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The Railroad Commission of Texas met on June 19 to take up a full agenda. The report below details all items discussed during the hearing.

This report is intended to give you an overview and highlight of the discussions on the various topics the committee took up. This report is not a verbatim transcript of the hearing; it 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.

 

Hearings Division

 

GUD No. 10715: Application filed by CenterPoint Energy Entex for Test Year 2017 Annual Interim Rate Adjustment for the unincorporated areas of the Houston Division and the cities that have ceded jurisdiction to the Railroad Commission of Texas.

Amy Bruce, Oversight and Safety Division

  • Increase of $9,770,346 million of which $4,569,814 million is allocated to customers
  • Asks for approval of rate adjustment
  • Members approve item

 

GUD No. 10716: Application of CenterPoint Energy Entex for the Test Year 2017 Annual Interim Rate Adjustment for the unincorporated areas of the Beaumont/East Texas Division and the cities that have ceded jurisdiction to the Railroad Commission of Texas.

Christina Poole, Oversight and Safety Division     

  • 5th interim rate adjustment for Beaumont/East Texas division
  • Incremental revenue increase of 1,768,245 475,125 is recoverable from the customer
  • Members approve item

 

GUD No. 10717: Application filed by CenterPoint Energy Entex for Test Year 2017 Annual Interim Rate Adjustment for the unincorporated areas of the Texas Coast Division and the cities that have ceded jurisdiction to the Railroad Commission of Texas.

Sarah Montoya, Oversight and Safety Division   

  • Incremental increase of 2,817,053 of which 1,270,064 million is recoverable
  • Members approve item

 

GUD No. 10645: Rate case expenses severed from Docket No. 10640, petition for de novo review by Atmos Energy Corp., Mid-Tex Division (Atmos), of the denial by the City of Dallas (Dallas) of the Dallas Annual Rate Review (DARR) Mechanism Tariff.

Dana Lewis, Hearings Division

  • Both parties reached a unanimous settlement
  • Recovery of rate case expenses $141,421 thousand and for Dallas up to $960,232
  • Parties purpose the recovery expenses over 12 months allocated to the customers in the same manner agreed upon in Docket No. 10640
  • Members approve item

 

GUD No. 10679, Consolidated: Statement of intent of SiEnergy, LP, to increase gas utility rates in Central and South Texas.

John Dodson, Hearings Division

  • Parties agreed to an increase of $1.77 million in revenue which is a reduction from their initial request of $2.27 million
  • Revenue requirement of $8.25 million and reduction of corporate income tax rate
  • This is SiEnergy first request for a rate increase since 2008; no city appeals
  • Members approve item

 

Docket No. C16-0003-SC-04-F: Application by Luminant Mining Company LLC for release of Phase I, II and III reclamation obligations for 13.2 acres, Phase II and III for 0.9 acres, and Phase III for 60.2 acres, Permit No. 4L, Martin Lake Mine, Rusk and Panola Counties, Texas

Kyle Lubbey, Hearings Division

  • Reclamation has been accomplished
  • Recommend a full release of the acreage and eligible bond reduction of $177,695 thousand
  • Members approve item

 

Docket No. C18-0009-SC-55-D: Application by Sabine Mining Company for acceptance of selfbond with third-party guarantee for reclamation of Permit No. 55, Rusk Mine, Rusk, Harrison and Panola Counties, Texas.

Kyle Lubbey, Hearings Division

  • The third-party guarantee is Southwestern Electric Power Company (SWEPCO)
  • Self-bonds for Sabine guaranteed by SWEPCO $140 million which equates to 6.72 percent of SWEPCO’s net-worth
  • Recommend the commission accepts the third-party partnership
  • Members approve item

 

Docket No. C18-0012-SC-47-E: Application by Texas Westmoreland Coal Company for acceptance of replacement surety bond for reclamation of Permit No. 47A, Jewett E/F Area Mine, Freestone and Leon Counties, Texas.

Kyle Lubbey, Hearings Division

  • Texas Westmoreland submitted a bond issued by Aspen American insurance company $18, 654,123 million to replace current and $15,500,000
  • Liberty mutual acceptance for 18 million stays in place
  • Replacement bond increase $33,500,000 million to 36,654,123 in amount equal to the reclamation costs
  • Members approve item

 

O&G 01-0305096: Application of Petro Waste Environmental, LP, pursuant to 16 TAC §§3.8 and 3.78 for a permit to operate a commercial waste separation and disposal facility, McMullen County, Texas.

