The Railroad Commission of Texas' 2021 Year in Review

Introduction For 130 years, the Railroad Commission has proudly served the people of the great state of Texas. Looking back on the 130th year of the agency’s existence, 2021 marks a time of continuing a streak of recent success and significant accomplishments in overcoming challenges. The COVID-19 pandemic continued to affect people’s lives, including the oil and gas industry that the RRC regulates. But 2021 will also be remembered most for February’s Winter Storm Uri in which intense winter weather wreaked havoc across the state with snow and ice impacting the energy sector, the electrical power grid and Texans. The unusual and historic storm presented challenges the state needed to overcome to avoid a future in which Texans could once again be victims of the weather if actions were not taken.

Fortunately, the RRC was able to assist lawmakers during the legislative session as they discussed and debated potential solutions after the storm. As with 1891 when the RRC was created by the Legislature to solve significant issues with a runaway railroad industry in which goods and services were becoming more and more dependent and hostage to the whims of powerful railway magnates, legislators would once again involve this agency as part of the solution to help Texans with such legislation as House Bill 3648 and Senate Bill 3, among others. Local gas company residential customers experienced minimum interruption of their gas supplies during Winter Storm Uri. More than 99.95% of these customers’ gas stayed on, providing heating and cooking gas to over 4.6 million households. The RRC is bringing our expertise to help strength the electric supply chain in our state. The legislation expanded the agency’s regulatory responsibilities to ensure a supply of natural gas would be available to the electrical grid, even during extreme weather events as Winter Storm Uri. The ongoing implementation of the bills will extend beyond 2021, which you can read more about in this issue of RRC’s Year in Review.

This special publication is split up into five sections to showcase the accomplishments of the agency. After videos from our agency’s three commissioners, the first section, “Historical Perspective,” looks back at the 130-year history of the agency and interviews with some staff who have been with the agency for decades. The second section, “A Historic Storm,” dives deep into what occurred during and since Winter Storm Uri. The third section, “Today’s Agency: Achieving Higher Standards,” covers how the RRC is meeting legislative goals and other significant information from all the agency’s divisions. The fourth section, “The Core Mission: Protecting Public Safety and the Environment,” explores a host of success stories the agency has made in service to the state. And the fifth section, “Getting Better for the Future,” looks at ways the agency is improving to keep up with changing times.

Commissioner Videos

Chairman Wayne Christian

Commissioner Christi Craddick

Commissioner Jim Wright

Contents Introduction �������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 2 Commissioner Videos ���������������������������������������������������������������������������������������������������������������������������������������������������������������� 3

HISTORICAL PERSPECTIVE �������������������������������������������������������������������������������������������������������������������������������������� 6 Railroad Commission Still Committed to Serving Vital Roles for Texans after 130 Years ��������������������������������������������������� 6 Oldest State Regulatory Agency Not Old Fashioned ������������������������������������������������������������������������������������������������������������ 8 RRC Embracing Technological Transformation ����������������������������������������������������������������������������������������������������������������������� 8 State Managed Well Plugging Program Protecting Public, Environment Since 1983 ������������������������������������������������������ 10 RRC’s Longest-Tenured Employee Not Stopping Anytime Soon ����������������������������������������������������������������������������������������� 12 From 18 to Management, RRC Provides Opportunities for Advancement for Career Employee ������������������������������������� 14 Jim Wright Sworn In As RRC’s 51st Commissioner ��������������������������������������������������������������������������������������������������������������� 16

A HISTORIC STORM ���������������������������������������������������������������������������������������������������������������������������������������������18 RRC Responds Quickly to February’s Severe Winter Storm ������������������������������������������������������������������������������������������������ 18 RRC Adopts Rules to Designate Critical Natural Gas Facilities Needed During Energy Emergencies ����������������������������20 RRC Takes Proactive Measures in Preparation for 2021-22 Winter ����������������������������������������������������������������������������������� 22 Representatives from Natural Gas Industry Tapped to Serve on Texas Energy Reliability Council ��������������������������������� 23 RRC Works to Ease Financial Burden for Customers of Natural Gas Utilities Impacted by Winter Storm Uri ���������������� 24 RRC Hires Director to Head New Critical Infrastructure Division ���������������������������������������������������������������������������������������� 26 New Division Will Be Key to Continuing Supply of Natural Gas in Emergencies ������������������������������������������������������������� 26 RRC Proposes Rule to Update Curtailment Standards ���������������������������������������������������������������������������������������������������������� 27

TODAY’S AGENCY: ACHIEVING HIGHER STANDARDS ��������������������������������������������������������������������������������������������������28 RRC Exceeds Legislative Goals for Inspections �������������������������������������������������������������������������������������������������������������������� 28 RRC’s Orphan Well Plugging Program Exceeds Legislative Goal for Fifth-Straight Year �������������������������������������������������� 29 Oil & Gas Division �������������������������������������������������������������������������������������������������������������������������������������������������������������������30 Field Operations ����������������������������������������������������������������������������������������������������������������������������������������������������������������������30 Drilling Permits and Completions �������������������������������������������������������������������������������������������������������������������������������������������30 Oversight & Safety Division ���������������������������������������������������������������������������������������������������������������������������������������������������� 31 Alternative Fuels Safety ����������������������������������������������������������������������������������������������������������������������������������������������������������� 31

Pipeline Safety ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������32 Pipeline Damage Prevention Program and Pipeline Support ���������������������������������������������������������������������������������������������������32 Surface Mining and Reclamation Division ����������������������������������������������������������������������������������������������������������������������������������33 Hearings Division ��������������������������������������������������������������������������������������������������������������������������������������������������������������������������33 Information Technology Services �������������������������������������������������������������������������������������������������������������������������������������������������33 Keeping Up with the Oil and Gas Industry: Training Program Helps RRC Staff Stay Current �������������������������������������������������34

THE CORE MISSION: PUBLIC SAFETY AND THE ENVIRONMENT ����������������������������������������������������������������������������������������� 36 RRC Honored with National Environmental Award for Project on National Seashore �����������������������������������������������������������36 Group Recognizes Agency’s Orphan Well Plugging Collaboration on Padre Island ������������������������������������������������������������36 RRC Focuses on the Protection of Freshwater During Well Plugging Operations ��������������������������������������������������������������������38 RRC Completes Four-Year Cleanup of West Texas Waste Disposal Site ����������������������������������������������������������������������������������40 Brownfields Response Program Restores Open Spaces for Public ��������������������������������������������������������������������������������������������42 RRC’s Underground Injection Control Program Continues to Earn EPA Recognition ���������������������������������������������������������������46 RRC’s Pipeline Inspectors Ensure Protection of Public Safety, Environment ������������������������������������������������������������������������������48 Agency Working to Improve Accident Response, Add Oversight of Gas Storage Facilities ��������������������������������������������������48 Mine Reclamation Important Part of RRC Work �������������������������������������������������������������������������������������������������������������������������54 RRC Shores Up Abandoned Mine in East Texas Neighborhood ����������������������������������������������������������������������������������������������56 Annual Oil & Gas Monitoring & Enforcement Plan Sets Priorities ���������������������������������������������������������������������������������������������58

GETTING BETTER FOR THE FUTURE ����������������������������������������������������������������������������������������������������������������������������� 60 Changes to Production Reports to Improve Monitoring of Flaring, Improve Enforcement ������������������������������������������������������60 New Program for Flaring Applications Improves Processes ������������������������������������������������������������������������������������������������������62 Tool Helps Staff with Audits, Data Analytics �������������������������������������������������������������������������������������������������������������������������������62 New PIPES Online System Improves Transparency, Access to Records �����������������������������������������������������������������������������������63 RRC’s Computing Modernization Efforts Receives Additional Support from Legislature ��������������������������������������������������������64 Updated Alternative Fuels Forms Allow for Electronic Signatures ���������������������������������������������������������������������������������������������67 RRC Launches New, Improved Website ��������������������������������������������������������������������������������������������������������������������������������������68 RRC Working on Innovative Project to Repurpose Mine for East Texas City ����������������������������������������������������������������������������70 RRC Aquifer Discovery Helps State with Future Water Planning Needs ����������������������������������������������������������������������������������73 Oil & Gas Discharge Permits Streamlined in RRC, TCEQ Collaboration ���������������������������������������������������������������������������������� 74

HISTORICAL PERSPECTIVE

Railroad Commission Still Committed to Serving Vital Roles for Texans after 130 Years Created to protect the greater interests of the public, the Railroad Commission of Texas is now 130 years strong and still upholding critical principals for the state.

Before the actions that created Texas’ oldest regulatory agency on April 3, 1891, railroads wielded tremendous power, controlling the flow of goods and setting their own rates. The Railroad Commission was given oversight of railroad operations and rates and brought much-needed stability and predictability to the industry.

Its first three commissioners were appointed by the governor, but after 1894, the RRC’s commissioners have been elected to overlapping six-year terms.

The coming of the railroad would be followed by a great rush for oil. In 1901, there was the famous discovery of oil at Spindletop near Beaumont. The well was so productive that it produced more than the world’s entire demand in 1902.

In 1917, using the same justification as with the railroads as a common carrier, the RRC’s duties were expanded with the Texas Legislature’s Pipeline Petroleum Law, giving it oversight of pipelines. That was followed with the Oil and Gas Conservation Law in 1919.

RRC’s first oil and gas rule in 1919 concerned the establishment of minimum distances between wells to protect field pressure and correlative rights.

In 1920, RRC was given authority over the regulation of natural gas utilities, including oversight of rates.

The well and those that followed it gradually brought into focus the need for responsible stewardship of this valuable resource. The rapid development of oil rigs would also bring to the forefront the need for protection of public safety and the environment from the volatile compound.

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The tragic 1937 explosion of the New London School near Tyler, which had used wellhead gas from oil wells to heat the school, spurred more concerns about public safety, especially of students. The incident killed nearly 300 students and teachers.

The Legislature that year gave RRC authority to require the odorization of natural gas and liquefied petroleum gases and to adopt rules and regulations for gas storage containers and transportation of such containers.

The tragic explosion ultimately resulted in the state adopting some of the more stringent alternative fuel training and certification requirements in the country.

The agency would later gain responsibility for the regulation of surface mining of coal and uranium in the state.

Over the years, the agency’s duties have been finetuned, as the needs of Texans have changed, including the relinquishing the last of its rail functions in 2005 to the Texas Department of Transportation in 2005.

Today, the RRC has more than 840 employees spread across the state, and is due to grow by more than 100 employees as the Legislature once again enlisted the help of the RRC in 2021 to ensure the supply of natural gas for electric generation in all weather conditions.

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Oldest State Regulatory Agency Not Old Fashioned RRC Embracing Technological Transformation Even though the Railroad Commission has been around for 130 years, that does not mean the agency rests on its laurels or is stuck in its ways.

In fact, the agency is forging ahead by embracing the latest technologies as it strives for ways to better serve Texans.

The RRC has leveraged technology to increase efficiency for operators and staff, and expanded transparency by providing the public even more access to agency information. Examples of recent technology enhancements to RRC operations include:

• RRC Online Inspection Lookup (RRC OIL), an award-winning, first-in-the-nation web application which is updated nightly and allows anybody to view inspection and violation data 24/7.

• RRC CASES, an online portal that allows operators to file Hearings case files electronically and makes them available for public view.

Operators can also pay fines online through the system.

• RRC PIPES is centralized cloud-based portal that streamlines agency processes and provides a valuable tool for RRC’s Pipeline Safety staff and operators to upload documents, including inspection and incident reports, and complaints, while automatically making more documents available to the public.

