WEBVTT 00:00:00.429 --> 00:00:04.899 This meeting of the Railroad Commission of Texas will come to order to consider matters which have been 00:00:04.899 --> 00:00:09.551 duly posted with the Secretary of State for April 9, 2019. The Commission 00:00:09.551 --> 00:00:15.040 will consider the items on the agenda as posted on the agenda. Under our public participation 00:00:15.040 --> 00:00:20.789 policy, anyone desiring to offer public testimony on any items that are not noticed on today's 00:00:20.789 --> 00:00:26.150 agenda will need to fill out a testimony form found in the back of the room and submit it 00:00:26.150 --> 00:00:37.610 to Commission Secretary Kathy Way. And remind you to turn off your phones. Good morning. 00:00:37.610 --> 00:00:48.980 - Good morning. Good morning, Chairman and commissioners. My name is Di Marlowe Chico. Administrative 00:00:48.980 --> 00:00:50.170 Law Judge with the Hearings division. Item number one is for the Commissioners to consider 00:00:50.170 --> 00:00:51.170 whether to suspend the effective date of a rate change for one hundred fifty days or 00:00:51.170 --> 00:00:56.430 to allow the rates to go into effect by Operation of Law. Both options are permissible under 00:00:56.430 --> 00:01:03.600 Texas Law. This rate case was filed by Zia Natural Gas Company, a division of Natural 00:01:03.600 --> 00:01:10.670 Gas Processing Company. Zia intends to increase rates within the unincorporated area of the 00:01:10.670 --> 00:01:16.420 Breckin Estate subdivision in Gaines County, Texas. The rate increase is not a major change 00:01:16.420 --> 00:01:22.360 and affects only twenty eight residential customers, no commercial customers and no 00:01:22.360 --> 00:01:28.830 municipalities. Thus, any rate case expenses incurred by Zia would fall under those twenty eight 00:01:28.830 --> 00:01:34.450 customers. Commission staff supports allowing Zia's proposed rate increased to go into effect 00:01:34.450 --> 00:01:41.030 by Operation of Law on the May 1, 2019 effective date. The examiners recommend 00:01:41.030 --> 00:01:47.670 the Commissioner's allow the rates to go into effect by operation of law. I'm available for questions. 00:01:47.670 --> 00:01:53.021 - Thank you. There any questions? I move we approve the examiners recommendation. Is there a second? 00:01:53.021 --> 00:01:58.140 Second, Commissioner Sitton. All those in favor say aye. Motion passes. Item's approved. 00:01:58.140 --> 00:02:04.520 Thank you. Item number 2. - Morning Commissioners. Kyle Lubbey, Administrative Law Judge with the Hearings 00:02:04.520 --> 00:02:11.609 Division. I'll be presenting items two and three on today's agenda. The subject of 00:02:11.609 --> 00:02:17.959 both items are replacement bond applications that have been filed by Texas Municipal Power Agency, 00:02:17.959 --> 00:02:25.279 or TMPA, for its Permits 26B and 28D for the Givens Creek Lignite Mines 00:02:25.279 --> 00:02:31.280 located in Grimes County. Regarding item two, Permit 26D is currently bonded with a collateral bond 00:02:31.280 --> 00:02:36.970 and letter of credit issued by Wells Fargo Bank NA, or Wells Fargo, in the amount 00:02:36.970 --> 00:02:42.370 of eleven million dollars. TMPA requests acceptance of a replacement collateral bond with letter of credit, 00:02:42.370 --> 00:02:47.469 also issued about Wells Fargo, in the amount of ten million dollars. The current letter 00:02:47.469 --> 00:02:52.400 of credit expires April 9, 2019. The profit Letter of Credit, as 00:02:52.400 --> 00:02:59.599 amended, is effective April 9, 2019, and expires June 9 2020. 00:02:59.599 --> 00:03:04.760 The reclamation cost estimate proposed for adoption, as calculated by staff and agreed 00:03:04.760 --> 00:03:10.709 to by TMPA. It's ten million nine hundred forty two thousand six hundred forty two dollars. 