Part I.
Railroad Commission of Texas
Chapter 3.
Oil and Gas Division
16 TAC §3.41, §3.42
The Railroad Commission of Texas adopts amendments to §3.41
and §3.42 relating to application for new oil or gas field designation
and/or allowable, and oil discovery allowable, without changes to the proposed
text as published in the October 30, 1998 issue of the
Texas Register
(23 TexReg 11014). The amendments move the bottom-hole
pressure requirement from §3.42 to §3.41, allow alternative methods
of bottom-hole pressure determination, and clarify the requirements and the
person(s) required to comply therewith.
Proposed amendments to §3.41 and §3.42 were originally published
in the May 29, 1998 issue of the
Texas Register
(23 TexReg 5544). The originally proposed amendments were withdrawn, revised,
and reproposed based on comments received to the originally proposed text.
No comments to the reproposed amendments (published October 30, 1998) were
received.
Comments to the originally proposed amendments were received from two associations:
the Texas Oil and Gas Association ("TxOGA") and the Texas Independent Producers
& Royalty Owners Association ("TIPRO"). TxOGA indicated that it supports
the intent of the amendments, but recommended two specific changes to §3.41
as published.
First, TxOGA noted that the preamble to the originally proposed amendments
stated that the amendments exempted certain low volume (15 barrels of oil
per day or less) discovery oil wells from the bottom-hole test requirement.
However, the originally proposed amendments to §3.41(a)(3) provided that
". . . The commission staff may grant an exception to the requirement of reporting
bottom-hole pressure for oil wells that have a potential production test of
15 barrels of oil per day or less."
TxOGA contended that there is a distinct difference between being exempted
from a requirement and having to obtain an exception to the requirement. The
commission agrees, but declines to adopt TxOGA's proposed language for reasons
discussed in response to the TIPRO comments discussed later in this preamble.
Second, TxOGA suggested that the commission make the proposed exemption
more meaningful to both operators and the state by extending it to all wells
with potential production of 50 barrels of oil per day or less. However, the
commission declines to make this suggested change for reasons discussed below
and because it would exempt approximately 40 percent of all new oil discoveries,
and thus eliminate 40 percent of all new oil discovery bottom- hole pressure
data collected by the commission. The commission believes that the importance
of the bottom-hole pressure data collected from wells with potential tests
in the range between 15 and 50 barrels per day, which are relatively good
producers, outweighs the one-time monetary expenses incurred in obtaining
the test data, especially since the adopted amendments allow for additional,
less expensive testing methods.
TIPRO, in its comments to the previously proposed amendments, agreed with
all of the suggested changes except one: TIPRO contended that no oil wells
should be exempted from the bottom- hole pressure test requirements, no matter
how marginal a producer, because such exemption would deny the public information
that may prove valuable in the future in developing the state's remaining
oil resources.
TIPRO further asserted that such bottom-hole pressure data are needed to
identify new field discoveries, and that without the data, operators will
be unaware of the pressure characteristics of reservoirs discovered by low-volume
wells.
Finally, TIPRO suggested that the bottom-hole pressure tests range in costs
from $250 to $600 each. TIPRO therefore believes that a single erroneous decision
based on the lack of bottom-hole pressure information might cost the industry
substantially more than the savings, and thus, it remains in the long-term
interest of the state to continue to require such bottom-hole pressure data.
The commission suggested to TxOGA and TIPRO that they discuss their differing
positions in an attempt to reach a consensus regarding the proposed exemption,
which they did. The two associations now agree that the proposed exemption
to the requirement of reporting bottom-hole pressures for new oilfield discovery
wells with a potential production test of 15 BOPD or less should be deleted
to preserve the historical availability of the information within the public
domain for use by oil operators. The commission agrees that such preservation
of well information is in the public interest and, accordingly, the adopted
amendments delete the exemption for oil wells that have a potential production
test of 15 barrels of oil per day or less.
The amendments move the bottom-hole pressure requirement from §3.42
to §3.41, and permit additional bottom-hole pressure test methods other
than pressure build-up tests. Additionally, some amendments reword existing
subsections without changing any substantive provisions in order to better
clarify the requirements and the person(s) required to comply.