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The Commission is currently in a six- to eight-year transformation of information technology systems to reduce dependence on aging mainframe systems and move to a cloud-based business application which implements modern technology tools, while enacting a data warehouse and business intelligence solution to make more of the agency’s data transparent and user-friendly.

The need for RRC’s regulation of the state’s energy resources has been evident with recent periods of massive growth and contraction because of market volatility. Over the last decade, the state experienced a boom in horizontal drilling; discoveries of huge untapped resources, including the 2018 announcement by the U.S. Geological Survey that the Delaware Basin portion of the greater Permian Basin contains an estimated 46.3 billion barrels of oil and 281 trillion cubic feet of natural gas; and market down turns in 2015 and 2020.

RRC’s three commissioners and 840-strong staff are dedicated to supporting Texas’ economic vitality as the nation’s leader in oil and gas while protecting the state’s natural resources, environment, and public safety.

requires regulatory certainty and adaptation to keep up with an ever-evolving, technologically advanced private sector. I look forward to continuing to prioritize health, safety, and innovation alongside my fellow Commissioners and agency staff as we maintain our status as the best agency in Texas.”

“While Texas has changed quite a bit since the creation of the commission,” said Commissioner Jim Wright, “our agency’s mission to ensure the production of our state’s natural resources is done safely and efficiently is more important than ever.

I am honored to serve as a Commissioner and look forward to advancing the legacy of the Railroad Commission of Texas.”

RRC continues in its role as the global leader in energy regulation. As the top producer of oil and natural gas in the United States, Texas’ resources are vital to ensure energy independence and security for our nation.

As the agency moves forward, more major technology upgrades are also in the works that will improve the agency’s operations, the experience of operators who interact with the agency, and online transparency.

“It has been an honor of a lifetime to serve the people of Texas at the Railroad Commission,” said Chairman Wayne Christian. “I wake up everyday excited to make the Commission better and hopefully lay a foundation to make the next 130 years as great as the last 130.”

“Over the past 130 years, the Railroad Commission of Texas has set itself apart as a global leader in regulatory excellence,” said Commissioner Christi Craddick. “The oil and gas industry is a critical component of our states’ overall success and Year 2021 - Historical Perspective

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State Managed Well Plugging Program Protecting Public, Environment Since 1983 Because of the sometimes-up-and-down nature of oil and gas industry, some operators can’t or won’t plug their own wells and abandon them.

For the resulting orphaned wells, RRC has utilized its rigorous State Managed Well Plugging Program, which formally began on Sept. 1, 1983, thanks to the Texas Legislature’s creation of the Well Plugging Fund.

Wells plugged with state funds are in violation of RRC’s well plugging rule or are leaking. The operators of these wells are either unidentified, inactive or delinquent, in default of a RRC order requiring compliance, or have failed or merely refused to bring the well in compliance.

In 1991, RRC sought additional funding and authority to address an increasing number of abandoned wells and oilfield pollution sites created by the collapse of the oil and gas industry in 1986.

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The Texas Legislature enacted Senate Bill 1103, which replaced the original Well Plugging Fund with the larger, more comprehensive Oil Field Cleanup Fund. The Legislature’s action created new sources of revenue for the fund, which is supported entirely by industry fees.

The size of the fund grew, allowing the RRC to plug even more abandoned wells. The bill also authorized the RRC to use the funds to remediate abandoned oilfield pollution sites via the State Managed Cleanup Program.

It is not just a bust that poses potential challenges to the well plugging program. A massive boom in the oil and gas industry from 2011 to 2017 resulted in a decline in the number of wells being plugged.

“The majority of plugging contractors were working for industry, and we had a very hard time getting plugging companies to work for us,” said Clay Woodul, Director of RRC Field Operations.

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In more recent years, though, the pace of statefunded plugging has significantly picked up with the RRC exceeding legislative targets for the last four years and being on track to surpass that goal again this fiscal year.

One of the improvements that the State Managed Well Plugging Program made in 2016 was a streamlined process that allowed the RRC to award contract amounts to well plugging contractors rather than needing to seek a bid for each project.

“The process now enables us to issue a contract for an entire year for a lot more value, and we simply issue workorders, as needed, to keep contractors busy,” Woodul said.

Orphaned wells are prioritized with the State Managed Plugging Program based on the level of risk to public safety and the environment. Since it started on Sept. 1, 1983, the well plugging program has plugged more than 42,000 orphan wells.

Since 2003, the well plugging program has grown from 23 plugging inspectors to 35 today.

The RRC’s expertise in well plugging has gained national recognition. As recently as November of this year, the Interstate Oil and Gas Compact Commission presented RRC with the Chair’s Environmental Partnership Award in recognition of the plugging of 11 orphaned wells in the Padre Island National Seashore on the barrier island close to Corpus Christi, which helped preserve ecological systems at the popular national park.

Before the creation of the State Managed Plugging Program, the RRC received limited funding since the early 1960s for the purpose of plugging leaking wells. The more common method of plugging orphaned wells before 1984 was for RRC representatives to obtain assistance from major producers in an area, said Nick Nichols, who has been with the agency for 45 years and is the lead inspector in the Wichita Falls District.

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RRC’s Longest-Tenured Employee Not Stopping Anytime Soon Luther “Nick” Nichols has been involved with the oil and gas industry as long as he can remember.

By the time the Louisiana native turned 15, he had moved 50 times, living in mobile camps as his father pursued oilfield work.

As an adult, he also worked in the business, holding a variety of jobs before being spotted by the Railroad Commission’s Pampa district director at the time, John Rogers, while Nichols was trimming trees for a natural gas pipeline company. Rogers encouraged him to apply for a position.

“I love this job. I’m just as excited about it today as I was in 1975,” said Nichols, 76, who is the agency’s longest tenured employee and is the lead inspector in Wichita Falls. “There have been times I wished there wasn’t a weekend.”

Laughing, he added, “Of course, there are times I wished the weekend wouldn’t end.”

He likes working for the Railroad Commission so much that his plans of retiring after 45 years of service fell by the wayside. He’s thinking about hanging up his hat when he reaches 50, but, really, he’s just taking it year to year, enjoying his time in the field and with his coworkers.

His only significant break from the oil and gas industry came during a period of service in the Army and a tour in Vietnam during the war. He was a gunner on a rescue helicopter.

“I didn’t think I’d make it another month,” he said of how dangerous his job in the military was before he got out.

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Before RRC hired him and assigned him the job of inspector in Wichita Falls, he was bringing home $600 every two weeks as a pipeline worker. RRC would pay him about $300.

He was 30 years old, married, and had three children. It wasn’t easy. He says, perhaps only half kidding, that he worried his wife would divorce him for taking a job that slashed his salary by so much.

It was much more than just the pay.

“It was something that fit me. I believed in what we were doing,” Nichols said. “I loved the Railroad Commission right away.”

He wanted to be the best employee he could be. He spent time after work at home to continue writing his inspection reports. He also worked part-time jobs to bring in extra money.

Nichols has seen the agency move from being mostly paper-based to relying on digital tools, such as laptops and cell phones. Before cell phones, when he would travel afar to remote sites for his inspections, his supervisors would not be able to contact him again until he returned to the office.

The way the agency got around this limitation was to have inspectors call collect via payphones back to their district offices twice a day. If the office rejected the call, the inspector would know his or her supervisor did not have any additional instructions.

Among the big issues for the Commission during Nichols’ time of service was a change in how orphan wells were plugged. During his early years with the agency, when an orphan well needed

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to be plugged, an RRC representative would ask for assistance from the major producers in the area, and they would collectively chip in to plug such wells.

In 1984, RRC created the State Managed Plugging Program, which was funded by industry fees.

Eventually, Nichols became interested in other opportunities at the RRC and heard about a program that employed criminal investigators at the agency.

The only problem was that RRC’s Theft Division only hired people with peace officer commissions and did not provide such training to its own employees.

That did not deter Nichols who paid for his own way to attend peace officer training in the evenings. In order to maintain his commission, he had to work 16 hours every month as a deputy.

While the agency would later pay for employees to earn peace officer commissions, Nichols says that the problem with hiring professional police offices to handle oilfield corruption cases was that most lacked an understanding about the technical aspects of rig operations and the ways in which a dishonest operator might try to deceive them.

Nichols was hired by the Theft Division in 1985 and not only worked cases from the oilfields but also on one from within his district office with the well plugging program and how bids were handled and the quality of work performed.

Nichols continued to work with a criminal investigation unit at the agency.

His biggest case was his last. He worked with the Texas Rangers for two years on an investigation in Wilbarger County. It resulted in five people being sent to prison in 2007.

Since then, he has worked as lead inspector, helping the Wichita Falls district director interview and manage the field inspectors.

Nichols says the agency has come a long way since he was hired, especially when it comes to investing in the professionalism of its employees.

The Commission now provides Boots on the Ground training for new inspectors and other training, as needed.

When he started, he had to buy the equipment he used as an inspector.

“Now, if you need, you ask for it,” Nichols said.

Pay is much better at the agency, but it still can’t compete with what the oil and gas companies offer.

But if you believe in the importance of public service, no amount of money will convince dedicated workers like Nichols to leave their posts.

The case resulted in an employee getting fired and changes to improve the program. An aide for one of RRC’s commissioners even contacted Nichols to ask for his input on any changes that the well plugging program needed.

While the Theft Division was disbanded in 1993,

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From 18 to Management, RRC Provides Opportunities for Advancement for Career Employee The Railroad Commission not only hired Tim Poe when he was just 18, it has given him numerous opportunities to advance over the course of his career, which has been only been with the agency.

He was hired as a clerk in September 1981 in the agency’s Drilling Permits Section. He rose to the position of assistant director in the Oil and Gas Division before retiring in 2016.

“Sadly, when I started, I was just a little clerk in a deep silo,” Poe said. “I did not pay attention to bigger picture issues. When you are down in the trenches, you are in a silo. When you rise to other positions, you begin to see the bigger picture.”

For him, being employed in several lower-level jobs at the agency first would ultimately make him a better manager when he had that opportunity.

Poe, who was rehired by RRC three months after his retirement, has cut back to half-time hours since November 2020. He is now a program specialist in the Legal Enforcement Section.

His primary work involves assisting with IT projects as the agency works to modernize its systems. He

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worked extensively on the development of the CASES portal – which stands for Case Administration Service Electronic System – that launched in March of 2020.

CASES allows those with legal cases at the RRC to file all of their paperwork electronically and make any payments online. It also allows the public to view case files, improving transparency.

Among the challenges that the RRC faces at it tries to update its computing systems is that much of the work at the agency has long been based in the antiquated and limited Mainframe. The technical challenges for the agency’s IT professionals are immense, but there is another, lesser-known issue with switching systems, Poe said.

The Mainframe, which has been around since the late 1970s, allowed the automation of various tasks at the agency.

“Computerization has enabled the agency to do far more with far less,” Poe said.

No longer did agency staff need to figure out by hand how to prorate an oil or gas field, which allows each operator on it to receive an equitable share of its resources.

Year 2021 - Historical Perspective

The Mainframe had been performing this task for so long that no one was left at the agency who still remembered how to manually calculate the proration of a field.

Poe and Joe Stasulli, the deputy assistant director over the Well Compliance Section, had to study the proration formula to figure out what the program in the Mainframe was doing and how to replicate it.

One of the big changes experienced by the agency while Poe was assistant director over the P-5 program was requirements for financial assurance for oil and gas wells, which took effect in 2004, providing the agency with resources to call upon to clean up and plug abandoned sites, if the need arose.

Even though industry was given years of notice, it did not prevent years of angry calls to the RRC and lawsuits, Poe said.

Another challenging time was the move of the Railroad Commission’s headquarters from South I-35 in Austin to near the Capitol in the William B. Travis Building in 1986.

