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The Crude Truth Ep. 114 Chris Hosek, Principal – Texas Star Alliance

Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.

Rey Treviño [00:00:00] As we roll into 2025, there’s no stopping what’s going on. And as we know, Texas leads, America follows. We visit with Chris Hosek to see how the 89th legislation here in Texas is going to go in 2025. On this episode of The Crude Truth.

Narrator [00:00:17] In 1901, at Spindle Top Hill near Beaumont, the future of Texas changed dramatically as like a fountain of fortune. Thousands of barrels of oil burst from the earth towards the sky. Soon Detroit would be cranking out Model T’s by the millions, and America was on the move thanks to the black gold being produced in Texas. Now, more than a century later, the vehicles are different, but nothing else has truly changed. Sure, there may be many other alternative energy sources like wind and solar and electric, but let’s be honest, America depends on oil and entrepreneurs. And if the USA is truly going to be independent, it has to know the crude truth.

Narrator [00:01:00] This episode is brought to you by LFS Chemistry. We are committed to being good stewards of the environment, We are providing the tools so you can be too. Nape Expo, Where deals happen. Air Compressor Solutions, When everything is on the line, Air Compressor Solutions is the dependable choice to keep commercial business powered up. Sandstone Group. Exec Crue. Elevate your network. Elevate Your Knowledge. Texas Star Alliance. Pecos Country Operating, Fueling Our Future.

Rey Treviño [00:01:36] Well, thank you, as always, for tuning in to another episode of The Crude Truth. Here we are. It is 2025 and everything is just moving forward as if 2024 hopefully didn’t even happen in some ways. As a lot of my viewers would like to say. President Trump has just been sworn in here. The legislation has just started here. And as you can tell, I’m shooting from our studios here in Austin as I get this all jumbled up. Today, I’m just really excited because 2025 for the oil and gas industry is really going to just ramp up and to really dive in. We got to talk about the state of Texas and what’s going on here, as in my teaser. There’s no doubt about it. The state of Texas, we lead the nation in so many things that what happens here for the next almost six months is really going to dictate how the rest of United States goes. So today, as I mentioned in my teaser, I’ve got another great guest, somebody that is a sponsor of the show. I have to say that out there, somebody is always my guest. Today is Chris Hosek of Texas Star Alliance. Chris,.

Chris Hosek [00:02:41] Rey Thank you for having me.

Rey Treviño [00:02:42] My gosh. Thank you. And that took forever to introduce you. I’m sorry.

Chris Hosek [00:02:45] That’s okay. No,.

Rey Treviño [00:02:46] There’s a lot going on.

Chris Hosek [00:02:48] There is a lot going on. Yeah, it’s January 14th when our legislature is sworn in.

Rey Treviño [00:02:52] Yes.

Chris Hosek [00:02:53] You know, we we go for about 140 days. So when sometime early June, you know, the session is really designed to start slow in the process. So you’ll start you’ll things will move slowly at the beginning and then really ramp up kind of March, April, May. And that’s really the sprint. It’s kind of a very interesting process because in those later months you can be up at the Capitol for 15 to 20 hours a day sitting in hearings listening to your issues and working your bills. So it’s a very interesting process. I encourage your listeners and your viewers to participate in it because, you know, it is it affects them. It impacts their industry and especially the oil and gas industry.

Rey Treviño [00:03:34] And Chris, that’s why I asked you to come on when I called you up and they were like, hey, sessions starting. It’s like Texas Star Alliance is really involved in a positive way in everything that’s going on at session, not just the oil and gas space, but all the parts of it. You know, it really started out kind of a fireworks were there on the first day a little bit. Is that a fair statement?

Chris Hosek [00:03:57] There were. I mean, I think we experienced something that we haven’t experienced in a while. It was a very serious speaker’s race.

Rey Treviño [00:04:03] Yes.

Chris Hosek [00:04:03] And the end result was Speaker Dustin Burrowes. He’s a Republican from Lubbock, is the new speaker of the House. And, you know, he was he was in leadership last time. So it’s a you know, we’re getting ready to work with him again and working all our issues. I, you know, we’ll see a committee assignments probably be appointed here in a month or two or in a month, excuse me. And that’s a very challenging process for 150 members. Both Republicans and Democrats are going to be serving on these committees. And every committee covers every issue in the state. Right. And every member and the 150 members has their issues are specifically care about. So these committee assignments are extremely important to them.

