By Ronda Fears Journal Record Staff Reporter Aside from the
philosophical aspects of natural gas as a major resource of
Oklahoma, the Natural Gas Policy Commission will be examining
possible solutions to problems of overproduction, high tax burdens
and storage, among many more.
Numerous issues will be before the commission, spanning the
natural gas industry from the wellhead to the burner tip, said
commission Chairman Bob Alexander, but major topics will be
proration, storage and taxes.
The Oklahoma Corporation Commission also has under way a notice
of inquiry into the entire scope of the natural gas industry in
Oklahoma, both isolated within the state and vis-a-vis the
interstate market. Comments are due in that proceeding by Dec. 31.
The Natural Gas Policy Commission is aiming to make a report
before the Legislature convenes in February. The meeting Monday was
the group's second. Presentations from about 20 specific interests
related to the natural gas industry, also ranging from the wellhead
to the burner tip and all in between, are being scheduled for Dec.
2 and Dec. 13.
Several written comments already submitted to the group include
philosophical statements about the importance of natural gas to
Oklahoma as the third top producing state in the nation and the
need to encourage additional use of the commodity.
But, perspectives from producers, pipelines, marketers, federal
and state regulators are being sought to discover existing problems
and explore solutions.
Proration is a controversial subject among the industry, but
Oklahoma Energy Secretary Charles Nesbitt has drafted legislation
for consideration when the Legislature convenes in February.
The oil and gas industry at every level is divided on the issue
A particular tax to be examined is the conservation excise tax
that kicks in on gas that is priced below $1 per thousand cubic
feet. At that point, the tax is levied at 7 cents per unit rather
than 7 percent of the total price. However, the tax is not supposed
to exceed one third of the total price.
Under some old gas contracts, Alexander said, the tax balloons
to 34 percent of the total price.
Storage, an increasingly important tool for large end users of
gas such as gas utilities, will also be probed by the policy
commission, as well as issues such as storage capacity available
and locations out of state.
On proration, some criticize that it is merely an attempt to
bolster gas prices, which in July dipped to a record low of 95
cents per thousand cubic feet.
Ben Jackson, chief oil and gas attorney at the corporation
commission, said the concerns about anti-trust violation with
proration should not be an obstacle. In existing gas fields where
production is regulated, or where field rules have been
implemented, there is a certain amount of cooperation among several