American Oil and Gas Reporter - June 2014 - 168

ConventionCoverage: Texas Alliance of Energy Producers

Texas Alliance of Energy Producers
President and Chief Executive Officer
Alex Mills, left, visits with George
Rogers, the Alliance's chairman for
2014-16, at the Board of Directors
meeting. Rogers is president of Bettis,
Boyle & Stovall Inc., in Graham, Tx.
The Board met as part of the Alliance's
annual convention, held April 22-23 in
Wichita Falls, Tx.

same," he assessed. "That is why coalition
building is so important. The Texas Alliance is making efforts to recognize
coalitions as an important way of maximizing the strength of this association."
Texas Issues
On the state level, producers should
be monitoring the interim studies coming
out in the late spring or early summer
about water issues, advised John Tinterra,
the Alliance's regulation adviser.
"Water is involved in a variety of activities and industries, but the oil and gas
industry's use of water will be part of
that focus," he predicted. "There were
repeated attempts to remove the rig exemption for water wells drilled by oil
and gas operators in the last session. That
will not go away, and it will be resurrected."
When the Texas Legislature holds
hearings on water use, Tinterra told the
board, the industry should expect controversial testimony likely to clash with
the interests of oil and gas operators.
The Alliance was involved significantly
when the Texas Railroad Commission
released its proposed regulations for injection wells for public comment in 2013,
and he promised the association would
be equally involved when the RRC sought
public input on the revised rules that
were likely to appear this summer. "I do
not see a trend toward making the regulations less cumbersome," he said. "There
is every chance they will be more restrictive and require more focus from operators, so stay tuned."
Several seismic incidents across the
state are generating media attention, but
Tinterra said as a geologist he was not
convinced the scientific story had been
told. Seismic activity and induced seismicity are extremely complex phenomena
that require a multidisciplinary effort involving seismologists, geophysicists, ge-

ologists and regional tectonic specialists,
he asserted.
Based on his research and discussions
with experts, Tinterra suggested allegations
that induced seismicity triggered all of
the reported incidents were wrong.
"It is very rare or perhaps extremely
rare where an injection well, through
pressure increases, is intersecting active
faults or faults that are at a so-called
tipping point for movement, and causing
them to have earthquakes," he said. "The
actual veracity of those claims is that
there might be, at most, a handful in the
United States that may have been a factor
during the course of history. But we get
everything thrown at us nowadays."
It is not the rarity of the alleged events
but the resultant regulatory framework
that poses the biggest challenge for producers, Tinterra warned. Oversight of the
underground injection wells being blamed
for induced seismic events falls under
the purview of the Safe Drinking Water
Act as regulated by the U.S. Environmental
Protection Agency, he said, which solidifies
federal involvement in the issue.
DEPA Update
Mike Cantrell, director of governmental
affairs for the Domestic Energy Producers
Alliance, said the group had spent more
than $1 million in donations that supported
its collaborative advocacy efforts on behalf
of the oil and gas industry. "The principle
of DEPA is it may not be right, but it will
be effective," he asserted.
DEPA is a nonpartisan group that supports Democrats who give it a reason to
support them, he said, adding that following such a bipartisan strategy is necessary in the U.S. Senate, which needs
61 votes to approve legislation. DEPA's
challenge is to make sure it always can
secure 41 votes, which means it has to
work with moderate Democrats on many
issues, Cantrell reported.

168 THE AMERICAN OIL & GAS REPORTER

However, Congress is not the major
challenge for producers these days, he
assessed, pointing to the regulatory environment created by the White House as
the larger concern.
"No other administration in history
has used executive power like these guys
have to come at us, and they are coming
at us every day," he said. "There is no
legislative fix there. We suggest cutting
off funds so they cannot throw government
into the regulatory arena, but you cannot
do that."
November's elections offer the serious
possibility of Republicans capturing the
majority position in the Senate, Cantrell
offered, with 23 Democrats facing reelection compared with only 14 Republicans. He cautioned that ratio reverses
in 2016, when 24 Republican and 10
Democratic senators will face voters at
the polls.
When federal issues become too onerous, DEPA and its industry allies have
turned to the courts for relief. Cantrell
pointed to a lawsuit filed in March by
DEPA and the state of Oklahoma over
the U.S. Fish & Wildlife Service's "sue
and settle" tactics as one example of its
judicial strategy.
He said the lawsuit was filed in response to two secret settlements between
USFWS and anti-development groups
under which the agency voluntarily agreed
to complete hundreds of listing decisions
required by the Endangered Species Act
in the near future. The lawsuit charges
the agreements violates the U.S. Constitution and the Administrative Procedure
Act.
The habitat management plan set up
for the lesser prairie chicken in advance
of its listing as a threatened species under
ESA imposes extreme financial hardships
on operators, Cantrell warned. Operators
working under candidate conservation
agreements pay $2 an acre annually for
the federal acreage, but then must pay a
sliding permit fee that could be as much
as $16,000 a well, depending on its location in relation to the known habitat of
the chicken, he said.
That is on top of the $4,000 for the
required cultural and archaeological survey
and the $8,000 drilling permit fee, he reported.
"I beseech you to educate yourself on
what the ESA really is, because it will
affect you," Cantrell asserted. "The state
found a dime-sized blind spider when
expanding a highway north of San Antonio

American Oil and Gas Reporter - June 2014

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