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Permian Basin Oil and Gas Magazine

PBOG is the Official Publication of the Permian Basin Petroleum Association and is published monthly by Zachry Publications, LP.

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Keeping Regulations in Check

December 17, 2012 by PBOG

Proposed changes to Rule 13 and other regulations could severely impact the industry.

What should we expect from Washington, Austin and Santa Fe now that the elections are over? From my view, we should expect increased proposed regulations for our industry from the Environmental Protection Agency (EPA), Department of Interior (DOI), U.S. Fish and Wildlife Service (USFWS), Bureau of Land Management (BLM), Texas Council of Environmental Quality (TCEQ), Texas Railroad Commission and the New Mexico Oil Conservation Commission (NMOCD).

The EPA recently instituted new regulations requiring our industry to report greenhouse gases from our producing operations. This is a significant burden on our industry. It requires significant time from our industry’s professional and operational personnel to collect, tabulate and report the information required by the EPA during a time when everyone is very busy finding, drilling and producing our nation’s oil and gas. I am concerned that this reporting may be significantly expanded. On October 15, 2012, the EPA instituted new regulations that require (among other things) notification to the EPA two days before completion of hydraulically fractured wells. I believe each of these reporting requirements is a precursor to new burdensome and costly regulations to our industry with little benefit to the environment.

The PBPA has put significant effort into successfully preventing the USFWS from listing the Dune Sagebrush Lizard as an endangered species under the Endangered Species Act. Now we expect the Lesser Prairie Chicken to be proposed soon as a candidate for listing. The PBPA is engaged in leading the charge opposing this listing also. However, there are 214 other species to be considered for listing by the USFWS, including over 100 in Texas.

The BLM has proposed a rule titled “Oil and Gas: Well Stimulation, Including Hydraulic Fracturing, on Federal and Indian Lands.” This rule as proposed will significantly increase the cost of drilling wells on federal lands and cause significant delays in permitting and completions. It could have a significant impact on the economics of drilling wells on federal lands. The PBPA has submitted comments on the proposed rule pointing out the many deficiencies.

The Texas Railroad Commission has recently proposed significant changes to Rule 13, relating to Casing, Cementing, Drilling and Completion Requirements, Rule 9, relating to Disposal Wells, Rule 36, relating to Operations in Hydrogen Sulfide Areas, and Rule 46, relating to Fluid Injection into Productive Reservoirs. Each of these proposed rule changes will have a real impact on the economics of drilling and producing oil and gas in the State of Texas. Of particular concern are the proposed changes in Rule 13. If implemented as proposed, it would essentially require circulating cement on every casing string, require drilling larger wellbore sizes with non-standard bits, running non-standard casing sizes, cementing with specified slurries that may or may not be best practices and using BOP stacks that will not fit many of the drilling rigs currently in operation. It attempts to regulate hydraulic fracturing by depth, geologic complexity, and zones that are likely to be transmissive. The PBPA is preparing comments to be submitted on each of these proposed rule changes.

I believe the future of our industry is the brightest it has been in my 32 years because of the technological innovations including horizontal drilling and hydraulic fracturing. However, as I have outlined a few of the regulations above, we face many challenges to keep reasonable regulations that do not create unnecessary burdens and costs on our industry while truly providing real benefits to our environment, economic growth and jobs for our nation’s economy and solutions to the growing and continuing need for affordable energy. The PBPA is at the forefront as an advocate for our industry and specifically the issues that are unique to the Permian Basin. We appreciate the support of our membership and solicit your increased involvement to protect Texas jobs and industries from misguided regulations.

 

Filed Under: From the Chairman

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