Thu January 31, 2013
Lawmakers Hunt for Cash to Fix Roads Hit by Drilling
An assortment of state lawmakers, county officials and energy industry leaders are working this session to fix the growing number of roads torn up as a result of increased drilling activity.
“Roads that are designed for a 20-year-life are being used in five years,” said DeWitt County Judge Daryl Fowler, who is pressing Austin to come up with a fix this session on behalf of several counties in the Eagle Ford Shale.
Most major players have yet to endorse a proposal to address the wear and tear on roads that weren't meant to handle big trucks regularly hauling heavy equipment or loads of water, oil or gas. But changing how the state’s bulging Rainy Day Fund is filled is drawing interest. The fund receives most of its money from state taxes paid by the energy industry. It is projected to have $11.8 billion by the end of the next biennium, though Gov. Rick Perry has called for tapping several billion dollars from the fund for infrastructure projects and tax relief.
State Rep. Ryan Guillen, D-Rio Grande City, offered the first proposal in this regard — House Bill 563, which would allow certain counties to create shale transportation districts, andHouse Joint Resolution 63, which would amend the state Constitution to change how oil and gas tax revenue is handled.
“What we filed was a shell legislation, and we’re working on the details as we speak,” Guillen said. “We’re trying to take money that the industry pays and focus those resources to address the problem it has created.”
Guillen said the goal is for a portion of the money that oil and gas companies currently pay in severance taxes to go toward rebuilding affected roads and bridges instead of its current destination, the Rainy Day Fund.
“We have to do all we can to make sure that we continue on that path and that things like bad roads don’t hinder production,” Guillen said. “I think the best way to handle that is to take the same dollars that this increase in production has brought to us and use them to continue to make sure that we don’t lose out on production, that we fix the problem it created.”
A recent report from a Texas Department of Transportation task force focused on energy-related issues offered several other proposals for addressing the problem including billing the energy companies directly for repairing the roads they use, taxing oversized tires and increasing fees for oversized trucks or commercial driver’s licenses.
Oil and gas companies have been heavily involved in talks with lawmakers and interest groups about possible solutions. The Texas Oil and Gas Association has not publicly backed a specific solution.
Over the last decade, the shale gas boom has led to a surge in drilling activity in parts of Texas, including the Barnett Shale region around Fort Worth and the larger Eagle Ford Shale in South Texas. Producing a single well typically requires more than a thousand loaded trucks traveling to the well site, often over rural or suburban roads that were never built for such use.
In its budget request to the Legislature this session, TxDOT asked for an additional $1.6 billion related to “support communities impacted by increased energy sector activity.”
The amount falls far short of what TxDOT would need to address the problem fully. The agency recently estimated that the cost of rebuilding infrastructure from the drilling boom would cost $4 billion a year, split evenly between repairs to the state highway system and rebuilding city streets and county roads.
As local officials in the middle of the shale activity have complained about their crumbling roads, energy companies have also expressed frustration at having trouble reaching their well sites. In some cases, companies have written checks to TxDOT to get specific roads fixed.
The problem is likely to spread to other parts of the state as new shale plays become economically viable. The fast-developing Cline Shale in West Texas has been described as “the Eagle Ford on steroids.”
“What we have now will be felt in the Permian Basin and the Cline and the Panhandle in two years,” Fowler said.