The bill allowing multiunit drilling in all rock formations in the state, one supported by the Oklahoma Independent Petroleum Association won approval Saturday in the State Senate.
Senate Bill 867, approved by the House of Representatives Joint Committee on Appropriations and Budget Committee on Friday won support in the Senate on a 26-19 vote.
It is formally called the Oklahoma Energy Jobs Act of 2017 and allows long-lateral drilling in all of the rock formations. It also includes provisions ensuring existing oil and natural gas producers, both vertical and horizontal, are protected as long-lateral drilling moves into areas of historic oil and natural gas production.
“Marrying 100 years of oil and natural gas production and the regulations related to it with new regulation and legislation for advanced drilling techniques is not an easy task,” OIPA Executive Vice President of Governmental Affairs Tim Wigley said. “Ensuring Oklahoma producers can effectively and efficiently utilize modern drilling practices like long-lateral horizontal drilling while protecting the state’s historic oil and natural gas production is a priority for the OIPA.”
The new act followed a move in 2011 in which the legislature created the Shale Reservoir Development Act which allowed producers to combine two 640-acre production units to accommodate horizontal drilling up to two miles long while developing shale oil and natural gas reservoirs. But since then, horizontal drilling moved into non-shale reservoirs and the industry said it needed changes in the law.
“Finding industry compromise on long-lateral drilling has been a priority for the OIPA,” Wigley said. “With 98 percent of Oklahoma’s new wells drilled horizontally, it has become imperative for Oklahoma oil and natural gas producers to embrace long-lateral drilling in all producing formations. Doing so puts our state on par with other energy-producing states in the nation and keeps Oklahoma’s oil and natural gas industry moving forward.”
With the changes in the law, SB 867 is expected to generate nearly $490 million in new royalty payments plus $229 million in new state and local revenues. The act will supposedly create 6,000 new jobs in the oil and gas sector. Speculation is it will also spur about $6 billion in investment from oil and natural gas producers.