The Texan Podcast - Interview: Railroad Commissioner Christi Craddick on Texas' Oil Industry, Her Future in Office

Episode Date: September 23, 2024

Railroad Commissioner Christi Craddick sat down with The Texan’s Senior Reporter Brad Johnson to discuss how her office fights to regulate the oil and gas industry while keeping endangered species safe. “When you look at us we regulate oil and gas... we also do pipelines and pipeline safety in the state. We have about 480,000 miles of interstate and intrastate pine in the state, which is to the moon and back,” Craddick said when taking a look at a portion of the work she oversees. The railroad commissioner also has a responsibility to the environment. “The kicker is this one. We now have to get US fish and wildlife to sign off on all these sights too. And it isn't just endangered species, or potentials, or animals, but it could be grass, or plants, or other things,” she explained. Be sure to subscribe to The Texan for complete access to all of our content on state political news: https://thetexan.news/subscribe/Cozen O’Connor Public Strategies - The Beltway BriefingListen for of-the-moment insider insights, framed by the rapidly changing social and...Listen on: Apple Podcasts   Spotify

Hi everybody, this is Brad Johnson, Senior Reporter here at the Texan. Today I'm joined by Railroad Commission Chairwoman Christy Craddock. Chairwoman, welcome. Thanks for having me. We appreciate you coming. You're on the ballot this year, a six-year term, right? That's right. Last time you were on the ballot was 2018.

Quite a difference, but maybe not that much from last cycle to this one. You know, the high profile nature of it, I should say. I would say it's been, it's a different cycle. One, nobody else is on the ballot but me statewide. So that makes it different. Yes, I know we've got Trump. Sorry, I meant 2018. No, I know for this cycle, this cycle is where it's different. Last cycle in 2018, everybody was on the ballot statewide. So the governor was on the ballot and Lieutenant Governor. Ted Cruz and I have the same six-year term. So we're both on the ballot.

And last time in 2018, we still had straight ticket voting. So this is my first time to be on the ballot without straight ticket voting. So people have to go look for you and remember to vote Republican and not just me, but all the way down. Right. So but I think issues are different. You know, we've got this president. We have a worse president from where we were in 2018. 2018, we had Trump. We're back to having a I don't know who's running the country, but we've got a Biden slash Harris presidency that, and being on a presidential cycle ballot is really tough. A lot more people vote. A lot less people seem to be engaged this cycle, which is a little concerning. They don't know what we do.

So it's a different cycle and a lot more people live in this state. I think that's a big piece of it too. That straight ticket voting point is actually really interesting. Going into 2020, Republicans were very concerned about how that would turn out, particularly compared with the 18 cycle. It really didn't seem to change that much. I don't think it changed too much, but you never know. It used to be easy. It was an easy message to just go push the red button and vote Republican.

And now you've got to spend more money and more time really going and communicating more with your donors, with your voters, with everybody that you want to get engaged because they can't just push Republicans. So I think it's a little bit more interesting. But like I said, you've got more people who always turn out in the presidential cycle. So we'll have people that we've never heard of. And we saw that even in the primary that were what, 30% of the people who voted in the Republican primary, which I had four other people against me and we got out without a runoff. So that was a good night, but I should say good day because Harris County never could get their vote counted. But, you know, I think you've got to communicate a lot more with your voters you don't know, and 30% of them were new even in the primary cycle. So we anticipate we'll have a lot

of new people come out and vote. In 2018, there was a lot of Democratic enthusiasm driven mainly by Beto at the top of the ticket. You know, it's not the same kind of enthusiasm, but we are seeing an enthusiasm bump across the country for Vice President Harris. Do you think that will last? Is it going to trickle down ballot, you think? You know, being number four on the ballot, you get about 15% of the people drop off from being the presidential race to you, to me, and I should say to where I am.

