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The Texas RRC met on October 26th to discuss gas service and oil and gas applications and administrative matters. The archive of the meeting can be found here. The agenda for the meeting can be found here.

 

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.

 

Application of Texas Gas Service Company for Test Year 2019 Annual Interim Rate Adjustment for the Unincorporated Areas of the Borger Skellytown Service Area

  • Claudia Gadoy, Market Oversight RRC – Since final order issued, adjustment in decrease of revenue requirement; does not include recovery of any costs associated with winter weather event of 2021; recommends approval
  • Motion passes

 

Application filed by Atmos Pipeline – Texas 2021 Rider Rev Adjustment

  • Gadoy – A decrease of $35 million; 75% will be a credit to pipeline customers; recommends approval
  • Motion passes

 

Application of Blackbeard Operating, LLC (Operator No. 073056) for blanket Rule 10 (16 TAC §3.10) authority, MER allowable, increased net GOR, and cancellation of overproduction for unlimited oil and gas allowable assignments in the Sand Hills (Clear Fork) and Sand Hills (Tubb) Fields, Crane County, Texas.

  • Austin Gaskamp, Hearings Division – Would increase GOR to 300 barrels a day; Millwey Oil Company contests application, argues it will lead to premature abandonment
  • Examiners recommend that board denies all requests except for exception to Rule 10
  • Jim Wright, RRC Commissioner – Would like to pass item to next conference

 

Agenda items 4-14

  • Ezra Johnson, Hearings Division – Items included together as they pertain same facts; request to transfer operatorship from Siana Oil to Tall Dune Resources; motion is for a rehearing; Siana’s motion fails to show basis for rehearing, no findings of fact or legal rulings to show error
  • Recommendation to deny motion for rehearing
  • Motion passes

 

Oil and Gas Consent Agenda

  • Wright – Has some questions for John Moore, Technical Examiner from Hearings Division to consider regarding further reduction of flaring volumes to continue
  • Wright – Can we require that an operator consider the current cost of gas when performing cost benefit analysis? Shouldn’t the price of oil be taken into consideration? What about the actual cost of treatment to remove certain elements from the gas stream? Are we verifying these estimates? Do we know of a way to run these cost analyses? Are we seeing any evidence of supply chain issues causing an increase in flaring?
    • Johnson – Getting indications from operators that supply chain and labor issues have created circumstances so that when equipment malfunctions, it takes longer to fix it/get parts to fix it; asking for additional flexibility in Rule 32 exception hearings to account for these issues
    • Wright – Seeing this more today than a year ago?
    • Johnson – Yes, accelerated need for more parts and labor, lag
  • Wright – Anything commission can do to help this?
    • Johnson – Can’t speculate, there are other legal uses to which natural gas could be used; can encourage alternative use
  • Chair Wayne Christian – RRC was one of first environmentally-concerned agencies; interesting that this isn’t well-known; talks about history of RRC involvement in environmental issues
  • Over 99% of natural gas in TX is not being flared; hear so many negative things in media, but RRC and industry have created clean industry
  • Wright – Yes, important to recognize; do we get parts to fix problems in field? Not sure how to control issues we have with supply chain the way it is
  • Christian – Not fault of anyone in TX
  • Craddick – Have good track record, it is good what RRC does
  • Motion passes

 

Master Default Orders

  • Christian – There are 8 master default orders; Staff recommends pass to next conference
  • Motion passes

 

Agreed Enforcement Orders

  • Christian – There are 118 items; move to approve all the items
  • Motion passes

 

Administrative Matters

Executive Director Report

  • Wei Wang, Executive Director of the Commission – Update on agency actions taken so far for winter preparation
  • Sent out letter to all members under jurisdiction to apply for critical load designation by ERCOT and take necessary actions to prepare for upcoming winter
  • Sent inspectors to facilities to assess and ask questions; have visited over 300 facilities
  • Wright – Have done great job working with PUC
  • Christian – Frustrated with disrespect Wang faced when he testified in front of the Senate
  • Wang – Appreciative of collaborative nature of RRC team
  • Craddick – Appreciative of Wang’s team and proactive work

 

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

  • Randall Collins, COO of RRC – Internal delegation of authority requires commissioner approval of contracts in excess of $1 million; 2 contracts and 1 amended contract
  • Approval will ensure commitment to infrastructure and allows RRC to remain on schedule; recommends approval
  • Motion passes

 

Proposed Internal Audit Plan for Fiscal Year 2022

  • Paul Delaney, Internal Auditor for RRC – Conducted agency wide risk assessment, consulted others in creating audit plan; recommends approval
  • Motion passes

 

Update from Office of General Counsel

  • David Cooney, Office of General Counsel RRC – Waiting on EPA publishing new emission rules this week, ready to comply with these rules