American Oil and Gas Reporter - March 2018 - 92

says. "But at the same time, we were
looking at alternatives to provide the necessary funding for county roads and infrastructure investments."
One idea TIPRO supported, he recalls,
was HB 4231, which would have dedicated
1.5 percent of severance taxes to the road
and bridge fund in the county in which
they were generated. Whether that ultimately is the answer, TIPRO "absolutely
is committed to finding an effective, longterm solution to providing infrastructure
investment to ensure safety and quality
of roads to benefit all who utilize them,"
Longanecker insists.
Beyond roads, Longanecker continues,
the state also is considering policies that
may facilitate investments in infrastructure
and workforce development in the Permian
Basin to support the anticipated growth in
industry activity and related population.
A hearing hosted by the House Energy
Resources Committee in December in
Midland focused on training and quality
of life issues, he reports. "How do we get
the workforce there and keep it there?" he
summarizes. "How are we training the
students in that area to go into the oil
fields? And when we are trying to lure
folks to Midland, how can you make that
appealing to them in the long term?"
Dunes Sagebrush Lizard
Another interim study of interest to
TIPRO, Longanecker reports, is the evolution of frac sand mining in the Permian
Basin and how it may impact county infrastructure and oil and gas development.
"There is a huge economic benefit, obviously, to having frac sand mining closer
to oil and gas operations," he comments.
"It cuts transportation costs and helps
with road degradation."
But while it is not the direct focus of
the Energy Resources Committee's investigation at this time, Longanecker admits that frac sand mining impacts another
longtime industry goal: preventing an
Endangered Species Act listing for the
dunes sagebrush lizard (DSL).
The U.S. Fish & Wildlife Service
began studying whether to list the lizard
in 2011, but eventually determined it was
not warranted (AOGR, July 2012, pg.
31). That decision was based at least
partly on the Texas Conservation Plan
developed by the state comptroller's office,
which set aside 240,000 acres of protected
DSL habitat, Longanecker says.
Many of the frac sand mines potentially
affect DSL habitat, and Longanecker says
the comptroller's office is revising its
conservation plan to accommodate that
activity. Ultimately, he says, frac sand
companies must either move their operations outside of DSL habitat or enroll
92 THE AMERICAN OIL & GAS REPORTER

their acreage in a conservation plan.
In the meantime, he adds, the Center
for Biological Diversity and the Defenders
of Wildlife have petitioned USFWS for
an emergency listing of the dunes sagebrush lizard, and the clock started ticking
in December on a year long data collection
period to again determine whether a
listing would be warranted.
Railroad Commission
Longanecker recalls that in August
2016, RRC Chairwoman Christi Craddick
announced the Texas Oilfield Relief Initiative
to reduce unnecessary regulatory burdens
on industry. That effort concluded in December, he says, when the agency released
a guidance document that allows an operator
to petition for a lesser washout factor in
his top-of-cement calculation for protecting
underground sources of drinking water.
He explains that the RRC has long
used a base-line washout factor of 20
percent for most of the state and 30
percent in coastal counties to determine
the volume of cement that must be circulated. However, he notes, those factors
were established in an era when most
wells were drilled vertically using waterbased drilling fluid. But industry experience has shown that drilling with oilbased mud in shale plays often results in
less than 10 percent washout.
The RRC's December guidance document authorizes staff to approve a lesser
washout factor on a case-by-case basis
with supporting documentation that includes, but is not limited to:
* Fluid caliper data from third-party
daily reports;
* Open-hole caliper log data; and
* Correlations from temperature surveys and/or cement evaluation logs.
TIPRO still is working with the RRC,
Longanecker continues, on amending
Statewide Rule 40 to allow duplicate assignment of acreage in plays with stacked
formations without each operator having
to file for an exception. He notes that a
number of areas within the Permian Basin
produce from multiple intervals that may
be leased and developed by more than
one operator.
At present, SWR 40 does not allow
more than one proration unit beneath the
same surface acreage without an administrative hearing. However, Longanecker
says, in 2013, the RRC released a final
order amending field rules for the Permian
Basin's Spraberry Field that established
an upper and lower tier that could be
permitted separately.
"The Spraberry model is perfect. We
just need to expand that so operators don't
have to go through all these administrative
hearings," Longanecker praises, adding,

"You are stranding resources if the RRC
doesn't have a way to assign those correlative intervals to different operators."
In December, he says, the RRC released
a discussion draft of amendments to SWR
40 that states, "Where mineral ownership
under a tract in an unconventional fracture
treated field is differentiated vertically,
the same surface acreage may be assigned
to more than one well, provided the wells
are not producing or will not produce
hydrocarbons from the same productive
horizon, and such duplicate acreage is
necessary to prevent waste, prevent confiscation, or protect correlative rights."
Seismic Monitoring
In 2017, the Texas Legislature passed
HB 2819, codifying the TexNet seismic
monitoring program within the University
of Texas' Bureau of Economic Geology,
which lawmakers established two years
earlier. Although Longanecker says TIPRO
was disappointed the legislature didn't
provide dedicated funding for TexNet,
he reports the seismometers are in place,
and the monitoring and research component are ongoing.
"That activity can be viewed on
TexNet's website," he says. "I think the
program is working as intended," noting
TIPRO's engagement with the TexNet
advisory committee as well as a second
committee focused specifically on the
Permian Basin.
Gilmer says TIPRO is especially cognizant of the potential for induced seismicity there because of the Permian
Basin's very high water cuts and the need
to ensure reinjection of produced water
stays below a public safety threshold.
In 2014, the RRC hired a seismologist
and amended its disposal well regulations
to require applicants to search U.S. Geological Survey records for reports of seismic activity within 9.08 kilometers of
the location. The rules also authorize
RRC staff to modify a permit's injection
volumes or pressures, and to require operators to file additional reports (AOGR,
November 2014, pg. 14).
Longanecker says TIPRO meets with
the RRC to ensure the injection well regulations are functioning as intended and that
disposal wells are being operated safely
for both the public and the environment.
Federal Issues
Like others in the oil and gas industry,
Longanecker says working at the federal
level with the Trump administration feels
like a breath of fresh air. "One of our
members told me the other day that during
the Obama administration, he was tracking
some 200 proposed or recently enacted
regulations. Now he is tracking seven,"

American Oil and Gas Reporter - March 2018

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