Christian: Good morning, everybody. This meeting of the Railroad
Commission of Texas will come to order to consider
matters which have been duly posted with the Secretary
of State for January 25, 2022. 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 have one person,
Ashley Watt, registered in advance for this meeting.
The Commission will consider the items on the agenda
as posted on the, agenda but before we start the meeting,
we have some awards to present that are probably
the most valuable part of this meeting to recognize
our good staff that makes our Commission what it is
today.
HR: Good morning. Chairman and Commissioners. I'm Wendy
O'Neil, HR Director. This morning, we will be recognizing
recognizing employees for their years of service with
the Railroad Commission of Texas for the first quarter
of Fiscal Year 2022. Collectively, these employees have
served our agency for 110 years. First, celebrating
five years of service is Jason Clarke with agency projects.
(audience chatter)
Next we have John Moore in the Hearings division, celebrating
five years of service.
(audience chatter)
Also celebrating five years of service is Danny Sorrells
from the oil and gas division.
(audience chatter)
Next we have Joseph Parks in the Surface Mining Division
celebrating five years of service.
(audience chatter)
Also celebrating five
years of service is Katherine Upem from the Surface
Mining Division.
(audience chatter)
Celebrating 10 years of service is Veneta
Jackson from Gas Service Audit. And I don't think she
is here this morning. Okay, no worries. Celebrating
20 years of service is Peter Pope from the oil and gas division.
(audience chatter)
Misty Dozier in Legal Enforcement is celebrating
25 years of service.
(audience chatter)
And last but certainly not least, Arthur Korea in
the oil and gas division is celebrating 30 years of service.
(audience chatter)
Christian: Okay, let's get started with agenda item number one.
Dubiel: Good morning Commissioners Natalie Dubiel of the
Office of General Counsel. Item number one is a status update
on the Phase 2 proceeding of House Bill 1520. House
Bill 1520 provides the procedure and mechanism to
minimize the costs that end use natural gas customers
would otherwise experience as a result of Winter Storm
Yuri by providing securitization financing to enable
utilities to recover those costs and most importantly
to reduce the cost to customers. As you're aware, phase
one of the proceeding was completed when the Commission
issued the regulatory asset determination order on
November 10, 2021. Since that time, Commission staff
has been working very closely with our outside counsel,
our financial advisor, and the Texas public financing
authority and their advisers to draft and finalize
a financing order for your consideration. We will continue
to work on a draft order and expect to bring a final
financing order to this Commission on the February
8, 2022 open meeting. Mark Everts, director of the
Market Oversight section, along with myself, are available
to answer any questions you might have regarding the
status update. Thank you.
Christian: And Kate Norman, with Texas
Gas Services, of course, is available for questions.
Are there any questions, members?
Wright: No, sir.
Craddick: Thank you for your work on this.
Christian: It saved Texans a lot of heartbreak on that storm,
we were seeing $600 and $700 bills, and had people very
hurt, and this allows with nobody making a profit that
I know of, spreading that over 30 years. It's a, it
helps the folks out, and I think it was a great work
that you have done, and the Legislature's ideas, so anyhow.
Are there any questions, members? Hearing none, let's
move to agenda item number two.
Gascamp: Good morning, Chairman and Commissioners. My name is
Austin Gascamp, Technical Examiner for the Hearings
Division. Item number two is the application of Parsley Energy
Operations, LLC, pursuant to Statewide Rule 46 for amendment
of its existing permit to inject fluid into a reservoir
productive of oil or gas for the Cox University Lease,
well number one, Block 17, Cherry Canyon Field in Ward
County Texas. Parsley request the maximum daily injection
volume of the permit to be amended from 20,000 barrels
per day to 48,000 barrels per day with all other parameters
remaining unchanged. The well remains noncommercial
The application is protested by Manzanita Operating
LLC. Manzanita, an adjacent operator, is concerned about
the possible influx of injected water to its productive
zones. Specifically, Manzanita stated the basis of
its protest is water influx at its Laguna five number
two well. In the area, the Ramsey sands are the predominant
produced interval near the top of the Bell Canyon Formation.
