WEBVTT
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Brought to you by adminmonitor.com.
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We'll begin momentarily.
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Thank you for your patience.
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Now, is everybody in place and can you see me?
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Yes, sir.
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Everybody looks fabulous this morning.
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Good morning, this is Callie Farar, Commission Secretary.
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I will be serving as the meeting moderator
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for today's conference.
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Just a few reminders for those speaking today.
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When it is your time to speak you will be transferred
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over to video at the necessary time and if needed.
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Please remember you'll also need to remove yourself
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from mute for the audience to hear you.
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The Commission does reserve the right to remove any audio
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or video sharing capabilities from any person if needed.
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Chairman and Commissioners,
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we are ready to begin when you are.
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Before we begin our meeting officially,
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I want to ask those who would like to please join me
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in just a word of prayer.
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Father, we come to you this morning recognizing
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an attack upon us as a country, as a industry.
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Father, where there are decisions to be made
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that we need your counsel
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and for this morning we know that we are your people
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and our pledge is to the flag,
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it specifically says one nation, one state under God.
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So come to you confessing that we are looking for an answer
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which we ask you to provide
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and as your people, called by your name,
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we are humbling ourselves before you
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and asking for guidance.
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And we hope and pray that you'll give us the answer
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to the situations we have in the emergency
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both the disease, the virus and give us wisdom
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that only your counsel can provide.
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In your name I pray, amen.
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Amen.
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Members, this is Chairman Christian
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this meeting of the Railroad Commission of Texas
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will come to order to consider matters
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which have been duly posted
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with the Secretary of State for April 21, 2020.
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Under our Public Participation Policy
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anyone desiring to offer public testimony
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on any item that were not noticed on today's agenda
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was required to register in advance.
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We did not have anyone
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registering in advance for this meeting.
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Commission will consider the Items Only Agenda
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as posted on the agenda.
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Before we get started on today's open meeting,
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I wanted to make another moment
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to acknowledge the elephant in the room.
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West Texas Intermediate traded as low as
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negative $40 yesterday,
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was in the positive the last I heard a few moments ago.
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But according to our primary vision
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over the course of the last five weeks
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the rig count is down 33%, fracking jobs are down 50%.
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This drop in price and reduction in production
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unfortunately means harm to Texas jobs and our economy.
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There is no simple answer during this time,
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but the Texas Oil and Gas industry is resilient
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and full of hardworking, creative professionals
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that solve problems for a living.
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While this is a dark time for our energy producers
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in our economy I have not doubt
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once this COVID-19 has rescinded
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and America's back to work a rebound will occur.
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This is not gonna be easy, will not happen over night,
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but Texans will rebuild this industry
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which has quite literally changed worldwide power dynamics
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and surrounding energy policy.
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We will discuss this more once we get to Item 309 and 310.
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Before we begin business as usual I wanted to make sure
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everyone who's watching knows that our agency
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is not taking this issue lightly
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and our hearts are with the thousands of Texans
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dealing with job loss and uncertainty during this time.
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Callie, please call up the presenter for Agenda Item One.
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Yes, thank you.
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Agenda Item Number One, Dee Marlo Chico presenting.
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You are invited to speak.
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Good morning, Chairman and Commissioners.
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Good morning.
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My name is Dee Marlo Chico, Administrative Law Judge
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with the Hearings Division.
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Item Number one is a gas utility rate case
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that resulted in a settlement
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between NatGas Incorporated and Staff.
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NatGas filed its statement of intent on September 27, 2019
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to increase rates in and around
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the unincorporated community of Ozona, Texas.
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The examiners recommend approval of this settlement
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as set forth in the proposed final order.
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The settlement represents diverse interests
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and the parties have engaged in significant discovery
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regarding the issues in dispute.
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The deadline for Commission action is April 23, 2020.
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I'm available for questions.
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Are their any questions, members?
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I move we approve the Examiner's recommendation.
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Is there a second?
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Second.
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Second Commissioner Sitton.
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All those in favor say aye.
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Aye.
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Any opposed?
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Motion passes, that item is approved.
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Callie, please call up Item Number Two.
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Thank you, Dee.
Okay.
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Agenda Item Number Two,
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John Dodson is presenting.
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You are invited to speak.
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Good morning, Chairman and Commissioners.
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I'm Administrative Law Judge, John Dodson,
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with the Hearings Division.
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Agenda Item Two, GUD 10900, is a rate case
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filed by Atmos Energy's, West Texas Division.
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Atmos seeks to establish cost-based rates
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for it's Triangle Distribution System
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for 10 transportation customers
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currently paying market-based rates.
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Commission staff intervened,
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as well as a coalition of 70 effected cities.
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Ultimately, the parties reached a settlement
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resolving all issues and agreeing to the establishment
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of cost-based rates for the Triangle.
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Premised on the revenue requirement of $7,681,934
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which is a decrease in annual base revenue
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provided from current market-based rates.
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Parties also agreed that the Triangle is properly treated
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as a natural gas distribution system
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for rate making purposes
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and that its acquisition by Atmos in 2003
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was in the public interest.
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The recommendation is to approve the settlement.
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Today is the last scheduled conference
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prior to the deadline for Commission action
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and I'm available for questions.
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Are there any question?
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This is Callie.
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Really quickly, this is Callie, a moderator.
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Ann Coffin on behalf of Atmos Energy has registered
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and is available for questions if needed.
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Are there any questions members?
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No.
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I hear none.
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I move the recommendation of the Examiner's recommendation,
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I move...
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I move the approved Examiner's recommendation.
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Do I hear a second?
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Second.
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Second, by Commissioner Craddick.
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All in favor say aye.
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Aye.
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Opposed?
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No, I didn't vote no, aye.
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That item is approved unanimously.
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This is not comfortable, not being able to see you guys.
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Thank you, John.
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Thank you.
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Callie, please call up the presenter
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for Item Number Three.
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Certainly, Agenda Item Number Three
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presented by Kyle Lebby.
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You are invited to speak.
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Good morning, Chairman and Commissioners.
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Kyle Lebby, Administrative Law Judge.
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Item Three is an application
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by San Miguel Electric Cooperative, Inc.
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in question Release of Phase II Reclamation Obligations
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on 477.7 acres within the San Miguel C-Area Mine,
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Permit Number 52A located in Atascosa County.
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The approved post-mine land use
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for the acreage is pastureland.
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Evidence in record indicates that reclamation activities
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related to revegetation and surface water protection
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as required for Phase II Release have been accomplished
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in accordance with the terms of the approved permit
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and the regulations.
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After notice, no comments
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or requests for a hearing were received,
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San Miguel and Staff are the only parties to the proceeding.
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No exceptions were filed.
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No changes to the current bond instrument are requested
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in this docket.
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The subject area is bonded
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based upon the worst-case bond method.
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Therefore, San Miguel is not eligible
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to reduce the amount of bond for the permit
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based on the release sought in this application.
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Phase II Release of the 477.7 acres is recommended.
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I'm available for questions.
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Are there any questions?
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No.
No.
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No questions.
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I move we approve the Examiner's recommendation.
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Is there a second?
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Second.
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Second by Commissioner Sitton.
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All in favor say aye.
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Aye.
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Any opposed?
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Motion passes, that item is approved.
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Thank you, Kyle.
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Thank you.
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All right, moving right along.
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Conference Agenda Item Number Four,
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presented by Veronica Ruberto.
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You are invited to speak.
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Good morning, Chairman, Commissioners.
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For the record, Veronica Ruberto, Administrative Law Judge
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with the Hearings Division.
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I will be presenting Items Four through Eight.
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Item Number Four is an application
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by Luminant Mining Company, LLC
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for Release of Phase I, II and III
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Reclamation Obligations for an aggregate 516.34 acres,
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Permit Number 34F within Monticello Winfield Mine
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located in Titus and Franklin Counties.
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There are five approved post-mine land uses
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within the subject area; pastureland,
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fish and wildlife habitat, develop water resources,
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forestry and industrial-commercial.
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Evidence in the record supports Luminant
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has satisfied all requirements
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for the requested release of the subject area.
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After notice, no comments
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or requests for a hearing were received.
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Staff and Luminant are the only parties to the proceeding.
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No exceptions were filed.
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No changes to the current bond are requested in this docket.
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It is recommended the request for Phase I, II and III
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Release for the subject area be approved
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and that Luminant be eligible
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to reduce the amount of bond for the permit
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that is attributable to the subject area.
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I'm available for questions.
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Thank you.
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Are there any questions?
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No.
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I move we approve the Examiner's recommendation.
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Is there a second?
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Second.
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Second by Commissioner Craddick.
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All in favor say aye.
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Aye.
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Any opposed?
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Motion passes, that item is approved, Callie.
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Thank you.
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Veronica, if will continue with Agenda Item Number Six,
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you're invited to speak.
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I have not presented Item Number Five.
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My apologies.
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I'm trying to move along too quickly, here.
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(she chuckles)
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Agenda Item Number Five, thank you.
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Item Number Five is an application
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by the Sabine Mining Company
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for Release of Phase I Reclamation Obligations
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for 76.6 acres, Permit Number 55A within Rusk Mine
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located in Harrison, Panola, and Rusk Counties.
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The approved post-mine land use
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is fish and wildlife habitat.
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Evidence in the record supports Sabine
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has satisfied all requirements
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for the requested release of the subject area.
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After notice, no comments
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or requests for a hearing were received.
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Staff and Sabine are the only parties to the proceeding.
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No exceptions were filed.
275
00:10:57.820 --> 00:11:00.890
No changes to the current bond are requested on this docket.
276
00:11:00.890 --> 00:11:03.800
It is recommended that the request for Phase One Release
277
00:11:03.800 --> 00:11:05.670
for the subject area be approved
278
00:11:05.670 --> 00:11:09.350
and that Sabine be eligible to reduce the amount of the bond
279
00:11:09.350 --> 00:11:12.710
for the permit that is attributable to the subject area.
280
00:11:12.710 --> 00:11:14.390
I'm available for questions.
281
00:11:14.390 --> 00:11:16.180
Any questions, members?
282
00:11:16.180 --> 00:11:17.013
No.
283
00:11:17.013 --> 00:11:18.900
I move we approve the Examiner's recommendation.
284
00:11:18.900 --> 00:11:20.341
Is there a second?
285
00:11:20.341 --> 00:11:21.174
Second.
286
00:11:21.174 --> 00:11:22.080
Second by Commissioner Sitton.
287
00:11:22.080 --> 00:11:23.801
All in favor say aye.
288
00:11:23.801 --> 00:11:25.140
Aye.
289
00:11:25.140 --> 00:11:26.170
Any opposed?
290
00:11:26.170 --> 00:11:28.480
Motion passes, that item is approved.
291
00:11:28.480 --> 00:11:29.730
Callie.
292
00:11:29.730 --> 00:11:30.970
Yes, thank you.
293
00:11:30.970 --> 00:11:33.040
Agenda Item Number Six, Veronica,
294
00:11:33.040 --> 00:11:34.913
if you will still please continue.
295
00:11:35.800 --> 00:11:37.690
Item Six is an application
296
00:11:37.690 --> 00:11:40.530
by San Miguel Electric Cooperative, Inc.
297
00:11:40.530 --> 00:11:43.470
for Release of Phase I Reclamation Obligations
298
00:11:43.470 --> 00:11:47.330
for 100.4 acres, Permit Number 52A,
299
00:11:47.330 --> 00:11:51.140
within San Miguel Lignite Mine, Area C
300
00:11:51.140 --> 00:11:53.770
located in Atascosa County.
301
00:11:53.770 --> 00:11:55.230
The approved post-mine land use
302
00:11:55.230 --> 00:11:58.150
within the area is pastureland.
303
00:11:58.150 --> 00:12:00.370
Evidence in the record supports San Miguel
304
00:12:00.370 --> 00:12:02.380
has satisfied all requirements
305
00:12:02.380 --> 00:12:04.330
for the requested release of the subject area.
306
00:12:04.330 --> 00:12:05.860
After notice, no comments
307
00:12:05.860 --> 00:12:08.030
or requests for a hearing were received.
308
00:12:08.030 --> 00:12:11.440
Staff and San Miguel are the only parties to the proceeding.
309
00:12:11.440 --> 00:12:13.620
No exceptions were filed.
310
00:12:13.620 --> 00:12:15.670
No eligible bond reduction amount
311
00:12:15.670 --> 00:12:17.240
is attributable to the acreage
312
00:12:17.240 --> 00:12:19.050
requested for Phase I Release
313
00:12:19.050 --> 00:12:21.180
because the bond has been calculated
314
00:12:21.180 --> 00:12:23.263
with the worst-case pit bond method.
315
00:12:24.330 --> 00:12:26.910
It is recommended that the request for Phase I Release
316
00:12:26.910 --> 00:12:28.500
for the subject area be approved
317
00:12:28.500 --> 00:12:31.140
and that San Miguel is not eligible.
318
00:12:31.140 --> 00:12:33.670
to reduce its bond amount at this time.
319
00:12:33.670 --> 00:12:35.163
I'm available for questions.
320
00:12:36.151 --> 00:12:37.187
Are there any questions?
321
00:12:37.187 --> 00:12:38.200
No.
No.
322
00:12:38.200 --> 00:12:40.460
I move we approve the Examiner's recommendation.
323
00:12:40.460 --> 00:12:41.610
Is there a second?
324
00:12:41.610 --> 00:12:42.443
Second.
325
00:12:42.443 --> 00:12:43.610
Second by Commissioner Craddick.
326
00:12:43.610 --> 00:12:45.270
All in favor say aye.
327
00:12:45.270 --> 00:12:46.530
Aye.
328
00:12:46.530 --> 00:12:47.500
Any opposed?
329
00:12:47.500 --> 00:12:49.400
Motion passes, that item is approved.
330
00:12:49.400 --> 00:12:51.520
Callie, please call up Item Seven.
331
00:12:51.520 --> 00:12:53.590
Thank you, Agenda Item Number Seven.
332
00:12:53.590 --> 00:12:55.820
Veronica, if you will still please continue.
333
00:12:55.820 --> 00:12:56.653
Thank you.
334
00:12:57.557 --> 00:12:59.300
Item Number Seven is an application
335
00:12:59.300 --> 00:13:02.440
by the Sabine Mining Company for Release of Phase I,
336
00:13:02.440 --> 00:13:07.440
II and III Reclamation Obligations for 24.6 acres,
337
00:13:07.540 --> 00:13:11.070
Permit Number 33I within South Hallsville,
338
00:13:11.070 --> 00:13:14.830
Number One Mine located in Harrison County.
339
00:13:14.830 --> 00:13:17.690
The approved post-mine land use within the subject area
340
00:13:17.690 --> 00:13:20.060
consists of industrial and commercial.
341
00:13:20.060 --> 00:13:21.640
Evidence in the record supports Sabine
342
00:13:21.640 --> 00:13:23.160
has satisfied all requirements
343
00:13:23.160 --> 00:13:25.770
for the requested release of the subject area.
344
00:13:25.770 --> 00:13:27.150
After notice, no comments
345
00:13:27.150 --> 00:13:29.300
or requests for a hearing were received.
346
00:13:29.300 --> 00:13:32.610
Staff and Sabine are the only parties in proceeding.
347
00:13:32.610 --> 00:13:33.840
No exceptions were filed.
348
00:13:33.840 --> 00:13:35.240
No changes to the current bond
349
00:13:35.240 --> 00:13:36.940
are requested in this docket.
350
00:13:36.940 --> 00:13:39.613
It is recommended that the request for Phase I, II
351
00:13:39.613 --> 00:13:43.170
and III Release for the subject area be approved
352
00:13:43.170 --> 00:13:45.420
and that Sabine be eligible to reduce
353
00:13:45.420 --> 00:13:47.410
the amount of the bond for the permit
354
00:13:47.410 --> 00:13:50.140
that is attributable to the subject acreage.
355
00:13:50.140 --> 00:13:52.506
I'm available for questions.
356
00:13:52.506 --> 00:13:53.817
Are there any questions, members?
357
00:13:53.817 --> 00:13:55.010
No.
No.
358
00:13:55.010 --> 00:13:55.843
Hearing none,
359
00:13:55.843 --> 00:13:57.700
I move we approve the Examiner's recommendation.
360
00:13:57.700 --> 00:13:59.060
Is there a second?
361
00:13:59.060 --> 00:13:59.893
Second.
362
00:13:59.893 --> 00:14:02.140
All in favor, the second by Commissioner Sitton.
363
00:14:02.140 --> 00:14:04.030
All in favor say aye.
364
00:14:04.030 --> 00:14:05.330
Aye.
365
00:14:05.330 --> 00:14:06.290
Any opposed?
366
00:14:06.290 --> 00:14:08.133
Motion passes, that item is approved.
367
00:14:08.133 --> 00:14:10.822
Callie, please call up Item Eight.
