Odessa American

by Bob Campbell

From oilfield thefts to electric reliability to managing produced water, the 89th Session of the Texas Legislature in Austin is heavily involved in energy-related issues.

The Permian Basin Petroleum, Texas Oil & Gas and Texas Independent Producers & Royalty Owners associations say their preparations have been ongoing since the last biennial session in 2023.

PBPA President Ben Shepperd said there is much work to be done in the remaining days of the regular session, which will end on June 2, to ensure that the oil and gas industry in the Permian Basin continues to thrive.

“This session we are focused on tackling oilfield theft and providing greater resources to combat organized criminal activity, efforts that are vital to ensuring a stable supply of natural resources for our prosperity and that of our allies,” Shepperd said. “We are also advancing the implementation of the Permian Basin Reliability Plan, which will for the first time prioritize long-overdue investments in transmission infrastructure to West Texas.

“This will support the region’s continued growth, benefiting residents, education, manufacturing and of course oil and gas operators.”

Additionally, he said, the PBPA remains committed to addressing produced water management by expanding beneficial re-use efforts across Texas.

Resulting from fracking, produced water is generally brackish and saline.

Shepperd said a more effective management system would help mitigate the challenges related to the seismicity and disposal of produced water and the energy industry can achieve this by deepening its understanding of the geological strata into which it produces and injects.

“Furthermore our members are dedicated to reducing the number of inactive wells that risk becoming orphaned,” he said. “We are working with lawmakers to ensure that operators meet their obligations to retire aging assets before they become a threat to our communities.

“Proactively addressing this issue is a significant step for our industry and we are proud to lead on it.”

TXOGA President Todd Staples said from Austin that his organization is fighting to protect the thousands of jobs supported by the oil and natural gas industry as the Texas Legislature is underway and it is closely watching key issues including taxes, infrastructure, water and electricity.

“All these issues are important to our members and we know water and produced water management continue to be the top priority,” Staples said. “In particular TXOGA is supportive of SB 1145 by Sen. Birdwell and HB 2584 by Rep. Landgraf, which provide an alternative to disposing produced water by allowing the TCEQ to permit land application of treated produced water.”

He said TXOGA is also backing SB 1150 by Sen. Middleton and HB 2766 by Rep. Geren, which address orphaned wells through the plugging of inactive wells; and SB 1146 by Sen. Birdwell, which will allow for the voluntary plugging of orphaned wells as well as SB 782 by Sen. King and HB 3159 by Rep. Darby, which will encourage the re-stimulation of already drilled wells.

“Together these bills will allow for the management of produced water, encourage treating produced water for beneficial re-use and enhance state and industry efforts to reduce the number of orphaned wells in Texas,” Staples said. “We are confident that House and Senate leadership will work collaboratively this session to advance legislation that ensures that Texas remains a national and global energy leader.

“Industry remains committed to working to responsibly produce the irreplaceable resources that fuel our modern lives.”

He said West Texas is well-represented in key House leadership positions with area state representatives chairing important committees including Tom Craddick, Transportation; Brooks Landgraf, Environmental Regulation; Drew Darby, Energy Resources; Ken King, State Affairs; John Smithee, Criminal Jurisprudence; Stan Lambert, Pensions, Investments and Financial Services and Dustin Burrows as Speaker.

TIPRO President Ed Longanecker said his organization is currently tracking 150 bills of relevance to its industry and that number will likely grow to over 200 by the March 14 filing deadline.

“The following are some of the bills on our radar,” Longanecker said. “TIPRO’s consensus-driven policy committee will determine our position on key legislation and we will advocate accordingly for our desired outcome on those bills.

“Last session TIPRO took formal positions on 99 bills. One hundred percent of the legislation we opposed failed to pass and 75 percent of the bills we supported passed and were signed into law.”

He said Chairman Geren filed House Bill 2766, the House companion to Senate Bill 1150 by Sen. Mayes Middleton, which require the plugging of an inactive well that has been inactive for more than 15 years and was completed 25 years ago or more.

“So 25 years old or more and inactive for 15 years, the bill allows for Railroad Commission-approved exceptions to the plugging requirement but mandates that an operator’s history of returning inactive wells to active status be considered when the RRC reviews exception requests,” Longanecker said. “Those exceptions are non-transferable.

“The bill also outlines the process for requesting the exception to the immediate plugging of wells through the approval of a compliance plan for inactive wells,” he said. “Through the compliance plan an operator of a well commits to plug or restore to active operation the inactive well prior Sept. 1, 2040.

