Kinder Morgan Sues City of Kyle over Anti-Pipeline Ordinance

City of Kyle, an Austin suburb was sued by Kinder Morgan over the passage of an ordinance that the company says aims to keep the proposed $2 billion Permian Highway Pipeline project out of town.

The 430 miles, the 42-inch diameter Permian Highway Pipeline project will connect the fruitful Permian Basin of West Texas to the Katy natural gas hub near Houston and is designed to move 2 billion cubic feet of natural gas per day. The proposed route faces stiff opposition in the Texas Hill Country, Hays County and the City of Kyle.

The Kyle City Council passed an ordinance on July 2nd stating that all natural gas pipelines with a diameter of 30 inches or more would require a city permit. Kinder Morgan, in a 22-page lawsuit filed on Monday in U.S. District Court in Austin, alleges that the City of Kyle overstepped state and federal law.

“While municipalities have the authority to impose certain fees in discrete circumstances under Texas law, those fees must be both reasonably calculated and tied to the actual costs incurred by the city administering valid municipal regulations,” Kinder Morgan said in a statement.

The ordinance states that the pipelines must be buried at least 13 feet below the surface and be located at least 200 feet away from schools, day cares, hospitals, retirement homes and other sensitive facilities.

Kinder Morgan has also filed a complaint with the Railroad Commission and the company says the Permian Highway Pipeline’s route affects the fewest number of landowners and is environmentally sound.


Texas Oil, Gas Regulator Receives Significant Increase in Budget

Texas' oil and gas regulator just received a significant increase in funding from the Legislature, which will boost the commission's well plugging, pipeline and well inspection programs.

Due to the recent oil bust, the Railroad Commission of Texas cut its budget by $1.3 million each month over the past year as well as froze hiring so it could focus on funding for permitting and inspecting wells. Abandoned well sites significantly increased during the downturn, posing a problem for the commission as they struggled to inspect and plug them with such a funding deficit.

At a recent legislation session, however, the commission received a 46 percent increase in its budget to $256 million.

The commission plans to use most of the funding increases toward programs for well plugging, oil field cleanup, and pipeline safety. Much of it will also go toward filling job positions and digitizing decades of oil and gas records.

The commission, which is responsible for plugging abandoned oil and gas wells, monitoring oil and gas operations, overseeing pipelines, and regulating the state's gas utilities, now has the money it needs to carry out its basic functions and fill funding shortfalls for other responsibilities like conducting a data backup and increasing salaries.

Fuel Fix

Legislator Pursues Necessary Changes for Texas' Oil, Gas Regulator

Dallas Democratic representative Rafael Anchia put forth two bills last week aimed at changing the name of Texas' oil and gas regulator and ordering the commission to post all of its data on inspections and violations on its website for the public to view.

This is not the first time efforts have been made to change the name of the Railroad Commission of Texas as legislators and environmental advocates have been requesting it for years. As put forth in Anchia's House Bill 237, advocates believe changing the commission's name to Texas Energy Resources Commission would better reflect the duties of the commission.

Efforts to make the commission's data on violations and inspections available for public viewing have also been pursued over the last several years but have subsequently failed.

The Texas Railroad Commission this year asked lawmakers for additional funding of $45 million to use toward commission improvements including updating its aging IT computer system in order to make it web-based for public viewing. Their current system is 40 years old and outdated, inhibiting the commission to make data readily available for the public to search. The House and the Senate, however, are divided on how much additional spending the commission should receive, if any at all.

Anchia put forth the two bills in the House's Energy Resources committee, which is made up of 10 Republicans and three Democrats.

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Texas Regulator Requests $45 Million from Lawmakers for More Inspectors, Updated Technology

In an effort to increase inspectors, upgrade its technology, and reduce its inspections backlog, Texas' oil and gas industry regulator is requesting $45 million from the Legislature.

The Texas Railroad Commission said it needs more inspectors and computer systems to reach its goal of inspecting every well in Texas at least once every five years. Because of lack of resources, the commission said two out of three wells in Texas go without inspection for about five years.

The commission reported that about 1,400 violations were issued last year when inspecting wells, mainly involving failure to adequately plug inactive wells and protect water sources from toxic chemicals. These violations were issued only to wells that were able to be inspected, leaving many unknown problems open to those that have yet to be reached due to lack of inspectors.

Executive Director Kim Corley said the commission is nowhere near where it would like to be as data is currently stored on a non web-based, 40-year-old system that cannot be easily reached.

The Railroad Commission will go before the Senate of Finance Committee to justify its requests on Thursday, hoping for the funding of resources that will ensure a safe energy sector in Texas.