So president, and then you've got the Cruz race. You've got your congressperson and then me. That's what your ballot looks like at the top. And then the judges are below me, which are, frankly, as important as I am. Not more important, but as important. So you usually see historically about a 15% drop off. So people have got to know what the Rural Commission does. So thanks for, we're going to talk about that in a minute so people know. But I think you've got people who will get out and vote, obviously for president, because they always do. I'm glad Senator Cruz is doing more than he did six years ago,

because it drug the whole ballot down. In fact, frankly, I beat Ted Cruz last cycle. We don't know that that'll happen again this cycle, but I had better voter turnout. So, you know, I think you've still got challenges in the Republican Party about people and women voting. Are moderates going to make sure they vote or are they not enthused about either side? And so those are some of the people we're trying to target to make sure they show up to vote. So you mentioned the Railroad Commission itself. Give us a brief explainer,

which I'm sure you have to do on the campaign trail all the time. What the heck is the Railroad Commission? And we like our name, by the way. So the Railroad Commission has nothing to do with railroads, so don't call me about the train tracks. Look, we're the most important state agency. We're one of the oldest state agencies, and we do oil and gas. So I'm going to give you the history lesson of the day. The Railroad Commission used to do railroads, and that's how we got our name when

the state was formed, and we came out, so we're 140 plus years old. In East Texas, when we discovered oil over Kilgore, if you've been over in that area long view that's kind of where the first oil field was in the state and at the time the governor said oh we're shipping barrels like trash can barrels of oil on the railroads y'all know about the railroads we're going to give you oil and gas so we have been regulating oil and gas since the 1920s, 1919, 1920. We're 100 plus years in. We're the oldest oil and gas regulatory body in the world. OPEC was founded because of us.

And so when you look at us, we regulate oil and gas. And so you've got to come get a drilling permit, for instance. We also do pipelines and pipeline safety in the state. We have about 480,000 miles of interstate and intrastate pipe in the state, which is to the moon and back, as we're all looking at space stuff. We also have another about 500,000 miles of gas utility pipes in the state, and about that many more of gathering lines. So a lot of pipe in this state. We also regulate strip mining for coal mining. We have coal mines, people forget, which is really important for our electricity grid on any given day, especially on a hot day

in Texas. We also, and everybody thinks this is new, we do geothermal, we've been doing CO2, and we're now doing hydrogen. So if you want to do energy, you come to the Railwork Commission because we're doing a big chunk of it. And it's important. I don't know how you keep track of all that, but well done. So in this race, you are there were in 2022 or 2020. So maybe you've lucked out there, but you still got to run a race. Right. What are the biggest issues in this race? And so actually, I've got a Democratic Green Party and a Libertarian.

So we've got all four. And look, I think the most important things have to do. And the Democrat Party has said that this think the most important things have to do, and the Democrat Party has said that this is the most important race they're looking at statewide. They said it in March. I did manage to get through a primary without having a runoff, and a lot of the same groups that were running against me in the primary are now showing back up in this general election. They want a Democrat sitting in the seat. And why?

Well, I told you we're the most important. I think we're the most important regulatory body in the country. And because of oil and gas being so important, not just to the state's economy, and that's what the key is, but also to what we're doing nationally and across the world, the Railroad Commission is really important. So I think fair, consistent regulations, and that's what has been what I've focused on since I've been at this agency, and I'm on in 12 years and hopefully going to get another six. So you know what the rules are. People want to develop and create jobs in the state because they know what the rules are and they know what we expect at the Rower Commission. We look at the environmental rules.

We, in fact, are in the middle of another big rulemaking that has to do with environmental cleanup and environmental stuff. That's our job is to make sure we clean up the environment. And look, I think our biggest challenge has been in this administration, the Biden-Harris administration, is to push back on their overregulation. First thing he did when he walked in the door was stop the Keystone XL pipeline. First thing. You know, they're now limiting LNG exports and are going to study where we are.

We are the LNG exporter for the world right now. And if you look at where our liquid natural gas is going for the state and in the country, it's all going, a lot of it's going to Europe. How do you think Europe has been able to get off of Russian natural gas? Because it's coming from the U.S., particularly from, specifically from Texas. So pushing back against the Green New Deal, they managed to pass it anyway. But, and their over-regulation that costs us all jobs is really important. And making sure this agency continues as we're regulating that people have opportunity to innovate and continue to create jobs is important.

