State Rep.: Texas oil, gas industry ‘under fire’
State Rep. Jim Keffer, R-Eastland, addressed a range of issues regarding energy production – air quality, pipelines and eminent domain, an expected deficit in 2011 – at a Fort Worth oil and gas seminar last week, but throughout the conversation he often returned to the subject of tension between residents and industry.
“The oil and gas industry, and the way they have done their business historically in our state and successfully, is under fire,” Keffer said. “It’s not totally anybody’s fault, it’s just the way things are.”
Keffer is the current chair of the House Committee on Energy Resources, in the Texas House of Representatives. He was the keynote speaker at law firm K&L Gates’ fifth annual Fort Worth Oil & Gas Seminar, hosted in Downtown on Nov. 11.
Much of that angst, concern and “gnashing of teeth,” he said, comes from the fact that Texas is becoming home to more than 1,000 people per day who come from other states and countries and move along the Interstate 35 corridor.
“They don’t know the traditions, they don’t know that the oil and gas industry has served Texas well,” said Keffer, adding without the state’s rainy day fund, supported primarily by oil and gas severance taxes, an economically bad situation could be worse. “They don’t understand that, and they
really don’t care.”
The oil and gas industry has become the bad guy in the most liberal districts as well as the most conservative districts, as well as in traditionally energy industry-friendly cities such as Odessa and Midland, Keffer said. Despite the amount of money spent on public relations, the oil and gas industry has missed the boat, and national focus continues to increase.
Communication, he stressed, will help alleviate the strain. For example, when it comes to mineral rights’ supersession of surface rights, “Just going in there and telling them, ‘That’s the way it is, take it or leave it,’ isn’t going to work,” Keffer said.
The next legislative session, the 82nd in 2011, will include plenty of issues related to the energy industry that will need to be resolved, he said, including the deficit, which likely will be resolved, in part, by the rainy day fund; the “sunset reviews” of the Railroad Commission of Texas, the Texas Commission on Environmental Quality and the Texas Department of Transportation; as well as topics unaddressed in the 81st Legislature, such as pipeline right-of-ways.
“It will be the session from hell,” Keffer said simply.
Other topics addressed
K&L Gates attorneys from the firm’s Fort Worth and Dallas offices paired the oil and gas industry with matters related to new forms of media that have become prevalent in business over the past decade.
New forms of communication have facilitated rapid business discussions between parties, but they also can lead to unintended consequences for the unaware. Spurred by the federal government’s 1999 push to develop the Uniform Electronic Transactions Act, the Texas Business and Commerce Code addressed contractual agreements as they relate to various forms of communication, such as e-mail and instant messaging. Per the code’s chapter 322, e-mails can be considered contractual agreements if certain aspects are met.
This impacts the oil and gas industry because seemingly simple conversations can be considered just as valid as a contractual agreement printed on paper.
For example, a positive response to an e-mail request for a partner in a $5 million drilling program could hold up in court as a binding agreement if the former included a typed “signature” in his or her e-mail, said Mitchell Murphy, a Fort Worth associate in the commercial litigation practice.
“We’ve seen a lot of cases where surface damages are negotiated by contractors or lower-level land department employees by e-mail – floating around numbers,” Murphy said. For example, a contractor offers a lessee $12,000 for a release, the lessee counters with $14,000 and both parties agree. “Do[es the lessee] have a binding contract? Under the UETA if they have a disclaimer, more than likely, yes. At least they’ve got a very good argument that they’ve got one.