The amendments to §3.41 add revised paragraph (3) to subsection (a)
requiring bottom-hole pressure data for oil wells to be included on the application
for new oil field designation and/or allowable. The bottom-hole pressure test
requirement, currently in §3.42, is being moved to §3.41 to better
facilitate applications for new oil or gas designation and/or allowable. Moving
the bottom-hole test requirement to §3.41, and thus requiring that the
bottom-hole pressure data be included on the application for new oil or gas
field designation and/or allowable, will ensure that bottom-hole pressure
data are available to the commission staff when reviewing new field discovery
applications.
In addition, the amendments to §3.41(a)(3) give operators of discovery
oil wells the option to determine bottom-hole pressures by methods which are
generally less costly than pressure build-up tests.
The remaining amendments to §3.41 renumber paragraphs (3) through
(5) of subsection (a) and reword them, without changing the substantive provisions,
in order to clarify the regulations.
The amendments to §3.42 reword subsection (a), without changing any
substantive provisions, to clarify the rule. In addition, the amendments to
§3.42 delete subsection (c), which contained the subsurface pressure
test requirement, and redesignate §3.42(d) as §3.42(c).
The commission adopts the amendments pursuant to Texas Natural
Resources Code §§81.051, 81.052, 85.042, 85.201, 85.202, 86.041,
and 86.042, which authorize the commission to prevent waste of oil and gas
and to protect correlative rights.
The Texas Natural Resources Code, §§85.053,
et seq
., and 88.051, are affected by the adopted amendments to these
sections.
Issued in Austin, Texas on December 15, 1998.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on December
15, 1998.
TRD-9818376
Mary Ross McDonald
Deputy General Counsel
Railroad Commission of Texas
Effective date: January 4, 1999
Proposal publication date: October 30, 1998
For further information, please call: (512) 463-7008
Subchapter A. Procedural Rules
16 TAC §7.4
The Railroad Commission of Texas adopts amendments to §7.4,
relating to procedure for abandonment or discontinuance of service by gas
utilities, with changes to the proposal published in the September 11, 1998,
issue of the
Texas Register
(23 TexReg 9194).
Section 7.4 sets forth procedures and standards for consideration of an application
to abandon or discontinue service at a city gate or local distribution company,
or to residential and commercial customers.
The amendments enhance and clarify the process by which a gas utility must
file an application for abandonment or permanent discontinuance of service.
The amendments will improve the effectiveness and efficiency of the regulation
of gas utilities by providing more detailed guidance as to the filing requirements
related to an application for abandonment and by setting out specific time
lines within which the commission must act on the application.
The amendments improve the current rule in several ways. First, subsection
(a) establishes specific guidelines for abandonment or permanent discontinuance
of service to city gate or local distribution companies, and subsection (b)
establishes the guidelines for abandonment or permanent discontinuance of
service to residential and commercial customers. The current rule addresses
only abandonment of service at a city gate or to a local distribution company.
Second, the amendments expand the information to be filed with the application
for abandonment. The current rule requires that a gas utility file with its
abandonment application the number of affected customers in each class, the
names and addresses of all affected customers, the specific reasons for the
proposed abandonment, the alternative energy sources available to the affected
customers, and any previous notice provided to the affected customers. In
addition to the information now required to be filed, the amendments require
an application for abandonment of service to a city gate or a local distribution
company to contain a description, age, and condition of the pipeline or plant
proposed for abandonment; the revenue from and cost to continue the existing
service; the cost of the alternative energy sources on an equivalent MMBtu
basis; a statement that the application is subject to commission approval;
and a statement of the right of the city gate or local distribution company
to intervene. For abandonment of residential and commercial customers, the
amendment further requires the cost per customer of each conversion to an
alternative energy source; the terms of any agreements, including qualifying
offers, for the conversion to an alternative energy source; copies of any
consents to abandon from the affected customers; and instead of a statement
of the right to intervene, a statement of the right of the affected customers
to protest the application and the procedure for doing so.