Approximately 5 - 700 ft separates the injection interval
from the Ramsey Sands. Between these intervals are
silt stones which prevent upward migration within the
Delaware Mountain group, partially performed step rate
testing to assess whether the increased rates would
fracture the reservoir. Service company found no evidence
of fracturing at the requested rate. The subject well
has casing designed to adequately protect groundwater
according to the ground water advisory units recommendations.
The examiners recommend approval of Parsley's application.
No exceptions were filed and I'm available for questions.
Christian: Any questions members?
Wright: You said it's below the Bell
Canyon, this injection?
Gascamp: Yes, sir.
Wright: Okay, thank you.
Christian: Okay
I move we approve the examiner's recommendation.
Is there a second?
Craddick: Second.
Christian: Second by Commissioner Craddick. All in favor
say aye. Any opposed? Motion passes. That item is
approved. Agenda items three through 5. Thank you much.
Moore: Good morning, Chairman and Commissioners. My name is
John Moore, hearing, a Technical Examiner in the Hearings division.
Christian: He's one of the inexperienced new people.
Moore: Items three, four, and five are the three applications of Owl
SWD Operating LLC, Pursuant to Statewide Rule 46 to
inject fluids into a reservoir productive of oil and
gas in Loving County, Texas. Namely, the proposed Aphrodite,
the Erme, and the Poseidon saltwater disposal wells.
The three injection applications were consolidated
into a single hearing and proposed final order as they
share common facts, parties and legal issues. Only
one vote is required for the proposed final order.
The applications are protested by Z & T Cattle Company
who contends that the wells are not in the public interest.
The wells, located within a mile of each other, are proposed
to be similar in construction and injection zone with
the injection capacity for each well limited to 35,000
barrels per day. The proposed injection interval for
the three wells is into the non productive segments
of the Delaware Mountain Group formation. The applicant
owl owns and operates a 500 mile water transfer pipeline
which extends between southern New Mexico and Loving
County Texas. With existing injection wells in both
new Mexico and Texas. Owl testified that it
will need about 100,000 barrels per day of additional
injection capacity to handle its contractual obligations
from the state of Texas. The protest in Z & T does
not dispute that Owl has a contract to provide disposal
services in the area of the proposed wells. The examiners
find that the three injection applications meet the
requirements of Statewide Rule 46 and the Texas Water
Code and recommend approval of the applications. Exceptions
and replies were filed. I'm available for questions.
Christian: Thank you. Commissioner Wright, I believe you have some
comments or questions.
Wright: I do. I have some concerns and
I appreciate it, Mr Chairman. For what it's worth, I
agree with the protestants these matters that if
an operator is bringing in large amounts of waste from
another state for disposal here in Texas, that is generally
not within the public interest of Texans. However,
I don't think there are any statutes, and I don't think
that we have any rules that would require us
to deny these applications based solely on that possibility.
Moreover, I don't think it's entirely clear how much,
if any, of the produced water in these applications
will originate in New Mexico. Therefore, I intend to
vote to approve these applications. That said I have
grave concerns in allowing massive amounts of produced
water from other states to be disposed of here in Texas,
particularly from New Mexico, which is a date adjacent
to regions in Texas that are currently undergoing significant
seismic activity, due to at least in part to injection
and disposal. I intend to keep an eye on this matter
and expect to have the ability to better identify when
operators try to use Texas as a dumping ground for
produced water from other states. So I just want to
make sure that we're watching that. And I have
a huge concern of bringing in other states
water, especially in seismic induced areas. So thank you.