00:03:10.709 --> 00:03:16.699 Given the profit replacement bond is less than the reclamation cost estimate, the proposed order includes an 00:03:16.699 --> 00:03:23.249 ordering provision that requires TMPA submit a bond application and proposes to increase the 00:03:23.249 --> 00:03:31.349 amount of bond in an amount that is equal or exceeds staff's latest reclamation cost estimate 00:03:31.349 --> 00:03:35.430 within ninety days of the date of the order. Additional order paragraphs were included 00:03:35.430 --> 00:03:41.079 in order to ensure the timley submittal and processing of replacement bond instruments. 00:03:41.079 --> 00:03:46.450 All other issues have been sufficiently addressed by TMPA for acceptance of the bond. Staffi and 00:03:46.450 --> 00:03:52.659 TMPA are the only parties to the proceeding. No exceptions were filed. It's recommended the 00:03:52.659 --> 00:03:58.290 Commission accept the profit collateral bond and letter of credit to replace the existing bond. I'm avaialble for questions. 00:03:58.290 --> 00:04:03.739 Thank you. There any questions? We have somebody here for two and three. 00:04:03.739 --> 00:04:09.931 If anybody wants to hear somebody from TMPA, by the way. Thank you. I move we approve 00:04:09.931 --> 00:04:14.669 the examiners recommendation on item number two. Is there a seconds? Second, Commissioner 00:04:14.669 --> 00:04:18.470 Christian. All those in favor say aye. Motion passes items approved. And number three. 00:04:18.470 --> 00:04:21.150 Item three TMPA requests acceptance of replacement self bond in the amount of 00:04:21.150 --> 00:04:27.409 three point three million dollars in collateral bond with a letter of credit issued by Wells 00:04:27.409 --> 00:04:28.216 Fargo in the amount of nine point three million 00:04:28.241 --> 00:04:29.039 dollars to replace the existing bonds for Permit 38D. 00:04:29.039 --> 00:04:40.850 The permit is currently bonded by a self bond in the amount of eight point 00:04:40.850 --> 00:04:42.442 nine million dollars and a collateral bond with letter of 00:04:42.467 --> 00:04:44.199 credit in the amount of nine point six million dollars. Current 00:04:44.199 --> 00:04:49.000 letter of credit expires April 9, 2019. Proffered letter of credit 00:04:49.000 --> 00:04:51.289 is effective April 9, 2019 and expires June 9, 2020. Staff 00:04:51.289 --> 00:04:56.120 has determined that the appropriate reclamation cost estimate for the 00:04:56.120 --> 00:05:05.069 permit is in the amount of fourteen million seven hundred sixty six thousand seven hundred ninety 00:05:05.069 --> 00:05:06.316 one dollars. A figure that exceeds the proffered 00:05:06.341 --> 00:05:07.639 total bond amount twelve point six million dollars. 00:05:07.639 --> 00:05:08.255 The proposed order adopts staff's estimate, includes 00:05:08.280 --> 00:05:08.870 an ording provision that requires TMPA submit a bond 00:05:08.870 --> 00:05:15.129 application that proposes to increase the total amoutn in bond for the permit in an amount that 00:05:15.129 --> 00:05:22.475 exceeds or equal to staff's most recent reclamation cost estimate 00:05:22.500 --> 00:05:29.599 within ninety days of the date of the order. Additional ordering 00:05:29.599 --> 00:05:32.087 paragraphs are including post order to ensure 00:05:32.112 --> 00:05:34.900 timely submittal and processing of replacement bond 00:05:34.900 --> 00:05:39.630 instruments. All of the issues have been sufficiently addressed about TMPA. Evidence in the record 00:05:39.630 --> 00:05:43.139 supports that TMPA meets our requirements for self bonding with respect to the proffered 00:05:43.139 --> 00:05:47.225 three point three million dollars self bond. 00:05:47.250 --> 00:05:52.310 Staff and TMPA are the only parties to the proceedings. 