Vol. 6, Issue No. 3

Members,

As the Texas Legislative Session comes to a close, we are thankful for your participation in aiding our advocacy efforts in Austin. Below you will find final updates on the dwindling Texas Session as well as news from New Mexico and D.C. that impact the Permian Basin. In addition to reviewing the Federal Updates included below, I encourage you to register for our upcoming June Membership Luncheon featuring Congressman August Pfluger who will provide additional insight on the 118th US Congressional Session.

PBPA has also been hard at work in Midland organizing efforts amongst the membership to address oilfield theft and electrical needs. To learn more about these important issues impacting everyday operations, proceed to the PBPA in Action section of the newsletter.

In this issue of The Standard, we provide you with updates on our recent advocacy activities, survey opportunities, and information on upcoming PBPA events and other important community events:

Important Updates

• New Mexico Announces New OCD Director
• Texas 88th Session Legislative Report
• Federal Permitting Reform
• PBPA v. DOI Update
• Possible NAAQS Non-Attainment Update
• WOTUS Update
• Oilfield Theft Response
• PBPA + Oncor Meeting Recap
• Closure of the Midkiff & I-20 Overpass
• Membership Survey
• Permian Basin Oil & Gas Compensation Survey
• Q1 New Members
• Q1 Committee Reports

PBPA Events

• June Membership Luncheon
• Sporting Clay Shoot & Oil Patch Pit King Challenge
• Committee Meetings
• 2023 Permian Basin Environmental Regulatory Seminar Recap

Community Events

• Midland College PPDC Training Courses
• RRC Regulatory Conference
• Nikki Haley for President Luncheon
• Additional events can be found on the calendar in the Member-Only Center!

Regards,

Ben Shepperd

PBPA President

State Updates

New Mexico Announces New OCD Director

Before the 2023 New Mexico Legislative Session began, we learned that the New Mexico Oil Conservation Division (OCD) Director Adrienne Sandoval would be leaving the agency and taking a position with the U.S. Environmental Protection Agency’s Region 8 office.

However, this month, OCD announced that acting director, and general counsel for the New Mexico Energy, Minerals, and Natural Resources Department (EMNRD), Dylan Fuge, would become the new full-time Director of the OCD on May 13. Mr. Fuge had been serving as acting OCD director since January and had been serving as general counsel for EMNRD prior to that. As general counsel, Mr. Fuge advised EMNRD’s secretary and divisions in matters related to natural resources and regulatory issues. While he is taking on the title of OCD director, Mr. Fuge will continue to serve as general counsel for EMNRD until that position is filled.

Mr. Fuge previously worked at T-Mobile in permitting efforts and advocacy support for cell site development efforts. Prior to that, he worked as counselor to the Director of the Bureau of Land Management and as Attorney-Advisor in the U.S. Department of the Interior’s (DOI) Office of the Solicitor. He has degrees in geology and studies in the environment from Yale University and earned his law degree and a Masters of Environmental Management from Duke University.

In addition, Farmington resident Brandon Powell will serve as the OCD Deputy Director responsible for the Engineering and Environmental Bureaus.

If you are interested either in helping out or in finding out more information about our New Mexico Legislative efforts, please reach out to Stephen Robertson (stephen@pbpa.info).

Texas 88th Legislative Session Report

Today marks the 136^th day of the 88^th Regular Session, with only 4 days remaining to accomplish the large bulk of the work that includes tax relief, education policy, bills that continue agencies like the Public Utility Commission, a fleet of bills related to electricity needs, and the budget that will fund state agencies and functions over the next two years.

If it sounds like a lot of things are hanging in the balance, it’s because they are. Additionally, a significant number of these pieces of legislation are tangled between disagreements between the House and Senate. The threats of a special session continues to hang high for legislators if they do not address the most pressing issues listed above.

