The Oklahoma Supreme Court has upheld in a 5 to 4 ruling the formula
used by the Oklahoma Corporation Commission in calculating Lone Star
Gas Co.'s rate base and cost of gas for its state ratepayers.
In awarding Lone Star a $5.28 million rate increase in November
1983, the commission's computations were based on what is used and
useful to Oklahoma ratepayers and not Lone Star's system-wide costof
Lone Star operates its natural gas public utility in both Texas
and Oklahoma. Its transmission systemspans the heart of Texas, that
state's southern plains and Gulf Coast. About 98.3 percent of
thecompany's system-wide demand is in Texas.
In Oklahoma, Lone Star's transmission system encompasses only a
southeastern portion of the state and accounts for 1.7 percent of
total system utilization.
Texas gas is priced higher than Oklahoma gas utilized by the
company and computing Lone Star's cost of gas on a system-wide
average would increase the cost of gas to Oklahoma ratepayers by
$1.22 per thousand cubic feet, the court said.
Oklahoma limits the increase in cost of gas dedicated to the
Oklahoma intrastate market while Texas does not, which accounts for
Lone Star appealed the commission's formula arguing it was caught
in a "regulatory squeeze" because the Texas Railroad Commission, the
equivalent of Oklahoma's corporation commission, allows Lone Star to
roll-in a system-wide average.
The court ruled that Oklahoma has an excess supply of lower priced
natural gas and Lone Star benefits by having Oklahoma on its system.
"Lone Star," the court said, "advocated a formula which attributes
to Oklahoma ratepayers expenses of the Lone Star operation which are
not used and useful to Oklahoma ratepayers.
"A utility rate which provides a fair return upon the fair value
of Lone Star's property used and useful in supplying the service
furnished can neither be said to be unreasonable or unjust, nor
confiscatory in nature.". .
- The staff of House conferees on the committee on tax reform is
rumored to be considering a position that would allow the oil and gas
industry to keep deductions for intangible drilling costs and
percentage depletions in full but, under the regular tax system, a
net income offset.
An operator would get the deduction depending on income.
How such an offset could be implemented is apparently still to be
worked out but its not likely to benefit companies in the initial
phases of a drilling program with little income. . .
- Warren Drilling Co. has apparently hit a good well by
re-entering an abandoned Major County attempt and drilling another
800 feet or so deeper.
The Oklahoma City company's Schoeppell 1-7, ne 1/4 Sec 7 20N 12W
had calculated open flow on a four-point test of 24 million cubic
feet of natural gas daily from the Mizner Hunton formation.
It is flowing 3.6 million cubic feet a day and 31 barrels of
condensate on a ba13/64-inch choke with 2,850 pounds of flowing
tubing pressure. The gas is being sold to Phillips Petroleum Co.
Total depth of the well was 9,259 feet. It was perforated between
8,720 and 8,732 feet.
The well had previously been drilled to 7,944 feet, reportedly by
TXO, then stopped. . .
- The Oklahoma City Assxociation of Petroleum Lease and Title
Analysts will hold its next meeting Aug. 19 at the Marriot Hotel on
Guest speaker will be Monica A. Amis on "Miscellaneous Title
Problems Associated With Bank Failures in Oklahoma.". .
- Petroleum imports from the Organization of Petroleum Exporting
Countries increased sharply during the first four months of the year
while imports declined from non-OPEC producers, says the American
Petroleum Institute. …