WEBVTT

00:00:01.719 --> 00:00:03.399
<v ->Good morning, everybody.</v>

00:00:03.399 --> 00:00:04.981
This meeting of the Railroad Commission of Texas

00:00:04.981 --> 00:00:06.864
will come to order to consider matters

00:00:06.864 --> 00:00:08.833
which have been duly posted with the

00:00:08.833 --> 00:00:12.898
Secretary of State for November 13th, 2018.

00:00:12.898 --> 00:00:14.881
The Commission will consider the items on the

00:00:14.881 --> 00:00:17.436
agenda as posted on the agenda.

00:00:17.436 --> 00:00:19.675
Under our public participation policy,

00:00:19.675 --> 00:00:21.622
anyone desiring to offer public testimony

00:00:21.622 --> 00:00:23.392
on any items that are not noticed

00:00:23.392 --> 00:00:25.696
on today's agenda will need to fill out

00:00:25.696 --> 00:00:27.886
a testimony form found in the back of the room

00:00:27.886 --> 00:00:30.738
and submit it to Commission Secretary Kathy Way.

00:00:30.738 --> 00:00:34.635
A reminder to turn off your cell phones.

00:00:34.635 --> 00:00:36.757
And wow we have two people in the chairs.

00:00:36.757 --> 00:00:37.723
So welcome, Dana.

00:00:37.723 --> 00:00:39.390
And item number one.

00:00:41.850 --> 00:00:42.683
Good morning, John.

00:00:42.683 --> 00:00:43.791
<v John>Good morning, good morning commissioners.</v>

00:00:43.791 --> 00:00:45.567
I'm John Dodson, Administrative

00:00:45.567 --> 00:00:47.446
Law Judge, Hearings Division.

00:00:47.446 --> 00:00:50.196
Agenda item one, GUD number 10739

00:00:51.082 --> 00:00:53.872
is a gas utility rate case filed by Texas Gas Service

00:00:53.872 --> 00:00:57.284
to increase the rates in its North Texas service area.

00:00:57.284 --> 00:00:59.496
Commission staff is the only intervening party

00:00:59.496 --> 00:01:01.085
and the Commission has jurisdiction in this case

00:01:01.085 --> 00:01:04.168
over environs rates only, not rates in cities.

00:01:04.168 --> 00:01:06.076
Ultimately TGS and staff reached a settlement agreement,

00:01:06.076 --> 00:01:09.233
agreeing to an apportioned increase of approximately

00:01:09.233 --> 00:01:13.400
$168,000 for NTSA for environs customers,

00:01:13.400 --> 00:01:14.911
which is a reduction from TGS's

00:01:14.911 --> 00:01:18.362
initial request of approximately $215,000.

00:01:18.362 --> 00:01:22.313
Recovered by TGS of an average of $19,313

00:01:22.313 --> 00:01:24.318
from environs customers through a

00:01:24.318 --> 00:01:27.076
pipeline integrity testing pit rider.

00:01:27.076 --> 00:01:30.239
Cost of equity set at 9.75%.

00:01:30.239 --> 00:01:32.898
Reduction of the corporate income tax rate

00:01:32.898 --> 00:01:35.801
from 35% to 21% to reflect changes

00:01:35.801 --> 00:01:38.955
due to tax cuts and jobs after 2017.

00:01:38.955 --> 00:01:41.623
A one-time refund of TGS, by TGS

00:01:41.623 --> 00:01:44.938
of approximately $47.23 to each customer

00:01:44.938 --> 00:01:47.370
and based on a 12-month period.

00:01:47.370 --> 00:01:49.047
And recovery of rate case expenses incurred

00:01:49.047 --> 00:01:52.297
by TGS totally no more than $87,714.22.

00:01:54.335 --> 00:01:56.728
We recommend approval of this settlement.

00:01:56.728 --> 00:01:59.155
TGS timely filed exceptions to the PFD

00:01:59.155 --> 00:02:01.141
that addressed certain type of

00:02:01.141 --> 00:02:02.442
graphical and clerical errors.

00:02:02.442 --> 00:02:04.328
We verified the accuracy of those errors

00:02:04.328 --> 00:02:05.392
and made all the necessary changes

00:02:05.392 --> 00:02:07.535
to the recommended final order that I have here today.

00:02:07.535 --> 00:02:09.440
The deadline for Commission action is January 19th, 2019

00:02:09.440 --> 00:02:11.889
and we're available for questions.

00:02:11.889 --> 00:02:12.722
<v ->[Chairwoman Craddick] Thank you, gentleman.</v>

00:02:12.722 --> 00:02:13.555
Is there any questions?

00:02:13.555 --> 00:02:14.388
<v ->No.</v>

00:02:14.388 --> 00:02:16.290
<v ->I'm move we approve the examiner's recommendation.</v>

00:02:16.290 --> 00:02:17.123
Is there a second?

00:02:17.123 --> 00:02:17.956
<v ->Second.</v>

00:02:17.956 --> 00:02:19.041
<v ->Second, Commissioner Sitton.</v>

00:02:19.041 --> 00:02:20.539
All those in favor say aye.