“The bill also details what the Commission must consider when approving a compliance plan: 1) the number of years the well has been inactive and its age; 2) current economic conditions; 3) the well operator’s percentage of inactive wells as compared to its total well count; 4) any plan of action by the well operator to plug or bring its inactive wells into production, injection or other service operation, which must include a compliance report to be submitted to the commission annually with the operator’s P-5 renewal; 5) whether the operator has financial assurance to cover the actual plugging costs of each well; 6) the well operator’s record of compliance, the history of any previous violations and the seriousness of any previous violations; 7) any potential hazards to the health and safety of the public or environmental risks posed by the inactive well; and 8) the demonstrated good faith of the well operator.”

Longanecker said operators whose compliance plans are denied may request a hearing from the Commission.

“The bill also requires the Commission to submit an annual report to each member of the legislature on inactive wells in Texas by Sept. 1, 2026, and yearly thereafter,” he said.

“The report must include the number of inactive wells in Texas, the age and duration of inactivity of these wells, the quantity of inactive wells that use various methods for extending their plugging deadlines, the identification of financial assurance methods for inactive wells and a count of the inactive wells for each assurance category, the number of inactive wells and total wells plugged in the previous 12 months including breakdowns by industry and commission district, the number of inactive wells that resumed production, injection or other operations in the past year, the statistical summary of operators of inactive wells including categorization by P-5 status, data on P-5 Organization Reports revoked including operator counts, financial assurance totals, amounts collected and the annual cost calculation for plugging an inactive well.”

Longanecker said Sen. Birdwell filed Senate Bill 1146 to allow an operator in good standing to contract with a commission-approved well plugger to plug an orphaned well on their lease without taking on ownership of the well.

“Sen. Sparks filed Senate Bill 1320, an oilfield theft-related bill that requires the director of the Texas Department of Public Safety to create an organized oilfield theft prevention unit headquartered in the Permian Basin,” he said.

“In addition to enforcing laws pertaining to theft and oil and gas, the unit will also develop and deploy specialized training, resources, policing strategies tailored to investigating and preventing organized oilfield theft to local law enforcement; they will conduct public outreach and awareness initiatives to educate industry professionals and communities on organized oilfield theft prevention; and maintain a centralized database for tracking organized oilfield theft incidents and related criminal enterprises.”

Longanecker said the bill will also require DPS to submit a biennial report to the legislature detailing the unit’s activities and effectiveness and include legislative or administrative recommendations to improve the efficacy of the unit.

“Chairman Darby recently filed the very similar House Bill 3035 at the end of last week,” he said. “Sen. Sparks also filed Senate Bill 1043 to include one sheriff who has experience investigating the theft of tubular steel used in the process of drilling and completing oil and gas wells and one member who represents the oil and gas industry to a currently existing advisory committee that advises DPS matters related to the regulation of metal recycling entities.”

He said Sparks and Landgraf filed HB 1647 and SB 494 to create the Theft of Petroleum Products Task Force and help address theft in the oil patch.

“Current Occupations Code, Section 1956, requires DPS to establish an advisory committee to advise the department on matters related to the regulation of metal recycling entities,” Longanecker said. “The committee currently consists of 15 members.

“Senate Bill 1043 would expand the committee to 17 members by adding to the committee one sheriff who has experience investigating the theft of tubular steel used in the process of drilling and completing oil and gas wells and one member who represents the oil and gas industry.”

He said Sen. Zaffirini filed Senate Bill 1054 creating the criminal offense of “oil and gas equipment” theft.

Longanecker said TIPRO worked with Sen. Zaffirini’s office to draft a bill that would add oilfield equipment back into Senate Bill 1871, making it subject to the theft ladder created by SB 1871 with a minor change.

“The lowest theft ladder offense of a state jail felony does not kick in unless the value of the theft is $2,500-$10,000, eliminating any confusion regarding a tire or hammer,” he said. “Thus the appropriation of oil field equipment is unlawful if it is without the owner ’s effective consent.”

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He said an offense is a state jail felony if the total value of the petroleum product appropriated is greater than $2,500 and less than $10,000.

• A felony of the third degree if the total value of the petroleum product appropriated is $10,000 or more but less than $100,000.
• A felony of the second degree if the total value of the petroleum product appropriated is $100,000 or more but less than $300,000.
• And a felony of the first degree if the total value of the petroleum product appropriated is $300,000 or more.

Longanecker said the bill defines “oil and gas equipment” as machinery, drilling equipment, welding equipment, pipeline equipment, fittings, pumps, vehicles or other equipment and materials that are part of or incident to the exploration, development, maintenance and operation of oil and gas properties including oil and gas wells, oil and gas leases, gasoline plants and refineries.

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