2-27-17 Commissioner Wayne Christian, Railroad Commission of Texas Prepared Remarks for Texas House of Representatives Committee on Energy Resources February 27, 2017 Chairman Darby and Members -- For those of you who don’t know me, I am Railroad Commissioner Wayne Christian. I am here today to give you a quick overview of our agency’s responsibilities, before my colleagues speak on the Sunset Process and our agency budget. The Texas Railroad Commission is the oldest regulatory agency in Texas, founded 126 years ago. Forbes Magazine recently stated that the Railroad Commission “has long been, without question, the most influential oil and natural gas regulatory body on the face of the earth.” The agency is currently made up of over 685 employees statewide, overseen by three elected commissioners that serve staggered six-year terms. We have nine oil and gas district offices and seven pipeline safety regional offices. Our agency does not regulate railroads, we are charged with the development and implementation of rules for regulated industries on energy exploration and production. The Railroad Commission has jurisdiction over oil and natural gas exploration and production, coal and uranium surface mining operations, Intrastate pipelines, Natural Gas utilities, and Liquefied Petroleum Gas, Compressed Natural Gas, and Liquefied Natural Gas. We currently oversee 434,000 oil and gas wells, of which 303,000 are active, 131,405 are inactive, and 5,400 are orphan. In fiscal year 2016, our agency conducted more than 124,000 oil and gas inspections, and assessed roughly $8.6 million in fines. The State of Texas has 440,000 miles of pipeline -- 219,000 of which is intrastate. On average, 50 miles of 20-inch pipe keeps 1,650 trucks off our roads each day. Horizontal drilling and hydraulic fracturing in Texas has changed the energy industry, and the world, forever. There were 15 oil fields and 8 gas fields discovered in Texas in 2016, including the largest oil and gas deposit in U.S. history – 20 billion barrels of oil and 16 trillion cubic feet of natural gas worth an estimated $900 billion in the Permian Basin. America is now an energy exporter and uses Texas ports to ship crude oil and natural gas to countries all over the world – the first shipment of crude oil left a Texas port January, 2016. Page 1 of 2 2-27-17 To help process all this oil and gas, the biggest oil refinery in the United States since 1977 is being built in Duval County to process 50,000 barrels of crude oil from the Eagle Ford shale. The oil and gas industry in Texas is on the cusp of a major recovery with the Federal Reserve Bank of Dallas concluding that the industry’s outlook improved dramatically at the end of 2016. The oil and gas industry directly employs more than 400,000 people in Texas, with an average annual salary of $124,000. In 2015, oil and gas activity contributed more than $135 billion to the Texas economy, which is more than the entire economic output (Gross State Product) of seventeen other states and the District of Columbia. More than 570,000 Texas families receive annual royalty income of $16.5 billion, which is a little over half of Vermont’s entire economy. For every $1 appropriated to the commission, the industry generates $51.20 in revenue for the state. As a financial planner and an ex-banker planner for about 45 years, if I can get a 50-to-1 return on the dollar, that’s a darn good investment for the tax payers of Texas. Chairman Craddick will get into the details on our budgetary challenges, but I ask that you keep all of this in mind as our agency goes through both the Sunset and Appropriations process this Session. Thank you for your time, please let our office know if you have any questions. Page 2 of 2 .