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Sunday, August 25, 2002 Finding the right balance Need for production not incompatible with resource preservation By Tony Garza
Some in and out of the industry cynically suggest that production and environmental protection represent a contradiction in terms. You can’t, they argue, encourage domestic production while also protecting our state’s land, air and water. I don’t agree, and I think we’ve proved otherwise. That’s why it’s important to have a regulatory agency that is pro-active and balanced in its policymaking, regulation and enforcement. One way we’ve done that is through our program of financial assurance. The Commission now requires operators to be bonded or to provide cash or letters of credit to assure Texans that sites are cleaned up and our water and rivers protected long after production ceased. Since changes to the financial assurance requirements took effect in March 2002, a number of groups, including regional oil and gas associations, have pressed hard to roll back this long overdue program. Sadly, more Americans than ever hold a negative opinion of the oil and gas industry, and the shortsighted and irresponsible actions of a few seemingly reinforce that perception. Why is financial assurance so critical? The state’s Oil Field Cleanup Fund faces a potential liability of $540 million for abandoned oil field sites and wells and is already stretched too thin for current demands on the fund. A burden of this magnitude cannot and should not be picked up by the taxpayers of Texas. Financial assurance was a key component to the Commission’s Sunset bill passed by the 77th Legislature in 2001. The state clearly had to act to halt the increasing number of unbonded, orphaned oil and gas wells in the state. These wells are draining the state’s Oil Field Cleanup Fund and-in many cases-posed environmental risks. Although critics have been vocal, financial assurance is working. We’re seeing a significant number of operators able to secure the bonds or letters of credit necessary to stay in business. In fact, currently, 95 percent of the oil and 96.2 percent of gas produced in Texas was produced by operators with bonds, cash or letters of credit, and of the 3,586 registered, active operators, some 57 percent have financial assurance — a 40 percent increase from just a year ago. The challenge we face is for the Commission to remain steadfast in its support of programs like financial assurance. We can create an environment where we find the right balance, an environment where production is valued but our resources, including water, are preserved, as well. About Tony Garza: Tony
Garza is Texas’ 41st Railroad Commissioner. Prior to his
election, he was a partner in the Austin office of Bracewell &
Patterson, LLP. Garza also served as Texas’ 99th Secretary
of State and was a Senior Advisor to then-Governor George W. Bush.
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The
oil and gas industry remains an integral part of our state’s
economy. Yet, while we need to encourage energy production, we
would be wise to do so with an eye toward responsible stewardship
of Texas’ other natural resources, particularly water.|
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E.W. Scripps Publications