Christian: I appreciate it, Commissioner, and you know, interesting,
of course war stories. But I've lived and I was state
rep while we had the water problem coming from Louisiana,
the same situation, and they were tearing the roads
up, tearing things up, dumping in ditches, everything
else you can imagine because Louisiana, they were bringing
the water over, and Jim, working with the feds, would find
out that there is interstate, at least was at the time, this was
15 years ago. And the law was, we couldn't discriminate
because of the cargo of the truck. So there was no
law to discriminate. And the Railroad Commission at
that time, which was years ago, worked with us. And
we decreased that by, you know, permitting limitations,
other things like that. So you might go back and dust
off the book of what happened with the Louisiana situation
and see if there's any applicable adjustments we can
look at for that. But the Commission at that time helped
the citizens out and really did a great job, historically,
and changed some of the rules, really a good time that
shows good points in the history. So once again dust
off the old books, if you would and see if there's anything
that we can do about other states doing that. I think
it was a problem then, it's a problem now and the Feds
aren't helping us with it for sure. But I move we
approve the examiner's recommendation. Is there
a second?
Wright: Second.
Christian: Second by Commissioner Wright. All
in favor say aye. Any opposed? Motion passes. Those
items are approved. Let's move to agenda items six and seven.
Reeve: Good morning, Chairman, Commissioners. Kristie Reeve,
Administrative Law Judge with the Hearings division.
Items six and seven will be presented together. They require
one vote as they are one order.
These items are the result of a good faith claim initiated
by the surface and partial mineral owner where the
subject wells are located. Against Minexprod, the
owner of record of the leases seeking plugging of
the wells. Minexprod contends it has a good faith
claim by virtue of the leases being pulled and ongoing
operations consistent with the operation savings clause
and one of the mineral leases. The Vardells argue Minexprod
activities occurring on one of the leases is not
consistent with the operation savings clause and the
mineral leases are no longer in effect. The examiners
found the Minexprod failed to provide a reasonably
satisfactory showing of a good faith claim to operate
the wells. Therefore, it is recommended that the Commission
find Minexprod does not have a good faith claim
and order Minexprod to plug and abandon the wells.
Exceptions and replies were filed. I'm available for
questions.
Christian: Any questions, members? Mr. Rob Hargrove,
representing Joe and Jackie Vardell is available for
questions also. Are there any questions? Okay, hearing
none. I move we approve the examiner's recommendation.
Is there a second?
Craddick: Second.
Christian: Second by Commissioner Craddick.
All in favor say aye. Any opposed? Motion passes. Those
items are approved. Oil and Gas Consent Agenda.
I believe Commissioner Wright, you may have some questions.
Moore: I do. I've got some comments that I'd like to make.
Christian: Let's wait and let her present here, and then. It's my fault.
Say what?
Nothing to--
Christian: Nothing to report on that? So there's
nothing. So Commissioner Wright, you have some statements?
Wright: Yeah, I just want to say. I think over this past year
we've done a wonderful job of looking at flaring permits
within the state of Texas. You can see it on the decrease
in the amount of flaring that we've done just
particularly in this past year. So with that I have
some concerns in this one, with specific
regard to item number 15 in the Consent Agenda in which
UniTex was the applicant for a flaring exception.
I want to note two things. First UnTex as well as
other operators who used to be connected to West Texas
gas pipeline appeared to have been left in a lurch
when West Texas pulled up stakes and so I understand
their frustration. However, that was two years ago.
Second, the flaring exception requested by UniTex
will expire in March of this year just two months from
now. I want to see that UniTex and all other operators
have a plan going further, going forward other than
flaring 100% of their gas. From the conference materials
that I was given, it appears that there were a total
of 216 wells connected to West Texas gas pipeline. Each
and every operator of those wells needs a plan going
forward to minimize the waste of our natural gas resources.
Whether that plan is to connect or contract with a
third party vendor to utilize the gas on site or if
the plan is for the operators in the field to band
together and connect with another takeaway provider,
whatever best works for the operators. If no plan is
made, however, I will be less likely to approve even
shorter flaring exceptions. I encourage the operators
not to put me in that position. Thank you, Mr. Chairman.
