Man: Momentarily, thank you.
-: This meeting of the Railroad Commission of Texas
will come to order to consider matters
which have been duly posted by the Secretary of State
for October 26th, 2021.
Under our public participation policy,
anyone designed 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 registered in advance
for this meeting.
The Commission will consider the items on the agenda
as posted on the agenda.
Let's get started with item number one.
-: Good morning, Chairman. Chairman: Good morning.
-: Chairman and Commissioners.
For the record, my name is Claudia Gidoy.
I'm representing the market oversight section
of the Oversight and Safety Division.
Agenda item number one is case number 7053,
the application of Texas Gas Service Company
for test year 2019 annual interim rate adjustment
for the unincorporated portion
of the Borger SKellytown service area.
This case is a second interim rate adjustment
the company has filed
for the Borger SKellytown service area.
Since the final order was issued
in the most recent statement of intent,
gas utilities docket number 10766,
the adjustment represents a decrease
in the company's revenue requirement in the amount of $1,902
of which $146 is refundable to customers
subject to this order.
The recommended adjustment does not include
recovery of any costs associated
with the winter weather event of February, 2021.
I recommend approval of the intermediate adjustment.
I'm available to answer questions.
Chairman: Are there any questions, members?
Wright: No. -: Okay, I move we approve
the examiner's recommendation.
Is there second? -: Second.
-: Second, Commissioner Craddick.
All in favor, say aye. -: Aye.
-: Any opposed?
Hear none, motion passes.
-: Agenda item number two is case number 7252.
The application filed by Atmos Pipeline Texas
for the 2021 Rider Rev adjustment.
This is the fourth Rider Rev adjustment
since the company's last statement of intent,
gas utilities docket number 10580.
In which the company's other revenue
was approved at $69,411,586.
This amount represents the benchmark
for a measurement of a debit or credit
for the Rider Rev adjustment.
In this application,
the Rider Rev adjustment represents a decrease
in rates to customers as other revenue
increased to $104,682,821.
The difference in other revenue from GUD number 10580
is a decrease of $35,271,235.
Of this amount, 75% or $26,453,426
will be accredit to city gate service
and pipeline transportation customers.
I recommend approval of the Rider Rev adjustment.
I'm available to answer questions.
Chairman: Are there any questions, members?
Wright: No.
-: I move we approve the examiner's recommendation.
Is there a second? Wright: Second.
-: Second by Commissioner Wright.
All in favor, say aye. Members: Aye.
-: Any opposed?
Motion passes, that item is approved.
Agenda item number three.
Austin.
Austin: Good morning, Chairman and Commissioners.
Wright: Good morning. -: My name is Austin Gasky,
I'm Technical Examiner for the Hearings division.
Item number three is the application
of Blackbeard Operating LLC
for a blanket exception to Statewide rule 10
for the Sandhills clear fort and Sandhills tub fields.
Additionally, Blackbeard requests to field wide,
maximum efficient rate and net gas-oil ratio
of 300 barrels of oil per day
with the daily casing head gas limit of 3000 MCF
of gas per day per well.
Alternatively, to field wide MER and GOR allowable increase,
Blackbeard requests salvage classification
for unlimited oil and gas allowables for the fields.
Lastly, Blackbird request cancellation
of accrued over production for its leases in the field.
Milwee Oil Incorporated,
an operator in the Sandhills tub field,
protests all components of the application.
Milwee argues that Blackbird has not proven
the need for increased oil and gas allowables,
and Blackbeard's accelerated production of the fields
will lead to premature abandonment
resulting in stranded reserves.
The examiners find insufficient evidence
that field wide approval of Blackbeard's request
would protect relative rights or prevent waste.
The examiners recommend the Commission
deny Blackbeard's request for blanket Statewide
rule 10 exception.
The request to classify the fields of salvage,
the request for field-wide MER and GOR,
and deny cancellation of overproduction in the fields.
However, the examiners do recommend approval
of exception to Statewide rule 10
for the subject leases being the 6-Pounder,
the Yellowjacket and Landlubbers units.
I'm available for questions.
-: Members, Austin is available.
We also have David Jackson with Milwee Oil company
available for questions.
Are there any questions for either Austin
or Mr. Jackson?
-: Chairman Christian, I've not been able to research
this item as thoroughly as I would like.
Therefore I would like to pass this item
until our next conference, if that's okay.
-: Very good.
Item is passed to the next conference.
Let's move on.