In this session, there were several efforts to address issues important to the industry, including funding the Railroad Commission (RRC) and the Texas Commission on Environmental Quality (TCEQ) to ensure that adequate staffing exists to promptly permit necessary activities. Further, PBPA has recognized the importance of working to decrease seismic activity and worked diligently to ensure that increased funding for TexNet Seismic Response Monitoring at the Bureau of Economic Geology, as well as allowing the Railroad Commission to utilize increased funding to contract for advanced modeling to better analyze seismic data. Better data will allow state agencies to better determine courses of action after events, but more importantly, work to prevent seismic activity.

PBPA also supported efforts to reduce patchwork regulations that may exist across the state. Two include a statewide preemption bill that ensures the state legislature is charged with determining appropriate energy policy for the state and also prohibits local governments from establishing policies that prevent the use of oil and natural gas in appliances and other consumer goods. On this front, PBPA also supported legislation that would prohibit local governments from adopting climate charters or other restrictive policies that sought to limit the use of oil or natural gas products in communities across the state.

While this session has very little time to accomplish a large list of things, PBPA will continue to work around the clock over the next few days to ensure that the Permian Basin continues to serve as the greatest place to produce domestic energy as well as the greatest place to live, work, start a business, and raise a family in the United States.

For more information on Committee Assignments, filed legislation, or other Texas Legislative efforts, please reach out to Michael Lozano (michael@pbpa.info).

Federal Updates

Federal Permitting Reform

Bipartisan activity is leading to some optimism for some type of permitting reform making it out of Congress and onto President Biden’s desk. While Republican permitting proposals focus on expediting oil, gas, coal, and other fossil fuel projects, Democratic plans seek to hasten approvals for clean energy projects and the build-out of high-voltage transmission lines needed to carry the power they produce. There is agreement between the two parties about the need to reduce the overall time it takes projects to clear environmental reviews and other bureaucratic hurdles. In addition, the White House’s proposal seeks to expedite some mining projects through reform of a 150-year-old mining law. Below is a quick summary of the four congressional proposals put forth so far along with links to bill language and other pertinent documents.

Senator Joe Manchin (D-WV), Chairman of Senate Energy Natural Resources (ENR), said that he believes that only entities benefiting from transmission lines should pay for them and that he thinks his recently released bill, which proposes to provide strengthened backstop authority to the Federal Energy Regulatory Commission (FERC) and lets FERC allocate costs, accomplishes that.

Senator Tom Carper (D-DE), Chairman of Senate Environment and Public Works, has also released his long-awaited permitting bill called the Promoting Efficient and Engaged Review Act (PEER). Chairman Carper’s proposal is narrowly targeted to address key reforms that would advance the development of renewable energy sources.

John Barrasso’s (R-WY), of Senate ENR Committee, bill called the Spur Permitting of Underdeveloped Resources (SPUR) Act, covers key reforms in ENR’s jurisdiction, including provisions to increase domestic energy and mineral development, ensure federal lands remain open to productive uses, and streamline permitting of energy infrastructure. For more on the SPUR Act: bill text of the SPUR Act, click here. A section by section of the SPUR Act, click here. For a one-pager on the SPUR Act, click here.

Shelly Moore Capito’s (R-WV), of Senate Environment and Public Works (EPW) Committee, bill called the Revitalizing the Economy by Simplifying Timelines and Assuring Regulatory Transparency (RESTART) Act, covers key reforms in EPW’s jurisdiction, including provisions to streamline the agency review process with enforceable timelines, implement time limits to prevent endless legal challenges, and modernize current laws while maintaining environmental protections. More on the RESTART Act: 

• For the bill text of the RESTART Act, click here.
• For a section-by-section of the RESTART Act, click here.
• For a one-pager on the RESTART Act, click here. 

PBPA v. DOI Update

PBPA filed its claim against the U.S. Department of the Interior and the U.S. Fish and Wildlife Service (Service) nearly two months ago, which means the deadline for the government to file its answer is right around the corner. While the litigation awaits its next step, action seeking the de-listing of the lesser prairie chicken (LPC) continues to take place in Washington, D.C.

