By a 2-1 vote on Wednesday, the Oklahoma Corporation Commission has allowed a small Tulsa oil company to go ahead and shut in its wells and allow others to do the same.
Under the decision, LPD Energy Company sought approval to classify unprofitable production as economic waste as a result of the oil crisis caused by Russia and Saudia Arabia and the coronavirus pandemic.
Commission Chairman Todd Hiett and commissioner Dana Murphy voted in support of the signing of the measure while Commissioner Bob Anthony stated, “I will not participate in the signing today.”
Anthony pointed out that the Administrative Law Judge who held a hearing last week on the oil company’s request for an emergency order did not make a recommendation on the written reference to the Commission.
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.”
Prior to the vote, the Commsision heard testimony from producer Eddie Rongey who said he operates 600 wells in Oklahoma and is losing nearly $200,000 a month by producing the economically challenged wells. He spoke in support of the emergency order saying it would help in avoiding fincial loss to operators.
The emergency order is a separate issue and was filed before the Oklahoma Energy Producers Alliance made a request last week of the commission to order a mandated reduction in oil production. The Commission plans to hear the OPEA’s request on May 11.
“This will offer interim relief,” said Commissioner Murphy in urging approval of the emergency order, adding there were “extenuating circumstances.”
The regulators were also briefed on the declaration by the Board of Equalization of the state’s revenue failure, a move that could see state agencies face budget cuts of 5 to 7%. The Corporation Commission would see a cut of $878,000 if it were to be hit with a 5% cut in its budget while a 7% cut would total $1.2 million. So far, the Commission has not seen any cuts in its April appropriation.