Chairman Christi Craddick Commissioner David Porter Commissioner Ryan Sitton December 2016 Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 11 RRC Mission Our mission is to serve Texas by our stewardship of natural resources and the environment, our concern for personal and community safety, and our support of enhanced development and economic vitality for the benefit of Texans. Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 2 RRC History Established 1891 • Texas’ oldest regulatory agency • almost 100 years regulating oil & gas • Led by 3 statewide elected officials Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 3 RRC Jurisdiction • Oil and natural gas industry • Intrastate pipelines, natural gas and hazardous liquid pipeline industry • Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), and Liquid Natural Gas (LNG) • Natural gas utilities • Coal and uranium surface mining operations Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 4 Permian Basin Located in West Texas and southeastern New Mexico • More than 7,000 RRC fields in 59 counties • Roughly 250 miles wide and 300 miles long • Oil and natural gas production ranging to depths of five miles below the surface • Estimated to contain recoverable oil and natural gas resources exceeding what has been produced over the last 90 years Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 5 6 Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 7 Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 8 Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 9 10 Oil and Gas District Offices Abilene 7B Corpus Christi 4 Houston 3 Kilgore 5 & 6 Midland 8 & 8A Pampa 10 San Angelo 7C San Antonio 1 & 2 Midland District Activity Wichita Falls 9 62.5% of all active rigs in Texas 28% of all active rigs in USA Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 1111 RRC District Offices • Serve as the eyes and ears of RRC regulatory efforts • Contact with complaints • On call 24/7 to respond to emergencies • Ensure oil and gas activities done in accordance with RRC rules & regulations • Jurisdiction over specific counties Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 12 RRC District Office Midland District Office 08 & 08A (432) 684-5581 10 Desta Dr. Midland, TX 79705 • Craig Pearson, Director • [email protected] • Sue Hannaman • [email protected] Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 13 RRC Partnerships • Texas Commission on Environmental Quality • Texas General Land Office • Texas Parks and Wildlife • Texas Department of Public Safety • Texas Dept. of Transportation • Texas Dept. of State Health Services • Office of the Attorney General • Texas Historical Commission Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 14 Pipeline Safety • 439,771 total pipeline miles in Texas • 218,670 miles of pipeline under direct RRC safety oversight • RRC regulates intrastate pipeline in Texas • interstate pipeline regulated by Pipeline Hazardous Materials and Safety Administration (PHMSA) • Oil and Gas Division responds to spills Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 15 Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 1616 RRC Expertise RRC is a global leader in energy regulation • Argentina • Nigeria • Australia • Norway • Brazil • Poland • Canada • South Africa • China • Spain • Iraq • Ukraine • Japan • • Mexico Uruguay OPEC was organized to resemble the Railroad Commission! Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 17 RRC Jurisdiction • Activities associated with oil and gas exploration and production • drilling and production operations at well sites • transportation of crude, natural gas, and produced water by pipeline • oil and gas waste haulers on public roadways • oil and gas waste management facilities • Memorandum of Understanding with TCEQ (Statewide Rule 30) Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 18 RRC Jurisdiction • Water protection, both Ground and Surface • Public safety • Waste prevention Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 19 NOT RRC Jurisdiction • Roads and traffic • Noise, odors, and lighting • Air quality • Mineral interests/leases • Railroads Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 20 Injection/Disposal Wells Injection well: • Produced wastewater returned to oil/gas reservoir for secondary or enhanced oil recovery Disposal well: • Produced wastewater injected into a “non- productive zone” Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 21 Commercial Disposal Wells • Primarily operate to provide disposal services to other operators – includes associated storage and/or receiving facilities • Vast majority are injection wells, not disposal wells – 34,200 currently active* – 26,100 injection (76%) – 8,100 disposal (24%) *As of July 2015 Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 22 Disposal Wells Oct. 2014: Amended disposal well rules to address operations in areas of seismic activity • Applicants must provide seismic data in permitting process • Clarify RRC authority to modify, suspend or terminate a disposal well permit • Ability to require additional information Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 23 Seismicity in Texas, 1975 to Present • Characterized by local clusters (swarms) and diffuse regional distributions • Often located in the proximity of Oil and Gas activities • Mechanisms for triggering poorly constrained • Public response varies according to population density • Texas is taking a leading role in promoting improved monitoring capability, regulatory response and industry cooperation Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 24 Recent Uptick of Seismicity in Texas Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 25 Texas Seismicity Is NOT Comparable to Oklahoma Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 26 But Texas’ Response Is World Class • RRC in 2014 amended rules to: – Require operators to review USGS Earthquake catalog for historic events within 100 square miles of proposed disposal well sites – Clarify authority of RRC to suspend, modify or terminate a disposal well permit if it is suspected that a well might be associated with an earthquake event • Texas Legislature in 2015 funded: – TexNet Seismic Network – Bureau of Economic Geology directed Research Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 27 TexNet Seismic Network House Bill 2, Texas Legislature, 84th legislative session, – Appropriated $4.47 million to UT for: • the purchase and deployment of seismic equipment • maintenance of seismic networks and • modeling of reservoir behavior for systems of wells in the vicinity of faults – Created Technical Advisory Committee • Governor appointed 9 person Technical Advisory Committee to the Bureau of Economic Geology at The University of Texas at Austin • The Committee advises the Bureau of Economic Geology on the use of the funding for: – the TexNet Seismic Network – collaborative research relationships with other universities in Texas – the preparation of a status report to the governor and Legislature Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 28 TexNet Portable Station Deployment • In addition to TexNet Permanent Stations, Portable Stations will be deployed to: – Study specific areas of heightened earthquake activity 1) DFW Metroplex 2) Cogdell Field Swarms 3) Eagle Ford/Fashing 4) Permian Basin, Central Basin Platform/Delaware Basin transition – Be available for rapid deployment to any new or renewed swarms and/or large magnitude events Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide) 29 Three technical research areas funded by the State of Texas 1. TexNet (data) and Seismology • Texas Seismicity Studies (Walter and Frohlich, UTIG) – Historical and Regional Texas Seismicity (Frohlich, UTIG) – Instrumental Seismicity (Savvaidis, BEG) – Texas Panhandle Seismicity (Walter, UTIG) – West Texas Seismicity (Walter, UTIG) – East Texas Seismicity (Walter, UTIG) – Crustal Seismic Velocity Models (Borgfeldt and Walter, UTIG) • Fort Worth Basin Earthquake Characterization (DeShon, SMU) – Azle – Irving – Venus 2. Geologic and Hydrologic Description • Fluid-Budget Protocols, Data, and Analysis (Nicot, BEG) – Fluid-Budget Protocols, Data, and Analysis (Lemons, BEG) – Injection and Production Fluids in the Fort Worth Basin Area (Lemons, BEG) • Faults and Geomodels (Hennings, BEG) – Fort Worth Basin Geomodel (Hennings and Dommisse, BEG) – Llano Fault Zone Characterization (Hennings and Osmond, BEG) 3. Geomechanics and Reservoir Modeling • Geomechanics of Basement Fault Reactivation (Eichhubl, BEG) • Pore-Pressure Analysis of Fort Worth Basin and Fault Rupture Modeling (Olson, UT-PGE) • Theoretical Analysis of Controls on Size of Earthquakes Induced by Fluid Injection (Olson, UT- PGE) • Coupled Fluid Flow and Geomechanical