Rey Treviño [00:04:46] Well, you know, when when they’re looking at how they do the committees, let’s talk about that for.

Chris Hosek [00:04:50] Sure.

Rey Treviño [00:04:51] How is it that one group gets A11 deal or another? What kind of committees do we have here?

Chris Hosek [00:04:56] Right. Right. Well, what’s really interesting is I think you hear every speaker talk about what a challenge it is. So you have 150 members. Go to the speaker and talk about their preferences, what they want. So they have a preference and then they have a scenario pick. And depending on how long they they’re here, their seniority rises, right? So that gives a little bit more weight to it. But the speaker also has to balance his picks with rural, urban or suburban and the different parties and different areas of the state. The panhandle represented in this committee is the Gulf Coast on represented on a certain committee. So it’s a very complicated puzzle they have to put together and a task that I would not envy because unfortunately, not everybody’s going to get what they want. So some people, I think, at the end of the process are always a little bit frustrated. But it is a is a jigsaw puzzle that I do not need to put together.

Rey Treviño [00:05:49] It all sounds like in some ways like the Electoral College. So make sure that you’ve got at least a say from every part of the panhandle, East Texas, Gulf Coast, I guess. What then? South Texas and West Texas.

Chris Hosek [00:05:59] Yeah. I mean, we’ve got a big state here. Everybody wants to represent a certain part of the or you know, every speaker wants to have every area covered. So I think it’s you know, it’s a very significant challenge for him.

Rey Treviño [00:06:13] Well, with all these people being represented, what are some of the key issues this this this session that we’re going to be talking about.

Chris Hosek [00:06:19] Right now from an overall perspective in what we heard a lot during the primaries and the general election were an issue of vouchers. I mean, Texas is one state that does not have a voucher system. It’s public education and private school. I was a big fight last session. A bill made it out of the. The Senate and had challenges getting out of the House. A lot of primary campaigns were run on this issue. A lot of in the governor himself invested a lot of capital into it. And the governors candidates he chose won pretty significantly. And so I suspect this is going to be a very key issue. It’s divisive. But I foresee it being one of the priorities, at least in I know in the Senate and the governor in the House is going to take it up and address it.

Rey Treviño [00:07:04] If I may, I want to dive into the vouchers for just a minute, because I don’t understand this one at all. And so you mentioned first of all, you mentioned that he got out of the Senate. Now, does that mean it passed the Senate or the Senate floor for a vote?

Chris Hosek [00:07:18] That’s right. So what it did, is it the bill passed out of the Senate? All right. And it’s got a bill has to pass both chambers and then it goes to the governor’s desk for signature. So that’s that’s the process. A bill can originate in either house. So a House bill can go through the Senate then to the governor or a Senate bill can go through the House to the governor. So that was the process in which it happened last session. So, you know, stay tuned on what that looks like. Those are always long nights when those bills are heard in committee. So I personally don’t represent any education clients on that, so I’m kind of a bystander to it. This was also an issue last session that the governor called special session after special session. And so you may remember the legislature was here until mid-summer and throughout the summer working on this issue. And it’s it was unable to pass then. So we’ll see what it looks like this time.

Rey Treviño [00:08:09] So with diving into just a little bit more, since I know you don’t got a foot in the race by any form, what is it that the what is it about the vouchers that either is good and or bad on both sides of that? That makes sense.

Chris Hosek [00:08:22] Yeah. No, I mean, it makes sense. I mean, what you’re trying to. There’s two different sides of the argument, right? There’s a there’s only a finite amount of dollars for public schools. And then yet schools that are in challenging districts, parents want to use the right to spend their tax dollars or get vouchers from from the state and send their kids to a different school that may be performing a little bit better. So it’s a it’s a real complicated issue. I know it’s try to hard to simplify in a couple seconds, but it is a but it’s been a contentious issue. Other states have passed these programs. Other states don’t have them. And so in the past 20 years, I think you’ve seen a lot of movement from it’s kind of more Republican states into passing these type of voucher programs.

Rey Treviño [00:09:06] Okay. And I thank you for that, because having a three year old down the road.

Chris Hosek [00:09:11] Wow. I feel sorry for you right now. Good zone defense.

Rey Treviño [00:09:16] Yeah. Though it’s been. It’s a full zone.

Chris Hosek [00:09:18] Yeah, that’s right.

