Railroad Commissioner Christi Craddick Announces Texas Oilfield Relief Initiative

AUSTIN – Railroad Commissioner Christi Craddick today announced details of her Texas Oilfield Relief Initiative as the first rule amendments of the project were rolled out during the Commissioners’ open conference. The initiative improves efficiencies for the state’s energy regulatory body, as well as oil and gas producers working to sustain business operations during the current downturn in the energy sector. The initiative will reduce the regulatory administrative burden on industry while ensuring the Commission continues to protect the public and environment.  

“This initiative is part of my ongoing efforts to adjust our processes and put in place common sense practices that achieve greater effectiveness in regulating energy the way it is produced today,” Craddick said. “During my time at the Commission, these efforts have not only included a reevaluation of our methods and rules, but also an overhaul of our IT programs.

“This initiative is an extension of our commitment to best serve Texas with innovative regulatory practices, yet calls for a more thorough review in a time of industry slow-down when we should find ways to save time and money for the state and those doing business at the agency,” Craddick said. “These initial ideas brought forth in the initiative will save extensive time for our staff and tens of millions of dollars for oil and gas operators. This initiative serves as phase one of a long-term effort to streamline our operations that our executive director and staff will continue to carry out.”

The initiative results from a comprehensive review of the Commission’s regulatory processes, and takes careful consideration to avoid weakening public and environmental protections, correlative rights, or measures designed to prevent the waste of resources.

The initiative is receiving broad praise from industry-related members:

“With the current industry downturn, at stake is the survival of the state's small producers and the oil industry's many marginal wells, which make up 85 percent of total U.S. oil wells and 18 percent of the nation's total oil output,” said Judy Stark, Panhandle Producers and Royalty Owners Association Executive Vice President. “During this critical time, Commissioner Craddick's initiative will provide relief to Texas' independent producers, the backbone of both our state and nation’s oil industry. For that, PPROA's members are truly grateful.”

“The Commission’s efforts could not be more timely given the current economic struggles the industry faces,” said Ben Shepperd, Permian Basin Petroleum Association President. “Throughout its history, the Railroad Commission has continually evolved to perform its duties in the most effective manner possible.  The Permian Basin Petroleum Association applauds Commissioner Craddick’s leadership of this effort.”

 “As Chairman of the Texas Alliance of Energy Producers, I applaud the leadership of Commissioner Craddick and pledge our participation and support of her regulatory initiative,” said Bob Osborne. “The challenges facing the oil and gas industry have never been greater, and our contribution to the State's economy never more important.”

“TIPRO applauds Commissioner Craddick’s leadership in developing an initiative that will provide necessary and timely improvements to the efficiency of Railroad Commission procedures and practices,” said Ed Longanecker, Texas Independent Producers and Royalty Owners Association President. “These reforms will provide much needed relief to operators across the state as we continue to confront depressed commodity prices.”

“Texas’ oil and natural gas industry is the lifeblood of our economy in terms of jobs, economic activity and state and local tax revenue,” said Todd Staples, Texas Oil and Gas Association President. “I commend the Commission for their work on the Oilfield Relief Initiative and their commitment to ensure that the oil and natural gas industry continues to anchor our economy, protect our environment and provide for Texas families well into the future.”

Commissioner Craddick’s Texas Oilfield Relief Initiative includes the following items for implementation:

• Identify agency reports and filings that can be reduced or eliminated, saving operating costs without impacting public or environmental safety.
  • Amend Statewide Rule (SWR) 28 to modify gas well deliverability reporting requirements.
  • Reduce the need for G-10 (Gas Well Status Report) filings except for surface commingled production. 

• Allow a calculated well shut-in pressure to be provided when filing Form G-10 for gas wells to reduce regulatory administrative burden. 

• Amend production requirements for marginal and stripper wells to reduce regulatory administrative burdens. 
  • Revise “Active Oil Well” definition from ten barrels of oil (BO) per month for 3 consecutive months to five BO per month for 3 consecutive months or any reported production in each month for a consecutive 12 month period (SWR 15). 
  • Revise “Active Gas Well” definition from 100 mcfg per month to 50 mcfg per month or any reported production in each month for a consecutive 12 month period (SWR 15). 

• Implement a revised internal inspection priority system so Commission inspectors prioritize drilling rig inspections and hydraulic fracture treatments in sensitive areas like cities or wetlands without affecting other inspections. 

• The agency’s new on-line completion program calculates the depth of cement behind casing (cement tops) using washout factors that have been used by the Commission for decades. A review of these washout factors should be conducted to determine whether different washout factors should be used in certain areas of the state to calculate cement tops. This will expedite the process of verifying compliance with these rules for both operators and the agency without compromising well integrity. 

• The Groundwater Advisory Unit (GAU) will identify counties or portions of counties in which the usable quality water protection depth is constant. Those areas will be eligible for area-wide recommendations for meeting surface casing requirements, streamlining regulatory requirements for industry.  

• Issue guidance for implementation of the Texas Environmental, Health & Safety Audit Privilege Act, permitting operators of new property to identify and remedy violations resulting previous to their ownership. This ensures compliance without punishing an operator not responsible for the cause of the violation. 

• Conduct an extensive review of all Railroad Commission forms required for application and reporting purposes and determine whether data collected is currently used or no longer necessary. Eliminate forms no longer useful to the Commission’s regulatory functions to reduce regulatory administrative burden on staff and industry. 

• Simplify the complete duplication of a drilling permit application with a sworn statement of no changes to the original application. The operator would then pay the fee for reissuance of the permit, speeding up the review process and reducing regulatory administrative burden for both the agency and industry.

Christi Craddick was elected statewide by the people of Texas in November 2012 to serve a six-year term as Texas Railroad Commissioner. A native of Midland, Christi is an attorney specializing in oil and gas, water, tax issues, electric deregulation and environmental policy.