In response to the statewide power outages during Winter Storm Uri earlier this year, which left millions of Texans without power and heat during a record freeze, the Texas Legislature passed SB 3 and HB 3648 to address the failure of the state’s natural gas supply to the power grid. The laws direct the Texas Railroad Commission (“RRC”) and the Public Utility Commission of Texas (“PUC”) to work together “to adopt rules to establish a process to designate certain natural gas facilities and entities associated with providing natural gas [in Texas] as critical customers critical gas suppliers during energy emergencies.” On September 14, 2021, the RRC proposed a new rule, 16 TAC Section 3.65, which designates critical infrastructure related to the provision of natural gas and requires operators of critical facilities to provide information to the PUC so that electricity providers have the necessary information to ensure that critical customers continue to receive power during an emergency. The rule does not prioritize between critical facilities – that power lies with electricity providers. Under the proposed rule, all gas supply facilities are designated as critical customers, including producing gas wells, gas processing plants, pipelines and pipeline facilities, gas transportation and storage facilities, and saltwater disposal facilities and pipelines:
The [RRC] chooses to include these facility types, located up and down the entire natural gas supply chain, because the statistics from Winter Storm Uri reveal that during the storm, every molecule of natural gas was important. Each piece of the supply chain included [in this rule] contributes to the delivery of gas downstream. If one piece of the supply chain cannot operate, then the gas cannot be delivered for electric generation or other important uses. Further, daily gas production alone may not be adequate for peak demand during a weather emergency, which makes gas storage an important source of natural gas.
Under the proposed rule, critical facility operators must file submit an acknowledgement of the facility’s critical designation on a bi-annual basis, which must identify all critical facilities and any other facilities necessary for the operation of a critical customer, unless the facility’s operator asserts that the facility is not prepared to operate during a weather emergency. Operators who fail to comply with the rule’s acknowledgement requirements may be subject to monetary penalties. The RRC estimates that 6,200 operators may be covered by the proposed rule. The RRC will accept public comment on the proposed rule through November 1, 2021.
Kuiper Law Firm, PLLC specializes in oil and gas issues and will continue to monitor legislation and provide updates related to Senate Bill 3, House Bill 3648, and 16 TAC Section 3.65; if you have any questions about the information in this article, or how it applies to you and your operations, do not hesitate to contact us.
