American Oil and Gas Reporter - April 2018 - 146

Texans regulated by other Texans, but
we also are looking for opportunities to
streamline regulations with a basis in
common sense, which will make it easier
for oil and gas companies to comply."
The shift in permitting related to hydrostatic testing could happen quickly by
the state of Texas and EPA agreeing to
discuss a shift already authorized by statute,
in a manner similar to how the state
oversees injection well permits, he says.
The Alliance also is pushing for state
oversight of Clean Water Act regulations,
which include the National Pollution Discharge Elimination System and Spill Prevention, Control and Countermeasure
Rule, he says, adding that state oversight
of NPDES would allow for greater reuse
of produced water while state SPCC oversight would eliminate duplicate federal
regulations and allow state inspectors to
oversee spill prevention and response.
Regulatory Hot Line
In addition to the advocating for
change, the Alliance continues to help
members stay abreast of regulatory requirements through a regulatory hot line,
Tintera says.
"That hot line is for any of our members
who may be confused about some of the
regulations and aren't sure which agency
they need to go to for answers," he explains. "Members can call the regulatory
hot line and we can point them in the
right direction. We also can respond by
e-mail within 24 hours.
"The Texas Alliance continues to focus
on member services," he adds. "We try
to provide unique opportunities for our
members, not just for their profit, but to
help with compliance."
Tintera says the Alliance Board's 2016
vote to establish FRED and call for a shift
in regulatory responsibilities influenced
passage last year of Texas Senate Concurrent Resolution 26, authored by Senate
Natural Resources Chairman Craig Estes,
R-Wichita Falls, and sponsored in the
lower chamber by House Energy Resources
Chairman Drew Darby, R-San Angelo.
Governor Greg Abbott signed the bill.
Taxes And Exports
The Alliance also is celebrating retention of the percentage depletion allowance and deduction for intangible
drilling costs in the federal Tax Cuts and
Jobs Act of 2017, Tintera continues.
"Regardless of what some critics have
argued, percentage depletion is applicable
only to small operators with less than
1,000 barrels a day of production," Tintera
reviews. "It doesn't impact large operators,
but for smaller operators, the ability to set
aside money, avoid taxes on it and reinvest

it into oil and gas is key to raising capital.
"We went to Washington armed with
a resolution that our board supported retaining percentage depletion," he recalls.
"We visited with our entire Texas delegation and we won. Percentage depletion
was retained in the tax code, and small
producers have associations such as the
Alliance to thank that it didn't get overlooked as the tax overhaul was taking
place. Those reinvestment opportunities
in stripper wells are responsible for countless oil field jobs and tax revenue at the
local, state and federal levels."
On other national matters, the Alliance
Board of Directors passed a resolution in
late January reaffirming the association's
commitment to maintaining a trade climate
favorable to oil and gas as the Trump administration renegotiates the North American
Free Trade Agreement, points out Jim Beck,
Alliance vice chairman, who will assume
the chairmanship at the annual meeting.
Of primary interest to Alliance members is that natural gas exports to Mexico
have increased 445 percent since 2010
and 30 percent in 2017 alone, according
to an Alliance summary, while exports
of crude oil to Mexico have increased
320 percent since 2010.
"NAFTA is going to be very important
to us," assesses Beck, owner and president
of Tiger Eye Resources LLC in Houston.
"Our board's resolution calls for avoiding
major changes that would have a severe
impact on oil and gas producers around
the state. We are a net exporter of gas to
Mexico, and we really don't want to see
any kind of negative impact from changes
to NAFTA. It really would help our members in South Texas if we could keep exporting to Mexico."
Comments Osborne, "NAFTA was
born on Jan. 1, 1989, and has become
part of our daily oil business lives. NAFTA
is important to Texas, and if renegotiated,
its impact on our markets for oil and gas
needs to remain positive and profitable."
Groundwater Policy
At the state level, Tintera says the Alliance continues to participate in the legislature's interim charge process. The
House Natural Resources Committee is
evaluating the status of groundwater
policy. The Senate Agriculture, Water
and Rural Affairs Committee is looking
into streamlining surface water permitting
by the Texas Commission on Environmental Quality and is examining the need
for permitting uniformity among the
state's 103 groundwater districts, he says.
Groundwater and common carrier
pipelines are big issues in Texas, confirms
Alliance chief lobbyist Bill Stevens.
Water issues will continue to include

146 THE AMERICAN OIL & GAS REPORTER

discussion about the future of disposal,
recycling and likely permitting for oil and
gas drilling as a growing number of midstream water-handling companies assume
greater roles in the process, Stevens says.
The Alliance continues to support recycling of water used in oil and gas operations, Tintera attests, saying the association
favors incentives to encourage recycling
instead of mandates. The Alliance is keeping
a close watch on the outcome of a pilot
project headed by Texas A&M University
in which the RRC will allow recycled produced water to be used to irrigate a cotton
crop on a 40-acre plot, he says.
"There are tremendous opportunities
with water conservation, and water use
and reuse. But with that being said, the
oil and gas industry needs to continue to
have access to groundwater supplies,"
Tintera maintains. "We believe in onestop shopping where you don't have to
get multiple permits from multiple entities
to drill a single well."
Bills last legislative session that would
have streamlined groundwater regulation
were vetoed, Stevens recalls.
"I still think there is going to be considerable interest and pressure for legislation to bring groundwater districts in
line with each other," he says. "All 103
groundwater districts in Texas can't have
separate rules. There has to be some uniformity. But at this point, I am not sure
what proposed legislation will look like."
The Alliance also continues to monitor
interim charges examining infrastructure
in the Permian Basin, Tintera continues.
"It's a key issue and we recognize that as
the economies of those areas experience
an uptick, roads are used more by oil
field trucks and others affiliated with the
industry," he says. "Our members are
among producers that certainly pay their
share of taxes into things such as the
state Rainy Day Fund, and have supported
using additional funds for Texas roads."
Top Of Cement
On a regulatory matter, Tintera says
the Alliance is keeping a close eye on the
effect of an RRC notice issued Dec. 7 on
the top-of-cement calculation for protecting
underground sources of drinking water
under Statewide Rule 13. As part of the
Texas Oil Field Relief Initiative, the
agency modified the TOC equation to be
consistent with industry practice for calculating excess borehole volume. The
RRC says it also reviewed the base line
washout factors used in the calculations.
"The top of cement is important because the volume of cement in a well ensures you are protecting freshwater and
that there is no communication of producing zones in multizone wellbores,"

American Oil and Gas Reporter - April 2018

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