The Good, The Bad, The Ugly

As I write this article, I am reminded on the old Clint Eastwood movie title, The Good, the Bad and the Ugly. The movie title aptly describes the current state of the oil and gas industry in Oklahoma.

The Good would be indicated by the recent passage of Senate Bill 809. Thanks to the hard work of a number industry and business organizations and leaders, including Terry Stowers of the Coalition of Oklahoma Surface and Mineral Owners, the legislature passed and the governor signed into law this important piece of legislation. SB 809 reaffirmed the Oklahoma Corporation Commission’s role as the primary regulator of oil and gas drilling in Oklahoma and prohibits cities from enacting drilling bans.

The passage of SB 809; however, is not the end to this story. Recently, three Oklahoma legislators have requested that the Oklahoma Attorney General render legal opinions interpreting the bill on several different questions. Some of those questions are: 1) whether city ordinances that were in effect at the time of the passage of the bill are “grandfathered in”; 2) can cities use zoning requirements to effectively ban oil and gas activities; 3) can a city with a ban on oil and gas activity claim compliance with SB 809 by providing an appeal of such a ban to its Board of Adjustment or city council; and finally, 4) a request to clarify the “reasonableness requirement” set forth in the bill.

Although SB 809 is a great step toward the protection of mineral owners’ rights located in and under municipalities, it appears that the reasonableness of city ordinances may still have to be tested on a case by case basis through the court system. Therefore, OK-NARO will continue to monitor.

The Bad is that Oklahoma is still experiencing earthquakes in northern and north central Oklahoma. Recently, Governor Fallin acknowledged a link between these earthquakes experienced in northern Oklahoma and wastewater disposal wells used by the energy industry. Fallin has put in place a council called the Coordinating Council on Seismic Activity to coordinate the research and protection efforts for the state.

The Oklahoma Corporation Commission has also moved forward by issuing directives to address this problem. This problem will not be solved overnight, but it appears to be a problem that is being addressed through responsible and scientific steps and without needless overreaction.

The Ugly, unfortunately as I write this article, the price of oil continues to fall. An August 13th Wall Street Journal headline reads “U.S. Oil Prices Fall to Six Year Low”. The article sites analysts that say there is little on the horizon that would suggest a reversal in prices anytime soon. However, I watched an interview of Boone Pickens a couple of weeks ago, and he predicted $70-$75 oil by year end. Right or wrong, I choose to believe in Boone. It makes me feel better.

As Will Rogers was quoted “We are all here for a spell; get all the good laughs you can.”