:27:51.806 Motion passes. Item's approved. Thank you, Ezra. Item number eight. 00:27:51.831 --> 00:27:55.633 - Good morning, Chairman. Commissioners. For the record, my 00:27:55.658 --> 00:27:59.308 name's Joe Menifee, paralegal in the Hearings division. 00:27:59.309 --> 00:28:05.470 I will be presenting items 8 through 10, all of which are motions for rehearing filed 00:28:05.470 --> 00:28:09.080 as a result of a final order signed March 26, 00:28:09.105 --> 00:28:12.930 denying renewal of the operators P5 because 00:28:12.930 --> 00:28:17.070 of wells noncompliant with Statewide Rule 15. 00:28:17.095 --> 00:28:20.940 Item number eight is good news. Subsequent 00:28:20.940 --> 00:28:23.786 to filing a motion for rehearing, EJ Carnes have 00:28:23.811 --> 00:28:26.690 come into compliance. Therefore, it's recommended 00:28:26.690 --> 00:28:29.740 the motion be granted and the underlying docket 00:28:29.765 --> 00:28:32.789 dismissed as moot. I'm available for questions. 00:28:32.789 --> 00:28:35.607 - Thank you. There any questions? We like good news. 00:28:35.632 --> 00:28:38.160 I move we approve the examiner's recommendation. 00:28:38.160 --> 00:28:40.821 Is there a second? Second by Commissiner Christian. 00:28:40.846 --> 00:28:42.970 All those in favor say aye. Motion passes, item's approved. 00:28:42.970 --> 00:28:50.220 Item number nine. In its motion, Vaquero Operating states it mistakenly 00:28:50.220 --> 00:28:55.370 believed all necessary compliance filings had been submitted and therefore response 00:28:55.370 --> 00:28:58.809 was not necessary, then further acknowledges 00:28:58.834 --> 00:29:02.400 that four wells are indeed noncompliant. Staff 00:29:02.400 --> 00:29:05.864 opposes the motion. Four wells remained noncompliant 00:29:05.889 --> 00:29:08.870 with Statewide Rule 15. it is recommended the 00:29:08.870 --> 00:29:12.100 motion be denied. The motion will be overruled 00:29:12.125 --> 00:29:15.330 by Operation of Law on July 5th. I'm available for questions. 00:29:15.330 --> 00:29:20.029 - Thank you. There any questions? I move we approve the examiner's recommendation. 00:29:20.029 --> 00:29:23.009 Is there a second? Second by Commissioner Sitton. 00:29:23.034 --> 00:29:26.049 All those in favor say aye. Motion passes. Item's 00:29:26.049 --> 00:29:31.950 approved. And number 10. - Item number 10. In its motion for rehearing, 7S Oil and 00:29:31.950 --> 00:29:34.924 Gas, LLC, states the operator believed they had 00:29:34.949 --> 00:29:37.650 complied with all requirements to renew its 00:29:37.650 --> 00:29:45.429 P5. Staff opposes the motion. 55 wells remained noncompliant. All due to failure 00:29:45.429 --> 00:29:52.010 to file approved form W3X and 15 for failure to resolve good faith claim 00:29:52.010 --> 00:29:54.924 issues. Therefore, it's recommended the motion 00:29:54.949 --> 00:29:57.590 be denied. The motion will be overruled by 00:29:57.590 --> 00:30:03.180 Operation of Law on July 5th. I'm available for questions. - Thank you. There any questions? 00:30:03.180 --> 00:30:09.070 We have somebody here on behalf of 7S Oil and Gas. Does anybody have any questions of 00:30:09.070 --> 00:30:11.645 him. Okay, I move we approve the examiner's 00:30:11.670 --> 00:30:15.040 recommendation. Is there a second? Second by Commissioner 00:30:15.040 --> 00:30:17.810 Christian. All those in favor say aye. Motion 00:30:17.835 --> 00:30:20.460 passes, item's approved. Thank you, Joe. 00:30:20.460 --> 00:30:27.350 All right, we're now going to the Oil and Gas consent agenda. There are six items 00:30:27.350 --> 00:30:31.119 on this, items 11 through 16. I move we approve items 11 00:30:31.144 --> 00:30:34.690 through 16. Is there a second? Second by Commissioner 00:30:34.690 --> 00:30:40.080 Sitton. All those in favor say aye. Motion passes. Those items are approved. Inactive 00:30:40.080 --> 00:30:46.590 Well items. Items 17 through 30. There are 14 items on this. I move we approve items 00:30:46.590 --> 00:30:49.134 17 through 30. Is there a second? Second by 00:30:49.159 --> 00:30:52.140 Commissioner Christian. All those in favor say aye. 00:30:52.140 --> 00:30:59.810 Motion passes, items approved. And Master Default items, 31 through 40. 