368
00:14:10.822 --> 00:14:13.700
Agenda Item Number Eight, Veronica,
369
00:14:13.700 --> 00:14:16.100
if you will still please continue.
370
00:14:16.100 --> 00:14:19.767
Item Number Eight is an application by Marshall Mine, LLC
371
00:14:19.767 --> 00:14:24.080
for the Renewal/Revision/Expansion of Permit Number 59,
372
00:14:24.080 --> 00:14:28.450
Consolidation of Permit Numbers 57 and 59
373
00:14:28.450 --> 00:14:31.940
and Release of Existing Bond for Permit Number 57
374
00:14:31.940 --> 00:14:35.000
within Marshall Mine and Marshall Mine facilities
375
00:14:35.000 --> 00:14:38.420
located in Harrison and Panola counties.
376
00:14:38.420 --> 00:14:41.010
The proposed permit area as revised, expanded
377
00:14:41.010 --> 00:14:46.010
and consolidated consists of approximate 3,025 acres.
378
00:14:46.120 --> 00:14:49.970
Marshall has selected Caddo Creek as its mine operator
379
00:14:49.970 --> 00:14:53.890
and proposes to mine approximately 1.8 million tons
380
00:14:53.890 --> 00:14:56.930
of lignite during the five year permit term.
381
00:14:56.930 --> 00:14:59.280
Marshall requests release of the amount of bond
382
00:14:59.280 --> 00:15:03.750
for Permit Number 57 which is currently bonded at 200,000.
383
00:15:03.750 --> 00:15:07.720
Permit Number 59 is currently bonded at 30 million
384
00:15:07.720 --> 00:15:10.190
exceeding the minimum required bond amount
385
00:15:10.190 --> 00:15:12.070
for this subject application.
386
00:15:12.070 --> 00:15:14.170
Evidence in the record supports that Marshall
387
00:15:14.170 --> 00:15:17.250
has satisfied all requirements for the requested mining
388
00:15:17.250 --> 00:15:21.740
and reclamation operations within the proposed permit area.
389
00:15:21.740 --> 00:15:24.850
The only parties to the proceeding are Marshall and Staff.
390
00:15:24.850 --> 00:15:27.300
All comments after public notice
391
00:15:27.300 --> 00:15:29.230
are addressed in the proposed order.
392
00:15:29.230 --> 00:15:30.490
No exceptions were filed.
393
00:15:30.490 --> 00:15:32.570
No hearing on the merits was held.
394
00:15:32.570 --> 00:15:35.030
It is recommended Marshall's application
395
00:15:35.030 --> 00:15:36.710
be approved with the adoption
396
00:15:36.710 --> 00:15:39.630
of permit provisions contained in Appendix One
397
00:15:39.630 --> 00:15:42.900
and soil testing plan contained in Appendix Two.
398
00:15:42.900 --> 00:15:46.210
The existing bond for Permit Number 57 be released
399
00:15:46.210 --> 00:15:49.130
and that Permit Number 59 be renumbered
400
00:15:49.130 --> 00:15:51.173
as Permit Number 59A.
401
00:15:52.030 --> 00:15:53.620
I'm available for questions.
402
00:15:53.620 --> 00:15:55.704
Are there any questions?
403
00:15:55.704 --> 00:15:57.610
I move we approve the Examiner's recommendation.
404
00:15:57.610 --> 00:15:59.060
Is there a second?
405
00:15:59.060 --> 00:15:59.893
Second.
406
00:15:59.893 --> 00:16:01.030
Second by Commissioner Craddick.
407
00:16:01.030 --> 00:16:02.770
All in favor say aye.
408
00:16:02.770 --> 00:16:04.080
Aye.
409
00:16:04.080 --> 00:16:05.430
Any opposed?
410
00:16:05.430 --> 00:16:07.133
Motion passes, that item is approved.
411
00:16:07.133 --> 00:16:10.232
Callie, please call up Items Nine and 10.
412
00:16:10.232 --> 00:16:12.370
Thank you, Veronica.
413
00:16:12.370 --> 00:16:13.830
Yes, thank you.
414
00:16:13.830 --> 00:16:16.610
Agenda Items Number Nine and 10.
415
00:16:16.610 --> 00:16:18.300
Peter Buva will be presenting.
416
00:16:18.300 --> 00:16:19.993
You are invited to speak.
417
00:16:21.020 --> 00:16:23.760
Good morning, Chairman, Commissioners.
418
00:16:23.760 --> 00:16:25.940
My name is Peter Buva, Technical Examiner
419
00:16:25.940 --> 00:16:27.730
with the Hearings Division.
420
00:16:27.730 --> 00:16:31.020
I will be presenting Items Number Nine and 10 together.
421
00:16:31.020 --> 00:16:33.320
Items Number Nine and 10 are applications
422
00:16:33.320 --> 00:16:36.210
by Boykin Energy, LLC for two new,
423
00:16:36.210 --> 00:16:38.570
noncommercial disposal wells.
424
00:16:38.570 --> 00:16:41.370
For each well, Boykin requests authority to dispose
425
00:16:41.370 --> 00:16:45.200
a maximum of 20,000 barrels per day of produced water
426
00:16:45.200 --> 00:16:47.820
into the Delaware Mountain Group formation
427
00:16:47.820 --> 00:16:51.853
and a maximum surface injection pressure at 1,100 psig.
428
00:16:53.928 --> 00:16:57.470
The application is protested by Colgate Operating, LLC.
429
00:16:57.470 --> 00:16:58.770
The protestor maintains that Boykin's
430
00:16:58.770 --> 00:17:02.510
two proposed disposal wells would endanger Colgate's
431
00:17:02.510 --> 00:17:05.230
underlying oil and gas formations.
432
00:17:05.230 --> 00:17:06.750
According to Colgate,
433
00:17:06.750 --> 00:17:07.930
there are naturally occurring
434
00:17:07.930 --> 00:17:09.500
fractured zones in the vicinity
435
00:17:09.500 --> 00:17:11.183
of the proposed injection wells.
436
00:17:12.610 --> 00:17:15.410
Protestant's concern is that the graben-like fractured zones
437
00:17:15.410 --> 00:17:17.280
could potentially serve as a conduit
438
00:17:17.280 --> 00:17:20.500
and push the injected water from the Delaware Mountain Group
439
00:17:20.500 --> 00:17:23.380
down to the Upper Wolfcamp Formation,
440
00:17:23.380 --> 00:17:25.493
thereby, harming Colgate's production.
441
00:17:27.100 --> 00:17:28.650
Boykin presented evidence
442
00:17:28.650 --> 00:17:30.280
addressing each of the requirements
443
00:17:30.280 --> 00:17:33.660
in the Statewide Rule Nine regarding protestant's concern
444
00:17:33.660 --> 00:17:35.960
about graben-like fracture zones.
445
00:17:35.960 --> 00:17:37.660
Examiners find that these wells
446
00:17:37.660 --> 00:17:40.260
given their distance from the fractured zones
447
00:17:40.260 --> 00:17:42.070
would not generate sufficient pressure
448
00:17:42.070 --> 00:17:44.820
to impact the Wolfcamp Formation.
449
00:17:44.820 --> 00:17:48.080
Examiners recommend approval of the applications.
450
00:17:48.080 --> 00:17:50.440
Exceptions and replies have been filed.
451
00:17:50.440 --> 00:17:52.453
I'm available for questions.
452
00:17:54.000 --> 00:17:54.833
Callie.
453
00:17:54.833 --> 00:17:57.940
If I may (audio echoing drowns out speaker)
454
00:17:57.940 --> 00:18:02.940
George Neale and Seth Crawford on behalf of Boykin Energy
455
00:18:05.610 --> 00:18:08.890
and John Hicks from Colgate Operating are all registered
456
00:18:08.890 --> 00:18:11.003
and are available for questions if needed.
457
00:18:12.330 --> 00:18:14.890
Okay, are there any questions for George, Seth,
458
00:18:14.890 --> 00:18:17.923
Doug or John on this agenda item, members?
459
00:18:19.260 --> 00:18:20.534
No.
460
00:18:20.534 --> 00:18:21.934
Okay, I hear no questions.
461
00:18:25.620 --> 00:18:27.723
This is Agenda Item Number Nine and 10.
462
00:18:27.723 --> 00:18:29.840
I move we approve the Examiner's recommendation.
463
00:18:29.840 --> 00:18:31.353
Is there a second?
464
00:18:31.353 --> 00:18:32.186
Second.
465
00:18:34.000 --> 00:18:35.266
Second.
466
00:18:35.266 --> 00:18:37.410
Okay, a second by Commissioner Sitton.
467
00:18:37.410 --> 00:18:39.160
All in favor say aye.
468
00:18:39.160 --> 00:18:40.430
Aye.
469
00:18:40.430 --> 00:18:41.410
Any opposed?
470
00:18:41.410 --> 00:18:43.860
Motion passes, those items are approved.
471
00:18:43.860 --> 00:18:45.440
Callie, please call up the presenters
472
00:18:45.440 --> 00:18:48.510
for Agenda Items 11 through 13.
473
00:18:48.510 --> 00:18:50.300
Thank you, Peter.
474
00:18:50.300 --> 00:18:51.300
Okay, thank you.
475
00:18:51.300 --> 00:18:53.043
Yes, hopefully, my-
476
00:18:54.260 --> 00:18:55.093
Better.
477
00:18:55.093 --> 00:18:56.222
Better, good.
478
00:18:56.222 --> 00:18:57.740
(she chuckles)
479
00:18:57.740 --> 00:19:01.900
Jennifer Cook is presenting Items Number 11 through 13.
480
00:19:01.900 --> 00:19:03.153
You are invited to speak.
481
00:19:04.907 --> 00:19:06.513
Good morning, Chairman and Commissioners.
482
00:19:06.513 --> 00:19:08.850
I am Jennifer Cook, an Administrative Law Judge
483
00:19:08.850 --> 00:19:10.150
with the Hearing Division.
484
00:19:11.080 --> 00:19:15.320
I am presenting Items 11 through 13 together.
485
00:19:15.320 --> 00:19:18.530
Items 11 through 13 regard an enforcement case
486
00:19:18.530 --> 00:19:20.500
alleging violations of Commission rules
487
00:19:20.500 --> 00:19:23.820
by Votaw Production Company, LLC.
488
00:19:23.820 --> 00:19:27.320
Commission staff initiated this case claiming Votaw
489
00:19:27.320 --> 00:19:31.070
is responsible for violations of Statewide Rule 14(b)(2)
490
00:19:31.070 --> 00:19:33.730
on three leases and an additional violation
491
00:19:33.730 --> 00:19:37.270
of Statewide Rule 3-2 on one of the leases.
492
00:19:37.270 --> 00:19:39.107
Staff requests that the Commission assess a penalty
493
00:19:39.107 --> 00:19:41.993
in the amount of $24,155,
494
00:19:43.620 --> 00:19:46.200
order Votaw to flood the subject wells
495
00:19:46.200 --> 00:19:49.160
and place the leases in compliance with Commission rules.
496
00:19:49.160 --> 00:19:52.750
Staff provided Commission records and workplace violations.
497
00:19:52.750 --> 00:19:56.040
Staff provided evidence that penalty requested
498
00:19:56.040 --> 00:19:57.840
is consistent with the Commission's practice
499
00:19:57.840 --> 00:19:59.980
in Statewide Rule 107.
500
00:19:59.980 --> 00:20:02.870
Votaw maintains it has made efforts to achieve compliance.
501
00:20:02.870 --> 00:20:05.750
It maintains the penalty amount requested is unwarranted
502
00:20:05.750 --> 00:20:07.820
considering the efforts that it's made.
503
00:20:07.820 --> 00:20:10.390
It is recommended that the Commission find the violations
504
00:20:10.390 --> 00:20:12.660
of Statewide Rules have occurred as alleged,
505
00:20:12.660 --> 00:20:15.873
assess a penalty of $24,155
506
00:20:16.804 --> 00:20:18.117
and order Votaw to plug the wells
507
00:20:18.117 --> 00:20:20.940
and place the leases in compliance with Commission rules.
508
00:20:20.940 --> 00:20:22.920
Exceptions and a reply were filed
509
00:20:22.920 --> 00:20:25.020
and I'm available for questions.
510
00:20:25.020 --> 00:20:26.930
Are there any questions, members?
511
00:20:26.930 --> 00:20:27.850
No.
No.
512
00:20:27.850 --> 00:20:29.980
I move we approve the Examiner's recommendation.
513
00:20:29.980 --> 00:20:31.210
Is there a second?
514
00:20:31.210 --> 00:20:32.043
Second.
515
00:20:32.043 --> 00:20:33.220
Second by Commissioner Craddick.
516
00:20:33.220 --> 00:20:35.030
All in favor say aye.
517
00:20:35.030 --> 00:20:36.000
Aye.
518
00:20:36.000 --> 00:20:36.833
Any opposed?
519
00:20:36.833 --> 00:20:38.330
Motion passes.
520
00:20:38.330 --> 00:20:39.940
Thank you, Jennifer.
521
00:20:39.940 --> 00:20:41.240
Yes, thank you.
522
00:20:42.538 --> 00:20:43.710
All right, Item-
Please call up.
523
00:20:43.710 --> 00:20:46.420
Yes, Agenda Item Number 14
524
00:20:46.420 --> 00:20:48.010
presented by Joe Menefe.
525
00:20:48.010 --> 00:20:49.653
You are invited to speak.
526
00:20:50.650 --> 00:20:52.850
Good morning, Chairman, Commissioners.
527
00:20:52.850 --> 00:20:54.390
For the record, Joe Menefe,
528
00:20:54.390 --> 00:20:56.840
Paralegal in the Hearings Division.
529
00:20:56.840 --> 00:21:00.230
I'll be presenting Items 14 through 16
530
00:21:00.230 --> 00:21:03.710
all of which are P-5 Motions for rehearing
531
00:21:03.710 --> 00:21:07.440
filed as a result of a final order denying renewal
532
00:21:07.440 --> 00:21:09.640
of the operator's P-5
533
00:21:09.640 --> 00:21:13.393
because of wells noncompliant with Statewide Rule 15.
534
00:21:14.440 --> 00:21:16.310
Item Number 14.
535
00:21:16.310 --> 00:21:21.310
In its motion, Guardian Energy Operating Company, LLC
536
00:21:21.630 --> 00:21:25.330
states it needs more time to come into compliance
537
00:21:25.330 --> 00:21:27.220
but it does not give a reason
538
00:21:27.220 --> 00:21:29.790
for failure to request a hearing.
539
00:21:29.790 --> 00:21:31.950
Staff opposes the motion.
540
00:21:31.950 --> 00:21:34.830
Two wells remain noncompliant.
541
00:21:34.830 --> 00:21:37.650
It is recommended the motion be denied.
542
00:21:37.650 --> 00:21:39.050
The motion will be overruled
543
00:21:40.020 --> 00:21:42.990
by operation of law on April 23rd.
544
00:21:42.990 --> 00:21:44.800
I'm available for questions.
545
00:21:44.800 --> 00:21:46.460
Are there any questions?
546
00:21:46.460 --> 00:21:47.293
No.
No.
547
00:21:47.293 --> 00:21:49.280
I move we approve the Examiner's recommendation.
548
00:21:49.280 --> 00:21:50.627
Is there a second?
549
00:21:50.627 --> 00:21:51.520
Second.
550
00:21:51.520 --> 00:21:52.870
Second by Commissioner Sitton.
551
00:21:52.870 --> 00:21:54.644
All in favorite say aye.
552
00:21:54.644 --> 00:21:55.910
Aye.
553
00:21:55.910 --> 00:21:57.050
Any opposed?
554
00:21:57.050 --> 00:21:59.580
Motion passes, that item is approved.
555
00:21:59.580 --> 00:22:03.020
Please call up, Callie, Item 15.
556
00:22:03.020 --> 00:22:05.090
All right, continuing Joe Menefe
557
00:22:05.090 --> 00:22:07.563
presenting for Agenda Item Number 15.
558
00:22:15.680 --> 00:22:17.010
We lost Joe.
559
00:22:17.010 --> 00:22:17.843
There he is.
560
00:22:18.890 --> 00:22:20.390
Okay, welcome back.
561
00:22:22.510 --> 00:22:26.090
Item Number 15 in its motion for rehearing
562
00:22:26.090 --> 00:22:30.330
LT Oil, LLC states that due to medical problems
563
00:22:30.330 --> 00:22:35.070
the operator has been unable to address compliance issues
564
00:22:35.070 --> 00:22:37.900
and needs more time to come into compliance,
565
00:22:37.900 --> 00:22:42.100
but fails to give a reason to request a hearing.
566
00:22:42.100 --> 00:22:43.860
Staff opposes the motion.