At the beginning of May, the U.S. Senate passed a Congressional Review Act resolution, being S.J. Res. 9, 50-48 to overturn the rule by the Service listing the LPC under the Endangered Species Act (ESA). The resolution was brought by Sen. Roger Marshall (R-KS). A similar resolution has now also been voted out of House Natural Resources but is yet to be brought up on the floor. The House effort is being led by Rep. Tracey Mann (R-KS).

PBPA has engaged to provide argument, testimony, and education on both efforts. However, for either resolution to become law, it must not only get passed by both chambers but be signed into law by the president. And, unfortunately, after S.J. Res. 9 was passed out of the Senate, President Biden released a statement that he would veto the effort if it reached his desk.

While we continue to support efforts in Washington, D.C. to overturn the listing of the LPC under the ESA, we still believe that a very valid, if not the best, path forward to supporting state-led conservation efforts for the LPC, and thus a de-listing of the LPC under the ESA, is through our action in the Western District of Texas Federal District Court. As this and any other efforts regarding this matter move forward, we will keep everyone updated.

Possible NAAQS Non-Attainment Update

Through a meeting held this week between our congressional partners, particularly Congressman August Pfluger (R-TX), and representatives from the Region 6 office of the Environmental Protection Agency (EPA), we have learned that it is highly likely, if not a certainty, that EPA will once again pursue the designation of the Permian Basin as being in non-attainment for ground-level ozone under the National Ambient Air Quality Standards (NAAQS). This action will likely occur once Congress takes its summer break. While we are presuming this means in August, it could also be when Congress takes a break around the July 4^th holiday as federal agencies are well known for announcing new regulations on the eve of federal holidays.

We still assert that a non-attainment designation under NAAQS for ground-level ozone in the Permian Basin (EPA has set certain ozone emission levels for major metropolitan areas) as previously proposed by the agency, and likely to be proposed again this summer, is not supported by scientific evidence and would be a significant overreach by the EPA, again leading to higher costs for customers.

Monitors for ground-level ozone are only found in the New Mexico portion of the Permian Basin and, at that, only in three locations. As you all know, the Permian Basin covers 75,000 square miles, making it one of the largest basins in North America. Three monitors in a small portion of that region cannot accurately determine the level of a substance like ground-level ozone for the entire region.

PBPA continues to urge Congress to aggressively monitor EPA’s action and take appropriate steps to block a non-attainment action should the agency move forward in the absence of sufficient monitoring mechanisms. We will continue to work with our partners in D.C. on these efforts and keep you updated.

WOTUS Update

The U.S. Supreme Court has handed down its decision in Sackett v. Environmental Protection Agency, curtailing the Environmental Protection Agency’s (EPA) authority by ruling that the EPA’s definitions for ‘waters of the United States’ under the Clean Water Act (CWA) that resulted in the Sackett’s claim have been insupportably broad. Specifically, the court provides that the CWA does not allow the agency to regulate discharges into wetlands that are not “indistinguishable” from true ‘waters of the United States.” 

While the ruling was 9 – 0, the justices were not in full agreement on the reasonings for the decision. In the majority opinion written by Justice Samuel A. Alito, Jr., the court held, in interpreting what constitutes “wetlands” covered by the CWA, that the CWA only covers wetlands that are “as a practical matter indistinguishable from waters of the United States.” And the opinion gives a two-part test for an agency asserting jurisdiction over possible wetlands, providing that such an agency must:

• First, establish that the adjacent body of water constitutes waters of the United States, (i.e. a relatively permanent body of water connected to traditional interstate navigable waters); and,
• Second, establish that the wetland has a continuous surface connection with that water of the United States, making it difficult to determine where the ‘water’ ends and the ‘wetland’ begins.