35, staff would 00:30:59.810 --> 00:31:07.200 like to pass. Is that correct? Or it's in compliance. Enforcement would like to pass. Okay. 00:31:07.200 --> 00:31:15.500 So there are nine, now nine items on this. I move we approve items 31 through 40 00:31:15.500 --> 00:31:21.529 with the exception of item number 35. Is there a second? Second by Commissioner Sitton. 00:31:21.529 --> 00:31:24.357 All those in favor say aye. Motion passes. 00:31:24.382 --> 00:31:27.580 Those items are approved. And Agreed Enforcement 00:31:27.580 --> 00:31:31.685 Orders. There are 177 Agreed Enforcement Orders. 00:31:31.710 --> 00:31:35.120 I move we approved items 41 through 217. 00:31:35.120 --> 00:31:40.450 Is there a second? Second by Commissioner Christian. All those in favor say aye. Motion 00:31:40.450 --> 00:31:42.815 passes. Those items are approved. Thank you. 00:31:42.840 --> 00:31:45.180 That concludes the Hearing section. We'll now take 00:31:45.179 --> 00:31:49.710 up Administrative. Good morning, Wei. - Good morning, Chairman, Commissioners. For the record, 00:31:49.710 --> 00:31:55.240 Wei Wang, Executive Director. Now the session is over, we're busy implementing 00:31:55.240 --> 00:31:58.438 bills, and also working on our operating budget. 00:31:58.463 --> 00:32:01.440 I'm glad to report for HB 793. This is a bill 00:32:01.440 --> 00:32:04.105 with deals with sorting contracting requirements. 00:32:04.130 --> 00:32:06.450 We have already implemented that. I believe 00:32:06.450 --> 00:32:10.018 we're the first agency in the state implementing 00:32:10.043 --> 00:32:13.440 that bill. This is more a public announcement. 00:32:13.440 --> 00:32:18.971 We have set the date for the annual regulatory conference to the be on August 20th and 00:32:18.971 --> 00:32:21.995 21st. The registration will be open later 00:32:22.020 --> 00:32:25.380 today. This is the second year we're combining 00:32:25.380 --> 00:32:29.310 the Oil and Gas and Pipeline Regulatory Conference 00:32:29.335 --> 00:32:32.470 together. As of yesterday, our headcount 00:32:32.470 --> 00:32:36.813 was 786 employees, and we have so far plugged 1292 00:32:36.838 --> 00:32:40.730 wells this year. And that concludes my report this morning. 00:32:40.730 --> 00:32:45.940 - Thank you. Had a good session. Thank you very much. Any questions? All right. Morning, Alex. 00:32:45.940 --> 00:32:47.955 - Good morning, Chairman and Commissioners. 00:32:47.980 --> 00:32:50.210 For the record, my name's Alex Schott, General 00:32:50.210 --> 00:32:53.881 Counsel of the Railroad Commission of Texas. For item number 00:32:53.906 --> 00:32:57.130 219, we'll give a brief update on some of litigation. 00:32:57.130 --> 00:33:01.919 Back in 2014-15, the Obama administration was adopting the Waters of the U. S. Rules, 00:33:01.919 --> 00:33:04.635 and the Commission filed comments on those in 00:33:04.660 --> 00:33:07.529 opposition to the rules, and eventually referred 00:33:07.529 --> 00:33:09.182 the matter to the attorney general to pursue 00:33:09.207 --> 00:33:10.799 litigation on our behalf to challenge those 00:33:10.799 --> 00:33:16.240 rules. There was press coverage last week about the fact the attorney general gotten a 00:33:16.240 --> 00:33:19.240 motion for summary judgment granted, enjoining 00:33:19.265 --> 00:33:22.240 those rules, so those rules are now in through 00:33:22.240 --> 00:33:25.360 the court system to be sent back to the EPA for 00:33:25.385 --> 00:33:28.740 further action. The reality is the EPA has proposed 00:33:28.740 --> 00:33:31.222 a formal repeal of the rule which should be 00:33:31.247 --> 00:33:33.929 final August and has proposed new rules for the 00:33:33.929 --> 00:33:36.241 Waters of the US which are a more appropriate standard. 