00:02:20.539 --> 00:02:21.372
<v ->[All commissioners] Aye.</v>

00:02:21.372 --> 00:02:22.638
<v ->Motion passes, items approved.</v>

00:02:22.638 --> 00:02:23.471
Thank you John.

00:02:23.471 --> 00:02:25.054
<v John>Thank you.</v>

00:02:26.096 --> 00:02:26.929
<v ->Good morning Jennifer.</v>

00:02:26.929 --> 00:02:27.762
<v Jennifer>Good morning.</v>

00:02:27.762 --> 00:02:28.912
Jennifer Cook with the Hearings Division.

00:02:28.912 --> 00:02:31.467
In item two, Cholla Petroleum Inc.

00:02:31.467 --> 00:02:33.921
Filed a single-signature F form

00:02:33.921 --> 00:02:36.064
P4, a Certificate of Compliance

00:02:36.064 --> 00:02:37.895
and Transportation Authority requesting

00:02:37.895 --> 00:02:40.769
it be designated the Commission Operator of Record

00:02:40.769 --> 00:02:43.688
for well number three on the Young-82 lease

00:02:43.688 --> 00:02:48.122
in the Roscoe South Pen Line field in Nolan county.

00:02:48.122 --> 00:02:50.751
The form P4 did not contain the signature

00:02:50.751 --> 00:02:53.967
of the current Commission operator for record for the well.

00:02:53.967 --> 00:02:56.193
Mokan Capital LLC is the current

00:02:56.193 --> 00:02:58.820
Commission Operator of Record for the well.

00:02:58.820 --> 00:03:01.057
Mokan asserts its underlying contractual lease

00:03:01.057 --> 00:03:04.576
is not terminated such that it still has a Good Faith

00:03:04.576 --> 00:03:08.608
claim and the well should not be transferred to Cholla.

00:03:08.608 --> 00:03:10.229
Cholla's position is that Mokan's

00:03:10.229 --> 00:03:12.409
contractual lease has terminated.

00:03:12.409 --> 00:03:15.282
The contractual lease is passed the primary term.

00:03:15.282 --> 00:03:17.305
It states the lease remains in effect after

00:03:17.305 --> 00:03:20.284
the primary term so long as there is production.

00:03:20.284 --> 00:03:22.015
The lease also states it does not terminate

00:03:22.015 --> 00:03:24.661
if reworking or drilling operations commence

00:03:24.661 --> 00:03:28.148
within 60 days of the cessation and production.

00:03:28.148 --> 00:03:31.125
Mokan has reported zero production over

00:03:31.125 --> 00:03:33.897
60 consecutive days four times,

00:03:33.897 --> 00:03:38.564
each being between approximately 92 and 123 days.

00:03:38.564 --> 00:03:42.398
Mokan asserts its contractual lease has not terminated.

00:03:42.398 --> 00:03:44.874
Mokan provided testimony and documentation

00:03:44.874 --> 00:03:47.634
that when the well ceased producing,

00:03:47.634 --> 00:03:50.492
Mokan conducted reworking or drilling operations.

00:03:50.492 --> 00:03:52.963
Production resumed after each of

00:03:52.963 --> 00:03:55.561
the four cessations of production.

00:03:55.561 --> 00:03:59.156
Even if a bona fide lease dispute exists,

00:03:59.156 --> 00:04:01.732
it does not defeat Mokan's Good Faith claim.

00:04:01.732 --> 00:04:03.541
Lease disputes are outside the

00:04:03.541 --> 00:04:05.487
jurisdiction of the Commission.

00:04:05.487 --> 00:04:07.098
The examiners recommend the Commission

00:04:07.098 --> 00:04:09.894
find Mokan provided a reasonably satisfactory showing

00:04:09.894 --> 00:04:13.065
it still has a Good Faith claim to operate the well

00:04:13.065 --> 00:04:15.464
and deny Cholla's application to transfer the well

00:04:15.464 --> 00:04:17.905
to Cholla as the Commission Operator of Record.

00:04:17.905 --> 00:04:20.475
Exceptions were filed and I'm available for questions.

00:04:20.475 --> 00:04:21.308
<v ->[Chairwoman Craddick] Thank you.</v>

00:04:21.308 --> 00:04:22.206
Are there any questions?

00:04:22.206 --> 00:04:24.153
<v ->[Commissioner Sitton] Yeah I do have questions.</v>

00:04:24.153 --> 00:04:26.903
Jennifer, you said that Mokan

00:04:28.115 --> 00:04:29.801
provided testimony and documentation

00:04:29.801 --> 00:04:31.534
that they had reworked the well.

00:04:31.534 --> 00:04:33.502
What documentation was provided?

00:04:33.502 --> 00:04:35.646
<v Jennifer>They provided some payment</v>

00:04:35.646 --> 00:04:37.363
and invoices that they had paid.

