OCC Nearing Decision on Gathering Rulemaking

As expected, there still is nearly complete disagreement among Oklahoma gatherers and producers over the fairness of current rates and service treatment. Responses to a recent Oklahoma Corporation Commission (OCC) questionnaire reveal that nearly half of producer respondents felt similarly situated producers on the same gathering system received higher or lower prices than they received. Also, 79% said this was unduly discriminatory.

"A large number of producers reported perceived unfair or unethical treatment by gas gatherers. Seventy-two percent of respondents reported this problem," according to a report to commissioners on questionnaire responses. "It should be noted that in each category, such as threats of increased gathering rates in order to purchase gas, high rate and low price in non-competitive situations, inducing long-term commitments by threats of curtailment, etc. that the respondents reporting no problems in that area approximately equaled those reporting unfair treatment."

Gatherers who responded to the commission questionnaire declined to disclose whether similarly situated producers received higher or lower prices for gas/rates for gathering. However, gatherers "universally felt such practices were not unduly discriminatory." Gatherers also were in near complete agreement opposing public disclosure of rates, terms and conditions. "The gatherers cited competitive reasons as the rationale for their position. About two-thirds of the gatherers offer the same terms to all parties at the wellhead. One-third do not."

The OCC is in the midst of considering whether to begin a rulemaking on gathering regulation and an informal gathering complaint mediation procedure that does not require parties to hire legal representation. Here, according to questionnaire responses, gatherers and producers seem to be united in their distaste for hiring lawyers. Combined, 140 respondents favor an informal mediation procedure, and only 14 oppose such a measure.

Following a veto of gathering legislation in the last session of the Oklahoma legislature, the governor issued an executive order to the OCC to review gathering rules and regulations to determine whether revision or update was necessary. The OCC held its first hearing session Oct. 19 in a notice of inquiry for a possible rulemaking on gathering. That hearing is to resume Wednesday. Previously, technical conferences were held at the OCC Aug. 14 and Sept. 14. A decision on whether the commission will proceed with a rulemaking should come shortly after this week's resumption of the hearing, according to Larry Lago, an aide to OCC Commissioner Bob Anthony.

Joe Fisher, Houston

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