Rey Treviño [00:09:20] In fact, during the Christmas holiday, you know, it’s fun. You can get them like, you know, new blue jeans and he’s happy. And kids, you know, I get a new pair of jeans, Chris and he goes for the oilfield kids. You know, my brothers are in the bag just going. Yes. And Duke’s mom was just right there going, well. No. But no, I appreciate that because I’ve got some good friends that are on one side of the issue. And.

Chris Hosek [00:09:44] Right.

Rey Treviño [00:09:44] And some people that I know that are on the other side. And for me, I, I don’t understand it, you know? Right. Because, you know, the crude truth, we talk about oil and gas primarily, and it’s like, you know, what are some of these other big issues that are going on here in the great state of Texas?

Chris Hosek [00:09:57] That’s a dominant. Yeah, that’s a dominant one. I think what you’re going to look at to which does impact us is water. Yes. So that cuts two different ways. I mean, we’re looking to upgrade our water infrastructure and our you know, there’s there was a fund that’s going to be proposed around $5 billion from a senator, Senator Perry, in in the Panhandle. He’s a water expert. Actually, we’re lucky to have a man that understands its issues, which are very complicated issue, as though it doesn’t sound like it. But he is a he’s really taking a deep dive into this and he’s trying to prep Texas for the future. And our future growth is pretty significant. And we’re gonna need those resources. Now, on the oil and gas side, I think what we’re looking at is the produce water issue kind of how we handle produce water in the Permian Basin. I know the Railroad Commission is taking a hard look at it and I know the legislature will too.

Rey Treviño [00:10:48] Yeah, you know, you talk about the water issues in West Texas and on all the produce water, you know, we’ve got such a thing going on out there where we just don’t know what we’re going to start to do with this almost it’s almost turned really into the natural gas is like we can’t flare produce water, but we just get, you know, water comes up with oil no matter what, right? Nine times out of ten. Sometimes I like to joke saying we actually produce water. We we just get oil on the supply.

Chris Hosek [00:11:13] Well, there’s something to that is the amount of water that’s produced. So, you know, I see that being an issue. You know, also another issue that we should probably touch on a little bit is the funding of our regulatory agencies. So the Railroad Commission needs to be properly funded. We need to have good field inspectors. We need to have a good hearing, a strong hearing examination process. So I know the commission is in. Every two years we reset our budget. So the commission has to go back in, you know, lay their budget out in front of the legislature and work on these issues. So that’s the the commission’s budget’s always an issue. It’s always an issue at the commission. Yeah. Trying to get the, you know, kind of the the latest and greatest it so they can function, you know, at a level that industry is functioning right a lot of times they’re not. So that’s what we’re going to be looking at whether commission funding the session is.

Rey Treviño [00:12:04] You know what you see is one of the important ones there. On the funding for the Railroad Commission. Do you see it from the I t like, let’s see, you had to pick like not to be a Democrat because, I mean, God knows, to get real time information, which I think is where the commission’s trying to get to, just like our companies are. But then you’ve got the orphan wells that just continue to be a pain. And then we have all this money from the federal government that we seem to not be able to get. And it’s not even the Rail Commission’s fault that they can’t disburse it.

Chris Hosek [00:12:35] Right? Right. Well, you’re right. The orphan well, problem, it’s that’s a big issue. Right. And, you know, unfortunately, they’ve had some very expensive wells, so that eats into those funds pretty quickly. And so I know the commission is going back to ask for more money to plug these orphan wells. And so that’s kind of on the back side of it. Now, there’s being there’s legislation they’re looking at right now to kind of address these issues on the front side of it. So if you’re, you know, there’s a there’s a certain amount of inactive wells in the state and those tend to flow into the Orphan well program. And what the idea is to try to get out these inactive wells before they move to that program. So I know the industry itself is talking about what that looks like, what the formula looks like on how many inactive wells you can carry, how long can you carry them. And so that’s yet to be determined. I mean, that’s why we have a legislative process. So we’re going to I highly confident we’re going to see a bill on that. And it’s just what that bill looks like is going to be a challenge. But that’s why we’re in this business,.

Rey Treviño [00:13:35] Right? So with that, like I know for us as an operator, we got to make sure that we’re plugging 10% of our number of wells a year. And by plugging it, I mean either plugging it or putting it online. Are they thinking of changing that number, that that percentage number or are they looking.