00:05:52.310 --> 00:05:56.042 Neither filed exception to the proposed order. It is recommended 00:05:56.067 --> 00:05:59.659 that the Commission accept the proferred bonds to replace the 00:05:59.659 --> 00:06:05.949 existing bonds. I'm available for questions. - Thank you. Any questions? Again, there's somebody here from TMPA. I move 00:06:05.949 --> 00:06:10.300 we approve the examiners recommendation. Is there a second? Second by Commissioner 00:06:10.300 --> 00:06:16.020 Sitton. All those in favor say aye. Motion passes. Item approved. Thank you, Kyle. Item number four. 00:06:16.020 --> 00:06:23.819 Good morning, Chairman and Commissioners, For the record, my name is Carl Caldwell. 00:06:23.819 --> 00:06:29.090 I was the technical examiner on item number four. This item is the application of Probity 00:06:29.090 --> 00:06:36.280 SWD LLC for a commercial permit to dispose of oil and gas waste by injection into a porous 00:06:36.280 --> 00:06:41.669 formation not productive of oil or gas pursuant to Statewide Rule 9 for the Haas 00:06:41.669 --> 00:06:47.650 846SWD Lease, well number one. The applicant proposes to inject a maximum 00:06:47.650 --> 00:06:53.400 volume of twenty five thousand barrels per day of saltwater and record exempt waste into 00:06:53.400 --> 00:06:58.360 the Montoya and Ellenberger formations in the depth interval from ten thousand four 00:06:58.360 --> 00:07:04.349 to eleven thousand feet. The application is protested by nearby operator Wagner Oil 00:07:04.349 --> 00:07:12.159 Company. Wagner's primary concern is the potential for injected fluids to migrate from the proposed 00:07:12.159 --> 00:07:17.520 disposal interval in Montoya and Albert formations up into the Fussman formation 00:07:17.520 --> 00:07:22.551 where Wagner's wells are completed. Based on the evidence in the record, the examiners recommend 00:07:22.551 --> 00:07:27.729 approval of the application with the addition of two special permit conditions to be met 00:07:27.729 --> 00:07:31.708 prior to commencing disposal operations. One, the 00:07:31.733 --> 00:07:35.289 entire well bore shall be cased, and two, the 00:07:35.289 --> 00:07:40.319 operator shall run a cement bond load and submit the log to UIC prior to commencing 00:07:40.319 --> 00:07:45.280 disposal operations to ensure the cementing of the well bore meets the requirements of 00:07:45.280 --> 00:07:51.189 Statewide Rule 13. The protestant filed exceptions to the proposal for the decision 00:07:51.189 --> 00:07:53.625 and the applicant filed a reply to protestants 00:07:53.650 --> 00:07:56.009 exceptions. I'm available to answer questions. 00:07:56.009 --> 00:08:01.260 Thank you. Are there any questions? We have somebody here from Probity, if we have 00:08:01.260 --> 00:08:04.308 any questions. Okay, I move that we approve the 00:08:04.333 --> 00:08:07.229 examiners' recommendation. Is there a second? 00:08:07.229 --> 00:08:09.526 Second by Commissioner Christian. All those in favor say aye. 00:08:09.551 --> 00:08:11.749 Motion passes. Item's approved. Thank you. Item number five. 00:08:11.749 --> 00:08:13.552 Morning Commissioners. For the record, I'm (voice obscured by papers shuffling) 00:08:13.577 --> 00:08:15.199 Administrative Law Judge with the Hearings division. 00:08:15.199 --> 00:08:21.164 Item number five is a motion for rehearing in 00:08:21.189 --> 00:08:26.870 a modified final order. On January 23, 2019, 00:08:26.870 --> 00:08:32.899 the Commission entered an order granting a disposal permit application of Wild Horse 00:08:32.899 --> 00:08:35.819 Resource's Management Company LLC. The permit 00:08:35.844 --> 00:08:38.930 application was protested by adjacent landowners 00:08:38.930 --> 00:08:44.660 and the Post Oak Savanna Groundwater District. On February 19, 2019, the 00:08:44.660 --> 00:08:47.235 Commission received two motions for