Litigation and Low Prices Drill Oil Industry in Osage County
After dipping to its lowest level in years, the price of oil may have bottomed out. Reuters reports prices rose again on Tuesday behind expectations of diminished oil supplies. That will come as welcome news, if little consolation, for oil-field service companies in Osage County hard hit by the recent downturn in the industry.
The Journal Record‘s D. Ray Tuttle was at an Osage Producers Association meeting January 31 where “businesspeople and local, state and federal officials met … to hear about the effects of the downturn” and how an ongoing lawsuit against the producers is making a bad situation worse.
The lawsuit, filed against both the Osage County producers and the U.S. Bureau of Indian Affairs, claims “the BIA has failed to perform and environmental assessment on each oil and has lease as required by the National Environmental Protection Act.
“First there was the lawsuit, and then the BIA started telling everyone about their new rules,” [TriAm Acid and Fracturing Service owner Dean Ammons] said. “So there has been no new drilling since the summer.”
… “This is one slap in the face after another, but what can you do? Ammons asked. “The working man, the average Joe, is in limbo, hoping he can hang on and survive until everybody works through these issues.”
Mike Mackey, owner of Osage Wireline Inc. cut half his workforce last month:
Mackey has lived in the area for 31 years and owned Osage Wireline for 25 years, he said. Business activity today is the worst he’s seen.
“Through all the downturns we’ve had, we’ve still been able to keep working in Osage County, until now,” Mackey said.
He cut his staff of 12 in mid-January.
“The six we have left agreed to take a pay cut so they could stay on,” Mackey said.
Mackey said company revenues have plummeted 70 percent since July.
The story is similar for Don Brown, co-owner of Falcon Field Service Inc., and many other similar businesses in the area. And as Tuttle reports, the downturn isn’t just hurting the oil business, but “businesses, schools and county government…”
But Brown blames the federal government for the lack of work in the Osage County oilfield, too.
Federal regulations, stringent environmental rules and a federal lawsuit targeting all the Osage County producers have had a chilling effect on production, Brown said.