Legislature Forced To Take Steps To Fix Railroad Commission’s Incompetence

[We've written before on how bad things are over at the Texas Railroad Commission. So have others. As you read this, you might be wondering why you should care about a dispute between an oil company and the Railroad Commission. Read on and you'll see.]

You know things must be getting really bad down at 1701 N. Congress when the Railroad Commission won’t own up to its mistakes to the point that the Legislature has to give those wronged by the commission permission to pursue redress of their grievances in court.

That is exactly what is happening with an Austin-based company called Gulf Exploration (not to be confused with this Gulf).

The long and short of the situation is that Gulf, a privately owned company, bought the rights to some orphaned wells in what is known as the Sherman Field in Texas waters off the shore of Calhoun County. That’s a good thing because it gets the wells back into circulation and generating revenue for the state and saves the state the cost of plugging them.

In the case of Gulf and its four Sherman field wells, however, the Railroad Commission made a very costly screw up.

After Gulf paid a significant sum to acquire the wells–and paid the Railroad Commission its $400,000 deposit to be able to put the wells in production, they went to actually drill on the wells this February only to find out that the Railroad Commission and a private contractor had plugged the well in error. It was a pretty big “oops” on the Railroad Commission’s part: according to the bill analysis for the resolution allowing Gulf to sue the RRC, the Commission actually plugged the well before they accepted the $400,000 deposit to allow Gulf to put the same well they plugged into production. Evidently the left hand and right hands at the Railroad Commission still have no idea what the other is doing.

After Gulf realized the RRC had screwed up, they asked the RRC to fix it. The Commission admitted it plugged the wrong well and asked for a cost estimate to fix it–which could run upwards of $2 million. Then, the RRC decided that the company whose well they plugged was simply out of luck. The RRC said they weren’t going to unplug the well or pay to have the well unplugged.

Bill Rhea, who testified before the Senate Committee about the resolution last week noted that the oil exploration business is risky, but that fact shouldn’t allow the Railroad Commission to shirk its responsibilities:

In our business, we understand risk and we are willing to take it when the balance between risk and reward is understood and quantified.  But we also understand responsibility – if our mistakes spoil the environment, we must clean it up.  What we do not understand is the ability of the Texas Railroad Commission to muster its regulatory and legal firepower to avoid making good on its mistakes.

And frankly, we don’t either. The Commission should own up to this mistake. Although government shouldn’t be beholden to corporations (which often seems the case with the legislature) the state and its agencies shouldn’t use their power and authority to screw a private business when the mistake is that of a state agency.

Too, in this case, we’re talking about a relatively small, privately owned business. The state shouldn’t be screwing small businesses. This isn’t Chevron or BP or a multi-national corporation to whom $2 million is pocket change. And, even if it was, would it be right for the Railroad Commission to deliberately screw them? As much as we may hate to say so, no, it would not be. When business does the wrong thing–when it pollutes or breaks the law–we expect them to do right, pay their fines, clean their mess, and be better corporate citizens.

We should expect the same standard from the Railroad Commission–whether it is an individual who is harmed or a small company drilling in the Gulf of Mexico. The RRC made the mistake, the RRC should fix it (or pay to have it fixed). It shouldn’t take a lawsuit to force a state agency to fix a mistake they admit to making.

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3. Lax Enfocement At The Railroad Commission Should Be No Surprise
4. Dale Henry Endorsed By The Austin Chronicle In Railroad Commission Race
5. Capitol Annex Mentioned In Mark Thompson Ad In Railroad Commission Race