2020 October Energy News

Energy News October 2020

From the Field Photo Fall Colors Photo by Randy Milligan

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Railroad Commission Exceeds Legislative Goals for Safety, Environmental Inspections

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Most Texans Getting Financial Break on Home Gas Service Texas Gas Services’ Central-Gulf

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Adapting to a Digital Age

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RRC Commissioners Approve Publishing Proposed Rules for Coal Mining, Alternative Fuels

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We Are RRC

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Commissioners’ Corner

Service Area Latest to Provide Refund to Customers

RRC Proposes Changes Allowing for Electronic Signatures on Alternative Fuels Forms

Upcoming Events November 4, 2020

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Open Meeting

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Online

Railroad Commission Exceeds Legislative Goals for Safety, Environmental Inspections AUSTIN – Even with the impact of the COVID-19 pandemic, the Railroad Commission still went above and beyond targets set by the Texas Legislature in protecting public safety and the environment.

The RRC’s commitment to that critical mission is reflected in how it exceeded performance goals for safety and environmental inspections during Fiscal Year 2020, which ended on Aug. 31.

For example, the agency completed 347,617 inspections of oil and gas wells and facilities, which was more than 150,000 above the legislative target for the fiscal year.

Performing above target is not uncommon at the RRC. Inspectors in other regulatory areas of the RRC were also hard at work. A critical component of the vast energy infrastructure across Texas is pipelines, and the agency’s pipeline safety inspectors exceeded both the annual performance targets for standard and specialized (including accidents) inspections by conducting a total of 5,575 inspections. In the Surface Mining and Reclamation Division, the legislative goal for inspections of surface coal mines was 400. The agency completed 417.

Beyond Expectations The Railroad Commission exceeded numerous legislative targets for FY 2020.

Category Number of oil and gas well and facility inspections performed Number of abandoned pollution sites investigated, assessed, or cleaned up with the use of state managed funds Average number of oil and gas well and facility inspections performed by district office staff Number of standard and follow-up comprehensive pipeline safety and inspections performed

Legislative Target

Achieved

189,367

347,617

230

258

1,199

2,107

3,013

3,561

Category Number of pipeline accident investigations and special investigations performed Average number of LPG/CNG/LNG safety inspections per inspector Percent of total well population inspected Percentage of identified abandoned pollution sites investigated, assessed, or cleaned up with state managed funds Surface Coal Mine Inspections Average number of cases completed by Hearings Division examiner Average number of field audits per Gas Services auditor Number of Railroad Commission records imaged from non-digital formats Number of oil and gas organizations permitted or renewed State Managed Plugging Program oil and gas wells plugged

Legislative Target

Achieved

1,100

2,014

1,350

1,429

22.5%

33.4%

10%

13%

400

417

100

152

17.5

17.91

1.5 million

3.28 million

8,750

13,346

1,400

1,477

“Inspections are the primary tool to ensure compliance with Commission rules. These numbers show how seriously our inspectors take the agency’s commitment to protecting natural resources and communities across Texas,” said RRC Executive Director Wei Wang. “Their performance is even more impressive given the fact that staff had to quickly adapt to the upheaval of the COVID-19 pandemic as they continued their work. The Railroad Commission is only as good as its people, and I am very fortunate to work with such a highly skilled and dedicated staff.”

The agency is continuously working to utilize technology and other tools to improve its inspection processes. In the spring, for instance, RRC started its first-ever drone inspection team. The drones help inspectors to quickly respond and inspect sites that are unsafe or inaccessible during emergencies, such as fires, flooding, and other natural disasters.

The agency also makes inspection information available online to the public at any time. The RRC Online Inspection Lookup portal (RRC OIL) is a searchable database that makes inspections and enforcement histories of oil and gas wells available online 24 hours a day. The digital tool earned the agency the 2019 Chairman’s Stewardship Award for Energy Education from the Interstate Oil & Gas Compact Commission.

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Most Texans Getting Financial Break on Home Gas Service Texas Gas Services’ Central-Gulf Service Area Latest to Provide Refund to Customers

Thanks to cost-cutting measures put in place by the Railroad Commission, most Texans with home gas service have realized rate savings and refunds on their bills over the last two years.

Customers of Texas Gas Services’ Central-Gulf Service Area were the latest to receive a much-need financial break. Residential customers received a $23.19 credit on September bills.

