Railroad Commission approves well integrity rules

Sanchez Energy's Prost A1H well in Fayette County, in the Eagle Ford Shale. (Sanchez Energy)

The Texas Railroad Commission adopted long-awaited changes to its rules for the construction of oil and gas wells Friday, saying its actions showed the value of allowing the state to regulate the industry.

The changes clarify standards for drilling, casing and cementing of wells and require that the commission be notified of any failed pressure test. The new rules take effect Jan. 1.

The unanimous vote came as legislators consider whether the agency, which regulates oil and gas drilling and production in Texas, should be disbanded after efforts to institute recommendations made by the Sunset Advisory Commission failed to win approval in the House of Representatives.

The proposals approved Friday, amendments to a section of the state’s regulations known as Rule 13, had been under discussion for months.

Commission Chairman Barry Smitherman suggested the effort “illustrates the importance of allowing state regulators, not the federal government, to regulate our booming oil and gas industry.”

The new rules were praised by the Texas Oil & Gas Association, which represents the industry.

“As technology used in oil and natural gas production evolves and improves, the Texas Railroad Commission is wise to examine rules related to well integrity,” Deb Hastings, executive vice president of the association said in a statement. “Through the Railroad Commission’s leadership, Texas is once again setting the national standard in crafting energy policy for the 21st century.”

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Environmentalists have been watching, too.

“I think generally, we’re pleased,” Cyrus Reed, conservation director for the Lone Star chapter of the Sierra Club, said after the approval.

He said he was disappointed that some technical specifications had been changed from the commission’s original proposal but noted that the requirements hadn’t been updated in decades.

“It’s a really important thing,” he said. “They make some important changes.”

The changes to Rule 13 were anxiously awaited by the industry.

They include:

For wells undergoing hydraulic fracturing, operators will be required to pressure test well casings to the maximum pressure expected and to notify the commission of a failed test.

Operations must be suspended if monitoring indicates a potential down-hole casing leak.

  Cementing will be required across and above all zones permitted for injection.  Requirements for well control and blowout preventers were updated.

The proposals had been under discussion even as the agency and its three commissioners were swept up in the political ramifications of its review by legislators under the Sunset process.

The Sunset Advisory Commission regularly reviews state agencies to determine if they are still needed and, if so, what changes might be called for. Recommended changes for the Railroad Commission ranged from the seemingly benign — changing its name to the Texas Energy Resources Commission to better reflect its mission — to a controversial proposal limiting when, and from whom, the three elected commissioners could collect campaign contributions. It also would have required them to resign from the commission before running for another office.

Legislation to update the Railroad Commission failed to pass in both the 2011 session and again this year.

Agencies not approved through the Sunset process could be allowed to die but are generally reauthorized.

As of Friday evening, the commission wasn’t included in a safety-net bill intended to extend it for at least another two years, and Rep. Dennis Bonnen, R-Angleton, sponsor of the House bill that would have overhauled the agency, said he wasn’t inclined to make a motion to add it in a conference committee.

“The agency shouldn’t get to go through Sunset another time,” he said. “If you can’t do it in two times, and the reason is significant lobbying by the agency opposed to doing anything differently, maybe the goal was to have the agency go away.”

A conference committee is also meeting on an ethics bill that includes a “resign to run” provision for railroad commissioners, to prevent them from using their position to build a campaign account for another office. Some observers think passage of that provision might lead lawmakers to revive the agency by including it in the sunset schedule.

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