News from the Oklahoma Corporation Commission

OKLAHOMA CITY – The Oklahoma Corporation Commission has voted unanimously to continue the present limit on gas production from unallocated wells through the second and third quarters of 2000.

The production limit of the greater of 65 percent of calculated wellhead open flow or 2 million cubic feet of gas per day has been in effect since the second quarter of 1999. Unallocated wells are not regulated by production limits for specific fields.

The commission order issued late Wednesday (March 1) said continuing the present production allowable will "preserve a stable regulatory environment and maintain important incentives to the domestic petroleum industry."

The commission staff recommended the continuance. No one opposed it.

Limiting production from high-volume wells is designed to ensure that all producers have a chance to share in the available market. Duncan Woodliff, production/proration manager, said demand for natural gas remains strong and there are ample markets for Oklahoma gas.

Commissioner Denise Bode said she voted to continue the current production allowable because "with natural gas having the opportunity to provide great economic growth for Oklahoma, we want to encourage drilling activity in the state.

"As we begin deregulation of the electric industry, we must position our gas industry to take advantage of the opportunities as they present themselves."

Chairman Bob Anthony noted that natural gas production contributes more than $3 billion annually to Oklahoma’s economy. He said continuing the present production ceiling encourages additional production by rewarding those willing to invest in high-cost deep drilling with an opportunity to receive a reasonable return on that investment.

The production ceiling affects only a few wells because most of Oklahoma’s approximately 29,000 unallocated gas wells don’t produce enough gas to reach the limit.

The Corporation Commission is required to set gas production limits twice each year, before the start of the summer and winter gas buying seasons.

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