So I think consistency and knowledge about the industry is a big piece of what I bring to the table. I grew up in Midland. You know a lot about oil and gas out in Midland, Odessa. The biggest oil field in the world sitting right there. It's lifeblood. It is. And lifeblood for the Texas economy, too. You mentioned the LNG rule.

It's kind of confusing how it was actually set up. And now it seems to kind of be in the rear view. At least the secretary said, you know, by next next year we won't even be talking about this. Do you view that as a campaign bluff by the Democrats, or do you think that's actually something they hope to implement should they retain the White House? Look, I think if they retain the White House, you have a vice president who's saying she's pro-fracking now when she's always been against fracking. Don't you think that's politics? That's politics to me. You've got a secretary who's

actually lost in the court at this point on LNG, but they're saying we're going to limit LNG. Well, that's nice for their voters, but it's not smart for the rest of the country in our world. Do I think that they will limit? Yes, I think they'll limit some things. What we're seeing this administration do, which is worse than Obama, which I never thought I'd be able to say that, but I can, they're using administrative rules and regulations and executive orders to limit oil and gas production. Why is LNG important? Because we have more natural gas in this country, we're number four in the world, Russia needs to be taken off the market, which then puts us number three in the world, right? And we're selling it all over the world to our friends. If they limit

that you can export liquid natural gas out of the state, now the country, then that means you can't produce it because you don't have any place to put it, then that means you can't produce it because you don't have any place to put it because you don't have a market for it. So another way for them to try to limit oil and gas production and development in this country to limit LNG exports. I think they'll do it. I think that this is another way for them to say, oh, it's not clean. When it's the cleanest fossil fuel and one of the cleanest energy sources in the world is LNG.

If you're looking for a political podcast that goes beyond the headlines, check out the Beltway Briefing. I'm Howard Schweitzer, CEO of Cozen O'Connor Public Strategies. Every week on the Beltway Briefing, our team of former Republican and Democratic presidential appointees, Capitol Hill veterans, and political advocates shares behind-the-scenes perspective that cuts through the noise. If you want the inside scoop, subscribe now to the Beltway Briefing here or wherever you get your podcasts. And I think Texas is in the process of building three, maybe four export facilities. We're in the process.

We have three online. There's a fourth one that's being challenged down in Brownsville. And two of those are expanding, actually. So we've got a lot. We weren't the first. I will say Louisiana got to go first, but we're the biggest now. And we've got the most pipes and we've got the infrastructure. We've got the ports. It goes all the way from the Permian Basin or East Texas or even North Texas and goes straight into our ports. This is a smart business play, and you've got each one of these LNG terminals is $10 billion plus of infrastructure and development and dollars they've put in the state with a lot of employees behind it. So between construction and then people to run it, this is real jobs for this state.

And, you know, you mentioned how profitable natural gas is and how well Texas produces it. The other side of that is related to the power grid. It is the largest source of power for the state. The Railroad Commission doesn't oversee the power grid, but they are kind of ancillary to it in terms of the flow of natural gas. And obviously, any time the power grid is mentioned, the 2021 storm is mentioned, and then that caused, you know, a lot of reforms made by the legislature. Can you give us an update on where that stands for the Railroad Commission and what they've been tasked with? You know,

that's a good question, because I don't want to sit in the dark for five more days again, like we did in 2021. So for, you know, a week after that storm, of course, the legislature was in town, which is never a good thing when they're in town for a lot of reasons, but they were here and they wanted answers, which is a good question. We're good questions. And what we went back in before I had to go testify, cause I, we rotate the chairmanship amongst the three of us and I'm always chairman going into session. I think the other two are smart, I've decided. They decided they don't want to go testify, which is fine. But I went to my industry and the oil and gas industry and said, all right, we're not going to go in and point fingers. We're going to go in and say, this is what we're going to do to fix