“We were expected to answer phone calls in the new building without having our files,” said Poe, who noted that movers would not deliver their things until a week after they were at their new desks. “We just figured out a way to get our files over there.

We got dollies and pushed our stuff into the flow of material being moved. It wasn’t organized.”

Not only did the agency become more reliant on the Mainframe during Poe’s time with the agency, he also saw the coming of the desktop computer as a tool for every agency employee.

“Some people who refused to use new technology found themselves replaced,” Poe said, saying he knew of an attorney who would type emails to his secretary so she could print them out for him. “We are streamlined. We are automated. The costs to move backwards are too high; we have no choice but to go forward.”

Texas Railroad Commission Oil & Gas Division 1985

Year 2021 - Historical Perspective

15

Jim Wright Sworn In As RRC’s 51st Commissioner On Jan. 4, the RRC’s 51st commissioner, Jim Wright, was sworn in. Wright joined Christi Craddick and Wayne Christian on the three-member Commission.

The RRC plays a major role in oversight and regulation of the oil and gas industry, an industry that has been the backbone of the state economy and plays a vital role in keeping energy costs low for Texans while also helping pave the way for the nation’s energy independence.

“Oil and natural gas will make up the majority of our nation’s energy for decades to come and it is best for our state, our nation and the world if that energy is produced right here in Texas,” said Wright, a lifelong South Texan. “As commissioner, I will work to streamline enforcement and increase transparency at the Commission, with the ultimate goal of creating a sustainable and dependable lifestyle for all Texans supported by our state’s abundant natural resources.”

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Year 2021 - Historical Perspective

Year 2021 - Historical Perspective

17

A HISTORIC STORM

RRC Responds Quickly to February’s Severe Winter Storm When Winter Storm Uri wreaked havoc on Texas for one week in February, RRC’s employees dealt with the same safety and comfort issues other residents around the state faced.

The regulatory efforts clearly had a positive impact. According to the United States Energy Information Administration, electricity produced from natural gas doubled from pre-storm levels.

Despite the challenges of the historic arctic blast, RRC staff worked long hours because of the critical role the agency has in regulating energy production companies and overseeing gas utilities that supply gas in people’s homes and business.

Throughout the weeklong storm, RRC staff worked around the clock coordinating with other state agencies, pipeline operators, local gas distribution companies, upstream oil and gas producers, trade associations, and electric companies to address issues to ensure power issues could be quickly resolved and more Texans could stay warm.

The severe cold brought ice, thick blankets of snow, and single-digit temperatures to much of the state.

“Out of 4.3 million residential customers, 99.95% of them had continuous gas services throughout the storm,” said Wei Wang, RRC Executive Director. “The tireless work of our employees helped make this happen.”

The agency’s commissioners took swift action to ensure the maximum amount of natural gas was prioritized for human needs during by passing an Emergency Order in two emergency meetings.

Mark Evarts, RRC Director of Gas Services Market Oversight, told commissioners during their Feb. 12 emergency meeting that “Commission staff has been made aware that certain electric generation facilities which serve human needs customers may be subject to curtailment as a result of the extremely cold weather.”

During the Feb. 17 meeting to extend the emergency order, which was broadcast on the Internet as is normal for conferences, commissioners had to connect with each other via cell phone due to outages.

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RRC received requested help from the Texas Department of Transportation to clear roads so energy workers could access their sites and the Texas Department of Emergency Management to help with generators, which provided muchneeded power to facilitate the extraction of energy resources.

RRC issued a notice to oil and gas operators on Feb. 13 instructing them to monitor and maintain operations for potential impacts as safety permitted.

Also on Feb. 13, the Commission issued a notice to local distribution companies authorizing each distribution gas utility to record in a regulatory asset account the extraordinary expenses associated with the winter storm, including gas costs.

As the need for energy production increased and weather conditions adversely affected disposal wells essential to the safe operation of oil and gas wells, the agency issued temporary modifications to waste hauler and disposal well permits to facilitate continued production from oil and gas wells.

Year 2021 - A Historic Storm

On Feb. 16, RRC proactively requested that Governor Greg Abbott waive specific statutes and rules to allow transportation companies not currently licensed with the agency to be allowed to transport alternative fuels, including propane and compressed natural gas, for the duration of the disaster declaration. The waiver, which was granted, ensured the ongoing supply of alternative fuels in the event of lack of truck transportation.

As the storm began to ease on Feb. 19, commissioners and agency staff started working with utility companies, consumer groups, and other groups to help prevent potential spikes in gas bills. On Feb. 24, the Commission sent out a notice to gas utilities recommending that they suspend disconnections because of nonpayment.

Following the storm, the RRC remained committed to lending its expertise and insight to help lawmakers formulate key pieces of legislation in response to Uri.

RRC Adopts Rules to Designate Critical Natural Gas Facilities Needed During Energy Emergencies RRC’s commissioners on Nov. 30 adopted rules for critical designation of natural gas infrastructure to help protect Texans in energy emergencies.

The new rules, the first of their kind, implement provisions in House Bill 3648 and Senate Bill 3 and define natural gas facilities that would be designated as critical gas suppliers and critical customers.

Critical gas suppliers include, but are not limited to, gas wells, oil leases that produce gas, natural gas pipeline facilities, underground natural gas storage facilities and saltwater disposal facilities.

Critical customers, which are a subset of critical gas suppliers, are facilities that require electricity to operate. These operators will submit a critical customer information to their electric utilities so that their electric utilities have the correct information for purposes of supplying power to the facilities.

Senate Bill 3 includes language to allow for certain facilities to apply for an exception to critical designation. However, the newly adopted rules 20

exclude certain types of highly critical facilities from being able to apply for an exception.

Examples include any facility that will be on the state’s electricity supply chain map, which is due to be published next year, underground gas storage facilities, pipelines that directly serve a power generation plant or local gas distribution companies, gas wells and oil leases that produce a large amount of gas per day, and gas processing plants. Applications for exception require objective evidence proving reasonable cause and justification, which will be reviewed, and RRC staff can deny an application.

“The Commission adopted a ‘critical designation’ rule to ensure our natural gas supply is prepared for future energy emergencies,” said Chairman Wayne Christian.

“With the passage of this rule, critical facilities including more than 19,000 of the state’s natural gas production facilities will be required to weatherize and be prepared to operate in future winter weather

Year 2021 - A Historic Storm

“It has been wrongly reported that for $150 any company can be exempted from preparing for winter,” said RRC Chairman Wayne Christian.

“The $150 is a fee set in statute two decades ago for all applications for exceptions. It is just an application fee, not a get-out-of-jail free card.

No company will automatically receive an exemption and applications can and will be denied.”

events. Despite what you may read in the news, no one is getting a bailout, and no one is getting a loophole.”

Critical gas suppliers will file RRC Form CI-D acknowledging their status, and critical customers will also submit critical customer information.

“Meaningful and responsible implementation of Winter Storm Uri legislation has been a top priority for myself and the Railroad Commission of Texas since February,” said RRC Commissioner Christi Craddick. “I appreciate the efforts of agency staff and stakeholders, whose hard work and diligence will benefit all Texans.”

Rules adopted on Nov. 30 address the issue that some critical gas suppliers were not eligible for critical load designation and had their power cut off inadvertently during Winter Storm Uri. Critical gas facilities are now able to, and required to, submit their information to electric utilities. Electric entities will use this information to plan load-shed procedures during an energy emergency.

“I am proud of the Railroad Commission’s work to incorporate the comments we received from stakeholders and the public,” said RRC Commissioner Jim Wright. “Today’s rule strikes an appropriate balance to ensure those operators that are substantially contributing to the natural gas supply chain are identified and designated as critical while also recognizing the need for electric utilities to have flexibility during load shed events to ensure that electricity is available to the residents and families who need it.”

There are several more steps that will be implemented to help fortify the state’s energy supply. The RRC and the Public Utility Commission of Texas have been working on mapping the state’s electricity supply chain and natural gas infrastructure along that chain.

VIEW THE FINAL RULES

Year 2021 - A Historic Storm

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RRC Takes Proactive Measures in Preparation for 2021-22 Winter Even before rules were adopted, the RRC began work to ensure operators were prepared for the 2021-22 winter season and natural gas supply is readily available.

Following the summer operations season, the RRC issued a Notice to Operators asking gas facility and gas pipeline facility operators to take all necessary actions as they prepare to operate during winter season 2021-2022. The notice included a reminder to operators update their information with their electric providers for critical load serving electric generation, and a list of best practices for winter preparation.

A second notice with updated best practices was issued in early December.

These were among an array of the RRC has undertaken since the end of the summer to ensure gas is flowing and available to protect Texans in case of weather emergencies this winter.

Inspectors from multiple RRC divisions have conducted site visits to observe winter preparations. RRC inspectors visited more than 2,550 facilities as of early December including a broad spectrum of natural gas infrastructure.

These include oil and gas leases that have more than 14,000 active producing or disposal wells;

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large gas storage facilities; processing plants, close to 50 pipelines directly serving gas-fired power generators; and about 150 other transmission pipeline facilities used to transport natural gas. The RRC will continue this effort throughout the rest of the year and the upcoming winter.

“Between these ongoing site visits and calls with executives of the top natural gas producers and pipelines, by volume, we know first-hand through onsite observations that operators are undertaking measures that will provide gas supplies under normal and emergency conditions,” said Ted Wooten, Director of RRC’s newly-created Critical Infrastructure Division. “The Commission takes preparation for this upcoming winter very seriously. Among all facilities we have visited so far, our inspectors physically observed that natural gas facilities have put in place devices and processes to harden their assets against cold weather conditions. The measures go beyond what’s being done on the equipment itself. For example, in order to keep operations up and running some operators will provide temporary shelter and supplies on leases for their staff, all part of a proactive plan to reduce any concerns for traveling on icy roads and the associated worker safety. By putting eyes on site and boots on ground, our inspectors provide that verification of gas companies’ preparedness.”

Year 2021 - A Historic Storm

Representatives from Natural Gas Industry Tapped to Serve on Texas Energy Reliability Council RRC’s commissioners on Oct. 12 appointed five members representing different segments of the natural gas industry to serve on the Texas Energy Reliability Council (TERC) as required by legislation.

TERC was formalized in Senate Bill 3 to “ensure that the energy and electric industries in this state meet high priority human needs and address critical infrastructure concerns” and to “enhance coordination and communication in the energy and electric industries in this state.”

The five members appointed to TERC by RRC’s commissioners join Chairman Wayne Christian and other representatives appointed by the Governor and the Public Utility Council and also officials from other agencies.

RRC’s appointees were: • Jason Herrick, president of Pantera Energy, representing the operation of wells producing natural gas.

• Grant Ruckel, vice president for government affairs at Energy Transfer, representing the pipelines.

• Danny Wesson, executive vice president of operations for Diamondback, representing injection and storage of produced water.

• Graham Bacon, executive vice president and chief operating officer of Enterprise Products, representing gas processing.

• Keith Wall, director of regulatory affairs for Southern Gas Operations at CenterPoint Energy, representing local gas distribution companies.

Year 2021 - A Historic Storm

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RRC Works to Ease Financial Burden for Customers of Natural Gas Utilities Impacted by Winter Storm Uri On Nov. 10, RRC’s commissioners took action to provide financial relief for customers of the state’s natural gas utilities.

As required by House Bill 1520, which was passed in response to the extraordinary high cost of gas caused by Winter Storm Uri, commissioners passed a Regulatory Asset Determination Order, which sets the maximum amount of storm expenses that companies can request to pay off with customer rate-relief bonds.

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“Without the process established by the bill, extraordinarily high natural gas costs from the storm would have had an immediate impact on people’s bills, potentially crushing family budgets and possibly much worse,” said Mark Evarts, Director of RRC Gas Services.