Thank you very much, Austin. Austin: Thank you.
-: Let's move on to the item agenda 4-14.
Ezra?
-: Good morning, Chairman and Commissioners.
For the record, my name is Ezra Johnson,
Administrative Law Judge with the Hearings division.
As mentioned, items 4-14 will be presented together
as they have common parties and facts,
and will require one vote and one order.
These items concerning a motion for rehearing
of a final order in these dockets granting an application
of Tall Dune Resources, LLC
to transfer operatorship of gas wells
in the Conger PENN field in Sterling County, Texas.
For the current operator of record,
Siana Oil and Gas.
Siana filed a timely motion for rehearing
stating that Tall Dune was obligated,
but failed to provide written notice
of the subject applications to Siana.
Siana further claims that the form P4s
for the subject properties were previously filed
in favor of a third party.
Siana also argues that additional information is needed
to verify the good faith claim of Tall Dune
to operate the subject properties.
Tall Dune filed a timely response opposing the motion.
The motion does not allege with particularity
the additional information that is required
to establish Tall Dune's good faith claim,
or that Siana did not receive the notice of opportunity
for hearing in these dockets from the Hearings division.
The form P4s referenced in the motion
have been disclaimed by the third party.
Accordingly, Siana's motion fails to allege facts
and circumstances sufficient to show
a valid basis for rehearing.
And in addition, the motion does not identify
with particularity any findings of fact,
conclusions of law, or legal rulings
that are claimed to be erroneous,
nor is there any indication of a legal and factual basis
for any such claimed error has been indicated,
as is required by the APA and Commission rules.
The examiners recommend that the Commission
deny the motion for rehearing.
The motion will be overruled by operation of law
on December 2nd, 2021, and I'm available for questions.
-: Members, we have Ezra.
In addition to Ezra, we have Greg Clip
with Tall dune Resources available.
Are there any questions of Ezra or Mr. Clip?
-: No.
-: No questions.
I move we approve the examiner's recommendation.
Is there a second? -: Second.
-: Second by Commissioner Craddick.
All in favor, say aye. -: Aye.
-: Any opposed?
Motion passes, those items are approved.
Let's move on to the oil and gas Consent Agenda.
And there are 63 items on the Consent Agenda.
I move we approve items 15-77.
Is there a second?
-: On the flaring issues,
I do have some questions for,
I don't know if there's any presenters here today.
John Moore or Johnson.
Good morning. John: Good morning.
-: Can you identify yourself,
so that will have for the record?
-: Yeah sure, for the record, my name is John Moore.
I'm a Technical Examiner in the Hearings division.
Thank you, sir.
Commissioner: Thank you for coming up, John.
-: Yes, sir.
Commissioner: Do you mind?
Chairman: No, sure.
-: John, thanks for being here.
I really appreciate it,
but first I wanted to commend you
and the rest of the hearing staff
regarding the mini state ride rule 32 flaring
exception applications that routinely
come before this Commission.
You guys have done a great job.
Thank you all so much.
John: Thank you, sir.
-: Starting in January of this year,
after I was sworn in,
I believe at one of my very first
Commissioner's conferences, I made some specific requests
to the Hearings division in an attempt to ultimately reduce
both flaring volumes as well as lengths of flaring terms.
I believe those items are working,
but I wanted that trend to continue.
To that end, I wanted to ask a few questions
that might help overall flaring volumes
continue to decrease.
First, have we, do we, can we require that an operator
consider the current cost of gas
when performing cost benefit analysis?
That's my one question
that I'd like for you guys to consider.
What about the price of the oil they are extracting?
Shouldn't that be taken into consideration?
That's another thing
I'd like to see if you guys could consider.
In addition, what about the actual cost of treatment
to remove hydrogen sulfide, carbon dioxide,
nitrogen from the gas stream?
Are we verifying those estimates?
In other words, whenever the comment comes up about H2S
and what those costs are
given the price of what natural gas is today,
or have we got any way or do we know of any way
to actually run those cost analysis?
I'd like for you guys to give that some thought,
if you could.
John: Yes, sir.
-: One last question.
It's apparent that the country is suffering
through some severe supply chain issues.
Are we seeing any evidence of these issues
causing elevated flaring instances,
and that's a question that I don't know
if you know the answer to today,
but what I'm hearing is that a lot of these parts and things
that are needed for our compressors or our way backlogged
because of supply chain issues.
Is that something you guys have been hearing?