some problems. And so we suggested some things that are ongoing. Texas Energy Reliability Council, we had what we call an informal group. Now it's a formal group between the oil and gas industry, the Railroad Commission, the PUC, ERCOT, the electric utility people, TIDM, a whole group of people, name the alphabet soup of groups, and then we're all in it. And we now meet regularly, have, and if we're in a storm event, whether it's winter or summer, remember, we all think about it being winter, but we have issues in the summer, whether it's a hurricane or just happen to have a bad, you know, a bad tornado one day. So we meet regularly. We have phone calls regularly and we issue a report yearly about where we are. That group met and we're getting ready to meet again. We meet usually at least three to four times a year. And that's helped with better communication between all sectors,

which I think has been important. We also came in and said, look, we as an agency know where the oil and gas wells are. We also know where the pipelines are because that's our job and we have it on our maps. But what we recognized during winter storm URI is that we as an industry didn't know necessarily where the natural gas power plants were. And they didn't know where we were. And so we suggested we map and put a critical map in place that everybody can see as far as agency, so we know what natural gas pipelines feed a power plant, for instance, where that natural gas is coming from out in the oil fields. So that map is updated several times a year. We are in the process of preparing, obviously, for winter,

because here we come up on winter. And we also put in place that we have, as an agency, we go out and inspect that you have to tell us what your critical assets are in the oil and gas industry, and we go and inspect them for weatherization. And we are in the oil and gas industry and we go and inspect them for weatherization and we are in the process of getting where everybody's filing their their plans for winter right now and then we'll go inspect and make sure those are in place so that I think has resolved several issues better communication first and foremost it's been a big deal and what we've all recognized between the sectors is this we We are in the oil and gas industry. So I said I was from Midland, so out in the Permian Basin.

More and more, they're using electricity out in the oil fields. Nobody in the electric world realized how much there was so much electricity being used. So they hadn't planned for all these oil and gas wells that are coming online. They hadn't planned for all this oil all these oil and gas wells that are coming online they hadn't planned for them needing electricity and they were previously using gas they were using electricity or they were using diesel or they were using so or some of them use solar and wind it depends on what you can find some days out there but they were had those that sector and in fact the entire oil field had been shut off electricity-wise. Well, once you're shut off, you can't just, you know, you freeze up.

You can't just go flip a switch and turn it back on. It takes some time. So we now know which switches they can better switch off if they have to to make sure the oil fields stay on so natural gas can continue to flow into the system. So there's been some real positive outcomes. That doesn't mean the world's perfect. That doesn't mean that natural gas doesn't get shut off from one well. But what we know is this and what industry did without being regulated. They built more storage and figured out how to make sure there's more available to every place in the state if they need it. So that's important to the state, I think, too.

And, you know, you mentioned this summer. We haven't had any problems yet, knock on wood. But it seems to be going pretty well, and we didn't have any problems really in the winter either. You know, last summer was a bit different in terms of... It was hotter. Yeah, a lot hotter and hotter for longer. That's right. In the evening. Is that the main reason you think that we haven't hit any problems yet this summer?

You know, I think that ERCOT's doing a better job working through the grid issues. I think you've got more companies looking at building natural gas power plants, which look, I've been touting them for years. We've got a lot of water we need to use in the state. When you're looking at flow back water and production water from oil and gas wells, you've got areas where we don't have emissions issues at all, and we've got a whole lot of natural gas. In fact, we talk about selling it around the world,

but at times in West Texas, it can go negative. They've got so much natural gas. So I think there's real opportunity in this state. We all voted this last cycle to make sure that there's constitutional amendment, that now we can use some dollars from the Rainy Day Fund. Guess where the Rainy Day Fund comes from? The oil and gas industry. So I think we're going to get some more power plants built in the state. We're a high-growth state. fund guess where the rainy day fund comes from the oil and gas industry so uh so there i think

we're going to get some more power plants built in the state we're a high growth state um no matter whether we have wind and solar and whether you think about it we need it all on any given day because we're a high growth state but i think you've got a lot of opportunity thankfully people recognize to build some more natural gas-powered plants. And that's your base load, and they run all day long no matter what happens. It doesn't matter if it's sunny or it's windy or we've got water issues. They run. And so I think we need some more just because we're in a high-growth state. And it looks like the TEF is providing the signals necessary to build more power plants in a sufficient manner.

