Railroad Commission of Texas (RRC) Commissioner Christi Craddick on Tuesday outlined her plans for lightening the regulatory burden on the state's oil and natural gas producers.

Craddick's Texas Oilfield Relief Initiative is intended to improve efficiencies at the state's energy regulatory body, as well as for oil and gas producers working to sustain business operations during the current downturn in the energy sector, RRC said. "The initiative will reduce the regulatory administrative burden on industry while ensuring the commission continues to protect the public and environment," it said.

The initiative would provide for:

  • Identifying agency reports and filings that can be reduced or eliminated. This includes amending Statewide Rule (SWR) 28 to modify gas well deliverability reporting requirements, and reducing the need for G-10 (Gas Well Status Report) filings except for surface commingled production.
  • Allowing a calculated well shut-in pressure to be provided when filing Form G-10 for gas wells.
  • Amending production requirements for marginal and stripper wells, including revising "Active Oil Well" definition from 10 bbl of oil per month for three consecutive months to five bbl per month for three consecutive months or any reported production in each month for a consecutive 12-month period (SWR 15). It also includes revising "Active Gas Well" definition from 100 Mcf of gas per month to 50 Mcf of gas per month or any reported production in each month for a consecutive 12-month period (SWR 15).
  • Implementing a revised internal inspection priority system so RRC inspectors prioritize drilling rig inspections and hydraulic fracture treatments in sensitive areas such as cities or wetlands without affecting other inspections.
  • Reviewing the agency's new online completion program as it calculates the depth of cement behind casing (cement tops) using washout factors that have been used by the RRC for decades. A review should be conducted to determine whether different washout factors should be used in certain areas of the state to calculate cement tops.
  • Allowing for the Groundwater Advisory Unit to identify counties or portions of counties in which the usable quality water protection depth is constant. Those areas would be eligible for area-wide recommendations for meeting surface casing requirements, streamlining regulatory requirements for industry.
  • Issuing guidance for implementation of the Texas Environmental, Health & Safety Audit Privilege Act, permitting operators of new property to identify and remedy violations resulting previous to their ownership. This ensures compliance without punishing an operator not responsible for the cause of the violation.
  • Conducting an extensive review of all RRC forms required for application and reporting purposes and determine whether data collected is currently used or no longer necessary, eliminating forms no longer useful to regulatory functions to reduce administrative burden on staff and industry.
  • Simplifying the complete duplication of a drilling permit application with a sworn statement of no changes to the original application. The operator would then pay the fee for reissuance of the permit, speeding up the review process and reducing regulatory administrative burden for both the agency and industry.

Industry trade groups praised the measures.

"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% of total U.S. oil wells and 18% 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."

The Texas Alliance of Energy Producers said it "wholeheartedly supports Commissioner Craddick's Texas Oilfield Relief Initiative and appreciates the time, effort and thought that the commissioner and staff have devoted to its formation and implementation."

Earlier this year, another Texas Sunset Commission review of the RRC recommended again a name change of the agency, stricter monitoring and enforcement of industry and changes to hearings procedures, among other things (see Daily GPI ,May 2). The review is under way, with the next hearing scheduled for Aug. 22.