Natural gas producers will have an opportunity Tuesday to comment on a plan by state regulators to continue with a 75% limitation or proration formula on the production of natural gas from what are called unallocated wells.
The Oil and Gas Division of the Oklahoma Corporation Commission recommended the 75% limit be the same as one approved for last year.
“The Commission finds that this rate will help preserve a stable regulatory environment, maintain important incentives to the domestic petroleum industry, and encourage production to meet the nation’s demand for natural gas,” stated the Division’s recommendation to the commission.
A Tuesday morning meeting, set for 10 o’clock, might include Corporation Commissioners but no vote is planned—only a presentation and discussion of what the Division has proposed. It is considered a Technical Conference for discussion and public comment on the proposed 75% of wellhead calculated open flow potential or 3,000 Mcf/day, whichever is greater
“The Commission also finds that this rate will allow Oklahoma to compete effectively for market share on a national scale and ensure the supply of natural gas from the State’s common sources of supply is maximized in a fair manner while preventing waste or production in excess of reasonable market demand,” declared the announcement.
Should the Corporation Commission eventually vote on the issue and approve it, the proration formula would apply to natural gas production from October 2024 through September 2025.
Just four years ago, there had been an attempt to push back the formula to 50%. It had been at 65% or 2 Mcf a day since 1999. But operators argued such a restriction would create regulatory uncertainty and maybe result in companies moving their investment dollars to energy sources in other states.
In 2021, following the destructive nature of Winter Storm Yuri, Commissioners voted to allow a 100% flow of natural gas from Oklahoma wells because of the natural gas disaster that affected utilities and their ability to produce power to warm homes and businesses.