Justice Alito’s opinion also specifically states its intent is to attempt to identify with greater clarity what the [Clean Water] Act means by “the waters of the United States.” The attempt to do so declares that “…the Rapanos plurality was correct:

The CWA’s use of “waters” encompasses “only those relatively permanent, standing or continuously flowing bodies of water ‘forming geogphraci[al] features’ that are described in ordinary parlance as ‘streams, oceans, rivers, and lakes…Although we have acknowledged that the CWA extends to more than traditional navigable waters, we have refused to read “navigable” out of the statute, holding that it at least shows that Congress was focused on “its traditional jurisdiction over waters that were or had been navigable in fact or which could reasonably be so made…At a minimum, the use of “navigable” signals that the definition principally refers to bodies of navigable water like rivers, lakes, and oceans.”

While we are still making our way through the 82-page ruling by the court to fully understand its possible impact on oil and gas operations in the Permian Basin, we wanted to at least get everyone this update. It will always be possible for those opposed to oil and gas operations to try and find room to nibble at the edges to undermine opinions like this from the Supreme Court, however, this opinion once again clearly shows that EPA’s attempts to broaden the definition of ‘waters of the United States’ is unfounded and is not supported by Congressional action.

If you are interested in learning more about these efforts please reach out to Stephen Robertson at stephen@pbpa.info.

PBPA in Action

Response to Oilfield Theft

After concern over the uptick in oilfield thefts was voiced by several members, PBPA organized presentations from the Midland County Sheriff's Office (MSCO) and our local FBI office to provide additional insight into law enforcement action. The meeting also served as an opportunity for PBPA members to speak with law enforcement about their experiences and learn how companies can assist in preventing the theft of equipment, vehicles, crude oil, and more.

As oilfield theft has reached an all-time high, PBPA will work to share helpful resources and information with our members that can assist with incident sharing amongst companies. We also plan to raise awareness with appropriate agencies and elected officials in an effort to gain state and federal support for putting theft in the Permian Basin oilfield to an end.

In the meantime, some preventative measures provided by the MCSO that you can take to curb theft include:

• Game Cameras
• Personalizing Equipment
• GPS/Tracking Devices
• Keeping a Detailed Inventory of Equipment/Tools
• Locking Company Vehicles
• Hiring Private Security (if able)
• & If you see something, say something! All information, big or small, can prove helpful in solving open cases.

PBPA + Oncor Meeting Recap 

Today, members of PBPA's Electrical Coalition and Oncor staff met to discuss transmission and distribution issues in the Permian Basin. Our goal is to strengthen communication and collaboration between our members and all those interested parties who want to meet the electrical needs of the Permian Basin, specifically the oil and gas industry.

Moving forward, PBPA will seek to establish regular meetings with Oncor representatives and PBPA members to facilitate an avenue for this communication and collaboration. We know that together, we will have a greater impact on creating change and raising awareness for our region.

Below are some actions you can take if you are interested in contributing to this endeavor.

• Communicate and reinforce the demand in the Permian Basin to ERCOT
• Actively participate in the upcoming rule-making process. Specifically, as it pertains to HB 5066 and SB 1076.
• Join PBPA's Electrical Coalition (open to Wildcat members and higher)

NOTICE: Closure of Midkiff & I-20 Overpass

As many of you have operations that utilize Interstate 20 and the intersecting roadways, we wanted to make you aware that on May 31st, demolition of the existing overpass at Midkiff and Interstate 20 will begin.

Alternative routes for East-to-West traffic:

• Business 20 (Hwy 80) will provide an alternate east-west connection between SH 349 and LP 250 north of I-20
• County Road 140 will provide an alternate east-west connection south of the interstate
• The overpass at CR 1250 and county road extension is expected to open in summer of 2023 providing an additional east-west connection from CR 1250 to LP 250 along Cholla Road

Expected Completion Dates:

• Midkiff Road - early Spring of 2024
• Cotton Flat Road - Spring 2024

Membership News

2023 Permian Basin Oil & Gas Compensation Survey

Whitney Smith Company is conducting the 7th annual Permian Basin Oil and Gas Compensation Survey. The survey is sponsored by the Permian Basin Petroleum Association in order to bring an industry compensation survey to its members, as well as to nonmembers, who have E & P operations or a decent sampling of the surveyed job positions in the Permian Basin area.

