WEBVTT 00:00:07.980 --> 00:00:13.140 Railroad Commission of Texas will come to order to consider 00:00:13.165 --> 00:00:18.171 matters which have been duly posted with Secretary of State for September the 00:00:18.196 --> 00:00:23.408 11th, 2019. Commissioners will consider the items on the agenda as posted on the 00:00:23.433 --> 00:00:28.491 agenda. Under our public participation policy, anyone desiring to offer public 00:00:28.516 --> 00:00:33.653 testimony on any items that are not noticed on today's agenda will need to fill 00:00:33.678 --> 00:00:38.726 out a testimony form found in the back of the room and submit it to the deputy 00:00:38.752 --> 00:00:43.876 Commission secretary, Sharon Walker. Please silence all your cell phones before 00:00:43.901 --> 00:00:48.680 we begin. And before we get any further, let's go into our service awards. 00:00:48.680 --> 00:00:51.075 Good morning, Chairman and Commissioners. My 00:00:51.100 --> 00:00:53.630 name is Robbie Craig. I'm the Director of Human 00:00:53.630 --> 00:00:56.910 Resources. Today, I'm here to present the 2019 00:00:56.935 --> 00:00:59.910 4th quarter Service Awards. First up, from 00:00:59.910 --> 00:01:10.400 our Office of General Counsel, celebrating five years of service, is Vanessa Burgess. 00:01:10.400 --> 00:01:32.290 (crowd chatter) Next, from our Surface Mining Division, celebrating five years of service, 00:01:32.290 --> 00:01:59.930 is Francis Calderon. (applause) (audience chatter) Next, from our ITS division, also celebrating 00:01:59.930 --> 00:02:32.030 five years of service, is Jenny Heath. (audience chatter) Next, from our Operations 00:02:32.030 --> 00:03:00.459 division, celebrating five years of service, is Sandra Maldonado. (applause) Also celebrating five 00:03:00.459 --> 00:03:22.319 years of service, from our Oversight and Safety division, Blake Roadie. (applause) (audience chatter) 00:03:22.319 --> 00:03:39.040 Next from our office of General Counsel, celebrating 20 years of service, it's Kathy Keels 00:03:39.040 --> 00:03:56.329 (applause) (audience chatter) Finally, also celebrating 20 years of service, from our Oil and Gas division, Julie 00:03:56.329 --> 00:04:32.130 Rickehoe. (applause) (audience chatter) This concludes today's service awards. Thank you. 00:04:32.130 --> 00:04:34.466 It's always nice to recognize those that 00:04:34.491 --> 00:04:36.880 make the Railroad Commission what it is, and we do appreciate 00:04:36.880 --> 00:04:39.817 all of you so much. Before we begin, I'd like 00:04:39.842 --> 00:04:42.690 to remember in that today is the anniversary 00:04:42.690 --> 00:04:46.298 of a horrific event 9-11, and the recent shootings 00:04:46.323 --> 00:04:49.270 in Odessa, Texas, and we do pay respects, 00:04:49.270 --> 00:04:51.736 and our prayers are with the families and the 00:04:51.761 --> 00:04:54.310 memories and all that survived those horrendous 00:04:54.310 --> 00:04:57.919 incidents, and hopefully we can make a better 00:04:57.944 --> 00:05:01.450 country from such evil that was upon us. But 00:05:01.450 --> 00:05:04.316 let's proceed. Item number one. 00:05:04.341 --> 00:05:07.318 Good Morning, Chairman and 00:05:07.343 --> 00:05:10.683 Commissioners. For the record, my name is Christina 00:05:10.708 --> 00:05:13.608 Poole, and I'm with the Oversight and Safety 00:05:13.633 --> 00:05:16.443 Division. The agenda item before you is Gas 00:05:16.468 --> 00:05:19.503 Utilities Docket Number 10857, the application 00:05:19.528 --> 00:05:22.603 of Texas Gas Service Company, a division of One 00:05:22.629 --> 00:05:25.716 Gas Incorporated. for the Test Year 2018 Annual 00:05:25.741 --> 00:05:28.481 Interim Rate adjustment for the Gulf Coast 00:05:28.506 --> 00:05:31.407 Service area. This is the third interim rate 00:05:31.432 --> 00:05:34.373 adjustment TGS has fallen for this area since 00:05:34.398 --> 00:05:37.479 the company's last rate case, GUD Number 10488. 00:05:37.504 --> 00:05:40.175 This adjustment represents an incremental 00:05:40.200 --> 00:05:43.031 revenue increase of $112,007 of which $2704 00:05:43.056 --> 00:05:46.119 will be recovered from the customers subject to 00:05:46.145 --> 00:05:48.900 the order in this docket. Staff recommends 00:05:48.925 --> 00:05:52.103 approval of the interim readjustment as proposed. 00:05:52.128 --> 00:05:55.765 Are there any questions? Ok. I move we approve the examiner's 00:05:55.790 --> 00:05:59.050 recommendations. Is there a second? Commissioner Sitton 00:05:59.050 --> 00:06:04.000 is the second. All in favor say aye. Any opposed? Motion passes. That item is 00:06:04.000 --> 00:06:06.578 approved. Item number two. 00:06:06.603 --> 00:07:14.738 Good Morning, Chairman and Commissioners. I'm to Demarlowe Chico, Administrative Law Judge with the Hearings Division. Item number two is a discrimination complaint filed by TG Barnett Resources LP against respondents Cowtown Pipeline Partners L.P. and Cowtown Gas Processing Ptrs L.P.. The parties timely filed exceptions and replies. Complainant TG Barnett also filed a motion for oral argument and Cowtown responded, urging denial of the motion. Two non-substantive clerical errors were corrected and are reflected in the final order that will be presented to you. Under the unique facts of this case, complainant failed to establish it is a similarly situated shipper based on conditions in circumstances existing at the time of agreement and negotiations between TG Barnett and Cowtown’s other shipper. Thus the examiners determined unreasonable discrimination has not occurred. The examiners recommend the Commissioner's deny and dismiss the complaint. There's no deadline for Commission action. I'm available for questions. 00:07:14.763 --> 00:07:23.191 Are there any questions? We have three that are available for any questions. 00:07:23.190 --> 00:07:27.677 Bill Johnson, Brian Sullivan and Larry Viscela. 00:07:27.702 --> 00:07:31.790 And if you have any questions of them, they 00:07:31.790 --> 00:07:37.361 are available. Any discussion? Commissioner Sutton? 00:07:37.386 --> 00:07:43.330 I do. Demarlowe walk through with me real 00:07:43.330 --> 00:07:46.155 quick. In fact, in the legal principles in the 00:07:46.180 --> 00:07:48.980 case summary, you reference, or we referenced, 00:07:48.980 --> 00:07:52.296 both the common carrier statute. We referenced 00:07:52.321 --> 00:07:55.470 the Natural Resources Code, and we reference 00:07:55.470 --> 00:07:59.631 the Gas Utility Code as a gas utility. 00:07:59.656 --> 00:08:05.820 My question is which does Bluestone-slash-Cowtown 00:08:05.820 --> 00:08:13.800 fall under? Are they common carrier, are they common gas purchaser, or are they a gas utility? 