Daisy Creager | The Journal Record
OKLAHOMA CITY – An ongoing saltwater purge in Blaine and Kingfisher counties and the relationship between horizontal and vertical drillers will be among the issues the Oklahoma Energy Producers Alliance will take up during the upcoming legislative session.
In a presentation to state legislators Thursday at the state Capitol, OEPA leaders discussed concerns they hope will be addressed. Kurt Bollenbach, managing director of Teocalli Exploration, a small independent oil and gas operator primarily located in northwest Oklahoma, discussed the ongoing saltwater purge occurring on the border of Kingfisher and Blaine counties.
Reported to the Oklahoma Corporation Commission July, the purge lead regulators to issue orders for the temporary restriction of disposal wells in the area. Bollenbach said the purge has been caused by producers disposing of the toxic water at too shallow of depths. Water with a salinity just shy of the Dead Sea’s is purging from cracks in the ground at a rate of 2 to 15 gallons per minute, enough to fill a swimming pool every day.
Water was previously disposed of at depths of 1.5 to 2 miles beneath the surface, but seismic activity led the industry to dispose at about three-fourths of a mile beneath the surface, he said.
“The seasoned producers I’ve had discussions with as well as those professionals who are truly concerned with resolving this problem, we’ve had a general consensus of two things. One, this is not naturally occurring, we’ve caused it. Two, the purge is a symptom of simply forcing too much water at too high a pressure in too shallow of zones. In other words, we’re just overdoing it,” Bollenbach said.
Art and Yvonne Platt lost everything due to horizontal fracking.
The Tulsa World
Op-ed by Dewey F. Bartlett, Jr., OEPA Chairman
The members of the Oklahoma Energy Producers Alliance are proud to have led the way for a flat 7% gross production tax for all wells to pay our teachers properly. We went as far as organizing an initiative petition drive to let the voters decide.
The Legislature compromised at 5% GPT for new wells. This was a huge win for the state and a compromise we supported. The improvement of teacher recruitment and tax revenue are now the result, as promised.
But the narrative of the big oil company association continues to be that they are overtaxed even after the 5% GPT compromise. To imply that a lowering of the GPT will keep rigs from leaving Oklahoma is simply poppycock! The compromise of 5% GPT is still lower than the GPT in other major producing states.
There is no question the Oklahoma rig count is falling. A major factor is the recent sharp decline in the price of crude oil. Insisting on a 3-point reduction in the gross production tax is not a solution to keep rigs drilling in Oklahoma.
If anyone would make a drilling decision based on a 3-point tax difference then their business model needs serious revision. At $50 per barrel, a 3-point difference would be $1.50 per barrel. A few days ago, the daily price of crude oil fluctuated by $2.21 a barrel.
The other major fact is that the Permian Basin in Texas has long been the absolutely dominant basin for oil and gas production in the U.S. The tight rock from which the historic production has been derived is commonly 2,500 feet thick, compared to an average of perhaps up to a few hundred feet in the reservoirs that make up similar Oklahoma plays. Too many “straws” in Oklahoma’s SCOOP and STACK plays are now reducing prior projections of estimated oil and gas reserves. Companies are reporting that additional wells are also damaging their own straws and their neighbors’ straws. By the way, hundreds of established vertical wells have been destroyed by horizontal frack jobs. The analysts have become more critical of the potential of Oklahoma plays, especially in comparison to the Permian Basin, but also compared to the Bakken in North Dakota and the Eagleford in Texas.
In my opinion, any migration of rigs is not due to the gross production tax. Common sense dictates that low-priced crude oil and natural gas coupled with an overly ambitious drilling program are the problem.
So even if Oklahoma were to make the decision to eliminate the gross production tax completely on these wells, it still wouldn’t make a difference compared to other basins in other states. Does anyone think it would be smart to subsidize drilling in Oklahoma by taking even more out of a state budget that is just now recovering? We hope not.
Oklahoma has a long history, at least until now, of conservation of our resources so that future generations will have access to them. Geology and the price of oil and natural gas determine the decision where to drill. That is as it should be.
