The question of whether to return to a 50% allowable natural gas prorationing rate in Oklahoma goes before Corporation Commissioners on Tuesday.
The regulators raised the rate to 100% during the February winter storm to allow a faster movement of more gas so power plants could operate during the frigid weather and prevent extended rolling blackouts. On Tuesday, commissioners will decide whether to return to the original 50% rate, a 75% rate as recommended by staff, or a rate they will determine.
The issue remains a source of debate in the industry as some oil and gas companies want a 100% or a rate higher than the 50% rate set in March of 2020. Other firms such as Continental Resources have campaigned for the lower rate on unallocated gas wells.
A spokesman for the American Petroleum Institute testified recently that Oklahoma’s natural gas industry was “harmed disproportionately more than that of other states” during the 2020 COVID-19 recession. The API argued the prorationing hampered the most productive and economic wells and weakened the incentives for future drilling.
The rate applies to the Calculated Absolute Open Flow potential or 2,000 MCF a day, whichever is greater. Some firms have preferred a higher percentage and increasing the potential to 3,000 Mcf a day.
As recommended by the commission staff, the rates would be in effect from April 1, 2021 through March 31, 2022.