Texas Pipeline Regulators Side with Eastman in Pipeline Rate Dispute

Texas oil and gas commissioners closed a three-year dispute on Wednesday by ruling that Westlake Chemical cannot charge Eastman Chemical a free-market rate for use of its Texas pipeline.

The dispute began when Eastman Chemical filed a complaint with the Railroad Commission of Texas after Westlake Chemical began to charge Eastman double its rate in 2013, from $1.90 per 100 pounds to $3.50. The Railroad Commission voted 2-1 on Wednesday to set the rate to $2.45 per 100 pounds.

In the midst of the dispute the last three years, several industry leaders had been watching to see if the commission would allow Westlake to set a market rate, which is not yet allowed.

Eastman Chemical proposed a rate of $1.67 per 100 pounds, but the ruling came to $2.45 per 100 pounds, which two of the three commissioners agreed on. Commissioner David Porter had proposed a $1.55 rate.

Although Commissioner Ryan Sitton had voted for the rate of $2.45, he said the case was a missed opportunity “to begin the process of setting market-based rates for common carrier pipelines."

Fuel Fix

Texas Oil Commissioner Predicts $60 Oil Prices Next Year

Commissioner Ryan Sitton, via Railroad Commission of Texas

Commissioner Ryan Sitton, via Railroad Commission of Texas

Oil prices will rise to $60 a barrel by next year, Texas oil commissioner Ryan Sitton predicted on Wednesday at NAPE, the world's largest upstream exploration and production expo.

During the expo, Sitton spoke about the victories of the Texas oil industry and its historic rise in production as well as its role in the global oil economy.

Sitton said that two years ago the world was producing 2 million more barrels of oil a day than it was consuming, dropping oil prices. However, oil production has since decreased by roughly 1.5 million barrels a day among our nation and Venezuela alone, and per capita demand continues to rise in countries like India and China.

He added that only about 65 million barrels of oil a day can be produced profitably at $40 a barrel and yet he cannot imagine that businesses will continue pumping oil and losing money in production.

During the predicted rise of oil prices next year, Sitton said Texas is poised to rebound because no other area in the world has such accessible land and so many miles of pipeline.

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Texas Oil and Gas Commissioner Proposes to Simplify State Regulation Rules

texas oil and gas commissioner proposes to simplify state regulation rules

A Texas oil and gas commissioner on Tuesday announced a number of rule changes that will purportedly help ease state bureaucracy navigation for energy companies, helping them to save money during the current industry downturn.

Texas Railroad Commissioner Christi Craddick, in her proposal that she calls “common sense practices,” aims to reduce paperwork, eliminate unnecessary rules, and improve efficiency for state energy regulators. Further, the commission has re-evaluated rules and overhauled information technology programs that could potentially save oil and gas operators tens of millions of dollars.

She will introduce the specifics of her proposal to the commission staff at their open meeting in Austin on Tuesday.

Craddick calls the full report of changes the Texas Oilfield Relief Initiative, which includes reducing gas well status filings, modifying gas well deliverability reporting, changing certain pressure calculations, amending production definitions, prioritizing rig inspections in sensitive areas, creating area-wide surface casing requirements in counties with constant water depth, and simplifying permit reissuance applications.

The initiative has support from several industry association leaders.

“With the current industry downturn, at stake is the survival of the state's small producers and the oil industry's many marginal wells, which make up 85 percent of total U.S. oil wells and 18 percent of the nation's total oil output,” said Judy Stark, Panhandle Producers and Royalty Owners Association Executive Vice President. “During this critical time, Commissioner Craddick's initiative will provide relief to Texas' independent producers, the backbone of both our state and nation’s oil industry. For that, PPROA's members are truly grateful.”

Railroad Commission of Texas
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Railroad Commission of Texas to Host 2016 Pipeline Safety Conference in San Antonio, Texas

The Railroad Commission of Texas (RRC) is hosting its 2016 Pipeline Safety Conference on August 24-26 in San Antonio, Texas.

The purpose of this conference is to educate the pipeline industry on both federal and state regulations. During the conference, attendees will have the opportunity to meet with RRC Pipeline Safety staff and inspectors, learn about safety changes at the RRC and how they will affect the industry, hear the new regulations that are coming from the federal and state levels, learn about services and products that will contribute to more efficient systems, and exchange ideas and best practices with peers in the industry.

Accommodations have been reserved at the Embassy Suites River Walk. For more information on rates and reservations, visit the Texas Gas Association website. The registration form and information on fees will also be available on their website.

For more information about the conference, visit Railroad Commission of Texas.