More than 9,000 new oil and gas wells have been drilled across Texas so far this year. The breakneck pace of the state’s burgeoning energy sector is keeping regulators at the Railroad Commission of Texas busy. Too busy, in fact, to inspect most of those wells to ensure they were drilled safely and securely, according to a new report from the environmental advocacy group Earthworks.
“Several state oil and gas agencies suggest that wells be inspected at least once during the drilling stage, and that active wells be inspected at least once per year,” according to the report "Breaking All the Rules: The Crisis in Oil and Gas Regulatory Enforcement."
“Texas is nowhere near that bar.”
Released Tuesday, the study of oversight in the oil and gas sector examined policies in Texas and five other states over 10 years. The report found that the number of Texas Railroad Commission inspectors is not keeping pace with the number of oil and gas wells being developed amid a hydraulic fracturing boom across South and North Texas.
Between 1993 and 2011, the number of wells producing oil and gas across Texas increased by 24,000. There were 20 fewer inspectors on the job last year than in 1993. The current 97 full-time inspectors are overwhelmed by their task of monitoring more than 270,000 active wells, according to the report. Each inspector is responsible for more than 2,700 wells — up from 2,000 in 1993. On average, each inspector made about 1,184 inspections in 2011 and that is with the help of other Railroad Commission staff performing inspections part-time. (While they don't make public which wells they inspect, the RRC does report the number of leases, which may contain a number of wells, that were inspected per year.)
That is what we do know. The Railroad Commission does not maintain a database of inspections that is accessible to the public. There is little way of knowing how many well sites have not been inspected.
When the Railroad Commission does report a violation, it is rarely acted upon, according to the study. So far this year, only 2 percent of violations were referred to the Railroad Commission’s enforcement staff. Whether regulators are able to keep oil and gas companies in line is debatable.
"Penalties are so weak that it is cheaper for violators to pay the penalty than comply with the law," the report says.
The average penalty this year was about $1,000.
"This is the biggest loophole the oil and gas industry has," said Calvin Tillman, the former mayor of Dish, Texas, who participated in the study. "The industry is saying that the state regulatory agencies are doing a fine job overseeing this industry. After reading this report, it's pretty clear why they are saying that."
Earthworks attorney Bruce Baizel said states should acknowledge the challenges they are facing in regulating the sprawling oil and gas industry. "The bottom line is, states shouldn't permit more than they could inspect," Baizel said.
While the report calls for state legislators to clarify rules for oil and gas drilling and stiffen the penalties for those who break them, it also encourages more citizen participation.
"States are not doing a good job. They're not enforcing their regulations," said Alan Septoff, research director for Earthworks. "More public involvement in enforcement can only be a good thing."
The report calls for greater transparency from regulators. After a scathing report from the Sunset Advisory Commission in 2011, the Railroad Commission pledged to make more data about oil and gas oversight available online. Yet with a little more public data, the industry is still not exactly transparent. "It's very opaque," said Baizel. "States vary quite a bit in terms of the transparency of the data."
Making more information accessible -- whether it is collected by regulators or concerned citizens living next to an oil rig -- could curb recklessness on the part of oil and gas developers.
"The more people know about what they do," Baizel said, "the harder it will be for them to do it."
The Railroad Commission supplied the Current a prepared response to Earthworks' report, which reads as follows:
For almost 100 years, the Railroad Commission of Texas has been effectively regulating the oil and gas industry and protecting our state’s environment and the public. In Fiscal Year 2012, Commission oil and gas inspectors conducted 118,484 lease inspections (the Commission inspects by lease not by well) and identified 55,960 alleged violations. Faced with a shut down of an oil, gas or injection well and/or financial penalties, the overwhelming majority of operators bring their leases into compliance.
If operators do not come into compliance with Commission rules, one of the most effective enforcement tools used by Commission staff are severances, which shut down a well operator’s ability to do business. Along with bringing operators into compliance, severances avoid the delay and cost of enforcement hearings for administrative penalties. Commission staff issued 24,022 severance notices in Fiscal Year 2012.
For those operators who did not bring their leases into compliance with Commission rules, the Commission assessed $1,965,019 million in enforcement penalties in FY 2012. The maximum penalty for oil and gas violations allowed by Texas law is $10,000 per day per violation.
The Commission also added 13 new oil and gas field inspector positions in Fiscal Year 2012 and has a total of 153* oil and gas field inspector positions.
Additionally in response to Sunset recommendations, the Commission adopted on Aug. 28, 2012, new standard penalty guidelines which established higher penalties for violating oil and gas rules, and set penalty enhancements for repeat violators.
Commission Chairman Barry Smitherman said, “Enforcement has always been a high priority of mine as reflected by my record at the Public Utility Commission and the Harris County District Attorney’s Office.”
Regarding the differing figures, Earthworks notes:
A January 2012 press release from the Railroad Commission said that “As a result of an increased appropriation from the 82nd Legislature, the Commission increased the number of oil and gas inspectors from 88 to 153.” (Source:Railroad Commission of Texas. Jan. 18, 2012. "2011: Year of Railroad Commission Accomplishments." News Release.)
An email from RRC clarified that “We. . .provided for an additional 21+ full time inspector positions in the past year. . .In Feb 2012 we averaged 127 filled positions, due to retirement and resignations, but we are trying to get back to our full compliment, plus the additional inspectors.” And that the RRC has “97 Full-time inspectors” but that lead techs, state pluggers, and cleanup coordinators “also spend a relatively large percentage of their time in the field.” When the latter positions are added in, there are 153 employees who carry out some inspection duties. (Source: Email from Leslie Savage, Railroad Commission of Texas to Bruce Baizel, Earthworks. April 10, 2012.)