Gas utility local distribution companies (LDCs) incurred high natural gas costs while continuing to provide the necessary gas to customers using the precious resource to heat homes

Year 2021 - A Historic Storm

and business. LDCs are authorized to directly pass-through gas costs, without a markup, to customers.

The RRC and the Texas Public Finance Authority are now working together to issue customer rate-relief bonds for the utilities, which will allow customers to gradually pay for the gas costs over an extended period instead of paying much higher amounts over a shorter period, reducing the impact of the recovery of these costs to customers.

Eight gas utilities ultimately pursued customer bond relief applications via the RRC, including Atmos Energy, Bluebonnet, CenterPoint, Corix, EPCOR, SiEnergy, TGS and UniGas. The total regulatory asset amount for the companies was approximately $3.4 billion.

Year 2021 - A Historic Storm

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RRC Hires Director to Head New Critical Infrastructure Division New Division Will Be Key to Continuing Supply of Natural Gas in Emergencies Over the summer, the RRC began work on a new Critical Infrastructure Division in response to legislation that gave the agency new responsibilities related to critical infrastructure needed for electric generation.

Senate Bill 3 had the agency developing statewide rules related to continuing production and delivery of natural gas during weather emergencies. In order to provide the RRC with the necessary resources, the Legislature authorized the agency to add up to 130 FTEs in its Fiscal Year 2022 and 2023 budgets or about 15% more employees than the agency’s current count of more than 840.

The Critical Infrastructure Division’s first director is Ted Wooten, who had been the Chief Engineer for RRC’s Oil and Gas Division.

Wooten will be filling key positions, such as regional director positions, to help him manage the division and hire field inspectors.

Wooten has more than 20 years of experience in the oil and gas industry. He was previously the operations vice president for an independent energy company. He was president of the 2,000-person oil service company Archer and has held various positions at PetroAlpha Energy, Arkoma Products, Kinder Morgan, and Saxon Oil Co. Joining Wooten as the new division’s engineer is Ivan Salas, who also has more 20 years of experience in the oil and gas industry.

He worked for Equinor (Formerly Statoil) in the Bakken as the lead engineer for operations and production, Anadarko Petroleum as the staff facilities engineer and El Paso Corp. as an engineer.

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Year 2021 - A Historic Storm

RRC Proposes Rule to Update Curtailment Standards The RRC’s current gas curtailment standards are reflected in what is known as Order No. 489 which was originally adopted in 1973. As mentioned earlier, during Winter Storm Uri the RRC adopted an emergency order that placed electric generation facilities second on the gas service prioritization list to give a higher priority to electric generators, which was a tremendous help during the winter emergency.

In response to stakeholder feedback on its emergency order, the RRC’s proposed rule (16 T.A.C. §7.455), relating to Curtailment Program) updates the service priority order. Service priority for human needs customers such as residences, hospitals, and schools remains the top priority, followed by electric generation facilities.

The proposed rule clarifies that firm deliveries have priority over interruptible deliveries during a curtailment event.

Additionally, the Uri emergency order included electric generators serving human needs customers in the second priority. The proposed rule expands the second priority to include all electric generation facilities, not just those serving human needs customers. Comments on the proposed rule are due by Jan. 7, 2022. The RRC has proposed an effective date of April 1, 2022, for its Curtailment Program rule.

Year 2021 - A Historic Storm

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TODAY’S AGENCY: ACHIEVING HIGHER STANDARDS

RRC Exceeds Legislative Goals for Inspections RRC’s various inspection programs for the industries it regulates ensure the protection of public safety and the environment, which is why the Legislature sets high goals for each program.

The RRC, which has district offices throughout the state, exceeded Fiscal Year 2021 legislative goals for a broad range of inspection categories concerning oil and gas; intrastate pipelines, the alternative fuels LNG, CNG and LPG; and surface mining of coal.

Inspections are critical to ensuring compliance with statewide rules designed to prevent pollution and dangerous situations that could affect residents and communities, or provide a safety net to allow us the luxury of such activities as weekend barbecuing with the use of propane.

RRC has managed to exceed the Texas Legislature’s high standards for inspections while working through a pandemic that impacted the agency’s operations and its regulated community.

Many of RRC’s success measures for division and inspector levels are highlighted below:

Category

Target

Number of oil and gas well and facility inspections performed

189,367

308,922

Number of LPG/CNG/LNG safety inspections performed

20,000

20,604

Number of standard and follow-up comprehensive pipeline safety and inspections performed

3,129

3,598

Number of pipeline accident investigations and special investigations performed

1,200

2,043

Number of Coal Mining Inspections

400

416

Average number of oil and gas well and facility inspections performed by district office staff

1,199

1,816

Average number of LPG/CNG/LNG safety inspections per inspector

1,350

1,386

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Year 2021 - Today’s Agency

Achieved

RRC’s Orphan Well Plugging Program Exceeds Legislative Goal for Fifth-Straight Year While the vast majority of oil and gas operators responsibly plug their wells when production has ceased, the RRC’s State Managed Plugging Program steps up when they can’t or won’t to ensure safety of Texans and the environment are protected.

RRC’s program for orphaned wells is so efficient, it exceeded the Texas Legislature’s target for plugging orphaned oil and gas wells for the fifth year running, despite challenges brought on by the COVID pandemic in 2020 and 2021.

Year

Legislative Goal

Actual Number

2017

875

918

2018

979

1,374

2019

979

1,710

2020

1,400

1,477

2021

1,400

1,453

The State Managed Plugged Program plugged 1,453 orphaned wells in Fiscal Year 2021 thanks to the hard work of staff in district offices across the state staying on top of the projects. The legislative goal was to plug 1,400 wells.

The total for FY 21 included a notable collaboration with the National Park Service to plug 11 wells at the Padre Island National Seashore near Corpus Christi. The work – which occurred from January to March and received funding from the Gulf Coast Ecosystem Restoration Council – helped preserve precious natural resources for visitors of the park.

A major benefit of the State Managed Plugging Program is that it provides work to skilled contractors, which is especially important during periods of economic downturn.

The State Managed Plugging Program is funded through oil and gas industry revenue, including, but not limited to, well plugging reimbursements, fees and financial securities paid by the industry.

Year 2021 - Today’s Agency

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Oil & Gas Division Field Operations

Drilling Permits and Completions

Key legislative performance measure for FY 21 include:

In FY 21, RRC’s Oil and Gas Division had 7,360 active operators. During the fiscal year, staff processed 9,381 drilling permits, which took an average of 2.7 days each to complete.

• Percentage of wells not inspected in last five years: Target was 5%; actual performance was 1%.

• Number of oil and gas well and facility inspections performed: Target was 189,367; actual performance was 308,922.

• Number of abandoned pollution sites investigated, assessed, or cleaned up with the use of state managed funds: Target was 230; actual performance was 276.

• Number of orphaned wells plugged with the use of state managed funds: Target was 1,400; actual performance was 1,453.

• Average number of oil and gas well and facility inspection performed by district office staff: Target was 1,199; actual performance was 1,816.

• Percent of Total well population inspected: Target was 22.5%; actual performance was 28.2%.

Number of orphaned wells plugged with the use of state managed funds: Target was 1,400 Actual Performance was

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1,453

The agency had 13,368 completions filed during the fiscal year. The number includes initial potentials, well records, recompletions, reclasses and injection wells. Of these, 62% were filed in the Permian Basin region and 20% in the Eagleford region. More details on completions by RRC district are below: FY 21 Completions Activity Submitted/Approved Date

District

Submitted Date Count

Approved Date Count

01

1,348

1,344

02

1,329

1,304

03

482

508

04

192

217

05

61

58

06

418

409

6E

3

3

7B

260

266

7C

962

985

08

6586

6917

8A

770

757

09

793

795

10

164

157

Totals: 13,368

13,720

Year 2021 - Today’s Agency

Oversight & Safety Division Alternative Fuels Safety In FY 21, RRC adopted changes to regulations for compressed natural gas and liquefied natural gas, which adopted NFPA standards and codes; added container manufacturer registrations and updated CNG licensing categories as a result of House Bill 2127 from the 86th Texas Legislature; removed outdated references to the Alternative Fuels Safety department; and clarified application processes to increase transparency.

• Training hours provided: 3,163

AFS performance measures for the fiscal year include:

• Completion reports processed within 30 business days: 94%

• 3,179 students attended 248 RRC training/CE classes. ◦ 150 In-person courses: 1,864 students ◦ 22 Online Continuing Education Courses (CE): 487 ◦ 48 Online Initial Course of Instruction (ICI): 462

• Inspections performed: 20,604

• Completion reports processed: 3,162

• Violations cited: 22,004

• Plans processed within 30 business days: 94%

• Exams/licenses/certifications /registrations:

• Plan applications processed: 70

34,482

◦ Exams administered: 4,640

Current stats

◦ Online exams administered: 1,258

• Licensed/registered: 4,069

◦ New exempt registrations: 707

• Certified individuals: 12,022

◦ Certification renewals: 12,481

• Registered individuals: 3,983

◦ Registrant renewals: 3,779

• Alternative fuel installations: 88,241

◦ Licenses issued/renewed: 7,221 ◦ Trucks registered/renewed: 5,654

Million

Gas Services Utility Audit Section $70 $58.5

$60 $50 $40

$35.7 $32.0

$30 $23.8

$20 $10

$13.8

$4.8

$15.9 $4.9

$0

Year 2021 - Today’s Agency

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FY‐2021 Audits Conducted 70

Audits Conducted The Utility Audit Section’s eight auditors conducted a total of 141 audits during FY 21.

This was 100.71% of the performance measure goal and an average of 17.6 audits per auditor.

66

60 50

47

40 30

24

20 10 2 0

Routine

Quality of Service

Special

Cost of Gas

Gas Services Market Oversight Section The Market Oversight Section of the Oversight and Safety Division is one of the numerous areas of the RRC to respond to events during and after February’s Winter Storm Uri. Throughout the storm, staff coordinated with gas utility customers and industry to address issues related to reliability of gas supplies to human needs customers.

During the storm, Texas local distribution utilities were able to maintain service to more than 99.95% of their human needs customers, providing a source of warmth to over 4.6 million households during one of the longest duration extreme cold weather events in Texas history.

Pipeline Safety Pipeline Safety exceeded the following performance measures: • Number of standard and follow-up comprehensive pipeline safety and inspections performed. Goal was 3,129, but the Pipeline Safety achieved 3,598.

• Number of pipeline accident investigations and special investigations performed. Goal was 1,200, but Pipeline Safety achieved 2,043.

Pipeline Damage Prevention Program & Pipeline Support While primarily teleworking this year, the Pipeline Damage Prevention Program staff attended several in-person and hybrid meetings and safety events, totaling 55 outreach opportunities, reaching an estimated 2,400 attendees.

Virtual meetings included participating in Damage Prevention Council of Texas meetings, teaming up with Texas 811 staff for educational webinars and attending multiple Utility Public Safety Alliance gatherings. The Pipeline Damage Prevention Program also presented 811 and Texas Damage Reporting Form information during this year’s webinar series for operators. In-person events included attending the annual Sunbelt Builders Show, held in Dallas, Texas, this year.

The RRC’s Pipeline Permitting and Mapping team reduced delinquent permits by 60% this year and continued to reduce permit processing time from 7.6 days to 7.33 days. The team gave several presentations to Operators during this year’s webinar series, focusing on common errors causing permit rejections.

• Average number of pipeline field inspections per field inspector. Goal was 100, but field inspectors managed 108.78.

