Torrential rains that have swept through Oklahoma and other parts of the Midwest and Texas have come at an “incredible cost to the oil and gas industry,” the chairman of the Oklahoma Independent Petroleum Association (OIPA) said last week.

John Pilkington, president of Tulsa-based Muirfield Resources Co., was named chair of the 1,600-member OIPA in June. His privately held company targets coalbed methane plays in Oklahoma and parts of Kansas, and it owns and manages interests in about 1,300 producing wells and 18,000 net mineral acres. Lately, however, his company and other domestic producers have had a lot of time on their hands.

“We’ve been trying to get a [natural gas] pipeline in Pushmataha [OK] in the ground since January,” Pilkington told NGI. “We’ve finally gotten the electricity, and the rigs are back in, but I can tell you, the increased costs and delays that this weather has caused so far this year have come at a huge cost to our industry.” Without the pipeline, he said he and his partners were “sitting and trying to open the present, but unfortunately, Mother Nature is spoiling our party.”

It “literally rained every day” for 33 straight days, he said. Most of Oklahoma’s gas production is around McAlester, OK, where about five feet of rain has fallen in just three months. In western Oklahoma, more than 20 inches of rain have fallen over the same period.

“You try to move a big truck in that kind of weather, and it will sink into nowhere,” said Pilkington. “It can be very discouraging when it goes on and on.”

The OIPA doesn’t yet have statistics on the number of wells or the amount of production that may have been shut in or curtailed, but Pilkington said he knows that several companies have had to cease operations for days — and weeks — at a time.

“Overall, there have been a number of weeks that we’ve had to curtail operations all over the state,” he said. “When you have a week per rig, and then it turns into a month per rig to get it up and going, well, you get the idea of what’s going on. If we can even get it done in that amount of time.”

Besides the costs of not having production and the added service costs, producers are paying their crews whether they work or not.

“We have no choice,” Pilkington said when asked about how companies are managing to retain their employees when there’s no work. “It’s thin out there. If you want to have a crew, you pay them whether they are working or not. It is certainly impacting the bottom line.”

OIPA spokesman Cody Bannister told NGI that it’s not only the small producers that are curtailing their output. The state’s largest producer, Devon Energy Corp. based in Oklahoma City, also has cut back, and others have revamped their production schedules. According to the OIPA, independents produce about 88% of the state’s gas and 96% of the crude oil.

“When the guys like Devon are slowing down, it’s really having an impact,” said Bannister. “We don’t yet know how much of an impact it has had on the bottom line, but it will start showing up in the next few months.”

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