Gas well prorationing to be considered again by Oklahoma regulators

 

The sometimes controversial issue of Oklahoma’s proration formula affecting some of the state’s most prolific gas wells is coming back before Oklahoma Corporation Commissioners.

No vote is anticipated this week but the Commission announced it will hold a special virtual meeting on Friday at 10 am. to conduct a technical conference and discussion of the latest proration effort.

Robyn Strickland, Director of the Oil and Gas Conservation Division of the Corporation Commission submitted an application last month to hold the conference. The application indicated that the division “will develop its recommendation regarding such formula after the public technical conference.”

The new formula, once approved by commissioners, would be used in determining production of unallocated gas wells for the period of April 1, 2021 through March 31, 2022.

It was last August when the commission, on a 2-1 vote agreed to leave the proration formula in place limiting natural gas production at a well’s absolute open flow to 50% or cap the maximum allowable production at 2 MMcf/d whichever is more.

Oklahoma has an estimated 40,000 to 50,000 unallocated gas wells and regulators allocate the output from them on market demand.

Commissioners Todd Hiett and Dana Murphy voted to maintain the 50% rate and Hiett said at the time, “I feel confident that this order today is the right decision, going forward. We can all learn together as this moves forward.”

The order not only reduced output but state revenue too. Commissioner Bob Anthony, the lone regulator to vote against it said “If Oklahoma curtails production, other states can fill in the gap on the national level.”

Prior to the first proration formula reduction to 50% in March 2020, the commission had required operators since 1999 to limit a well’s open flow at 65% or the maximum allowable production of 2 million cubic feet a day.

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