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Year 2021 - Today’s Agency

Surface Mining & Reclamation Division

Information Technology Services

Here are some notable legislative goals for the division on FY 21:

Despite COVID-19 restrictions in FY 21, Central Records continued to provide frontline services for in-person visitors to the public research area in Austin.

• Number of coalmining inspections performed: 400 was the goal; 416 was achieved.

• Percent of uranium exploration sites inspected monthly: 95% was the goal; 100% was achieved.

• Percent of abandoned surface mine sites on which reclamation has been initiated: 95% was the goal; 95% was achieved.

• Percent of coal permitting actions completed within statutory review time frames: 90% was the goal; 99% was achieved.

Hearings Division The Hearings Division adapted to the prevalent virtual environment that resulted from the pandemic. All 1,800 hearings in FY 21 were conducted via Zoom.

RRC CASES was integral to the smooth transition from in-person hearings to virtual hearings. Parties and examiners, as well as the general public, have ongoing access to all information filed in a docketed case, which allowed examiners to conduct hearings without a hardcopy file.

The Hearings Division worked to overcome any challenges faced communicating in a virtual world.

Examiners and participants in the hearings process exhibited patience if someone was struggling with a connection, sound or video.

When not assisting the public, researchers received and completed more than 750 requests for information. Requests range from basic well record searches to in-depth production reports requiring many hours of collation and searching through micro-film records.

Also, RRC document transparency continued with more than 2.9 million documents imaged from paper, including 464,132 of the 1.2 million documents from the Kilgore Imaging Project. Meanwhile, Public Sales accepted payment on 8 thousand permits and fees totaling over $4 Million.

RRC’s free data sets available for download were migrated to HTTPS in FY 21 to ensure more secure and streamlined file transfers. This move allowed users to select and download multiple files at one time.

The data sets ensure around-the-clock access to important RRC data. The data is directly accessible using links found on the RRC website without need of a username or password.

Here are other statistics from the Hearing Division for FY 21: • 1,467 new cases docketed • 1,945 docketed cases closed • An average of 215 docketed cases completed per Oil & Gas examiner Year 2021 - Today’s Agency

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Keeping Up with the Oil and Gas Industry: Training Program Helps RRC Staff Stay Current As the state’s primary energy regulator, the RRC works to proactively train staff to keep up with technology innovation from the oil and gas industry. This further solidifies the RRC’s valued reputation in the energy industry.

Among the programs that RRC uses to keep its inspectors and technical staff up to speed is Topcorp, which takes place on the campuses of the University of Texas at Austin, the Colorado School of Mines, and Penn State University.

More than two dozen RRC staffers are currently working their way through the educational program that includes three workshops: Petroleum Geology and Engineering and Petroleum Technology, Environmental Management and Stewardship and Emerging Trends and Communications.

Dr. Ahmad Majid Professor Chemical and Biological Engineering

Before participants travel to one of the universities for each workshop, they take a series of online lessons to prepare themselves. Each workshop takes place over a three-day period on its host campus and includes time in the classroom, lab, and field.

Downtown Golden, CO

MORE INFO ON TOPCORP TRAINING

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Year 2021 - Today’s Agency

The Center for Rock and Fluid Multiphysics (CRFM) (Arkhat Kalbekov, Graduate Research Assistant).

Michael Sorensen & Logan Baker of RRC pictured.

Dr. Bill Eustes, Research Professor, Petroleum Engineering Department, CSM giving the presentation of the week.

Classroom Instruction – Ancient Petroleum Landscapes & Geohazards.

(Dr. Lesli Wood, Professor of Geology & Geological Engineering)

Chemical and Biological Engineering (CBE) Hydrate Center (Dr. Jose Delgado, Professor Chemical and Biological Engineering)

Old equipment and the entrance into the Edgar Experimental Mine donated to the school in 1910.

Year 2021 - Today’s Agency

35

THE CORE MISSION: PUBLIC SAFETY AND THE ENVIRONMENT

RRC Honored with National Environmental Award for Project on National Seashore Group Recognizes Agency’s Orphan Well Plugging Collaboration on Padre Island

From left, RRC Executive Director Wei Wang, RRC Chairman and IOGCC Vice Chairman Wayne Christian, RRC Assistant Executive Director and Oil and Gas Division Director Danny Sorrells and RRC Assistant Director for Field Operations Clay Woodul with the IOGCC Award.

The RRC earned national recognition from the Interstate Oil and Gas Compact Commission (IOGCC) in November for a collaborative orphan well project.

The IOGCC is an international organization that includes oil and gas regulators from 38 states and eight Canadian provinces.

During its annual conference, IOGCC presented RRC with the Chair’s Environmental Partnership Award in recognition of the plugging of 11 orphaned wells in the Padre Island National Seashore on the barrier island close to Corpus Christi.

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The project occurred from January to April 2021 and helped preserve sensitive ecological systems for both wildlife and all the visitors who enjoy visiting the park every year.

Environmental Partnership is one of IOGCC’s Chair’s Stewardship Award categories for “innovative projects led by non-industry organizations with the cooperation and participation of industry.”

RRC’s State Managed Plugging Program oversaw the effort and worked with the National Park Service, AAA Well Services and E-Tech

Year 2021 - The Core Mission

Padre Island well plugging, Spring 2021

Environmental and Safety Services to plug 10 former gas wells and an associated water well.

Funding for the work, which also included the removal of five well pads and two tank batteries, came from the RESTORE Council.

“Because of the great collaboration between Railroad Commission experts, the National Park Service and funding from the RESTORE Act, this project was accomplished quickly and efficiently,” said Wei Wang, RRC Executive Director. “The National Seashore is one of the State’s great natural

treasures. I am proud we were able to do our part to help protect it for all Texans and the future generation.”

To protect the integrity of the dunes at the National Seashore, the plugging company built a mat road to allow the trucks to safely cross the dunes and get to the remote wells. Trucks carrying equipment traveled the beach road each day, providing access for crews to complete their work while protecting public safety and the environment.

Year 2021 - The Core Mission

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RRC Focuses on the Protection of Freshwater During Well Plugging Operations There’s much more to the plugging of oil and gas wells than simply closing its opening and covering it with dirt.

The Earth’s geology is like a layered cake, which oil or gas wells have to go through, often down thousands of feet. Different sweet elements or geological features fall in different zones. In much of Texas, there are often freshwater aquifers and other features that may contain oil and gas resources, salt water, and more.

“Our primary goal is to protect the freshwater zones,” said Matthew Barth, the lead well plugging coordinator for RRC’s Kilgore District.

Another issue with an unplugged well is the potential for it to contaminate other productive zones by allowing different geological layers to communicate via an open wellbore. For example, that could allow hydrogen sulfide from a sour productive zone to migrate to a sweet crude zone and turning it sour and dangerous, or perhaps causing the productive zone to shift, which would affect other producers in the same field.

Plugging an oil or gas well generally consists of having a workover rig, cement mixing unit and pump, and a couple of storage tanks for water.

Setting a plug consists of running a steel or poly tubing into a well’s casing to a given depth, figuring out how much cement is needed for the plug based on the size of the well’s casing, pumping cement down the tubing and displacing it down to where it needs to be, and then pulling the tubing out of the well, leaving the cement in place.

It is not enough to simply pour cement down the casing. To ensure that each plug is doing what is supposed to, the pluggers will use a perforating gun to pierce 360 degrees of holes in the steel casing in order to squeeze cement to its outside.

“After we set the bottom plug, we wait at least three to four hours and pressure test the casing to see if there are any holes in the casing and try to plug any holes off,” Barth said.

There can be any number of additional plugs for each well, based on the number and depths of the freshwater zones, productive zones, and disposal/ injection zones in proximity to a given well. The final plug will be from at least 150 feet to the top.

The wellbore is cut off at least three feet below the ground’s surface, and once the well is fully plugged, it is covered with the topsoil.

In Kilgore, much of the city used to be where oilfields were, and many of the buildings have been built over plugged wells. To make sure that there are no problems with the plugging of orphan wells, an RRC plugging inspector will oversee each operation.

Also, before a plugging operator can get approval to plug wells in the state, a lead plugger will supervise one of their operations to make sure that they know what they are doing and understand and follow RRC expectations and Statewide Rule 14.

Much of what Barth does, as the leader plugger in his area, is to ensure that funds are utilized as efficiently as possible. One of the major costs of plugging is the transportation of bulky plugging equipment to the various sites.

Different plugs will be placed at different locations in the well to protect resources, Barth said.

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Barth tries to group as many wells together as a packaged project. He might even make the contractor’s next project to be a nearby location, thus limiting transportation costs and maximizing actual plugging.

“I’m working on a nine-well package here in Gregg County in the East Texas Field,” he said. “I will award it to one of the contractors we are using now, based on the movement rates they give.”

Thanks to a streamlined process, personnel in Austin award plugging contractors maximum budgets for a year. Lead pluggers in the different RRC districts select projects for each of the approved pluggers in their district up to the total amount of the contract.

“I have four contractors right now,” Barth said. “I have to figure out where to best spend that, and I try to spend all of the money they have been awarded.”

In order for each contractor to provide an accurate estimate for how much each well will cost to plug, Barth has to research everything he can on the history of the well, including completion reports, and information from the groundwater conservation district, so all of the well’s features and geological zones that it crosses are understood as best as possible.

“The estimate is just a starting point,” Barth said. “We want to be at or below our estimate, but we are not going to cut any corners. We are going to do it right, the way it should be done.”

One of the cheaper parts of the project is the cement for plugging. This allows Barth the leeway to require at least an extra 10% for each plug.

“It doesn’t hurt to add a little to it,” he said.

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RRC Completes Four-Year Cleanup of West Texas Waste Disposal Site The RRC completed a massive four-year project to clean up a surface waste disposal facility near Odessa.

The $9 million remediation effort of the Wheeler Road Westex Notrees site began in 2017. The facility had operated as a surface waste disposal facility from the early 1990s to 2012 in Ector County and included several waste pits.

The open pits were emptied and closed using state managed funds generated from industry fees. The final pit was closed in April. Overall, 204,000 cubic yards of oily waste were removed from the five pits.

“For state managed cleanup efforts, our objective is to remove all contamination and waste in order to

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protect public safety and the environment,” said Peter Pope, RRC Site Remediation Manager. “The closure of the abandoned pits near Odessa resolves complaints the agency received over the years. I am proud of the work that our staff and contractors put into achieving this positive result.”

The project was one of 275 oil and gas sites cleaned up by the RRC’s State Managed Cleanup Program in FY 21. The legislative target was 230 for the fiscal year.

The State Managed Cleanup Program is funded through oil and gas industry revenue, including, but not limited to, regulatory fees, permit fees, and financial security.

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Year 2021 - The Core Mission

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Brownfields Response Program Restores Open Spaces for Public Thanks to the Brownfields Responses Program, RRC is turning old oil and gas sites into open spaces for the public to enjoy.

The program, which began in 2002, is supported

by EPA funding. Many of the projects are restoring the natural beauty of the land, creating places that people want to flock to and not away from.

“We seek projects that serve a greater good,” said Leslie Etzel, RRC’s Brownfields Response Program Manager. “It is personally satisfying to see these projects completed and people enjoying them.”

In order to create jobs and improve communities, numerous entities – including governmental

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bodies, nonprofits, universities, school districts, economic development corporations, and private landowners with community supported projects – can apply for assistance.

The RRC provides free assessments, environmental inspections, and cleanup for approved projects, but once a Brownfields property has passed this stage, the RRC continues to support it, including writing letters of support for applicants seeking other grant funding sources that can help in property redevelopment, such as from HUD, EPA, USDA, and Texas Parks and Wildlife.

