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Texas Railroad Commission Rolls Back Oil and Gas Regulations

The Law Office of C. William Smalling, P.C. March 11, 2017

The Texas Railroad Commission continues to relieve the oil and gas industry of regulatory burdens. While this initiative was originally launched in the summer of 2016, the regulatory agency plans to lessen reporting requirements and allow for self reporting of violations all in an effort to further reduce compliance costs.

The commissioners argue that eliminating regulations it deems to be unnecessary will help oil and gas companies prioritize crucial rules, such as ones that are designed to protect water resources. They also believe that reducing reporting requirements will lower costs, particularly for smaller firms that operate low-producing wells.

"We want to make sure that those wells and those operators stay in business, and that those wells have an opportunity to produce," said commission Chairwoman Christi Craddick.

In August, the commission launched the "Oilfield Relief Initiative" aimed at updating a variety of rules and processes such as reporting requirements of obscure data and eliminating other paperwork.

In particular, the state regulator changed the definition of active oil and gas wells, which lowered the costs associated with plugging inactive wells that produce minimal amounts of oil. Previously, an inactive well was one that produced 10 barrels a month for three consecutive months; now a well that produces one barrel a month for a year is considered active.

This year the Railroad Commission started to allow well logs to be filed electronically in order to reduce paperwork. These logs are reports of rock formations that a well passes through. Also being eliminated is a requirement that producers conduct and report pressure tests to measure production of oil and gas wells. These tests help determine when a well becomes inactive and needs to be plugged. In order to conduct these tests, however, companies needed to shut down a well. The commission will now rely on information provided by production data companies on a monthly basis.  

While producers cheered these changes, environmental advocates have voiced their opposition. In addition, the Texas Land and Mineral Owners Association also opposed these initiatives. Nonetheless, the commission remains confident that the changes will not affect public safety or the environment. Ultimately, these changes are designed to  create more jobs and help the energy sector recover from the downturn.

In the end, it remains to be seen whether the Texas Railroad Commission's initiative will face legal challenges. In the meantime, oil, gas, and environmental disputes continue to require the advice and counsel of experienced attorneys.