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Oklahoma Continues Green Light for Increased Production

Oklahoma Continues Green Light for Increased Production

In response to national concerns over a possible natural gas shortage this winter, the Oklahoma Corporation Commission has given producers with unallocated gas wells in Oklahoma the go-ahead to continue their increase in production to the limit.

The order which was issued last week will act as an extension of the commission's previous finding to allow unallocated gas wells in Oklahoma to produce the greater of 65% of calculated absolute open flow (CAOF) or 2 MMcf/d.

The commission believes these numbers represent the maximum amount a well can physically produce in Oklahoma. Commission Chairman Bob Anthony believes that there is no reason for Oklahoma consumers to panic. "While the tightening market conditions will undoubtedly be reflected in higher energy prices this winter, all indications are that our state utilities will have an adequate supply of natural gas to serve their customers during the upcoming heating season," Anthony said.

Commission Vice Chairman Denise Bode believes that the order will be beneficial for consumers and the energy industry, but warns that it is not a silver bullet. She points out that even "maximum production of existing wells will not replace new production. The numbers show gas production is relatively flat. Even though the higher prices have prompted a renewed interest in exploring for additional gas, on average it will take at least two years before we see any impact on the total output. At the same time, any gain could be offset by the loss of aging, existing wells. When coupled with the expected increased demand for natural gas for electric generation, it becomes clear a problem exists."

In relation to the passage of the order, the commission is calling for actions aimed at addressing problems over the long term as well. "The commission needs to get input from the industry, consumers and other policymakers on other actions we can take to increase gas exploration and production in Oklahoma to make sure Oklahoma consumers continue to be supplied with abundant, reasonably priced energy," Bode said. "We are planning several get-togethers here within the next month with both utilities and with industry and consumer groups to see if we can work together as a team to come up with short term and long term solutions."

Alex Steis

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