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The following are examples of Brownfields projects that provided open spaces: Artist Boat: A 207-acre former historic oilfield site on West Galveston Island that is part of 1,400 contiguous acres of coastal land that Artist Boat, a nonprofit group, and the Costal Heritage Preserve are working to preserve and restore. The property is used for kayaking, hiking, camping and educational purposes.

Texas Forest Service: A 1,643-acre urban forest, known as the W.G. Jones State Forest, in Montgomery County, that is home to the endangered redcockaded woodpecker. Orphaned wells had to be plugged and contaminated soil cleaned up. The property contains an ecology center, a wildlife refuge, a habitat preserve for the woodpecker, an urban forest conference center, an urban forest learning center and a forest museum and history exhibition center.

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Turtle Bayou: A 511-acre abandoned oilfield site located between Houston and Beaumont in Chambers County, which is now the location one of the state’s newest nature preserves: the Turtle Bayou Nature Preserve, which opened in October 2016. The project was cleaned up to standards necessary for wetland habitat. Currently, the RRC performs quarterly surface water sampling events to monitor chloride levels in both Turtle Bayou and Lake Anahuac.

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Andrews Bird Park: A 4.5-acre property that was the location of an abandoned saltwater disposal facility that had wooden tank batteries and an associated pit. The property is now a popular bird viewing spot because of a sedimentation lagoon connected to outflow from a water treatment plant, which has been treated and has high organic content that supports wildlife and vegetation.

Frank Gray Park/Bass Lake: An 11.4-acre property that is the location of the Frank Gray Memorial Park in Gorman. The site had been impacted from a crude oil release from a pipeline. The site supports recreational activities, such as swimming and fishing.

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RRC’s Underground Injection Control Program Continues to Earn EPA Recognition RRC’s Underground Injection Control program once again was lauded by EPA’s Region for the protection of underground sources of drinking water and the control seismic activity.

RRC’s UIC program, which handles the most Class II injection well applications in the nation, carries out state and EPA-approved rules on permitting, construction, and testing of underground injection wells.

Injection wells are used to dispose of waste fluid from oil and gas operations, especially saltwater; for brine mining; for enhanced oil recovery, which prolongs the life of oil and gas fields; and for hydrocarbon storage. Injection wells are located in underground formations geologically isolated from aquifers that are sources of drinking water.

In his letter accompanying a report on RRC’s program, EPA Region 6 Water Division Director Charles Maguire wrote: The Railroad Commission continues to confront significant challenges in the program and has taken some innovative measures to address them in a year complicated by the Covid pandemic. We wish to thank you and your staff for your work in protecting underground sources of drinking water from underground injection activities under your authority.

We appreciate the continued attention to issues related to permitting disposal wells in seismically active areas of the Permian Basin and the continued attention on problematic areas in East Texas resulting in a consistent system for evaluating seismic hazards near disposal wells and application of appropriate permitting conditions.

“We take a lot of pride in our UIC program, which is informed by the best available science to protect groundwater and control seismicity,” said Paul Dubois, RRC Assistant Director for Technical Permitting. “While we do like to be recognized for our efforts, we appreciate all critical feedback the EPA provides in its annual review of our program, which helps us to improve and better serve Texans.”

The full Fiscal Year 2020 EPA Region 6 End-of-Year Evaluation Railroad Commission of Texas Underground Injection Control Program is available on the RRC’s website.

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Y ENTAL PROTECTION AGENC UNITED STATES ENVIRONM REGION 6 1201 ELM STREET, SUITE 500 DALLAS, TEXAS 75270

May 26, 2021 Danny Sorrells, Director Oil and Gas Division Railroad Commission of Texas P.O. Box 12967 Austin, TX 78711-2967 Dear Mr. Sorrells: nd Injection ion (EOY) of the Texas Undergrou luat eva r yea -ofend 's EPA ts smi This letter tran Texas (RRC) for State d by the Railroad Commission of Control(UIC) program implemente Fiscal Year 2020. in the program and has es to confront significant challenges tinu con sion mis Com d lroa Rai The the Covid pandemic. ress them in a year complicated by add to s sure mea tive ova inn e som taken nd sources of your work in protecting undergrou for f staf r you and you k than to h appreciate the We wis activities under your authority. We n ctio inje nd rou erg und from er active areas of drinking wat ting disposal wells in seismically mit per to ted rela es issu to n ntio lting in a continued atte problematic areas in East Texas resu on n ntio atte ed tinu con the and the Permian Basin application of mic hazards near disposal wells and consistent system for evaluating seis continued improvement of . We also note your efforts toward appropriate permitting conditions focus on Class VI at the Commission. An increased ing eep rdk reco and ng orti rep data s on the RRC in the projects will put additional burden ture Cap bon Car and ion trat ues sion pursues Geoseq on between our staffs as the Commis rati abo coll e clos ts ges sug EPA future and . primacy for Class VI well permitting g program. implementation of this challengin the in rts effo r you for f staf r you We thank you and me at (214) 665-7101, or of this EOY evaluation, please call If you wish to discuss any aspect If your staff have specific James R. Brown at (214) 665-3175. you or your staffmay contact Mr. Vaughan at (214) 665-7313 ance, please contact Mr. Michael form per nt gra UIC ut abo ns stio que 's program oversight.

-7435 for questions regarding EPA 665 4) (21 at enk rsch Bie old Arn or Mr. Sincerely,

Charles W. Maguire Director Water Division Enclosure r, Technical Permitting, w/encl. cc: Paul Dubois, Assistant Directo ncl.

Sean Avitt, RRC UIC Manager, w/e

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RRC’s Pipeline Inspectors Ensure Protection of Public Safety, Environment Agency Working to Improve Accident Response, Add Oversight of Gas Storage Facilities When it comes to pipelines, the RRC has the same core interests as operators.

“When you are in the industry, there is a mindset, ‘Oh no, they coming to get us,’ though you don’t have anything to hide,” said Joe Rusk a senior RRC Pipeline Safety inspector who worked for more than three decades in the private sector. “We both have the same goal. They want a safe pipeline system. I want a safe pipeline system.”

The RRC enforces both state and federal regulations for intrastate pipelines state, including natural gas and LP-gas distribution lines, hazardous liquid and natural gas transmission lines, and hazardous liquid and natural gas regulated gathering lines.

When the RRC inspects a pipeline, it’s an opportunity for operators to understand where they might need to improve. Inspectors review paperwork to make sure it’s current and ensure operators have done all necessary maintenance tasks, such as leak surveys and valve checks.

Then these documented activities are verified by the inspector.

“We go out into the field and watch them perform those tasks, like say, operate a valve; operate a regulator station, make sure it is working properly; go to back to where they had leaks repaired, make sure they are not leaking,” Rusk said.

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Sometimes, a corroborating message from an RRC inspector might provide weight to an operator’s recommendation for infrastructure improvements.

Over his vast experience working with pipelines, Rusk said he has seen positive improvements, especially with pipeline safety regulations and also with the culture of companies. This includes the creation of RRC’s Damage Prevention section in 2007, which focuses on preventing physical damage to pipelines. Damage Prevention and Pipeline Safety are both under the RRC’s Oversight and Safety Division and work closely together.

Pipeline Safety also works closely with the federal Pipeline and Hazardous Materials Safety Administration. All RRC field inspectors attend extensive training from PHMSA in its Oklahoma City training center and also online since the Covid pandemic began.

RRC’s field inspectors are as thorough as possible to prevent potential incidents and accidents, and if those occur, field inspectors respond to investigate whether pipeline operators have complied with all safety regulations and were taking proper care of the pipeline as required.

“You don’t want to respond to where a fatality occurred,” Rusk said.

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Improving Accident Response Preventing such tragedies motivates Rusk every day in his work as a pipeline inspector.

In an effort to improve responses to accidents, Pipeline Safety earlier this year created a new position: accident investigation lead.

The first to hold the position is Godspower Oniovosa, who has been with the RRC as a pipeline inspector since 2017.

“My job is to add subject-matter expertise,” he said.

Pipeline Safety inspectors in the district offices – which are positioned throughout the state – respond directly to accidents and investigate them.

“I support inspectors during their investigations,” said Oniovosa, who is based in the Houston District. “I advise the inspectors to make sure every area is covered and make sure the root cause of the accident is discovered.”

He reviews and approves accident and incident investigation reports. As part of his position, he is

developing training to support his fellow pipeline inspectors be better prepared when they need to respond to an emergency event.

Pipeline Safety inspectors report to incident command, which is headed up by first responders, and conduct their investigations at a safe distance.

They do not directly work near the source of an event until given clearance by incident command.

“Pipeline inspection starts with oversight,” said Oniovosa, who started work as a geologist in 2000 in Nigeria. “We make sure companies are doing what they are supposed to be doing and keep the product inside the pipes. What we do has real consequences of protecting people’s lives and the environment.”

He is appreciative of the opportunities he has had as an RRC inspector and now accident investigation lead.

“I’m looking forward to the daily work challenges,” Oniovosa said. “Every day I wake up, it a different thing. That is what I enjoy, serving the public.”

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New Horizon for Pipeline Safety With Winter Storm Uri affecting Texas in February, there has been an increased interest in natural gas storage.

Natural gas storage facilities in Texas, which are in geologic formations under the ground, are currently under the federal oversight of PHMSA, which has encouraged RRC to apply for certification to take over safety inspections of such facilities in the state.

RRC’s commissioners adopted the necessary statewide rules for gas storage in August.

Pipeline Safety inspector Mark Lay, who has been with the RRC since 2004, was designated as the natural gas storage lead.

He noted an incident at a natural gas storage facility in California in 2015 put an emphasis on improving safety of such facilities.

Lay, who is based in RRC’s Kilgore office, shadowed PHMSA inspections of natural gas storage facilities along with a handful of other RRC pipeline inspectors from the Houston District as part of preparing to take over regulatory oversight.

Natural gas storage gives both electric and gas utilities the ability to buy gas when it is cheap and to have more readily available during challenging weather events, such as in February.

“There is definitely a need for these facilities,” said Lay, who worked as an engineer before coming to the RRC and was previously an oil and gas inspector. “Most are depleted reservoirs and aquifers. They inject gas back in to feed the supply and demand curve.”

He noted that storage facilities are also created within salt formations. Operators create caverns by dissolving the salt and ensuring it can hold pressure. Most of these types of facilities are along the coast.

“I’m looking forward to what the commission does next with this underground storage program,” Lay said. “I think we deserve a say in what happens in Texas.”

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Mine Reclamation Important Part of RRC Work For RRC Surface Mine Inspector Cade Harris, his office is thousands of acres.

the mine,” said Harris, who has been working at the Luminant mine.

“Some surface mine permits can range in size from 30,000 to 40,000 acres, which require multiple days of in-depth inspection,” he said. “Each permit must be inspected unannounced monthly, making turnaround time for inspection reports rather short and requires immense flexibility.”

Three Oaks, which received its RRC permit in 2003 and supplied about 6.2 million tons of lignite per year for electric power generation at the Sandow Power Plant in Rockdale, is being transformed into pastureland, fish and wildlife habitat, developed water resources and prime farmland.

And, as his job is often outdoors, the weather dictates when Harris and other mine inspectors can be at a site.

But work does not stop when mining ceases.

When Luminant stopped harvesting lignite from its 16,000-acre Three Oaks Mine near Elgin east of Austin in 2018, it still faced years of work to return the land to beneficial use.

“Texas coal mining regulations require lands disturbed due to mining-related activities be reclaimed to a state equal to or better than before

But before it is returned to the beneficial uses, the operator has multiple steps to go through.

In order to ensure the protection of public safety and the environment, surface and groundwater quality monitoring begins even before mining starts and continues until the mine is fully reclaimed and approved by RRC. Oxidized overburden and other unsuitable soils are covered with a minimum of four feet of soil that meets RRC requirements for soil chemistry and texture. An appropriate groundcover of approved native and/or improved species is then planted.

