The Oklahoma Energy Producers Alliance is calling on the Oklahoma Corporation Commission to exercise its authority to prevent the waste of Oklahoma’s oil during this unprecedented oil price collapse.
“Oklahoma oil is now selling below $20 per daily barrel, which is a price well below its “actual value” and the Oklahoma Corporation Commission should take action,” said OEPA Chairman Dewey Bartlett, Jr. Click here to see OEPA’s letter.
The Commission began regulating oil and gas in 1914 when it restricted oil drilling and production in the Cushing and Healdton fields to prevent waste when production exceeded pipeline transport capacity. Their authority to regulate the volume of oil produced has grown over the years. The statutes actually prohibit oil to be sold below its actual value.
52 O.S. Section 272 provides:
“The taking of crude oil or petroleum from any oil-bearing sand or sands in the State of Oklahoma at a time when there is not a market demand therefor at the well at a price equivalent to the actual value of such crude oil or petroleum is hereby prohibited, and the actual value of such crude oil or petroleum at any time shall be the average value as near as may be ascertained in the United States at retail of the by-products of such crude oil or petroleum when refined less the cost and a reasonable profit in the business of transporting, refining and marketing the same, and the Corporation Commission of this state is hereby invested with the authority and power to investigate and determine from time to time the actual value of such crude oil or petroleum by the standard herein provided, and when so determined said Commission shall promulgate its findings by its orders duly made and recorded, and publish the same in some newspaper of general circulation in the state.”
Senator James Inhofe has taken action by asking the U.S. Department of Commerce to investigate Saudi Arabia and Russia for “dumping” in our market with the express purpose of taking market share from the U.S. oil and gas industry. The Texas Railroad Commission is proposing to curtail production by 500,000 barrels per day. Oklahoma needs to step up and do its part.
“We are not suggesting that the Commission shut down all oil production in Oklahoma, although that is certainly within their power to do so. There are many actions they can take under that authority that would have a positive effect on a chaotic market,” said OEPA President and Ardmore oil and gas producer David Little.
There are currently “allowables” on oil production that already limit what can be produced. Click here to see allowables. But, they are rarely enforced. They can even be adjusted downward to fit the current market condition.
Source: Oklahoma Producers Alliance