American Oil and Gas Reporter - June 2021 - 39

Legislature Earns TIPRO's Affirmation
IssuesUpdate: Texas Independent Producers & Royalty Owners
AUSTIN, TX.-If the 2021 Texas legislative
session were turned into a movie,
Texas Independent Producers & Royalty
Owners Association Director of Government
Affairs Ryan Paylor says it would
be a stressful but ultimately uplifting tale
about diverse groups cooperating to solve
problems. He explains that several key
energy bills passed during the legislative
session because advocates such as TIPRO
and other trade partners worked with
people from outside the industry on important
issues for the state.
" There was a lot of collaboration, " he
recounts of the session, which ran from
Jan. 12-May 31. " Oil and gas producers
sat down with royalty owners, landowner
groups, electric generation folks and more.
Together, we were able to craft language
we all liked and pass some good bills. "
This progress occurred despite many
pitfalls and other hazards to TIPRO's
legislative priorities. After all, observes
TIPRO President Ed Longanecker, Winter
Storm Uri slammed Texas about a month
into the session. The storm stressed the
state's power grid and natural gas supply,
endangered residents' health and wellbeing
and wrought billions of dollars in
property damage. The consequences disrupted
the session's dynamic and prompted
some lawmakers to propose mitigating
measures that threatened the industry.
" TIPRO understood and respected the
magnitude and complexity of this issue
and policymakers' difficult job to strike
the right balance to effectively address
present-day concerns with the state's energy
system, while avoiding unintended
consequences, " he relates. " Bottom line,
this storm was devastating and a wakeup
call that reinforced the need for smart
reforms. TIPRO proved it was committed
to being part of the solution. "
Meanwhile, a top issue that was no
surprise, considering it has surfaced but
gone unresolved in several of the past
legislative cycles, was eminent domain
reform. This session proved different,
Paylor reports. " We have been negotiating
eminent domain for six years, " he notes.
" This was the first time we were able to
reach an agreement that met the needs of
all stakeholders. "
Sudden Change
According to Paylor, TIPRO entered
the session focused on a state budget
shortfall associated with economic constraints
largely attributable to the COVID19
pandemic. " A budget shortfall can be
a big issue, especially because we want
to be sure the Texas Railroad Commission
and our other regulatory agencies are
fully funded, " he recounts. " We spent
time on the front lines to help make sure
the RRC received appropriate funding. "
Then Uri hit, Longanecker observes,
and policymakers worked to ensure millions
of Texans never again faced similar blackouts,
exorbitant power rates or natural gas
shortages. Unfortunately, some lawmakers
sought to require all Texas producers to
re-equip their gas sites to withstand comparable
weather in the future.
" The importance and resilience of natural
gas for power generation was made
abundantly clear during the storm, " Longanecker
reflects. " Natural gas producers
continued to provide an adequate level
of supply for power generation and carried
approximately 63% of the load throughout
the storm. "
And when Senator Charles Schwertner,
R-Bryan, introduced SB 3, Longanecker
says, TIPRO concurred with many of its
provisions, but not its universal weatherization
mandate that included noncompliance
penalties as steep as $1 million a day.
" That concerned us immediately, " Paylor
affirms. " Only about 20% of all Texas
gas facilities have anything to do with
electric generation in our state. Weatherizing
the other 80% will not help these
kinds of situations, but can be incredibly
costly. For small independents, those
pointless costs could be a death knell. "
Fortunately, he says, TIPRO helped
persuade legislators to amend that portion
of SB 3 before it passed. Industry advocates
also received assistance from important
regulators, including those who
will help craft the rules that come from
the new statute. " Texas Railroad Commission
Chairman Christi Craddick was
very vocal and helped disseminate a lot
of information, " Paylor says.
Among its extensive reforms, the new
law includes a supply chain and continuity
provision that relates to legislation originally
introduced by Representative Craig Goldman,
R-Fort Worth, Paylor mentions. He
points out that the language addresses the
considerable extent to which many wells'
reliability challenges during Uri stemmed
from their own power interruptions.
" Most issues at our facilities were a
matter of having the electricity cut off, "
Paylor explains. " Representative Goldman
introduced a wise bill that sought to make
sure there was a map to prevent electric
generation facilities from cutting off
natural gas facilities that were providing
gas for electric generation. "
" Moving forward, we must ensure
that we have adequate reserve power,
bolster our energy infrastructure and determine
the right level of resilience to
safeguard it against extreme weather
events, " Longanecker affirms. " We commend
our state elected officials for working
hard to prevent this scenario from ever
happening again. "
At Long Last
The session also saw legislators in
Austin approve HB 2730, an omnibus
eminent domain reform bill introduced
by Representative Joe Deshotel, D-Port
Arthur, who chairs the House Land and
Resource Committee. Such eminent domain
bills have failed repeatedly in recent
sessions, but this time, Paylor says, the
stakeholders ironed out an agreement that
balances landowner protection with the
need for infrastructure.
" TIPRO members are producers and
royalty owners, but they are also landowners,
and many of them have dealt with
pipelines in that capacity, " he relates.
" We were happy to agree to a licensor
process for right-of-way agents, about
which there have been many complaints
for bullying (to obtain consent for their
desired terms). Now there will be an ombudsman
hotline landowners can call to
get general information through the Texas
Real Estate Commission. Anyone with
questions about eminent domain can turn
to that before calling a lawyer.
" The best part of that legislation is
providing landowners those additional
protections while maintaining the ability
to work on critical infrastructure projects, "
Paylor explains.
Getting HB 2730 to the governor's
desk was a significant feat, Paylor says,
noting that oil and gas representatives
and landowners were by no means the
only stakeholders at the negotiating table.
" We are talking about municipalities
and other infrastructure such as water
and electricity, " he details. " All those interests
came together on one side, with
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