American Oil and Gas Reporter - July 2015 - 143

ConventionSection: Texas Independent Producers & Royalty Owners
of $209.4 billion. In addition, she says
the state's Economic Stabilization Fund,
commonly referred to as the Rainy Day
Fund, still holds more than $11.1 billion
for emergencies and future allotments.
Last fall, Texas voters approved a
constitutional amendment allowing the
state to send half of the oil and gas severance taxes that would normally go into
the Rainy Day Fund to the state highway
fund. In the November referendum, 80
percent of voters approved the measure.
To ensure the fund maintains an adequate
balance, legislators also approved a bill
requiring it to hold a $7.1 billion floor.
Miller notes that transportation funding
continues to be a very important issue
for the association. "We have to make
certain we have the infrastructure in place
to allow our communities to grow as industry operations continue to expand
across the state."
This year, she says, the Texas Legislature appropriated $23.1 billion to the
state Department of Transportation to
address transportation funding needs.
Moreover, she says, because the Texas
Constitution requires the state to have a
balanced budget, state residents will see
some positive news regarding tax relief
next year, thanks to significant cuts in
spending the state made in 2011.
"It is important to the oil and gas industry to make sure legislators take a
balanced approach to tax relief," Miller
says. "Severance taxes make up the bulk
of the Economic Stabilization Fund, which
is more or less the state's piggy bank. It
has served as our crutch as we moved
through the economic hard times Texas
has seen. TIPRO's goal was to make
sure that businesses as well as property
owners with homestead exemptions were
going to experience tax relief."
To secure that broad tax relief, Miller
says legislators approved a series of measures, including SB 1, which increases
the homestead exemption from school
property taxes from $15,000 to $25,000,
and HB 32, which reduces the franchise
tax on Texas businesses by 25 percent.
Over the biennium, it will lower businesses' tax burden by $2.56 billion.
Senator Jane Nelson, R-Flower Mound,
introduced SB 1, while Representative
Dennis Bonnen, R-Angleton, chairman
of the House Natural Resources Committee, led the HB 32 effort, Miller says.

Seismic Issue
Railroad Commissioner Ryan Sitton
and members of the agency's technical

staff held a hearing June 5 on seismic
events recorded near Azle, Tx. According
to the RRC, a study of five disposal wells
in Johnson County, south of Azle, determined there was no conclusive evidence
suggesting the wells were responsible
for a series of seismic events on May 7.
Following commission rules adopted
in 2014, the state ordered additional
testing to evaluate any potential connection
to the 4.0 earthquake. The agency says
the five wells are within 100 miles of the
earthquake's estimated epicenter, and its
study concludes there were no bounding
faults in the immediate vicinity of the
disposal wells.
Longanecker says TIPRO looks forward to continued participation at the
state level. He adds he believes continued
collaboration and analysis related to earthquake mitigation, risk assessment and
related regulations are important parts of
the evaluation and regulatory processes.
He adds that the 2014 regulations also
affirmed the RRC's authority to modify
or terminate a disposal well permit if
scientific data indicated a connection to
seismic activity in the area.
The RRC hearing followed the May
release of a Southern Methodist University
study focusing on the seismicity issue.
Researchers looked at 230 Barnett Shale
wells in the Eagle Mountain Lake area,
just east of Azle, and concluded fluid
disposal operations were responsible for
an increase in seismic activity.
Longanecker says the SMU study makes
numerous assumptions, where even minor
errors could affect the conclusions dramatically. "Another important point that
is abundantly clear from the testimony
provided by the SMU scientists is that hydraulic fracturing is not the cause of any
seismic activity in Azle. Despite this fact,
members of the media, along with activist
groups, continue to claim a direct connection when there is none. Correlation does
not mean causation," he emphasizes.
The RRC should be allowed to do its
job, which is to study the issue in greater
detail and determine what sources and
data are credible, Longanecker urges. He
adds that Texans also need to resist the
anti-oil-and-gas rhetoric and use of scare
tactics and misinformation used to advance
a flawed ideology.
Welder says the state should consider
further updating its well disposal rules to
better reflect the fact that some Texas
rocks are better than others at taking in
large amounts of fluid.

"But we have one rule for all rocks,"
he says. "My thinking is that we need to
bring forward the rule making for saltwater
disposal wells and make sure the rules
are finely tuned to geological realities. I
do not think that is occurring at the moment. Some of the best scientists, geoscientists and geophysicists on the planet
are working in the state. If there are problems, they can be solved and mitigated."
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American Oil and Gas Reporter - July 2015

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