00:08:13.825 --> 00:08:18.577 Common carrier but Cowtown is the gas utility in this case. 00:08:18.602 --> 00:08:21.270 And the discrimination, the issue 00:08:21.270 --> 00:08:24.753 of discrimination, applies under 81. I know 00:08:24.778 --> 00:08:28.710 Cowtown responds to with regards to seven points, 00:08:28.710 --> 00:08:34.880 rather, 104.003, but 81.061 is what applies with regard to discrimination complaints in 00:08:34.880 --> 00:08:38.638 this case. So as we do the analysis, we also 00:08:38.663 --> 00:08:42.479 look under 7.003d, which is the determination 00:08:42.479 --> 00:08:45.094 of those 13 factors that we analyze. We looked 00:08:45.119 --> 00:08:47.430 at all 13 factors and determined based on 00:08:47.430 --> 00:08:53.519 the specific facts of this case, that the circumstances and conditions that occurred 00:08:53.519 --> 00:08:58.940 during the time of negotiation or agreement is what is dispositive material in this case. 00:08:58.940 --> 00:09:01.291 Okay, I understand the use of the 00:09:01.316 --> 00:09:03.519 definition of similarly situated. What I'm asking is, 00:09:03.519 --> 00:09:07.013 before we get there, I wanna be specific because 00:09:07.038 --> 00:09:10.079 we we don't actually say, sate in our PFD, 00:09:10.079 --> 00:09:15.180 in our findings of fact or conclusions of law, exactly what they are. Are we treating 00:09:15.180 --> 00:09:18.415 them as a gas utility or as a common carrier 00:09:18.440 --> 00:09:21.649 or as a common purchaser? In fact, under the 00:09:21.649 --> 00:09:31.149 rules in Chapter 7, just when we talk about the, in fact, Chapter 7.001, we're 00:09:31.149 --> 00:09:35.829 specifically talking about gas purchasers. So I wanna make sure that we are being 00:09:35.829 --> 00:09:40.540 deliberate or being specific in how we're treating Countdown, and are you saying 00:09:40.540 --> 00:09:46.103 that we're treating them as a common carrier? 00:09:46.128 --> 00:09:52.149 Okay, if that's the case, and I understand, 00:09:52.149 --> 00:09:58.360 you walk through the 13 different criteria looked at, and specifically section M, which 00:09:58.360 --> 00:10:03.379 is we looked at the timing and the conditions when negotiations were met, I'll say it 00:10:03.379 --> 00:10:05.121 specifically what it is. It's conditions and 00:10:05.146 --> 00:10:06.980 circumstances existing at the time of agreement 00:10:06.980 --> 00:10:12.879 or negotiation. Correct? And so you're you're finding was, well, there was a bankruptcy 00:10:12.879 --> 00:10:18.610 going on. Hence the negotiation for rates between Cowtown as both the producer 00:10:18.610 --> 00:10:24.190 and the operator and the gatherer that that was a different time that when 00:10:24.190 --> 00:10:26.960 the other rates were negotiated? Am I summarizing correctly? 00:10:26.985 --> 00:10:28.550 Among other factors there was that. There 00:10:28.550 --> 00:10:31.584 was a market conditions at the time, the fact 00:10:31.609 --> 00:10:34.749 that they ratified these contracts at different 00:10:34.749 --> 00:10:38.554 time frames. And there was also the fact that 00:10:38.579 --> 00:10:42.110 these were sophisticated companies who did 00:10:42.110 --> 00:10:46.050 their due diligence when they ratified those contracts again at those different points 00:10:46.050 --> 00:10:50.502 in time when there were different circumstances existing. 00:10:50.527 --> 00:10:53.189 Okay? And I do like the fact 00:10:53.189 --> 00:10:56.860 that we identify a specific business or a an 00:10:56.885 --> 00:11:00.450 economic issue at the time, i.e. bankruptcy 00:11:00.450 --> 00:11:02.957 is something that does create different circumstances 00:11:02.982 --> 00:11:04.999 and therefore rates determined in 00:11:04.999 --> 00:11:09.600 a bankruptcy hearing don't necessarily apply it to other situations. I agree with that. 00:11:09.600 --> 00:11:20.279 However, my issue is in TG Barnett's nets exceptions, they go to some specific 00:11:20.279 --> 00:11:23.705 lengths to mention the fact that ENI gets the 00:11:23.730 --> 00:11:27.205 same rates that Cowtown gets. Is that correct? 00:11:27.230 --> 00:11:29.945 Well, the difference between 00:11:29.970 --> 00:11:32.320 ENI and TG Barnett was that ENI, 00:11:32.320 --> 00:11:37.480 at the time the contracts were ratified, they didn't ratify the contract 00:11:37.480 --> 00:11:42.329 themselves. They were not a producer party, unlike TG Barnett when it ratified their 00:11:42.329 --> 00:11:47.589 contracts with Cowtown back in 2014. ENI, at that time, chose not to be a producer 00:11:47.589 --> 00:11:50.388 party, and it still is not a producer party. 00:11:50.413 --> 00:11:53.250 They're just working interest owners, so they 00:11:53.250 --> 00:11:55.825 are not similarly situated in that respect. 00:11:55.850 --> 00:11:58.400 But similarly situated. If I wanted to 00:11:58.399 --> 00:12:02.450 say that Cowtown was the one involved in the bankruptcy, but ENI is a working 00:12:02.450 --> 00:12:04.697 interest owner with a similar percentage sitting 00:12:04.722 --> 00:12:06.760 on the same exact pipelines 00:12:06.760 --> 00:12:11.230 producing the virtually the same amount of gas? In other words, if I go through the 13 00:12:11.230 --> 00:12:19.360 criteria, and ENI is getting the same rates that Cowtown is, then I'm concerned that 00:12:19.360 --> 00:12:26.440 there is nothing that differentiates, today, ENI and TG Barnett. Once again, if they 00:12:26.440 --> 00:12:29.510 had been involved in a bankruptcy, somehow, I get that that was a different situation, 00:12:29.510 --> 00:12:34.230 but they were not. So while they were, there may have been different criteria or 00:12:34.230 --> 00:12:36.785 different circumstances under which they conducted 00:12:36.810 --> 00:12:39.089 a negotiation, if we're looking today to look 00:12:39.089 --> 00:12:44.069 for rate discrimination, then I don't see how we see a difference between ENI 00:12:44.069 --> 00:12:46.747 TG Barnett. They seem virtually identical to me. 00:12:46.772 --> 00:12:48.660 Well, I would see the differences as 00:12:48.660 --> 00:12:53.660 they weren't in control of the negotiations. They didn't ratify the contract. Unlike TG 00:12:53.660 --> 00:12:56.060 Barnett, where, when they ratified their contract, 00:12:56.085 --> 00:12:58.459 they were in control. They did their due diligence 00:12:58.459 --> 00:13:02.261 and they chose to accept the contract terms 00:13:02.286 --> 00:13:06.149 at that time. So that's why we looked at subsection L. 00:13:06.149 --> 00:13:11.197 with a significant specific, facts based specific to this case. 00:13:11.222 --> 00:13:14.202 So I guess, though the following to that is, 00:13:14.227 --> 00:13:17.051 if any time we can say, well, there was a difference in standing 00:13:17.050 --> 00:13:20.779 in a contract negotiation, then, honestly, how we'd ever find discrimination? There's 00:13:20.779 --> 00:13:27.480 never gonna be two people that negotiated a contract in an identical fashion. 00:13:27.480 --> 00:13:30.267 Well, when it comes to discrimination in these 00:13:30.292 --> 00:13:33.410 cases, they're all fact-back specific. So that's why 00:13:33.410 --> 00:13:34.945 I keep referring to the facts of this case. 00:13:34.970 --> 00:13:36.550 So we can't say right now whether or not that 00:13:36.550 --> 00:13:38.864 will happen in the future. It just is fact dependent. 00:13:38.889 --> 00:13:40.450 My point is, I never have two people 00:13:40.450 --> 00:13:42.190 sitting in the exact same room, negotiating 00:13:42.215 --> 00:13:43.970 contracts and exact same time over the exact 00:13:43.970 --> 00:13:46.007 same circumstances. There's always something 00:13:46.032 --> 00:13:48.089 different. And so if I use the fact that they 00:13:48.089 --> 00:13:50.945 were in different situations, simply from a contract 00:13:50.970 --> 00:13:53.369 negotiation standpoint, then that will throw 00:13:53.369 --> 00:13:57.287 out, we'll never find that. If all the other 00:13:57.312 --> 00:14:01.380 criteria, A through L, are met, and M in this 00:14:01.380 --> 00:14:05.990 case as far as ENI goes, is the only, and the only differentiator is that ENI, 00:14:05.990 --> 00:14:07.844 what you're saying is they were unsophisticated 00:14:07.869 --> 00:14:09.660 or they did not choose to participate actively 00:14:09.660 --> 00:14:12.573 in negotiations but somehow got a lower rate. 00:14:12.598 --> 00:14:15.740 TG Barnett who we don't know what their situation 00:14:15.740 --> 00:14:19.660 was. Just that it wasn't exactly the same as ENI's, right? Like we weren't in the room 00:14:19.660 --> 00:14:21.327 negotiating the contract. 