Newspaper article THE JOURNAL RECORD

Officials Debate Future of Natural Gas Allowable

Newspaper article THE JOURNAL RECORD

Officials Debate Future of Natural Gas Allowable

Article excerpt

Industry representatives presented a range of viewpoints Tuesday at a technical conference held at the Oklahoma Corporation Commission concerning 1994 fourth quarter natural gas allowables for unallocated wells.

Claude McNully, manager of the oil and gas division's technical department, said the staff had not made a decision as of Tuesday afternoon on what recommendation it would present to the commissioners. The hearing is set for 9:30 a.m. Tuesday.

For the three previous quarters, allowables have been set at the greater of 45 percent of wellhead absolute open flow potential or 1 million cubic feet per day.

Fear of a short-term problem of oversupply in gas storage was cited by some industry representatives Tuesday as a reason to reduce natural gas allowables.

Data from industry officials that show storage levels to be 74 percent of capacity with predictions that storage capacity will be achieved by mid-September "confirm the need to cut back allowables on a temporary basis," according to comments presented to the commission by Continental Resources Inc. of Enid.

Continental stated that the allowables must be decreased to conserve natural gas.

"Conservation of Oklahoma's natural gas resources is not occurring," according to comments filed by the company.

"The market is oversupplied as a result of a rate that was set too high for too long," said Harold Hamm, president of Continental.

Continental asked that the allowables be set at the greater of 35 percent of absolute open flow or 1 million cubic feet per day due to the waste of natural gas occurring in the state.

Kaiser-Francis Oil Co. of Tulsa also supported a reduction in allowables for the fourth quarter.

"The allowables are too high. Storage is near full; the market demand is not there to support the allowable that we have in place of 45 percent," said Buddy Kleemeier of Kaiser-Francis Oil Co. …

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