Regulatory Affairs committee Report May 13th

Richard Parrish | Regulatory Affairs


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.


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.