News from the Oklahoma Corporation
Commission
Phone: (405)
521-4180, FAX: (405) 522-1623, m.skinner@occmail.occ.state.ok.us
BOTH A BOOM AND A BUST?
Corporation Commissioners express concern over latest energy stats
OKLAHOMA
CITY -- Oklahoma’s oil and gas industry is experiencing a revival many thought
would never occur.
But
members of the Corporation Commission, which regulates oil and gas exploration
and production in Oklahoma, say the latest numbers show there is still a dark
lining to that silver cloud.
Commission
Chairman Denise Bode says there is a dire need for a national energy policy
that will reduce oil and natural gas price volatility and encourage more
domestic production.
Bode
likens the domestic energy situation to throwing a party that only a few can
attend.
“Our
numbers show prices for Oklahoma oil and gas at near-record levels, but
production continues to lag,” said Bode.
“The
nation’s long-standing policy of ‘cheap energy at any price’ has, ironically,
caused far higher price volatility than should be the case, as domestic
producers were put out of business over recent years at record rates. Rigs were
scrapped, and experienced oil field hands found work in other sectors,” she
explained.
“Now
we are faced with fewer domestic producers scrambling to meet demand while
handicapped by a lack of equipment and manpower. The latest numbers, which
track January through September of 2003, show both oil and gas production for
the period lagging behind the 2002 total, even though prices are sharply
higher.
“The
last time energy prices were near these levels, Oklahoma had over eight hundred
rigs actively exploring for oil and natural gas,” said Bode. “The latest Baker-Hughes rig count for
Oklahoma is only 146.”
(more)
(Production, pg. 2)
Vice-chair Bob Anthony said the situation shows the
clear need for a multi-faceted policy that addresses more than just energy
concerns.
“As a member of both the Gas Committee and the
Special Natural Gas Task Force of the National Association of Regulatory
Utility Commissioners, I have received various estimates that agree on one
central point: natural gas demand in this country will continue to grow and
producers are having a difficult time meeting even current needs.
“It is the classic ‘Catch 22’ situation. Natural gas usage is increasing because it
is offered as the clean-burning, environmentally friendly fuel. Yet, environmental concerns prohibit
producers from drilling in many of the most promising areas both on and
offshore.
“Meanwhile, production from the mature areas that
have been drilled for years continues to decline and becomes more expensive to
replace. Although prices to consumers
are at an all-time high, that extra money is not necessarily going to producers
to meet the increasing drilling expenses.
Part of it goes to middlemen marketers and investors who often allow the
speculative commodities and futures markets to dictate price more than true
market conditions,” Anthony explained.
Commissioner
Jeff Cloud noted, “We finished 2003 with intent-to-drill applications at a
15-year high in Oklahoma. However, the number of rigs in Oklahoma actively
exploring for oil and natural gas is only at about a 29-month high.”
Cloud
explained, “The Oklahoma Corporation Commission faces the awesome
responsibility of protecting the environment and providing a system for
resolving issues and disputes involving producers, mineral owners, and surface
owners. We also are responsible for ensuring the orderly and beneficial
production of Oklahoma’s oil and natural gas resources. Our employees are going
‘above and beyond’ to meet the challenge. I deeply appreciate the Oil and Gas
Division staff’s diligence and hard work.
We must do everything possible to ensure this excellent service
continues and we must provide a business climate that is favorable for
increased investment in the critical energy sector.”
(more)
(Production,
pg. 3)
The
latest oil and gas industry numbers from the commission show the number of
drilling applications rose to a 15-year high in 2003 with a total of 5,119.
However,
the latest Commission data on Oklahoma oil production shows oil production
decreased for the first nine months of 2003, totaling about 48.6 million
barrels. That was down from about 50.1 million barrels in the same time period
a year before.
Perhaps
more telling is that the production slump came in spite of the fact that oil
prices for the 2003 period were very high, averaging more than 27 dollars a
barrel. Production for the time period was even less than for the same period
in 1998, when Oklahoma crude prices dropped to 60 year lows (5 to 6 dollars per
barrel), when adjusted for inflation.
September
2003 oil production totaled about 5.2 million barrels, an increase of
approximately 110 thousand barrels from the August (revised) production of
about 5.1 million barrels.
Natural
gas production in Oklahoma during the first nine months of 2003 totaled about
1.13 trillion cubic feet. That is also a decrease from the same time period in
2002, when natural gas production totaled about 1.18 trillion cubic feet.
As
was the case for oil, the drop in production comes in spite of a sharp increase in the price of natural
gas. The average price for Oklahoma gas during the first nine months of 2003
was about $5.00 per thousand cubic feet, up from $2.69 for the same time period
in 2002.
September
2003 gas production totaled slightly less than 112 billion cubic feet, a sharp
decrease from the August 2003 (revised) production total of about 129 billion
cubic feet.
-OCC-
All OCC
advisories and releases are available at www.occ.state.ok.us
**Please Note: All
production numbers are subject to change, and should be used for trend purposes
only.
EDITORS, PRODUCERS: ATTACHED
IS A CHART SHOWING THE COUNTY-BY-COUNTY BREAKDOWN OF THE PRODUCTION NUMBERS.
ALSO ATTACHED IS AN EXCEL
CHART SHOWING APPROVED INTENTS-TO-DRILL FROM 1944-2003.
FOR MORE STATISTICS ON OIL
AND GAS PRODUCTION IN OKLAHOMA, CALL LARRY CLAXTON, MANAGER - STATISTICS/SURETY
DEPARTMENT, OIL AND GAS DIVISION, OKLAHOMA CORPORATION COMMISSION (405)
521-2273.