OEPA chairman says legislators and regulators should not ignore oil and gas industry
Jerry Bohnen | Oklahoma Energy Today
Jerry Bohnen | Oklahoma Energy Today
Erin Beu | KOCO News 5
Nine days until the inauguration of President-elect Joe Biden, and oil executives in Oklahoma are making plans for what they say will be a tough era.
Biden promised a carbon-neutral nation by 2050. KOCO 5 asked executives how they’re feeling.
“Get rid of the oil and gas companies? Will you remember that, Texas? Will you remember that, Pennsylvania, Oklahoma?” President Donald Trump said during one of the presidential debates.
That comment during the heated debate between Trump and Biden sparked some interest among Oklahomans.
“The oil industry pollutes scientifically,” Biden said during the debate.
Biden further explained he wanted to move away from fossil fuels and rely on green energy.
Dewey Bartlett, with the Oklahoma Energy Producer Alliance, said regardless of his political beliefs, he panicked when he heard Biden say he plans to move away from fossil fuels.
“We’ll be having problems. Everyone will be having problems,” Bartlett said. “That would not only devastate Oklahoma, that would devastate the entire country.”
According to ABC News, energy companies stockpiled enough drilling permits for western public lands to keep pumping oil for years. Biden wants to end new drilling on those same lands as part of his overhaul of how Americans get energy.
“He wanted to not allow any more drilling on federal lands, on public lands,” Bartlett said.
But that’s not happening in Oklahoma because the oil and gas companies don’t operate on too many federal lands. Instead, Bartlett said they feel like sitting ducks, waiting to find out what types of regulations Biden might put into place.
Erin Beu | KOCO News 5
About 200 people have lost their jobs at Chesapeake Energy over the last couple of days.
The layoffs represent roughly 15% of the company’s workforce.
A current employee told KOCO 5 that it’s “like a bloodbath inside” and employees didn’t have any warning of the layoffs.
Chesapeake has gone through Chapter 11 bankruptcy.
“The company itself has had some difficulties because of their extremely large debt,” said Dewey Bartlett Jr., chairman of the Oklahoma Energy Producers Alliance.
Chesapeake reported debt of as much as $21.5 billion when it filed for bankruptcy.
“It’s a real tough, tough situation, obviously,” Bartlett said.
Bartlett said he isn’t shocked to hear about Chesapeake layoffs because the price of oil has plummeted throughout 2020.
Bartlett said he doesn’t think the layoffs will be the last for the Oklahoma City-based energy company. He said he expects about 1,000 jobs to be lost throughout the country and thinks the company is only about halfway through those losses.
Niina H. Farah | E&E News
A Supreme Court ruling yesterday declaring that nearly half of Oklahoma remains Native American reservation land is causing a stir among some oil executives who are wary of increased federal regulations.
In a 5-4 decision led by Justice Neil Gorsuch, the high court found that 19 million acres of land in the eastern half of the Sooner State was part of the Muscogee (Creek), Cherokee, Chickasaw, Choctaw and Seminole Nations’ reservations.
Yesterday’s ruling stemmed from a dispute over whether an Oklahoma court had the power to convict Jimcy McGirt, a member of the Creek Nation, on charges of sexual abuse against a child (Greenwire, July 9).
The prospect of Congress taking action offered little comfort to prominent oil executive Dewey Bartlett, a former Tulsa mayor who runs Keener Oil & Gas Co.
“It’s going to be total chaos,” he said.
Bartlett said Congress should fix what he sees as a major problem, but he questioned whether lawmakers from the rest of the country would be willing to take action.
“It’s very unique to Oklahoma. With a lack of real political power, it’s going to be difficult,” he said. “The rest of the states could give a damn.”
The oil industry, Bartlett said, will be concerned about the validity of its leases. He said he is also worried that tribes could impose new taxes or environmental restrictions on developers.
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 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.
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.