October___, 2011

Charles Horton

Executive Director

Texas Board of Professional Geoscientists

P.O. Box 13225

Austin, Texas 78711

Dear Mr. Horton:

On behalf of the Texas Independent Producers and Royalty Owners Association (TIPRO), thank you for the opportunity to comment on the proposed rule changes regarding licensure and regulation of professional geoscientists as published in the September 30, 2011 issue of the Texas Register. TIPRO is a statewide oil and natural gas trade association representing over 2,300 members. TIPRO’s membership consists of small family-owned companies, the largest publicly traded independents, and large and small royalty owner interests and mineral trusts.

After carefully reviewing the proposed rule changes, TIPRO is firmly opposed to their adoption. We strongly encourage the Texas Board of Professional Geoscientists to consider the facts presented in the attached position paper as they deliberate on the proposal.

Again, TIPRO’s membership appreciates the opportunity to comment, and we hope the attached information will serve to aid the board in their final decision on the rule package. If you have questions or need further assistance, please do not hesitate to contact me at (512) 477-4452 or at tcarter@tipro.org.

Sincerely,

Teddy Carter

Director of Public Affairs

TIPRO Geoscientist Certification Position Paper

Background

The Texas Geoscience Practice Act (TGPA) was enacted by the 77^th Texas Legislature in 2001 with the passage of Senate Bill (SB) 405. The TGPA set forth regulation for the public practice of geoscience, established the qualifications for licensed geoscientists, and provided penalties for violation of the Act. The TGPA also specifically and intentionally exempted petroleum geoscientists from certification requirements in Section 1002.252(3) of the Texas Occupations Code. The exemption reads as follows:

The following do not require a license under this chapter:

(3) geoscientific work performed exclusively in exploring for and developing oil, gas, or other energy resources, base metals, or precious or nonprecious minerals, including sand, gravel, or aggregate, if the work is done in and for the benefit of private industry.

Rule Proposal

The proposed rule package being considered by the Texas Board of Professional Geoscientists (TBPG) attempts to carve out certain geoscientific work performed by petroleum geoscientists in the course of oil and gas exploration and development and identify it as “non-exempt” from certification.

Legislative Intent

State agency rules cannot circumvent or trump law. In this case, the intent of the statutory exemption is clear, and the proposed rule package would directly conflict with Texas law by requiring the certification of petroleum geoscientists performing work for which they are currently exempt from certification. Further confirmation of this intent was offered in the testimony of multiple witnesses who testified in favor of the TGPA when it was considered by the 77^th Legislature. Excerpts of this testimony have been transcribed below.

Mark Baker with the Texas Association of Professional Geologists gave the following testimony which stated very clearly to which geoscientists the TGPA is, and is not, intended to apply:

Baker - We have a lot of geologists working in Texas, that find oil and gas and work in the minerals industry and so forth; those people are not going to be regulated (under this bill). They’re still allowed to do what they do, and that’s fine. What we’re talking about are people that set forth standards for building and construction materials, bridges, dams, landfills, people that are involved in environmental cleanups and certify these things.

Mr. Kevin Coleman with the Association of Engineering Geologists, reinforced Mr. Baker’s testimony. Mr. Coleman unequivocally states that only geoscientists whose practice affects the public health and safety are to be regulated under the TGPA. Petroleum geoscientists are to be exempted forever:

Coleman - No, no, we specifically exempted those (petroleum) geologists, and we exempted them twice in the bill, once in the regular exemptions sections and then again in the back where we’ve exempted everybody who doesn’t practice before the public, or practice for the public or perform public practice of geology. And we are only regulating geologists and other geoscientists that will perform practice for the public and affect the public health, safety and welfare, or well-being. All the mining people and the petroleum people are exempted, they will be forever exempted.

In the following excerpt, Senator Troy Fraser expressed concern that the Board of Professional Geoscientists may try to “draw in” petroleum geoscientists to the certification requirements at a later time. His concern includes a statement that any such expansion of the TGPA would require passage of additional legislation. The possibility of widening the TGPA’s scope through a rule change was not discussed or contemplated.

Fraser - …I’ve had expressed concern that once this regulatory body is set up, even though they (petroleum geologists) are exempt initially, that it would just be a change of the legislation to draw them in. That was a concern…

Coleman - There is no need for them ever to be licensed and nobody really wants them to be licensed. For them to be licensed would be for them to cross practice and deal with impact health and safety and most of them just aren’t qualified to do it. They could become qualified by additional education, but we really don’t need petroleum and mining people who are involved in natural resource exploration, evaluation, and removal to get involved in things that they don’t understand.

Mr. Coleman calmed concerns over the TGPA being expanded to apply to petroleum geoscientists by assuring that no “down the road” changes to try to include them would occur. However, it is now ten years since SB 405’s enactment, and the initial concerns expressed by the legislature are proving to be well-founded, as it appears this rule proposal is attempting to do exactly what the bill’s proponents assured would not happen.

Applicability of Certification to Petroleum Geoscientists

Testimony on SB 405 repeatedly expressed that the certification requirements established in the TGPA are an effort to protect public health and safety. This standard does not apply to geoscientists who use science to speculate on the mineral extraction potential of a geologic formation because, in these cases, the extent of potential damage caused by interpretive geologic work that does not produce anticipated results is strictly financial. Petroleum geoscientists do not seek a determination of “protective” or “non-protective”; they are concerned with “productive” or “non-productive”. Put very simply, geoscientists who consistently generate a quality work product are those who will continue to be hired by the oil and natural gas industry.

Damage to Texas

If adopted, the proposed rule change could have a severely negative impact on prospecting and exploration for new hydrocarbon reserves in Texas. The change would result in an inevitable loss of talented petroleum geoscientists that would no longer be able to practice their craft without a license that has no bearing on their applicable skill level. The proposed changes would also negatively impact new technology development in exploratory plays, possibly stunting advancements that could help reduce waste, enhance production, and better protect the environment.

Summary of Position

The Texas Independent Producers and Royalty Owners Association is opposed to any proposed rule changes that would include petroleum geologists or petroleum geoscientists in the certification requirements put forth in the TGPA. The Texas Legislature never intended for the Act to apply to those practicing geoscience in the oil and natural gas industry, and they were assured it never would. Certification of petroleum geoscientists has no bearing on protecting public health and safety, and has the potential to negatively impact technological advances associated with exploratory plays.

Finally, many oil and gas operators develop prospects and solicit partners to share the costs and reduce risks. The inherent risks and interpretive nature of prospect development by geoscientists is well known among operators, and requiring certification will not improve the success rate of petroleum geoscientists, nor will it reduce risk to investors. If an operator feels an added level of comfort is provided by employing a licensed geoscientist, there is no restriction on making that decision. However, hiring a licensed geoscientist to work on an oil and natural gas project should remain an option, not become a mandate.

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