A divided Corporation Commission keeps order allowing voluntary well closures to prevent crude oil waste

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Jack Money | The Oklahoman

A majority of elected members of the Oklahoma Corporation Commission decided Wednesday to continue allowing operators to voluntarily shut-in wells in cases where those operators believe crude oil is being wasted.

Chairman Todd Hiett and Commissioner Dana Murphy voted to approve an interim order that extends findings of fact and conclusions of law included in an earlier emergency order adopted in April that gave producers that ability.

The interim order aims to provide relief to operators who otherwise would be forced to lose money on what they produce, while specifically protecting correlative rights held by the company, well investors and mineral rights owners.

Some operators have stated they believe the commission’s order provides them with an ability to shut in unprofitable wells without losing leases that are held by production.

Notably, the interim order approved Wednesday adds language that strengthens that position through stating that wells shut in under the order “shall be deemed as producing under the commission rules and regulations.”

Commissioner Bob Anthony voted no on Wednesday’s order.

In a prior written dissent, Anthony wrote he believed the measure was “replete with fatal errors.”

Anthony wrote the order lacks any specifics about at what price for oil waste occurs. Plus, he said it gives operators the discretion of making that determination, rather than regulators.

Oklahoma regulators approve voluntary well shut-ins

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Kallanish Energy

Oklahoma regulators on Wednesday gave oil producers the legal liability protection to voluntarily shut-in wells as prices for oil remain under $40 per barrel, Kallanish Energy has learned.

The move was approved by a 2-1 vote of the Oklahoma Corporation Commission with little discussion, reported Oklahoma Energy Today, a media outlet.

Commissioners Todd Hiett and Dana Murphy supported the request made by Tulsa-based LPD Energy Co. Commissioner Bob Anthony voted against the measure.

The problem may be less severe and state action less needed because oil prices have risen in the last two weeks, officials said.

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OCC OEPA Waste Case & Levinson Case

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Richard Parrish | OEPA Regulatory Affairs 

The Corporation Commissioners took up deliberation/discussion/consideration of the above-referenced cases today.  The Commissioners took up the LPD Energy (Levinson case) first.  After a very brief discussion, they approved the order, attached. The LPD Order is substantially the same as the previous interim order entered in that case.

They next took up OEPA’S case. It was noted that proposed orders had been submitted by OEPA and Kaiser Francis Oil Company that was substantially the same. The Commissioners then held a brief discussion. Commissioner Murphy indicated that the OEPA proposed order was not necessary as there was not much difference in the OEPA proposed order and the Order they approved in the LPD case adequately addressed the issue. Commissioner Murphy further noted that the OEPA case as filed requested prorationing but OEPA changed its requested relief. Chairman Hiett stated that he was uncomfortable with the declaration that waste was occurring as stated in the OEPA proposed order. Chairman Hiett further suggested that the OEPA case be tabled, making it dead but revivable if the Applicant wanted to continue working on the matter. Commissioner Anthony suggested that the matter be laid over to a future date. Commissioner Hiett then announced that the OEPA case was tabled for today to be taken up next week.