These performance standards must be met before and/or during a five-year extended responsibility period before the operator can apply for final release of reclamation liability.

Each mine is required to have sufficient bonding coverage to ensure reclamation costs can be covered if an operator defaults on reclamation obligations.

“Although it is not unheard of for companies to default on bonds in other regions of the country,” Harris said, “no mine has had to enter bond forfeiture in Texas since the inception of our program in 1981.”

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Surface coal mine reclamation is based upon a three-tiered, incentive system. As the mine operator completes each phase for specific pieces of property, it applies to the RRC to have a proportionate amount of its bond security returned. These include: • Phase I: Requires a demonstration that backfilling, regrading and drainage control have been completed in accordance with the approved reclamation plan and the applicable performance standards contained in regulations.

On June 16, 2020, RRC allowed 225.8 acres of previously mined Three Oaks land to receive final release of reclamation liability. A combined 818.28 acres have received Phase I release, and another 17.3 acres have also received final Phase III release.

As an inspector, Harris makes sure reclamation plans are followed and that offsite locations are not impacted.

When the Earth has healed and is green once again, Harris knows his job is done.

• Phase II: Requires that vegetation be established on regraded, mined lands in accordance with the approved reclamation plan and that applicable ground cover performance standards have been met. Additionally, it requires that lands are not contributing suspended solids to stream flow outside the permitted area in excess of the regulatory limits.

• Phase III: Requires that the operator demonstrate successful completion of all surface coal mining and reclamation activities and that applicable vegetation productivity performance standards have been met. The RRC may release the remaining portion of the bond but not before the completion of the five-year extended responsibility period. No bond shall be fully released until all reclamation requirements are fully met.

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RRC Shores Up Abandoned Mine in East Texas Neighborhood For residents of two homes less than half a mile south of the historic courthouse in Center in East Texas, a hand-dug mine dating back to the 19th century snaked under their properties.

Thanks to the Railroad Commission’s Abandoned Mine Land Program, the threat of the underground void was nullified.

The RRC first responded to this area in 2016 on an emergency basis to address subsidence next to one of the homes. The agency returned this year to finish addressing issues with the former lignite mine, which is about 40 feet deep in some places, focusing on the property next door to the one from 2016.

If mines such as these are not properly addressed, the voids could lead to dangerous sinkholes that could swallow property and harm unsuspecting people.

For the nearly $380,000 project in Center that began in April, there was noticeable subsidence at the property’s fence line. After RRC’s contractor carefully cleared vegetation and removed the fence, a sinkhole did, in fact, develop.

“It opened up this pit. I never saw anything like it before,” said George Perez, an RRC engineering specialist who worked on the project.

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“However many years those people had lived there, there were people playing or moving about in that area.”

The fence and roots served as the final support structure for that portion of the yard, and when they were removed, the sinkhole, which went down about 20 feet, appeared.

“It was fortunately in the right place that it posed the least amount of danger,” added Lee Hileman, an RRC engineering specialist who also worked on the project. “This is definitely something, in another situation, that could have been far more of a danger.”

Before work started to fill in remaining portions of the mine with cement, the area had to be extensively studied with geotechnical surveying tools that could see into the ground and drilling boreholes to determine the exact locations of the voids.

Contractors also drilled horizontally under the house to ensure there were no voids there, either.

Fortunately, there were none, but each borehole was filled with cement as a precaution.

“I joked that she’s got the strongest foundation in Texas,” Hileman said.

Year 2021 - The Core Mission

Also during the boring, the contractor hit a hard lignite pillar, which was probably left to support the mine, and at the bottom of a void, found waterlogged lignite. The drilling auger even brought up a metal bracket from a depth of about 30 to 40 feet.

in the neighborhood if it were to do any additional assessments or work.

“I think it was probably used to support a wooden beam of some sort,” Perez said.

Hileman believes the original miners were clued into this area because of a noticeable lignite seam next to the streambed, which is down a hill behind the properties.

“Having people happy with our program is important to us,” Hileman said. “In my mind, it is important to leave the site attractive. Most of the work we do is under the ground. The homeowner is not going to be able to see that. If we take as good care with what they can see, hopefully they can be assured of what they cannot see.”

When the weather permitted, it took about a month to complete boring and grouting of underground voids with 300 cubic yards of cement.

Both Hileman, who was trained as a geologist, and Perez, who went to school to be a civil engineer, both worked in the oil and gas industry before starting with the AML program last year.

Lignite deposits are common in East Texas and typically appear in the Eocene layer. Many former mines, such as the one in Center, were lost to history and not recorded anywhere or remembered by locals.

The reclamation project in Center was the first one they have had the chance to take part in.

While the Center mine was not extensive, RRC’s projects related to it only focused on the two properties. The agency would need to be granted rights of entry to other properties

After the critical period of stabilizing the underground voids, the fence was replaced and the property landscaped.

“Leaving it looking nice is the icing on the cake,” Perez said. “For me, the big takeaway from it all is that the landowners feel safe and have peace of mind. I want to leave that place knowing that they are safe, knowing that there is no longer that danger. That is what is important.”

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Annual Oil & Gas Monitoring & Enforcement Plan Sets Priorities The agency’s Fiscal Year 2022 Oil and Gas Monitoring and Enforcement Plan was approved by commissioners in June.

The plan, which outlines strategic priorities, affirms the RRC’s commitment to inspecting every oil and gas facility at least once every five years. It provides an overview of penalties and procedures and a current snapshot of various violations and the agency’s progress.

“RRC’s oil and gas staff deserves praise for their exemplary performance and hard work, despite recent challenges,” said Wei Wang, RRC Executive Director. “However, we always strive for even bigger successes, and the Oil and Gas Monitoring and Enforcement Plan provides a pathway for us to do just that.”

Among the goals for the agency are the continued upgrade and modernization of its computing systems away from a legacy mainframe to cloud-based software that utilizes tools to improve reporting and efficiencies.

In addition to Hileman and Perez, Katherine Upham, a natural resources specialist with the AML program, did plant and animal surveys to ensure no threatened species or migratory birds were harmed. Also, Patrick Shelton with RRC’s General Counsel and Matthew Bowman with

the Procurement Division were instrumental in helping with bidding and contracts. For systems that have already been developed, the agency is refining and expanding capabilities.

For instance, inspectors utilize a system called Inspection, Compliance, and Enforcement (ICE).

Additional information will be added for certain types of inspections, such as well plugging and mechanical integrity tests. Also, an H2S indicator and GPS location will be integrated, alerting inspectors to potential hazards.

Another goal is to improve training for oil and gas staff. In 2019, the agency implemented a highly successful program for inspectors with fewer than two years of service. During COVID-19, training had to move to a virtual format. The lessons learned from the change presents the opportunity for expanded professional development for other oil and gas personnel, including administrative and technical staff based in Austin.

While the agency will continue to leverage the virtual space to provide expanded educational opportunities to its regulated community, it intends to provide in-person training in FY 22, including its annual regulatory conference in Austin, regulatory forums around the state, and presentations at industry events.

VIEW THE FY 2022 PLAN

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R A I L R OA D C O M M I SS I O N O F T E X AS

OIL & GAS MONITORING & ENFORCEMENT PLAN Fiscal Year 2022

WAYNE CHRISTIAN COMMISSIONER

CHRISTI CRADDICK CHAIRMAN

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JIM WRIGHT

COMMISSIONER

59 photo by Charles Dabney

GETTING BETTER FOR THE FUTURE

Changes to Production Reports to Improve Monitoring of Flaring, Improve Enforcement RRC’s commissioners in February approved changes to the agency’s monthly production report as part of the continued effort to address flaring from oil and gas sites.

Modifications to Form PR, Monthly Production Report now allow for more accurate tracking of the volumes of gas flared and vented in Texas.

Before the revised form, operators recorded the amount of vented and flared gas as one combined value per lease on the production report. The revised form requires operators to report the amount of gas flared and the amount of gas vented as separate values on the monthly lease production report.

The form is part of a broad effort by the RRC to reduce flaring in the state. On Nov. 4, 2020, commissioners approved a revamped Form R-32, Application for Exception to Statewide Rule 32, that provides specific guidance on when an exception to flare would be permissible, under which circumstances, and for how long.

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RRC’s efforts to address the issue are reflected in flaring trends. Production data shows that the percentage of natural gas flared compared to the natural gas produced from oil and gas wells in Texas dropped from a high of 2.29% in June 2019 to 0.21% in September 2021.

With more specific information on Form PR, the RRC will be in better position to track compliance and correct potential violations. The changes will require operators to distinguish gas that is flared from gas that is vented and will allow Commission staff to better assess compliance between requirements to vent gas and requirements to flare gas.

The new form was phased in over the year to allow for upgrades to RRC’s electronic reporting system and also those of operators. Gas Disposition Code 4, was used to report the volume of gas that was vented or flared, was discontinued.

It was replaced with Disposition Code 10 for the amount of gas flared and Disposition Code 11 for the amount of gas vented.

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30

6%

25

5%

20

4% 19.40

15

3%

10

1.61

2.27%

5

2%

Percent of Total Gas Flared

Total Gas Flared (BCF)

Flaring in Texas: June 2019 to September 2021

1%

0.21% 0

0%

Total Gas Flared (BCF)

Total Percent of Gas Flared

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New Program for Flaring Applications Improves Processes Tool Helps Staff with Audits, Data Analytics Over a seven-month period in 2021, RRC staff developed an online system through which operators could file applications for Statewide Rule 32 flaring exceptions. This system provides the agency with a better mechanism for compliance audits and data analytics.

The SWR 32 system replaced a mainframe-based process that had been used for many years. The new system provides more flexibility and efficiency for

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operators and staff. In addition to submitting online, operators can make minor changes or corrections to applications if required and request amendments, extensions or a hearing.

Via the system, RRC staff can review and approve or deny submissions. Additional features and functionality was added to the system in phases.

Year 2021 - Getting Better For The Future

New PIPES Online System Improves Transparency, Access to Records In FY 21, the commission launched the new Pipeline Inspection Permitting Evaluation System (RRC PIPES).

RRC PIPES is a centralized cloud-based portal, which streamlines agency processes and provides a valuable tool for RRC’s Pipeline Safety staff and operators to upload documents, including inspection and incident reports, and complaints, while automatically making more documents available to the public.

Not only does the new system improve transparency, allowing the public to see inspection and violation information 24/7, but it reduces staff time spent working on data entry and processing open records requests, helping Pipeline Safety staff focus more of their efforts on the oversight of about 1,600 operators and 248,000 miles of intrastate pipelines which include: natural gas and LP-gas distribution lines; hazardous liquid and natural gas transmission lines; and hazardous liquid, and natural gas regulated gathering lines.

Inspection packages uploaded by pipeline inspectors are made publicly available once the internal review process has been completed and a letter has been sent to the operator.

The system also makes it easier for operators.

It reduces the amount of paperwork they must mail to the RRC and allows for the payment of fees online. Operators may, after becoming authenticated users, now submit and upload applications and other documents for review and approval by the RRC. “Our goal is to find efficiencies where we can so staff can focus on their core duties,” said Wei Wang, RRC Executive Director. “PIPES makes data more readily available for us to analyze and for the public to view. Online systems like PIPES help us better serve the public and help with the experience of operators in complying with our rules and requirements.”

Other recent advancements at the RRC include the launching of an award-wining database in 2019 called RRC OIL (Online Inspection Lookup), which is updated daily and allows the public to see inspection and violation information 24/7, and the CASES portal (Case Administration Service Electronic System) in 2020, which enabled the agency to process all hearings and enforcement case types electronically, reducing the reliance on paper and automatically making documents for the cases available to the public.