-: I'll defer to Judge Johnson.
He's got some personal experience with that.
Commissioner: Okay.
-: Once again, Ezra Johnson ALJ
for the Hearings division for the record.
Yes, Commissioner Wright, we have in our recent hearings,
been getting indications from operators
that supply chain issues and labor issues
have created circumstances where equipment malfunctions,
it is more difficult, takes longer to get replacement parts
or replacement equipment,
and that the labor shortage also may means
that where equipment is available,
there isn't always someone onsite to be able to install it.
So they are asking us for additional flexibility
in these rule 32 exception hearings to account
for those issues.
-: So is that something you're seeing more and more today
than say, a year ago?
-: Well, certainly more than we were a year ago.
Both the increase in demand
that has resulted from the economy
recovering from the global pandemic
has accelerated the need for more parts and more labor.
And right now, there's a lag
in being able to obtain those inputs.
So, yes, I can't say that we've had an overwhelming number
of those requests,
but we are starting at least starting to see an uptick
in that being addressed, that being brought to us.
Commissioner: Is there anything that you could think of
that the Commission could be doing
to help those circumstances besides requiring people
to work 24 hours a day at the port?
-: Well, I think I would need to humbly decline
to speculate from my position
about what the Commission could do
about global supply chain issues.
But if I were to say anything,
it would be, there are, of course other legal uses
to which this natural gas can be put
besides being put into a pipeline.
Anything the Commission can do to encourage
other alternative uses I think would alleviate
some of these problems. Commissioner: I agree.
Well, thank you.
Thank you both for your time.
I appreciate that,
and I would appreciate you guys giving some thought
to my first questions and getting back to me on it.
Thank you. John: Certainly, certainly.
-: Any more questions? -: No, sir.
-: I appreciate that,
and I appreciate the work that you're doing, Commissioner.
It's something I think that I wanna brag about our staff,
our Railroad Commission,
and looking at the historical records,
again, the Railroad Commission of Texas
was one of the first environmentally concerned organizations
in the nation, perhaps the world
that was concerned with cleanliness.
And my gosh, I can remember back in the,
I can't remember back, but I remember that
one of the first-- -: So you can?
How far back are you going? -: When I was a child, okay?
Kilgore, Texas had all this, I mean,
it was one barrack after another.
Dirty, muddy streets.
You can go to the museum in the Kilgore and see,
and it was the Railroad Commission of Texas
that came in and cleaned up that thing.
It increased the regulations, the spacing issues.
I mean, it was invented by this institution.
And it's kind of interesting to me that so little
is known that when people gripe
about the environmental issues and whatever,
here's our staff in the organization for decades.
I mean, the federal government admits
and openly brags that in the past 50 years,
we've decreased every EPA heinous gas by 77 plus percent.
Environmental deaths are down 99%
since the last 100 years.
It's just, I don't remember in the 2017 study
that came back from the feds and from our Commission jointly
that they could not find primary drinking water
or even secondary resources drinking water
that had been polluted for injection wells
or disposal wells.
And it goes on and on.
The world's not perfect.
We've got these problems, but that you're following this
is such an example that I commend you, Commissioner,
that we continue to follow it
and correct things as best we can.
In fact, it's amazing that flaring right now is, I think,
anybody can correct me if I'm wrong,
I'm usually wrong a lot of times.
I think it's 0.55%, one half a percent.
Almost 99.5% of natural gas is not being flared
in the state of Texas.
And that's just astounding to me.
I think you hear so much negative in the media, the press.
And the voters, the citizens are not aware
of the good job our staff and this industry has done
for a cleaner environment,
the cleanest industrialized nation on the planet.
-: Chairman, I think the Railroad Commission this year
especially has done a great job about other ideas
of what we do with flared gas
and how we create more of a market for that.
I'm so proud of our division
that's been really on top of that.
But I'm concerned now about did we get parts
to go out and fix the problems that we have in the field?
And you know, it's like we take one step forward
and sometimes we get a step back.
And I don't know how we control
any of those issues right now
with the way that our supply chain is.
So that's got me concerned.
-: Yes, yes.
But again, very clearly that is of no fault of any people
of the Railroad Commission of Texas.
-: Not at all. -: And that you're aware
of it and watching it is our job to monitor.
And they're doing a darn good job
and you're doing a darn good job.
Appreciate you for it -: Thank you, I appreciate it.
-: You wanna say anything (indistinct)?