Christian: Thank you. (crosstalk) I appreciate it. There are 21 items on the
Consent Agenda. And I move we approve these
items 8 through 28. Is there a second?
Wright: Second.
Christian: Second by Commissioner Wright, All in favor say aye.
Any opposed? Motion passes. Those items are approved.
Let's move to the Master Default Orders. There are
nine Master Default Orders. I move we approve
items 29 through 37. Is there a second?
Craddick: Second.
Christian: Second by Commissioner. Craddock. All in favor say aye. Any
opposed? Motion passes. Those items are approved. Let's
move to the Agreed Enforcement Orders. There are 121
Agreed Enforcement Orders. I move we approve
items 38 through 158. Is there a second?
Wright: Second.
Christian: Second by
Commissioner Wright. All in favor say aye. Any opposed?
Motion passes. Those items are approved. That concludes
the Hearing sections. We will now take up our Administrative
agendas. Agenda Item 159 is an update from the Office
of General Counsel.
Cooney: Good morning, Chairman, Commissioners.
David Cooney from the Office of General Counsel. Just
a brief report that staff is provided its input
to TCEQ for comments on the oil and gas methane
rules that are due January 31st. TCEQ is to provide us with
the final draft in time for executive directors of
both agencies to sign and turn in before the comment
deadline of January 31. On the Waters of the United
States Rule comments that are due February 7, the
day before our next conference, final draft is under
review circulating in the agency and we'll be prepared
to file under executive director's signature by or
before the deadline.
Craddick: Thank you.
Cooney: Thank you.
Christian: Thank you appreciate that.
Wright: It's a lot of work, too.
Christian: Before I forget it, we have one of our, we
had one of our PUC Commissioners that was here
and that I visited with and want to thank him for taking
the time to be with us today. I can't see you from
wherever, but thank you and the good work that you're
doing, the PUC is really on the ball correcting some
problems that we had and I commend our friends there,
the good work they're doing and the work they're doing
and relationship with them and appreciate the Commissioner
being here. I'm blind, maybe, I think that he ran away.
Okay. But we do commend them. Agenda item
233 is our public participation item and Miss Ashley
Watt has registered indicating that she wishes to speak
on a non-posted item. Mrs Watt happy to, Miss Watt, happy
to see you here today and please take a couple of minutes
to (indistinct).
Williams-Watt: Good morning. My name is Ashley Williams Watt
and I last spoke to you in September about the
ongoing series of blowouts that have contaminated the
freshwater aquifers underneath my West Texas cattle
ranch in Ward and Crane counties. At that time we did
not know exactly what was causing these blowouts, but
it's now more clear. For decades, Chevron and only Chevron
operated the field underneath my land as a water flood.
However, they recklessly disregarded their Railroad
Commission permits and over injected past their authorized
limits by millions and millions of barrels. They were
never cited nor fined. Over time this excess of salt
water dissolved through casing and cement on wells
both active and plugged, allowing produced water to
contaminate freshwater zones via confirmed casing failures.
This problem continues to reveal itself as just last
month, another shallow water well on my land began
bubbling up salty radioactive brine to surface on its
own without a pump. I have informed you of all this
already. In December, I sent each of you a five page
letter detailing these facts with attached exhibits
and data. Commissioner Wright to his credit, even agreed
to come see the issues on the ground. But then another
old Chevron well blew out, creating 150 ft tall
brine geyser in my neighbor's pasture and Commissioner
Wright suddenly had anywhere else in the world to be.
As a Commission, you owe it to me and to all Texans
to enforce the existing laws, namely Title 16, Part
1, Chapter 3, Rule 3.8(b) which states that, quote,
no person conducting activities subject to regulation
by the Commission may cause or allow pollution of surface
or subsurface water in the state, end quote. It's now clear,
it's now clear that this aquifer pollution is occurring
on a colossal scale in West Texas across at least tens
of thousands of acres. The question is, will you do
your job and enforce the existing regulations already
on the books? Will you require these bad actors, namely
Chevron, to remediate the damage they have done to the
freshwater aquifers? Don't let a California oil company
permanently ruin the best part of Texas on your watch.