00:04:37.363 --> 00:04:40.181
I believe you refer to them as a plugger, or--

00:04:40.181 --> 00:04:41.014
<v ->[Commissioner Sitton] A pumper.</v>

00:04:41.014 --> 00:04:41.847
<v ->Pumper, yes.</v>

00:04:41.847 --> 00:04:43.192
<v ->[Commissioner Sitton] So I saw in here</v>

00:04:43.192 --> 00:04:44.025
that there were, I guess, checks

00:04:44.025 --> 00:04:45.154
or check stubs or check receipts.

00:04:45.154 --> 00:04:47.736
Was there anything other than that that was provided?

00:04:47.736 --> 00:04:49.242
<v ->I don't recall.</v>

00:04:49.242 --> 00:04:51.707
I think that was the focus of the discussion.

00:04:51.707 --> 00:04:53.224
<v ->[Commissioner Sitton] That's what I saw on the record.</v>

00:04:53.224 --> 00:04:54.387
I just wanted to make sure that it was there.

00:04:54.387 --> 00:04:55.304
<v ->Yes, yes.</v>

00:04:56.655 --> 00:04:59.257
I think Heber provided some electricity invoices too

00:04:59.257 --> 00:05:02.434
that he had maintained the electricity on the wells.

00:05:02.434 --> 00:05:05.903
I think that was also some of the documentation.

00:05:05.903 --> 00:05:07.751
<v ->[Commissioner Sitton] So an issue here</v>

00:05:07.751 --> 00:05:09.168
appears to be that you've got, we've got

00:05:09.168 --> 00:05:12.354
four periods of time that clearly went

00:05:12.354 --> 00:05:14.611
longer than the lease stipulated

00:05:14.611 --> 00:05:15.800
in terms of the amount of time that

00:05:15.800 --> 00:05:17.611
we could have zero production, but the issue is

00:05:17.611 --> 00:05:20.361
that the current operator, Mokan,

00:05:21.344 --> 00:05:22.999
claimed that they had, in this case,

00:05:22.999 --> 00:05:25.689
"oh, well, we had done reworking operations earlier."

00:05:25.689 --> 00:05:26.799
Reworking operations.

00:05:26.799 --> 00:05:29.838
And the evidence of that was checks to pumpers.

00:05:29.838 --> 00:05:32.947
<v Jennifer>And testimony by Mokan's representative.</v>

00:05:32.947 --> 00:05:33.780
<v ->Okay.</v>

00:05:35.897 --> 00:05:38.722
When we go to, in fact I thought one of the

00:05:38.722 --> 00:05:42.113
comments here that was provided in the case summary

00:05:42.113 --> 00:05:45.780
responded by Cholla was where they reference

00:05:46.674 --> 00:05:49.722
the Texas Pattern Jury Charge

00:05:49.722 --> 00:05:52.989
where it says in there that drilling

00:05:52.989 --> 00:05:54.555
or reworking operations means actual work

00:05:54.555 --> 00:05:57.125
or operations in which an ordinarily competent operator,

00:05:57.125 --> 00:05:58.553
under the same or similar circumstances,

00:05:58.553 --> 00:06:00.808
would engage in a Good Faith effort with

00:06:00.808 --> 00:06:03.494
due diligence to cause a well or wells to

00:06:03.494 --> 00:06:06.169
produce oil or gas in paying quantities.

00:06:06.169 --> 00:06:09.042
I thought that was a very good reference

00:06:09.042 --> 00:06:10.217
because if I understand right also

00:06:10.217 --> 00:06:13.007
from their exceptions that this well only

00:06:13.007 --> 00:06:16.211
produced four barrels of oil for a 14 month period

00:06:16.211 --> 00:06:19.529
and in the first two instances where there were

00:06:19.529 --> 00:06:24.529
92-day lapses they came back and only produced one barrel.

00:06:25.128 --> 00:06:26.301
That well doesn't even meet our definition

00:06:26.301 --> 00:06:29.893
of an active well for the period that it was in operation.

00:06:29.893 --> 00:06:32.297
So I think that while your point about it

00:06:32.297 --> 00:06:35.550
being a lease dispute would be,

00:06:35.550 --> 00:06:38.209
I understand that lease disputes are handled in court,

00:06:38.209 --> 00:06:42.235
but if the question is was this a producing well

00:06:42.235 --> 00:06:44.353
and were there actual operations that were happening

00:06:44.353 --> 00:06:46.364
to cause it to be a producing well,

00:06:46.364 --> 00:06:49.189
it seems like that all of the evidence

00:06:49.189 --> 00:06:50.362
that was provided says it wasn't.

00:06:50.362 --> 00:06:51.985
Now I do feel like that's our responsibility

00:06:51.985 --> 00:06:54.235
to make that determination.

00:06:58.485 --> 00:06:59.896
The other thing is that obviously

00:06:59.896 --> 00:07:01.653
the mineral owner felt like that

00:07:01.653 --> 00:07:04.144
they had not met the lease operations

00:07:04.144 --> 00:07:06.373
and I didn't see that they were involved in the case

00:07:06.373 --> 00:07:08.893
here at all which I understand this was a P4 dispute.

