RAILROAD COMMISSION OF TEXAS 2014 HIGHLIGHTS

12/31/2014

Texas Crude Oil Production Surpasses 2 Million Barrels a Day


AUSTIN--The Railroad Commission of Texas, the state’s oldest regulatory agency, will begin the New Year following a successful and productive 2014. Highlights include strengthened regulations, special initiatives and aggressive well inspection, well plugging and site remediation efforts statewide.

The Commission is committed to protecting the safety of all Texans; the stewardship of our state’s natural resources and the environment; and enhanced development and economic vitality in Texas.

Chairman Christi Craddick said, “The Railroad Commission reached milestones as Texas oil and gas production surged in 2014. We implemented rule changes, took up special initiatives and provided diligent oversight of our state's energy industry during a time of immense energy growth. Looking ahead, we will continue to be responsive to the needs of Texas with sensible, effective regulation of this fast-evolving industry.”

Commissioner David Porter said, “Texas remains positioned as a global energy leader, and our regulatory structure, based in science and fact, has been strengthened by the work accomplished these past 12 months. We will carry this momentum into 2015 as we continue to effectively regulate oil and gas, pipeline safety, alternative fuels, surface mining, and natural gas utilities in Texas.”

Commissioner Barry Smitherman said, “A great deal has been achieved across all divisions at the Railroad Commission of Texas. Over 700 natural gas consumer complaints were resolved by the Gas Services Division (GSD) in 2014, helping consumers work with their natural gas providers, and more than 175,000 tariff and other electronic filings were processed ensuring all rates charged by Texas natural gas utilities are accessible to the public. Also, our historical use of Texas lignite, along with ample supplies of natural gas, has helped to reliably and inexpensively keep the lights on for our citizens.”

Highlighted activities at the Railroad Commission in 2014 include:

  • Texas Oil and Gas Water Conservation and Recycling Symposium – Hosted by Chairman Christi Craddick, this event provided industry with the opportunity to update the Commission on efforts to conserve, reuse and recycle produced water in the oilfield. The event highlighted how new regulations adopted by the Commission one year earlier have made it economically viable for operators to enhance their water recycling efforts and help conserve Texas’ water resources. Chairman Craddick said, “We know that industry technology in water recycling is changing the way energy is developed in Texas. We are working to fully understand the scope and potential of current recycling technologies, so that our agency’s regulatory oversight can help maximize these efforts. The production of Texas’ great mineral wealth can go hand in hand with conserving our precious water resources as has been illustrated by numerous oil and gas operators.”
  • Texas Natural Gas Summit – Commissioner David Porter helped coordinate an event that connected job seekers with more than 10,000 job openings from 64 exhibitors representing the oil and gas industry. Leaders of military bases and higher education institutions were invited to participate in the event which was free and open to the public. Job seekers were provided with the chance to speak directly with human resources professionals about a wide range of employment opportunities related to natural gas technology. Commissioner Porter said, “The jobs featured at the Summit are crucial. The industry expects both domestic and export markets to grow, which will likely maintain demand for workers down the road for some time. This year gave us unprecedented growth in the number of natural gas vehicles, fuel sales, fueling stations and jobs created. I look forward to building on this record in 2015 and beyond.”
  • Commissioner Barry Smitherman received the 2014 Energy Public Service Award from the Texas Mining and Reclamation Association, the state’s leading mining industry organization. The award recognized the commissioner’s advocacy during his term on the Railroad Commission for the use of Texas lignite as a low-cost fuel for generating electricity. Texas is the sixth largest coal-producing state in the nation.
  • Early in 2014, production reports from operators to the Commission showed oil production reached 2 million barrels a day statewide, a production level not seen in Texas since 1986. Texas’ all-time record oil production occurred in 1972 at 3.45 million barrels per day. According to the U.S. Energy Information Administration, Texas is the largest oil producer in the nation, producing almost 37 percent of the nation’s crude oil.
  • Seismologist Dr. Craig Pearson joined the Commission in April and was charged with working with researchers who are trying to determine if there is a direct linkage between oilfield activity and seismic events in Texas. As the Commission’s staff seismologist, Pearson is able to coordinate an exchange of factual scientific information between oil and gas operators and these researchers.
  • The Commission made significant advances in the Information Technology Modernization Program including the launch of a redesigned website and upgrades to the Commission’s online Geographic Information System (GIS). GIS Map Viewers are used by the public and industry to view statewide oil, gas and pipeline data. Additionally, the Commission implemented a more streamlined permitting process for drilling permits issued by the agency. In November, more than 50 percent of the drilling permits were processed within 1 to 3 days compared to about 9 percent of the permits processed within 1 to 3 days in the spring of 2014. These upgrades are part of the Commission’s Information Technology Modernization Program and are intended to increase transparency and provide the public and stakeholders with greater access to extensive agency data.
  • Midland Railroad Commission employee Lucy Molina was recognized in September as an Outstanding Woman in Texas Government in the category of Community Involvement. Her efforts have included offering shelter to homeless, pregnant teenagers; volunteering at a local nursing home; coaching for Special Olympics; and leading a local youth church group to raise money for holiday meals for low-income residents.
  • During the fall of 2014, the Commission adopted several significant rule amendments. In October the Commission adopted disposal well rule amendments designed to address disposal well operations in areas of historical or future seismic activity. Disposal wells are permitted by the Railroad Commission to safely dispose of non-hazardous produced water (saltwater) and hydraulic fracture flowback fluid from oil and gas wells.
  • Pipeline permit rule amendments designed to clarify how a pipeline operator may be classified by the Commission as a common carrier were adopted in December. Common carrier pipelines in Texas are pipelines which are contracted to carry crude petroleum, gas or carbon dioxide for hire.
  • Soon after, rule amendments designed to reduce rate case expenses that can be passed on to natural gas utility customers were adopted by the Commission. The amendments were adopted with an effective date of Sept. 1, 2015.
  • Throughout the year Commission staff worked in the field on a daily basis, ensuring industry compliance with all rules and regulations. Inspectors in the Oil and Gas Division conducted more than 130,000 field inspections, and the Pipeline Safety Division carried out more than 2,850 pipeline inspections.
  • The Alternative Energy Division conducted almost 14,000 safety inspections. These inspections included schools, health care facilities, commercial and industrial sites, school buses, and mass transit and cargo tank motor vehicles. Additionally, Alternative Energy Division staff processed more than 30,650 LPG/CNG/LNG examination certifications, registrations and licenses.
  • The Surface Mining and Reclamation Division’s inspectors conducted 502 inspections on 30 permitted lignite mines, as well as 25 uranium exploration inspections.
  • The Gas Services Division, which regulates 32 natural gas distribution utilities and 177 transmission and gathering utilities, conducted 139 utility field audits resulting in the collection of $531,662 in underpaid gas utility taxes. The Division also cited gas utility companies for rate overcharges requiring refunds of more than $1. 3 million to natural gas customers.
  • Commission staff processed more than 30,300 drilling permits in 2014.
  • The Commission’s aggressive well plugging program coupled with funding from the Oil and Gas Regulation and Cleanup Fund (OGRC) resulted in the plugging of more than 563 orphaned wells and 238 site remediation and cleanup activities, including plugging five offshore orphaned wells. Since Fiscal Year 1992 more than 30,345 orphaned wells have been plugged at a cost of $224 million, using the OGRC. The OGRC Fund is funded entirely by the oil and gas industry.

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About the Railroad Commission

Established in 1891, the Railroad Commission of Texas is the oldest regulatory agency in the state. The Commission has a long and proud history of service to both Texas and to the nation, including more than 90 years regulating the oil and gas industry. Additionally, the Commission promotes research and education on the use of alternative fuels and has jurisdiction over gas utility, surface mining and pipeline industries. Our mission is to serve Texas by our stewardship of natural resources and the environment, our concern for personal and community safety, and our support of enhanced development and economic vitality for the benefit of Texans. To learn more, please visit http://www.rrc.texas.gov/.