567
00:22:43.860 --> 00:22:46.960
10 wells remain noncompliant.
568
00:22:46.960 --> 00:22:49.670
It is recommended the motion be denied.
569
00:22:49.670 --> 00:22:51.090
The motion will be overruled
570
00:22:51.090 --> 00:22:54.430
by operational of law on April 23rd.
571
00:22:54.430 --> 00:22:56.220
I'm available for questions.
572
00:22:56.220 --> 00:22:57.290
Any questions, members?
573
00:22:57.290 --> 00:22:58.530
No.
574
00:22:58.530 --> 00:23:00.670
I move we approve the Examiner's recommendation.
575
00:23:00.670 --> 00:23:01.945
Is there a second?
576
00:23:01.945 --> 00:23:02.778
Second.
577
00:23:02.778 --> 00:23:03.840
Second by Commissioner Craddick.
578
00:23:03.840 --> 00:23:05.463
All in favor say aye.
579
00:23:05.463 --> 00:23:06.810
Aye.
580
00:23:06.810 --> 00:23:08.370
Any opposed?
581
00:23:08.370 --> 00:23:10.520
Motion passes, that item is approved.
582
00:23:10.520 --> 00:23:13.310
Please call up Item 16, Callie.
583
00:23:13.310 --> 00:23:14.150
Yes, thank you.
584
00:23:14.150 --> 00:23:18.760
Item Number 16 still continuing, Joe Menefe is presenting.
585
00:23:18.760 --> 00:23:20.510
Item Number 16.
586
00:23:20.510 --> 00:23:23.860
Subsequent to filing its motion rehearing
587
00:23:23.860 --> 00:23:27.490
Tristar Oil and Gas has come into compliance.
588
00:23:27.490 --> 00:23:30.180
Therefore, it's recommended the motion be granted
589
00:23:30.180 --> 00:23:33.470
and the underlying docket dismissed as moved.
590
00:23:33.470 --> 00:23:34.697
I'm available for questions.
591
00:23:34.697 --> 00:23:36.850
Are there any questions, members?
592
00:23:36.850 --> 00:23:38.050
We sure like good news.
593
00:23:38.050 --> 00:23:39.900
Thank you, Joe.
594
00:23:39.900 --> 00:23:42.059
I move we approve the Examiner's recommendation.
595
00:23:42.059 --> 00:23:43.197
Is there a second?
596
00:23:43.197 --> 00:23:44.180
Second.
597
00:23:44.180 --> 00:23:45.480
Second by Commissioner Craddick.
598
00:23:45.480 --> 00:23:47.119
All in favor say aye.
599
00:23:47.119 --> 00:23:47.953
Aye.
600
00:23:49.300 --> 00:23:50.533
That item is approved.
601
00:23:52.880 --> 00:23:55.871
Let me find, I'm back on Number Two.
602
00:23:55.871 --> 00:23:57.617
Let me get my pages straightened out.
603
00:23:58.858 --> 00:24:01.183
Ah, got ya.
604
00:24:03.900 --> 00:24:05.050
Joe is it my understanding
605
00:24:05.050 --> 00:24:07.663
that we have an agenda Item Number 17?
606
00:24:09.343 --> 00:24:12.757
Agenda Item 17 is moving on to the Consent Agenda.
607
00:24:14.160 --> 00:24:15.353
Okay, well, let's move on
608
00:24:15.353 --> 00:24:17.650
to the Oil and Gas Consent Agenda.
609
00:24:17.650 --> 00:24:19.250
I've got my paper back.
610
00:24:19.250 --> 00:24:21.610
Okay, we have Cyrus Reed and the Sierra Club
611
00:24:21.610 --> 00:24:24.410
who has registered for Items 23 and 24.
612
00:24:24.410 --> 00:24:26.210
Does anyone want to hear from Cyrus?
613
00:24:27.930 --> 00:24:31.633
Okay, there are also 58 items on the Consent Agenda.
614
00:24:33.311 --> 00:24:36.420
I move we approve Item 17 through 75,
615
00:24:36.420 --> 00:24:39.150
except for Item 37.
616
00:24:39.150 --> 00:24:40.257
Is there a second?
617
00:24:41.213 --> 00:24:42.220
Second.
618
00:24:42.220 --> 00:24:43.440
Second by Commissioner Sitton.
619
00:24:43.440 --> 00:24:45.390
All in favor say aye.
620
00:24:45.390 --> 00:24:46.500
Aye.
621
00:24:46.500 --> 00:24:47.570
Any opposed?
622
00:24:47.570 --> 00:24:50.150
Motion passes, those items are approved.
623
00:24:50.150 --> 00:24:53.310
Let's move on to Rule 15 Inactive Well Items.
624
00:24:53.310 --> 00:24:56.700
There are 15 items on Rule 15 Inactive Wells list.
625
00:24:56.700 --> 00:24:59.890
I move we approve Items 76 through 96,
626
00:24:59.890 --> 00:25:04.890
except for Items 79, 82, 90, 91, 95 and 96.
627
00:25:08.830 --> 00:25:10.840
Are there any questions?
628
00:25:10.840 --> 00:25:12.210
Excuse me, Commissioner.
629
00:25:12.210 --> 00:25:14.990
We also need to pass item Item 82.
630
00:25:16.985 --> 00:25:17.818
Okay.
And he said 82.
631
00:25:17.818 --> 00:25:19.490
He said it.
632
00:25:19.490 --> 00:25:20.323
Okay.
633
00:25:21.230 --> 00:25:23.610
You wanna pass 82, Dana,
634
00:25:23.610 --> 00:25:26.013
or do we wanna not vote on it?
635
00:25:28.487 --> 00:25:31.150
It is a pass of 82.
636
00:25:31.150 --> 00:25:36.150
And then an exception of 79, 90, 91 and 95.
637
00:25:38.813 --> 00:25:39.963
And 96, right?
638
00:25:42.370 --> 00:25:43.720
And 96, right?
639
00:25:43.720 --> 00:25:44.620
Yes, yes.
640
00:25:44.620 --> 00:25:45.530
Very good.
641
00:25:45.530 --> 00:25:50.450
All right, I'll move that we approve those items as stated.
642
00:25:50.450 --> 00:25:51.473
Is there a second?
643
00:25:52.442 --> 00:25:53.520
Second.
644
00:25:53.520 --> 00:25:54.500
Second by Commissioner Craddick.
645
00:25:54.500 --> 00:25:56.350
All in favor say aye.
646
00:25:56.350 --> 00:25:57.800
Aye.
647
00:25:57.800 --> 00:25:58.720
Any opposed?
648
00:25:58.720 --> 00:26:01.530
Motion passes, those items are approved.
649
00:26:01.530 --> 00:26:04.470
Let's move to the Master Default Orders.
650
00:26:04.470 --> 00:26:07.070
There are 11 Master Default Orders.
651
00:26:07.070 --> 00:26:10.630
I move we approve Items 97 through 107.
652
00:26:10.630 --> 00:26:12.439
Is there a second?
653
00:26:12.439 --> 00:26:13.272
Second.
654
00:26:13.272 --> 00:26:14.630
Second by Commissioner Sitton.
655
00:26:14.630 --> 00:26:16.490
All in favorite say aye.
656
00:26:16.490 --> 00:26:17.940
Aye.
657
00:26:17.940 --> 00:26:19.000
Any opposed?
658
00:26:19.000 --> 00:26:21.500
Motion passes, those items are approved.
659
00:26:21.500 --> 00:26:24.050
Let's moved to the Agreed Enforcement Orders.
660
00:26:24.050 --> 00:26:27.000
There are 198 Agreed Enforcement Orders.
661
00:26:27.000 --> 00:26:31.150
I move we approve Items 108 through 305.
662
00:26:31.150 --> 00:26:32.586
Is there a second?
663
00:26:32.586 --> 00:26:34.020
Second.
664
00:26:34.020 --> 00:26:35.010
Second.
665
00:26:35.010 --> 00:26:37.010
All in favor say aye.
666
00:26:37.010 --> 00:26:38.320
Aye.
667
00:26:38.320 --> 00:26:40.010
Any opposed?
668
00:26:40.010 --> 00:26:41.760
Motion passes, those items are approved.
669
00:26:41.760 --> 00:26:43.920
The second was by Commissioner Craddick.
670
00:26:43.920 --> 00:26:45.600
That concludes the hearing sections.
671
00:26:45.600 --> 00:26:48.450
We will now take up our Administrative Agenda.
672
00:26:48.450 --> 00:26:52.370
Callie, please call up the presenters for Agenda Items 306.
673
00:26:52.370 --> 00:26:53.870
Yes, thank you.
674
00:26:53.870 --> 00:26:56.390
Presenter for Agenda Item Number 306,
675
00:26:56.390 --> 00:27:00.093
Randall Collins, you are invited to speak.
676
00:27:04.650 --> 00:27:06.920
And I believe he is ready to go.
677
00:27:06.920 --> 00:27:08.883
We'll give him just a few moments.
678
00:27:15.500 --> 00:27:18.673
We may need to come back to Mr. Collins.
679
00:27:19.900 --> 00:27:22.960
Can we go on to Number 307, 308
680
00:27:22.960 --> 00:27:24.780
and come back to Mr. Collins?
681
00:27:24.780 --> 00:27:26.540
If you'll remind us to come back, Callie.
682
00:27:26.540 --> 00:27:27.626
I will.
683
00:27:27.626 --> 00:27:28.570
I'll put my paper right there.
684
00:27:28.570 --> 00:27:30.385
I'm writing it down.
685
00:27:30.385 --> 00:27:31.930
Please call up Item 307.
686
00:27:31.930 --> 00:27:33.782
Okay, thank you.
Oh, there's Randall.
687
00:27:33.782 --> 00:27:34.754
There's Randall.
688
00:27:34.754 --> 00:27:35.722
Did we get him?
689
00:27:35.722 --> 00:27:36.555
We got him.
690
00:27:36.555 --> 00:27:37.582
Welcome, Randall.
691
00:27:37.582 --> 00:27:38.415
Take you off of mute.
692
00:27:38.415 --> 00:27:39.860
There you go, Randall, we're ready for you.
693
00:27:39.860 --> 00:27:42.070
Okay, Agenda Item Number 306,
694
00:27:42.070 --> 00:27:43.253
Randall Collins.
695
00:27:47.050 --> 00:27:48.573
Ready when you are, Randall.
696
00:27:54.020 --> 00:27:55.100
He got skipped.
697
00:27:55.100 --> 00:27:57.799
Poor guy's just having issues this morning.
698
00:27:57.799 --> 00:28:00.049
The sound didn't come in.
699
00:28:01.240 --> 00:28:04.040
Okay, looks like we're moving on to 307, 308.
700
00:28:05.024 --> 00:28:06.374
We'll come back to Randall.
701
00:28:07.710 --> 00:28:12.690
Agenda Item 307 and 308 will be given by Clay Woodul.
702
00:28:12.690 --> 00:28:15.269
Clay, you are invited to speak.
703
00:28:15.269 --> 00:28:17.850
Good morning, Chairman and Commissioners.
704
00:28:17.850 --> 00:28:19.430
Clay Woodul, the Assistant Director
705
00:28:19.430 --> 00:28:22.630
of the Oil and Gas Division for Field Operations.
706
00:28:22.630 --> 00:28:26.793
I will be presenting Items 307 and 308 this morning.
707
00:28:27.890 --> 00:28:30.650
Item 307 is the Oil Field Cleanup Program,
708
00:28:30.650 --> 00:28:34.053
Second Quarter Status Report for fiscal year 2020.
709
00:28:35.050 --> 00:28:36.450
During the second quarter,
710
00:28:36.450 --> 00:28:38.780
plugging operations were completed
711
00:28:38.780 --> 00:28:42.065
and files were closed on 277 wells
712
00:28:42.065 --> 00:28:47.065
at the cost of $6,852,065.
713
00:28:47.400 --> 00:28:50.340
This includes only those wells that were plugged,
714
00:28:50.340 --> 00:28:52.180
invoiced by the plugging contractor
715
00:28:52.180 --> 00:28:55.050
and approved for payment by Field Operations.
716
00:28:55.050 --> 00:28:56.370
During this same period,
717
00:28:56.370 --> 00:29:00.600
238 new wells were approved for plugging with state funds.
718
00:29:00.600 --> 00:29:02.150
The fiscal year-to-date totals
719
00:29:02.150 --> 00:29:03.460
through the end of the second quarter
720
00:29:03.460 --> 00:29:07.260
include 722 wells physically plugged,
721
00:29:07.260 --> 00:29:10.453
of which 587 have been invoiced and paid.
722
00:29:11.300 --> 00:29:13.514
As of last Friday, April 17th,
723
00:29:13.514 --> 00:29:16.760
922 wells have been physically plugged
724
00:29:16.760 --> 00:29:19.643
at an estimated cost 20.8 million.
725
00:29:20.780 --> 00:29:21.720
The well plugging target
726
00:29:21.720 --> 00:29:25.363
for fiscal year 2020 is 1,400 wells.
727
00:29:26.440 --> 00:29:28.930
The state managed cleanup program completed
728
00:29:28.930 --> 00:29:32.200
and closed 96 cleanup activities
729
00:29:32.200 --> 00:29:37.200
at a cost of $1,228,911 using OGRC funds
730
00:29:39.300 --> 00:29:44.040
and two activities at a cost of $31,134 using grant funds
731
00:29:45.750 --> 00:29:49.233
during the second quarter of fiscal year 2020.
732
00:29:49.233 --> 00:29:53.660
42 new activities were authorized during the second quarter.
733
00:29:53.660 --> 00:29:55.230
The fiscal year-to-date totals
734
00:29:55.230 --> 00:29:57.630
through the end of the second quarter include a total
735
00:29:57.630 --> 00:30:02.630
of 135 cleanup activities completed and closed.
736
00:30:02.780 --> 00:30:07.780
As of April 16th, 194 activities have been completed
737
00:30:08.260 --> 00:30:10.363
at an estimated cost of $3 million.
738
00:30:11.540 --> 00:30:13.023
May I answer any questions?
739
00:30:14.500 --> 00:30:16.650
Any questions, members?
740
00:30:16.650 --> 00:30:17.933
No.
741
00:30:17.933 --> 00:30:19.774
Thank you, Clay.
742
00:30:19.774 --> 00:30:21.030
I'm advised that votes are not needed
743
00:30:21.030 --> 00:30:22.910
by the Commissioners on this agenda item.
744
00:30:22.910 --> 00:30:23.880
So thank you, Clay.
745
00:30:23.880 --> 00:30:25.920
Appreciate your good work.
746
00:30:25.920 --> 00:30:26.753
Thank y'all.
747
00:30:26.753 --> 00:30:28.070
Thank you very much.
748
00:30:29.610 --> 00:30:31.030
Callie.
749
00:30:31.030 --> 00:30:33.900
Okay, do I understand Clay
750
00:30:33.900 --> 00:30:37.241
that you have Agenda Item Number 309 as well?
751
00:30:37.241 --> 00:30:39.670
I have 308.
752
00:30:39.670 --> 00:30:40.503
Right, it's next.
753
00:30:40.503 --> 00:30:41.720
Oh, I'm sorry.
754
00:30:41.720 --> 00:30:42.723
Let's backup.
755
00:30:43.570 --> 00:30:46.030
Let's do 308 and then we'll be bringing
756
00:30:47.080 --> 00:30:49.723
Mr. Collins back in for 306.
757
00:30:50.606 --> 00:30:51.850
Thank you.
758
00:30:51.850 --> 00:30:53.880
Very good, Item 308.
759
00:30:53.880 --> 00:30:56.960
Staff is seeking your approval to make available
760
00:30:56.960 --> 00:30:59.310
for public comment the Commission's
761
00:30:59.310 --> 00:31:02.720
Oil and Gas Division Monitoring and Enforcement Plan
762
00:31:02.720 --> 00:31:05.340
for fiscal year 2021.
763
00:31:05.340 --> 00:31:09.080
The Plan was required by House Bill 1818
764
00:31:09.080 --> 00:31:11.850
from the 85th Legislature.
765
00:31:11.850 --> 00:31:14.520
House Bill 1818 also requires the Commission
766
00:31:14.520 --> 00:31:18.610
to seek public input as the plan is developed.
767
00:31:18.610 --> 00:31:20.860
With your approval the plan will be made available
768
00:31:20.860 --> 00:31:24.750
to the public from today until May 21st,
769
00:31:24.750 --> 00:31:29.640
with the option to submit feedback via a web-based survey
770
00:31:29.640 --> 00:31:31.533
or via U.S. mail.
771
00:31:32.520 --> 00:31:34.920
We will return to conference on June 16th
772
00:31:34.920 --> 00:31:38.060
with a final version of the plan for your approval.