00:07:08.893 --> 00:07:11.221
But if the mineral owner has gone out and said

00:07:11.221 --> 00:07:15.641
"hey these are not meeting the requirements of the lease

00:07:15.641 --> 00:07:18.308
"because the well is not producing, it hasn't produced,"

00:07:18.308 --> 00:07:22.233
and all the evidence is a check to a pumper.

00:07:22.233 --> 00:07:24.371
And then the testimony, I understand,

00:07:24.371 --> 00:07:26.337
but the check to the pumper doesn't

00:07:26.337 --> 00:07:28.889
demonstrate that the pumper did anything.

00:07:28.889 --> 00:07:31.094
Now it's just words.

00:07:31.094 --> 00:07:33.715
I sure have a hard time saying that Mokan

00:07:33.715 --> 00:07:36.147
in this case has demonstrated that they were

00:07:36.147 --> 00:07:38.259
doing the things to comply with the

00:07:38.259 --> 00:07:42.426
basic lease requirements to have a producing well.

00:07:44.916 --> 00:07:47.583
With that, Chairman, I'm gonna--

00:07:49.520 --> 00:07:52.736
I don't agree with the findings in this case

00:07:52.736 --> 00:07:55.796
and I think we should go in a different direction.

00:07:55.796 --> 00:07:57.274
That's my questions.

00:07:57.274 --> 00:07:58.410
<v ->Alright, you have any questions?</v>

00:07:58.410 --> 00:08:00.427
<v ->The main concern about the lease owners</v>

00:08:00.427 --> 00:08:02.053
that you brought up, commissioner,

00:08:02.053 --> 00:08:05.798
are there any here to testify for the lease owners today

00:08:05.798 --> 00:08:07.697
or any representation from them?

00:08:07.697 --> 00:08:09.316
<v ->There's somebody here from Cholla.</v>

00:08:09.316 --> 00:08:11.026
The attorney's here from Cholla.

00:08:11.026 --> 00:08:12.164
But that's the only person that's

00:08:12.164 --> 00:08:14.341
signed in that I'm aware of.

00:08:14.341 --> 00:08:16.945
<v ->I'm always concerned but if there was</v>

00:08:16.945 --> 00:08:18.162
a significant problem I would expect

00:08:18.162 --> 00:08:21.952
somebody representing them to be here before us.

00:08:21.952 --> 00:08:24.004
<v ->They weren't party to the case</v>

00:08:24.004 --> 00:08:27.087
but they had released the minerals in this case

00:08:27.087 --> 00:08:30.261
to another producer after a couple long spans of--

00:08:30.261 --> 00:08:32.326
<v ->Right well my concern wasn't what you mentioned</v>

00:08:32.326 --> 00:08:36.709
is if the owners had problems I'd be concerned of that

00:08:36.709 --> 00:08:40.626
but I don't see evidence that they're here, so.

00:08:41.676 --> 00:08:42.509
<v ->Okay.</v>

00:08:42.509 --> 00:08:44.009
<v ->That's my question.</v>

00:08:44.009 --> 00:08:47.077
<v ->If you'd like to do your motion</v>

00:08:47.077 --> 00:08:47.910
I don't know what you're motion might be,

00:08:47.910 --> 00:08:49.321
I'm inclined to stay with where we are.

00:08:49.321 --> 00:08:51.229
I think lease disputes unfortunately ought to be

00:08:51.229 --> 00:08:53.512
in the court house and not here.

00:08:53.512 --> 00:08:56.044
<v ->Well as I said, I think that this case is a</v>

00:08:56.044 --> 00:09:00.698
lease dispute but the basis is was this a producing well?

00:09:00.698 --> 00:09:02.832
In our definition this would've been

00:09:02.832 --> 00:09:06.162
an inactive well for a period of 14 months.

00:09:06.162 --> 00:09:07.652
I don't think that the amount of evidence

00:09:07.652 --> 00:09:12.402
that was produced demonstrates that the current operator,

00:09:13.239 --> 00:09:16.989
former operator was complying with the lease.

00:09:18.838 --> 00:09:20.799
If the two of y'all want to go with this

00:09:20.799 --> 00:09:23.799
then, my motion would be to

00:09:25.498 --> 00:09:27.982
to grant Cholla's application

00:09:27.982 --> 00:09:29.812
to become a D4 operator on this well.

00:09:29.812 --> 00:09:30.778
<v ->Do you have a second?</v>

00:09:30.778 --> 00:09:32.245
I don't think you have a second at this point.

00:09:32.245 --> 00:09:33.078
<v ->Okay.</v>

00:09:33.078 --> 00:09:33.911
<v ->Okay.</v>

00:09:33.911 --> 00:09:36.282
Do we have any other questions?

00:09:36.282 --> 00:09:38.244
Alright, I move we approve the examiner's recommendation.

