As a follow-up to this post, the Railroad Commission of Texas’s May 5, 2020 open meeting resolved the pending prorationing request. Public comments made by the Commissioners in advance of the meeting made clear that the Commission would not order prorationing, and as expected, the Commission voted 2-1 at the meeting to dismiss the verified complaint submitted by Parsley Energy and Pioneer Natural Resources, with only Commissioner Sitton in opposition.
In addition to dismissing the complaint, the meeting resulted in other important items that producers should be aware of. First, the Commission issued orders providing temporary relief and exceptions to several of its rules, including (1) waivers of fees and surcharges associated with multiple applications for the remainder of 2020 (namely, P-17, W-14, H-1, H-4, W-3C), (2) extensions to the deadline to plug certain wells and to backfill authorized pits under Statewide Rules 8 and 14, (3) extensions to the permitted duration of administrative approvals for alternative casing and tubing programs under Statewide Rule 13, and (4) granting greater discretion to the Commission’s legal enforcement division in assessing penalties for violations of the Commission’s rules occurring between March 1, 2020 and March 1, 2021.
Of particular note, the Commission broadened the options for underground liquid storage by granting a temporary exception to Statewide Rule 95. Under the current rule, only an impermeable salt formation may be used as a liquids storage facility. However, the order will allow applications for permits to store liquids in all other types of formations and suspends the requirement to hold a hearing for uncontested storage permit applications.
Some of the rule modifications approved yesterday were based on recommendations of the Blue Ribbon Task Force for Oil Economic Recovery, comprised of representatives from each facet of the industry, which the Commission tapped to provide advice for recovery following the COVID-19 pandemic. The Task Force submitted a report to the Commission with over four dozen recommended action items, indicating that more rule changes may be expected in the future.
Finally, the Commission expressed an increased desire to explore additional regulations on the flaring of natural gas, with both Chairman Christian and Commissioner Craddick stating their belief that the current circumstances presented an opportunity to address the issue in a meaningful way. Chairman Christian further requested that the Task Force explore possible ways to effectively address flaring and report back before the Commission’s open meeting scheduled for June 16th.
For further information, see the full recording of the open meeting, with discussion of the above topics beginning approximately thirty minutes into the recording, The Task Force’s report, and the full text of two of the orders, including the exception to Statewide Rule 95.
Thompson & Knight, LLP
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