Members of the Oklahoma Energy Producers Alliance say it’s time for Oklahoma Corporation Commissioners to lower production of crude oil. They have put their request in the form of a legal filing with the regulators.
On Friday, the group filed a formal case with the commission, asking for their request to be heard ‘en banc’ by the full commission and saying if something isn’t done soon, thousands will lose their jobs in the oil and gas industry.
“We’re fighting for our families. We want to keep this industry alive,” stated David Little, President of the OEPA and with Kingery Energy Company of Ardmore.
As demand for gasoline plunged over the coronavirus and the resulting oil price war caused by Saudi Arabia and Russia, oil producers found themselves in a life and death struggle, not only in Oklahoma but every oil-producing state.
The OEPA is a group that was formed in 2015, largely as vertical well drillers in a fight with horizontal well drillers in the state. Most of the state’s oil production comes from horizontally-drilled wells but the vertical well drivers, made up largely of smaller independents, organized to fight the damage they contend had been inflicted on their wells by horizontal drilling.
The organization, with more than 500 members had already sent a letter to the Corporation Commission asking it to prevent the “waste” of oil. Board member Joe Warren, who is with Cimarron Production Company of Oklahoma City said, “The Commission has not only an obligation but a duty to prevent waste.”
He explained the while West Texas Intermediate oil prices were in mid-$20, what was actually being offered under some contracts was only about $12.50 a barrel.
When asked whether the group had the support of any members of the commission, members indicated they were not sure how the regulators stood on the matter of controlling oil production in the state. OK Energy Today reported last week that Commission Chairman Todd Hiett stated he would not take a public stand until a case had been filed. Now that a filing has been made, Hiett and Commissioners Bob Anthony and Dana Murphy will have a decision to make.
The OEPA filing asked regulators to prevent the waste of Oklahoma crude oil by “providing for the prorationing of the production of Oklahoma crude oil or petroleum.” The request for a meeting or conference with the Commission said the Commission has “the duty and obligation” to prevent waste and “prevent it form being taken and sold below its actual value.”
While some say the free market should rule the production of oil and its resulting price, David House, another board member who is with Kiser Creek Energy complained of the flood of oil caused by OPEC.
“There is no free market in oil and the commission has a legal obligation to pro-rate the market. It’s clear no one is flying and no one’s on a cruise ship. Just drive down the streets of Tulsa! No one is driving their cars,” he said during a news conference. “We’re asking the Oklahoma Corporation Commission to do its part.”
David Guest of Guest Petroleum Inc. based in Edmond went on to state that the price collapse has had a “devastating effect on mineral owners” and families who depend on royalties to survive are getting notices that “wells are shut in.”
Calling it a “monumental time for all of us,” Mike Cantrell also called on the commission to take some action.
“They need to get off the sidelines and do their jobs…..it’s naive to say we need a free market place—there’s never been one.”
Dewey F. Bartlett, Jr. , chairman of the OPEA and with Keener Oil and Gas Company of Tulsa suggested the Commission should even consider a temporary moratorium on issuing drilling permits.