00:14:21.352 --> 00:14:24.816 Can I ask a question? Because it seems to me. 00:14:24.841 --> 00:14:26.328 No, I want to finish mine first please. Just let me finish this. 00:14:26.329 --> 00:14:30.874 Ok because I disagree with how you read it. So I'd like to let you finish. 00:14:30.899 --> 00:14:32.829 Okay, what I'm trying understand is 00:14:32.829 --> 00:14:39.749 if my issue is that I've got two different situations for negotiating a contract 00:14:39.749 --> 00:14:44.889 in which we weren't present. There will always be differences in contract negotiations. 00:14:44.889 --> 00:14:47.407 So I'm trying understand, My premise is how 00:14:47.432 --> 00:14:50.040 would we ever find 00:14:50.040 --> 00:14:55.749 find discrimination between two parties if we use a different situation 00:14:55.749 --> 00:14:59.175 for negotiating contracts, as the bar. 00:14:59.200 --> 00:15:02.249 I think well, the way I see it, the 00:15:02.249 --> 00:15:04.879 issues, again going back to the fact specifics 00:15:04.904 --> 00:15:07.509 of the case, in this case, not only do we have 00:15:07.509 --> 00:15:10.234 the different time frame, we have the bankruptcy 00:15:10.259 --> 00:15:12.680 that placed them in different level playing 00:15:12.680 --> 00:15:18.939 fields, so being asked to speculate as to future contracts, there might 00:15:18.939 --> 00:15:21.680 be a case where they did look forward as to how 00:15:21.705 --> 00:15:24.249 to negotiate their contracts and be prepared 00:15:24.249 --> 00:15:27.035 for it. And that would then, if the contracts 00:15:27.060 --> 00:15:29.699 were different then yes, we can assume 00:15:29.699 --> 00:15:32.590 that maybe they're not, they are similarly 00:15:32.615 --> 00:15:35.749 situated. But this in this specific fact case, 00:15:35.749 --> 00:15:40.174 they're not and those conditions or what we looked at. 00:15:40.199 --> 00:15:42.749 So can I clarify? Because 00:15:42.749 --> 00:15:45.132 it seems to me you're reading the ENI piece 00:15:45.157 --> 00:15:47.569 and we have very little information from ENI 00:15:47.569 --> 00:15:50.419 right because they weren't a party to the case. 00:15:50.444 --> 00:15:53.269 It seemed, the way I read it, is that Bluestone, 00:15:53.269 --> 00:15:58.279 make sure I said that right, is a marketer on behalf of ENI, so ENI may or may not have 00:15:58.279 --> 00:16:04.839 its own contract. That's the perception I have. We don't know that for sure, right? 00:16:04.839 --> 00:16:07.954 So Bluestone really is the marketer on behalf 00:16:07.979 --> 00:16:10.870 of ENI, the way I read the very 00:16:10.870 --> 00:16:15.470 limited information I have. So ENI may or may not have their own contract. We may 00:16:15.470 --> 00:16:18.346 or may not know the answer to that, but Bluestone 00:16:18.371 --> 00:16:20.819 is the marketer. Would that be a decent assessment? 00:16:20.819 --> 00:16:24.812 Yes, they're not a producer party to the contract. 00:16:24.837 --> 00:16:29.407 Which is where I think they're different in this respect. 00:16:29.432 --> 00:16:31.349 I agree that. I agree with 00:16:31.374 --> 00:16:33.190 the point that Commissioner Craddick is making. 00:16:33.190 --> 00:16:35.286 The fact is, we don't know. And as I said, in fact, 00:16:35.311 --> 00:16:37.180 it's only in the exceptions where we see where 00:16:37.180 --> 00:16:41.499 they go to length to state that the Cowtown executive, Mark Mitchell, testified 00:16:41.499 --> 00:16:45.660 that Bluestone and ENI are both getting the lower rates, not knowing what contract 00:16:45.660 --> 00:16:51.649 was in place. So my concern is we don't know enough to say that Oh, definitively, there 00:16:51.649 --> 00:16:53.835 wasn't discrimination And we've met virtually 00:16:53.860 --> 00:16:55.879 all the criteria in our similarly situated 00:16:55.879 --> 00:16:59.339 definition going back to the common carrier 00:16:59.364 --> 00:17:03.429 chapter. All it says, common carrier of the Natural 00:17:03.429 --> 00:17:05.761 Resources code, all it says is that we're looking 00:17:05.786 --> 00:17:07.860 for people that have like or contemporaneous 00:17:07.860 --> 00:17:12.319 service. It's our definitions where we list out these 13 criteria, and these seem awful 00:17:12.319 --> 00:17:18.931 close to me to not find discrimination in this case. 00:17:18.956 --> 00:17:22.799 Any further comments? Okay, and 00:17:22.799 --> 00:17:27.709 we do have again, remind you, three that are here. 00:17:27.734 --> 00:17:32.330 Bill Johnson, Brian Sullivan and Larry Viscella 00:17:32.330 --> 00:17:40.850 that are available should anybody have any questions of them, if not is there a motion? 00:17:40.850 --> 00:17:46.539 I'm a move we approve the examiners recommendation. 00:17:46.564 --> 00:17:49.790 Is there a 2nd? Second. All in favor, say aye. 00:17:49.790 --> 00:17:51.980 Aye. Any opposed? 00:17:52.005 --> 00:17:53.641 Nay 00:17:53.666 --> 00:17:58.550 Motion passes, two to one, that item is approved.Item number three. 00:17:58.550 --> 00:18:03.013 Good Morning, Chairman, Commissioners. Kyle 00:18:03.038 --> 00:18:07.250 Lubbey, Administrative Law Judge with Hearings Division. 00:18:07.250 --> 00:18:09.905 Item three is an application by Luminant Mining 00:18:09.930 --> 00:18:12.450 Company LLC requesting renewal, revision, and 00:18:12.450 --> 00:18:15.908 expansion of Permit Number 50b for the Kosse mine 00:18:15.933 --> 00:18:19.090 located Limestone and Robertston counties. In 00:18:19.090 --> 00:18:26.470 the application, Luminant proposes to expand the existing 15,206 a permit area. Adding 00:18:26.470 --> 00:18:32.080 approximately 1357 acres, and seeks approval of renewed and revised operations during 00:18:32.080 --> 00:18:35.343 a five year renewal term. The application is protested 00:18:35.368 --> 00:18:38.190 by Mr Ray Field and Mr Miss Susan Calhoun-Field 00:18:38.190 --> 00:18:42.929 who own land adjacent to the proposed permit boundary and requested a hearing 00:18:42.929 --> 00:18:46.687 in November 2018 following notice of application. 00:18:46.712 --> 00:18:50.370 Public hearing was convened on June 14, 2019, in 00:18:50.370 --> 00:18:53.067 Franklin, Texas to receive public comment and 00:18:53.092 --> 00:18:55.940 consider requests with party status. The hearing 00:18:55.940 --> 00:18:59.297 on the merits was held on June 17, 2019, in 00:18:59.322 --> 00:19:02.731 the Commission's Austin offices. Protestant 00:19:02.731 --> 00:19:07.510 gave public comment and testimony regarding its interest at setting in Franklin but did 00:19:07.510 --> 00:19:10.687 not attend or participate in the hearing on the merits. 00:19:10.712 --> 00:19:12.559 Staff recommends approval of the 00:19:12.559 --> 00:19:18.070 application with the adoption of two permit provisions. Luminant has accepted staff's review, 00:19:18.070 --> 00:19:22.299 protestant contends the application should be denied for wide variety of reasons, but 00:19:22.299 --> 00:19:29.240 have not offered any evidence to contradict positions of the other parties. 