In Major Upset, Texas Oil Regulator Loses Republican Primary

(Bloomberg) -- A member of the top energy regulator in Texas lost his place on November's ballot to a Republican challenger, a major upset for an incumbent who has attracted criticism for his handling of natural gas flaring and occasionally split with his fellow commissioners.

Ryan Sitton, whose six-year term ends in January, conceded to Jim Wright as the party's nominee for a spot on the Texas Railroad Commission. Despite the name, the powerful agency regulates the state's massive oil fields, including issuing permits for flaring, in which oil producers burn off unwanted natural gas.

“Congratulations to Jim Wright,” Sitton wrote in a tweet late Tuesday night in Texas. “It's been an honor and incredibly rewarding to put my experience to work for Texas.”

Sitton has occasionally broken with the other two Republicans on the commission. Most recently, Sitton independently released a report on gas flaring that both tried to address criticism of the issue while defending the agency's practice of granting every permit that comes its way. He pointed at Iraq and Iran as examples of oil producers that burn off much more of their gas and could more easily cut flaring.

The report was applauded by industry groups but panned by environmental groups and criticized by academics for trying to minimize the problem. Still, an executive at Royal Dutch Shell Plc last month called on regulators to craft better policies to reduce flaring in the Permian.

“The pressure from Texas' major operators must compel some kind of leadership from the RRC,” said Katie Bays, co-founder of Washington-based Sandhill Strategy LLC. “Sitton staked out a role as an opponent of change, even if the industry was calling for it.”

Why Oil Producers Are Lighting the Skies With Flaring: QuickTake

Wright, a rancher and chief executive of an oilfield services company, will face the Democrat challenger for the seat currently held by Sitton, who had also clinched endorsements for the Republican primary from the editorial boards of the Houston Chronicle and the Dallas Morning News.

Wright has said that the Railroad Commission should do a better job of encouraging oil producers to get their gas to market, though he doesn't support actions that would reduce oil output.

“Wright is thoughtful, shares our concerns about flaring and seismicity, and wants to increase transparency at the commission,” the Dallas Morning News' editorial board wrote last month in its endorsement of Sitton. “However, he isn't a viable candidate. He did not complete our Voter Guide questionnaire and his campaign lacks a meaningful website or social media presence.”

Dallas lawyers Chrysta Castañeda and Roberto Alonzo, a former state representative, will compete in a May runoff to challenge Wright.

“Wright's victory adds uncertainty to key Texas issues such as flaring, as he is now the frontrunner for the position,” said Ethan Bellamy, an analyst at Robert W. Baird & Co. who covers oil and gas pipeline operators. “His official positions on his website don't offer much in the way of specific policy, but as an owner of multiple energy service companies he clearly is in a position to understand the commercial impacts of the RRC's decisions.”

To contact the reporter on this story: Rachel Adams-Heard in Houston at radamsheard@bloomberg.net

To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Christine Buurma

©2020 Bloomberg L.P.