RRC’s Porter lauds Texas upstream performance, knocks Feds


RRC’s Porter lauds Texas upstream performance, knocks Feds

BY KURT ABRAHAM, Executive Editor

SAN ANTONIO -- Presenting a long list of his state’s E&P superlatives, Texas Railroad Commissioner (TRRC) David Porter also took aim at the Obama administration during a lunchtime speech in San Antonio today. Speaking to attendees at the Energy, Air & Water Conference of the Texas Alliance of Energy Producers, the largest producers association in Texas, Porter described how he has presided over, and tended to, the amazing growth of the Eagle Ford shale in South Texas.

“One of the main reasons that I ran for Railroad Commissioner in 2010, was that I felt that many of the original objections to development of the Eagle Ford could have been avoided by more active participation of the Railroad Commission,” said Porter. “So, in the summer of 2011, I formed the Eagle Ford Shale Task Force, and made sure that it wasn’t hindered by (poor) communications. Overall, the common, underlying theme of all the task force discussions was the incredible, rapid growth of the Eagle Ford.”

To bolster his point, Porter noted that just four years ago, in 2009, the TRRC issued only 94 drilling permits for the Eagle Ford. This total ballooned to just over 1,000 a year later. “In 2011,” continued Porter, “we shot up to 3,000 permits, and the total last year was over 4,000. We believe that the 2013 total will be roughly the 2012 figure.” Porter also predicted that Eagle Ford oil production will reach 1.0 MMbpd by the end of 2014. “This compares to just 100 bopd in 2009,” he noted.

The commissioner tackled a number of themes in his remarks, particularly road infrastructure throughout Texas, flaring of natural gas, and water management. “We’ve look at how the heightened activity has created infrastructure challenges for local communities, including the wear-and-tear on roads,” he said. “The result in the legislature this spring was a $100-million appropriation for roads. We’re also looking at ways to divert additional oil and gas tax receipts to paying for road infrastructure.”

Porter said that he knows that some people in Texas oppose the flaring of natural gas that is co-produced with oil in the Eagle Ford and other plays. “However, if you don’t have the pipelines built in these areas to move the gas, you have to do something with it, and that’s where flaring comes in. While the number of flaring permits granted by the TRRC has increased in recent years, it is only paralleling the growth in overall Eagle Ford drilling and production,” continued Porter. “Only one-half of 1% of the total gas produced is flared.”

One thing that the commissioner said that he remains concerned about is water usage by the industry in Texas. “Oil and gas are using only a small percentage of Texas water, but it’s highly visible,” explained Porter. “So, if we can do things to increase the overall supply, it will take the pressure off (companies). That, along with recycling of water, will make a difference.” He pointed out that while 1 to 5 gal of water are used to generate 1 gal of fuel, it takes 500 to 2,000 gal of water to create 1 gal of ethanol. “That’s something that the environmentalists and alternative energy advocates don’t talk about.”

Nevertheless, Porter said that he is “putting my full support behind Proposition 6, to provide for a reliable water supply for Texas.” Proposition 6, which must be approved by voters on the statewide ballot next month, would take $2 billion from the Rainy Day Fund and place it in a separate fund, which would then be loaned out to organizations around the state to fund water projects for the next 50 years. Those organizations would then pay back the loan, with interest, to keep the fund going. The commissioner said that he also is encouraging water recycling by operators, by removing regulatory obstacles, such as eliminating requirements for some types of permits. “One operator in the Permian basin is reporting that it is now using brackish or recycled water for more than 50% of its water needs,” said an enthused Porter.

Porter saved his harshest comments for last, while describing his feelings about the U.S. federal government. “We must continue to fight attempts by the federal government to regulate the oil and gas industry out of business,” he declared, referring to onerous executive orders and/or rulemaking authored by the Environmental Protection Agency, the Department of the Interior, and the Department of Energy. “It is not enough to just call for state primacy. In order to keep the federal government out, we must fight for a fully-funded, fully-staffed Railroad Commission. I pledge all that I can do, to protect the top economic generator in Texas.”

You don’t have to look far to see why this is of paramount importance, said Porter. “Texas produced 2.5 MMbopd last month, the highest monthly average in more than 30 years; and there has been 100% growth in the oil production rate over the last several years. The impact on the state budget has been huge.”

The commissioner pointed out that back in 2011, when the state legislature met previously, “the big story was the state budget deficits. But this year, the state had roughly $100 billion in funds available to spend, a 12.4% increase from the 2011-2013 biennium. And this is all thanks to greater receipts from increased oil and gas production.”

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