Announcer: The feed for this streaming event brought-
Callie: I'll be serving as the meeting moderator
for today's conference.
Just a few reminders, when it is your time to speak
you'll be transferred from over to video
and un-muted when transferring.
During this transition, the speaker and audience
may experience a moment of delay.
This is normal.
Speakers will also need to begin their video
and remove themselves from mute
for their video and audio to work.
Commission does reserve the right
to remove any audio video sharing capabilities
for any person needed.
Chairman Craddick, we are ready to begin when you are.
-: Good morning, thank you, Callie.
This is Christie Craddick.
This meeting of The Rural Commission of Texas
will come to order to consider matters
which have been duly posted,
with the secretary state for March 9 2021.
Under our public participation policy,
anyone desiring to offer public testimony
on any items that are not noticed on today's agenda
was required to register in advance.
We did not have anyone register in advance.
The Commission will consider the items
on the agenda as posted on the agenda.
Let's go to item number one.
-: Thank you.
John Dodson will be presenting agenda item one,
John, we are ready when you are.
-: Good morning chairman and Commissioners.
I'm Administrative Law Judge John Dotson
with the Hearings division.
Agenda item one, GUD number 10597,
is a complaint and request for interconnection
filed by Vopak Moda Houston or VMH,
against Magellan Crude Oil Pipeline Company.
VMH is in the process of planning and developing
a deep water crude storage and terminal facility
on the Houston Ship Channel.
In addition to operating storage tanks and docks,
VMH also plans to construct side-by-side
inbound and outbound pipelines,
that will connect its plans storage facility,
with Magellan's nearby
crude oil distribution system, the HDS.
Which is located roughly 5.7 miles away.
In this docket, VMH asked the Commission to compel
an interconnection with Magellan.
By ordering Magellan to install a new connection equipment
at its nearby HDS facility, to make possible a connection
with VMH's planned, yet unbuild pipeline segments.
As well as establishing our connection terms.
VMH argues that it's requested
interconnection technically is very simple.
It would cost Magellan nothing, and would benefit the public
by adding a new crude storage facility in the Houston area.
Something that VMH argues
will alleviate market congestion costs.
Magellan opposes the VMH's request
highlighting that the Commission has never ordered
a connection to an unbuilt pipeline.
And that as things currently are,
VMH does not have customers or completed facilities.
The first amended PFD was issued on January 29th,
and both VMH and Magellan filed exceptions.
Consistent with the first amended PFD,
the recommendation is to deny VMH's request.
I'm available for questions
Callie: Commissioners, we also have Richard Hall
representing Vopak Moda Houston,
LC, Bill Johnson and James Mann are also registered
representing Magellan Crude Oil Pipeline Company.
And all are available for questions.
-: Thank you, Callie.
Are there any questions of our witnesses?
-: Madam chairman, -: Yes sir.
-: I just have a comment, that I'd like to make on this.
This was a unusual case,
a close case for me to consider.
The law gives the Commission the authority
to order a connection, if a necessity exists.
However, the law doesn't define what a necessity is.
While it seems a necessity would exist, in this case,
if Vopak had completed the project,
and Magellan was refusing a connection.
That's not what's happening here.
The project has not been started.
So we are dealing with hypotheticals.
How necessary is car insurance, if you don't have a car?
How necessary is a connection order,
if there's nothing to.
Well I understand the company's desire for certainty,
before spending millions of dollars on a project.
I do not think a connection order
is appropriate in this case, as things currently stand.
Unless something significant changes,
my hope that has a common carrier,
Magellan does the right thing when it comes time.
So that neither party must go through
an entirely new hearing process,
unnecessarily using up our hearing staff's time.
All that commentary aside,
I have one question for Judge Dodson.
Judge Dodson, in your opinion,
why is the contingent order not appropriate,
under the law at this time?
Especially given that you said in your PDF,
quote, everything Vopak asked the Commission to do
is already required under existing Texas law.
-: Thank you Commissioner.
So as the PFD, we kind of walked through
whether or not Magellan has any legal duties right now.
And for me, that is the big issue in this case.
