American Oil and Gas Reporter - February 2015 - 120

ConventionSection: Texas Independent Producers & Royalty Owners
level of concern as Denton yet, but the industry is prepared to respond, and we are
coordinating more effectively," he reports.
Skinner adds that one of the biggest
questions circulating among lawmakers
relates to matters of inverse condemnation,
or the taking aspect of an ordinance. "I
think legislators are going to explore
under what circumstances ordinances
should be considered a taking," she says.
TIPRO Chairman Raymond James
Welder expresses optimism that the association's efforts to educate lawmakers
will help them better understand the
cost/benefit calculus regarding oil and
gas exploration in Texas municipalities.
"I am confident we are going to prevail
and allow producers to continue to produce
oil and natural gas safely and efficiently,"
he relates. "TIPRO is taking a very active
stance. I am grateful to a number of
elected officials who have taken a keen
interest in the matter. I view the vote in
Denton as an aberration. The truth will
prevail eventually."
Welder says the association will continue to emphasize that no documented
case ever has linked hydraulic fracturing
to groundwater contamination. "It is a
very safe, secure, and technologically advanced way to unlock hydrocarbons. Antifracturing advocacy is actually anti-oiland-gas," he remarks. "The rationale attacks fracturing, but it is a necessary part
of the producing process."
More Bills
TIPRO also is monitoring HB 128 by
Representative Craig Goldman, R-Fort
Worth, which would raise the amount required for a mineral interest owner to be
eligible for an ad valorem tax exemption
from $500 to $2,000, Skinner says.
HB 201 and companion bill SB 109
would create a statutory process for water-right permit applications at the TCEQ,
and includes timelines for both applicants
and TCEQ, she adds.
Meanwhile, Skinner continues, lawmakers are expected to continue to weigh
how to address transportation infrastructure
needs as the Texas Department of Transportation eyes yet another budget shortfall
this biennium. Thus far, numerous bills
have been filed to bolster highway funding,
she comments.
"Bills already have been filed to reallocate a portion of the motor vehicle
sales tax to the TxDOT highway fund,"
Skinner points out.
One proposal seeks to allocate the
proceeds in phases, earmarking 10 percent

this year and the remainder over the next
10 years, she reports. "Legislators have
filed bills with similar language the past
two sessions, but they haven't been able
to move them," Skinner reviews. "This
session, oil and gas price trends suggest
the state cannot necessarily rely on severance taxes as an additional revenue
source, which clarifies the need to a take
a closer look at potential solutions."
Adds Welder, "I am confident that
enough monies will be allocated and appropriated for the repair and building of
our road infrastructure in areas where
the industry is most active and the state
has enjoyed such a newfound wealth.
The legislature recognizes the importance
of infrastructure and will appropriate the
monies correctly."
Skinner says discussions also continue
about possible legislation to address the
allocation of funding set aside last session
for a grant program to help counties in
boom areas pay for needed road repairs.
Initial applications for funding were submitted by 191 Texas counties. In an effort
to make certain funding is allocated appropriately to energy areas according to
the bill's intent, lawmakers may need to
take another look at the disbursement
formula, Skinner says.
A unitization bill, SB 118 by Senator
Van Taylor, R-Plano, also has been filed,
she observes, adding that TIPRO has
taken no formal position on similar bills
in the past.
RRC And Water Bills
Although there will be no comprehensive sunset review for the state's primary oil and gas regulatory agency this
session, following earlier postponements
that stem from disagreements regarding
the agency's makeup and functions, the
Texas Railroad Commission will be required to perform an internal audit this
year to evaluate where its functions will
be housed if the agency is eliminated,
she says.
"Within the RRC's legislative appropriations request, it has asked for additional
appropriations to be used to fulfill the
audit requirements," Skinner says. "Estimates indicate conducting that will cost
between $1.0 million and $1.5 million."
The only other piece of legislation
that had been filed by late January that
pertained to the RRC's makeup and functionality was HB 224, by Representative
Ryan Guillen, D-Rio Grande City, which
seeks to change the RRC's name to the
Texas Energy Resources Commission,

120 THE AMERICAN OIL & GAS REPORTER

Skinner reports.
The commission's budget is going to
be a key issue, she predicts. "We have not
gone through the proposed budget at length
with the commission yet," she said in midJanuary. "We probably will shortly."
TIPRO also expects to see legislation
this session that pertains to utilizing
brackish water, which is being used increasingly during oil and gas operations,
Skinner says. "There have been significant
discussions on the best way to utilize
brackish water, as well as desalination,
throughout the interim," she observes. "I
expect those conversations to continue
throughout the legislative session."
TIPRO will continue to point out that
industry is working successfully to reduce
water use and rely increasingly on recycling, Welder vows. "The industry is not
trying to waste water; water is expensive,"
he relates. "Our member companies continue to work on cost structure so we can
deliver oil and gas inexpensively, and
water is a big cost. The industry is working
to use less water, reuse it where we can,
and deploy different kinds of frac designs
that are less water intensive."
RRC Rules
As for state regulatory matters, Skinner
points out that on Dec. 2, the RRC approved amendments to statewide rules
for pipeline permits that clarified the procedural steps an operating company must
take before it can obtain status as a common carrier, gas utility or private line operator. The new amendments have not
aroused significant concern among TIPRO
members, she assesses.
Meanwhile, she adds, mid-January was
too early to gauge the influence of amendments adopted in October and effective
Nov. 17 to Statewide Rule 9, which covers
disposal wells, and Rule 46, which deals
with fluid injection into productive reservoirs. The RRC undertook the changes to
address concerns about disposal well operations in areas of historical or potential
seismic activity, she says.
"We hope it puts more procedures in
place that provide added caution, and
will discourage people from applying for
disposal well permits in areas where historical seismic activity exists," Skinner
says.
Federal Issues
Even with all of TIPRO's emphasis
on state issues, members and association
staff continue to work with other industry

American Oil and Gas Reporter - February 2015

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