Chris Hosek [00:13:52] Well, it’s a it’s a whole range of things and options are on the table. So, I mean, I think what they’ll do is I think one thing they’re going to look at is how long you can carry an inactive well, it’s so like the year. You know how long that will be. You know, five years. Is it ten years? It’s a you know, it’s not going to be in perpetuity. I think that day is passed. And this is a you know, this is something that the industry has been looking at and we’ve been studying. And, you know, we’re we’re going to work on this this bill and this legislation, this session, see if we can’t come to a good compromise.

Rey Treviño [00:14:24] Yeah. You talk about inactive wells. I know we just got done in January, plug in, I don’t know, 3 or 4 wells, you know, and you’re already getting ahead of the numbers for the for the year. Right. And one of the wells that we plugged actually was drilled in 1958, well produced oil to the mid 80s and then was an injection well for the next 20 years or so. Wow. And this is lead that we picked up, I don’t know, 15, 20 years ago. And, you know, it’s just amazing how long these wells can actually serve as a positive to the oil and gas industry and the American people. And also the fact that you talk about the inactives, you know, I don’t know how many times I’ve turned down an old or an oil and gas lease because it might have great production, but the amount of inactive wells on it is just so many that it’s like, that’s a plugging liability and you hate to throw it away, especially with what I’d like to think is the relationships that I’ve been able to build with, with, with the all in the Railroad Commission. But it’s like I can’t afford to plug that many wells. And, you know, and the bad part is neither can the people that have the lease right now.

Chris Hosek [00:15:26] Right? Yeah. It’s a balancing act. Right? So, I mean, you have to look at the whole the whole package itself and what makes sense for you and what’s going to work or not.

Rey Treviño [00:15:33] Right.

Chris Hosek [00:15:33] And and that’s kind of the challenge we face kind of at a much larger level in the state. So that that’s where you can see the genesis of this legislation coming from. It’s your little snapshot. It’s kind of a good cross-section of what’s going going on.

Rey Treviño [00:15:47] And that was something we were talking about, me and my father on the way here. It’s like, you know, we picked up some leases from some other individuals and it’s like, okay, they did this and they did this and they did this. And it’s like, Well, let’s just do it the right way. And it, you know, it takes a little bit of time. You know, you never do the right stuff overnight.

Chris Hosek [00:16:02] Right, Right. So it’s interesting. We’re talking about this. So at the beginning of the session, the comptroller gets his biannual revenue estimate and and his revenue estimate. This time we’re gonna have a $24 Billion surplus is much larger than in any other states around in Texas is blessed to have that kind of opportunity. But as you heard the comptroller say, you have to use it wisely. And, you know, do we do one time investments in critical infrastructure like water, like transportation? These are things are going to help Texas grow and address also address the need to address the needs while we’re growing. But it. It is an amazing number to say 24 billion when you look at it’s much larger than probably a dozen total state budgets. It’s our sort of surplus. So that’s that’s pretty exciting.

Rey Treviño [00:16:48] You know, on a total random question, how many more people do you think are going to be moving into Texas? I mean, because you talked about infrastructure and we’ve got to get prepared. Obviously, the freeze taught us something like, you know, of course, it was one of those once in a generation or 100 year freeze is a couple of years back. But Texas is only growing. Austin that we’re in hasn’t stopped growing now for 20 years. And it’s like, you know how important you think the infrastructure is in this session,.

Chris Hosek [00:17:15] Right? I think it’s important every session to get these type of projects done because Texas is going to continue to grow. I mean, if I lived somewhere else, I try to move here, right? I mean, it’s a beautiful state to live in. And there’s a lot of economic opportunity here. And that’s part of what we do in the legislature is make sure that when people do move here, they do have that economic opportunity that most average citizen enjoys here in Texas.

Rey Treviño [00:17:39] Yeah, no, it’s been great. And, you know, there’s no doubt that the first few days, the way that session has gone, it’s going to be pretty exciting. I mean, I remember just you know, it blows my mind. This has been now, you know, it feels like it was yesterday, the last session, when I had a great chance to be with the former president of the Texas Alliance of Energy Producers, Jason Mogilny. And they were just gearing up for that, him and David Blackmon. And now we’re back at it again. I can’t believe it.

Chris Hosek [00:18:07] Right? It happens pretty quickly.

Rey Treviño [00:18:10] I don’t envy those congresspeople over there at all. They they’re on a two year cycle.