Whether or not Magellan has a duty.
And if yes, whether they're violating that duty.
And we come down with, they don't have a duty right now
for some of the reasons that you just mentioned.
The facilities are not built,
the pipelines are not built yet.
So a contingent order, how that would look, I think
would just be to compel,
to order Magellan to do something,
even though it hasn't yet done anything wrong.
Vopak has been, these companies
have been working and negotiating for years right now.
So Vopak in their experience with Magellan,
they may expect something out of Magellan in a few years,
whenever they build this.
Or they may they may think Magellan
is going to act a certain way.
But as the regulator, the Commission shouldn't guess
or expected Magellan is going to
break its duties in the future.
It should have the opportunity to meet its duties,
and to comply with the law whenever that happens.
So that's why I don't think
a contingency order right now is appropriate sir.
-: Thank you.
-: Chairman, I'd like to say
I agree with Commissioner Christian.
And what I hope we've made clear today is that
these connections are vital to Texas,
as it equates to transporting and exporting
our natural resources.
It is my understanding that if when,
the project is completed,
Magellan will be compelled to do what is best for Texas.
And that would be providing a connection.
Which is what I'm assuming that you're saying here,
Mr. Dodson.
-: And do you have any comment back?
Is that kinda your, perception is like
if they come back in for a hearing.
-: I apologize Commissioner,
I had some noise beside my window.
Yes, sir, that is what the PFD says.
That's my view of the law also.
Is that the Magellan at some point, very likely
will have some very hard
and very straightforward duties to interconnect.
Not now, there's no facilities,
but if VMH decides to go forward with it's project
and do what it needs to do,
sure the companies want their assurances,
before they green light a very expensive project but
the existing laws that are on the books,
as we say in the PFD,
in my view will give VMH all those assurances.
But a VMH has to finish their facility,
but once they do, yes sir,
I do think that Magellan is going to have to go ahead
and make due a interconnection.
-: Thank you.
Callie: I've heard it.
I just want to make a statement that Richard Howe
has raised his hand to make a comment,
but that you, it's up to you
if that wants to be heard at this time.
-: Thank you.
Do you have any questions of the parties specifically?
-: I do not chairman. -: Okay.
Any other questions of John?
All right, thank you John for your work on this.
I move we approve the examiner's recommendation.
Is there a second?
-: Second.
-: Second by Commissioner Christian.
All those in favor say aye.
-: Aye. -: Aye.
Motion passes, the items are approved.
Thanks John.
All right, Callie number two and three,
I think at the same time please.
Callie: Yes, you are correct.
Thank you, Veronica Roberto.
Presenting agenda items two and three.
Veronica, we are ready when you are.
-: Good morning Chairman Commissioners.
For the record, Veronica Roberto,
Administrative Law Judge with the Hearings division.
Item number two.
Is the application by San Miguel Electric Cooperative Inc.
Requesting a release of phase two reclamation obligations,
on an aggregate 306.2 acres,
within San Miguel area sea mine.
Permit number 52A located in Atascosa County.
The approved post mine land use,
within the subject area is pastureland.
Evidence in the record supports that
San Miguel has satisfied all requirements
for phase two release of subject area.
The subject area is bonded,
based on the worst case bond method.
So there is no eligible bond reduction
until phase three is approved.
After notice, no comments or
a request for a hearing were received,
San Miguel and staff are the only parties
to this proceeding.
No exceptions were filed, no changes to the current bond
are requested in this docket.
It is recommended that the request for phase two release
of the reclamation obligations,
for the subject area be approved,
and San Miguel is not eligible
to reduce the amount of bond at this time.
I'm available for questions.
-: Thank you, are there any questions.
Right, I move we approve the examiners recommendation,
is there a second?
-: Second. -: Second Commissioner Wright.
All in favor say aye.
-: Aye. -: Aye.
Motion passes, items approved.
Veronica number three please.
-: Item number three, is the application
by the Sabine Mining Company
requesting the release of phase one, two, and three
reclamation obligations, for 11.4 acres
within South Hospital Number One Mine,
permit number 33I, located in Harrison County.