VISIT THE RRC PIPES WEBPAGE A user guide is available on the page

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RRC’s Computing Modernization Efforts Receives Additional Support from Legislature

The 87th Texas Legislature appropriated $21.48 million to the RRC to continue modernization of computing systems in the new biennium.

The agency started planning its technology modernization efforts in 2018 and received funding from the Legislature in 2019. RRC’s Information Technology Services Division is partnering with several divisions to modernize the agency’s various applications.

A general focus of the greater project is getting the agency off the mainframe-based computing system. The modernization consists of various moving parts with several major software development projects planned to last several years and require numerous resources.

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RRC’s mainframe applications are interconnected and must be replaced carefully.

Most areas of RRC have key functions in the mainframe, including Oil and Gas, Pipeline Safety, Gas Services, General Counsel, Hearings, Central Records, and more.

The agency is replacing aging technologies that RRC has relied on since the 1970s – before advances in memory, storage, and computing power of individual devices that include desktops, laptops, tablets, and mobile phones – with cloud-based systems that improve the agency’s capabilities and access to information while automatically making more data available to the public.

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The new technologies RRC is working on take advantage of the internet, which was quite rudimentary when the RRC built its mainframe system in the ’70s. Today, the internet is changing the way we live, including basic tasks, such as how we consume the news, shop, watch television and movies, communicate, and much more.

“We are going from very old technology that was mainframe-based and a very old database framework that was not relational to a more modern architecture and relational database,” said Kelli Casteel, an ITS systems analyst. “What that will allow us to do is have more real-time updates, be able to be more efficient in our processing and have efficient and timely reporting.”

While not officially part of the more recent modernization projects envisioned in 2018, RRC launched the Inspection, Compliance and Enforcement reporting system in 2015. ICE supports the agency’s Oil and Gas inspectors and allows them to file inspection reports in the field using laptops without the need for an internet connection.

ICE provides the basis for the award-wining website called RRC OIL (Online Inspection Lookup), which was unveiled in 2019 and is updated daily and allows the public to see inspection and violation information 24/7.

After those initial successes, the agency began its current ongoing modernization effort, creating additional compliance and enforcement applications, including the CASES portal, which stands for Case Administration Service Electronic System, and RRC PIPES, which is short for Pipeline Inspection Permitting Evaluation System, both based on the Salesforce platform.

CASES initially launched in August 2019 for RRC staff. In March 2020, the CASES public portal launched. CASES gives authenticated parties the ability to upload documents and make payments via the system. Not only does the system make it easier on parties involved in RRC hearings to submit and receive paperwork, but the publicfacing component, makes approved documents available to anyone interested in a case, reducing staff time to process open records requests. In August 2020, upgrades were made that provided more functionality.

RRC PIPES, which launched in July 2021, allows for RRC’s Pipeline Safety staff and operators to upload documents, including inspection and incident reports, and complaints, while automatically allowing the public to view inspection and violation information.

The new round of funding allocated by the 87th Legislature allows RRC to continue to leverage the existing Salesforce platform to automate tasks for Alternative Fuels, which regulates LNG, CNG and LPG. The new application will process complaints and inspections and allow for the digital exchange of other information.

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Along with the Alternative Fuels platform, RRC is developing LoneSTAR (State Tracking and Reporting) to efficiently handle the Oil and Gas Division’s business functions and make more of the agency’s data transparent and user-friendly.

The LoneSTAR system is being built on the RiskBased Data Management System (RBDMS) platform, which was developed by the Groundwater Protection Council, of which Texas is a member. It will allow for online filings and tracking of regulatory Oil and Gas Division information. LoneSTAR will be implemented in phases beginning with filings for Form P-5, Organization Report, which operators need to operate under RRC regulations, and also some well filings. Other Oil and Gas forms and permitting processes will follow in later phases.

“We have so many complex business processes,” said Mark Johannsen, an ITS systems analyst. “This project shows how each of the mainframe applications are connected. It is a web of inter-connected applications. What happens when you move one of those pieces? It is very complex. Just devising ways to make that happen is hard. You have to pick it up and maintain a bunch of trails off it.”

“Think of it as two games of Jenga,” Casteel added.

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As a part of the modernization effort, the RRC is building a data warehouse which will be the centralized point of access to data contained in RRC’s information systems. The data stored in the data warehouse will be uploaded from the systems that process the day-to-day transactions in the agency. The data warehouse will allow the agency to organize data and present the agency’s information consistently. This project includes data analytics solutions.

The agency is already realizing the benefits of what it has been able to accomplish thus far.

The next phases of the modernization effort will continue to transform how the RRC works and the relationship operators and the general public have with the agency.

With more documents now readily accessible to the public than ever before, the RRC has been able to further expand the transparency of its functions and decrease reliance on paper record.

“You would be amazed how much paper was being used just a few years ago,” Johannsen said. “We are marching toward modernization.

We have this thing in the air now, and it is progressing nicely.”

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Updated Alternative Fuels Forms Allow for Electronic Signatures The RRC finalized changes to more than 40 alternative fuels forms in FY 21 to allow operators to allow the use of electronic signatures.

That is also advantageous during unique situations, such as the current pandemic, when workplace access may be restricted.

The revised forms were part of an agencywide effort to modernize its operations in a digital work climate.

The change allows operators to electronically sign forms with whatever computer program that they are using to fill out the forms, such as DocuSign, Adobe Reader, Adobe Professional, or Preview on Macs.

“It’s about customer service,” said April Richardson, Director of Alternative Fuels Safety. “Being able to function digitally allows us to better serve our regulated community. It allows operators to conduct business quickly no matter where they are located.”

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RRC Launches New, Improved Website At the beginning of the year, RRC unveiled a new website that is much easier to navigate with a more contemporary design.

The new website optimizes user experience with a more task-oriented, easy-to-navigate layout than the previous version. It is another of the agency’s initiatives to help operators efficiently get what they need and to also help the public easily access the RRC’s trove of information.

A key change on the new website are menu options at the top of the site that provide a one-stop shop for operators and the public.

Examples include: • The Resources page that includes popular links for research queries, the GIS Viewer, statistics and more; and

The landing pages for RRC divisions and departments are marked by icons on the home page (as shown below), and those icons also appear on the left of the screen as you visit different pages.

A new Events panel on the homepage provides an across-the-board list of events at the agency including trainings, exams, and open meetings.

Events for a particular division could also be found on each division’s landing page.

Mobile device users will notice another major benefit of the new website, as tables and associated links fit within mobile screens.

The RRC will continue to fine-tune the new website based on input.

• The Forms page where operators can access every RRC division and department’s forms for permits or other required filing without having to go to a particular division’s page.

• The red RRC Applications button at the top right of the website houses applications such as CASES and RRC OIL (for inspection lookups). More innovative applications will be added there as they are released.

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RRC Working on Innovative Project to Repurpose Mine for East Texas City RRC requires former surface coal mines to be reclaimed. Most are repurposed into farmland or natural areas that support of wildlife.

The city of Sulphur Springs, however, has a different idea for Luminant’s former 4,857-arcre Monticello Thermo Mine, which supplied lignite coal for electric generation from the late 1970s until its closure in 2016.

The mine was gifted to the Northeast Texas city, which has plans to create public spaces – including jogging paths, a community pond, and an amphitheater – and industrial zones to help with its economy.

RRC staff has been conducting a technical analysis of Luminant’s reclamation plans, which take into account the city’s intended uses for the property. Each phase of the reclamation work will be closely monitored and evaluated by RRC inspectors, and before any property is released, extensive soil testing must come back verifying its ability to support vegetation.

There are still significant challenges and years of reclamation work remaining at the former Monticello Thermo Mine before RRC gives it the green light; however there is great optimism over the vision of Luminant and the city of Sulphur Springs for the property.

“If it happens as planned, it will be a multiusetype reclamation where parties all benefit,” said Jason Corley, RRC Manager of Surface Mining Inspection and Enforcement.

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Photo courtesy of Michael Gay

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Photo courtesy of Robert MacNabb

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RRC Aquifer Discovery Helps State with Future Water Planning Needs An unusually deep aquifer find along the U.S.Mexico border has been shown to contain significant volumes of freshwater that could benefit this semiarid region and could help the state with future water planning needs.

RRC’s geologists worked to identify and map the Maverick Basin Aquifer in the Glen Rose Formation, which is more than a mile under the surface in some places. Maverick, Dimmit, and Zavala Counties have deeper water, and Kinney and Uvalde Counties are somewhat shallower. So far, the aquifer is known to be at least 3,000 square miles in area and averages about 1,000 feet thick in most places.

The aquifer’s recharge zone geologically is via karsts in the hills 50 miles west of the Rio Grande in Mexico and has no connection with the river.

A driller of a would-be oil well is working with the RRC to obtain permission to convert it to a drinking water well, which is what prompted research by RRC’s Groundwater Advisory Unit (GAU).

Maverick Basin Aquifer

“It’s because of oil and gas exploration that we found this aquifer, said James Harcourt, Manager of the GAU. “The aquifer likely holds sustainable quantities of drinking water. It almost never happens that you have pristine water quality at these depths in these volumes.”

RRC’s GAU, which is more than 100 years old, reviews data from operators, academics, government agencies, and groundwater conservation districts and other sources to ensure that oil field activities and well designs are protective of fresh water. The GAU issues groundwater identification reports which must be reviewed by RRC field staff and operators before underground oil and gas engineering operations could be approved.

Data from testing the Maverick Basin Aquifer during GAU research showed future water wells could be capable of sustainably producing thousands of gallons of freshwater per day from an individual well with some wells exhibiting artesian flow.

The RRC has had the water tested by a San Antonio laboratory, and tests show it meets or exceeds federal and state drinking water standards. Most water occurring so deep under the surface of the earth is extremely salty or has other constituents, so this find, initially reported by the driller, is quite unusual.

The GAU is sharing this new water find with the Texas Water Development Board, which oversees the state’s water planning and water availability; the Board will do further research of its own.

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Oil & Gas Discharge Permits Streamlined in RRC, TCEQ Collaboration The need to discharge produced water and other sources of wastewater has gone up significantly in recent years because of unconventional drilling.

Previously, operators needed to apply to both the Railroad Commission and the Environmental Protection Agency to obtain a permit for surface water discharges, operators needed to apply.

And for related environmental activities, such as surface water rights, they might need to contact the Texas Commission on Environmental Quality.

In order to simply and streamline processes for the oil and gas industry, the 86th Texas Legislature approved House Bill 2771. The RRC started working with the TCEQ in 2019 to help that agency gain primacy from the EPA for all surface water discharge issues in the state.

On Jan. 15, 2021, that work culminated in RRC transferring certain discharge permitting to surface waters of the state for produced water, hydrostatic testing, and gas plant effluent to the TCEQ and EPA granting TCEQ authority to administer the National Pollutant Discharge Elimination System program in Texas.

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“This greatly benefits the energy industry in our state by making the regulation easier to understand for our operators,” said Wei Wang, RRC Executive Director. “Through our planning with the TCEQ, we were successful in that EPA agreed to delegate this NPDES program and transfer its authority to Texas.”

Obtaining a permit for certain discharges to surface water has become much simpler for the oil and gas industry. For instance, before the current permitting process took effect, to conduct hydrostatic testing on a pipeline to ensure its integrity, an operator needed to get a permit from RRC and EPA to release any discharge to a surface water body and call a TCEQ regional office to obtain permission to use surface water for the testing. Now, operators will only need to contact TCEQ. RRC did retain certain regulatory authority in water discharge, such as surface application of wastewater that does not impact the waters of the state and the recycling of domestic wastewater

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