PBPA members receive discounted rates for the survey whether your company participates or only desires the results!

Participating is important for organizations in analyzing pay levels against current market practices. The survey provides comprehensive data for budgeting, setting, and administering competitive pay levels and updating compensation structures. 

The 2023 survey will report annual base salary/hourly rates, annual bonus data, long-term incentives, and total annual compensation for approximately 90 positions. All data will be held in the strictest confidence.

Q1 New Members

Q1 Committee Reports

Reports on the activities of the PBPA's working committees have been added to the Member-Only Center on the website.

If you are a Gusher-level member or higher, you may access these reports for an overview of the important work that has been accomplished by PBPA in the first quarter of 2023. Individual members may reach out to PBPA staff to access the reports

PBPA Events

Join us for our June Membership Luncheon featuring Rep. August Pfluger of U.S. District TX-11! Enjoy lunch at the Petroleum Club of Midland while you hear the latest news about the 118th Congressional Session.

Congressman August Pfluger represents 20 counties in Texas, including Midland, Odessa, San Angelo, Killeen, Brownwood, and Llano. He grew up in San Angelo and served twenty years as a decorated fighter pilot, later as an advisor on the National Security Council, and still serves as a Colonel in the Air Force Reserves. 

In Congress, Rep. Pfluger is the first Member to represent Midland and Odessa on the Energy and Commerce Committee. He also serves on the House Committee on Homeland Security and co-founded the MACH 1 Caucus and the Texas Ag Task Force. 

You will want to ensure you are up to date regarding the important federal legislation that could impact your business. 

Registration and Sponsorships are now available for PBPA'a annual Sporting Clay Shoot & Oil Patch Pit King Challenge!

This annual event takes place at Jake's Clays in Midland, TX, and features a morning sporting clay shoot followed by a delicious BBQ cook-off lunch.

PBPA's Clay Shoot is a great way to meet fellow industry leaders or treat your team to a day of fun and fellowship.

Not a shooter? Show off your skills by entering the Oil Patch Pit King Challenge and serve up your best pit delicacies at the event for a chance to be named this year's Pit King.

For more information on these events, please contact Jamie Ramirez at jamie@pbpa.info or (432) 684-6345.

Committee Meetings

• Regulatory Practices Committee: June 20, 2023

For more information on these or any of our other committees, please contact Stephen Robertson at stephen@pbpa.info or (432) 684-6345.

RECAP: 2023 Permian Basin Regulatory Seminar

Thank you to everyone who attended the 2023 Permian Basin Environmental Regulatory Seminar! We hope you gained new knowledge and insights into the ever-evolving regulatory climate.

Special thanks to all event sponsors and the Midland College PPDC for allowing us to be a part of this great event. Check out more event photos on our social media.

Community Events

PPDC Programs

MC PPDC provides quality training programs designed to keep oil and gas industry professionals current in their areas of expertise by offering the latest industry updates, as well as providing timely and pertinent educational opportunities. Click the link below for upcoming classes being offered by the MC PPDC in the coming months.

Customized Training Available! For more information contact Midland College PPDC at (432) 683-2832 or cepetroleumtraining@midland.edu

Save the Date - RRC Regulatory Conference

The Railroad Commission of Texas (RRC) invites oil & gas and pipeline operators and other industry representatives to attend its annual conference.

Who:     Railroad Commission of Texas

What:    2023 RRC Regulatory Conference

When:   Monday, July 31 - Wednesday, August 2, 2023

Where:  AT&T Hotel and Conference Center in Austin, Texas

What’s New: This year’s conference will feature exhibitors!

Registration will open in early June.

While PBPA does not engage in political activity, we always want to make sure our members are aware of opportunities to get to know candidates or elected officials who could make decisions that impact operations in the Permian Basin. This is not a PBPA event or an endorsement of any candidate or party.