The approved post mine land use within the subject area
is industrial commercial.
Evidence in the record supports that
Sabine has satisfied our requirements,
for the various phases of release of the subject area.
After notice, no comments or requests
for a hearing we received,
Sabine and staff are the only parties to the proceeding.
No exceptions were filed, no changes to the current bond
are requested in this docket.
It is recommended that the request
for phase one, two and three release
of reclamation obligations for the subject area be approved.
And Sabine be eligible to reduce the bond
for the permit by the amount
that is attributable to the subject acreage.
I'm available for questions.
-: Thank you, are there any questions?
All right, I move, we approve the examiners recommendation.
Is there a second? -: Second.
-: Second by Commissioner Christian,
all in favor, say aye.
-: Aye. -: Aye.
Motion passes, that item is approved.
Thank you, Veronica.
Callie, if you call item number four, please.
Callie: Thank you.
Austin Gaskamp will be presenting agenda item four.
Austin, we are ready when you are.
And we still have you, there we go.
-: I understand that we got a request to pass this item.
So would you like, would everybody like it presented,
or do we want to pass and bring it up, the next cycle?
Do y'all have an-
-: I'd like to pass it if we could Chairman,
presented on the next slide.
-: Okay, all right.
Thank you Austin.
We're going to pass this,
and we'll see you at a later conference.
Thank you very much. -: Thank you.
Items five through 42, Callie.
Callie: Thank you.
Robert Vusick, will be presenting
agenda items five through 42.
Robert, we are ready when you are.
-: Good morning, chairman and Commissioners.
My name is Robert Vusick, technical and examiner
for the Hearings division out of numbers,
Items number five through 42 are applications from
Capitan Energy Incorporated for Statewide
roll 32 exceptions, associated with various Wells
in the Ford West Wolfcamp Field,
Culberson and Reeves counties Texas.
Each of the 38 dockets, are a single gas well,
with a single flare point.
Capitan is seeking a two year exception
to Statewide rule 32 to flare gas.
The Commission previously granted Capitan exceptions
to flare gas by administrative authority,
or by Commission final order.
Capitan is currently selling gas to EagleClaw Midstream,
as their primary takeaway pipeline.
In May 2020, EagleClaw
expanded their pipeline systems capacity,
which is expected to increase deliverability,
from the subject leases to the gas market.
Capitan developed and proposed their daily flare volume
for each flare point, using seven months
of production and flaring data,
collected prior to the pipeline expansion.
In turn Capitan also calculated
the proposed maximum monthly flare limit,
by multiplying the daily flare volume by factor of five.
Allowing up to five days per month,
to flare gas while resolving any equipment failure,
or pipeline system upsets.
Capitan's production and flaring history
presented in the hearing,
was gathered prior to the pipeline expansion.
In addition, the data does not represent
the impact of the increased take-away capacity
of the EagleClaw pipeline.
The examiners recommend an 18 month flare exception period,
instead of the two years proposed by Capitan.
The 18 month exception period,
will cover the six months before
the EagleClaw pipeline expansion,
and the 12 months after the pipeline expansion.
The 12 month exception period will allow the,
the 18 month exemption period will allow the stabilized,
will allow the pipeline to stabilize,
so that the Commission can more appropriately evaluate
Captain's production and flaring history
in light of increased pipeline capacity.
Exceptions were filed, I'm available for questions.
-: Thank you Robert, are there any questions?
-: Actually Chairman, I would like to just make
a comment if I could. -: Yes, sir.
-: Now I'd like you, even after that,
I'd like to hear your motion, if that's okay.
First I would like to applaud our staff on these matters
and reducing the requested
24 month flaring exceptions to 18 months.
In addition, in the upcoming Consent Agenda,
there are a series of matters
which were also reduced from 24 months to 18 months.
I believe this is a really good step in the right direction.
It is important for the public to know
that these burning exceptions,
if approved are not unlimited.
For instance in most,
if not all of these burning exceptions,
Capitan is only allowed to Flair limited amounts of gas
on a limited number of days,
and only in the event of system upset,
either by equipment or needed by pipeline capacity issues.