Make them play by the same rules as anyone else and
clean up their mess. Do your job. Thank you very much.
Christian: Are there any questions, Members? Okay, thank you so
much for caring enough to come and bring your views.
You know, and I am concerned about that. If that
is correct, there is a problem that we, as Commissioners,
have a responsibility to the public and law and just
wondering if we might get some type of update on this.
Clay, are you available? Maybe? You or somebody
from the staff to, could you come and maybe respond
and informed the Commissioners here of any
updates or...
Woodal: Good morning Chairman, Commissioners. For the record,
I'm Clay Woodal, Assistant Director of Oil and Gas,
for field operations. So on January 2 this year,
the middle and district office was contacted by a landowner
stating there was a leak on his property. Within 24
hours, Railroad Commission inspectors were dispatched
to investigate. The inspectors did indeed find a leak
spraying what appeared to be brine and or produced
water into the air. The inspectors and our Midland
District Office staff immediately began contacting
pipeline and oil and gas operators in the area to inspect
their facilities and operations in an attempt to identify
the source.
No source was identified. District staff, simultaneously,
district staff started research into the RRC Public
GIS Viewer and the Texas Water Development Board
GIS System. We did not find a well showing up
at this location of the leak. Additionally, the RRC
GIS viewers showed the closest injection
wells were approximately 1.2 miles away from
this leak. While all of this was going on by Midland
staff, our district state managed plugging staff was
in contact with my staff, here in Austin, field operations,
and my staff was in contact with contract management.
Contract Management issued an emergency purchase order,
and district staff contacted code well control to respond
to the emergency situation, which was a threat to both
the environment and public safety. In fact, that evening
around 7 or 8 PM, Commission staff and CUD representatives
went out to location to get a view of what was happening.
On Tuesday, January 4, CUD representatives arrived
on site with equipment and began to dig pits
to divert water away from the well bore and to contain
the water. As a precaution, two injection wheels, both
approximately 1.2 miles away were requested to cease
operations until further notice. Site security was established
to prevent unauthorized access and vacuum trucks began
hauling water from the site. Depending on the time of
day, we had anywhere between 8 and 25 vacuum trucks
running, and this was day after day. A Commission
drone pilot was dispatched to the location and conducted
a reconnaissance mission on that same day. On January
5, dirt work and water management activities continued,
a specialty casing cutting tool from
from Houston arrived on site.
On January 6, a no fly zone was established at the
request of code because drones and an air craft of unknown
origin were flying low, causing a safety concern for
workers, landowner on the location, and Commission employees.
Okay. I authorized my drone pilot to contact the FAA
and get that no fly zone implemented out of safety
concerns for the personnel on location.
Continuing operations on that day were the roads,
pits, berms, fence, these were being built to facilitate
ingress and egress from the location and to assist
in diverting the brine or produced water away from
the well. Also on that day a crane was brought in by
by CUD to assist in the movement of equipment that
was out there.
From January 7 to January 9, the pad
for the crane and the well site was completed. CUD
began the final preparations to begin cutting away
the casings and at that time a water sample was sent
by the RRC for lab analysis. On Monday, January 10,
the well was identified as the possible Gulf Oil Corporation
W. N. Waddell, et al, Lease core test well number 112.
This was identified using Commission records. The Commission
contacted Chevron which acquired Gulf Oil Corporation,
to discuss transfer of operations. Tuesday morning,
January 11, Chevron assumed operations at the site.
Water management and well-controlled activities continued
through Saturday, January 15, when new wellheads and
a blowout preventer were installed and the flow was
diverted into pits. Operations continued Sunday by
installing diverter equipment and casing risers. Backfilling
efforts around the well began and continued through
Monday, January 17, when the area was backfilled and
compacted and could accommodate plugging equipment,
the well was shut in and no flow was observed from
the well.
