American Oil and Gas Reporter - March 2018 - 91

ConventionSection: Texas Independent Producers & Royalty Owners
will speak on understanding the activist
threat. "There are 22 organizations registered in the United States that oppose reliable energy and, in essence, oil and gas
development," Longanecker relates. "That
should be an interesting discussion."
In addition to Wallace's keynote address, Longanecker mentions that Tues-

day's agenda includes an energy market
outlook by Michael Cohen, director and
head of energy commodities research at
Barclays; a state and federal political
outlook by David M. Carney, CEO of
Norway Hill Associates, who advises
U.S. Senator Ted Cruz, R-Tx., among
others; and a federal regulatory update

from Michael Nedd, who is the acting
deputy director for operations at the U.S.
Bureau of Land Management.
Tuesday's activities conclude with the
Chairman's Dinner and presentation of
TIPRO's 2018 Hat's Off Award to Texas
Railroad Commission Chairwoman Christi
Craddick.
r

Infrastructure Vital To Industry Rebound
AUSTIN, TX.-As the Texas oil and
gas industry claws its way back from the
downturn of 2015-16, operational success
isn't only a matter of drilling economic
wells. Especially in the prolific Permian
Basin, muses Texas Independent Producers
& Royalty Owners Association Chairman
Allen Gilmer, operators also must focus
on getting their product to market.
Since Texas oil production peaked in
1970, reflects Gilmer, co-founder and
chairman of Drillinginfo Inc. in Austin,
two generations of oilmen "were in this
beautiful Garden of Eden of oversupplied
infrastructure relative to the amount of
production we had."
But as today's production levels reach
and surpass those historical highs, Gilmer
says operators "have to be much more
focused on infrastructure than they have
had to be for 47 years. I think there is
going to be some pain in doing so."
Texas lawmakers are interested in
what the state can do to ease that pain.
TIPRO President Ed Longanecker notes
that three interim charges being considered by the state's House Energy Resources Committee deal with infrastructure in one way or another, including
one focused specifically on frac sand
mining in the Permian Basin and another
dealing with Permian Basin workforce
development.
Meanwhile, Longanecker mentions,
TIPRO continues to work with the Texas
Railroad Commission on amendments to
Statewide Rule 40 as well as seismicity
issues. And at the federal level, the association is involved in efforts to halt and
replace the Obama administration's Subpart
OOOOa New Source Performance Standard for oil and gas industry emissions of
methane and volatile organic compounds.
Fiscal Antennae
In addition to infrastructure issues, Longanecker says the state's response to natural
disasters-and in particular Hurricane Har-

vey-"is something every legislative committee will take up this interim session."
The House Energy Resources Committee is looking into the RRC's response
to Hurricane Harvey, which Longanecker
recalls went smoothly from an upstream
perspective. But besides operations issues,
"There is a huge cost associated with an
event such as that," he points out. "There
is between $8 billion and $13 billion still
needed for hurricane relief."
With Texas facing another tight budget
cycle-in January, Comptroller Glenn
Hegar estimated the state faced a $3 billion-$4 billion shortfall in the current
budget before lawmakers even start to
consider the 2020-21 biennium-Longanecker says TIPRO has its antennae up.
"We don't know where that money is
going to come from at this point, but as
an industry that contributes heavily to
state coffers, we will be watching closely,"
he assures.
No doubt, he adds, Texas' Economic
Stabilization Fund (known as the Rainy
Day Fund) will come into the conversation.
Since the ESF consists primarily of excess
severance tax collections, "We want to
make sure we have a say in that discussion," Longanecker states.
Another committee charge important
to TIPRO, Longanecker says, is examining
whether current statutes adequately encourage reactivating nonproducing oil
and gas wells.
A bill he says TIPRO "worked on
heavily" last session would have provided
a five-year severance tax deduction for
reactivated wells. "We were able to get it
through the Calendar Committee and set
on the House floor, but ran into a delay
and were not able to get it off the floor
and through the Senate," he recalls.
Not only does reactivating idle wells
generate more revenue for the state down
the road, but it also lessens the likelihood
wells will be orphaned and require state
attention, Longanecker points out.

Infrastructure Studies
According to Gilmer, besides roads,
infrastructure concerns range from increasing crude oil take-away capacity to
moving freshwater from place to place
and encouraging the use of closed-loop
systems to conserve water.
Although not specifically part of the
interim charges being taken up by the
legislature, Gilmer says one important
aspect of pipeline development is eminent
domain, which he acknowledges "has
been abused in some ways, but not used
appropriately in others."
"The concept of eminent domain has
to be clearly articulated," he encourages.
"We need to have pipelines that actually
are common carriers and open to whoever
wants access. There can't be a lot of
funny little clauses that make it technically
a common carrier but not really open."
According to Longanecker, TIPRO believed in 2013 it had gone a long way
toward solving road degradation in oil-producing areas when it worked with other oil
and gas associations to pass SB 1747,
which set aside half of a $450 million highway appropriation for grants to affected
counties, and also enabled counties to create
energy transportation reinvestment zones
into which they could funnel additional
revenues generated by oil field activity.
However, the program later was deemed
unconstitutional in three attorney general
opinions. But beyond that, Longanecker
says, criteria TIPRO believed at the time
would direct the highway money to oilproducing counties were not tight enough
to keep every county in the state from applying for a share. Consequently, he says,
"Although it raised a significant amount
of money, it resulted in very few road
projects. It also led to exorbitant consulting
and administrative fees."
So, while industry came together in
2013 to create the energy transportation
program, "We also worked to repeal it in
the last legislative session," Longanecker
MARCH 2018 91
American Oil and Gas Reporter - March 2018

Table of Contents for the Digital Edition of American Oil and Gas Reporter - March 2018
