The SBA released its official application for PPP forgiveness. Click Here for the document. The application has four components with accompanying instructions:
OEPA will keep you up to date as more information becomes available.
Richard Parrish | Regulatory Affairs
CRUDE OIL STORAGE TANK EMERGENCY RULES – RM 202000004
Corporation Commission adopted emergency rules to address anticipated issue with crude oil storage tanks. First proposal would have impacted lease tanks, off lease tank batteries, centralized tank batteries, tanks at salt water disposal well, oil reclaimers, commercial recycling facilities, etc. Our Regulatory Affairs Chairman, Parker Bowles, has working with the OCC on this issue for several weeks. After comments from Steve Altman, and a number of OPEA members, and others, the proposed rules were amended to only apply to off lease crude oil storage built and beginning to store crude oil after April 1, 2020 that are not affiliated with the above-mentioned tanks. The OCC created a new form to be submitted to permit such off-lease crude oil storage tanks. Requirements for these crude oil storage tanks include fencing, signs, passable roads, consent of surface owner, not being in the 100-year flood plain, site closure requirements, notification of the Department of Environmental Quality, surety in the amount of $100,000, among other requirements. These emergency rules will be in effect after approval by the Governor. Such approval is pending.
RELIEF FROM ELECTRIC BILLS (Demand charges, rate categories, etc.) — PUD 202000050
The Public Utility Division filed a rulemaking to provide residential electric customers protection from service cut-offs, and related relief as the result of the Covid-19 coronavirus pandemic. As part of this rulemaking several oil and gas producers, raised concerns about demand charges, billing deposits, etc. The OCC did not take up these issues but deferred for further review by staff. The staff followed up with a video/teleconference on May 13, 2020. A number of issues were discussed. OEPA asked the Commission to compile a list of contact persons at each utility for operators to be able to contact to obtain information on their options related to billing and electric usage. At least some of the utilities have the option for operators to switch to time usage rates to reduce their bills while they are curtailing their production or shutting in their wells. There was a lot of discussion concerning how demand charges can’t be adjusted due to the capital investment the utilities have in providing services to operators. From the discussions it appeared that some operators were more receptive to providing help to operators than others. The OEPA will continue as an active participant in this process.
OEPA CRUDE OIL WASTE CASE – CD NO. 202000984
The OEPA’s case requesting that the OCC determine and declare that under the current market conditions, the collapse in demand, low or negative prices, limited storage availability, etc,, that waste of crude oil, is occurring in Oklahoma, and that the OCC take appropriate actions to address that the waste of crude oil that is occurring. This case came on for hearing on May 11, 2020. The specific recommendation the OEPA made to the OCC was for the OCC enter an Interim Order to declare that the waste of crude oil was occurring in Oklahoma, directing that operators not commit waste, and for OCC to continue and monitor the crude oil crisis and markets and reopen the case in 30 days for the purpose of determining if additional relief was necessary to respond to the crude oil market crisis.
OEPA was well represented at hearing. OEPA Board Members, Dewey Bartlett, David Little, Joe Warren, Mary Anne McGee, Bob Nikkel, Darlene Wallace, David Guest and Mike Cantrell, along with Richard Parrish, OEPA’S Regulatory Affairs Counsel all presented statements and testimony to the OCC at the hearing. Each of the Board Member did great job in describing the current crude oil market crisis existing in Oklahoma and the impact on producers, royalty owners, the State, cities and towns, and the citizens of Oklahoma. In addition, a number of OEPA members filed comments and statements supporting OEPA’S Application in advance of the hearing and are to be commended for doing so. The filing of such comments and statements are always helpful in proceedings before the OCC.
Shortly before the hearing, the OEPA filed a Memorandum of the Case and Recommendation with a proposed order attached. Prior to the hearing a number of other parties filed comments opposing the OEPA. At the hearing several parties spoke in opposition to OEPA’S Application. Objections centered around whether notice was proper, the OCC had the authority to grant the relief requested and that free markets should be allowed to solver the crude oil market crisis. OEPA has addressed each of these issues to the OCC. At the conclusion of the hearing the OCC took the matter under advisement, and gave the other parties until May 18, 2020 to file additional comment upon the proposed order and testimony presented to the OCC by the OEPA.