Chris Hosek [00:18:14] They are. They are in it’s you know, I’ve been doing this long enough and, you know, I’ve been married 25 years and it’s my I’ve done it my whole career. So my wife is kind of understand the the cycles of the legislature and. Yeah. And you know she I haven’t and she joked sometimes she calls herself a session widow because six months out of the year every two years, you know, we’re working here kind of nonstop starting in the morning, go in pretty late at night. And but it is a very kind of interesting business to be in. And I love it. And it’s exciting.

Rey Treviño [00:18:45] Well, you know, what is one thing that you are excited about from this session that maybe you hope to see out of this the session that we’re going to be in?

Chris Hosek [00:18:53] Whether. No, if I may, if there’s one thing I would say I’m really excited about, but I. You know, there are some certain clients I have that we’ve discussed before. For example, I. I’d be remiss if I didn’t talk about the elephant preserve that I represent in Fredericksburg, Texas. It’s a it’s a beautiful facility. And I think one thing I’m excited about the session is kind of to expand kind of the knowledge and the education of Asian elephants. And it’s a it’s for an oil and gas guy. That sounds like a weird thing to say, but it’s a it’s an exciting issue to work on. And it’s a you know, they have three Asian elephants out there that were, you know, last movie stars in California and U.S. and they, like everybody else from California, decided to move to Texas. And so not just people, but elephants are moving to Texas. This was just about ten years ago. But, you know, I love going around talking about kind of the, you know, their how they’re an endangered species and what we can do to kind of protect.

Rey Treviño [00:19:54] What’s the name of that preserve.

Chris Hosek [00:19:55] It’s called. It’s actually called the preserve.

Rey Treviño [00:19:57] The preserve. Okay. Okay. And if I’m correct, there’s a porcupine there.

Chris Hosek [00:20:01] That’s Right.

Rey Treviño [00:20:01] A little. Chris.

Chris Hosek [00:20:02] That’s right.

Rey Treviño [00:20:02] And how is little Chris doing?

Chris Hosek [00:20:04] Little Chris is doing great. He’s an African crested porcupine and loved to go out there and play with them. He’s very friendly. You know, you may not believe it, but you’re allowed to pet him sometimes. And he’s like, he’s a cute little dude,.

Rey Treviño [00:20:17] Man. I can only imagine it. That that must be kind of fun.

Chris Hosek [00:20:21] Yes, I’ve been teased a lot about it. A lot. Because when they did name the animal after me, you know, a porcupine is a rodent. Yeah, it does smell bad and it’s prickly. So I don’t think I thought that one out too well. But little Chris is little Chris or Chris.

Rey Treviño [00:20:38] Or Chris.

Chris Hosek [00:20:39] Or Chris. What’s coming?

Rey Treviño [00:20:40] Well, you know, Chris, I know you’re about in this town again for 140 days or 80 days. How many.

Chris Hosek [00:20:46] 140,.

Rey Treviño [00:20:46] 140 days? You’re about to be here. Good luck with everything.

Chris Hosek [00:20:51] Thank you.

Rey Treviño [00:20:52] I mean, I can’t thank you enough from where I sit on everything that you’re doing, because, again, it’s not overnight. This is a bunch of long hours that you’re about to be in. And I can only imagine the stories you’re about to hear.

Chris Hosek [00:21:03] Right? Right. Well, I can’t you know, I’m excited to get this session started and look forward to it. And let’s check back in in a couple of months and I’ll tell you how great it’s going or how horrible it’s going.

Rey Treviño [00:21:14] Well, again, I can’t thank you enough with all that you’re doing, the Texas Star Alliance. And, you know, the easy thing to say is really just keep up the good fight.

Chris Hosek [00:21:22] We’ll try.

Rey Treviño [00:21:22] All right, Chris, thank you.

Chris Hosek [00:21:24] Good seeing you.

Rey Treviño [00:21:25] Well, guys, again, get ready for a bunch more fireworks if you haven’t already heard about them. They’re from the Texas state capital. This is going to be a momentous legislation session. We’re going to definitely do our best to stay on it this year. Thank you, as always, for tuning in. If you got any questions about what’s going on, don’t hesitate to reach out to me. I’m going to do my best also this year to really stay on it and just kind of keep everybody up to date with what’s going on. Again, this is Rey Treviño, and thank you for always is watching The Crude Truth.

Narrator [00:21:56] Again, The crude truth would like to think today’s sponsors LFS Chemistry, Nape Expo, Air Compressor Solutions, Sandstone Group, Exec Crue, Texas Star Alliance, Pecos Country Operating and Real News Communication Network.

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