So that's, of course, going to take a couple years to get all those online. It just takes a while, right? It does. You know, permitting takes a little bit, getting the pipelines built to it. All of that takes some time, but I think we're heading the right direction. So I'm glad. I think Texas continues to be a leader, and you're going to see us across. Everybody's going to come back and say, oh, y'all did some really smart things.

What do we do differently? We're going to look to Texas. It just takes a little bit to get there. Another big issue that the Railroad Commission is frequently dealing with, you know, orphan wells and capping them. It's gotten some headlines recently. Where in your mind does this issue stand in terms of the Railroad Commission fulfilling its obligation on this issue? You know, orphan wells is an issue and will always be an issue.

We've got today in this state 150,000 inactive wells. That doesn't mean they're orphaned or abandoned. That just means they've been drilled and they're not pumping today. And most of those, 95% of those are owned by companies and managed by companies. But we today as an agency have identified 8,000 orphaned abandoned wells, meaning we don't, they've been drilled the operators disappeared they've gone bankrupt they've died we don't know where they are we can't identify where they are and those wells we go in and and this has been an issue since well let me say before i was born

um but in early 1999 this this industry came into the legislature and said, we would like to set up a program to plug orphaned abandoned wells. We're going to pay a bond, meaning there's an insurance policy every time an operator wants to get a permit or an operator files to be an operator, they have to pay a bond. And it sits, and then if they go out of business, we the state go and collect it. Otherwise, it sits, and they have to have an insurance business, we the state go and collect it. Otherwise, it sits, and they have to have an insurance policy. Before that, which is most of these wells, we didn't have any insurance. So we've got wells that are sitting that have been there for 50 years. We have wells that are sitting that have been there for 20. We as an agency go in and

prioritize those wells, and we inspect them. We do a lot of inspections in the state. In fact, last year we did over 200,000 inspections total. Some of them orphan abandoned wells. It's one piece of our portfolio. But we go prioritize them if they've got an, we believe, an environmental risk. They obviously go to priority one or two, or if there's a leak, they go up. If it's one where one where you know it's on somebody's ranch it's been there a long time they're concerned because their cow could step in the hole but they're not can they're not leaking or having an environmental issue we're going to get to it but we're going to prioritize those and some of these wells are also

glo permitted that they're orphaned abandoned out out in the bay. We've got about 150 wells out in the bay and in the water that we also put in our portfolio that we have to plug as well. So we as an agency have been plugging wells for years. About eight years ago, the legislature came in, Texas legislature came in and said, you know, we want you to plug more than whatever you have extra money for because we use bonding, but mostly it's based on our budget. We're a fee-based agency in our budget. So when oil's booming and we've got a lot of permits, we have a lot of money. When oil's down, like in 1990 and nobody was driving, and, you know, we weren't drilling,

my numbers went down. So we've historically plugged what we can, and like I said, if they have environmental risk, we do it immediately. So they came in the legislature about eight years ago and said, we're going to give you additional money. We want you to plug about 1,000 wells a year, which has been great. We've hit that metric or been over that metric every year for the last eight years. And 1,000 wells is great. We're still at about 8,000 because some come on, some come off, and that's part of the challenge. But what we're doing additional now, look, I wasn't for the II iija dollars i'm still not for them but they're my tax dollars so i might as well figure out how to use them smart and the part of what got put in

the that legislation of the green new deal part was that they would give states who had active well plugging programs which texas leads where everybody's well plugging program is based on what we do we've realized um they'll give you dollars. Like, okay, we'll go take those dollars. It's my tax dollars. I might as well use them for the good of the state. So about a year and a half ago, we took $25 million from the federal government. It was unquote unrestricted, whatever that means. There's never unrestricted from feds, but that's basically what it was. We plugged in additional 730 wells with that. And then about a year ago, we all agreed as states, as well as with Department of Interior. And when California and Texas can agree, you think, oh, we all agreed on something. When we didn't like something, we didn't like it either. But last August, we all agreed on rules for the next tranche of money.