With the fingers of northern cold fronts occasionally dipping deep down into Texas, it couldn’t have come at a better time. And it’s not just furnaces and faux fireplaces, home gas service is also used for ovens, hot water heaters, and even refrigerators (a hot commodity when electric service putters out because of an extreme weather event).

Because of the federal Tax Cuts and Jobs Act of 2017, gas utilities had their corporate income tax rates reduced from 35 percent to 21 percent.

Because rates are based upon expenses, including tax liabilities, the Railroad Commission ordered gas utilities to pass the savings on to their customers.

It has been a significant decrease for gas customers in the state, Mark Evarts, Director of the RRC Gas Services Market Oversight Section

“It has been a significant decrease for gas customers in the state,” said Mark Evarts, Director of the RRC Gas Services Market Oversight Section.

Whenever a gas utility needs to adjust its rates upwards, financial analysts in the Market Oversight Section, an attorney in the Office of General Counsel, and an administrative law judge and technical examin-

ers undergo an administrative hearings process that can take up to six months to determine whether the increase is justified.

Of course, just like home budgets, gas utilities are not immune to rising expenses, which include capital investments, safety related expenditures, payroll and benefit costs, insurance costs, and more.

“As companies grow, they have to put pipe into the ground,” Evarts said. “And, to maintain safe and reliable service to customers, there is a lot of capital investment needed.”

However, because of the reduction in the corporate income tax rate, most gas customers in the state have seen rates reduced or smaller increases to rates over the past three years.

Because the vast majority of gas utilities would need to decrease rates because of the federal tax action, RRC commissioners in February 2018 signed an accounting order (Gas Utilities Docket No. 10695), which instructed rate regulated natural gas utilities to pass the benefits of the lower federal tax rate through to their customers. Statute allows Evarts and his team to expeditiously review and approve the resulting rate reductions and refunds.

And for the TGS Central-Gulf Service Area, customers are not just getting a refund this year. Subsequent refunds will be applied to their customers’ bills in February of each year until the regulatory liability for excess deferred income taxes is fully amortized in approximately 35 years.

Texas Gas Services’ Central-Gulf Service Area is comprised of about 310,000 customers in the incorporated and unincorporated areas of Austin, Bayou Vista, Beaumont, Bee Cave, Cedar Park, Cuero, Dripping Springs, Galveston, Gonzales, Groves, Jamaica Beach, Kyle, Lakeway, Lockhart, Luling, Nederland, Nixon, Port Arthur, Port Neches, Rollingwood, Shiner, Sunset Valley, West Lake Hills and Yoakum.

Adapting to a Digital Age RRC Proposes Changes Allowing for Electronic Signatures on Alternative Fuels Forms The Railroad Commission continues to look for ways to take advantage of the digital age. On Oct. 20, commissioners approved publishing proposed versions for public comment of various Alternative Fuels forms that would allow for electronic signatures.

The proposed amendments to the 42 LPG, CNG and LNG forms allow electronic signatures to be considered equal to those signed with a pen. In the time of a global pandemic and restrictions on movement, allowing for the use of electronic signatures assists industry in submitting necessary forms without a huge inconvenience.

“Electronic signatures will allow us to better serve our regulated community,” said April Richardson, Director of Alternative Fuels Safety. “It makes sense for us to adjust with the times, and being able to conduct business electronically allows us to be more accessible, no matter where an operator may be.”

The Commission currently allow forms to be submitted electronically via email; however, documents must be printed, signed and scanned before sending the email.

The proposed change allowing for electronically signed forms greatly reduces the effort needed to email necessary forms to the RRC. The proposal would allow operators to elec-

tronically sign forms with whatever computer program that they are using to fill out the forms, such as Adobe Reader, Adobe Professional, or Preview on Macs.

If no comments are received on the forms, or if only comments are received in support with no suggested revisions, the forms would automatically go into effect on Nov. 1. If comments in opposition or other suggested changes are received, then the proposed forms and the suggestions will be considered by commissioners at a future Conference.

The draft versions of the forms can be seen on the following page: https://rrc.texas. gov/about-us/resource-center/forms/proposed-form-changes/.

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RRC Commissioners Approve Publishing Proposed Rules for Coal Mining, Alternative Fuels On Oct. 20, RRC’s commissioners also approved publishing in the Texas Register proposed rule amendments regarding surface coal mining and alternative fuels safety.

The public is invited to comment on the proposals.