773
00:31:38.060 --> 00:31:39.560
That version will reflect
774
00:31:39.560 --> 00:31:43.370
any public comment received by May 21st.
775
00:31:43.370 --> 00:31:45.649
The final version of the plan must be posted
776
00:31:45.649 --> 00:31:49.970
to the Commission's website no later than July 1st.
777
00:31:49.970 --> 00:31:52.090
May I answer any questions?
778
00:31:52.090 --> 00:31:53.340
Any questions, members?
779
00:31:54.347 --> 00:31:55.180
No.
780
00:31:55.180 --> 00:31:57.270
I move we approve the draft Oil and Gas Monitoring
781
00:31:57.270 --> 00:32:01.933
and Enforcement Strategic Plan for fiscal year 2021, boom.
782
00:32:03.982 --> 00:32:04.815
It just-
783
00:32:04.815 --> 00:32:06.030
Second.
784
00:32:06.030 --> 00:32:08.030
Okay, a second by Commissioner Craddick.
785
00:32:08.030 --> 00:32:09.980
All in favor say aye.
786
00:32:09.980 --> 00:32:11.300
Aye.
787
00:32:11.300 --> 00:32:12.330
Any opposed?
788
00:32:12.330 --> 00:32:14.840
Motion passes, that item is approved.
789
00:32:14.840 --> 00:32:16.150
Thank you.
Callie.
790
00:32:16.150 --> 00:32:18.010
Thank you, Clay.
Thank you.
791
00:32:18.010 --> 00:32:19.130
We are now gonna go back
792
00:32:19.130 --> 00:32:21.780
to Agenda Item Number 306
793
00:32:21.780 --> 00:32:24.283
with Mr. Randall Collins presenting.
794
00:32:26.130 --> 00:32:27.280
Good morning, Commissioners.
795
00:32:27.280 --> 00:32:28.550
For the record, I'm Randall Collins,
796
00:32:28.550 --> 00:32:30.010
Chief Operating Officer.
797
00:32:30.010 --> 00:32:32.020
Item Number 306 on the agenda
798
00:32:32.020 --> 00:32:33.660
pertains to the Commission approval
799
00:32:33.660 --> 00:32:35.520
of an emergency purchase order
800
00:32:35.520 --> 00:32:38.570
pursuant to the Commission's delegation authority,
801
00:32:38.570 --> 00:32:42.920
Section 2261.254 of the Texas Government code.
802
00:32:43.860 --> 00:32:45.850
The Commission's internal delegation authority
803
00:32:45.850 --> 00:32:49.720
and Section 2261.254 of the Texas Government Code
804
00:32:49.720 --> 00:32:51.960
requires Commissioner approval of contracts
805
00:32:51.960 --> 00:32:54.310
and associated amendments greater than
806
00:32:54.310 --> 00:32:56.230
or equal to $1 million.
807
00:32:56.230 --> 00:32:58.370
At issue today is an emergency purchase order
808
00:32:58.370 --> 00:32:59.730
for well plugging.
809
00:32:59.730 --> 00:33:01.080
Approval of this item will ensure
810
00:33:01.080 --> 00:33:03.890
emergency well pugging operations remain on schedule
811
00:33:03.890 --> 00:33:07.420
and the necessary approvals will be in place
812
00:33:07.420 --> 00:33:10.490
with the Commission's delegation authority and state law.
813
00:33:10.490 --> 00:33:13.760
A summary of the emergency purchase order is included
814
00:33:13.760 --> 00:33:17.270
in your notebooks along with the EPO Number and amount.
815
00:33:17.270 --> 00:33:19.610
Staff asks the Commission to approve the contract
816
00:33:19.610 --> 00:33:21.500
pursuant to Commission's delegation authority
817
00:33:21.500 --> 00:33:23.450
and I'm available if you have any questions.
818
00:33:23.450 --> 00:33:25.648
Are there any questions, members?
819
00:33:25.648 --> 00:33:26.910
No.
No.
820
00:33:26.910 --> 00:33:27.743
Okay.
821
00:33:31.457 --> 00:33:33.700
I move we approve the Examiner's recommendation.
822
00:33:33.700 --> 00:33:35.287
Is there a second?
823
00:33:35.287 --> 00:33:36.120
Second.
824
00:33:36.120 --> 00:33:37.110
Second by Commissioner Sitton.
825
00:33:37.110 --> 00:33:38.990
All in favor say aye.
826
00:33:38.990 --> 00:33:39.940
Aye.
827
00:33:39.940 --> 00:33:41.090
Any opposed?
828
00:33:41.090 --> 00:33:42.750
Hearing none, motion passes.
829
00:33:42.750 --> 00:33:44.100
That item is approved.
830
00:33:44.100 --> 00:33:45.310
Thank you, Randall.
831
00:33:45.310 --> 00:33:46.143
Thank you.
832
00:33:47.380 --> 00:33:52.380
Okay, I believe it's Items 309 and 310.
833
00:33:52.570 --> 00:33:54.730
And Commission if it's okay with you,
834
00:33:54.730 --> 00:33:57.860
I'd like to go out of order and discuss Item 310
835
00:33:57.860 --> 00:34:01.997
before we move to Item 309 an issue on proration.
836
00:34:03.105 --> 00:34:05.710
Item 310 is a consideration and possible action
837
00:34:05.710 --> 00:34:09.620
of potential waiver or suspension of applicable statutes,
838
00:34:09.620 --> 00:34:12.720
rules, final orders, or other regulatory requirements
839
00:34:12.720 --> 00:34:15.540
due to the COVID-19 pandemic.
840
00:34:15.540 --> 00:34:16.990
While industry was split on whether
841
00:34:16.990 --> 00:34:19.330
or not proration is the answer,
842
00:34:19.330 --> 00:34:20.640
they were unified in their message
843
00:34:20.640 --> 00:34:22.650
the state must do everything it can to ensure
844
00:34:22.650 --> 00:34:26.200
the longterm future of the Texas Oil and Gas industry
845
00:34:26.200 --> 00:34:27.660
and I agree.
846
00:34:27.660 --> 00:34:30.180
That's why I would like to provide a big picture overview
847
00:34:30.180 --> 00:34:32.880
of everything the Commission has done so far
848
00:34:32.880 --> 00:34:35.590
during this downturn and some things we're working on
849
00:34:35.590 --> 00:34:37.283
to stabilize the Texas industry.
850
00:34:38.159 --> 00:34:40.170
In the start of this COVID-19,
851
00:34:40.170 --> 00:34:42.870
the Railroad Commission of Texas has been diligent
852
00:34:42.870 --> 00:34:46.840
about offering relief and flexibility through our operators.
853
00:34:46.840 --> 00:34:50.140
Some of these measures we have put in place by our own
854
00:34:50.140 --> 00:34:53.520
and others have been suggested by industry operators
855
00:34:53.520 --> 00:34:55.320
and trade associations.
856
00:34:55.320 --> 00:34:57.670
These include deadline extensions
857
00:34:57.670 --> 00:34:59.610
for certain requirements filings;
858
00:34:59.610 --> 00:35:02.460
online processing and electronic submissions;
859
00:35:02.460 --> 00:35:05.540
enforcement discretions and waiver considerations.
860
00:35:05.540 --> 00:35:07.890
I would like to call upon our agency's Executive Director,
861
00:35:07.890 --> 00:35:10.660
Wei Wang, to go into what our agency
862
00:35:10.660 --> 00:35:12.793
has done in greater depth, Wei.
863
00:35:14.000 --> 00:35:15.690
Good morning, Chairman, Commissioners.
864
00:35:15.690 --> 00:35:18.343
For the record, Wei Wang, Executive Director.
865
00:35:19.230 --> 00:35:22.430
So shortly after the Governor issued the declaration
866
00:35:22.430 --> 00:35:26.370
of disaster the following Monday we issued several notices
867
00:35:26.370 --> 00:35:30.200
to operators advising the operators that they may submit
868
00:35:30.200 --> 00:35:33.830
a request for extension on issues
869
00:35:33.830 --> 00:35:38.410
that they see appropriate during the COVID response time.
870
00:35:38.410 --> 00:35:42.440
And about a couple weeks after that in early April,
871
00:35:42.440 --> 00:35:45.595
we issued another notice to operators,
872
00:35:45.595 --> 00:35:49.490
essentially, granting an extension for all permits,
873
00:35:49.490 --> 00:35:52.200
licenses, registration, rule exceptions,
874
00:35:52.200 --> 00:35:55.680
that are expiring after March 1st.
875
00:35:55.680 --> 00:35:59.550
We extended that expiration til September 30th.
876
00:35:59.550 --> 00:36:01.130
So that would allow operators
877
00:36:01.130 --> 00:36:04.340
more time to apply for renewals.
878
00:36:04.340 --> 00:36:07.730
And, in addition to that, in the same notice
879
00:36:07.730 --> 00:36:12.730
we clarified on certain violations if they're not related
880
00:36:13.070 --> 00:36:18.070
to safety, health or environmental concerns
881
00:36:18.098 --> 00:36:20.120
that the operators will have more time
882
00:36:20.120 --> 00:36:22.040
to get into compliance.
883
00:36:22.040 --> 00:36:25.010
And it's important to know that these are not related
884
00:36:25.010 --> 00:36:26.580
to health and safety issues.
885
00:36:26.580 --> 00:36:29.383
These are just extensions for filing paperwork.
886
00:36:30.520 --> 00:36:33.760
In addition to oil and gas or gas services,
887
00:36:33.760 --> 00:36:36.510
we issued a notice to operators essentially,
888
00:36:36.510 --> 00:36:40.630
in the common order from the department advising them
889
00:36:40.630 --> 00:36:45.250
to create an account in their financial records
890
00:36:45.250 --> 00:36:50.000
to keep track of all COVID-19 related expenses
891
00:36:50.000 --> 00:36:52.720
and also we encouraged all utilities in Texas
892
00:36:52.720 --> 00:36:56.263
to not disconnect customers during COVID response time.
893
00:36:57.100 --> 00:37:00.470
And in addition to these notices to our operators,
894
00:37:00.470 --> 00:37:05.140
we also started in March a online training platform
895
00:37:05.140 --> 00:37:08.170
to provide electronic capabilities for people
896
00:37:08.170 --> 00:37:11.170
that are needing continuing education credits
897
00:37:11.170 --> 00:37:13.140
to keep their licenses.
898
00:37:13.140 --> 00:37:16.610
And also in March, we released our docket management
899
00:37:16.610 --> 00:37:19.430
system public portal RRC CASES.
900
00:37:19.430 --> 00:37:21.800
This online application allow the public
901
00:37:21.800 --> 00:37:25.260
and the practitioners to search case records online
902
00:37:25.260 --> 00:37:27.680
and also, they may file documents
903
00:37:27.680 --> 00:37:31.550
to a docketed case online as well.
904
00:37:31.550 --> 00:37:34.680
So, although a majority of our employees
905
00:37:34.680 --> 00:37:36.543
are working remotely from home,
906
00:37:37.430 --> 00:37:40.690
our agency's operation is running as normal.
907
00:37:40.690 --> 00:37:42.970
Our mailroom remains open.
908
00:37:42.970 --> 00:37:45.450
Our docket services remain open
909
00:37:45.450 --> 00:37:48.210
and our finance departments, the cash registers
910
00:37:48.210 --> 00:37:50.910
and the revenue department remains open.
911
00:37:50.910 --> 00:37:53.100
So thanks to the hard work of our employees
912
00:37:53.100 --> 00:37:56.440
and your leadership, I think our agency is well prepared
913
00:37:56.440 --> 00:37:57.820
and we are in good shape
914
00:37:57.820 --> 00:38:00.150
in terms of meeting our performance target.
915
00:38:00.150 --> 00:38:02.250
And as a matter of fact, for certain areas
916
00:38:05.170 --> 00:38:07.090
our performance has been becoming
917
00:38:07.090 --> 00:38:09.500
more efficient during this time.
918
00:38:09.500 --> 00:38:14.480
And I'm glad to report that for inspections,
919
00:38:14.480 --> 00:38:16.618
we already exceeded the number of oil
920
00:38:16.618 --> 00:38:18.160
and gas inspection target
921
00:38:18.160 --> 00:38:21.130
for the year by 30,000 inspections.
922
00:38:21.130 --> 00:38:24.240
And for the performance measure of wells
923
00:38:24.240 --> 00:38:27.980
not inspected in the last five years, the target is 5%
924
00:38:27.980 --> 00:38:31.250
and as of yesterday, we already met that target.
925
00:38:31.250 --> 00:38:33.520
So we're four months ahead of schedule.
926
00:38:33.520 --> 00:38:36.960
So, again, I think our agency is well prepared to respond
927
00:38:36.960 --> 00:38:38.890
and we continue to work with operators
928
00:38:38.890 --> 00:38:42.770
to answer their questions, provide electronic methods
929
00:38:42.770 --> 00:38:46.470
for them to file applications and reports electronically.
930
00:38:46.470 --> 00:38:50.201
So in summary, I think our agency staff,
931
00:38:50.201 --> 00:38:51.740
in terms of operations,
932
00:38:51.740 --> 00:38:54.193
we're not suffering during this time.
933
00:38:56.380 --> 00:38:57.370
Thank you, Wei.
934
00:38:57.370 --> 00:39:00.067
Are there an questions at this time, members?
935
00:39:00.067 --> 00:39:02.400
Mr. Chairman, if I could just reiterate I think
936
00:39:02.400 --> 00:39:04.330
what you've already said and what Wei's been saying.
937
00:39:04.330 --> 00:39:06.880
Wei, thank you to our staff and for you
938
00:39:06.880 --> 00:39:09.950
and all our administrators for keeping us up and going.
939
00:39:09.950 --> 00:39:11.940
I'm impressed 'cause there are other agencies
940
00:39:11.940 --> 00:39:14.330
not doing their job as effectively
941
00:39:14.330 --> 00:39:15.617
and efficiently as we are.
942
00:39:15.617 --> 00:39:18.040
And I would ask y'all and I know you have
943
00:39:18.040 --> 00:39:21.244
and will continue to work with operators
944
00:39:21.244 --> 00:39:24.140
and people who come and need some help.
945
00:39:24.140 --> 00:39:26.890
I think we're trying to continue to do that
946
00:39:26.890 --> 00:39:28.860
and if they come up with any other ideas
947
00:39:28.860 --> 00:39:32.970
that we night can look at or some creative things,
948
00:39:32.970 --> 00:39:35.280
I'd appreciate y'all continuing to do that as well.
949
00:39:35.280 --> 00:39:38.010
So thank you for keeping our agency up and running
950
00:39:38.010 --> 00:39:38.843
and to your staff.
951
00:39:38.843 --> 00:39:40.470
Y'all are doing a great job for us.
952
00:39:40.470 --> 00:39:41.970
Thank you, ma'am.
953
00:39:41.970 --> 00:39:42.803
Thank you, Commissioner.
954
00:39:42.803 --> 00:39:43.636
Thank you, Mr. Chairman.
955
00:39:43.636 --> 00:39:44.469
Thank you, Wei.
956
00:39:44.469 --> 00:39:45.302
I appreciate you.
957
00:39:46.787 --> 00:39:49.800
If you visit our website you'll see a full list
958
00:39:49.800 --> 00:39:52.000
of our notice to operators and learn more about
959
00:39:52.000 --> 00:39:54.890
the various relief initiatives to our agency.
960
00:39:54.890 --> 00:39:56.280
If you have any additional ideas,
961
00:39:56.280 --> 00:39:58.760
I believe I speak for everyone at our agency
962
00:39:58.760 --> 00:40:01.460
when I say we would love to hear them.
963
00:40:01.460 --> 00:40:03.610
So please don't hesitate to reach out.
964
00:40:03.610 --> 00:40:05.130
I also wanna make sure people are aware
965
00:40:05.130 --> 00:40:08.580
of the Production Tax Credit for all producing oil leases.
966
00:40:08.580 --> 00:40:12.500
This statute allows credits of 25% to 100%
967
00:40:13.540 --> 00:40:17.410
of your Production Tax as a result of sustained drop
968
00:40:17.410 --> 00:40:20.240
in oil prices below $30 a barrel.
969
00:40:20.240 --> 00:40:23.050
This tax credit could help thousands of small producers
970
00:40:23.050 --> 00:40:24.430
across the state.
971
00:40:24.430 --> 00:40:27.000
A low producing well is a well that produces less
972
00:40:27.000 --> 00:40:31.350
than 15 barrels a day or 5% recoverable oil per barrel
973
00:40:31.350 --> 00:40:34.730
of the produced water over a 90 day period.
974
00:40:34.730 --> 00:40:37.180
That credit applies when the previous three month period
975
00:40:37.180 --> 00:40:39.890
drops below $30 or the amount of credit
976
00:40:39.890 --> 00:40:42.283
and it increases as the price decreases.