00:19:29.240 --> 00:19:32.870 The reclamation cost estimate to account for the proposed activities, as calculated by 00:19:32.870 --> 00:19:43.240 staff in the amount of $200,777,829 is recommended for adoption. Luminant 00:19:43.240 --> 00:19:47.159 currently bonds all of its statewide mining operations with a blanket collateral bond 00:19:47.159 --> 00:19:52.789 in the amount of 975 million. The current bond exceeds the sum of estimated reclamation 00:19:52.789 --> 00:19:58.169 costs for all of Luminant's mines, including the proposed amount attributable to the Kosse 00:19:58.169 --> 00:20:01.363 mine. Therefore, no changes to the bond are 00:20:01.388 --> 00:20:04.630 required as a result of this renewal. Review 00:20:04.630 --> 00:20:06.775 by staff shows at all technical requirements 00:20:06.800 --> 00:20:08.920 are met for approval with recommended permit 00:20:08.920 --> 00:20:11.443 provisions set out Appendix one to the proposal 00:20:11.468 --> 00:20:13.860 for decision and adopted in a proposed order. 00:20:13.860 --> 00:20:17.264 Appendix 2 contains postmine soil testing plant. 00:20:17.289 --> 00:20:20.390 The parties to the proceeding, including the 00:20:20.390 --> 00:20:25.059 protestant, did not file exceptions to the PFD. Based on evidence in the record, it is 00:20:25.059 --> 00:20:27.422 recommended application be approved and the renewed 00:20:27.447 --> 00:20:29.740 and revised permit renumbered as permit number 50C 00:20:29.740 --> 00:20:36.950 be issued to Luminant for a term of five years. I'm available for questions. 00:20:36.950 --> 00:20:40.450 Any questions? We have a one filed 00:20:40.475 --> 00:20:43.690 person that he's here for questions. Mr Ray Field 00:20:43.690 --> 00:20:46.419 is available. Does anybody have any questions 00:20:46.444 --> 00:20:48.970 of Mr Field? If not, I move we approve the 00:20:48.970 --> 00:20:51.284 examiners recommendation. Is there a second? 00:20:51.309 --> 00:20:51.894 Second. 00:20:51.919 --> 00:20:53.650 Second by Commissioner Sitton. All in favor 00:20:53.650 --> 00:20:59.365 say aye. Any opposed? Motion passes. Item is approved. Item number four. 00:20:59.390 --> 00:21:02.883 Good morning, Chairman Commissioners. For the record, 00:21:02.908 --> 00:21:06.440 Veronica Roberto, Administrative Law Judge with the Hearings 00:21:06.440 --> 00:21:12.870 division. Item number four is an application by Luminant Mining Company LLC requesting 00:21:12.870 --> 00:21:17.253 a release of Phase 1 reclamation obligations 00:21:17.278 --> 00:21:21.830 on 301.38 acres within Three Oaks Mine, permit 00:21:21.830 --> 00:21:25.541 number 48C, located in Lee and Bastrop counties. 00:21:25.566 --> 00:21:28.570 The approved post mine land uses within 00:21:28.570 --> 00:21:31.391 the subject area are pasture land and developed 00:21:31.416 --> 00:21:34.330 water resources. Evidence in the record supports 00:21:34.330 --> 00:21:37.152 that Luminant has satisfied all requirements 00:21:37.177 --> 00:21:40.100 for Phase One release of the subject area. After 00:21:40.100 --> 00:21:43.007 notice, no comments or request for a hearing 00:21:43.032 --> 00:21:45.980 were received. Luminant and staff are the only 00:21:45.980 --> 00:21:50.100 parties to the proceedings. No exceptions were filed. No changes to the current bond 00:21:50.100 --> 00:21:52.534 are requested in the docket. It is recommended 00:21:52.559 --> 00:21:54.760 that the request for Phase One release for 00:21:54.760 --> 00:21:57.828 the subject area be approved and that Luminant 00:21:57.853 --> 00:22:00.700 be eligible to reduce the amount on the bond the 00:22:00.700 --> 00:22:03.209 permit. I'm available for questions. 00:22:03.234 --> 00:22:05.617 Any questions? I move we approve 00:22:05.642 --> 00:22:07.820 the examiners recommendation. Is there a second? 00:22:07.820 --> 00:22:09.373 Second 00:22:09.398 --> 00:22:14.031 Second by Commissioner Craddick. All in favor say aye. Any opposed? Motion 00:22:14.030 --> 00:22:19.820 passes. That item is approved. Item number five and six. 00:22:19.845 --> 00:22:23.070 Good morning, Chairman, Commissioners. My name is Peter Bouva, 00:22:23.070 --> 00:22:25.645 technical examiner with the Hearings division. 00:22:25.670 --> 00:22:28.110 I'll be presenting items number five and six 00:22:28.110 --> 00:22:34.210 together. I have one order for both dockets, and therefore you only need to vote once. 00:22:34.210 --> 00:22:37.480 Items number five and six are applications by 00:22:37.505 --> 00:22:40.679 High Roller Wells LLC for two new commercial 00:22:40.679 --> 00:22:43.715 disposal wells. The application is protested by 00:22:43.740 --> 00:22:46.751 Frank and Gwen Legion, Legion Family Partnership 00:22:46.750 --> 00:22:50.673 LP, Legion Management LLC, and Robert and Caroline 00:22:50.698 --> 00:22:54.520 Sadler. Protestants do not dispute that applicant 00:22:54.520 --> 00:22:59.610 meets the operational requirements. The protestants contend that applicant does 00:22:59.610 --> 00:23:04.309 not have a good faith claim to operate the proposed wells and thus should be denied a 00:23:04.309 --> 00:23:10.559 permit to operate. To drill the wells. High Roller presented evidence addressing each 00:23:10.559 --> 00:23:13.198 of the requirements in Statewide Rule Nine. High 00:23:13.223 --> 00:23:15.730 Roller has a written lease giving it the right 00:23:15.730 --> 00:23:21.130 to operate the proposed injection wells. Protestants claim that there is a written oil and 00:23:21.130 --> 00:23:26.240 gas lease that is dominant to High Rollers written lease. The protestants provided 00:23:26.240 --> 00:23:29.216 insufficient legal authority for their claim. 00:23:29.241 --> 00:23:32.580 The examiners find that there has been a reasonably 00:23:32.580 --> 00:23:38.080 satisfactory showing of a good faith claim. The dispute that protestants have with High 00:23:38.080 --> 00:23:40.572 Roller is outside of the jurisdiction of the 00:23:40.597 --> 00:23:43.120 Commission and is insufficient to defeat High 00:23:43.120 --> 00:23:48.909 Rollers good faith claim. The Examiner's recommend approval of the application. Exceptions and 00:23:48.909 --> 00:23:52.243 replies have been filed. I'm available for any questions. 00:23:52.268 --> 00:23:56.210 Are there any questions? I move we approve examiners' recommendation 00:23:56.210 --> 00:23:58.911 on items five and six. Is there a second? 00:23:58.936 --> 00:23:59.669 Second. 00:23:59.695 --> 00:24:01.870 Second by Commissioner Sitton. All in favor 00:24:01.870 --> 00:24:09.360 say aye. Any opposed? Motion passes. Those items are approved. Item number seven. 00:24:09.360 --> 00:24:11.530 Good morning, Chairman, Commissioners. For 00:24:11.555 --> 00:24:13.590 the record, my name is Robert Music, technical examiner 00:24:13.590 --> 00:24:19.320 for the Hearings division. Item number seven is the application of NGL Water Solutions, 00:24:19.320 --> 00:24:25.309 Permian LLC. The application is for a commercial permit to dispose of oil and gas 00:24:25.309 --> 00:24:29.703 waste by injection into a resevoir productive 00:24:29.728 --> 00:24:33.730 of oill and gas for Ramsey 12A Well lease, 00:24:33.730 --> 00:24:41.860 well number two, Ford 4000 Delaware Field, Reeves County, Texas. NGL is requesting to 00:24:41.860 --> 00:24:45.121 amend the 2012 existing injection permit for the 00:24:45.146 --> 00:24:48.049 subject well. The current permit authorizes 00:24:48.049 --> 00:24:51.407 a maximum injection volume of 20,000 barrels 00:24:51.432 --> 00:24:54.840 per day of saltwater and nonhazardous oil and 00:24:54.840 --> 00:25:01.860 gas waste into the field. NGL seeks authority to increase the maximum injection volume 00:25:01.860 --> 00:25:09.270 to 33,800 barrels per day. The request is based on an injectivity test showing the 00:25:09.270 --> 00:25:12.920 well has the capacity to inject the requested 00:25:12.945 --> 00:25:16.809 volume within required wellhead pressure limits. 