Third, the amendments establish time lines for the commission to act on
abandonment applications. For abandonment of city gate or local distribution
companies, the amendments specify that a formal hearing be held within 60
days after the application is filed if another party participates or intervenes,
or the Director of the Gas Services Division will act on the application administratively
within 45 days if no participation or intervention is granted to other parties.
For abandonment of residential and commercial customers, the amendments specify
that a formal hearing be held within 60 days after the application is filed
if a customer files a protest within 30 days after the application is filed,
or the Director of the Gas Services Division will act on the application administratively
within 45 days if not all customers consent to the abandonment or receive
a qualifying offer, but none file a protest within 30 days after the application
is filed. Also, the Director of the Gas Services Division will act on the
application administratively within 30 days if all customers consent to the
abandonment or receive a qualifying offer, but none file a protest within
15 days after the application is filed. In any case where the Director of
Gas Services denies an application for abandonment, the amendments specify
that the gas utility may request a formal hearing be held within 60 days after
the date the application was denied. The current rule requires a formal hearing
be held if another party intervenes in an application, and allows the application
to be handled administratively if there are no intervenors, but the rule sets
no other time lines to act either formally or administratively.
Fourth, the amendments define a qualifying offer as an offer to convert
all of a residential or commercial customer's gas burning facilities to the
lowest cost available alternative energy source, including a tank filled once
with a liquid alternative energy source. The amendments allow the customer
to elect to receive the cash equivalent of the cost of conversion to the lowest
cost alternative energy source.
Fifth, the amendments require that if any residential or commercial customers
become affected customers as a result of an application to abandon or permanently
discontinue service to a city gate or local distribution company, then the
local distribution company must file an application for abandonment of the
residential and commercial customers.
Sixth, the amendments explicitly delegate authority to the Director of
the Gas Services Division to act administratively on applications to abandon
or permanently discontinue service, subject to the conditions set forth in
the amendments.
Seventh, the amendments clarify the exemption for filing an application
under emergency conditions. The concept of an emergency abandonment under
the existing rule is replaced with the concept that a temporary termination
of service due to a pipeline safety emergency is not to be considered abandonment
of service. If a gas utility determines not to resume service after a pipeline
emergency, the amendments establish a time line for the gas utility to file
an abandonment application 30 days after the temporary termination of service.
Eighth, the amendments explicitly state that the gas utility has the burden
of proof to show that the proposed abandonment is reasonable and necessary
and is not contrary to the public interest. The amendments establish conditions
the commission will consider when evaluating an application, including whether
continued service is no longer economically viable for the gas utility; whether
the potentially abandoned customers have any alternatives and, if so, how
many, and at what cost; whether any customer has made investments in reliance
on continued availability of natural gas, where an alternative energy source
is not viable; whether the gas utility has failed to properly maintain the
facilities proposed for abandonment, rendering them unsalvageable due to neglect;
and any other considerations affecting the potentially abandoned customers.
The commission received one comment on the proposed amendments, filed by
the Association of Texas Intrastate Natural Gas Pipelines (ATIP). ATIP initially
filed a petition for rulemaking to amend §7.4, and worked with commission
staff to develop final proposed amendment language. ATIP supports the amendments
as proposed, but suggested a clarifying change to the wording in subsection
(a)(3). This subsection addresses the instance in which abandonment of service
to a local distribution company (LDC) affects service to the LDC's residential
or commercial customers. ATIP's suggested change is consistent with the intent
of the proposed amendment, does not alter the effect of the subsection, and
provides clearer wording. The suggested change has been incorporated into
the adopted amendments.
The commission adopts the amendments under Texas Utilities Code,
§104.001, which authorizes the commission to determine the classification
of customers and services and to ensure that gas utilities comply with the
obligation of the Code, and §121.151, which authorizes the commission
to establish rules for the control and supervision of gas pipelines in their
relations with the public; and under Texas Government Code, §2001.004,
which requires state agencies to adopt rules of practice stating the nature
and requirements of all available formal and informal procedures.
Texas Utilities Code, §§104.001 and 121.151, and Texas Government
Code, §2001.004, are affected by the amendments.
Issued in Austin, Texas, on December 15, 1998.
§7.4.Procedure for Abandonment or Discontinuance of Service.