rehearing 00:08:47.260 --> 00:08:49.810 one from Post Oak and the other from the land 00:08:49.810 --> 00:08:56.180 owners. On March 1, 2019, the Commission received Wild Horse's reply. The 00:08:56.180 --> 00:08:59.550 landowner's and Post Oaks motions do not raise significant issues of fact or law not 00:08:59.550 --> 00:09:01.923 previously considered by the Commission. In 00:09:01.948 --> 00:09:04.620 reviewing the motions, a clerical error was found 00:09:04.620 --> 00:09:06.959 in two of the findings of fact. The error does 00:09:06.984 --> 00:09:09.149 not change the examiners recommendation for 00:09:09.149 --> 00:09:14.060 approval of the permit. The commission rules provide for modification of the order due 00:09:14.060 --> 00:09:19.500 to a clerical error. It is recommended that the modification of the final order granted 00:09:19.500 --> 00:09:22.094 and the motions for rehearing be denied. The 00:09:22.119 --> 00:09:24.630 two were included in one order. The motions 00:09:24.630 --> 00:09:27.110 for rehearing will be overruled by operation of 00:09:27.135 --> 00:09:29.590 law on May 3. I'm available for questions. 00:09:29.590 --> 00:09:32.169 Thank you. There any questions? I move we approve 00:09:32.194 --> 00:09:34.800 the examiners' recommendations? Is there a second? 00:09:34.800 --> 00:09:40.140 Second by Commissioner Sitton. All those in favor say aye. Motion passes. Thank 00:09:40.140 --> 00:09:43.143 you, Christie. Item number six. 00:09:43.168 --> 00:09:47.735 - Good morning, Chairman, Commissioners. For the record, my 00:09:47.760 --> 00:09:52.150 name is Joe Menifee, currently with the Hearings division. 00:09:52.150 --> 00:09:58.690 I'll be presenting items six through nine. All of which are motions for rehearing filed 00:09:58.690 --> 00:10:06.769 as a result of a final order signed on February 5 denying renewal of the operators P5 00:10:06.769 --> 00:10:14.070 because of wells noncompliant with Statewide Rule 15. Item number six, in its motion 00:10:14.070 --> 00:10:21.150 Barrel Petroleum LLC requests more time to come into compliance, but it gives no basis 00:10:21.150 --> 00:10:25.283 for failing to request a hearing prior to issuance 00:10:25.308 --> 00:10:28.930 of the final order. Staff opposes the motion. 00:10:28.930 --> 00:10:34.860 Four wells remain noncompliant with Statewide Rule 15. It is recommended the motion be 00:10:34.860 --> 00:10:43.370 denied. The motion will be overruled by operation of law on May 16. I'm available for questions. - Thank you. Four wells, you say? 00:10:43.370 --> 00:10:49.269 All right. I move, are there any questions? I move we approve staff's recommendation. 00:10:49.269 --> 00:10:53.519 Is there a second? Second by Commissioner Christian. All those in favor say aye. 00:10:53.519 --> 00:11:01.830 Motion passes. Item's approved. Number seven. - Item number seven. In its motion, DPMP Energy 00:11:01.830 --> 00:11:04.868 LLC states the operators failure to request a 00:11:04.893 --> 00:11:07.839 hearing was because they mistakenly believed 00:11:07.839 --> 00:11:13.910 all necessary filings had been submitted to the Commission. DPMP claims that the 00:11:13.910 --> 00:11:20.180 required paperwork to get compliance has since been submitted to the district office. Staff 00:11:20.180 --> 00:11:28.050 opposes the motion. One well remains noncompliant due to H15 failure. It's recommended 00:11:28.050 --> 00:11:31.701 the motion be denied. The motion will be overruled by 00:11:31.726 --> 00:11:35.690 Operation oft Law May 16. I'm available for any questions. 00:11:35.690 --> 00:11:41.350 Are there any questions? I move we approve the staff's recommendation. Is there 00:11:41.350 --> 00:11:43.750 a second? Second, Commissioner Sitton. All those 00:11:43.775 --> 00:11:46.199 in favor say aye. Motion passes. Item's approved. 