The House Committee on Energy held its organization hearing and took invited testimony only.
This report is intended to give you an overview and highlight of the discussions on the various topics taken up. It is not a verbatim transcript of the discussions but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.
Opening Remarks
Goldman – today is not an extension of the winter storm hearing but it does not mean we are not working on the issue, at this time have had 2 bills referred to the committee
Christi Craddick, Railroad Commission
- Reviewed jurisdiction
- 840 employees
- Job as regulators, to regulate and protect the environment
- Numbers may be off by 1/3 going into the year regarding drilling permits
- Did plug about 1700 wells last year, metric is 1400 for this year
- More priorities than budgeting this year, need consistent budget
- Trending down in revenue
- On time and under budget on IT system, now do hearings in house, etc
- IT is ongoing project that will take them to 2024-2025
- Herrero – wanted to go back to last weeks hearing in winter storm, have you seen PUC resignation letter?
- Aware she resigned but have not read the letter
- Craddick – what percentage of budget is drilling permits?
- About half of the half – 25%-30%
- Craddick – how do you address?
- Asked legislature for a rider that if RRC is below 90% then House will support financial a portion; amount would be capped and would need to find a consistent answer going forward
- Craddick – well fees?
- Charged on the vertical part
- Geren – plan to plug similar number of wells as last biennium, without help from appropriations will you have enough money to do that?
- If we did not have additional dollars we could not continue; so appreciate the dollars going into it now
- Reynolds – understand concerns on fiscal constraints, would raising fees help?
- It’s a longer conversation, not asking for additional fees
- Additional fees would change the dynamic and probably be damaging to the industry at this point
- Reynolds – will you be able to report back best practices so we can resolve issues going forward?
- Yes
- Goldman – reminded committee they have asked for reports on best practices and suggestions on legislation, still waiting for those reports
Todd Staples, Texas Oil and Gas Association
- Provided handout to the committee which reviewed snapshot of what is happening today
- Handout includes detail roadmap going forward
- Reviewed supports and contributions industry has made
- Support a well-funded RRC and TCEQ
- Notes importance of infrastructure
- Herrero – any information on Eagle Ford Shale, any others than dropped production
- Not a simple process to get a well back in motion, they are doing this
- Don’t think it won’t come back on line but it will take some time
- Herrero – which policies or practices are most successful in removing ethane?
- Replacement of valves, etc focus is to capture every molecule that you can
- Reynolds – agrees with opening comments we should not be politicizing science, thoughts on climate change?
- Different scientists and companies have different ideas, members are focused on what they do best using innovative technologies to deliver a product
- Reynolds – how are you addressing consumer confidence since storm?
- Forensics on each step of the supply chain is being done, working on things that need to be done
- We have power that we need
Ed Longnecker, TIPRO
- Reviews supports and details on their organization
- Invites them to Oil and Gas webinar on April 4 virtually
Jason Modglin, Texas Alliance of Energy Producers
- Became a statewide organization in 2000
- Gave recap of alliance work and context for what has happened over the last decade
- Priority this session is budget
Eddie Trevino, State Energy Conservation Office (SECO)
- Provides overview of services and resources they have
- Walks through slides provided to the committee
- Notes they also have project financing
- A low interest revolving loan program, 2% interest rate up to 15 years and $8 million max per load
- Can apply for 3 loans at a time, so they can leverage up to $24 million
- Local government and public schools are majority of loans, the next group would be state agencies and higher education institutions
- Never had a default in program
- $698 million in savings and 5.6 billion KW hours in savings as well because of the loans
- Pantex program provides environmental oversight and training to help
- Address low level radioactive waste shipped through Texas to Las Cruces and this program is training of responders during this shipment and to make sure nothing happens in transit
- Darby – PACE program update?
- Commercial entities but not publicly owned, two providers are major providers
- Local governments still in process of adopting and focus still on major population areas
- Just a matter of getting the word out
- Darby – is there a report we can see on PACE?
- No report
- On PACE technical guidelines, updating those right now
- Craddick – what is budget from state?
- $397k with 5% reduction, it was $418k in FY 20, have 8 employees
- Have match requirement for federal funding so budget it used to get match
- Craddick – Interested in Pantex and move low level waste to storage facility?
- Pantex stand alone project to protect the environment
- Second project on waste isolation is carrying low level radioactive waste to point of origin and when it is carried through Texas they make sure it is safely transported
- Craddick – what do you do to make it safe?
- Emergency planning along route and track all shipments so they know where it is
- For waste isolation project plant, low level radioactive waste
- Craddick – what about facility low level waste facility in Andrews?
