Martin Vaughan calls natural gas the future mineral wealth of
But Vaughan, president of Fortuna Energy Corp. of Tulsa, says the
natural gas business is in trouble as deep as Oklahoma's deepest
reserves - complete with thievery and bound by abominable laws.
""It's utter chaos,'' says Sen. Gene Stipe, D-McAlester.
Stipe is sponsoring a resolution calling on the governors of
Oklahoma, Texas, Louisiana and New Mexico to establish an interstate
natural gas compact commission.
More than half of the natural gas in the United States exists in
the four states, Stipe said.
Stipe said the proposed compact could ""stop these chaotic
marketing conditions and stabilize the industry.''
The industry is in the same shambles as the oil business was in
the 1930s, when Gov. Alfalfa Bill Murray called in the National Guard
to shut in wells because of waste and stealing, according to Vaughan
Out of that confusion grew the Interstate Oil and Gas Compact
Commission, Stipe said, and he envisions similar results with a
natural gas commission.
In today's natural gas fields, the rights of mineral owners are
being violated and gas is being wasted, Stipe charges.
Reserves are being drained by producers who have a market for
their gas, while other producers who own part of the same reserve but
don't have a market ""are losing their reserves and, possibly, the
wherewithal to make an income,'' said Jack Davidson, chief of the
Corporation Commission's oil and gas division.
""It's simply a very complex situation,'' Davidson said. ""Some
are benefitting, some are getting hurt. . .We're doing all we know
how to do to investigate the situation.''
An oversupply, not of reserves but of gas on the market, has led
to prices that are so low that producers can't afford to reinvest to
explore for future reserves, Davidson said.
Vaughan worries the situation, if not corrected, could lead to
severe shortages by as early as 1990. A shortfall of 8 trillion
cubic feet of natural gas - almost half the nation's current
consumption of approximately 17 trillion cubic feet - has been
predicted, he said.
Because drilling and exploration for new reserves have been
severely reduced, Vaughan foresees ""a humongous shortfall. . .an
absolute disaster in the making.''
He envisions, however, ""a better situation developing very
rapidly,'' should a compact commission be created that helps conserve
the state's wealth of natural gas and protects the rights of mineral
As Vaughan sees it, here's one of the problems in the natural gas
fields of Oklahoma:
One producer has a long-term contract to produce a limited amount
of gas at $3 per thousand cubic feet; another producer of the same
reserve has a spot market contract for $2 per thousand cubic feet
with a purchaser willing to take all the producer is able to pump
from the ground.
Because gas generally is more difficult to pump as the reserve is
depleted, the producer selling on the spot market ""is literally
stealing'' gas from the producer with the long-term contract, Vaughan