And they were things we didn't love them, but they were things we could live with. And we went, okay, we'd asked originally for $330 million. We're now going to get the next chunks, assuming the program continues in pieces. And so we're the first state to apply. We did. We got our more restricted dollars came down on February 1st. We had $79 million in our bank account. However, and this is where I say federal government. Meanwhile, we're still plugging $1,000 with our state dollars, but this is in addition to um the federal government put some more uh hooks in it as right before they sent the money down that nobody knew and the three that are the most onerous and difficult to comply with one say we come in and we have 10 wells and we do them kind of in groupings right it's silly to go plug just one well if you don't have to you

try to do a big managed contracts that you do them together it costs you less yeah it's a better use of everybody's dollars and so you only have to move a rig once to a site instead of moving here and then i'm going to move it across the state next week that doesn't that doesn't make a lot of sense for our regular plugging program so say we've got 10 wells to a, and we send it up to the federal government, and they say, well, you have to get a Native American tribe to sign off. I don't know who those are, so they're helping us. I don't know if they're helping us or not. Two, you have to get the historical society to sign off of your individual state, which, okay, that's okay.

The Texas group has been very helpful, and we can do that in about two or three days. But the kicker is this one. You now have to, we also have to get U.S. Fish and Wildlife to sign off on all these sites too. And it isn't just endangered species or potentials or animals, but it could be grass or plants or other things. So that's not gone as quickly as we would have wanted. And they have a minimum like 45 days. So to that end, look, we'll get a project that we'll send 10 in, they'll okay seven, we'll say, okay, we're going to go use federal government dollars for seven, and we'll plug the other three. It slowed us down on the federal government program.

We're off 60% where we thought we'd be because it's your federal government at work, not me. But to that end, they can plug the offshore ones because there's no Native American tribe. So we're getting ready to be thoughtful about how we can really maximize the dollars. Like I said, it's your tax dollars, it's mine. We might as well use them to continue to do the right thing by the state. But you have read about a few wells. There are always emergency wells. That's not new for us.

And we're managing through that and working with industry and working with local people to see and landowners to get feedback and to try to remediate those. Our job is to make sure we get stuff cleaned up for the environment too. So that's important to us. Long story, but so you now know a whole lot more about well-being. It's a detailed issue, right? It is. You mentioned the problems you run into with the U.S. Fish and Wildlife Service. Is that significantly different from the administration when Trump was in office, or is that just kind of how these agencies work? I think it's more

onerous than when Trump was around. Look, when you think about, I'm going to go back to Obama, because that's when I came into office. So that seems like a long time ago. But Obama did a lot of the same things that this administration is doing and the fact that they were using rules and regulations to change policy and manipulate what you were able to do with oil and gas, for lack of a better way to put it. So dune sagebrush lizard, as I know you know a lot about, if you're out in West Texas, everybody knows about the dune sagebrush lizard, right?

So that's a good example that Obama, they decided it was going to be endangered. We as a state figured out how to manage it. The Trump administration and their EPA realized that, worked with it, and U.S. Fish worked with us, realized we had a plan. And then this administration hit the door, Biden, and they decided that all plans were off and we're going to come at you again. So now I think they're using administration, this administration's used the administrative and executive orders as a hammer and worse than Obama. The Trump administration, and if something's in play, but methane rules are a good example of the difference between the two administrations. The Trump administration paused

them, frankly. They realized they didn't make sense, that they didn't have science of what they were trying to do behind it, that they hadn't done enough testing, that it just didn't make sense. And that it was, one, the states ought to be able to do it better, which we have, I believe. And two, it was going to penalize a lot of companies for job creation. Then you've got the Biden administration. They put him back in place. So now we rely on the attorney general's office a lot to sue. We're back in the suit.

I don't think we sued maybe once during the entire Trump administration and we won. Now we're suing all the time as a state. So I think that's the difference. It costs you and I money. Yeah. So any other big issues that the Railroad Commission is tackling that we haven't talked about so far? You know, I think our biggest challenge at the agency, and I say this because I grew up in West Texas, again, although I think it's a challenge for everybody, water. Water, you're not in the oil and gas industry, you're in the fluids industry. Because we have a lot of water, not just that this industry uses water, although I think they use about 2% of the state's water. It's not like everybody thinks they use huge amounts.

