Newspaper article THE JOURNAL RECORD

Ruling Favors ONG in Creek Systems Case

Newspaper article THE JOURNAL RECORD

Ruling Favors ONG in Creek Systems Case

Article excerpt

Another conflicting ruling has been issued at the Oklahoma Corporation Commission in a dispute between Oklahoma Natural Gas Co. and Creek Systems, in which Commissioner Bob Anthony asserts improper conduct has occurred in the past.

An appellate judge filed a report Tuesday upholding the portion of an administrative law judge's recommendation Aug. 12 to reverse an interim order by the commission that was in favor of Creek Systems.

Appellate Judge Randy Specht's report suggests ONG should prevail in the dispute over two months of gas purchases from Creek Systems. Commissioners ruled on an interim basis in May for Creek Systems, after voting against Creek Systems in March.

Thus, Specht recommended that the 244 million cubic feet of gas purchases from Creek Systems by ONG, which were previously ordered by the commission, be denied.

The battle between Creek Systems of Norman and ONG goes back to April 1990, and there have been several conflicting decisions at the commission surrounding the dispute.

At the crux of the dispute are the Priority Take Rules adopted by the commission in January 1984 at the request of ONG, which set up a five-tier category of gas wells and the order from which first purchases must be taken.

Under a 15-year contract signed by ONG and Creek Systems in 1980, ONG was to buy natural gas from Creek Systems at $2.83 per thousand cubic feet from November through April. Creek Systems, a partnership managed by Gage Corp. of Norman, operates a gas gathering pipeline in Creek and Okfuskee counties; an affiliate runs an enhanced recovery project in the area that recycles gas later sold to ONG. Creek Systems says it also buys gas from 130 to 165 low pressure, or hardship, wells.

Until April 1990, the contract apparently was met without a hitch. Then, ONG notified Creek Systems that it would not make gas purchases for that month by invoking the Priority Take Rules.

Creek Systems disputed application of the Priority Take Rules. Creek Systems asserted that the rules only apply to first purchasers of gas, and since Creek Systems buys gas from several sources to resell to ONG, the rules had no bearing on the issue. At the time, Specht agreed with Creek Systems, but the commission rejected his recommendation and ruled for ONG. Creek Systems appealed the commission decision to the Oklahoma Supreme Court.

No high court ruling has been made on the issue.

Meanwhile, in February ONG notified Creek Systems that it would suspend March gas purchases as well. Hence, the current dispute.

In the present case, Creek Systems asked for a deviation from the Priority Take Rules for the months of March and April.

The commission had rejected the deviation March 3, but granted it May 19 on an emergency interim basis in advance of a hearing before an administrative law judge. …

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