{"id":28277,"date":"2017-05-11T13:31:52","date_gmt":"2017-05-11T18:31:52","guid":{"rendered":"http:\/\/stateimpact.npr.org\/oklahoma\/?p=28277"},"modified":"2017-05-11T13:45:11","modified_gmt":"2017-05-11T18:45:11","slug":"group-defending-vertical-wells-digs-in-as-major-oil-groups-reach-deal-to-expand-horizontal-drilling","status":"publish","type":"post","link":"https:\/\/stateimpact.npr.org\/oklahoma\/2017\/05\/11\/group-defending-vertical-wells-digs-in-as-major-oil-groups-reach-deal-to-expand-horizontal-drilling\/","title":{"rendered":"Group Defending Vertical Wells Digs In As Major Oil Groups Reach Deal to Expand Horizontal Drilling"},"content":{"rendered":"<div id=\"attachment_28279\"  class=\"wp-caption module image right\" style=\"max-width: 620px;\"><img decoding=\"async\" loading=\"lazy\" class=\"size-full wp-image-28279\" alt=\"Pete Brown of Kingfisher oil company Brown & Borelli and former Tulsa mayor Dewey Bartlett of Keener Oil and Gas speak out against legislation to expand horizontal drilling at a Oklahoma Energy Producers Alliance media event.\" src=\"https:\/\/stateimpact.npr.org\/oklahoma\/files\/2017\/05\/20170510-oepa-pics022_WEB.jpg\" width=\"620\" height=\"413\" srcset=\"https:\/\/stateimpact.npr.org\/oklahoma\/files\/2017\/05\/20170510-oepa-pics022_WEB.jpg 620w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2017\/05\/20170510-oepa-pics022_WEB-500x333.jpg 500w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2017\/05\/20170510-oepa-pics022_WEB-150x100.jpg 150w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2017\/05\/20170510-oepa-pics022_WEB-300x200.jpg 300w\" sizes=\"(max-width: 620px) 100vw, 620px\" \/><\/p>\n<p class=\"wp-media-credit\">Joe Wertz \/ StateImpact Oklahoma<\/p>\n<p class=\"wp-caption-text\">Pete Brown of Kingfisher oil company Brown & Borelli and former Tulsa mayor Dewey Bartlett of Keener Oil and Gas speak out against legislation to expand horizontal drilling at a Oklahoma Energy Producers Alliance media event.<\/p>\n<\/div><p>Oklahoma oil executives have argued for years over a new law that would let companies drill and frack longer horizontal wells in new areas.<\/p><p><iframe loading=\"lazy\" src=\"https:\/\/w.soundcloud.com\/player\/?url=https%3A\/\/api.soundcloud.com\/tracks\/322138436&auto_play=false&hide_related=false&show_comments=true&show_user=true&show_reposts=false&visual=false\" height=\"150\" width=\"100%\" frameborder=\"no\" scrolling=\"no\"><\/iframe><!--more--><\/p><p>Right now, companies with leases in non-shale rock formations can\u2019t drill horizontal wells more than a mile long. This one-mile limit is frustrating many of the most active drillers in Oklahoma who say companies, shareholders, mineral owners and the state\u2019s tax coffers are missing out on millions in new development from booming oil fields. The potential is a promising political incentive, given the state\u2019s nearly $900 million budget hole.<\/p><p>The state\u2019s two largest industry groups and an organization representing surface and mineral owners this week reached <a href=\"http:\/\/newsok.com\/extended-horizontal-drilling-compromise-reached-by-major-oklahoma-energy-associations\/article\/5548598\">a compromise<\/a> on legislation to allow these longer horizontal wells, known as \u201claterals,\u201d and larger horizontal drilling units, but the move is dividing Oklahoma drillers.<\/p><p>The Oklahoma Oil and Gas Association, Oklahoma Independent Petroleum Association and the Coalition of Oklahoma Surface and Mineral Owners support the legislation. The language isn\u2019t finalized but appears likely to be carried in <a href=\"http:\/\/www.oklegislature.gov\/BillInfo.aspx?Bill=SB%20867\">Senate Bill 867<\/a>, authored by Republican House Speaker Charles McCall and Republican Senate President Pro Tempore Mike Schulz.<\/p><p>\u201cWe&#8217;ve got companies that say, \u2018We are sitting here waiting. We are ready to go,\u2019\u201d says Terry Stowers, the surface and mineral group\u2019s executive director.<\/p>\n<div id=\"attachment_28278\"  class=\"wp-caption module image right\" style=\"max-width: 619px;\"><img decoding=\"async\" loading=\"lazy\" class=\"size-full wp-image-28278\" alt=\"Workers assemble a horizontal drilling rig in southwestern Oklahoma's Grady County, near a booming oil play known as the SCOOP.