Jack Money | The Oklahoman
Elected members of the Oklahoma Corporation Commission decided to leave in place an emergency order allowing operators to voluntarily shut-in wells in cases where they believe crude oil is being wasted.
However, they opted to give oil and gas industry executives and attorneys more time to consider an amended request made by the Oklahoma Energy Producers Alliance that would, if adopted, result in a declaration from the agency that oil production from wells across the state is wasteful.
During a hearing Monday, OEPA representatives stated a mandatory oil waste declaration from commissioners would allow the agency to take additional steps requiring operators to shut in wells or to take other actions deemed appropriate to cumulatively cut crude production.
It would leave determinations about what would be allowed and how to achieve those cuts up to the regulatory agency, unlike its initial request calling for the agency to take a series of specific steps to curtail production.
The OEPA represents mostly smaller, independent oil and gas producers who primarily operate older, vertical wells with smaller rates of production.
Dewey Bartlett, chairman of the OEPA and president of Keener Oil and Gas Co., said such a declaration is needed.
“It is the duty of the OCC as stated in the statutes to determine economic waste, and, that if one is made, to consider means of eliminating that waste in manners they see fit,” he said.
Joe Warren, an OEPA board member who is a partner in Brown & Borelli Inc. and Cimarron Production, agreed each well is unique in terms of production costs and revenues.
“But for the vast majority of Oklahoma producers, the West Texas Intermediate price is not what most receive,” Warren said. Instead, those prices are based on monthly averages of WTI, less costs to transport the product to storage.
He noted some companies are setting up massive amounts of temporary storage to hold crude they were forced to take involving contracts settled when oil was trading at negative values.
“In Oklahoma, we have more oil than we have demand. I would ask the commission to consider exercising its statutory duties and powers to prevent waste and to prevent this dumping of Oklahoma oil production by taking a stance and prorating oil production in the state,” Warren said.
Mary Anne McGee, an OEPA member who is president of GLM Energy, said her company began shutting in some of its wells in April, and expects it will have to shut in additional wells, moving forward.
McGee said one of her biggest expenses is the electricity it takes to run her wells, plus limited storage capacity for wells.
“I have not seen anything like this” before, McGee told commissioners. “At this rate, there is no way for smaller, vertical producers to continue operating.”
Liz Hampton | Reuters
Oklahoma’s energy regulators on Monday took no action on applications from oil and gas producers seeking to win state-support for measures they said would help stabilize oil prices.
The Oklahoma Corporation Commission, which regulates the state’s oil and gas industry, heard proposals seeking to declare some oil production in the state waste, and a plan submitted by trade group Oklahoma Energy Producers Alliance (OEPA) that included mandated output cuts.
After a five-hour meeting, the commission took the two under advisement and did not set a date or timeline for any decisions.
U.S. oil futures CLc1 this year have fallen about 60% to $24.14 a barrel as coronavirus-related lockdowns have crushed demand for fuel. The price collapse has companies in major oil-producing states pushing for regulatory action to stave off further declines.
Oklahoma last month adopted an emergency order that said some oil production could be considered economic waste. That allowed operators to opt to shut wells without losing valuable leases.
One commissioner last week submitted a dissent to the emergency order, saying it was “replete with fatal errors” and said he was not satisfied that the “basic requirements of due process had been met with respect to notice of the hearing.”
Last week, Texas regulators struck down a proposal to mandate output cuts.
“We’re floating out there in dangerous waters,” said Lee Levinson, owner of LPD Energy Company LLC, which submitted the order requesting some output be considered waste and was granted the emergency order.
Darlene Wallace, a member of the OEPA, said she has shut-in most of her wells and has had purchasers say they may not take her oil because of lack of storage.
“I cannot stay in business if I continue to lose money,” she said in support of the proposals.
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