-: I don't doing anything--
(indistinct)
I think agency has, historically, I agree.
They've done a very good job,
and I appreciate not just this agency,
but this industry trying to work and move the ball forward
and have best practices in the state.
I think we have a good history of that,
and I appreciate what this agency's doing
and what our people do.
-: It's great to be a part of these three Commissioners,
I think are great team.
I appreciate both of you, the work you do,
and it is an honor to work for historically
this agency, this Commission.
It really is an honor.
Okay, let's move on to agendas.
There are 63 items in the Consent Agenda, all right?
I move to approve items 15-77.
Is there a second? -: Second.
-: Second by Commissioner Wright.
All in favor, say aye. -: Aye.
Any opposed?
Motion passes, those items are approved.
Move on to the master default orders.
There are eight master default orders.
Staff request we pass items 86 to the next conference,
so I move that we approve item 78-85,
and pass item 86 to the next conference.
Is there a second? -: Second.
-: Second by Commissioner Craddick.
All in favor, say aye. -: Aye.
-: Any opposed?
Motion passes, those items are approved.
Let's move on to agreed enforcement orders.
There are 118 agreed enforcement orders.
I move that we approve items 87-204.
Is there a second? -: Second.
-: Second by Commissioner Wright.
All in favor, say aye. -: Aye.
Any opposed?
Motion passes, those items are approved.
That concludes the hearing section.
We will now take up our administrative agenda.
Agenda item 205 is the Executive Director Report.
-: Good morning, Chairman and Commissioners.
Wei Wang, executive director of the agency.
As we come off the summer and get into the fall,
I thought I'd give y'all a quick update
on the agency actions we have taken so far
in terms of weather winter preparation
for the upcoming winter.
So back in March, when ERCOT revised their application form
for critical load designation,
which they allowed oil field services
to be eligible for that designation,
we send out a letter and notice or operator
to all of the operators under our jurisdiction
asking them to apply for that designation.
And earlier this month,
we also send out another notice to operator
asking all operators to take all necessary actions,
to prepare for the upcoming winter.
In addition to that, we also reminded them
to update their critical load designation
and submit that information to their electric providers.
And as recent as last week,
we send out a third reminder telling operators
to submit their application to their electric providers,
their utilities by November 1st.
In addition to that, as operators started
making modification to their facilities
and during the fall to prepare for the upcoming winter,
we're sending our inspectors to these facilities
to physically make observation,
assess the situation, and also ask questions.
So as of last week, we have visited
over 300 facilities already.
Our goal was to focus on the large producing leases,
the gas processing plants and their ground storages,
and transmission pipelines,
as well as disposal wells to perform site visits,
make observation, and ask their staff on site
about their plans and process and technology
and equipment they're using for this upcoming winter.
And we'll continue to do that throughout this winter.
So again, that's just a quick update,
and I'll continue to provide more update
as we proceed with our plan for the site visits.
So I'm available for questions.
-: Wei, I'd like to say you guys have done
a really good job about working with PUC here.
What I've seen this past couple of months.
Great job.
Thank you for leading that.
-: And Wei, I appreciate you and the staff.
And a couple weeks ago, I was out in Midland, Texas
at an event and I was approached by some of the folks
in the industry there that acquainted me with the fact
that you had appeared before Senate Committee
and that you were treated very disrespectfully.
And I continue to receive that from different people
in the industry that watched that.
I want you to know that this Commission appreciates,
supports, honors your work.
You're one of the, you're a leader that we're proud of.
And we, I apologize personally,
how disappointed I am as how the Senate treated you
in that situation.
It was inappropriate.
It was rude.
It was arrogant.
It was everything that we don't like.
And just want to let you know that I'm sorry
that you experienced that
and disappointed that our friends in the Senate
decided to do that on that occasion.
And there's a lot in the industry
that are still talking about how unprofessional
that entire situation was.
So we appreciate you and want you to know that we are sorry
you had to endure that, and thank you for your good work.
-: Thanks, sir.
I think, you know, I just wanna take the opportunity
to say we have a culture here of one agency, one team.
And everybody on our staff has been helping
our newly created Critical Infrastructure Division.
We're actively hiring staff with our own gas division
and our pipeline safety department.
They've been sharing their inspectors
to help with the site visits,
and everybody is coming together, you know,
on the multiple sections that's requiring the bill
that we're all working together as one agency, one team
to make sure that we are doing all we can
to prepare for this upcoming winter.
