Utah PSC hearing reviews settlement to authorize limited WexPro horizontal drilling pilot with $55 million cap

Enbridge Gas Utah and state utility regulators presented a confidential settlement stipulation to the Utah Public Service Commission on a proposed limited horizontal drilling pilot under the WexPro program, and the commission took the matter under advisement.

Austin Summers, identified himself as director of regulatory and pricing for Enbridge Gas in Utah, Wyoming and Idaho and summarized the agreement as resolving Docket 26‑057‑03. He told the commission, "The settlement stipulation resolves the issues in docket number 26‑057‑03 concerning Enbridge Gas Utah's request for authorization to conduct a limited horizontal drilling pilot program on existing WexPro properties," and urged approval given the program's cost caps and oversight.

The settlement, as summarized by Summers and supported by Division and Office of Consumer Services witnesses, narrows the company’s original request. Key terms include a maximum pilot duration of four years and a capital cap of $55 million unless the commission explicitly approves an increase. The stipulation reduces the number of wells and limits drilling to a single field, the parties said.

The agreement also builds layered reporting and review into the pilot. WexPro must provide quarterly drilling reports showing actual costs, cost‑of‑service rates, drilling days and production volumes, consult with the hydrocarbon monitor, and meet with the Division, OCS and Wyoming OCA after each pilot well before drilling another. Any of those parties may seek commission relief to stop further drilling if they object.

On financial terms, the parties told commissioners that 100% of oil and natural gas liquids revenues from pilot wells will be credited to customers, and that for wells deemed non‑commercial customers would bear the cost while WexPro's return on those wells would be reduced by 50 basis points below the commission‑allowed rate of return. Commissioners and witnesses noted the current commission‑allowed return of 6.86% would equate to about 6.36% under that 50‑basis‑point reduction this year, subject to annual fluctuation.

WexPro vice president Brady Rasmusson (sworn as Brady Rasmmanson in the record) described the technical basis for the pilot. He said the company used public analog wells in nearby fields to model expected production and costs, that the pilot cost‑of‑service forecasts include uneconomic ("dry") wells, and that pads can host multiple laterals — roughly four laterals on an optimized pad — with some pilot laterals on the same pad and others on different pads. Rasmusson told the commission drilling could begin in a few months if the stipulation is approved and permits remain in order: "We've got the permit and everything ready to go."

Division witness Ryan Dagel explained that the company's original filing had proposed up to $150 million and 8–12 wells over five years; the settlement's $55 million four‑year cap and additional controls, combined with the commission's authority to halt the pilot at any time, led the Division to conclude the stipulation is just and reasonable and in the public interest.

Office of Consumer Services technical consultant Bella Vastag said OCS joined the settlement after negotiations reduced the program's size and added safeguards; OCS acknowledged that ratepayers will still carry the financial risk if the pilot fails but recommended approval because the pilot could help sustain WexPro volumes and provide a hedge against market volatility.

Commissioners questioned how quickly investments are placed into the utility investment base and how partially completed work would be treated if the pilot were discontinued. Witnesses explained that under typical WexPro accounting uneconomic projects move through AFUDC until a paying‑well test is met, but because the pilot shifts dry‑hole risk to customers certain expenditures may be placed in rate base earlier in the pilot than under prior WexPro treatment.

The hearing admitted the confidential settlement stipulation and supporting exhibits into the record but did not produce a final commission order. The commission complimented the parties on collaborative settlement negotiations and took the matter under advisement; no vote or final authorization occurred at the hearing.

The commission record now reflects a narrowed pilot design with explicit caps, reporting obligations and customer protections; if the commission later approves the stipulation on the merits, earlier testimony indicates drilling could start within a few months, subject to permitting and any remaining confidentiality procedures.