00:33:36.266 --> 00:33:38.140 And we've commented on that. We brought those 00:33:38.140 --> 00:33:41.272 comments into you for approval, so our expectation is 00:33:41.297 --> 00:33:44.520 the replacement rule will come into effect in December. 00:33:44.520 --> 00:33:46.524 But I thought I'd mention it just to show the 00:33:46.549 --> 00:33:48.440 the long life these things take on. I mean, 00:33:48.440 --> 00:33:51.441 the original rule proposal five years ago, and five years 00:33:51.466 --> 00:33:54.080 through the courts, four years through the courts, 00:33:54.080 --> 00:33:56.368 just to get a motion for summary judgment. But 00:33:56.393 --> 00:33:58.850 it's, progress is being made and our expectations, 00:33:58.850 --> 00:34:00.988 by the end of the year, the appropriate Waters of 00:34:01.013 --> 00:34:03.040 the US Rule will be a place. - Thank you, thanks 00:34:03.040 --> 00:34:05.154 for the update, and thank you all for staying 00:34:05.179 --> 00:34:07.130 on top of it. It's very important, all 00:34:07.130 --> 00:34:16.599 of this. I appreciate it - And Item 220, I think we've got Natalie here for that. 00:34:16.599 --> 00:34:18.969 Natalie Dobeal, Office of General Counsel, for 00:34:18.994 --> 00:34:21.289 the record, Item 220 pertains to Commissioner 00:34:21.289 --> 00:34:26.069 approval of certain contracts pursuant to the Commission's delegation of authority and 00:34:26.069 --> 00:34:28.824 state law. The Commission's internal delegation 00:34:28.849 --> 00:34:31.349 of authority requires Commissioner approval 00:34:31.349 --> 00:34:35.625 of contracts and associated amendments greater 00:34:35.650 --> 00:34:39.629 than or equal to $500,000. Section 2261.254 00:34:39.629 --> 00:34:44.339 of the Government Code requires approval of contracts and associate amendments greater 00:34:44.339 --> 00:34:48.068 than $1,000,000. Finally, Section 2155.88 00:34:48.093 --> 00:34:52.329 requires Commissioner consideration of material 00:34:52.329 --> 00:34:55.353 changes to contracts, including an increased 00:34:55.378 --> 00:34:58.780 greater than 10%. At issue today are two contracts 00:34:58.780 --> 00:35:01.930 for IT services. Approval of this item today 00:35:01.955 --> 00:35:05.359 will ensure agency operations remain on schedule 00:35:05.359 --> 00:35:09.380 and the necessary approvals will be in place pursuant to the Commission's delegation of 00:35:09.380 --> 00:35:12.005 authority and state law. A summary of these 00:35:12.030 --> 00:35:14.690 agreements, including requisition number and 00:35:14.690 --> 00:35:16.700 amount, was included in your notebooks. Staff 00:35:16.725 --> 00:35:18.710 asks the Commission approve these agreements, 00:35:18.710 --> 00:35:24.200 and I'm available for questions. - Thank you. Are there any questions? 00:35:24.200 --> 00:35:27.212 I move we approve of the delegation of authoriy. 00:35:27.237 --> 00:35:30.900 Is there a second? Second by Commissioner Sitton. All those 00:35:30.900 --> 00:35:35.245 in favor say aye. Thank you, Natalie. Item's approved. 00:35:35.270 --> 00:35:39.590 Item, you didn't have anything else, Alex? Item 221 is 00:35:39.589 --> 00:35:45.489 our public participation item, and nobody's turned in any additional cards. Item 222 00:35:45.489 --> 00:35:47.757 is executive session, which won't be going into 00:35:47.782 --> 00:35:49.789 today. And are there any other duly posted 00:35:49.789 --> 00:35:52.819 things? Hearing none, this meeting's adjourned. Thank you all.