Richard Eyster, Hearings Division

  • Facility with be made 4 miles north of Tilden on 33 acres of ranch land
  • The city of Three Rivers, McMullen County, and the McMullen County Groundwater Conservation District protest the facility
  • Concerned the facility could have adverse effects on ground water and Choke Canyon Reservoir

 

Judge James Teal, McMullen County Judge

  • Expresses fear for the Frijole River and that it will become an issue for Texas
  • Asks the committee to consider that the facility will disrupt McMullen county and pollute the groundwater
  • Request that the committee deny the proposal; there has been a lack of transparency
  • The proposal for decision disregarded supplemental submission; RRC staff did not examine
  • Chair Craddick asks Judge Teal to move onto the next point and not impugn a RRC staffer
  • Sitton- You said the proposal disregarded the proximity to water, but the PFD shows 6-7 pages going through locations of aquifers, the different formations, and the testing for potential contaminants. I feel like your statement is not correct and our examiner took a long time going through this.
    • The county’s groundwater analysis shows that dangerous risk exists between shallow ground water and the bottom of the disposal cells
    • Waste management cell 2 shows there are 3.64 feet to the bottom of the liner to the ground water, cell 3 is less than 1 foot from the groundwater, and cell 4 shows the liner is underwater.
    • According to the records, this information has been talked about in the hearings
  • Sitton- PFD examiners gave enough examination.
    • I want it to be on record that we respectfully disagreed
  • Eyster, RRC Staff- When you drill into the confined aquifers you will get a rise in the piezometer; however, under the pits the water is plugged back down to the depth of saturation. The groundwater will not be coming into the pits.
  • Members approve items

 

O&G 7B-0307112: Enforcement action against Brown Industrial Gas Operating, Inc. for violations of Statewide Rules on the Hamer (29489) Lease, Well Nos. 12, 13, 14, 15, and 17, Amity Field, Comanche County, Texas; Violations of 16 TAC §§3.3(2), 3.3(3), 3.13(a)(6)(A), 3.14(b)(2) and 3.21(j).

Jennifer Cook, Hearings Division

  • Members approve item

 

O&G 01-0306688: Complaint of Alta Mira Land & Cattle that Patterson Energy Corporation (008490) does not have a good faith claim to operate the Chittim (Gas ID No. 145261) Lease, Chonan (S.M.D.) Field, Zavala County, Texas.

Clayton Hoover, Administrative Law Judge

  • Recommend the commission find the operator has a good faith claim to operate and the claim should be dismissed
  • Members approve item

 

O&G 03-0308322: Enforcement action against Rap Operating, L.L.C. (Operator No. 693654) for violations of a Statewide Rule on the Goolsbee (Gas ID No. 250050) Lease, Well No. 2, Hamman, East (11,150) Field, Matagorda County, Texas; and Talafuse Gas Unit (Gas ID No. 257003) Lease, Well No. 4, Hamman, East (Fb A) Field, Matagorda County, Texas; Violation of 16 TAC §3.14(b)(2); Motion for Rehearing.

Clayton Hoover, Administrative Law Judge

  • Operator filed a motion for re-hearing alleging failure to respond was a mistake.
  • Motion for re-hearing holds no certificate of service
  • Recommendation to deny the re-hearing
  • Members approve item

 

O&G 7B-0309487: Complaint of Billy Don and Nolo Gene Davis that Harrell, Bob Trucking (Operator No. 359015) does not have a good faith claim to operate the Victoria (29809) Lease, Well No. 2, Group, S. (Ellenburger) Field, Nolan County, Texas; Motion for Rehearing

Christy Reaves, Administrative Law Judge

  • Recommend the motion should be denied
  • Members approve item

 

O&G 03-0309135: Single Signature P-4 Filing of MT Energy LLC (Operator No. 518947) for the Maresh LT (26641) Lease, Well No. 1H, Giddings (Austin Chalk-3) Field, Burleson County, Texas, to change the operator from TT Operating, LLC (Operator No. 872252) to MT Energy LLC; Motion for Rehearing

Christy Reaves, Administrative Law Judge

  • TT Operating did not respond with evidence or create a hearing date
  • TT Operating’s stated they were not aware they had to show good-faith documentation
  • Recommended the motion should be denied
  • Members approve item

 

O&G 08-0311740: Application of Rio Oil and Gas (Permian) II, LLC for an exception to 16 TAC §3.40 for the Conquista State Unit 54-1-8 Lease, Well No. 1H, Phantom (Wolfcamp) Field, Reeves County, Texas.

O&G 08-0311741: Application of Rio Oil and Gas (Permian) II, LLC for an exception to 16 TAC §3.40 for the Expedition State Unit 71-67 Lease, Well No. 1H, Phantom (Wolfcamp) Field, Reeves County, Texas.