Daisy Creager | The Journal Record
A bill creating a task force to evaluate the impacts of new drilling on existing wells, a topic that has horizontal and vertical drillers at odds, is moving to the Oklahoma Senate Appropriations Committee after winning unanimous approval from the Senate Energy Committee on Thursday.
Mike Cantrell | The Journal Record
Number four of the Rotary Club’s Four-Way Test – whether something is beneficial to all concerned – comes to mind when observing the ongoing dispute between a segment of the state’s oil and gas industry and the state’s county commissioners and municipal governments.
The Oklahoma Energy Producers Alliance, made up of small oil and gas producers across Oklahoma, respectfully disagrees with the state’s big oil and gas producers over House Bill 2150, which would strip virtually all authority of local and city governments over the oil and gas industry.
In our view, that is a serious overreach. The most egregious hypocrisy of this bill is that it hides the true intent behind the “rights of mineral owners.”
If enacted, this bill will create a backlash over time, harming our relationship with our fellow citizens.
The state’s oil and gas industry has enjoyed unusual support from the state’s elected officials. That support should be honored as a covenant with Oklahoma to always measure our political initiatives with the best interest of the citizens of Oklahoma in mind. If that unwritten covenant is not honored, our industry will inevitably suffer in the long run.
The horizontal frackers and their trade association maintain they should be allowed to use the county rights of way to lay “temporary lines” to transport water from location to location regardless of the authority of the state’s county commissioners. A recent state Supreme Court decision reaffirms that the “Oklahoma Corporation Commission has exclusive jurisdiction over oil and gas operations” – an assertion with which we largely agree.
Daisy Creager | The Journal Record
The Oklahoma Corporation Commission will consider a rule proposed by Devon Energy that would require vertical drilling operators to take action to reduce environmental impact of horizontal drilling prior to and during the drilling process.
The rule will need to receive two out of three votes to progress to the state Legislature for consideration.
Matt Skinner, public information officer for the OCC, said currently well hits are required to be reported only if there is pollution, but the commission began urging the reporting of well hits that do not involve pollution in 2017 so the OCC could collect data.
Since then, the OCC has received 49 reports of incidents that did involve pollution and 74 reports of incidents not involving pollution, Skinner said.
Mike Cantrell, president of the Oklahoma Energy Producers Alliance, said the organization is against the rule, which would affect smaller oil and gas companies more than large ones.
Mike Averill | Tulsa World
Some vertical well operators are concerned about a proposed revision of oil and gas conservation rules determining the responsibility for environmental cleanup in cases involving horizontal drilling.
Leaders of the Oklahoma Energy Producers Alliance, which represents vertical producers, believe the revisions would unfairly favor horizontal drillers.
At the core of the issue is determining what party is responsible for environmental cleanup in cases when a horizontal well causes fracking fluid and sand to come up through an existing vertical wellbore.
“We need to come to a place where we have a good, reasonable solution so everyone’s interests can be met in a proper fashion,” said Dewey Bartlett, OEPA board chairman.
Devon Energy has proposed language to the corporation commission that would formally place the responsibility on wellbore operators, upon receipt of timely notice of hydraulic fracturing near its wellbore, to actions prior to and during fracturing operations to prevent an environmental impact.
Richard Parrish, an Oklahoma City-based attorney representing the OEPA, told members of the group during a meeting Friday that there have been several recent cases where horizontal hydraulic fracturing resulted in pollution through a producing wellbore and the corporation commission determined the vertical operator was responsible for cleanup.
“The horizontal operator is not being required to limit their frack or concern themselves or make sure the wells being fracked won’t cause purging,” Parrish said. “This is going to be a real problem around the state. We know of at least 47 incident reports of wells purging as a result of horizontal fracks.”
Members of the OEPA are trying to gather support in opposition of the pending revisions and are proposing an alternative revision stating that horizontal well operators giving notice of hydraulic fracturing operations should be required to take reasonable actions to prevent environmental impact.
“There is a need to find common ground for the benefit of Oklahoma,” Bartlett said. “Each one of us represents a company that has an owner and a lot of employees and their families. By us finding a common ground it means the breadwinners will be able to continue to support their family in a good way.”