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."
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