977
00:40:43.930 --> 00:40:46.840
At the meeting last week, we heard several times
978
00:40:46.840 --> 00:40:49.200
that small producer contracts with shippers
979
00:40:49.200 --> 00:40:52.990
and purchasers are being reduced or canceled altogether.
980
00:40:52.990 --> 00:40:54.240
If you're in this situation
981
00:40:54.240 --> 00:40:56.440
and feel you've been unfairly discriminated against
982
00:40:56.440 --> 00:40:58.940
by a purchase you can file a complaint
983
00:40:58.940 --> 00:41:01.940
at the Railroad Commission under the Common Purchaser Act.
984
00:41:01.940 --> 00:41:06.190
Common carriers must provide space for walkup customers.
985
00:41:06.190 --> 00:41:09.010
Texas Natural Resources Code authorizes our agency
986
00:41:09.010 --> 00:41:12.580
to request common carrier pipelines to provide a report
987
00:41:12.580 --> 00:41:14.890
of their unfilled storage capacity.
988
00:41:14.890 --> 00:41:16.660
I have instructed the staff to request
989
00:41:16.660 --> 00:41:17.951
and compile this information
990
00:41:17.951 --> 00:41:20.310
so we have a better picture of the aggregate amounts
991
00:41:20.310 --> 00:41:24.461
held by all common carriers and their storage capacity.
992
00:41:24.461 --> 00:41:28.170
And speaking with enterprise partners last week,
993
00:41:28.170 --> 00:41:31.290
they told me they currently have 250,000 barrels per day
994
00:41:31.290 --> 00:41:33.220
of crude pipeline capacity,
995
00:41:33.220 --> 00:41:37.010
over two million barrels per day of crude export capacity.
996
00:41:37.010 --> 00:41:39.520
It'll be useful to know what is available generally
997
00:41:39.520 --> 00:41:42.330
by the midstream operators across the state.
998
00:41:42.330 --> 00:41:45.340
We have also reached out to the 25 refineries in Texas
999
00:41:45.340 --> 00:41:48.970
and asked them to submit an update R1 report
1000
00:41:48.970 --> 00:41:52.740
to provide the latest on their unfilled crude oil capacity.
1001
00:41:52.740 --> 00:41:56.290
My phone's been ringing off the hook this last week
1002
00:41:56.290 --> 00:41:58.210
speaking with producers big and small
1003
00:41:58.210 --> 00:42:01.190
about the right course of action for our agency.
1004
00:42:01.190 --> 00:42:03.300
The Texas Oil and Gas industry is resilient
1005
00:42:03.300 --> 00:42:06.740
and full of big ideas during this challenging time.
1006
00:42:06.740 --> 00:42:09.230
On that note, I'm excited to announce today
1007
00:42:09.230 --> 00:42:11.860
the formation of a Blue Ribbon Task Force
1008
00:42:11.860 --> 00:42:14.189
for oil economic recovery.
1009
00:42:14.189 --> 00:42:16.990
I want to challenge the Task Force to look at
1010
00:42:16.990 --> 00:42:19.730
every aspect of what can be done at the state level
1011
00:42:19.730 --> 00:42:22.450
to assist operators and to save jobs
1012
00:42:22.450 --> 00:42:25.910
as we endure these historic circumstances.
1013
00:42:25.910 --> 00:42:30.790
Operator's permitting timelines, tax policy
1014
00:42:30.790 --> 00:42:34.670
and deadlines, storage capacity expansion,
1015
00:42:34.670 --> 00:42:37.540
pipeline capacity, market access barriers,
1016
00:42:37.540 --> 00:42:40.270
anything else the Task Force can think of
1017
00:42:40.270 --> 00:42:41.480
that will aid the industry
1018
00:42:41.480 --> 00:42:43.860
in managing through difficult times.
1019
00:42:43.860 --> 00:42:45.560
The goal is to save as many jobs,
1020
00:42:45.560 --> 00:42:47.400
enable operators to survive
1021
00:42:47.400 --> 00:42:50.970
and return to a robust level as quickly as possible.
1022
00:42:50.970 --> 00:42:53.860
The heads of our state's many trade association
1023
00:42:53.860 --> 00:42:56.610
have graciously volunteered to lead this effort.
1024
00:42:56.610 --> 00:42:57.600
Including the leadership
1025
00:42:57.600 --> 00:42:59.800
of the Texas Oil and Gas Association,
1026
00:42:59.800 --> 00:43:02.020
the Texas Alliance of Energy Producers,
1027
00:43:02.020 --> 00:43:03.400
the Texas Independent Producers
1028
00:43:03.400 --> 00:43:05.420
and Royalty Owners Association,
1029
00:43:05.420 --> 00:43:08.080
the Permian Basin Petroleum Association,
1030
00:43:08.080 --> 00:43:11.580
the Panhandle Producers and Royalty Owners Association
1031
00:43:11.580 --> 00:43:13.610
and the Pipeline Association.
1032
00:43:13.610 --> 00:43:16.880
Everything should be on the table during this downturn.
1033
00:43:16.880 --> 00:43:18.960
Given the immediate nature of this emergency,
1034
00:43:18.960 --> 00:43:22.050
I've ask them to get us recommendations quickly
1035
00:43:22.050 --> 00:43:27.050
in my advance of our next open meeting on May the 5th.
1036
00:43:27.580 --> 00:43:30.440
Given this, I would like to pass on any action
1037
00:43:30.440 --> 00:43:34.103
on Item 310 at this time if there's no objections.
1038
00:43:35.380 --> 00:43:39.320
And at this time, we're gonna take up Agenda Item 309,
1039
00:43:39.320 --> 00:43:41.200
which is a motion by Pioneer and Parsley
1040
00:43:41.200 --> 00:43:43.610
on the Reasonable Market Demand
1041
00:43:43.610 --> 00:43:44.770
and Commissioner Craddick
1042
00:43:44.770 --> 00:43:48.874
has requested a time to comment at this time.
1043
00:43:48.874 --> 00:43:50.760
Commissioner Craddick.
Well, first, Mr. Chairman.
1044
00:43:50.760 --> 00:43:53.490
I wanna thank you for your Task Force
1045
00:43:53.490 --> 00:43:56.440
and for, I think we've all been looking for real solutions
1046
00:43:56.440 --> 00:43:59.400
and I appreciate you putting that group together.
1047
00:43:59.400 --> 00:44:02.030
I look forward to seeing what they come up with.
1048
00:44:02.030 --> 00:44:03.383
If there's some other ideas as well.
1049
00:44:03.383 --> 00:44:05.720
I think that's gonna be really important
1050
00:44:05.720 --> 00:44:07.890
and I, too, about two weeks ago
1051
00:44:07.890 --> 00:44:12.299
asked the Controller to look at severance tax.
1052
00:44:12.299 --> 00:44:15.957
In fact, asked him to give operators more time
1053
00:44:15.957 --> 00:44:18.480
and in a 24 hour period he told us no.
1054
00:44:18.480 --> 00:44:20.230
So I think there's some opportunity now
1055
00:44:20.230 --> 00:44:23.550
for those operators to go back and look at severance tax
1056
00:44:23.550 --> 00:44:26.790
and see if there's a chance for them to pay less
1057
00:44:26.790 --> 00:44:30.170
and, hopefully, the Controller posts something timely
1058
00:44:30.170 --> 00:44:32.343
so we can move that process along.
1059
00:44:33.564 --> 00:44:37.010
And I think between that and what's going on today
1060
00:44:37.010 --> 00:44:41.100
and in the future there's some opportunity for that.
1061
00:44:41.100 --> 00:44:44.690
You started the meeting by talking about families
1062
00:44:44.690 --> 00:44:47.720
and people and their job losses and I wanna reiterate that.
1063
00:44:47.720 --> 00:44:50.260
I think we've been up a lot of nights,
1064
00:44:50.260 --> 00:44:52.430
or I have at least at my house for about a month,
1065
00:44:52.430 --> 00:44:54.190
knowing that some of that was coming
1066
00:44:54.190 --> 00:44:56.487
and some of them are personal friends and a lot of them are.
1067
00:44:56.487 --> 00:44:59.670
And I think that that's one of the reasons
1068
00:44:59.670 --> 00:45:02.790
why we're all taking this very, very seriously.
1069
00:45:02.790 --> 00:45:05.890
But I wanna thank you for having a hearing last week.
1070
00:45:05.890 --> 00:45:08.020
I thought it was important.
1071
00:45:08.020 --> 00:45:11.130
We've received a lot of information from all sides.
1072
00:45:11.130 --> 00:45:13.050
Look, I took 15 pages of notes
1073
00:45:13.050 --> 00:45:16.000
and I continue to receive more information
1074
00:45:16.000 --> 00:45:17.370
and visit with people.
1075
00:45:17.370 --> 00:45:20.620
And, look, I think it's our job as the Commission
1076
00:45:20.620 --> 00:45:24.120
to protect the industry as well as the overall state
1077
00:45:24.120 --> 00:45:26.770
as we look at this oil and gas world.
1078
00:45:26.770 --> 00:45:30.610
And one of the things that came up quite a bit last week
1079
00:45:30.610 --> 00:45:32.720
and think we're all continuing to do it
1080
00:45:32.720 --> 00:45:35.200
is we need to have conversations
1081
00:45:35.200 --> 00:45:37.330
whether they're states and the federal government
1082
00:45:37.330 --> 00:45:40.240
to see how we best continue to go forward.
1083
00:45:40.240 --> 00:45:41.750
But I still have some questions
1084
00:45:41.750 --> 00:45:44.370
that I believe need to be answered.
1085
00:45:44.370 --> 00:45:47.380
Based on newspaper reports, believe them or not,
1086
00:45:47.380 --> 00:45:50.590
but at the least the ones I'm thinking of
1087
00:45:50.590 --> 00:45:53.130
anything we do probably will end up in court.
1088
00:45:53.130 --> 00:45:54.220
So being the attorney,
1089
00:45:54.220 --> 00:45:57.280
I kind of look at the world from that direction.
1090
00:45:57.280 --> 00:45:59.680
Look, litigation for the next four to six years
1091
00:45:59.680 --> 00:46:02.050
doesn't help anyone if we don't do this right.
1092
00:46:02.050 --> 00:46:04.350
And so I think we should direct staff
1093
00:46:04.350 --> 00:46:07.570
to look at all the options, procedures
1094
00:46:07.570 --> 00:46:10.740
and answer the questions that were raised
1095
00:46:10.740 --> 00:46:12.710
during this hearing last week
1096
00:46:12.710 --> 00:46:15.220
and, specifically, we need to make sure
1097
00:46:15.220 --> 00:46:18.780
that we have the legal grounds to do what's appropriate.
1098
00:46:18.780 --> 00:46:21.720
If we have to do something right now that isn't legal,
1099
00:46:21.720 --> 00:46:23.770
then it shouldn't be done.
1100
00:46:23.770 --> 00:46:26.810
I believe our staff should consult with the Attorney General
1101
00:46:26.810 --> 00:46:29.430
who will be our attorney if we go forward
1102
00:46:29.430 --> 00:46:31.740
to help us answer these questions.
1103
00:46:31.740 --> 00:46:34.590
And so I have a few issues that this isn't exhaustive,
1104
00:46:34.590 --> 00:46:36.460
but these are some questions I still have
1105
00:46:36.460 --> 00:46:38.080
that are outstanding.
1106
00:46:38.080 --> 00:46:42.240
One, the Administrative Procedures Act has been implemented
1107
00:46:42.240 --> 00:46:47.240
since our proration hearings were enacted 50 years ago,
1108
00:46:47.900 --> 00:46:49.890
as there's been other case law.
1109
00:46:49.890 --> 00:46:50.900
What does that do to us?
1110
00:46:50.900 --> 00:46:53.440
What does that mean in our process?
1111
00:46:53.440 --> 00:46:56.590
Two, can we legally prorate statewide
1112
00:46:56.590 --> 00:46:58.773
or must we do it field by field?
1113
00:46:59.800 --> 00:47:03.230
Three, do we need an evidentiary hearing prior to any order
1114
00:47:03.230 --> 00:47:06.333
and is one necessary to defend an order?
1115
00:47:07.300 --> 00:47:09.850
Four, are marginal wells gonna be left out?
1116
00:47:09.850 --> 00:47:11.480
What about other types of wells?
1117
00:47:11.480 --> 00:47:16.480
What about other types of operators of certain sizes?
1118
00:47:17.220 --> 00:47:21.560
And last, do we need a data call to determine markets?
1119
00:47:21.560 --> 00:47:23.640
I think that's an important question for us.
1120
00:47:23.640 --> 00:47:26.210
So these are just some questions I have.
1121
00:47:26.210 --> 00:47:27.690
I'm sure plenty of others,
1122
00:47:27.690 --> 00:47:29.980
but those I wanna highlight today.
1123
00:47:29.980 --> 00:47:32.800
And I appreciate everybody's input
1124
00:47:32.800 --> 00:47:35.000
and I look forward to continuing to get input.
1125
00:47:35.000 --> 00:47:37.010
I think it's gonna be important for us
1126
00:47:38.350 --> 00:47:40.730
as we go through this historic time.
1127
00:47:40.730 --> 00:47:43.380
Thank you, Mr. Chairman, for allowing me a few minutes.
1128
00:47:43.380 --> 00:47:45.030
Thank you, Commissioner Craddick.
1129
00:47:45.030 --> 00:47:47.619
Commissioner Sitton, would you like
1130
00:47:47.619 --> 00:47:48.910
to make any remarks at this time?
1131
00:47:48.910 --> 00:47:50.710
Yes, thank you, Chairman, I would.
1132
00:47:51.710 --> 00:47:54.180
And I also appreciate your leadership on this.
1133
00:47:54.180 --> 00:47:56.510
I appreciate the hearing last week.
1134
00:47:56.510 --> 00:47:57.660
As I said at the end of that hearing,
1135
00:47:57.660 --> 00:47:59.190
it was the longest that I'm aware of
1136
00:47:59.190 --> 00:48:01.000
the Railroad Commission ever having.
1137
00:48:01.000 --> 00:48:02.810
And certainly the level of engagement
1138
00:48:02.810 --> 00:48:05.150
the three of us had and asking questions
1139
00:48:05.150 --> 00:48:09.520
brought out information and challenged folks
1140
00:48:09.520 --> 00:48:12.010
to think not just within the range
1141
00:48:12.010 --> 00:48:13.280
or the realm of where they came in,
1142
00:48:13.280 --> 00:48:15.870
but also what do you hear about,
1143
00:48:15.870 --> 00:48:17.410
what do you think about what other people are saying?
1144
00:48:17.410 --> 00:48:20.023
Which I think is crucial to this kind of move.
1145
00:48:21.680 --> 00:48:22.880
I'm gonna start by saying this,
1146
00:48:22.880 --> 00:48:26.750
while the Blue Ribbon Task Force is a great idea
1147
00:48:26.750 --> 00:48:28.530
and that's where we wanna get ideas from
1148
00:48:28.530 --> 00:48:31.330
is from industry, from trade associations,
1149
00:48:31.330 --> 00:48:34.280
from the general population, from any groups concerned
1150
00:48:34.280 --> 00:48:35.620
and we wanna bring that information in
1151
00:48:35.620 --> 00:48:38.330
and have an opportunity to consider it.
1152
00:48:38.330 --> 00:48:43.160
Let's be clear taking weeks,
1153
00:48:43.160 --> 00:48:47.980
even days right now to act is in itself a choice.
1154
00:48:47.980 --> 00:48:51.230
And we are seeing a level of demand destruction
1155
00:48:51.230 --> 00:48:53.860
and a level of oil industry downturn
1156
00:48:53.860 --> 00:48:57.290
that in the past happened over a course of years,
1157
00:48:57.290 --> 00:48:59.890
now happening over a course of days.
1158
00:48:59.890 --> 00:49:04.170
And so our normal process to go out and get information
1159
00:49:04.170 --> 00:49:07.040
and to allow input, if it takes us,
1160
00:49:07.040 --> 00:49:08.770
what normally would be considered
1161
00:49:08.770 --> 00:49:11.400
a very rapid amount of time, you know a couple,
1162
00:49:11.400 --> 00:49:14.840
three weeks, in the meantime the entire world changes.
1163
00:49:14.840 --> 00:49:18.330
In the last just five weeks,
1164
00:49:18.330 --> 00:49:22.730
we've seen the price of oil go from, I guess six weeks now,
1165
00:49:22.730 --> 00:49:25.620
the price of oil go from $50 a barrel down
1166
00:49:25.620 --> 00:49:27.580
to minus $37 a barrel.
1167
00:49:27.580 --> 00:49:29.670
Now, I recognize that that is all
1168
00:49:29.670 --> 00:49:31.440
about the May delivery contract
1169
00:49:31.440 --> 00:49:34.140
and I get that this has to do with specifically,
1170
00:49:34.140 --> 00:49:36.070
storage filling up in Cushing, Oklahoma,
1171
00:49:36.070 --> 00:49:39.430
which is a delivery point for those contracts.