00:25:16.809 --> 00:25:20.102 The application is protested by Ring Energy 00:25:20.127 --> 00:25:23.470 Incorporated and Conoco Philips Company. The 00:25:23.470 --> 00:25:26.751 protestants argued additional disposal capacity 00:25:26.776 --> 00:25:29.759 is not needed and the injection fluids will 00:25:29.759 --> 00:25:33.427 negatively impact production in the area. 00:25:33.452 --> 00:25:37.620 Their proposed disposal well is cased, cemented, 00:25:37.620 --> 00:25:42.659 and completed in a manner consistent with Commission rules under Statewide Rule 46. 00:25:42.659 --> 00:25:46.043 The Examiner's recommend approval of the application 00:25:46.068 --> 00:25:48.789 to amend the maximum injection pressure of 00:25:48.789 --> 00:25:52.802 volume to 33,800 barrels per day for the subject 00:25:52.827 --> 00:25:58.090 well. No exceptions were found. I'm available for questions. 00:25:58.115 --> 00:26:00.358 Are there any questions? I 00:26:00.382 --> 00:26:04.036 move we approve the examiners' recommendation. Is there a second? 00:26:04.062 --> 00:26:05.097 Second. 00:26:05.121 --> 00:26:08.200 Second Commissioner Craddick. All in favor, say aye. Any 00:26:08.200 --> 00:26:16.090 opposed? Motion passes. That item is approved. Item Number eight. 00:26:16.115 --> 00:26:19.678 Good morning, Chairman, Commissioners. For the 00:26:19.703 --> 00:26:23.538 record, Joe Menifee, paralegal In the Hearings division. I'll be 00:26:23.539 --> 00:26:28.909 presenting items eight through 10, all of which are P5 motions for rehearing filed as 00:26:28.909 --> 00:26:32.205 a result of a final order denying renewal of the 00:26:32.230 --> 00:26:35.299 operators P5 because of wells noncompliant 00:26:35.299 --> 00:26:39.474 with Statewide Rule 18. Item number eight. In 00:26:39.499 --> 00:26:43.649 its motion Banner Oil and Gas LLC states they 00:26:43.649 --> 00:26:46.700 mistakenly believe that filing W3X 00:26:46.725 --> 00:26:49.960 would resolve compliance issues. Staff opposes 00:26:49.960 --> 00:26:53.700 the motion. Currently one well remains noncompliant 00:26:53.725 --> 00:26:56.649 with Statewide rule 15. It's recommended 00:26:56.649 --> 00:27:00.180 the motion be denied. The motion will be overruled 00:27:00.205 --> 00:27:04.928 by Operation of Law on September 26. I'm available for questions. 00:27:04.953 --> 00:27:06.707 Any questions? I move we 00:27:06.731 --> 00:27:10.022 approve the examiners recommendation. Is there a second? 00:27:10.048 --> 00:27:11.124 Second. 00:27:11.148 --> 00:27:12.820 Second Commissioner Sitton. 00:27:12.845 --> 00:27:14.350 All in favor, say aye. Any opposed? Motion 00:27:14.350 --> 00:27:17.117 passes that items approved. Item 9. 00:27:17.142 --> 00:27:21.960 Item number nine. Subsequent to filing its motion for rehearing, 00:27:21.960 --> 00:27:24.874 Hydrogeo LLC has come into compliance with 00:27:24.899 --> 00:27:28.059 Statewide Rule 15. Therefore, it's recommended 00:27:28.059 --> 00:27:30.554 the motion be granted and the underlying docket 00:27:30.579 --> 00:27:33.100 dismissed his moot. I'm available for questions. 00:27:33.100 --> 00:27:34.700 Any questions? 00:27:34.725 --> 00:27:35.648 Good news. 00:27:35.674 --> 00:27:38.419 I move we approve the examiners recommendation. Is there a second? 00:27:38.419 --> 00:27:39.942 Second. 00:27:39.967 --> 00:27:42.999 Second by Commissioner Craddick. All in favor say 00:27:43.024 --> 00:27:46.163 aye. Any opposed? Motion passes. That item is approved. Item number 10. 00:27:46.188 --> 00:27:49.409 Item number 10. Subsequent to following its motion for 00:27:49.409 --> 00:27:52.362 rehearing White's Industrial Engines has come 00:27:52.387 --> 00:27:55.250 into compliance. Therefore, it's recommended 00:27:55.250 --> 00:27:58.072 the motion be granted and the underlying docket 00:27:58.097 --> 00:28:01.130 dismissed as moot. I'm available for any questions. 00:28:01.155 --> 00:28:03.090 Any questions? I move 00:28:03.090 --> 00:28:06.119 we approve the examiners recommendations. Is there a second? 00:28:06.144 --> 00:28:06.485 Second. 00:28:06.510 --> 00:28:11.420 Second by Commissioner Sitton. All in favor say aye. 00:28:11.445 --> 00:28:16.330 Any opposed? Motion passes. That item is approved. Items 11 through 64. 00:28:16.330 --> 00:28:23.390 Let's move on to the Oil and Gas consent agenda. There 54 items on the agenda. I move 00:28:23.390 --> 00:28:27.512 we approve items 11 through 64. Is there a second? 00:28:27.537 --> 00:28:28.238 Second. 00:28:28.262 --> 00:28:33.042 Second by Commissioner Craddick all in favor, say 00:28:33.067 --> 00:28:37.960 aye. Any opposed? Motion passes. Those items are approved. Items 65 00:28:37.960 --> 00:28:42.585 through 90 on the, let's move to the Rule 15 Inactive 00:28:42.610 --> 00:28:46.440 Well items. There're 20 items on the Rule 15 00:28:46.440 --> 00:28:52.910 and active wells list. I move we approve out on 65 through 90 except for items 72 00:28:52.910 --> 00:28:57.713 75, 76, and 80. Now, we have filed a person that, 00:28:57.738 --> 00:29:01.940 if you need any questions on this before we 00:29:01.940 --> 00:29:05.887 vote from Kinder Morgan, Bill Hynega! 00:29:05.912 --> 00:29:11.600 I'm sorry. Hennega. Haynaga. I'll guess on that, okay? 00:29:11.600 --> 00:29:14.923 I've butchered that good. Okay, that's somebody from 00:29:14.948 --> 00:29:18.120 East Texas can't talk English. Okay. Any questions 00:29:18.120 --> 00:29:22.227 of Bill? I can gGet that part. OK? If not, I 00:29:22.252 --> 00:29:26.700 move we approve those items 65 through 90 except 00:29:26.700 --> 00:29:29.260 for 72, 75, 76, and 80. Is there a second? 00:29:29.285 --> 00:29:30.113 Second. 00:29:30.139 --> 00:29:34.559 Second by Commissioner Sitton. All in favor 00:29:34.559 --> 00:29:42.269 say Aye. Any opposed. Motion passes. Those items are approved. Let's move to the Master 00:29:42.269 --> 00:29:46.794 Default Orders. There's seven master default orders. I 00:29:46.819 --> 00:29:51.483 move, we approve Items 91 through 97. Is there a second? 00:29:51.508 --> 00:29:52.906 Second. 00:29:52.931 --> 00:29:57.100 Second by Commissioner Craddick. All in favor say aye. Any opposed? 00:29:57.100 --> 00:30:00.330 Motion passes. Those items are approved. Move 00:30:00.355 --> 00:30:03.490 the Agreed Enforcement Orders. There are 170 00:30:03.490 --> 00:30:08.545 Agreed Enforcement Orders. I move we approve items 98 through 267. Is there a second? 00:30:08.570 --> 00:30:10.230 Second. 00:30:10.230 --> 00:30:13.348 Second by Commissioner Sitton. All 00:30:13.373 --> 00:30:16.351 in favor say aye. Any opposition? Motion passes, those 00:30:16.351 --> 00:30:19.053 items are approved. That concludes the hearing section. 00:30:19.078 --> 00:30:21.320 We will now take up our administrative agenda. 00:30:21.320 --> 00:30:26.325 Good morning, Chairman, Commissioners. 00:30:26.350 --> 00:30:30.840 For the record. Wei Wang, executive director. 00:30:30.840 --> 00:30:33.689 As state employees, we get to celebrate New Year's 00:30:33.714 --> 00:30:36.370 wwice a year, so as we we start FY20, I thought 00:30:36.370 --> 00:30:38.565 it's appropriate for me to provide you with 00:30:38.590 --> 00:30:40.809 the progress update on what we achieved last 00:30:40.809 --> 00:30:44.751 year and provide and give you a few highlights. 00:30:44.776 --> 00:30:48.610 On the inspection front, glad to report 00:30:48.610 --> 00:30:50.871 that we have met all of our inspection goals. 