Oklahoma Corporation Commission staffers say the COVID-19 pandemic is still hurting the state’s natural gas production and are recommending the commission continue with a 50% prorationing rate of natural gas production in the state beginning in October.
Duncan Woodliff, Manager of Production and Proration for the Commission’s Oil and Gas Conservation Division issued his recommendation this week and also noted some energy companies had asked for an allowable rate up to 100% of the calculated absolute open flow of a well. Two firms advocated an even more restrictive rate.
Woodliff’s recommendation came after a July 15 meeting where he and other staffers held a meeting with 12 representatives of gas operators, pipeline companies, industry groups and public representatives.
Some of those who attended the meeting argued in support of the 50% rate, claiming the global and national gas oversupply existed even before the COVID-19 pandemic.
“The ongoing pandemic, and to a lesser extent unseasonably warm weather this spring, have greatly slowed down the market and have resulted in record-high volumes of storage,” said Woodliff.
In March, the Corporation Commission voted to support a 50% prorationing rate, down from the 65% open flow rate that had been routinely adopted by commissioners since 1999. The new rate also includes a maximum allowable production of 2 million cubic feet per day. The proration formula had an effective period of April 1 to Sept. 30.
“In view of the concerns presented to us, along with the study and various discussions with staff, we recommend leaving the proration formula at 50% of the calculated wellhead absolute open flow or 2,000 MCF/d, whichever is greater,” wrote Woodliff in his recommendation. “If the formula were to be changed at this time, production would be available for only some of the year on an irregular well-by-well basis—.”
He went on to state that the ongoing COVID-19 pandemic has “drastically slowed down the market, and likely will for some time.”
The final decision will be made by the Corporation Commission at a Thursday public hearing that begins at 9:30 a.m.