00:11:46.199 --> 00:11:54.500 Number eight. - Item number eight. In its motion for rehearing, Luling O&G LLC states 00:11:54.500 --> 00:11:59.800 it chose not to request a hearing because of its intention to bring all wells into 00:11:59.800 --> 00:12:03.305 compliance. Staff opposes the motion. Fifty six 00:12:03.330 --> 00:12:06.810 wells remain noncompliant with Statewide Rule 15 00:12:06.810 --> 00:12:10.453 It is recommended the motion be denied. The motion will be 00:12:10.478 --> 00:12:14.529 overruled by operation of law May 16. I'm available for questions. 00:12:14.529 --> 00:12:21.370 Are there any questions? I move we approve staff's recommendation. Is there a second? 00:12:21.370 --> 00:12:25.600 Second Commissioner Christian. All those in favor say aye. Motion passes. That item's approved and number nine. 00:12:25.600 --> 00:12:32.300 Item number nine. In its motion, NHRG INC states 00:12:32.300 --> 00:12:35.720 the operator believed they had complied with all 00:12:35.745 --> 00:12:39.699 requirements to renew their P5. Staff opposes the motion. 00:12:39.699 --> 00:12:47.269 Thirty seven wells remain noncompliant due to a failure to file Form W3A. Therefore 00:12:47.269 --> 00:12:50.507 it's recommended the motion be denied. The motion 00:12:50.532 --> 00:12:53.680 will be overruled by Operation of Law on May 16. 00:12:53.680 --> 00:12:58.440 I'm available for questions. - Are there any questions? I move we approve staff's 00:12:58.440 --> 00:13:03.880 recommendation. Is there a second? Second by Commissioner Sitton. All those in favor 00:13:03.880 --> 00:13:10.540 say aye. Motion passes. That item's approved. Thank you, Joe. All right, we're going to 00:13:10.540 --> 00:13:16.790 the Oil and Gas Consent Agenda There are thirty one items. Items ten through forty. I move 00:13:16.790 --> 00:13:21.550 we approve items ten through forty. Is there a second? Second by Commissioner Christian. 00:13:21.550 --> 00:13:27.420 All those in favor say aye. Motion passes. Those items are approved. Rule 15, Inactive 00:13:27.420 --> 00:13:31.268 Well items. Y'all have one to pass, is that correct? Which? 00:13:31.293 --> 00:13:35.170 - It's number fifty eight. - Fifty eight. Okay. All right. There are twenty two 00:13:35.170 --> 00:13:40.680 otherwise. I move that we approve items forty one through sixty two, with the 00:13:40.680 --> 00:13:45.779 exception of fifty eight. Is there a second? Second by Commissioner Sittion. All those 00:13:45.779 --> 00:13:52.010 in favor say aye. Motion passes. Those items are approved. Agreed Enforcement Orders. 00:13:52.010 --> 00:13:57.029 There were one hundred fifty four items originally posted. But now there are one hundred fifty. 00:13:57.029 --> 00:14:02.649 We've got four to pass. Is that right? All right, I'm gonna pass item sixty three, 00:14:02.649 --> 00:14:08.260 sixty four, sixty five, sixty six, correct? All right, I move we approve item sixty three through 00:14:08.260 --> 00:14:14.089 two sixteen, with the exception of items sixty three, sixty four, sixty five and sixty six. 00:14:14.089 --> 00:14:19.400 Is there a second? Second by Commissioner Christian. All those in favor say aye. 00:14:19.400 --> 00:14:22.977 Motion passes. Those items are approved. That concludes 00:14:23.002 --> 00:14:25.980 the Hearings section. Thank you. We'll take up 00:14:25.980 --> 00:14:32.440 the Administrative. Morning, Wei. - Morning, Chairman, Commissioners. For the record, Wei Wang 00:14:32.440 --> 00:14:34.892 Executive Director. This year, we have a goal to 00:14:34.917 --> 00:14:37.544 reduce the number of wells not inspected in the last 00:14:37.544 --> 00:14:40.623 five years. Twenty percent. And last week, I 00:14:40.648 --> 00:14:43.839 just got a report from Clay. We're currently at 00:14:43.839 --> 00:14:48.379 