Texas Energy Day!
Today is Texas Energy Day in Austin! This is the day where hundreds of energy professionals come to the Capitol to have meetings with elected officials. The purpose is to educate members on the positive impact of the oil and gas industry. I was excited to participate in the first Texas Energy Day last legislative session, and I am proud to participate again this year.
You may think this is Texas, and our senators and representatives should know how important the energy industry is here. We are here to remind them. For example, the oil and natural gas industry paid more than $14 billion in state and local taxes and state royalties in fiscal year 2018, a 27% increase over 2017. This revenue pays for our schools – our local school districts as well as our state universities. The revenue also funds our roads and infrastructure and, in one way or another, touches almost every aspect of state government.
With Texas’ new production, billions of dollars in investment are pouring into the state. As oil and natural gas shale production has increased, so has Texas manufacturing. Between 2009 and 2018, Texas manufacturing has increased over 50 percent. This new production of shale natural gas has reduced costs of domestic chemical companies by 8 percent. What does that look like on a regional level? Take the Port of Corpus Christi as an example: Over $30 billion of capital is being invested in the region, with $28 billion of that in San Patricio County alone. This is an exciting time to work in the energy industry.
As industry advocates walk the halls of the Texas Capitol, here are several energy issues that could have a significant impact on the oil and gas industry:
School Financing: Property taxes and school finance will play a major role this Legislative Session. Governor Greg Abbott, Lt. Governor Dan Patrick, and House Speaker Dennis Bonnen have discussed the need to reform the current system. Senators and Representatives alike have heard from constituents, educators, and policy experts on this issue.
Road Funding: Another key issue will be road infrastructure. As the industry continues to grow, we are putting pressure on local highway systems. Last session, the oil and gas industry supported several plans to focus more dollars on this critical infrastructure, with some limited success. Look for road funding to again be a public policy topic that the legislature will debate.
Eminent Domain: The use of eminent domain will be one of the most important issues for the energy industry this session. Before the 2017 session, a group of large landowners formed “Texans for Property Rights” to address several issues they saw as wrong with the current process of utilizing eminent domain. Working with some legislators, they filed a bill that included a long list of perceived grievances. Some of these issues included forcing industry to pay for their attorneys’ fees, venue location, aggressive sale tactics by right of way agents, “low-ball” offers, and the lack of oversight to file a complaint against perceived abuse of the system. The bill failed last session, but another version was filed two weeks ago.
Water: Water is always a major policy debate in Texas. In this Legislative Session, it will be no different. We must watch this carefully, since water impacts our business in several different ways and is vitally important to continue our production and growth. On the produced water side of the policy debate, efforts to look at water recycling will continue. These may include trying to identify and streamline any regulatory or legislative issues. This effort may have new support as induced seismicity continues to be debated and monitored. The industry worked several sessions ago to create and fund the TexNet program, to help understand and better monitor any issues.
Railroad Commission: One of the major obstacles to federal overreach in Texas energy production is a properly funded, fully staffed Railroad Commission. Their budget is an important factor to watch this session. Having worked there, the Legislative Appropriations Request (LAR) is one of the most important documents produced to set the budget. This session the Railroad Commission is requesting 22 new pipeline inspectors and $10 million to advance their IT systems operations. They are not requesting any new fees or taxes.
Building off the strong performance of last session, I know Texas Energy Day will be a success. Communicating effectively with the legislators is key to keeping our industry successful. The energy companies can take nothing for granted, and we must advocate for reasonable energy policy. The oil and gas industry is too important to Texas, the United States, and the world.
By: Chris Hosek
Energy Consultant in Austin Texas