Oklahoma Corporation Commissioner Bob Anthony is now speaking publicly for the first time since he voted last month against allowing a Tulsa oil company to shut-in its oil production because of the COVIS-19 outbreak and the following oil crisis.
In a filing on Friday, Commissioner Anthony formally issued his dissent statement, saying the emergency order granted to LPD Energy Company LLC was replete with fatal errors.
“The emergency order gives any well operator the discretion to curtail or shut-in their oil production because of market price. The first problem with the grant of such a privilege is that the emergency order does not set any standard of parameters for the exercise of such discretion,” wrote Anthony. “If there is ever any dispute over the exercise of that discretion, how would anyone enforce such an order.”
The order was issued as LPD Energy contended it should be granted the emergency order because of the “waste” of crude oil in the state.
Anthony raised the question “what happens when the price goes up? When does such waste begin and end.”
The Commissioner contends if the emergency order gives a well operator discretion to curtail or shut-in a well because of waste, then logically it also gives him the discretion or choice to produce oil from his well while waste is occurring from his production.
Anthony also said the Tulsa firm, while arguing it might lose an oil lease if it carries out a shut-in did not submit any lease to support its contention.
“In essence, LPD asked the Commission to base a statewide order on a mere assumption about legal obligations outside the Commission’s jurisdiction, based on the testimony of a layman—.”
Anthony concluded in his dissent statement he was not satisfied that the basic requirements of due process had been met in the filing of the notice of the hearing on the request for the emergency order.
LPD Energy sought the emergency order contending the production of crude oil amounted to economic waste because of the oil crisis caused by Russia and Saudi Arabia and the coronavirus pandemic.
Anthony chose not to participate in the vote while Commissioners Todd Hiett and Dana Murphy voted to grant the order.
Commissioner Murphy issued a statement afterward noting “The global energy landscape has been turned upside down due to the COVID-19 pandemic…..Today’s action by the Commission gives those operators the freedom and flexibility they need to respond to market forces and decide what actions to take to survive.”
Click to view the statement.
Dissent by Comm Anthony in CD 2020-986 5-8-2020 FS
Source: OCC document