Operators can often divest older, less profitable wells to avoid Assets Retirement Obligation (AROs).  Since the decommissioning of these wells represents a liability for these companies, transferring these wells and their associated liabilities is beneficial for its financials. To avoid having to incur the decommissioning expense, the new operators of the transferred wells will either keep them marginally producing or file for bankruptcy, in which case the liability is shifted onto the taxpayer.

The RRC should adopt joint liability retroactively to hold the original operators responsible and protect the taxpayer for paying for the well-plugging and site cleanup. Equitably Administer Liability can ensure that each operator would only be liable in portion to its share of the assets it profited from. 

The commission ultimately needs to seek clarity from the federal courts in applying the priority of liabilities in bankruptcy proceedings. Environmental liabilities are supposed to have priority in these proceedings; however, the number of wells being transferred to the RRC suggests this is not being enforced.

Optical Gas Imaging (OGI) cameras

OGI cameras allow inspectors to find gas leaks invisible to the human eye.

Successfully identifying:

• methane venting

• extinguished flares

• other chemical leaks

The cameras can also live-stream this footage to a central data repository could be a huge step forward in establishing certainty and objective standards when finding leaks at oil and gas industry sites.  It is essential leaks are detected and handled quickly.

Natural gas is composed of methane. Advocates of natural gas say it is much cleaner than coal since it only releases half the carbon dioxide when burned. However, left unburned, as with leaky infrastructure, methane is a highly harmful greenhouse gas. It only takes 3% of natural gas (methane) to leak into the atmosphere to make it worse than coal.

DRONES

The RRC should start a program to map methane emissions to supplement the commission’s inspection and enforcement program. The RRC can partner with the NASA Methane Source Finder.

Currently, the RRC has 16 licensed drone pilots. Still, the commission’s “statutory authority is limited to using drones to respond to spills/leaks and emergency situations, and the commission does not have the legal authority to otherwise use drones.”

The RRC will have to train a new workforce, get new vehicles and equipment, and engage in partnerships with other agencies in implementing these changes. 

The RRC also needs to repeal all oil and gas severance tax exemptions and tax incentives since they create perverse incentives.

For example, the state does not charge a severance tax – which is a tax imposed on removing natural resources for gas that is lawfully vented or flared. On the other hand, the state provides a severance tax exemption for the value of previously released gas brought to the market. If an operator vents flare gas, the state will not charge a severance tax, even though the operator is extracting natural resources. When the operator eventually brings gas to the market, they will receive a severance tax exemption even though they never paid one in the first place. 

Directly against the RRC mission of protecting the residents of Texas, the state also has a low-producing oil lease tax incentive, a low-producing gas well tax incentive, and a tax credit for enhanced efficiency equipment. These incentives all pay operators for delaying plugging and abandonment of their wells. 

The RRC needs to grant access to its records for a third-party audit to understand the total spread of bonding and liabilities. Additionally, the RRC should issue a Decommissioning Costs Reporting Rule to inform bonding and trust requirements by including all decommissioning data into a public database. This will help cost calculation for plugging inactive wells.