During this time, water sample results were received,
and it's noted that there was no indication of the
presence of hydrocarbons. On Tuesday, January 18, while
performing operations, Chevron excavated around the
area and located the core test 112 well. This well
was located approximately 10 ft away from the leaking
well.
The Commission's Central Records Department was contacted
to resume research into Commission records
in an attempt to identify this well.
We have not been able to identify the well yet. Chevron
continues operations on the well. A coiled tubing
unit was utilized and was able to get down to 715 ft
before tagging up and after several attempts, the coiled
tubing unit was able to get down to 1229 ft. On January
21, Chevron performed a camera run into the well bore,
and the cameras showed parted casing at 721 ft.
Of note, about the 721 ft, this seems to coincide with
the Salado Salt Formation, which
our GAU Department provided me the information, they
did the research into it. And they indicate that the
top of the Salado salt is at 370 ft and the bottom
of the salt Seletto salt is approximately 770 ft at
the core test well 112.
Chevron's continuing operations out there,
logging operations are continuing. We want to know
what's going on with the well. Chevron wants to know what's
going on with the well. Do I have answers this morning
for you? No sir, I don't. But we are looking
into this. Chevron is looking into this, and we're
going to do our best to figure out what's going on.
May I answer any questions?
Christian: Any question members? You
know, one thing that I want us to address, are you aware of
any pollution of aquifers to any large extent or any
extent there?
Woodal: Preliminary test results that that I have been given
indicate that the fluid out of this well has a high
chloride concentration to almost to the point of saturation
levels. I knew you were going to ask that
question. I believe it's 180,000 parts per million.
174,000 parts per million.
Of note, sodium parts per million out of this water
is 100, roughly, 100 thousand parts per million. Additionally, what
I can tell you from the preliminary test results is
none of the, the samples were tested for TBS, B Tex,
PHs and TPHs.
None of the hydrocarbon constituents. BTX, TPH, PAH,
were detected in these samples. Okay. So we do have
an extremely high chloride and sodium flow from this
well. We also know where the salt formations are in
this well. What's driving that? I'm unable to answer
that question at this time.
Wright: So you said that Salado
salt formation was 370 top, 770 bottom. And y'all
saw the wells, I guess cut at 725?
Woodal: That's where the,
yes sir, let me double check my numbers. Yeah.
The camera showed parted casing at 721.
And the Salado salt is like you said 370 top and
bottom 770.
Christian: Any other questions, Members. Okay. Thank you. And
let me just say, we appreciate so much Clay, the
report and, the good work that you're doing and
the Railroad Commission is doing and that Chevron
has partnered with you I think is, is doing their part
in this. And we'll look forward to the report on what
the status is on this. And, let me, tell Ms.
Watt, we appreciate her being here and bringing this
to our attention and we as the Commissioners, at least
I'll speak as chairman, we do not intend, and
this agency, I don't think has any proof in the past,
but if there's any doubt we direct our staff to
follow the laws, follow the rules, follow the, and if
there's anything there number one is water. I was,
I was privileged to represent the largest inland freshwater
in the United States of America during my 14 years
in the House and I'm well aware of the risk, the safety,
the desire, the importance of water and West
Texas even more because they didn't have the excess
that we had in East Texas. And so I'm much familiar
and appreciate the your work, Clay, and your and
all the folks out there with the Commission. We charge
you to make sure and obey the law. Obey any statistics
we find that can make sure that we are protecting the
citizens. I think a couple of the first charges we
give in as the Railroad Commission is for the safety
of our public and water safety, preserve water, and
those two things just, we just restate that that
you already know and already practiced to assure the
citizens of the state that these Commissioners have
addressed that issue or concern of the issue and continue
the good work of the Commission and our friends in
the industry to encourage that be followed and done,
every law, every regulation to protect the public.
That's our desire. So thank you Clay for that report
and move ahead, Agenda item 161 is our executive session
item which 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.