They do, regionally, use a good amount. But a lot of it's not like everybody thinks they use huge amounts. They do regionally use a good amount, but a lot of it's not fresh water anymore. It's brackish now, which is smart stuff you and I aren't going to drink. And they're recycling a lot more and doing smarter things, but we've got a lot of water that flows back up after you have drilled an oil well. You're breaking up the rock, but it doesn't just flow oil and gas, it flows water too. And so what do you do with all this water? And what are the opportunities that we have instead of just disposing of it back down hole? Can we use it to put on crops, for instance? Do we use it and can we clean it up? Because you can, it's a cost thing. Can you

clean it up for people to drink at some point? So what we're going to do, beneficial use and what we do with all this water, we spend a lot of time on. I think that's a real challenge and a real opportunity for the state. Senator Charles Perry, I think, said it was either 11 or 19 million acre feet of water short for the state's general supply. What are you hearing from the industry on how that projection is affecting their operations? You know, I think that they're thoughtful about it. Like I said, when I got here, so it's almost been 12 years ago, we put recycling rules in place and hired a seismic expert too.

It all goes together. It all works together. But since we've had recycling and redone our recycling rules, it's coming up on 12 years, we've seen a lot more brackish water. When I first got to the agency, it was all fresh water. Now I would say about 90% of what people are using for oil and gas development is brackish water. They're recycling, and then they reuse it and reuse it, and they may add a little fresh or reuse. So I think that that's moved a long way, but we've still got more water than we know what to do with.

So I think that Senator Perry's got some good ideas. We've been participating with both his work group and I testified a couple weeks ago as well. I think he's got some thoughts. It's figuring out how, one, to make it cost effective, and two, to make sure the water gets to move downstream somehow, too. You can't just leave it all in one spot. So we're all looking for smart solutions. In my mind, the faster, the better. Yeah, especially with how fast the state is booming population, not only population, but also economic footprint, you know, so all of that's going to come with not just additional power needs, but water needs. That's right. Infrastructure is really important. Roads, the whole thing. If you talk about infrastructure, this industry needs it all. So, But water is really important. So I think we're all spending a lot of time talking about water.

I think we're moving the ball forward. Like I said, maybe not as fast as we would all like, but we're now recycling a lot more. And I think getting to the beneficial use, there's about three test projects we've permitted out in the Permian Basin specifically to test on beneficial use. And what does that mean? Really today it's about putting it on crops, right? So if you can clean it up and there's, you can clean, you can take, they're taking lithium out of water now, they're taking boron out, they're taking really good things out of water too to resell. So let's take that off. And what do you leave ammonia in? Because that's not a bad thing.

You put it on a crop, that's your fertilizer, right? Or do you take it out because you already have enough fertilizer? I mean, so figuring out what that water looks like, what the cost of it is to clean up, and then how you move it to places where we really need to have it. But like I said, there's three projects we've permitted as an agency specifically. There's more going on than we had to permit. And I think in the next, I hope in the next 18 months, we're going to really start seeing results from that. There are a couple of companies out there just growing alfalfa, which okay, you're going to feed it to cows and then the cows are going to go, you know, let's make sure it's safe as we go forward.

So that's what people are really looking at at this point. Okay. On a broader topic, I'll just throw this out there. What do you see as the direction of the Texas oil and gas industry right now? Is it up and up and up, or are there things we've got to contend with? Is it generally looking good? I think this industry isn't going away in a lifetime, and it really is. You can talk about how much wind and solar we have in the state.

You can talk about that this administration wants to get rid of oil and gas. They now realize they can't do it without oil and gas. Coal is shifting, so that's a different landscape, I think. And I think in the next 10 to 10 years plus, you've got coal plants in this state, powered plants that have announced they're going to close down. Whether they get to or not, if we've built enough, that'll be important. But I think natural gas is not going away. I don't think any of us are not going to be driving our cars in this state either, despite the tailpipe emissions plans from the Biden administration, you know, that one out of or two out of every three cars that are going to be sold in the next 10 years have to be electric to be able to meet their tailpipe emission standards. That's not reality. It might be reality if you live in a city. It might be reality in New York City or if California wants to make it reality.

