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Oklahoma Regulators Table Mandated Production Cuts, Adopt Storage Measures

On Monday, May 11, Oklahoma oil and gas regulators heard arguments on a petition to declare excess oil as “waste” and a plan to mandate production cuts but did not act on either proposal at the conclusion of the five-hour meeting.

In April, LPD Energy Company submitted an application to the Oklahoma Corporation Commission for the commission to declare and prevent economic waste. The Oklahoma Energy Producers Alliance, a trade group, filed a similar application for the OCC to mandate state-wide production curtailments due to global oversupply. The Commission took both proposals under advisement and did not set a future date for decisions.

Emergency Orders Adopted

In late April the OCC adopted an emergency order that allows operators to shut-in well or curtail production to prevent economic waste without losing leases. Commissioner Anthony did not vote at the time and later filed a dissent because he believed the emergency order violated due process by failing to provide legally required notice. The 90-day order took effect April 17.

The OCC adopted an additional emergency measure regulating how and where crude oil is stored at off-lease locations. The rule, which becomes effective after Governor Stitts’ signature, allows storage in locations that were not already permitted by the commission or other state and federal agencies. Operators will be required to report, stop and control any leaks and violators caught storing oil at off-lease location without a permit could receive a fine up to $5,000 per day.

For additional state updates, join the Government Affairs Townhall meetings on Friday May 22 and June 5.

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