00:09:38.244 --> 00:09:39.077
Is there a second?

00:09:39.077 --> 00:09:39.910
<v ->Second.</v>

00:09:39.910 --> 00:09:40.743
<v ->Second, Commissioner Christian.</v>

00:09:40.743 --> 00:09:41.940
All is favor say aye?

00:09:41.940 --> 00:09:42.927
<v ->[Chairman and Commissioner Christian] Aye.</v>

00:09:42.927 --> 00:09:43.760
<v ->Opposed?</v>

00:09:43.760 --> 00:09:44.593
<v ->Nay.</v>

00:09:44.593 --> 00:09:45.572
<v ->Motion passes, items approved.</v>

00:09:45.572 --> 00:09:47.155
Thank you Jennifer.

00:09:48.430 --> 00:09:49.584
Item number three.

00:09:49.584 --> 00:09:50.417
<v Lynn>Thank you.</v>

00:09:50.417 --> 00:09:51.402
Good morning, Chairman and commissioners.

00:09:51.402 --> 00:09:52.556
My name is Lynn Latombe, the

00:09:52.556 --> 00:09:54.914
Administrative Law Judge with the Hearings Division.

00:09:54.914 --> 00:09:56.835
I'm here to present items three through five,

00:09:56.835 --> 00:09:59.670
all of which are P5 motions for rehearing.

00:09:59.670 --> 00:10:01.220
Item number three is a motion for

00:10:01.220 --> 00:10:04.374
rehearing filed by ABX Oil and Gas Inc.

00:10:04.374 --> 00:10:08.051
On September 18th, 2018 a final order was singed

00:10:08.051 --> 00:10:09.552
by the Commission denying the renewal of the

00:10:09.552 --> 00:10:12.536
operator's P5 organization report because

00:10:12.536 --> 00:10:15.591
the operator has wells noncompliant with Statewide Rule 15.

00:10:15.591 --> 00:10:18.331
In its motion, the operator states they are

00:10:18.331 --> 00:10:20.609
soliciting a bid to plug their noncompliant

00:10:20.609 --> 00:10:22.358
wells and asked to postpone the

00:10:22.358 --> 00:10:25.076
consideration of their P5 situation.

00:10:25.076 --> 00:10:28.082
Staff responds that seven wells are noncompliant.

00:10:28.082 --> 00:10:30.034
It is recommended that the motion be denied.

00:10:30.034 --> 00:10:31.637
The motion is overruled by operation

00:10:31.637 --> 00:10:34.594
of law on December 27th, 2018.

00:10:34.594 --> 00:10:35.709
I'm available for any questions.

00:10:35.709 --> 00:10:36.542
<v Chairman>Thank you.</v>

00:10:36.542 --> 00:10:37.375
Are there any questions?

00:10:37.375 --> 00:10:38.208
<v ->[Commissioner Sitton] Nope.</v>

00:10:38.208 --> 00:10:39.041
<v Chairman>I move we approve</v>

00:10:39.041 --> 00:10:40.157
the examiner's recommendation.

00:10:40.157 --> 00:10:40.990
Is there a second?

00:10:40.990 --> 00:10:41.823
<v ->Second.</v>

00:10:41.823 --> 00:10:42.762
<v ->Second, Commissioner Sitton.</v>

00:10:42.762 --> 00:10:44.306
All those in favor say aye?

00:10:44.306 --> 00:10:45.139
<v ->[All commissioners] Aye.</v>

00:10:45.139 --> 00:10:46.776
<v ->Motion passes, items approved.</v>

00:10:46.776 --> 00:10:48.028
Number four.

00:10:48.028 --> 00:10:49.308
<v Lynn>Item number four is a motion for</v>

00:10:49.308 --> 00:10:52.830
rehearing filed by Atwell Technical Services Inc.

00:10:52.830 --> 00:10:57.728
On September 28th, September 18th, excuse me, 2018

00:10:57.728 --> 00:10:59.907
a final order was entered by the Commission

00:10:59.907 --> 00:11:01.997
denying the renewal of the operator's P5

00:11:01.997 --> 00:11:03.982
organization report because the operator

00:11:03.982 --> 00:11:06.861
has wells noncompliant with Statewide Rule 15.

00:11:06.861 --> 00:11:09.530
In this motion, the operator explains that

00:11:09.530 --> 00:11:10.549
a reduction in staff has caused

00:11:10.549 --> 00:11:12.678
a delay in filing its paperwork.

00:11:12.678 --> 00:11:15.420
Staff responds that 17 wells are noncompliant.

00:11:15.420 --> 00:11:17.648
It is recommended that the motion be denied.

00:11:17.648 --> 00:11:19.008
The motion is overruled by operation

00:11:19.008 --> 00:11:22.102
of law on December 27th, 2018.

00:11:22.102 --> 00:11:23.278
I'm available for any questions.

00:11:23.278 --> 00:11:24.111
<v Chairman>Thank you.</v>

00:11:24.111 --> 00:11:24.944
Are there any questions?