O&G 08-0311742: Application of Rio Oil and Gas (Permian) II, LLC for an exception to 16 TAC §3.40 for the Expedition State Unit 71-67 Lease, Well No. 2H, Phantom (Wolfcamp) Field, Reeves County, Texas.

O&G 08-0311743: Application of Rio Oil and Gas (Permian) II, LLC for an exception to 16 TAC §3.40 for the Expedition State Unit 71-67 Lease, Well No. 3H, Phantom (Wolfcamp) Field, Reeves County, Texas.       

Carl Caldwell, Hearings Division

  • Provides explanation one explanation for items 15-18
  • Recommend approval of wells
  • Members approve items

 

O&G 01-0311764: Application of North South Oil, LLC to consider amending the field rules for the Luling-Branyon Field, and to consider creating the proposed Luling Branyon R 40 Exc Field pursuant to 16 TAC §3.40, Caldwell and Guadalupe Counties, Texas.

Carl Caldwell, Hearings Division

  • Recommend approval of the application
  • Members approve item

 

O&G 20-0310187: In Re: P-5 Organization Report of RBE Wichita, LLC (Operator No. 685834); Motion for Rehearing.

Lynn Latombe, Hearings Division

  • Recommend the motion be denied
  • Members approve item

 

OIL AND GAS CONSENT AGENDA (29 items; numbers 21 – 49)    

  • Members approve items

 

Office of General Counsel

AGREED ENFORCEMENT ORDERS (131 items; numbers 50 – 180)               

  • Members approve items

 

Administrative Matters

EXECUTIVE OFFICE

Executive Director Report: Issues related to the management and operation of the agency, and personnel matters.               

Wei Wang, Executive Director

  • Introduces new CFO Corey Crawford

 

FINANCIAL SERVICES

Legislative Appropriations Request for Fiscal Years 2020-2021.

Martin Powell, Budget Manager       

  • Hoping for a response from the Governor’s office or the LBB soon
  • Staff requests to adjust the LAR as necessary to stay within the base established by the LBB and seeking approval to request 22 additional FTEs, 2 IT projects, and authority for the executive director to make any conforming changes necessary to fit any policy letters that may come out in the future
  • Members approve items

 

OFFICE OF GENERAL COUNSEL

Pending and/or contemplated litigation, rulemakings, and other actions initiated by or involving the U.S. Environmental Protection Agency, U.S. Department of Interior, U.S. Department of Transportation, and other federal agencies that may impact the State of Texas, including, but not limited to, the energy, pipeline, and natural resource industries

Vanessa Burgess, Assistant General Counsel

  • Nothing to present on 183

 

Cause No. 09-08-0809, Gulf Energy Exploration Corporation v. Railroad Commission of Texas, in the 267th Judicial District Court of Calhoun County.     

Natalie Dubiel, Office of General Counsel

  • Recommends the commission delegates authority to the executive director
  • If approved a motion to
  • Members approve items

 

Approval of certain agency contracts pursuant to the Commission’s Delegation of Authority.

Vanessa Burgess, Assistant General Counsel

  • One state-wide bundled solicitation for site remediation services and one well plugging amendment out of the Abilene district office
  • Members approve items

 

OIL AND GAS DIVISION

Oil Field Cleanup Program Quarterly Status Report, Fiscal Year 2018, 3rd Quarter.

Clay Woodul, Oil and Gas Division

  • Plugging operations were closed on 265 wells at a cost of $5.3 million, 446 new wells were approved for plugging with state funds,1,084 wells have been plugged at an estimated cost of $18.7 million, etc.
  • Well plugging target is 1,500 wells for next year

 

Art Correa, Team Lead of State Managed Cleanup Program

  • Closed 31 cleanup activities at a cost of $309,695
  • At the end of the 3rd quarter, 121 authorized clean-up activities remained to be completed
  • As of June 15, 2018, a total of 94 activities have been completed

 

COMMISSIONERS

Chairman Craddick

Oilfield Relief Initiative a. Update on progress of Oilfield Relief Initiative. b. Discussion and possible withdrawal of proposed amendments to 16 TAC §§3.52 and 3.53, relating to Annual Well Tests, and corresponding amendments to the Form W-10.

Brandon Harris, Chief Information Officer

  • Began to assess resources needed and timelines to implement candidates
  • Implementations grouped into categories of in progress/work, in planning, or assessing feasibility
  • There have been improvements to oil well status report and taken implementation steps, but will be based on proposed rule making
  • Within oil and gas, a downloadable file for easier manipulation will be available in the fall
  • Chair Craddick- Makes a motion to withdrawal the proposed amendments statewide oil and gas ruled to 52 and 53 and proposed amendments to the W-10.
  • Members pass motion