00:30:50.896 --> 00:30:53.230 Whether it's performance measures or internal 00:30:53.230 --> 00:30:57.035 goals, for some cases, and specifically for oil and 00:30:57.060 --> 00:31:00.840 gas, the performance measure is 130,000 inspections 00:31:00.840 --> 00:31:04.267 for the year. We have performed close 234,000 00:31:04.292 --> 00:31:07.470 inspections. For pipeline safety, we had a 00:31:07.470 --> 00:31:14.919 internal goal of 3000 standard comprehensive inspections. We completed 3108 inspections 00:31:14.919 --> 00:31:23.559 and in addition to that, we also performed 1692 specialized inspections, which is a 70% 00:31:23.559 --> 00:31:27.006 increase from the year before. Surface mining 00:31:27.031 --> 00:31:30.379 completed 405 inspections exceeding our goal 00:31:30.379 --> 00:31:37.891 off 400 inspections. And our AFS department performed 18,771 inspections, exceeding the 00:31:37.891 --> 00:31:41.311 17,000 performance measures set by the Legislature. 00:31:41.336 --> 00:31:44.139 We also made tremendous improvement on the 00:31:44.139 --> 00:31:49.809 permit review turnaround time. After setting a record last year for three days for Drilling 00:31:49.809 --> 00:31:57.120 Permit, we at a new record of two days in FY19. And our USC application review for 00:31:57.120 --> 00:32:01.679 nonassessment review. We're able to bring that number down from over 100 days to under 00:32:01.679 --> 00:32:06.588 45 days at year end. And when we started the year, 00:32:06.613 --> 00:32:10.919 we had over 5000 AFS completion report.Today 00:32:10.919 --> 00:32:19.669 we're looking at zero. It's pretty much the same day approval and review. 00:32:19.669 --> 00:32:22.098 Another one that want to mention is our damage 00:32:22.123 --> 00:32:24.320 prevention program. We have stepped up our 00:32:24.320 --> 00:32:29.720 public overreach in this area. So for three years in a row, we have reduced the number 00:32:29.720 --> 00:32:33.960 of damages per 1000 locations from close to 00:32:33.985 --> 00:32:38.490 three to under 2.5 damages per 1000 locations. 00:32:38.490 --> 00:32:41.531 And our IT departments also working very hard, 00:32:41.556 --> 00:32:44.249 they were able to bring four forms online 00:32:44.249 --> 00:32:46.821 as part of the Oil Field Relief Initiative. 00:32:46.846 --> 00:32:49.509 We also rolled out RRC Oil seven months 00:32:49.509 --> 00:32:53.990 ahead of schedule. At the end of the year, we met the legislative mandate 00:32:53.990 --> 00:32:58.302 to roll out our case docket management system at the 00:32:58.327 --> 00:33:02.520 end of the year. So also leading that target. 00:33:02.520 --> 00:33:06.224 And as you already know, we exceeded the well 00:33:06.249 --> 00:33:10.009 plugging number by a large margin. We finished 00:33:10.009 --> 00:33:15.724 the year with 1724 wells, closing out the biennium him 00:33:15.749 --> 00:33:20.919 with 3164 wells. And our site remediation program 00:33:20.919 --> 00:33:24.625 also significantly exceeded their performance 00:33:24.650 --> 00:33:28.090 measure of a 188 activities. They finished 00:33:28.090 --> 00:33:30.961 a year with over 400 activities, more than 00:33:30.986 --> 00:33:34.100 double the performance measure. So in summary, 00:33:34.100 --> 00:33:36.438 our performance that's going up, our head count is 00:33:36.463 --> 00:33:38.639 going up, we're gaining momentum, thanks to the 00:33:38.639 --> 00:33:40.908 hard work off our employees, and your leadership 00:33:40.933 --> 00:33:42.899 and vision. We had a really great year and 00:33:42.899 --> 00:33:44.619 we're ready for FY20. 00:33:44.644 --> 00:33:49.779 Commend you, Wei, and all the people that work in this agency in 00:33:49.779 --> 00:33:52.176 this Railroad Commission. Just recently returned 00:33:52.201 --> 00:33:54.720 from the Interstate Oil and Gas Compact Commission. 00:33:54.720 --> 00:33:57.085 Wei and some of the staff went, and I'm proud 00:33:57.110 --> 00:33:59.399 to say, the Railroad Commission of Texas won 00:33:59.399 --> 00:34:03.612 the Chairman's Stewardship Award for Energy 00:34:03.637 --> 00:34:08.399 Education. Here it is proof. These were presented 00:34:08.399 --> 00:34:12.590 again, and just very proud of us. And this award, of course, was from the 00:34:12.590 --> 00:34:17.270 program that you all have introduced this year that allows our public to be able to 00:34:17.270 --> 00:34:22.422 access information directly, anytime, night or day, 24 hours, on oil and gas and the 00:34:22.422 --> 00:34:26.520 wells that are actually in production. So it's a real statement that you received 00:34:26.520 --> 00:34:28.915 with all, just the 31 states that produce oil 00:34:28.940 --> 00:34:31.310 and gas, you received the highest award this 00:34:31.310 --> 00:34:33.842 year for that. So we commend you and are proud 00:34:33.867 --> 00:34:36.159 of. I also want to recognize a local Texas 00:34:36.159 --> 00:34:39.080 company, Apache, that also receive an award in 00:34:39.105 --> 00:34:42.000 the large company category for its partnership 00:34:42.000 --> 00:34:45.250 with Parks and Wildlife Federation in support of 00:34:45.275 --> 00:34:48.500 Balmorhea Ray State Park Patty. Apache partnered 00:34:48.500 --> 00:34:54.510 with the Parks and Wildlife Foundation to raise $2 million to support the repair and 00:34:54.510 --> 00:35:00.300 restoration the iconic pool following its closure in early 2018 after years of erosion 00:35:00.300 --> 00:35:04.980 from the flow of water from spring caused the structural collapse of the pool wall. 00:35:04.980 --> 00:35:07.939 So it's nice to hear that a Texas company won 00:35:07.964 --> 00:35:10.770 that award also. So very proud of our staff 00:35:10.770 --> 00:35:13.762 and of the good folks in the industry here in 00:35:13.787 --> 00:35:17.079 Texas. And we commend you for that. Any questions? 00:35:17.079 --> 00:35:19.085 I was gonna say thank you. This 00:35:19.110 --> 00:35:21.160 is the first time we've not only met but exceeded targets. I 00:35:21.160 --> 00:35:23.731 think. We're definitely exceeding targets. It's 00:35:23.756 --> 00:35:26.141 amazing what paying people a little bit more 00:35:26.141 --> 00:35:28.065 and having some great staff. So thank y'all for 00:35:28.090 --> 00:35:30.150 what you're doing and thank you for your leadership 00:35:30.150 --> 00:35:35.071 and what's going on across the agency. We appreciate everybody. 00:35:35.096 --> 00:35:36.840 Thank you, Wei. 00:35:36.840 --> 00:35:39.301 Thank you, sir. I also have Paul 00:35:39.326 --> 00:35:41.980 Deboisl with me today. Last month, Commissioners, 00:35:41.980 --> 00:35:47.079 you asked us to look into our flaring permit, and Paul, our assistant director for Technical 00:35:47.079 --> 00:35:50.089 Permitting, has conducted some research and 00:35:50.114 --> 00:35:53.440 analysis, so he will provide you with an update. 00:35:53.440 --> 00:35:55.785 Morning, Chairman, Commissioners. 