00:11:24.944 --> 00:11:25.777
<v ->[Commissioner Christian] Nope.</v>

00:11:25.777 --> 00:11:26.610
<v Chairman>I move we approve</v>

00:11:26.610 --> 00:11:27.528
the examiner's recommendation.

00:11:27.528 --> 00:11:28.361
Is there a second?

00:11:28.361 --> 00:11:29.194
<v ->[Commissioner Christian] Second.</v>

00:11:29.194 --> 00:11:30.574
<v Chairman>Second, Commissioner Christian.</v>

00:11:30.574 --> 00:11:31.617
All those in favor say aye?

00:11:31.617 --> 00:11:32.450
<v ->[All commissioners] Aye.</v>

00:11:32.450 --> 00:11:33.949
<v ->Motion passes, items approved.</v>

00:11:33.949 --> 00:11:35.775
Number five I hear is good news.

00:11:35.775 --> 00:11:37.379
<v Lynn>Number five is good news.</v>

00:11:37.379 --> 00:11:40.038
Item number five is a motion for rehearing

00:11:40.038 --> 00:11:42.376
filed by Wilcox Operating Corporation.

00:11:42.376 --> 00:11:44.505
Subsequent to filing their motion for rehearing,

00:11:44.505 --> 00:11:46.473
they have come into compliance.

00:11:46.473 --> 00:11:48.154
We recommend granting the motion for rehearing

00:11:48.154 --> 00:11:50.692
and dismissing the underlying docket as moot.

00:11:50.692 --> 00:11:52.334
I'm available for any questions.

00:11:52.334 --> 00:11:53.482
<v Chairman>Are there any questions?</v>

00:11:53.482 --> 00:11:55.683
I move we approve the examiner's recommendation.

00:11:55.683 --> 00:11:56.516
Is there a second?

00:11:56.516 --> 00:11:57.349
<v ->Second.</v>

00:11:57.349 --> 00:11:58.495
<v ->Second Commissioner Sitton.</v>

00:11:58.495 --> 00:11:59.802
Will all those in favor say aye?

00:11:59.802 --> 00:12:00.635
<v ->[All commissioners] Aye.</v>

00:12:00.635 --> 00:12:01.814
<v ->Motion passes, items approved.</v>

00:12:01.814 --> 00:12:02.647
Thank you, Lynn.

00:12:02.647 --> 00:12:03.480
<v Lynn>Thank you.</v>

00:12:03.480 --> 00:12:07.433
<v ->Alright, we're now going to items six through 25,</v>

00:12:07.433 --> 00:12:08.968
the Oil and Gas consent agenda.

00:12:08.968 --> 00:12:11.714
There are 20 items on this consent agenda.

00:12:11.714 --> 00:12:14.196
I move we approve items six through 25.

00:12:14.196 --> 00:12:15.029
Is there a second?

00:12:15.029 --> 00:12:15.862
<v ->[Commissioner Christian] Second.</v>

00:12:15.862 --> 00:12:16.705
<v ->Second, Commissioner Christian.</v>

00:12:16.705 --> 00:12:17.867
All in favor say aye?

00:12:17.867 --> 00:12:18.700
<v ->[All commissioners] Aye.</v>

00:12:18.700 --> 00:12:21.495
<v ->Motion passes, those items are approved.</v>

00:12:21.495 --> 00:12:23.995
Items 26 through 46, which are

00:12:25.670 --> 00:12:27.569
rule 15 and active well items.

00:12:27.569 --> 00:12:28.704
There are 21.

00:12:28.704 --> 00:12:29.924
We don't have any changes on those?

00:12:29.924 --> 00:12:33.260
Okay, I move approve items 26 through 46.

00:12:33.260 --> 00:12:34.093
Is there a second?

00:12:34.093 --> 00:12:34.926
<v ->[Commissioner Sitton] Second.</v>

00:12:34.926 --> 00:12:36.672
<v ->Second, Commissioner Sitton.</v>

00:12:36.672 --> 00:12:37.505
All those in favor say aye.

00:12:37.505 --> 00:12:38.338
<v ->[All commissioners] Aye.</v>

00:12:38.338 --> 00:12:40.230
<v ->Motion passes, those items approved.</v>

00:12:40.230 --> 00:12:44.789
Master default, there are 10 master default orders.

00:12:44.789 --> 00:12:47.753
I move that we approve items 47 through 56.

00:12:47.753 --> 00:12:48.586
Is there a second?

00:12:48.586 --> 00:12:49.419
<v ->[Commissioner Christian] Second.</v>

00:12:49.419 --> 00:12:50.450
<v ->Second, Commissioner Christian.</v>

00:12:50.450 --> 00:12:51.757
All those in favor say aye.

00:12:51.757 --> 00:12:52.590
<v ->[All commissioners] Aye.</v>

00:12:52.590 --> 00:12:55.021
<v ->Motion passes, those items are approved.</v>

00:12:55.021 --> 00:12:56.786
Agreed enforcement orders.

