Permian Basin activity remains strong throughout the Basin and that makes the work we do here at the PBPA all that much more important. The issues keep coming at us and the Board and I are committed to doing what it takes to keep folks drilling and producing for years to come.
PBPA continues to be a strong leader in our various Endangered Species efforts. Unfortunately, it looks like those issues will be with us for a long time. PBPA has intervened in the Defenders of Wildlife lawsuit against the U.S. Fish and Wildlife Service (USFW) to overturn the Not-Warranted decision on the Dunes Sagebrush Lizard. The USFW made the right decision based on the best available science and it is imperative that the decision be protected.
We also continue to work daily towards a Not-Warranted decision on the Lesser Prairie Chicken. If either of these species were to be listed, the potential economic impact to the oil and gas industry would be in the billions of dollars. PBPA is also working on some long-term solutions for the Endangered Species challenges facing us.
There are plenty of other issues PBPA is focusing on. We continue to have discussions with the Railroad Commission regarding the new Rule 13 casing, cementing and completion regulations slated to take effect January 1, 2014. The Commission held a seminar in Midland last month to answer PBPA member questions about Rule 13 as well as Rules §3.9, relating to Disposal Wells; §3.36, relating to Oil, Gas, or Geothermal Resource Operation in Hydrogen Sulfide Areas; and §3.46, relating to Fluid Injection into Productive Reservoirs.
In our comments to the Commission, we have tried to stress the differences between commercial disposal wells, lease disposal wells and enhanced oil recovery project wells. While all must be engineered to protect the fresh water and be confined to permitted zones, there are many differences in these types of wells and the rules must reflect these different circumstances.
Water use, access and protection are another set of priority issues we will be addressing for the next year or so as we prepare for next Texas legislative session. There will be increasing pressure to repeal or re-draft our industry’s permitting exemption. This will come from some of the ground water conservation districts (“GCDs”), farmers, ranchers, municipalities, elected officials both local and statewide. In other words, we quickly are getting outnumbered by a very strong coalition of opponents.
Moreover, as we are seeing in the current RRC rulemaking, some GCDs and their allies will continue to push for notice, standing, and party status for all E&P permitting activity at the RRC. If they achieve their goal, they will be able to significantly delay E&P permit applications at the RRC and in the courts. Based on some of the previous settlement proposals, we can expect that they will hold this new leverage over the industry.
Finally, many people are actively discussing using brackish water as a new source to help meet our state’s water shortage. Among other things, GCDs are starting to seek, or declare, jurisdiction over brackish water. Meanwhile, certain staff at the RRC already have floated the idea that the time is coming when the RRC will need to require casing protection for brackish water in the E&P industry. Requiring surface casing of brackish water would dramatically change both the economics as well as the actual feasibility for a great amount of wells which we currently drill in our business.