(a)
Service to a Local Distribution Company or City Gate Customer.
A gas utility shall obtain written commission approval prior to the abandonment
or permanent discontinuance of service to any local distribution company or
city gate customer that involves the removal or abandonment of facilities
other than a meter.
(1)
Except in pipeline safety emergencies, the gas utility
shall file an application to abandon or permanently discontinue service to
a local distribution company or city gate customer with the Director of the
Gas Services Division at least 60 days prior to the proposed effective date
of the proposed abandonment or permanent discontinuance of service. In addition
to the information required in §1.25 of this title (relating to Form
and Content of Pleadings), the application shall state the following:
(A)
the number of affected customers in each class;
(B)
the names and addresses of the local distribution company
or city gate customer affected;
(C)
the specific reasons for the proposed abandonment or permanent
discontinuance of service;
(D)
a description, age, and condition of the pipeline or plant
that the gas utility proposes to abandon or through which it proposes to permanently
discontinue service;
(E)
the revenue from and cost to continue the existing service
to the affected local distribution company or city gate customers;
(F)
all reasonable alternative energy sources available to
the affected local distribution company or city gate customers, and the cost
of such energy sources on an MMBtu equivalent basis;
(G)
the cost per customer of each conversion to available alternative
energy sources;
(H)
any previous notice provided by the utility to the affected
local distribution company or city gate customer,
(I)
a statement that the application is subject to commission
approval; and
(J)
a statement of the affected local distribution company
or city gate customer's right to intervene in the application.
(2)
The gas utility shall send a copy of the application
to the affected local distribution company or the affected city gate customer
on the same day that the gas utility files the application to abandon or discontinue
service with the Director of the Gas Services Division.
(A)
If a person files a statement of intent to participate
or motion to intervene with the commission within 30 days from the date of
the filing of the application, and party status is thereby subsequently established,
a formal hearing shall be held within 60 days following the date on which
the application is filed.
(B)
If the commission does not receive and grant a timely-filed
statement of intent to participate or intervention pleading, then the Director
of the Gas Services Division shall act administratively on the application
to abandon or permanently discontinue service within 45 days following the
date on which the gas utility filed the application. In the event that the
director denies the application administratively, the gas utility may request
that a formal hearing be held within 60 days following the date on which the
director denies the application. The gas utility shall file any request for
a formal hearing within 30 days of the date the director administratively
denies an application to abandon or permanently discontinue service.
(3)
If, upon the granting of the application to abandon
or permanently discontinue service, the local distribution company would no
longer provide service to any residential or commercial customer because of
such abandonment, then the local distribution company shall file an application
to abandon or permanently discontinue service under subsection (b) of this
section.
(4)
The Director of the Gas Services Division or the director's
delegate shall have the authority to act administratively on abandonment or
permanent discontinuance applications that satisfy the conditions of this
subsection. The term Director of the Gas Services Division when used in this
section shall mean the Director of the Gas Services Division or the director's
delegate.
(5)
Temporary termination of service due to a pipeline
safety emergency shall not be considered to be abandonment or permanent discontinuance
of service under the terms of this section. If the gas utility determines
not to resume service as a result of a pipeline safety emergency, then the
gas utility shall file an application under this section within 30 days of
the temporary termination of service.
(6)
The gas utility shall have the burden of proof to
show that the proposed abandonment or permanent discontinuance of service
is reasonable and necessary and is not contrary to the public interest. The
conditions to be considered when making a determination regarding an application
for abandonment or permanent discontinuance of service shall include:
(A)
whether continued service is no longer economically viable
for the gas utility;
(B)
whether the potentially abandoned customers have any alternatives,
how many, and at what cost;
(C)
whether any customer has made investments or capital expenditures
in reliance on continued availability of natural gas, where use of an alternative
energy source is not viable;
(D)
whether the utility has failed to properly maintain the
facilities proposed for abandonment, rendering them unsalvageable due to neglect;
and
(E)
any other considerations affecting the potentially abandoned
customers.
(b)
Service to Residential and Commercial Customers. A gas
utility shall obtain written commission approval prior to the abandonment
or permanent discontinuance of service to any residential or commercial customer
that involves the removal or abandonment of facilities other than a meter.