00:35:55.810 --> 00:35:58.130 For the record, Paul Debois with the Oil and Gas 00:35:58.130 --> 00:36:00.792 division. At the August 2nd conference, Chairman 00:36:00.817 --> 00:36:03.400 Christian requested Commission staff determine 00:36:03.400 --> 00:36:06.424 how many wells have received long term flaring 00:36:06.449 --> 00:36:09.190 permits and are connected to gas pipelines 00:36:09.190 --> 00:36:13.809 and are still flaring. Commissioner Sitton then asked staff to determine whether those 00:36:13.809 --> 00:36:16.022 wells are connected to gas gathering systems and 00:36:16.047 --> 00:36:18.010 processing plants and whether those systems 00:36:18.010 --> 00:36:20.699 have available capacity. To begin to address 00:36:20.724 --> 00:36:23.329 his questions, staff identified the flaring 00:36:23.329 --> 00:36:26.520 permits and associated leases and wells that 00:36:26.545 --> 00:36:29.710 met the following three criteria. First, the 00:36:29.710 --> 00:36:35.170 authority to flare gas was granted for 180 days or longer, what I'll refer to as a long 00:36:35.170 --> 00:36:38.759 term permit. Second, the producers Transportation 00:36:38.784 --> 00:36:41.990 Authority and Certificate of Compliance Form P4 00:36:41.990 --> 00:36:48.170 identifies a gas gatherer and purchaser, indicating the availability of a point of 00:36:48.170 --> 00:36:54.140 transaction. And third, the lease operator reported production and flared gas in May 00:36:54.140 --> 00:37:02.490 2019 which was the most complete production data set available to us. Staff determined 00:37:02.490 --> 00:37:06.618 there were 234 flaring permits met these criteria. 00:37:06.643 --> 00:37:10.260 There were 700 oil and gas leases associated 00:37:10.260 --> 00:37:15.165 with those permits, and there were 3073 wells 00:37:15.190 --> 00:37:20.070 on those associated leases. For context, these 00:37:20.069 --> 00:37:25.890 3073 wells represent about 1% of the number of current producing oil and gas wells in 00:37:25.890 --> 00:37:30.079 Texas. In May 2019, these 3073 wells produced 00:37:30.104 --> 00:37:34.450 about 10.7 billion cubic feet of gas and flared 00:37:34.450 --> 00:37:38.974 about 578 million cubic feet of gas, a flaring 00:37:38.999 --> 00:37:43.210 rate of about 5.4% of the gas produced. The 00:37:43.210 --> 00:37:47.476 state wide flaring rate for May 2019 was about 00:37:47.501 --> 00:37:51.120 1.34%. So these 3073 wells flared about 00:37:51.120 --> 00:37:55.340 5.5% of all gas flared statewide in May. Since 00:37:55.365 --> 00:37:59.290 January 2014, the average monthly statewide 00:37:59.290 --> 00:38:03.786 flaring rate has been around 1.24%, fluctuating 00:38:03.811 --> 00:38:07.720 between about 0.82 point 2%. The question 00:38:07.720 --> 00:38:09.808 about gathering systems of processing plants 00:38:09.833 --> 00:38:11.850 and midstream capacity is more difficult to 00:38:11.850 --> 00:38:14.833 answer because the Commission does not regulate 00:38:14.858 --> 00:38:17.630 the daily capacity of those midstream system 00:38:17.630 --> 00:38:20.756 components. However, the U. S Energy Information 00:38:20.781 --> 00:38:23.500 Administration, EIA, maintains some 00:38:23.500 --> 00:38:29.020 information that is helpful to understand gas processing plants. So first, we compared 00:38:29.020 --> 00:38:35.130 the spatial distribution of the 3073 wells and gas plant location from EIA in the 00:38:35.130 --> 00:38:43.630 year 2017. The geospatial analysis indicates that most of the 3073 wells are clustered 00:38:43.630 --> 00:38:47.240 primarily in the Permian Basin and the Eagle 00:38:47.265 --> 00:38:50.930 Ford Shale, and that the 373 wells associated 00:38:50.930 --> 00:38:53.838 with long term flaring permits are noticeably 00:38:53.863 --> 00:38:56.809 absent from traditionally gas dominant regions 00:38:56.809 --> 00:39:00.491 such as the Panhandle, Barnett Shale, East 00:39:00.516 --> 00:39:04.430 Texas and the Gulf Coast. Second, we compared 00:39:04.430 --> 00:39:06.912 the EIA gas plant data and the Commission's 00:39:06.937 --> 00:39:09.450 production data, which indicates that in the 00:39:09.450 --> 00:39:18.410 Permian Basin, gas processing plant capacity increased about 30% between 2014 and 2017, 00:39:18.410 --> 00:39:21.518 and the volume of gas flowing through the 00:39:21.543 --> 00:39:25.069 plants during that time increased 40%. However, 00:39:25.069 --> 00:39:30.075 from 2014 to 2017, gas production in the Permian 00:39:30.100 --> 00:39:34.570 Basin increased 55%. Although the increases 00:39:34.570 --> 00:39:37.197 in gas processing plant capacity and through 00:39:37.222 --> 00:39:39.940 plant gas flow increased, those increases were 00:39:39.940 --> 00:39:43.708 not as large as the increases in gas production. 00:39:43.733 --> 00:39:47.630 According to the EIA , the number of gas producing 00:39:47.630 --> 00:39:51.496 processing plants in the Permian Basin increased 00:39:51.521 --> 00:39:55.361 from 61 in 2014 to 64 in 2017. That is, although 00:39:55.361 --> 00:39:57.808 the capability to process gas increased, the 00:39:57.833 --> 00:40:00.200 number of locations at which the processing 00:40:00.200 --> 00:40:03.436 take place did not proportionately increase. 00:40:03.461 --> 00:40:06.960 This suggests continued geographical constraints 00:40:06.960 --> 00:40:11.414 on getting gas from the lease to the gas plant. 00:40:11.439 --> 00:40:15.960 During this time, 2014 to 2017, more than 20,000 00:40:15.960 --> 00:40:18.206 initial well completions were filed in the 00:40:18.231 --> 00:40:20.609 Permian Basin, again, suggesting the need for 00:40:20.609 --> 00:40:23.849 significant gathering system infrastructure 00:40:23.874 --> 00:40:27.309 gains to connect the wells to markets. Finally, 00:40:27.309 --> 00:40:29.662 scanning the production disposition data of 00:40:29.687 --> 00:40:32.069 individual leases indicated wide variability 00:40:32.069 --> 00:40:39.329 and gas production in disposition proportions over time. By disposition, I generally 00:40:39.329 --> 00:40:45.339 mean whether the produce gases sold, flared or used on the lease for fuel or gas lift. 00:40:45.339 --> 00:40:50.760 In some situations, sales disruptions were observed in which the gas was flared until 00:40:50.760 --> 00:40:53.937 sales service was restored. In other situations, 00:40:53.962 --> 00:40:57.049 varying proportions of gas were sold and flared 00:40:57.049 --> 00:41:04.119 on a lease over time. Other factors are also likely involved. Staff's high level review 00:41:04.119 --> 00:41:09.540 indicates both acute and chronic limitations to the gas gathering systems on 00:41:09.540 --> 00:41:14.609 the lease level. I'm available for questions or to continue research on these issues as directed. 00:41:14.609 --> 00:41:20.193 Are there any questions? Commissioner Sitton? 00:41:20.218 --> 00:41:23.200 Thank you. Paul, just want to, you went 00:41:23.200 --> 00:41:25.649 through those numbers quick, and I made notes, so 00:41:25.674 --> 00:41:28.050 forgive me if I didn't capture it all correctly. 00:41:28.050 --> 00:41:32.819 The criteria you looked at in May were, if there was what you call a long term permit, 00:41:32.819 --> 00:41:35.099 so a permit granted for longer than 180 days, 00:41:35.124 --> 00:41:38.850 which goes beyond our administrative permit limit. 00:41:38.875 --> 00:41:40.046 That's correct. 00:41:40.071 --> 00:41:43.559 And if they P4 identified as a gas gatherer, gas purchaser, 00:41:43.559 --> 00:41:45.790 meaning that because we don't know if they're 00:41:45.815 --> 00:41:48.119 connected, but we can assume they've identified 00:41:48.119 --> 00:41:54.780 someone to take the gas. And then did they actually flare in May? So if they had some 00:41:54.780 --> 00:41:56.656 flare capacity, they have a long term permit, 00:41:56.681 --> 00:41:58.531 and they have identified a gas pressure. This 00:41:58.531 --> 00:42:01.944 was the answer to the question. How many people 00:42:01.969 --> 00:42:04.930 theoretically could have a way to get rid 00:42:04.930 --> 00:42:08.400 to send their gas and might be flaring? And as you said, there's a lot of other things 00:42:08.400 --> 00:42:10.640 that might be happening. But this was just a 00:42:10.665 --> 00:42:12.930 way to get some numbers. Did I summarize correctly? 