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Oklahoma Corporation Commission emergency order allows operators to shut-in oil wells

  • 1.  Oklahoma Corporation Commission emergency order allows operators to shut-in oil wells

    Posted 04-23-2020 14:11
      |   view attached
    In the wake of the COVID-19 pandemic, on April 22 the Oklahoma Corporation Commission (OCC) issued an emergency order allowing operators to shut-in or curtail oil production in wells to prevent economic waste.

    According to the announcement from OCC Commissioner Dana Murphy:

    The global energy landscape has been turned upside down due to the COVID-19 pandemic. While overproduction by Saudi Arabia and Russia has played a role in the collapse in oil prices, the far bigger factor is a drop in oil demand that only weeks ago would have been thought impossible. There was no way for Oklahoma and other U.S. producers to anticipate and plan for up to 30 million barrels per day of consumption to disappear within just a few weeks.

    Thanks to the resourcefulness and ingenuity of America’s oil producers, the U.S. has taken a position of energy independence in this century. No one understands the oil business better than Oklahoma’s operators. Today’s action by the Commission gives those operators the freedom and flexibility they need to respond to market forces and decide what actions to take to survive.

    Oklahoma’s oil producers have faced and triumphed over many challenges in the past 100 years. I have no doubt they will win out even over these previously-unimaginable market conditions.

    Specifically, the order provides:

    THE COMMISSION THEREFORE ORDERS that to assist in the prevention of waste,
    protection of correlative rights, and to optimize production, operators/producers may shut-in or
    curtail oil production from wells where they determine such action is necessary and warranted to
    prevent economic waste.

    THE COMMISSION FURTHER ORDERS that this Order is subject to extension or
    modification as necessitated by this abnormal market pricing environment, or as the Commission
    determines otherwise.

    THIS ORDER SHALL BE EFFECTIVE as of the date of the hearing, April 17, 2020, and
    shall remain in effect for ninety (90) days or until superseded by a subsequent order, whichever
    comes first.

    To view the announcement and emergency order, please see the attached document.

    For more information, see: https://www.reuters.com/article/us-oil-usa-oklahoma-cuts/reeling-oklahoma-oil-producers-win-right-to-keep-leases-while-wells-shut-idUSKCN2242DR
    and https://www.tulsaworld.com/business/emergency-order-from-oklahoma-corporation-commission-allows-operators-to-shut-in-oil-wells-to-prevent/article_0963dd0e-d9f9-52a3-bfbb-67c9d5e7ab6f.html#1



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    Russell Cohen
    AAPL Governmental Affairs
    rcohen@landman.org
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