For coal mining regulations, commissioners approved publication of proposed amendments to Chapter 12 of 16 Texas Administrative Code. The proposed amendments would better organize and clarify certain procedures, conform RRC rules to federal regulations and guidance, and update references to statutes or editions of external documents. The federal Office of Surface Mining Reclamation and Enforcement will review the amendments before formal adoption.

Amendments to alternative fuels safety regulations in 16 TAC Chapters 13 and 14 would implement changes to statutes passed by the Texas Legislature, and adopt, by reference, National Fire Protection Association standards. The proposed amendments also update, clarify, and ensure consistency among RRC’s alternative fuels regulations. In addition, the proposed changes include repealing 16 TAC Chapter 15, relating to alternative fuels programs, to reflect changes made by the Texas Legislature.

The proposals will appear in the Nov. 6 issue of the Texas Register for public comment. The proposed amendments were also be posted for comment on RRC’s website at https://www.rrc.state. tx.us/general-counsel/rules/proposed-rules/. Public comment on the proposed amendments to Chapter 12 will be accepted until Nov. 23. Public comment on the proposed changes to Chapters 13, 14, and 15 will be accepted until Dec. 14.

V I E W P RO PO S E D F O R M S4 Once the comment periods end, RRC staff will review the comments and make any necessary changes. The staff’s recommendations regarding adoption of the proposals will be scheduled for an open meeting for a vote by the Commission before any of the proposed changes can take effect.

From administrative compliance on oil and gas wells to ensuring enrollment in Alternative Fuels continuing education, these individuals keep the RRC running smoothly. Even with changing deadlines for waiver requests and notices to operators due to COVID-19, the Railroad Commission offers support for operators to remain in compliance during these difficult times.

If you need Alternative Fuels propane certification, you’ve met Maurie Hebert. Maurie helps with class registration inquiries, online payments, and more! At the Alternative FuelsTraining Center, which is open at 50% capacity, she checks temperatures, requires masks, and ensures the safety of the students and instructors in the building.

Danny Sanchez is a huge part of Administrative Compliance within the Oil and Gas Dicisions While he misses his work family, he’s proud of tackling unexpected challenges like working an alternating schedule from home and in the office. He’s glad he can continue to support his the public and his team in a timely fashion.

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Chairman Craddick CO M M I S S I O N E R S’ CO R N E R

As a new fiscal year is underway, the Railroad Commission is proud to announce that it exceeded its legislative targets for safety and environmental inspections. Although the industry continues to face challenges, this agency has continued to meet and exceed its commitment to provide regulatory certainty and environmental stewardship. I have continued to meet with industry groups and stakeholders to discuss ways in which the Commission can continue to provide for operators.

Looking ahead, I am working on the legislative priorities for the Commission. With January approaching, my sights are set on ensuring that this agency is fully funded in order to effectively execute our mission. I look forward to working collaboratively with the legislature next session and will work hard to make sure that this agency remains the best agency in Texas.

Commissioner Sitton CO M M I S S I O N E R S’ CO R N E R

Commissioner Ryan Sitton is continuing to transition back to leading the successful private sector enterprise he founded and which employs hundreds of Texans. Commissioner Sitton is also getting set for the release of his first book, Crucial Decisions, on Nov. 10.

Commissioner Christian CO M M I S S I O N E R S’ CO R N E R

In a recent op-ed, Commissioner Christian responded to news reports on a study that claimed that taxpayers would be on the hook to pay $117 billion to clean up abandoned oil and gas wells. This isn’t true.

When a well no longer produces oil or gas, the operator is required to plug it. Most oil and gas wells are plugged by their operators. In Fiscal Year 2020, the oil and gas industry plugged 7,375 wells without the use of any state funds.

However, some operators do not follow the law, but this does not mean that taxpayers pay for that well to be plugged. When an operator applies for a drilling permit from the RRC, they must provide financial security that the RRC will use to plug wells. The oil and gas industry also pays millions of dollars in fees to the RRC every year.

The Commission takes our responsibility to protect public safety and the environment very seriously. The RRC’s State Managed Plugging Program plugged 1,477 last fiscal year and for the last four years the program has exceeded targets set by the Texas Legislature.

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Oil and Gas Production Statistics

View monthly production totals of crude oil, condensate and total oil; and of gas well gas, casinghead gas, and total natural gas.

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Enforcement Actions

The Commission has primary oversight and enforcement of the state’s oil and gas industry and intrastate pipeline safety. View RRC’s Latest Enforcement Actions here.

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Public GIS Viewer

The Public GIS Viewer allows users to view oil, gas and pipeline data in a map view.

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