twenty one percent. So we're getting really close to meeting the target and most likely will 00:14:48.379 --> 00:14:51.851 exceed target for the fiscal. Uh, on the well plugging 00:14:51.876 --> 00:14:55.070 front, as a last Friday, we've plugged one thousand 00:14:55.070 --> 00:15:04.160 and thirteen wells. We see that one thousand more. And as of Monday, our head count is seven hundred 00:15:04.160 --> 00:15:06.701 seventy two employees. That concludes my report this 00:15:06.726 --> 00:15:09.050 morning. I'm available for questions. Thank you. 00:15:09.050 --> 00:15:16.440 - Thank you. Any questions? Okay. Thank you very much. Alex, good morning. - Morning, Chairman, Commissioners. 00:15:16.440 --> 00:15:20.370 For the record, my name is Alex Schott, General Counsel with the Railroad Commission 00:15:20.370 --> 00:15:26.440 of Texas. We've got nothing to report on item 218. David has a report on 219 and 220. 00:15:26.440 --> 00:15:28.970 About some possible proposed rulemaking. - Good morning, Commissioners. David Cooney 00:15:28.970 --> 00:15:36.380 from the Office of General Counsel, I will present item numbers 219 and 220. 00:15:36.380 --> 00:15:42.990 219 is staff's recommendation that the Railroad Commission authorize Wei, 00:15:42.990 --> 00:15:51.420 authorize the executive director, to join TCEQ and PUC in comments on the what 00:15:51.420 --> 00:15:58.110 is known as the Mercury Air Toxics Rule comments, which are due on April 17. I've provided a draft 00:15:58.110 --> 00:16:03.269 comments from TCEQ in your notebook. The likelihood is those will not change. Staff 00:16:03.269 --> 00:16:08.740 recommends that we join in the comments. The primary thrust of the comments from Texas 00:16:08.740 --> 00:16:17.089 is unique because Texas asserts that EPA does not have the necessary threshold 00:16:17.089 --> 00:16:21.589 finding with respect to regulating Mercury Air Toxics, and we take the position that 00:16:21.589 --> 00:16:27.759 the rulingought to be repealed, which is even a little more aggressive than what EPA is proposing 00:16:27.759 --> 00:16:32.449 in this rule making. So staff recommends we authorized Wei to join the other agencies 00:16:32.449 --> 00:16:38.480 in comments. - Thank you. There any questions? I move we approve staff's recommendation is there a second? 00:16:38.480 --> 00:16:45.319 Second by Commissioner Sitton. All in favor, say aye. Motion passes. 00:16:45.319 --> 00:16:49.980 - Item number 220 is staff's recommendation that the Commissioners authorise the staff 00:16:49.980 --> 00:16:55.889 to file Railroad Commission comments on proposed revision of the definition of waters of the 00:16:55.889 --> 00:17:01.740 US. Those comments are due to be filed on Monday, April 15. And provided a copy 00:17:01.740 --> 00:17:03.823 of the draft comments, which, if they go 00:17:03.848 --> 00:17:06.160 unchanged between now and Monday, and we don't 00:17:06.160 --> 00:17:10.150 expect to make any changes. We'd like authorisation 00:17:10.175 --> 00:17:13.220 to file those comments with the Monday. 00:17:13.220 --> 00:17:19.060 Are there any questions? I appreciate y'all doing both of these. This is important stuff. 00:17:19.060 --> 00:17:23.660 I move we approve the staff's recommendation. Is there a second? Second by Commissioner 00:17:23.660 --> 00:17:30.480 Christian. All those in favor say aye. Motion passes. Item's approved. Thank you. Anything else? 00:17:30.480 --> 00:17:35.530 All right. Item 221 is our Public Participation item and nobody else has turned in 00:17:35.530 --> 00:17:40.880 any additional cards. Item 222 is our Executive Session, which we won't be 00:17:40.880 --> 00:17:45.340 going into. Are there any other matters? Hearing none, this meeting of the Railroad Commission 00:17:45.340 --> 00:17:46.620 is a adjourned. Thank you.