But if you're driving from Amarillo to Dallas, there's no charging stations. We're not going to sit and wait for 30 minutes for our car to charge. And people aren't going to do that. I think they should have choice about what they do. And personal choice to me is really important. So I don't think a car is going away. But not only that, if you go look at those, the electric cars, the batteries right now are from China. Although, like I said, we're collecting lithium and beginning to do that in the oil fields. But that process takes a little bit.

So I think you'll see the country have a more robust opportunity in the next few years. But most of those cars are plastic. And people forget. You know, so you're not in the oil and gas industry, and that's fine. But how does it affect you? Like I said, the economics affect you because the jobs we've created. But every day you're using, you know, your cell phone that's plastic or you're writing with ink and that's, you know, that's an oil and gas product or you're

cleaning something. All of us are using some kind of cleaning product or medical equipment when you go to your doctor's office or, you know, we all, most of us wear now the athletic clothes and the tennis shoes. That's all oil and gas. You're wearing oil and gas products. So it touches you every single day. It's not going away. What I think's happening and what industry's smart about, I said we're now regulating, quote, the new industry, CO2. That isn't actually new for the state. We've been doing CO2 capture in the state and using those gases and putting back into oil fields to get more oil up. We started doing that in 2001, 2002. We were the first state to do it. Now everybody's going, oh, you're doing that? Yes, we've been doing this. And we regulate it right at this agency.

And we're trying to get primacy from the EPA on CO2 wells so we can, if you want to capture it, great. It's a job opportunity. Come at it. Hydrogen, everybody thinks is the new thing. Okay, that's fine. If you're in the oil and gas industry, you've got hydrogen going. It may not be green hydrogen. It's blue or gray, whatever the colors are.

But we're using some of these chemicals. The oil and gas industry is a chemical industry, right? And what I think everybody thinks geothermal is new. Well, it's not. Our last geothermal permit was probably 30 to 35 years ago at this agency. We're in process, and we have new rules that are getting ready to go out on geothermal and some things just to update, which we'll get comments on. But we want to be at the forefront. And this industry, I think, is the technology, they're moving faster than anybody realizes. You know, for those of you who get mad at your kids for playing video games with

a joystick, this is how we're drilling an oil well now. You're basically, it's all computerized. A lot of what they're doing after they've drilled the well and they're moving the pipe with a joystick. This is how we're drilling stuff. This is the technology today. Wow. That's amazing. So we started this podcast on politics. I want to end it on politics.

So, you know, an important constituency for some candidates, a pivotal constituency is rural Republicans, and they turn out in droves. That's the biggest reason why Abbott won by so much. That's the biggest reason why Senator Ted Cruz avoided an upset six years ago. You live out in Midland. As you're traveling the state, do you think rural Republicans are going to turn out like they have before? I hope so. You know, in 2018, I won. I think all of us won because of rural Republicans, and we continue to. I'm sitting today in Austin, Texas. It's not rural red. So you got to rely on people with, I consider, normal conservative values, and that is rural Republicans. And a few other, a few people in the cities, but it's hard, it's gotten harder in cities.

So I hope the rural Republicans show up. Look, oil and gas is sitting in your communities. We think as an industry, we've seen rural opportunity in South Texas, for instance, because why? There's oil and gas in South Texas. It's a job creator. And the values that people in South Texas have are the same conservative values that people have in West Texas. It's a job creator. And the values that people in South Texas have are the same conservative values that people have in West Texas. It's about their families. It's about the environment. It's

about safety in the off from the border, which they have not had under this administration at all. The values are the same. So I'm hopeful that rural Republicans remember they do swing the votes and that they're important to the state because their values are really what my values are, too. It's going to be interesting to watch down the homestretch. And, Chairwoman, good luck on the campaign trail. Thank you for joining us. Thanks. Thanks for having me. Thank you.