- Not involved with that project he believes but will check on it
- Craddick – not involved with safety of Waste Texas, interested in safety you are providing
- Craddick – how much does state provide funding for this program?
- It is a single source funding coming from federal government
Judith Talavera, AEP Texas
- Heart goes out to people of Texas, AEP wants to be part of the solution
- Reviews timeline of their action during winter storm
- They felt prepared going into week of February 13, impact they did have was minimal
- AEP Texas began communicating on Feb 10
- Close to being out of options to shed any more load during the storm
- Shed entire list of circuits that Monday and did not have anywhere to rotate outage
- As sites were identified that were impacted they responded quickly to bring them back online as quickly as they could
- Goldman – critical infrastructure list, how does one apply? A widow at home on oxygen
- Form they can fill out with retail electric provider and they need to get it signed by their doctor
- Does not know how the provider communicates with their customer on this
- Cannot guarantee service will not be interrupted so put out communications
- Goldman – how do you communicate to your customers
- End use customer is not their direct customer, but thinks this is an area where they can improve
- King – follow up on communication, they are a TDU correct?
- Yes
- King – Interested in communication and how we make it better
- Reynolds – communication on load shed came from ERCOT? They don’t tell you where but how much? Directions from ERCOT are mandatory?
- Yes
- Yes
- Yes and have to do it in 30 minute
- Reynolds – was there ample communication between ERCOT, PUC and your member organizations?
- Asked for clarification of term ample communication
- Reynolds – enough details on the severity so they could quickly act
- Meetings happened daily
- If they would have had to shut down it would have been weeks or months without electricity
- Reynolds – do you think your members were prepared?
- AEP felt their system was prepared
- Anchia – is being taken down a voluntary activity?
- Voluntary
- There are programs they could enter into
- Anchia – do you all manage any demand response program with industrial and commercial?
- Do not, prohibited from doing so
- ERCOT does that
- Anchia – do no allow residential demand response statewide?
- There are energy efficiency programs
- Agrees not a contract opportunity with residential
- Anchia – can grid operator despite smart meters can pull people’s thermostats down to 64 degrees
- That tool would be helpful and they would be interested in having it
- Herrero – ERCOT is looking at supply and trying to guess demand, load shed need is not conveyed to consumer or does AEP convey that information to the consumer?
- Communicating we received orders to shed load but not specific circuits
- Herrero – asked for more details on how one person can have lights on one side of street but not the other one
- It does come down to circuits and can explain more if needed
- Herrero – Chronic or critical care customers, want to follow up with her on this, because customer fills out as well as physician, asked for more details on the process and communication to consumer
- Load shed is not determined by individual customer, look at feeder
- There is not level of granularity where they are communicating with the customer of what circuit they are on
- Thinks there is opportunities on how to improve communication
- Herrero – what about car dealership, etc how do you know who is cut
- Really does depend on what feeder you are on
- Do review critical list annually and will be in the process of reviewing all this information as part of the event
- Reynolds – public was lead to believe it was a rolling blackout and it was not communicated power would not come on for an extended period of time; was there ever a follow up communication it was not coming back up
- For AEP Texas they adjusted messaging on Monday
- Reynolds – frustration in false expectations of rolling blackouts
- There was a lot of uncertainty in that time – agrees there were plenty of lessons learned
Thure Cannon, Texas Pipeline Association
- Pipelines within border of state would be their jurisdiction
- Work with legislature on getting sound and reliable policies
- Goldman – did any pipelines freeze?
- No natural gas pipes froze
- Geren – there was a problem as the compressor though? Some were not listed as critical infrastructure and the word needs to get out, your association could help get the word out
- Did hear there was a problem on a call
- Appreciate that comment and agrees
- Herrero – pricing question, any stories of storing gas and demand skyrocketing
- Antitrust law prohibits certain discussions so do not discuss pricing
- Have not heard those stories
- Herrero – what are prohibitions on price discussions?
- Non-profit with organizations that may compete on pricing they do not discuss pricing
Michael Lozano, Permian Basin Petroleum Association
- Advocate in Texas and New Mexico
- Impacts to state revenue due to activity are staggering; there are substantial taxes producers pay
Jennifer Bremer, Texas Land and Mineral Owners Association
- Reviews industry contributions
- This committee may consider legislation that would impact their contracting abilities but strive to provide solutions that would help both sides of the equation
- Support efforts to ensure inactive and orphan wells are plugged in a timely manner
Goldman – will not meet on Monday since they only have two bills referred to them so far but they will plan to meet on the following Monday