1172
00:49:39.430 --> 00:49:41.130
The fact is the Spot Price
1173
00:49:41.130 --> 00:49:44.783
has moved $90 a barrel in six weeks.
1174
00:49:46.180 --> 00:49:51.110
You know when I think about the incumbency on us
1175
00:49:52.040 --> 00:49:53.960
to consider the landscape in front of us
1176
00:49:53.960 --> 00:49:57.160
and to make a decision on action or no action,
1177
00:49:57.160 --> 00:49:59.520
I think back to the history of the United States
1178
00:49:59.520 --> 00:50:02.140
over the last 40 years, 50 years even.
1179
00:50:02.140 --> 00:50:04.380
From the last time we prorated to today,
1180
00:50:04.380 --> 00:50:08.640
we've gone through in 1973, 1976 the United States
1181
00:50:08.640 --> 00:50:12.607
was at peak oil production up until the last five years.
1182
00:50:12.607 --> 00:50:15.750
The oil production began to decline as the Middle East
1183
00:50:15.750 --> 00:50:17.960
flooded the oil markets from the 1980s
1184
00:50:17.960 --> 00:50:19.830
all the way until 2006,
1185
00:50:19.830 --> 00:50:22.120
our oil production just dropped steadily.
1186
00:50:22.120 --> 00:50:24.980
And over that 40 year period the words energy independence
1187
00:50:24.980 --> 00:50:26.260
were used around this country
1188
00:50:26.260 --> 00:50:28.940
and especially, in this state constantly.
1189
00:50:28.940 --> 00:50:33.940
Because we watched as anything from military instability
1190
00:50:35.290 --> 00:50:38.570
to civil unrest, oil market flooding,
1191
00:50:38.570 --> 00:50:40.650
you know incidents around the world
1192
00:50:40.650 --> 00:50:43.540
would reek havoc on oil prices in the United States
1193
00:50:43.540 --> 00:50:44.530
and we watched as we were dependent
1194
00:50:44.530 --> 00:50:46.530
on foreign oil powers to make decisions.
1195
00:50:48.081 --> 00:50:50.760
And if you look back our peak oil production it took,
1196
00:50:50.760 --> 00:50:54.607
literally, 30 years for the oil production
1197
00:50:54.607 --> 00:50:56.490
in the state of Texas and in the United States
1198
00:50:56.490 --> 00:50:59.390
to drop at the rate that it is going to drop
1199
00:50:59.390 --> 00:51:00.380
in a matter of two months,
1200
00:51:00.380 --> 00:51:02.970
from a month ago to a month from now.
1201
00:51:02.970 --> 00:51:05.770
And so we have to inform our decisions
1202
00:51:05.770 --> 00:51:07.460
with the fact that what took 30 years before
1203
00:51:07.460 --> 00:51:10.410
is now gonna take two months with our own level of urgency.
1204
00:51:11.300 --> 00:51:14.480
I think that if we, we heard some of the testimony last week
1205
00:51:14.480 --> 00:51:16.730
about what's gonna happen in this market.
1206
00:51:16.730 --> 00:51:18.083
People talking about the numbers of jobs
1207
00:51:18.083 --> 00:51:19.370
that are gonna be lost.
1208
00:51:19.370 --> 00:51:20.670
Let's be clear about this,
1209
00:51:21.634 --> 00:51:23.340
if the oil industry drops
1210
00:51:23.340 --> 00:51:27.530
and the tens maybe hundreds of thousands are laid off,
1211
00:51:27.530 --> 00:51:30.820
eventually, those jobs will come back.
1212
00:51:30.820 --> 00:51:32.607
But they may never come back in the State of Texas
1213
00:51:32.607 --> 00:51:34.400
and the United States.
1214
00:51:34.400 --> 00:51:36.690
We may be sitting here in 10 years,
1215
00:51:36.690 --> 00:51:38.320
looking back at this time in history
1216
00:51:38.320 --> 00:51:40.560
and saying that America, we finally achieved
1217
00:51:40.560 --> 00:51:42.937
American energy independence over the last five years.
1218
00:51:42.937 --> 00:51:44.010
And some people will say, well,
1219
00:51:44.010 --> 00:51:45.060
you're still buying foreign oil.
1220
00:51:45.060 --> 00:51:50.060
Yeah, but we, the nation, determines when we buy that oil.
1221
00:51:50.209 --> 00:51:51.042
We're not incumbent.
1222
00:51:51.042 --> 00:51:53.400
We're not dependent on any one producer.
1223
00:51:53.400 --> 00:51:55.200
If any one producer decides they're not gonna sell
1224
00:51:55.200 --> 00:51:56.760
the United States oil, that's fine.
1225
00:51:56.760 --> 00:52:00.730
We saw just this past summer when Saudi Arabia was attacked
1226
00:52:00.730 --> 00:52:02.290
and five million barrels came offline
1227
00:52:02.290 --> 00:52:03.990
the price of a gallon gas in the United States
1228
00:52:03.990 --> 00:52:06.010
didn't change almost at all.
1229
00:52:06.010 --> 00:52:09.088
Because of our independence in energy.
1230
00:52:09.088 --> 00:52:10.860
And I believe that in 10 years people are gonna look back
1231
00:52:10.860 --> 00:52:13.940
and say that energy independence was threatened right now
1232
00:52:13.940 --> 00:52:17.160
at this time in history by these unprecedented,
1233
00:52:17.160 --> 00:52:19.813
we talk about unprecedented and things like that.
1234
00:52:20.870 --> 00:52:22.660
Let's talk about the market for a second.
1235
00:52:22.660 --> 00:52:24.240
We're in a market where the government has effectively
1236
00:52:24.240 --> 00:52:26.180
shutdown every restaurant in the United States.
1237
00:52:26.180 --> 00:52:29.690
We have planes flying from one city to another
1238
00:52:29.690 --> 00:52:32.880
carrying one passenger, a doctor to get them
1239
00:52:32.880 --> 00:52:36.410
from Las Vegas to New York to help with this pandemic.
1240
00:52:36.410 --> 00:52:38.380
This is not unprecedented,
1241
00:52:38.380 --> 00:52:41.480
this is completely out of the ordinary.
1242
00:52:41.480 --> 00:52:43.390
And when I hear people talk about the market is working,
1243
00:52:43.390 --> 00:52:45.080
I cannot help but ask myself
1244
00:52:45.080 --> 00:52:47.410
what part of this looks like the market?
1245
00:52:47.410 --> 00:52:48.810
So my concern is this,
1246
00:52:48.810 --> 00:52:49.960
go back to this idea of the market.
1247
00:52:49.960 --> 00:52:51.690
People are gonna look down in 10 years,
1248
00:52:51.690 --> 00:52:52.523
they're gonna look back
1249
00:52:52.523 --> 00:52:55.150
and say American energy independence was threatened
1250
00:52:55.150 --> 00:52:58.910
and I don't believe that inaction on our part is acceptable.
1251
00:52:58.910 --> 00:53:01.270
I believe that we have to step up
1252
00:53:01.270 --> 00:53:05.010
and do things to protect that energy independence,
1253
00:53:05.010 --> 00:53:07.460
because in the end, we don't work for the energy industry,
1254
00:53:07.460 --> 00:53:10.720
we work for 27, 28 million Texans.
1255
00:53:10.720 --> 00:53:12.700
And I believe it is in their interest
1256
00:53:12.700 --> 00:53:16.400
for our energy economy, our energy industry to be strong.
1257
00:53:16.400 --> 00:53:19.370
So while I think that all of the points
1258
00:53:19.370 --> 00:53:20.670
that we have discussed
1259
00:53:20.670 --> 00:53:24.330
about how this could be done are good points
1260
00:53:24.330 --> 00:53:26.510
and I think they should be discussed in the context
1261
00:53:26.510 --> 00:53:30.250
of taking action, not waiting to take action.
1262
00:53:30.250 --> 00:53:35.180
So where I sit today is I believe that we should take,
1263
00:53:35.180 --> 00:53:37.259
put it this way, I'm ready to vote.
1264
00:53:37.259 --> 00:53:40.860
And I'm ready for us to vote on proration
1265
00:53:40.860 --> 00:53:43.040
and following a motion that was filed
1266
00:53:43.040 --> 00:53:46.570
by Pioneer and Parsley to prorate
1267
00:53:46.570 --> 00:53:51.240
20% of Texas oil production, however, I've got some criteria
1268
00:53:51.240 --> 00:53:53.663
that I think we need to make it dependent on.
1269
00:53:54.830 --> 00:53:59.830
One is I think that that proration has to got to be tied to
1270
00:54:00.230 --> 00:54:02.200
other countries, other nations prorating.
1271
00:54:02.200 --> 00:54:03.910
So here's how I would do that.
1272
00:54:03.910 --> 00:54:08.170
I would prorate 20% of Texas oil production
1273
00:54:08.170 --> 00:54:12.186
starting June 1st, if another four million barrels per day
1274
00:54:12.186 --> 00:54:16.310
of production is brought offline by other U.S.,
1275
00:54:16.310 --> 00:54:19.520
Canadian and OPEC Plus producers.
1276
00:54:19.520 --> 00:54:22.520
I'm expecting that other states in the nation would cut.
1277
00:54:22.520 --> 00:54:25.100
Canada would cut and then OPEC Plus would cut
1278
00:54:25.100 --> 00:54:27.330
another four million barrels to back up our one.
1279
00:54:27.330 --> 00:54:30.320
And so if we took a vote cutting a million barrels
1280
00:54:30.320 --> 00:54:31.940
contingent upon that four million,
1281
00:54:31.940 --> 00:54:35.730
then we would have done exactly what the statute requires
1282
00:54:35.730 --> 00:54:38.640
which is to take steps to minimize waste
1283
00:54:38.640 --> 00:54:43.020
and that definition of waste being reduction
1284
00:54:43.020 --> 00:54:45.660
in excess of reasonable market demand.
1285
00:54:45.660 --> 00:54:48.030
I think that this should absolutely be temporary.
1286
00:54:48.030 --> 00:54:50.310
In fact, I think what we should do is tie
1287
00:54:50.310 --> 00:54:53.630
that proration to market demand
1288
00:54:53.630 --> 00:54:58.100
and when market demand gets back to 85 million barrels a day
1289
00:54:58.100 --> 00:55:00.080
then I think that our proration should lift
1290
00:55:00.080 --> 00:55:02.170
without us taking affirmative action.
1291
00:55:02.170 --> 00:55:04.090
'Cause one of my real big concerns is
1292
00:55:04.090 --> 00:55:06.890
that we set a precedent that the Railroad Commission
1293
00:55:06.890 --> 00:55:10.410
gets involved in regulating the market,
1294
00:55:10.410 --> 00:55:13.680
but I think if we tie it to 85 million barrels a day
1295
00:55:13.680 --> 00:55:18.680
which is 15% less than market demand was just two months ago
1296
00:55:19.790 --> 00:55:22.960
I think we have set an extremely high threshold
1297
00:55:22.960 --> 00:55:24.840
for the Railroad Commission to get involved in the future,
1298
00:55:24.840 --> 00:55:26.803
since that's never happened before.
1299
00:55:28.480 --> 00:55:30.720
I think that this should only apply to Texas producers
1300
00:55:30.720 --> 00:55:32.853
who produce over 1,000 barrels a day.
1301
00:55:34.410 --> 00:55:36.090
I think that this proration should be done
1302
00:55:36.090 --> 00:55:38.800
by operator not by lease.
1303
00:55:38.800 --> 00:55:42.340
I think that we should, the basis for the new allowable
1304
00:55:42.340 --> 00:55:44.890
should be the maximum of their production in October,
1305
00:55:44.890 --> 00:55:45.723
November and December.
1306
00:55:45.723 --> 00:55:47.510
So whichever month they produced the most,
1307
00:55:47.510 --> 00:55:50.680
that becomes their maximum, it becomes their current basis
1308
00:55:50.680 --> 00:55:53.143
and we set the allowable at 20% of that.
1309
00:55:53.143 --> 00:55:56.570
I think we should be flexible to consider those
1310
00:55:56.570 --> 00:55:59.520
who have drilled new wells in-between that time to come in
1311
00:55:59.520 --> 00:56:02.120
and address or adjust allowables
1312
00:56:02.120 --> 00:56:03.280
or the basis depending on
1313
00:56:03.280 --> 00:56:05.030
if they've taken activity in the last three months,
1314
00:56:05.030 --> 00:56:07.040
but we don't have the production reports.
1315
00:56:07.040 --> 00:56:09.940
And then, finally, I think we should evaluate
1316
00:56:09.940 --> 00:56:12.360
this on a monthly basis as we go forward.
1317
00:56:12.360 --> 00:56:15.730
And we'll have two conference meetings between now
1318
00:56:15.730 --> 00:56:18.257
and June 1st to consider this action
1319
00:56:18.257 --> 00:56:19.700
and to take additional action
1320
00:56:19.700 --> 00:56:21.700
or additional adjustments if we need to.
1321
00:56:22.590 --> 00:56:24.970
I know that this is not comfortable for us.
1322
00:56:24.970 --> 00:56:27.090
I know that in general the rules of politics tells us
1323
00:56:27.090 --> 00:56:28.530
that we should wait for a consensus,
1324
00:56:28.530 --> 00:56:31.100
that it's politically risky to take these kind of votes.
1325
00:56:31.100 --> 00:56:34.020
And trust me, I see the opportunities out there
1326
00:56:34.020 --> 00:56:36.260
for challenges from across the spectrum,
1327
00:56:36.260 --> 00:56:37.610
but as I said in the beginning I believe
1328
00:56:37.610 --> 00:56:41.260
that this is much bigger than simply oil industry.
1329
00:56:41.260 --> 00:56:44.137
It's much bigger than production numbers.
1330
00:56:48.400 --> 00:56:49.690
It's bigger than corporate interests
1331
00:56:49.690 --> 00:56:50.590
and all those sort of things.
1332
00:56:50.590 --> 00:56:52.500
The fact is there is waste.
1333
00:56:52.500 --> 00:56:55.363
We saw yesterday that there's waste dollars,
1334
00:56:56.263 --> 00:56:58.480
there's waste economics on a dollar per barrel basis
1335
00:56:58.480 --> 00:57:01.650
is in the tens, if not hundreds of millions of dollars
1336
00:57:01.650 --> 00:57:02.930
a day of waste.
1337
00:57:02.930 --> 00:57:06.160
We all know that this is due to market oversupply.
1338
00:57:06.160 --> 00:57:07.917
Supply in excess of reasonable market demand
1339
00:57:07.917 --> 00:57:09.900
and so I believe that it is incumbent upon us
1340
00:57:09.900 --> 00:57:11.500
to take action.
1341
00:57:11.500 --> 00:57:14.930
So, I will say I respect the two of you tremendously
1342
00:57:14.930 --> 00:57:18.010
and that I know this is challenging
1343
00:57:18.010 --> 00:57:20.050
and I have appreciated the conversation
1344
00:57:20.050 --> 00:57:23.910
and the difficulty that we've had in making this decision,
1345
00:57:23.910 --> 00:57:26.120
but I for one am ready to vote today.
1346
00:57:26.120 --> 00:57:29.300
And so, if either one of you is ready to take a vote
1347
00:57:29.300 --> 00:57:30.660
and I'm open for more discussion
1348
00:57:30.660 --> 00:57:31.810
before you get to that point,
1349
00:57:31.810 --> 00:57:34.690
then I'd say we move forward and we start the clock running
1350
00:57:34.690 --> 00:57:36.340
and we begin this process.
1351
00:57:36.340 --> 00:57:37.253
If neither of you are ready,
1352
00:57:37.253 --> 00:57:40.200
then I will instruct staff to bring an order
1353
00:57:40.200 --> 00:57:43.513
with all these specifics to vote on in the future.
1354
00:57:44.420 --> 00:57:45.803
Thank you, Commissioner.
1355
00:57:47.110 --> 00:57:49.360
If you would, I'd like to make my comments before
1356
00:57:49.360 --> 00:57:51.800
since we're all expressing what's going on
1357
00:57:51.800 --> 00:57:53.450
and I appreciate your view
1358
00:57:53.450 --> 00:57:55.377
and it's a challenging time to all of us.
1359
00:57:55.377 --> 00:57:57.560
And I wish there was a clear,
1360
00:57:57.560 --> 00:57:59.380
crystal clear picture to take on this
1361
00:57:59.380 --> 00:58:01.030
and want to make sure we do that.
1362
00:58:01.030 --> 00:58:02.235
But if you'd allow me.
1363
00:58:02.235 --> 00:58:03.677
Please.