Chairman: Well, and literally almost 1,000,
how many total employees do we now have?
-: We have a about 840.
-: 840 employees, and this agency are good folks
across the state of Texas.
We appreciate you, and we indeed are proud to be
part of the team that's working to help the citizens
of Texas protect them and make sure
that we look over their natural resources appropriately,
and honor you for the good work that you
and all of our workers do.
Wei: Thank you, sir. -: Thank you.
-: And if I could just add,
thank you, Wei, 'cause you and your team,
you've got a whole group of them,
not just on point and on task, all of them,
but frankly ahead of the game.
So we appreciate it and y'all have reacted
very appropriately and very quickly, I believe.
And so, we are really appreciative of what you're doing
and thank you for being very engaged
and being a leader on this,
'cause I think this agency has come back with good feedback
and good information and are doing a good job
across the board.
So thank you for what you're doing
and thank you for your team.
Wei: Thank you.
-: Thank you. -: Thanks, Wei.
-: Randall Collins.
Bring us words of wisdom, Randall.
-: Or cut the mic off.
-: Yeah, cut the mic off.
(laughter)
-: At least I probably (indistinct).
(laughter)
Chairman, Commissioners, for the record,
I am Randall Collins, chief operating officer
and stand up comedian.
Item number 206 on the agenda seeks Commission approval
for two solicitations and a contract amendment
pursuant to the Commission's delegation of authority
and section 2261.254 Texas Government Code.
The Commission's internal delegation of authority
requires Commission approval for contracts
in excess of $1 million.
Section 2261.254 of Texas Government Code,
requires approval of contracts and associated amendments
greater than $1 million
or contracts for outside legal services.
At issue today are two contracts or solicitations
and one amended contract for site remediation.
Approval of these items today
will ensure the agency's continued development
of the critical infrastructure division
in compliance with SB three,
and that the Commission remains on schedule
in site remediation projects,
along with the necessary approvals
pursuant to the Commission's delegation of authority
and state law.
The summary of the two critical infrastructure contracts
and the site remediation amendment details and amounts
are included in your notebooks.
Staff requests Commission to approve the contracts
and amendments and I'm available if you have any questions.
Chairman: Are there any questions, members?
I move we approve these contracts.
Is there a second. Craddick: Second.
-: Second by Commissioner Craddick.
All in favor, say aye. -: Aye.
Any opposed?
Motion passes, that item is approved.
Randall: Thank you. -: Thank you.
-: Agenda item 207 is the proposed internal audit plan
for fiscal year 2022.
-: Good morning, Chairman and Commissioners.
Dor the record, my name is Paul Delaney.
I'm the internal auditor for the Railroad Commission.
Section 2102 of the Texas Government Code
requires each state agency
to prepare an annual audit plan,
and then submit a copy of that plan
to the State Auditor's office by November 1st of each year.
As a result of that requirement,
I conducted an agency-wide risk assessment.
I received input from executive management,
and then I developed the audit plan
that you have before you.
If any of the proposed audits are not completed in FY 22,
they'll be added to the following year's plan.
I'm requesting that the audit plan be approved,
and I'm available to answer any questions.
-: Are there any questions, members?
I move we approve the proposed internal audit plan
for the fiscal year 2022.
Is there a second. -: Second.
-: Second by Commissioner Wright.
All in favor, say aye. -: Aye.
-: Any opposed?
Motion passes, that item is approved.
Thank you. Paul: thank you.
-: Agenda item 208 is an update
from the Office of General Counsel.
-: Good morning, Chairman, Commissioners.
I'm David Cooney from the Office of General Counsel.
We have nothing to report
on the federal litigation side of this,
but hold onto your hats,
EPA is expected to publish
its oil and gas methane emission rules this week.
Staff has poised and ready to cooperate
as we have traditionally on these rules
with our sister agencies, the TCEQ and the PUC.
We will be formulating comments once we see them
and keep you posted of developments as they occur.
-: Thank you, that's very significant.
Appreciate you watching that.
That's a high cost risk
to the entire Governor family in the United States.
Very dangerous.
-: Thank you, Dave.
-: Agenda 209 item is our public participation item.
No one is registered indicating
that they wish to speak on any nonposted items.
Agenda item 210 is our executive session item,
which we will not be going into today.
Are there any other duly posted matters
to be brought before the Commission at this time?
Hearing none, this meeting of the Railroad Commission
of Texas is adjourned.
Can I carry my water with me?