This subsection shall not apply to discontinuance of service to residential
or commercial customers for any of the reasons set forth in §7.45 of
this title (relating to Quality of Service).
(1)
Except in pipeline safety emergencies, the gas utility
shall file an application to abandon or permanently discontinue service with
the Director of the Gas Services Division at least 60 days prior to the proposed
effective date of the proposed abandonment or permanent discontinuance of
service to any residential or commercial customer involving the removal or
abandonment of facilities other than a meter. In addition to the information
required in §1.25 of this title (relating to Form and Content of Pleadings),
the application shall state the following:
(A)
the number of directly affected customers in each class
of service;
(B)
the names and addresses of all directly affected customers;
(C)
the specific reasons for the proposed abandonment or permanent
discontinuance of service;
(D)
a description, age, and condition of the pipeline or plant
that the gas utility proposes to abandon or through which it proposes to permanently
discontinue service;
(E)
the revenue from and cost to continue the existing service
to the directly affected customers;
(F)
all reasonable alternative energy sources available to
the directly affected customers, and the cost of such energy sources on an
MMBtu equivalent basis;
(G)
the cost per customer of each conversion to available alternative
energy sources;
(H)
the terqualifying offers, to, directly affected customers
by the gas utility for the conversion of customers' appliances to enable the
use of alternative energy sources;
(I)
copies of any consents to abandonment or permanent discontinuance
obtained by the utility from directly affected customers;
(J)
any previous notice provided by the utility to the directly
affected customer,
(K)
a statement that the application is subject to commission
approval; and
(L)
a statement of the directly affected customer's right to
protest the application and the procedure for filing such a protest.
(2)
The gas utility shall send a copy of the application
to all directly affected customers on the same day that the gas utility files
the application to abandon or permanently discontinue service with the Director
of the Gas Services Division.
(A)
If any of the directly affected customers files a protest
within 30 days following the date on which the application is filed, a formal
hearing shall be held within 60 days following the date on which the application
is filed.
(B)
If all of the directly affected customers have not consented
to the abandonment or permanent discontinuance of service and if the gas utility
has not given all of the directly affected customers a qualifying offer, as
defined in paragraph (3) of this subsection, but none of the directly affected
customers files a protest within 30 days following the date on which the application
is filed, the Director of the Gas Services Division shall act administratively
on the application within 45 days following the date on which the application
is filed. The director may seek additional information from the directly affected
customers to determine whether they have received adequate information regarding
the consequences of the proposed abandonment. In the event that the director
denies the application administratively, the gas utility may request that
a formal hearing be held within 60 days following the date on which the director
denies the application. The gas utility shall file any request for a formal
hearing within 30 days of the date the director administratively denies an
application to abandon or permanently discontinue service.
(C)
The Director of the Gas Services Division shall act administratively
on the application within 30 days following the date on which the gas utility
files the application if either all of the directly affected customers consent
to the abandonment or permanent discontinuance of service and none of the
directly affected customers files a protest within 15 days following the date
on which the gas utility files the application; or the gas utility has given
all of the directly affected customers a qualifying offer, as defined in paragraph
(3) of this subsection and none of the directly affected customers files a
protest within 15 days following the date on which the gas utility files the
application. In the event that the director denies the application administratively,
the gas utility may request that a formal hearing be held within 60 days following
the request for a hearing. The gas utility shall file any request for a formal
hearing within 30 days of the date the director administratively denies an
application to abandon or permanently discontinue service.
(3)
A qualifying offer for the purposes of this section
means an offer to convert all of the residential or commercial customers'
gas burning facilities to the lowest cost available alternative energy source,
including, at a minimum, a single tank of normal size for the customer's premises
filled once with any liquid alternative energy source. At the customer's election,
the qualifying offer shall be the cash equivalent of the cost of conversion
to the lowest cost available alternative energy source.
(4)
The Director of the Gas Services Division or the director's
delegate shall have the authority to act administratively on abandonment or
permanent discontinuance applications that satisfy the conditions of this
subsection. The term Director of the Gas Services Division when used in this
section shall mean the Director of the Gas Services Division or the director's
delegate.