00:42:12.930 --> 00:42:16.525 And so you get came up with 324 permits, 00:42:16.550 --> 00:42:20.040 which covered 700 leases and 3000 wells and 00:42:20.040 --> 00:42:24.295 across all of that, in the month of May, 578 00:42:24.320 --> 00:42:28.550 million cubic feet of gas were flared, which 00:42:28.549 --> 00:42:31.046 comes out to them doing about 18 or 19 million 00:42:31.071 --> 00:42:33.490 cubic feet a day in the month of if I average 00:42:33.490 --> 00:42:36.515 it out, just doing the math in my head here. 00:42:36.540 --> 00:42:39.540 So that's and you said that constitutes 00:42:39.540 --> 00:42:46.720 what percent? Did you did you say what that costitutes of the state's total flaring? 00:42:46.720 --> 00:42:49.925 the state wide flaring rate in May was, 00:42:49.950 --> 00:42:55.025 May 2019, was about 1.34 of all gas produced statewide was flared 00:42:55.050 --> 00:42:58.124 - 1.34? - Percent. 00:42:58.148 --> 00:43:02.083 But the total volume of that was? 00:43:02.109 --> 00:43:04.500 Flared statewide? I don't have number. 00:43:04.500 --> 00:43:08.926 That's okay. 00:43:08.951 --> 00:43:14.890 These 3073 wells represent about 5.5% of that 1.34%. 00:43:14.915 --> 00:43:22.565 Okay, I'm checking my own notes here because 00:43:22.590 --> 00:43:29.540 I think, I want to say were flaring as a state, something like 00:43:29.540 --> 00:43:32.904 between five and 600 million cubic feet a day. 00:43:32.929 --> 00:43:35.910 This is across the entire state of Texas. 00:43:35.910 --> 00:43:37.740 I think that's about right. 00:43:37.765 --> 00:43:40.571 So what I'm getting at here is 18 00:43:40.596 --> 00:43:43.230 million out of somewhere between five and 600 million 00:43:43.230 --> 00:43:46.908 cubic feet a day, in answer to Chairman Christian's 00:43:46.933 --> 00:43:50.030 question is being flared, who on a long term 00:43:50.030 --> 00:43:54.005 contract who have a gas purchaser identified. 00:43:54.030 --> 00:43:57.720 So we're talking, you know, in the 3 to 4% 00:43:57.720 --> 00:44:00.514 range of the state's flaring meets those criteria, 00:44:00.539 --> 00:44:02.980 which I think is noteworthy. In other words, 00:44:02.980 --> 00:44:07.690 a very small percentage have identified a gas purchaser and are on a long term flaring 00:44:07.690 --> 00:44:14.349 permit. The other whatever would end up being 500 or million cubic feet a day 00:44:14.349 --> 00:44:16.715 due to operational issues, new well, something 00:44:16.740 --> 00:44:18.880 else that was not including that criteria. 00:44:18.880 --> 00:44:21.749 That's noteworthy. Thank you for that. 00:44:21.774 --> 00:44:24.470 Any questions? Let me let me commend 00:44:24.470 --> 00:44:28.700 you and thank you and your staff for the hard work that you did in this, and I would 00:44:28.700 --> 00:44:30.656 apologize for the question, but I think it is 00:44:30.681 --> 00:44:32.740 very important in this day and time, and I think 00:44:32.740 --> 00:44:39.369 it's a positive comment on our industry in the state of Texas and across the nation. 00:44:39.369 --> 00:44:43.479 And in point of personal privilege, I watched 00:44:43.504 --> 00:44:47.410 as little as possible I could, of the CNN's 00:44:47.410 --> 00:44:52.900 what I call the Chicken Little seven hour conference on the environment that they had, 00:44:52.900 --> 00:44:55.635 and it just, I think, it behooves us to brag on 00:44:55.660 --> 00:44:58.200 our industry and what good that our industry 00:44:58.200 --> 00:45:02.069 and this department and regulating it has done. 00:45:02.094 --> 00:45:06.180 Over 3000 wells out of 265,000 active wellsi n the 00:45:06.180 --> 00:45:10.670 state have long term flaring permits that lasts 00:45:10.695 --> 00:45:14.599 more than 180 days. That's 1.2% of wells. 00:45:14.599 --> 00:45:20.580 In Fiscal Year 2019, you reported that the Commission issued only issued almost 7000 00:45:20.580 --> 00:45:25.358 flaring permits, but only 234 of them were 00:45:25.383 --> 00:45:30.470 long term. In May 2019, only 1.3% of gas well 00:45:30.470 --> 00:45:33.390 of gas was flared of gas, okay, 1.3%. 00:45:33.415 --> 00:45:37.310 Most of the flaring is in areas of new development 00:45:37.310 --> 00:45:40.426 where infrastructure has not kept pace with production, 00:45:40.451 --> 00:45:42.930 which is expected, and this is good news for 00:45:42.930 --> 00:45:47.000 the state of Texas and for the nation. And again, I think it's important we recognize 00:45:47.000 --> 00:45:53.780 that and be a contrast when there is good news to report that maybe our public is not 00:45:53.780 --> 00:45:57.180 hearing. If we could be a part of getting the word out that our industry is doing a 00:45:57.180 --> 00:46:02.210 fantastic job and if they want clean up the environment worldwide, the most efficient 00:46:02.210 --> 00:46:07.849 best thing they could do is export Texas industries record and policies on cleaning 00:46:07.849 --> 00:46:10.398 the environment because we've done it, proved 00:46:10.423 --> 00:46:12.780 it. It's been there, and it's not guessing 00:46:12.780 --> 00:46:15.493 whether it can. Our industry and our Commission, 00:46:15.518 --> 00:46:18.040 I'm proud to say, have been on the right side 00:46:18.040 --> 00:46:22.450 of the environmenttal issue. And I'm proud to brag about that to the citizens 00:46:22.450 --> 00:46:25.158 and to our industry. So thank you for the work you did. I think it's important. 00:46:25.183 --> 00:46:27.777 I really love the analysis on the 00:46:27.802 --> 00:46:30.690 location of the gas plants too, Paul. It's cool. Thank you. 00:46:30.690 --> 00:46:35.775 Item 269 is our Office of General Counsel item. 00:46:35.800 --> 00:46:38.450 Good morning, Chairman Commissioners. For the 00:46:38.475 --> 00:46:41.100 record, my name is Alex Schott, General Counsel for the Railroad 00:46:41.100 --> 00:46:43.412 Commission of Texas. We don't have anything 00:46:43.437 --> 00:46:45.829 new to report for item 269. I'm also covering 00:46:45.829 --> 00:46:49.192 item 270. I'd like to report that staff respectfully 00:46:49.217 --> 00:46:51.920 requests that Commissioners pass this item 00:46:51.920 --> 00:46:54.800 to a future conference. Nothing further. 00:46:54.825 --> 00:46:57.619 Okay, We pass that on to the next conference. 00:46:57.619 --> 00:47:05.151 Any objections? Then it's passed on. Item 271 is our public participation item. No one 00:47:05.151 --> 00:47:08.614 has turned in any cards indicating they wish 00:47:08.639 --> 00:47:12.230 to speak on any non posted items. Item 272 is our 00:47:12.230 --> 00:47:17.290 executive session item. Having convened in a duly noticed open meeting, the Railroad 00:47:17.290 --> 00:47:22.161 Commission of Texas will now at, what time is it, 00:47:22.186 --> 00:47:26.740 10:20 AM, current time, on Wednesday, September 00:47:26.740 --> 00:47:33.740 the 11, 2019, hold a closed meeting in the Kathy Way Conference room on the 12th 00:47:33.740 --> 00:47:38.730 floor of the William B Travis State Office Building, pursuant to Texas Government Code, 00:47:38.730 --> 00:47:41.599 Chapter 551, the Commission will discuss personnel 00:47:41.624 --> 00:47:44.130 matters related to the position of Executive 00:47:44.130 --> 00:47:48.114 Director, pursuant to Section 551.74 of the Code. 00:47:48.139 --> 00:47:51.859 The Commission will reconvene the open meeting 00:47:51.859 --> 00:47:53.500 in the Kathy Way Conference Room.