Our goal and industry's goal,
should be to continue to limit these circumstances.
Finally also (indistinct) operators
and midstream companies alike,
who continually strive to improve
the efficiency of the pipeline systems.
So we can eliminate routine flaring,
and get as much gas to market as possible.
With that chairman, I would like to hear your motion.
-: Thank you.
Any other questions or comments?
I appreciate your comments.
I move that we approve the examiners recommendation
for items five through 42.
Is there a second? -: Second.
-: Second by Commissioner Wright.
All in favor say aye.
-: Aye. -: Aye.
Motion passes, those items are approved.
Thank you, Robert.
Let's move on to the oil and gas Consent Agenda.
There are 12 items on the oil and gas Consent Agenda.
These are items 43 through 54.
I move we approve items 43 through 54.
Is there a second? -: Second.
-: Second by Commissioner Christian.
All in favor say aye.
-: Aye. -: Aye.
Motion passes, those items are approved.
I've got agreed enforcement orders, items 55 through 130.
There are 76 agreed enforcement orders.
I move that we approve items 55 through 130.
Is there a second? -: Second.
Second by Commissioner Wright.
All in favor say aye.
-: Aye. -: Aye.
Motion passes, those items are approved.
And that concludes our hearing section matter.
Will now take up administrative agenda.
And this is public participation.
I previously stated there's no one
indicating they wish to speak on any non-posted items.
We've got no executive agenda.
Is there any other comments?
Oh yes, sir.
-: I just had some statements I'd like to make.
Which are dangerous, of course at any time.
But before we close,
I wanted to take a moment to give our Chairman kudos,
for testimony before the legislature.
I really think you did an excellent job of just,
kudos to you.
It's just was a great job.
You made us proud.
She was spot on, when she stated natural gas
wasn't the problem, it was the solution.
While many tried to publicize this issue,
the numbers don't lie.
Wind and solar combined represented 27% of electricity
before the power crisis, 10% during the crisis.
Natural gas represented 38% of electricity within the ERCOT,
before the power crisis, and 64% during the crisis.
On the other hand,
critics say that wind and solar can replace natural gas
to meet our energy needs,
and get us to net zero carbon emissions by 2035.
But on the other hand, when unreliables wind fail,
they claimed they're not buying,
because they weren't expected to perform
during conditions like this.
Can't have it both ways.
Texas cannot afford to come within minutes
of a total electric grid system failure ever again.
And the only way to ensure this,
is to prioritize reliable energy sources.
Not the unreliables.
Reliables such as natural gas, coal and nuclear.
And last, I want to apologize to the Commission
for making a false statement.
In the last meeting, I mentioned that
I was without electricity,
electricity and water, and heat, for 90 hours.
I was wrong, it was 120 hours.
And by the way, I'm not making client of this, by the way,
Deep East Texas where I live, is not in the Texas grid.
So for those that say,
if you weren't in the Texas grid, you were better off,
I'm sorry, at my age and appearance,
I'm not a poster boy, but if you need a poster boy
for living outside the grid, didn't do good, I'm it.
Thank you.
-: I'd like to say also (indistinct) chairman
for doing an excellent job,
in front of the legislature all that week.
And I really am proud to serve with you, thank you.
-: Oh, thank you both.
Since I'm going to kudos to our staff too,
cause they prepped us and gave us a lot of information.
And so thank you both for your comments and,
and Commissioner Christian.
I think we've got a lot of educating
still to do in the legislature.
So I'm back over there again today.
And I would hope that everybody who's working this issue
would continue to give good information.
Thank you for correcting your 90 to 120 hours.
I think I had a few, a few less than you
but I think we all had some real challenges that we can now,
we want to have good solutions to
so we don't have to do this again.
And that's what we're being asked to do,
and I think we've got some ideas.
So I appreciate the work that we're all,
we're all doing in different parts
in sectors across the state.
It's going to be important to continue
educating and communicating better.
So thank you all for that.
Anything else?
All right.
Hearing none, this meeting
of the Rural Commission is adjourned.
Thank you all, and safe week.
Thank you.