(5)
Temporary termination of service due to a pipeline
safety emergency shall not be considered to be abandonment or permanent discontinuance
of service under the terms of this section. If the gas utility determines
not to resume service as a result of a pipeline safety emergency, then the
gas utility shall file an application under this section within 30 days of
the temporary termination of service.
(6)
The gas utility shall have the burden of proof to
show that the proposed abandonment or permanent discontinuance of service
is reasonable and necessary and is not contrary to the public interest. The
conditions to be considered when making a determination regarding an application
for abandonment or permanent discontinuance of service shall include:
(A)
whether continued service is no longer economically viable
for the gas utility;
(B)
whether the potentially abandoned customers have any alternatives,
how many, and at what cost;
(C)
whether any customer has made investments or capital expenditures
in reliance on continued availability of natural gas, where use of an alternative
energy source is not viable;
(D)
whether the utility has failed to properly maintain the
facilities proposed for abandonment, rendering them unsalvageable due to neglect;
and
(E)
any other considerations affecting the potentially abandoned
customers.
This agency hereby certifies that the adoption
has been reviewed by legal counsel and found to be a valid exercise of the
agency's legal authority.
Filed with the Office of the Secretary of State on December
15, 1998.
TRD-9818375
Mary Ross McDonald
Deputy General Counsel
Railroad Commission of Texas
Effective date: January 4, 1999
Proposal publication date: September 11, 1998
For further information, please call: (512) 463-7008
Subchapter A. General Applicability and Requirements
16 TAC §9.32, §9.34
The Railroad Commission of Texas adopts amendments to §9.32
and §9.34, relating to LP-gas advisory committee and LP-gas (welding)
advisory committee, without changes to the versions published in the November
6, 1998, issue of the
Texas Register
(23 TexReg
11265). Specifically, the Commission amends §9.32(b) and §9.34(b)
to change the date on which each advisory committee is abolished in order
to continue both committees in existence until August 31, 2002. The amendment
in §9.32(a)(4) reflects organizational changes within the Commission.
The Commission received no comments on the proposal.
The amendments are adopted under the Texas Natural Resources
Code, §113.051, which authorizes the Commission to adopt rules relating
to any and all aspects or phases of the LP-gas industry that will protect
or tend to protect the health, welfare, and safety of the general public.
Texas Natural Resources Code, §113.051, is affected by the adopted
amendments.
Issued in Austin, Texas, on December 15, 1998.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on December
16, 1998.
TRD-9818392
Mary Ross McDonald
Deputy General Counsel
Railroad Commission of Texas
Effective date: January 5, 1999
Proposal publication date: November 6, 1998
For further information, please call: (512) 463-7008
Subchapter G. General Applicability and Requirements
16 TAC §13.2001
The Railroad Commission of Texas adopts amendments to §13.2001
relating to the LNG advisory committee without changes to the version published
in the November 6, 1998,
Texas Register
(23
TexReg 11266). Specifically, the Commission amends subsection (b) to extend
the date on which the advisory committee is abolished in order to continue
the committee in existence until August 31, 2002. Also, the amendment in subsection
(a)(4) reflects organizational changes within the Commission.
The Commission received no comments on the proposal.
The amendment is adopted under Texas Natural Resources Code,
§116.012, which authorizes the commission to adopt rules and standards
relating to liquefied natural gas activities to protect the health, welfare,
and safety of the general public.
The Texas Natural Resources Code, §116.012, is affected by the adopted
amendment.
Issued in Austin, Texas, on December 15, 1998.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on December
16, 1998.
TRD-9818391
Mary Ross McDonald
Deputy General Counsel
Railroad Commission of Texas
Effective date: January 5, 1999
Proposal publication date: November 6, 1998
For further information, please call: (512) 463-7008
Chapter 7.
Gas Utilities Division
Chapter 9.
Liquefied Petroleum Gas Division
Chapter 13.
Regulations for Compressed Natural Gas (CNG) and Liquefied Natural Gas (LNG)
Part II.
Public Utility Commission of Texas