Newspaper article THE JOURNAL RECORD

White Oil Questions Cloud Panhandle Future / Railroad Commission Tangled Up in Liquified Gas Argument

Newspaper article THE JOURNAL RECORD

White Oil Questions Cloud Panhandle Future / Railroad Commission Tangled Up in Liquified Gas Argument

Article excerpt

WASHINGTON - The Texas Panhandle is used to living from boom to bust.

""We've always lived in a kind of unique area,'' says Pampa Mayor Sherman Cowan. ""You know, when there was a recession going around, we were the first to feel it but the first to get over it.''

But, he says, ""white oil'' has changed that.

The argument over whether liquified natural gas - ""white oil'' - can legally be sold by independent oil drillers has tangled up the Texas Railroad Commission, which regulates the oil industry in the state, and the Federal Energy Regulatory Commission in Washington, which regulates natural gas in interstate commerce.

The independents were accused by major oil companies of tapping into the majors' natural gas reserves under the guise of drilling for oil.

Both the state and federal agencies have ruled against the independents, who have appealed in state and federal courts, and the state agency and the federal commission are arguing over who has jurisdiction in the case.

But as the wheels of bureaucracy grind away, the hum of drilling rigs has slowed in the Panhandle, and so has the area's economy.

Lingering uncertainties about the legality of the oil drilling has stagnated the area's economy, affecting it more than the recent drop in oil prices, says Cowan.

The Amarillo Globe-News reported recently that about 30 merchants in Borger and Pampa reported business was down from 20 to 60 percent.

""It's a snowball effect, and we're just starting to see the snowball begin rolling down the hill,'' said Pampa attorney David Martindale, who represents about 300 royalty owners.

""Unless there's something rather quickly done, I think what you're going to see - and I don't think I'm being overly dramatic - is the death of the Panhandle economy up here,'' he said.

With the FERC preparing for an August remedies hearing at which it could demand a return of their gas profits, independent oil drillers are pulling out.

Cowan estimates that his town's 25,000 population has dropped about 10 percent since the white oil boom, which began in the late 1970s, went bust.

""The majority of people that left came in during the boom years,'' said Cowan, who says his own business, oilfield construction, is off 50 percent this year over last.

""The area we live in is basically agriculture and oil,'' he said. ""We don't live in an area that has a lot of high tech resources.''

Martindale said his law firm's business is also down about 50 percent.

""I've got five bankruptcies sitting on my desk right now,'' he said. …

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