00:12:56.786 --> 00:13:00.453
I move that we approve items 57 through 244.

00:13:01.457 --> 00:13:02.930
There are 188 of these.

00:13:02.930 --> 00:13:03.882
Is there a second?

00:13:03.882 --> 00:13:04.715
<v ->[Commissioner Sitton] Second.</v>

00:13:04.715 --> 00:13:05.996
<v ->Second by Commissioner Sitton.</v>

00:13:05.996 --> 00:13:07.158
All those in favor say aye.

00:13:07.158 --> 00:13:07.991
<v ->[All commissioners] Aye.</v>

00:13:07.991 --> 00:13:09.911
<v ->Motion passes, those items are approved.</v>

00:13:09.911 --> 00:13:11.124
That concludes the Hearing section.

00:13:11.124 --> 00:13:11.957
Thank you.

00:13:12.834 --> 00:13:15.016
We'll now take up the administrative matters.

00:13:15.016 --> 00:13:18.106
(papers shuffling)

00:13:18.106 --> 00:13:19.158
<v Wei>Good morning Chairman and commissioners.</v>

00:13:19.158 --> 00:13:19.991
<v ->Good morning.</v>

00:13:19.991 --> 00:13:23.110
<v Wei>For the record, Wei Wang, Executive Director.</v>

00:13:23.110 --> 00:13:24.950
Glad to report that we're maintaining

00:13:24.950 --> 00:13:28.309
the one-day turnaround time for creating a permit.

00:13:28.309 --> 00:13:30.809
And today we plugged 284 wells

00:13:32.234 --> 00:13:35.484
and completed five clean up activities.

00:13:36.324 --> 00:13:41.002
In the hiring front, our headcount grew to 757.

00:13:41.002 --> 00:13:45.744
Now that's seven additional employees from last report.

00:13:45.744 --> 00:13:48.822
So we'll continue that effort in the district offices

00:13:48.822 --> 00:13:52.720
hiring technical reviewer and inspectors.

00:13:52.720 --> 00:13:54.673
That concludes my report today

00:13:54.673 --> 00:13:56.179
and I'm available for questions.

00:13:56.179 --> 00:13:57.012
<v Chairman>Thank you.</v>

00:13:57.012 --> 00:13:57.845
Do you have any questions?

00:13:57.845 --> 00:13:58.678
Thank you.

00:14:01.370 --> 00:14:02.776
<v ->Good morning Chairman and commissioners.</v>

00:14:02.776 --> 00:14:04.517
For the record, my name is Alex Schoch,

00:14:04.517 --> 00:14:05.603
Chair and General Counsel of the

00:14:05.603 --> 00:14:06.479
Railroad Commission of Texas.

00:14:06.479 --> 00:14:09.848
For item 246, we've got nothing to report today.

00:14:09.848 --> 00:14:12.181
Haley has items 247 and 248.

00:14:14.993 --> 00:14:16.941
<v Chairman>Good morning, Haley.</v>

00:14:16.941 --> 00:14:18.193
<v Haley>Good morning, Chairman and commissioners.</v>

00:14:18.193 --> 00:14:20.587
Haley Cochran with the Office of General Counsel.

00:14:20.587 --> 00:14:23.781
Item number 247 pertains to commissioner approval

00:14:23.781 --> 00:14:25.219
of certain contracts pursuant to

00:14:25.219 --> 00:14:27.294
the Commission's delegation of authority.

00:14:27.294 --> 00:14:29.202
The Commission's internal delegation of authority

00:14:29.202 --> 00:14:31.102
requires commissioner approval of contracts

00:14:31.102 --> 00:14:35.605
and associated amendments greater than or equal to $500,000.

00:14:35.605 --> 00:14:38.801
Section 2261.254 of the government code requires

00:14:38.801 --> 00:14:40.963
approval of contracts and associated amendments

00:14:40.963 --> 00:14:42.984
greater than one million dollars.

00:14:42.984 --> 00:14:45.912
At issue today is the approval of $750,000

00:14:45.912 --> 00:14:49.098
for solicitation and resulting contract for

00:14:49.098 --> 00:14:52.535
mainframe transformation services in Fiscal Year 2019.

00:14:52.535 --> 00:14:54.719
Additionally staff seeks approval for an amendment

00:14:54.719 --> 00:14:56.786
to an existing site remediation contract

00:14:56.786 --> 00:14:59.236
for the Kilgore district office.

00:14:59.236 --> 00:15:01.375
Approval of these items will ensure agency operations

00:15:01.375 --> 00:15:02.958
remain on schedule and will ensure

00:15:02.958 --> 00:15:04.210
compliance with the Commission's

00:15:04.210 --> 00:15:07.102
delegation of authority and state law.

00:15:07.102 --> 00:15:07.986
<v Chairman>Thank you.</v>

00:15:07.986 --> 00:15:09.294
Are there any questions?

00:15:09.294 --> 00:15:11.092
I move we approve the staff's recommendation.

00:15:11.092 --> 00:15:11.925
Is there a second?

