Testimony of Virginia Palacios Before the Senate Committee on Natural Resources and Economic Development #2
AUSTIN, TX – Texas lawmakers filed a slate of bills this week that would help prevent operators from orphaning oil, gas, and injection wells in the state and reform the Railroad Commission, the state’s regulating agency for oil and gas development.
Oil, gas, and injection well operators create orphaned wells when they fail to set aside funds for well plugging and cleanup before they go out of business. The well then joins the orphaned wells list, becoming the state’s responsibility to plug.
The Railroad Commission spends more than 50 million dollars each year plugging orphaned wells and cleaning up sites, but the roster of wells continues to grow. Commission Shift identified in its March 2021 report, Unplugged and Abandoned, that currently the bonds that operators pay to assure the state that financial resources will be available to plug the wells cover only a fraction of the cost of plugging and cleanup. Our January 2022 report presented ten solutions for Eliminating Orphaned Wells and Sites in Texas. In 2017, the Sunset Commission found that insufficient and inequitable statutory bonding requirements contribute to the large backlog of abandoned wells. HB 3839 (Goodwin) would amend blanket bonding and require operators to set aside funds to more closely cover estimated decommissioning costs of oil, gas, and injection wells.
Once a well stops producing oil or gas, operators are required to plug them within 12 months. However, state law requires the Railroad Commission to grant plugging extensions under a wide variety of circumstances. As wellbores deteriorate, they can leak oil, gas, or saltwater containing radionuclides or hydrogen sulfide into groundwater supplies. Unplugged wells also can release methane, a powerful greenhouse gas, into the atmosphere, and open pits for collecting wastewater or other byproducts of the drilling process can leak and pose threats to groundwater as well. HB 3840 (Goodwin) places limits on the number of plugging extensions the Railroad Commission may grant, and strengthens the requirements an operator must meet in order to request a plugging extension.
State Representative Vikki Goodwin filed the bills.
“Orphaned wells aren’t a mystery. They don’t suddenly appear on the Railroad Commission’s doorstep, swaddled in a blanket. They’re the direct result of policy designs that allow operators to drop their liabilities on the state. Changing state law can help to protect our people, lands, and waters for generations to come” said Virginia Palacios, Executive Director of Commission Shift.
Name Change for the Railroad Commission Long Overdue
Another bill Commission Shift supports focuses on renaming the state’s regulatory agency for oil and gas development.
As former Railroad Commissioner Ryan Sitton once said, changing the commission’s name is “about transparency, good government, and keeping people informed about what we’re doing.”
The Railroad Commision relinquished any lingering responsibilities having to do with trains in 2005, however the agency’s name has not caught up its modern day duties, which include permitting of oil and gas wells, plugging and cleaning up abandoned oil and gas wells, overseeing pipeline safety, enforcing emission standards on industry flaring, and setting utility rates for the natural gas in our houses.
While past Sunset Commissions have identified changing the name as a key reform in order to increase the agency’s transparency and accessibility to the public – especially those most impacted by oil and gas development – attempts to change the Railroad Commission’s name over the years have not yet been successful.
SB 1701, filed by Sen. Nathan Johnson, sets out to change the name to the “Texas Energy Resources Commission.” Rep. Rafael Anchia filed a companion bill, HB 4788.
These proposals are joined by two other ethics-related bills aimed at reforming the Railroad Commission: HB 1296 (Goodwin) which would clarify the recusal policy for railroad commissioners, and HB 1245 (Goodwin) which sets limits on campaign contributions for statewide candidates, like railroad commissioners.
“As Americans, we must protect our freedom to choose our elected officials. The names of elected offices and state agencies should be informative to voters and residents of the state, and should reflect the purpose of the office,” said Tannya Benavides, Advocacy Director of Commission Shift.