Prorationing decision possible by Oklahoma regulators


Nearly three months after the Oklahoma Energy Producers Alliance filed a request for statewide prorationing of crude oil production, Oklahoma Corporation Commissioners will possibly make a decision on Wednesday.

The OEPA’s request was put on the agenda of the Commission’s regular meeting even as West Texas Intermediate crude oil prices settled above $40 a barrel in Monday’s trading.

While some energy companies in the past have cited $40 as the break-even price, the OEPA is pushing ahead.

“We have no plans to dismiss the case,” said OEPA Chairman David Little in an email to OK Energy Today. “We wanted this during the height of the waste.  While it may be mute (sic) now, the under lying issue still exists.  We believe the Commission should have gone further than they have to prevent waste.  They did it with natural gas but seem reluctant with oil.  Why?”

In the original filing made in April, the Authority contended the production of crude oil at low prices was essentially a “waste.” A similar request was filed by Tulsa-based LPD Energy Co. and was approved by the Commission on a 2-1 vote in June. The approval allowed the company to shut-in its wells but the order did not include a statewide prorationing.

But the Commission took the OEPA’s request under advisement and this week finally placed it on the agenda.

There is speculation that the commission will also take a similar vote to approve the prorationing crude oil request of the authority. Commissioners Todd Hiett and Dana Murphy supported the request of LPD Energy while Commissioner Bob Anthony was against it.

Several firms joined the Oklahoma Energy Producers Alliance in making the prorationing request of crude oil production. They include: Keener Oil & Gas Company, Columbus  Oil Company, Brown & Borelli, Inc., Cimarron Production Co., Inc., Cantrell Investments, LLC, Postwood Energy, LLC, GLM Energy, Inc., Toklan Oil & Gas Corporation, Guest Petroleum, Inc., Singer Oil Company, and RKR Exploration, Inc.

Meanwhile, the Commission has been asked by its staff to renew a prorationing decision made concerning the production of natural gas. Since 1999, the commission had limited gas production to 65% at a maximum allowable rate of 2 mmcf a day. But in March of this year, commissioners reduced the production to 50% of the 2 mmcf/day.

The latest prorationing natural gas matter was filed by the Commission’s Oil and Gas Conservation Division and asked for a technical conference to be held Wednesday, July 15 followed by a public hearing on Thursday, August 20, 2020.

The request is for an order to apply from Oct. 1, 2020 to March 31, 2021.