I'd like to make
1364
00:58:03.677 --> 00:58:06.350
a few comments before we go to the subject if I could.
1365
00:58:06.350 --> 00:58:08.190
Now, I'll just take a moment, of course,
1366
00:58:08.190 --> 00:58:10.100
and thank everyone who joined last week
1367
00:58:10.100 --> 00:58:13.800
for our 10 hour virtual open meeting on prioritization
1368
00:58:13.800 --> 00:58:15.690
and what Texans can do to stabilize
1369
00:58:15.690 --> 00:58:17.540
the international price of crude oil.
1370
00:58:18.430 --> 00:58:22.300
About 30,000 people in 86 countries, 49 states, tuned in,
1371
00:58:22.300 --> 00:58:26.190
over 50 witnesses, 130 written testimonies,
1372
00:58:26.190 --> 00:58:30.163
a variety of ideas people testified on what could be done.
1373
00:58:31.030 --> 00:58:33.120
Just to bring you up, Commissioners,
1374
00:58:33.120 --> 00:58:37.240
in the last 24 hours including just minutes prior
1375
00:58:37.240 --> 00:58:39.900
while dragging a little late having trouble getting set up,
1376
00:58:39.900 --> 00:58:42.360
this was Senator Cruz on the phone.
1377
00:58:42.360 --> 00:58:46.540
John Cornyn has reached out and scheduled calls
1378
00:58:46.540 --> 00:58:49.310
to discuss what is happening in our oil markets
1379
00:58:49.310 --> 00:58:54.310
and I've invited the North Dakota Oil Executive
1380
00:58:54.810 --> 00:58:58.910
or Oil Commissioner, whatever his title, to join in that.
1381
00:58:58.910 --> 00:59:01.010
Working with other states like North Dakota
1382
00:59:01.010 --> 00:59:02.970
and Oklahoma, at their request.
1383
00:59:02.970 --> 00:59:07.180
I visited with my friend in North Dakota
1384
00:59:07.180 --> 00:59:08.930
this morning regarding this.
1385
00:59:08.930 --> 00:59:12.590
And North Dakota will be going into a meeting noon today
1386
00:59:12.590 --> 00:59:16.389
and they have come to the point that they are considering
1387
00:59:16.389 --> 00:59:19.610
this is waste when the price gets to the price it is
1388
00:59:19.610 --> 00:59:21.650
on their natural resources
1389
00:59:21.650 --> 00:59:24.310
and are considering implementing that.
1390
00:59:24.310 --> 00:59:28.770
As has a judge in a case before Oklahoma
1391
00:59:30.030 --> 00:59:31.330
said that this is waste
1392
00:59:31.330 --> 00:59:34.250
and has ordered them to consider the same.
1393
00:59:34.250 --> 00:59:39.120
And I am to get back with our North Dakota friend
1394
00:59:39.120 --> 00:59:42.130
and visit with him today prior to his meeting,
1395
00:59:42.130 --> 00:59:43.950
to let him know where we stand
1396
00:59:43.950 --> 00:59:46.240
as a Railroad Commission in the state of Texas.
1397
00:59:46.240 --> 00:59:48.050
I think a lot of the testimony that we heard
1398
00:59:48.050 --> 00:59:51.590
said it would be much more powerful to move in conjunction
1399
00:59:51.590 --> 00:59:54.170
with other states and other countries
1400
00:59:54.170 --> 00:59:56.770
and so I've reached out to Canada this past week
1401
00:59:56.770 --> 00:59:59.360
and talked to their Oil Minister
1402
00:59:59.360 --> 01:00:03.310
and she has offered to help us if we decide.
1403
01:00:03.310 --> 01:00:05.823
And that they have been implementing some probate,
1404
01:00:07.750 --> 01:00:09.870
capping some of their supplies.
1405
01:00:09.870 --> 01:00:11.980
And they have been doing such in the past.
1406
01:00:11.980 --> 01:00:16.240
So she's offered to help us if we decide to.
1407
01:00:16.240 --> 01:00:17.250
Working with stakeholders
1408
01:00:17.250 --> 01:00:19.240
that participated in the hearing last week,
1409
01:00:19.240 --> 01:00:22.550
we've tried to find a solution that'll work for everybody.
1410
01:00:22.550 --> 01:00:26.183
But again, this is not a time, I think, to be timid.
1411
01:00:28.920 --> 01:00:30.067
Agenda Item is 311.
1412
01:00:32.282 --> 01:00:34.082
Well, we're still on 310, I'm sorry.
1413
01:00:35.880 --> 01:00:38.170
It's a time folks, we are here
1414
01:00:38.170 --> 01:00:42.880
and I've got the Senators asking to input federally.
1415
01:00:42.880 --> 01:00:47.360
We're on 309 right now, Item 309 and considering this.
1416
01:00:47.360 --> 01:00:50.163
And before we turn it back to Commissioner Sitton,
1417
01:00:51.330 --> 01:00:55.450
I just wanna say that I believe that with the forces
1418
01:00:55.450 --> 01:00:56.560
we have that are out working
1419
01:00:56.560 --> 01:00:58.900
trying to get the information together for us
1420
01:00:58.900 --> 01:01:00.340
with the Task Force,
1421
01:01:00.340 --> 01:01:03.160
I believe being called on by other states to visit
1422
01:01:03.160 --> 01:01:05.149
with them in the decision
1423
01:01:05.149 --> 01:01:08.630
and coordinate an action rather than go on our own alone
1424
01:01:08.630 --> 01:01:12.710
and I think it's time that we really need
1425
01:01:12.710 --> 01:01:13.880
to get the information correct
1426
01:01:13.880 --> 01:01:17.720
before we make a move alone and by ourself in Texas.
1427
01:01:17.720 --> 01:01:20.963
And with that, Commissioner Sitton, I recognize you.
1428
01:01:24.480 --> 01:01:26.670
Well, thank you, Chairman.
1429
01:01:26.670 --> 01:01:29.120
I appreciate your comments and I agree that it is
1430
01:01:30.520 --> 01:01:33.540
if we had more luxury to make more aggressive,
1431
01:01:33.540 --> 01:01:34.980
take more time I would take it.
1432
01:01:34.980 --> 01:01:36.230
But I just don't think we do.
1433
01:01:36.230 --> 01:01:37.820
But at the end of the day, as I said,
1434
01:01:37.820 --> 01:01:40.320
there's a reason that this is a three member commission
1435
01:01:40.320 --> 01:01:45.000
and that it takes two of us to make a vote to move forward.
1436
01:01:45.000 --> 01:01:46.760
I agree completely with your sentiment
1437
01:01:46.760 --> 01:01:50.050
that we have to do something leading a group
1438
01:01:50.050 --> 01:01:52.200
as opposed to simply on our own.
1439
01:01:52.200 --> 01:01:56.430
My point is that with a motion like the one I'm proposing
1440
01:01:56.430 --> 01:01:59.310
we begin that process by making a formal motion,
1441
01:01:59.310 --> 01:02:02.210
yes, we're gonna prorate a million barrels a day
1442
01:02:02.210 --> 01:02:04.650
if the rest of the world will prorate
1443
01:02:04.650 --> 01:02:06.810
an additional four million barrels a day
1444
01:02:06.810 --> 01:02:09.070
then we do that and we start that movement.
1445
01:02:09.070 --> 01:02:11.960
So as I said, though, if neither of the two of you are ready
1446
01:02:11.960 --> 01:02:16.250
I respect that and I'll ask the staff
1447
01:02:16.250 --> 01:02:18.920
to prepare an order for May 5th.
1448
01:02:18.920 --> 01:02:23.544
But if either of the two of you's ready to vote on this,
1449
01:02:23.544 --> 01:02:25.265
then I'll make a motion.
1450
01:02:25.265 --> 01:02:26.623
I'll follow you're lead.
1451
01:02:27.470 --> 01:02:29.870
I appreciate that Commissioner.
1452
01:02:29.870 --> 01:02:31.780
Commissioners, if I could, I'm sorry.
1453
01:02:31.780 --> 01:02:33.950
I do wanna include that Brian Sullivan
1454
01:02:33.950 --> 01:02:35.810
representing Pioneer Natural Resources
1455
01:02:35.810 --> 01:02:38.900
is available for questions if needed.
1456
01:02:38.900 --> 01:02:40.603
Are there any questions, members?
1457
01:02:41.564 --> 01:02:44.120
No, and if I could, Mr. Chairman.
1458
01:02:44.120 --> 01:02:48.150
Look, I think, Ryan, you can direct staff how you wish,
1459
01:02:48.150 --> 01:02:50.262
'cause I think that there are still questions
1460
01:02:50.262 --> 01:02:52.710
that I really would like staff to come back
1461
01:02:52.710 --> 01:02:57.710
and give us a process like I said in my statement
1462
01:02:58.630 --> 01:03:00.920
about what we do, how we do it.
1463
01:03:00.920 --> 01:03:02.800
I'm not sure, by law,
1464
01:03:02.800 --> 01:03:05.330
that some of what you're proposing is legal or not.
1465
01:03:05.330 --> 01:03:07.423
I think we need to clarify some of that.
1466
01:03:09.740 --> 01:03:11.640
I would hope that staff comes back
1467
01:03:11.640 --> 01:03:14.360
and not just if you direct them with your order,
1468
01:03:14.360 --> 01:03:18.620
but also a broad-based understanding of what we need to do
1469
01:03:18.620 --> 01:03:20.600
going down the road with proration.
1470
01:03:20.600 --> 01:03:23.763
Other options, all options should be on the table,
1471
01:03:25.551 --> 01:03:28.660
not just one perspective, but all options.
1472
01:03:28.660 --> 01:03:32.130
And we need to make sure our legal counsel is up-to-date
1473
01:03:32.130 --> 01:03:34.350
and knows what they are supposed to do
1474
01:03:34.350 --> 01:03:36.210
or what we can do legally.
1475
01:03:36.210 --> 01:03:39.090
'Cause I think there are some real questions about that.
1476
01:03:39.090 --> 01:03:42.070
And, look, I may be the only lawyer on the group,
1477
01:03:42.070 --> 01:03:44.180
but I'm telling you this is going to the courthouse
1478
01:03:44.180 --> 01:03:46.870
and we need to really think about that, too.
1479
01:03:46.870 --> 01:03:49.550
And I appreciate, Mr. Chairman, that you are continuing
1480
01:03:49.550 --> 01:03:52.360
to visit with other states and with our federal leadership,
1481
01:03:52.360 --> 01:03:56.010
because I hope that there is an all of the above
1482
01:03:56.010 --> 01:03:58.300
conversation that we continue
1483
01:03:58.300 --> 01:04:00.040
to figure out how to do it together.
1484
01:04:00.040 --> 01:04:02.040
So I think it's important for the United States,
1485
01:04:02.040 --> 01:04:05.190
Canada and, frankly, Mexico, too, to be all together
1486
01:04:05.190 --> 01:04:07.180
if we decide to go down this road.
1487
01:04:07.180 --> 01:04:10.360
So, thank y'all for both of your thoughts
1488
01:04:10.360 --> 01:04:12.110
and how we're working through this.
1489
01:04:13.610 --> 01:04:14.650
Frankly, Commissioner,
1490
01:04:14.650 --> 01:04:16.130
you know, frankly, there's a flotilla
1491
01:04:16.130 --> 01:04:19.230
from Saudi Arabia headed with a lot of oil
1492
01:04:19.230 --> 01:04:21.350
coming to the United States right now as we speak
1493
01:04:21.350 --> 01:04:24.940
that we need to visit with our senators
1494
01:04:24.940 --> 01:04:29.940
and federal administration regarding of the intent
1495
01:04:29.940 --> 01:04:34.090
that they had when OPEC made it's agreement.
1496
01:04:34.090 --> 01:04:35.650
There's a lot of challenges here folks
1497
01:04:35.650 --> 01:04:38.570
and I agree that this is not
1498
01:04:38.570 --> 01:04:41.220
the typical time of watching what's going on.
1499
01:04:41.220 --> 01:04:45.900
This is clearly a war on our industry by foreign advisories
1500
01:04:45.900 --> 01:04:48.110
and it's a time we need to respond.
1501
01:04:48.110 --> 01:04:53.110
I am still concerned to do it today as a vote,
1502
01:04:53.270 --> 01:04:55.020
because I'm with Commissioner Craddick
1503
01:04:55.020 --> 01:04:57.500
that I would rather our team at the Railroad Commission
1504
01:04:57.500 --> 01:04:59.740
make sure we research how we do it,
1505
01:04:59.740 --> 01:05:01.900
so it doesn't get turned around in some court
1506
01:05:01.900 --> 01:05:04.500
or get delayed even beyond the time
1507
01:05:04.500 --> 01:05:06.320
that we could do anything if it gets hung up
1508
01:05:06.320 --> 01:05:08.170
in some type of judge ruling.
1509
01:05:08.170 --> 01:05:11.020
I'd rather bring in General Paxton
1510
01:05:11.020 --> 01:05:14.160
to review this with our staff
1511
01:05:14.160 --> 01:05:14.993
here at the Railroad Commission
1512
01:05:14.993 --> 01:05:17.540
to make sure when we do make the motion,
1513
01:05:17.540 --> 01:05:19.970
that it doesn't get delayed.
1514
01:05:19.970 --> 01:05:23.580
In that case, that would impose a restriction
1515
01:05:23.580 --> 01:05:25.690
that'd be far out into the future.
1516
01:05:25.690 --> 01:05:27.390
So I agree with Commissioner Craddick
1517
01:05:27.390 --> 01:05:31.090
that we need to make darn sure when we make the motion
1518
01:05:31.090 --> 01:05:35.830
that it fits legal requirements not to get stuck in court
1519
01:05:35.830 --> 01:05:38.560
in another week and then we're sitting here for months
1520
01:05:38.560 --> 01:05:41.280
and it's totally too late for us to take action
1521
01:05:41.280 --> 01:05:42.900
if the courts tell us that we can't
1522
01:05:42.900 --> 01:05:44.700
or waiting on some court ruling.
1523
01:05:44.700 --> 01:05:46.530
And I've seen that for decades.
1524
01:05:46.530 --> 01:05:50.730
So what I do not want anybody from this meeting
1525
01:05:50.730 --> 01:05:53.570
to go forward that the Railroad Commission is hesitant,
1526
01:05:53.570 --> 01:05:55.573
is not taking action.
1527
01:05:56.450 --> 01:05:58.890
I want everybody to know that it is the intent
1528
01:05:58.890 --> 01:06:01.110
of all three of us Commissioners
1529
01:06:01.110 --> 01:06:05.180
and if you object say this, that we are proceeding
1530
01:06:05.180 --> 01:06:07.990
and have been working as independently
1531
01:06:07.990 --> 01:06:09.580
and now as a Commission giving orders
1532
01:06:09.580 --> 01:06:12.100
for both the industry, by our staffs,
1533
01:06:12.100 --> 01:06:15.520
for the Railroad Commission staff, General Paxton,
1534
01:06:15.520 --> 01:06:18.340
calling them all together to make darn sure
1535
01:06:18.340 --> 01:06:21.800
that when we make this motion that it will have affect.
1536
01:06:21.800 --> 01:06:24.250
I fear as Commissioner Craddick has expressed
1537
01:06:24.250 --> 01:06:26.960
and I repeat myself, I've seen too many times
1538
01:06:26.960 --> 01:06:29.040
the courts come in and have some quick ruling
1539
01:06:29.040 --> 01:06:32.650
by some opposing faction, which there will be in this,
1540
01:06:32.650 --> 01:06:36.030
guaranteed and if we make the motion today
1541
01:06:36.030 --> 01:06:38.380
without legal counsel screening this
1542
01:06:38.380 --> 01:06:39.980
and General Paxton going through it
1543
01:06:39.980 --> 01:06:43.000
and making sure that we stand together legally,
1544
01:06:43.000 --> 01:06:44.417
I have great fear, Commissioner Sitton,
1545
01:06:44.417 --> 01:06:49.417
that that would delay it past even two weeks, very easily.
1546
01:06:49.440 --> 01:06:51.690
And so I would request that we...
1547
01:06:51.690 --> 01:06:54.750
That I appreciate, I honor your suggestion
1548
01:06:54.750 --> 01:06:56.550
that if the two of us decide
1549
01:06:56.550 --> 01:06:59.440
we don't want to exactly move on that motion today
1550
01:06:59.440 --> 01:07:01.780
it's not because we don't have an intent
1551
01:07:01.780 --> 01:07:03.143
to desire to reflect it,
1552
01:07:03.143 --> 01:07:05.330
it's I'm negotiating again with other states,
1553
01:07:05.330 --> 01:07:06.380
with other countries.