00:15:11.925 --> 00:15:12.758
<v ->[Commissioner Christian] Second.</v>

00:15:12.758 --> 00:15:13.701
<v Chairman>Second Commissioner Christian.</v>

00:15:13.701 --> 00:15:14.842
All those in favor say aye.

00:15:14.842 --> 00:15:15.675
<v ->[All commissioners] Aye.</v>

00:15:15.675 --> 00:15:16.948
<v ->That motion passes, items approved.</v>

00:15:16.948 --> 00:15:17.781
248.

00:15:17.781 --> 00:15:20.333
<v Haley>Item 248 is staff's recommendation</v>

00:15:20.333 --> 00:15:22.298
to publish proposed amendments to

00:15:22.298 --> 00:15:27.139
16 Texas Administrative Code, Section 3.25, 26, and 27,

00:15:27.139 --> 00:15:28.711
related to common storage and commingling.

00:15:28.711 --> 00:15:32.395
Most of the amendments are proposed in section 3.26.

00:15:32.395 --> 00:15:33.482
These amendments change how an operator

00:15:33.482 --> 00:15:35.582
applies to commingle production,

00:15:35.582 --> 00:15:37.816
which currently requires a rule exception.

00:15:37.816 --> 00:15:39.564
The proposed amendments would specify

00:15:39.564 --> 00:15:42.763
two instances in which an exception is no longer required.

00:15:42.763 --> 00:15:44.494
One: where an operator measures production

00:15:44.494 --> 00:15:47.246
from each tract and each reservoir separately;

00:15:47.246 --> 00:15:49.185
and two: where the tracts and reservoirs have

00:15:49.185 --> 00:15:51.876
identical working interest and royalty interest ownership.

00:15:51.876 --> 00:15:53.980
In these instances an operator would still be

00:15:53.980 --> 00:15:56.041
required to apply for a commingle permit

00:15:56.041 --> 00:15:58.739
but would not be required to apply for an exception.

00:15:58.739 --> 00:16:01.359
At an upcoming conference, staff will propose a new form.

00:16:01.359 --> 00:16:04.270
The form is 17A, which an operator will file

00:16:04.270 --> 00:16:06.751
if commingling pursuant to the proposed amendments.

00:16:06.751 --> 00:16:08.284
The proposed amendments to sections

00:16:08.284 --> 00:16:12.311
3.25 and 3.27 reflect the changes to 3.26.

00:16:12.311 --> 00:16:14.835
All of the proposed amendments are described in detail

00:16:14.835 --> 00:16:18.117
in the preamble which is in your notebook materials.

00:16:18.117 --> 00:16:19.353
Staff requests the Commission's

00:16:19.353 --> 00:16:20.974
approval to publish the proposed amendments

00:16:20.974 --> 00:16:22.684
in the Texas Register for public comment.

00:16:22.684 --> 00:16:24.818
If approved today, the proposal should appear in the

00:16:24.818 --> 00:16:28.347
November 30th issue of the Register.

00:16:28.347 --> 00:16:29.660
The proposal and an online comment form

00:16:29.660 --> 00:16:31.622
would also be made available on the Commission's website,

00:16:31.622 --> 00:16:33.013
giving interested persons more than

00:16:33.013 --> 00:16:35.009
two additional weeks to submit comments.

00:16:35.009 --> 00:16:35.936
I can answer any questions.

00:16:35.936 --> 00:16:37.232
<v Chairman>Thank you.</v>

00:16:37.232 --> 00:16:38.065
Are there any questions?

00:16:38.065 --> 00:16:40.417
I move we approve the staff's recommendation.

00:16:40.417 --> 00:16:41.250
Is there a second?

00:16:41.250 --> 00:16:42.117
<v ->[Commissioner Sitton] Second.</v>

00:16:42.117 --> 00:16:43.447
<v ->Second by Commissioner Sitton.</v>

00:16:43.447 --> 00:16:44.587
All those in favor say aye.

00:16:44.587 --> 00:16:45.420
<v ->[All commissioners] Aye.</v>

00:16:45.420 --> 00:16:46.585
<v ->Motions passes, items approved.</v>

00:16:46.585 --> 00:16:48.614
Thank you, Haley.

00:16:48.614 --> 00:16:50.942
You have anything else, Alex?

00:16:50.942 --> 00:16:54.161
Alright, item 249 is our public participation item.

00:16:54.161 --> 00:16:55.988
No one has turned in any other cards

00:16:55.988 --> 00:16:59.175
indicating they wish to speak on any non-posted items.

00:16:59.175 --> 00:17:01.396
Item 250 is our executive session,

00:17:01.396 --> 00:17:03.282
which we'll not be going into today.

00:17:03.282 --> 00:17:05.710
Are there any other duly posted matters

00:17:05.710 --> 00:17:08.069
to be brought in front of the Commission hearing?

00:17:08.069 --> 00:17:08.902
Hearing none, this meeting is adjourned.

00:17:08.902 --> 00:17:10.069
Thank you all.