1554
01:07:07.800 --> 01:07:10.360
I believe, as Commissioner Craddick has suggested,
1555
01:07:10.360 --> 01:07:14.110
have it reviewed by the Attorney General's office
1556
01:07:14.110 --> 01:07:16.330
and make darn sure we don't get shut down.
1557
01:07:16.330 --> 01:07:17.980
I'm repeating myself.
1558
01:07:17.980 --> 01:07:20.160
And so, I would request at this time
1559
01:07:20.160 --> 01:07:22.160
that we not consider a motion,
1560
01:07:22.160 --> 01:07:27.160
but, indeed, that we need to work toward that motion.
1561
01:07:27.580 --> 01:07:28.580
Commissioner Sitton.
1562
01:07:29.720 --> 01:07:31.070
Mr. Chair, thank you for that.
1563
01:07:31.070 --> 01:07:35.320
And in fact, since you both articulated the concerns
1564
01:07:35.320 --> 01:07:38.503
over legal precedent since Brian Sullivan is on the phone.
1565
01:07:39.450 --> 01:07:41.430
Well, I appreciate that Brian Sullivan's on the phone.
1566
01:07:41.430 --> 01:07:42.610
But I think we've heard
1567
01:07:42.610 --> 01:07:44.890
and I appreciate Brian has one perspective.
1568
01:07:44.890 --> 01:07:48.390
And, look, Brian I appreciate you as an attorney,
1569
01:07:48.390 --> 01:07:51.040
but I don't think until we hear all sides
1570
01:07:51.040 --> 01:07:53.690
and since he's the only one on the phone.
1571
01:07:53.690 --> 01:07:56.700
This is, frankly, above my pay grade
1572
01:07:56.700 --> 01:07:58.003
and above Brian's at this point.
1573
01:07:58.003 --> 01:08:00.380
That we really need to hear from the Attorney General
1574
01:08:00.380 --> 01:08:02.823
and our counsel staff.
1575
01:08:03.960 --> 01:08:06.930
Brian has a perspective, in my opinion,
1576
01:08:06.930 --> 01:08:09.960
about the motion you wanna bring.
1577
01:08:09.960 --> 01:08:12.620
But I think there are, we heard a lot of sides
1578
01:08:12.620 --> 01:08:16.128
this past week and just 'cause this is the direction
1579
01:08:16.128 --> 01:08:18.110
that his clients wanna go,
1580
01:08:18.110 --> 01:08:20.730
I'm not sure that that's exactly the direction
1581
01:08:20.730 --> 01:08:21.930
anybody else would wanna go.
1582
01:08:21.930 --> 01:08:24.470
So that's where I hope that our staff looks not just
1583
01:08:24.470 --> 01:08:29.470
at your proposed motion but gives us lots of options
1584
01:08:29.700 --> 01:08:32.760
of some other things we need to look at.
1585
01:08:32.760 --> 01:08:35.220
I like Brian, but I'm not sure that that's,
1586
01:08:35.220 --> 01:08:37.100
Mr. Chairman, necessarily appropriate
1587
01:08:37.100 --> 01:08:39.810
since there's not an opposing person on the phone as well.
1588
01:08:39.810 --> 01:08:42.810
And we always try to give everybody an opportunity.
1589
01:08:42.810 --> 01:08:44.060
I haven't made a motion.
1590
01:08:44.060 --> 01:08:45.890
So at this point I just wanna get some,
1591
01:08:45.890 --> 01:08:48.220
you both expressed concerns over legal input.
1592
01:08:48.220 --> 01:08:49.077
I'd like to get some legal input.
1593
01:08:49.077 --> 01:08:51.810
And I know that Brian and his team have studied this,
1594
01:08:51.810 --> 01:08:55.080
so I want an answer to the question,
1595
01:08:55.080 --> 01:08:57.500
Commissioner Craddick you brought up a number of questions.
1596
01:08:57.500 --> 01:08:59.740
I'd like to get his input on that
1597
01:08:59.740 --> 01:09:01.420
and all the research they've done.
1598
01:09:01.420 --> 01:09:03.150
Since I haven't make a motion I don't there's any risk
1599
01:09:03.150 --> 01:09:04.870
in us getting more input on this.
1600
01:09:05.955 --> 01:09:08.633
I'd like to go ahead and let Brian answer some questions.
1601
01:09:10.450 --> 01:09:12.950
Okay, Brian.
1602
01:09:12.950 --> 01:09:14.630
Now look, I mean I feel like
1603
01:09:14.630 --> 01:09:15.587
we heard a lot of it last week.
1604
01:09:15.587 --> 01:09:18.420
And, like I said, I appreciate Brian
1605
01:09:18.420 --> 01:09:19.790
and I appreciate the feedback.
1606
01:09:19.790 --> 01:09:21.730
And, Brian, you've given us some good memos
1607
01:09:21.730 --> 01:09:24.730
and I've read them and I still,
1608
01:09:24.730 --> 01:09:26.740
not all this has been answered.
1609
01:09:26.740 --> 01:09:29.150
It's my understanding that we've got a process
1610
01:09:29.150 --> 01:09:32.030
to make sure that we have people available.
1611
01:09:32.030 --> 01:09:35.970
And so I wanna make sure all sides are available on this
1612
01:09:35.970 --> 01:09:40.810
and I am concerned that we don't have all sides available.
1613
01:09:40.810 --> 01:09:43.170
And so, Brian's not my attorney.
1614
01:09:43.170 --> 01:09:46.510
Brian's a party's attorney and I think our attorneys
1615
01:09:46.510 --> 01:09:49.780
whether it's Alex, who is on the call
1616
01:09:49.780 --> 01:09:52.260
and I'm not sure that they're or Haley,
1617
01:09:52.260 --> 01:09:56.090
and I'm not sure they're ready to answer this question.
1618
01:09:56.090 --> 01:09:58.420
That's why I think that we need to make sure
1619
01:09:58.420 --> 01:09:59.880
some of these questions are answered.
1620
01:09:59.880 --> 01:10:01.720
And my list wasn't exhaustive,
1621
01:10:01.720 --> 01:10:03.120
I've got like I said a list.
1622
01:10:03.120 --> 01:10:05.960
But I think the Attorney General is our attorney
1623
01:10:05.960 --> 01:10:08.133
and that's who I would like to listen to.
1624
01:10:09.273 --> 01:10:10.830
We'll get a chance to listen to them, too.
1625
01:10:10.830 --> 01:10:12.825
But if we could, let's go ahead and have Brian come on.
1626
01:10:12.825 --> 01:10:14.700
I'd like him to answer some of these questions.
1627
01:10:14.700 --> 01:10:18.460
I agree and, Brian, I welcome you,
1628
01:10:18.460 --> 01:10:21.680
because I think we want to make sure
1629
01:10:21.680 --> 01:10:23.810
all people get to speak anytime
1630
01:10:23.810 --> 01:10:26.350
and I believe I will allow.
1631
01:10:26.350 --> 01:10:27.900
It's okay, the power of the Chair,
1632
01:10:27.900 --> 01:10:31.003
to recognize Brian Sullivan for comments at this time.
1633
01:10:32.150 --> 01:10:33.070
Thank you, Commissioners.
1634
01:10:33.070 --> 01:10:34.460
Can you hear me?
1635
01:10:34.460 --> 01:10:35.293
Yes.
1636
01:10:37.640 --> 01:10:39.610
I'm happy to answer questions.
1637
01:10:39.610 --> 01:10:42.890
I'm also happy to address the questions
1638
01:10:42.890 --> 01:10:46.043
that Commissioner Craddick raised in her statement.
1639
01:10:47.707 --> 01:10:51.163
What is best for you in terms of how I could address this?
1640
01:10:53.284 --> 01:10:54.470
If it's okay for my part, Brian,
1641
01:10:54.470 --> 01:10:58.250
I'd like to keep it specific to Commissioner Craddick
1642
01:10:58.250 --> 01:10:59.710
brought up some really good points.
1643
01:10:59.710 --> 01:11:01.260
We're gonna need a lot of opinions on this.
1644
01:11:01.260 --> 01:11:03.990
But just for your part, I know you guys have studied this
1645
01:11:03.990 --> 01:11:07.460
in terms of does the Administrative Procedures Act
1646
01:11:07.460 --> 01:11:08.403
affect us?
1647
01:11:12.260 --> 01:11:14.400
Can we legally prorate statewide as opposed to by field?
1648
01:11:14.400 --> 01:11:16.060
Some of the things Commissioner Craddick asked
1649
01:11:16.060 --> 01:11:20.143
and then in so far as the items that I've proposed,
1650
01:11:21.500 --> 01:11:22.360
didn't make a motion,
1651
01:11:22.360 --> 01:11:24.247
but that I think we should include in our motion.
1652
01:11:24.247 --> 01:11:26.697
I'd like to get your opinion on all those things.
1653
01:11:28.449 --> 01:11:29.610
And you can just take it in order
1654
01:11:29.610 --> 01:11:32.380
and I can re-offer my list if you need it.
1655
01:11:32.380 --> 01:11:34.590
No, I just briefly I think
1656
01:11:34.590 --> 01:11:38.170
I would point out to you that 85.051
1657
01:11:38.170 --> 01:11:42.110
says very clearly that you, as the Commission,
1658
01:11:42.110 --> 01:11:46.360
may issue any order that is reasonably required
1659
01:11:46.360 --> 01:11:49.190
to correct, prevent or lessen the waste.
1660
01:11:49.190 --> 01:11:52.280
So if you decide that you want to address this order
1661
01:11:52.280 --> 01:11:56.300
to operators you can do that.
1662
01:11:56.300 --> 01:11:58.940
The statutory provision that talks about
1663
01:11:58.940 --> 01:12:03.370
prorating as to field starts with the word if.
1664
01:12:03.370 --> 01:12:06.750
The Commission historically had a staff
1665
01:12:06.750 --> 01:12:09.880
that did an analysis on a field by field basis.
1666
01:12:09.880 --> 01:12:12.930
That is not required by the statute.
1667
01:12:12.930 --> 01:12:16.990
You can direct operators to reduce production
1668
01:12:16.990 --> 01:12:20.370
and provide the exceptions that you have recommended.
1669
01:12:20.370 --> 01:12:25.370
So, I don't see any legal impediment to the order
1670
01:12:26.110 --> 01:12:28.500
that you have proposed.
1671
01:12:28.500 --> 01:12:32.250
So, in my opinion, the Commission could do exactly
1672
01:12:32.250 --> 01:12:33.920
what you have proposed.
1673
01:12:33.920 --> 01:12:37.430
I think Commissioner Craddick makes a good point, though,
1674
01:12:37.430 --> 01:12:39.050
that there's going to be litigation,
1675
01:12:39.050 --> 01:12:41.730
but there could be litigation on either side.
1676
01:12:41.730 --> 01:12:44.350
If the Commission issues your order
1677
01:12:44.350 --> 01:12:46.960
and somebody seeks to enjoin it,
1678
01:12:46.960 --> 01:12:48.990
which I doubt they will,
1679
01:12:48.990 --> 01:12:50.940
won't they have to post a bond.
1680
01:12:50.940 --> 01:12:54.250
What would the bond be for some company
1681
01:12:54.250 --> 01:12:58.370
to interrupt the Commission's order?
1682
01:12:58.370 --> 01:13:00.700
I think your order would be affective
1683
01:13:00.700 --> 01:13:04.470
until some court ruled against you down the road.
1684
01:13:04.470 --> 01:13:08.943
So my view is that you can do this, if you choose to.
1685
01:13:11.070 --> 01:13:14.224
Brian, I appreciate the efficiency with your answer
1686
01:13:14.224 --> 01:13:16.530
and I understand what you're saying is
1687
01:13:16.530 --> 01:13:19.900
that the concern being if we took this action
1688
01:13:19.900 --> 01:13:21.630
it may get quickly overturned
1689
01:13:21.630 --> 01:13:23.670
with some sort of injunctive action to cancel it,
1690
01:13:23.670 --> 01:13:25.670
but you believe is it would be effective
1691
01:13:27.450 --> 01:13:29.660
until it was overturned in court.
1692
01:13:29.660 --> 01:13:30.630
And thank you for that commentary.
1693
01:13:30.630 --> 01:13:33.300
My question's in some of the more specific legal questions
1694
01:13:33.300 --> 01:13:37.250
in terms of, for example, making our action
1695
01:13:37.250 --> 01:13:38.470
contingent upon others
1696
01:13:38.470 --> 01:13:40.193
which is some things I proposed.
1697
01:13:41.490 --> 01:13:43.380
You already spoke to doing it by producer
1698
01:13:43.380 --> 01:13:46.463
as opposed to lease, I believe.
1699
01:13:48.390 --> 01:13:49.440
By field.
1700
01:13:49.440 --> 01:13:50.790
By field, sorry, yeah.
1701
01:13:50.790 --> 01:13:52.530
Well, actually I'm asking it too by lease.
1702
01:13:52.530 --> 01:13:54.330
Doing it, I'm pretty sure, as opposed to by lease.
1703
01:13:54.330 --> 01:13:55.730
Sounds like you've spoken to all that,
1704
01:13:55.730 --> 01:13:57.883
but if I missed something say so.
1705
01:13:59.900 --> 01:14:03.390
What about limiting it to a producer
1706
01:14:03.390 --> 01:14:05.060
producing over 1,000 barrels a day.
1707
01:14:05.060 --> 01:14:08.430
So is anything that I said in there give you any concern
1708
01:14:08.430 --> 01:14:10.790
or anything that we need to do from your perspective,
1709
01:14:10.790 --> 01:14:12.200
anymore homework on?
1710
01:14:12.200 --> 01:14:14.140
And not looking for a yes or a no.
1711
01:14:14.140 --> 01:14:16.590
I'm looking for a yeah, you need to look in this.
1712
01:14:18.380 --> 01:14:20.440
I'm assuming we're not gonna vote on something today.
1713
01:14:20.440 --> 01:14:22.903
but as we get ready for May 5th,
1714
01:14:24.160 --> 01:14:26.640
what things should we be looking at?
1715
01:14:26.640 --> 01:14:28.020
Sir, our legal team
1716
01:14:28.020 --> 01:14:29.620
and it's more than just me.
1717
01:14:29.620 --> 01:14:31.830
There are some other law firms that have been involved
1718
01:14:31.830 --> 01:14:33.363
and have vetted this.
1719
01:14:34.440 --> 01:14:36.820
We don't see any problem with you all
1720
01:14:36.820 --> 01:14:39.120
issuing a contingent order
1721
01:14:39.120 --> 01:14:42.090
as long as the contingencies are clear.
1722
01:14:42.090 --> 01:14:45.980
So the fact that you would not implement this until June 1st
1723
01:14:46.980 --> 01:14:51.193
if others participated we don't think is a legal impediment.
1724
01:14:53.930 --> 01:14:55.150
Okay.
1725
01:14:55.150 --> 01:14:57.030
We had the required hearing.
1726
01:15:00.560 --> 01:15:01.560
Any more comments?
1727
01:15:04.690 --> 01:15:06.450
I continue, thank you very much, Brian.
1728
01:15:06.450 --> 01:15:08.120
Appreciate your comments
1729
01:15:08.120 --> 01:15:12.270
and, again, I join Commissioner Craddick in believing
1730
01:15:12.270 --> 01:15:14.040
we need to check with our Attorney General on this
1731
01:15:14.040 --> 01:15:17.283
to confirm those points.
1732
01:15:18.210 --> 01:15:21.330
Frankly, agreeing with Commissioner Sitton
1733
01:15:21.330 --> 01:15:24.570
a date of June the 1st would be very good.
1734
01:15:24.570 --> 01:15:26.290
We will have power May the 1st,
1735
01:15:26.290 --> 01:15:29.330
hopefully, to meet that deadline.
1736
01:15:29.330 --> 01:15:33.760
So I would consider right now that we would not take action
1737
01:15:33.760 --> 01:15:36.960
on this motion if it's the pleasure of the Commissioners.
1738
01:15:38.563 --> 01:15:42.152
Okay, and let's move on to Agenda Item 311
1739
01:15:42.152 --> 01:15:44.550
is our Public Participation Item.
1740
01:15:44.550 --> 01:15:46.860
No one has registered indicating that they wish to speak
1741
01:15:46.860 --> 01:15:49.010
on any non-posted items.
1742
01:15:49.010 --> 01:15:51.600
Agenda Number 312 is our Executive Session item
1743
01:15:51.600 --> 01:15:53.653
which we will not be going into today.
1744
01:15:54.700 --> 01:15:56.510
Are there any other duly posted matters
1745
01:15:56.510 --> 01:15:59.370
to be brought before the Commission at this time?
1746
01:15:59.370 --> 01:16:01.090
Hearing none, this meeting
1747
01:16:01.090 --> 01:16:04.210
of the Railroad Commission of Texas is adjourned.
1748
01:16:04.210 --> 01:16:05.043
Thank you.