\" src=\"https:\/\/stateimpact.npr.org\/oklahoma\/files\/2017\/05\/20170425-grady-county-well-pics025_WEB.jpg\" width=\"619\" height=\"413\" srcset=\"https:\/\/stateimpact.npr.org\/oklahoma\/files\/2017\/05\/20170425-grady-county-well-pics025_WEB.jpg 619w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2017\/05\/20170425-grady-county-well-pics025_WEB-500x334.jpg 500w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2017\/05\/20170425-grady-county-well-pics025_WEB-150x100.jpg 150w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2017\/05\/20170425-grady-county-well-pics025_WEB-300x200.jpg 300w\" sizes=\"(max-width: 619px) 100vw, 619px\" \/><\/p>\n<p class=\"wp-media-credit\">Joe Wertz \/ StateImpact Oklahoma<\/p>\n<p class=\"wp-caption-text\">Workers assemble a horizontal drilling rig in southwestern Oklahoma&#39;s Grady County, near a booming oil play known as the SCOOP. <\/p>\n<\/div>\n<h3>Lateral movement<\/h3><p>The pursuit of longer laterals created <a href=\"https:\/\/stateimpact.npr.org\/oklahoma\/2017\/04\/13\/energy-industry-divided-as-public-calls-to-increase-oil-and-gas-taxes-grow-louder\/\">a schism within the Oklahoma oil industry<\/a>, which is often aligned in its legislative and regulatory policy efforts. A group of oil executives left the OIPA earlier this year over that group\u2019s support of the legislation and formed their own industry organization, the Oklahoma Energy Producers Alliance, to further policies they say will better protect vertical well interests.<\/p><p>The Energy Alliance is small, but the group includes respected oil industry veterans and high-profile executives like former Tulsa Mayor Dewey Bartlett, president of Keener Oil and Gas Company. The nascent organization lacks the size and financial lobbying power of the other industry groups, but co-chair Mike Cantrell says its members are working around the clock to block the legislation.<\/p><p>\u201cWe&#8217;ve stopped a Speaker-Pro Tempore bill two years in a row,\u201d he said at a media event this week. \u201cAnd we&#8217;ve done it one member at a time. It&#8217;s the only way we can do this.\u201d<\/p>\n<h3>Crude capture<\/h3><p>The dispute at issue in the long lateral debate is an evolution of an essential conundrum at the center of arcane oil and gas law: How should a government divide and share valuable property that\u2019s underground, moves and has multiple owners?<\/p><p>[module align=&#8221;right&#8221; width=&#8221;full&#8221; type=&#8221;aside&#8221;]<img decoding=\"async\" loading=\"lazy\" class=\"alignleft size-thumbnail wp-image-28285\" alt=\"milkshake\" src=\"https:\/\/stateimpact.npr.org\/oklahoma\/files\/2017\/05\/IMG_2543-150x150.jpg\" width=\"150\" height=\"150\" \/>Common source of supply? Rule of capture? Confused? StateImpact\u2019s explains it all with an 8-year-old \u2014 and a milkshake.\u00a0Listen <a href=\"https:\/\/soundcloud.com\/stateimpactok\/group-defending-vertical-wells-digs-in-as-major-oil-groups-reach-deal-to-expand-horizontal-drilling\">here<\/a>! [\/module]<\/p><p>Companies drilling horizontal wells often drill through shallower formations tapped by vertical wells to reach formations and mineral interests deeper underground. The owners of those vertical interests say horizontal drilling and fracking reduces flow to their wells, and can even damage their wells. This problem is acknowledged throughout the industry, but vertical and horizontal producers disagree on how often it occurs.<\/p><p>Under a legal doctrine known as \u201crule of capture,\u201d horizontal drillers are allowed to produce oil and gas even if their well or completion technology \u2014 such as fracking \u2014 pulls in crude or natural gas that might otherwise migrate to a vertical well.<\/p><p>States have adopted laws and rules to balance such capture \u2014 which incentivizes mineral owners to drill lots of wells and pump quickly \u2014 with other concerns, including the impact of drilling on land, water and wildlife. Such conservation laws leave less waste and reduce the likelihood that too much drilling in an oil field can reduce flow and change pressures, which can\u00a0 harm the entire pool of oil and gas and impede all owners\u2019 ability to pump it out.<\/p>\n<h3>Drilling, disputes<\/h3><p>Disputes between drillers and different mineral owners with adjacent or overlapping oil and gas interests are common and are often settled at the Oklahoma Corporation Commission, where producers with vertical interests say they\u2019re outgunned. The OEPA wants to kill the legislation unless it\u2019s changed to protect vertical interests or makes horizontal drillers more likely to seek deals and operating agreements.<\/p><p>If a long-lateral bill does pass the 2017 legislative session, the OEPA has vowed to fight any rules regulators write to carry out the law.<\/p><p>\u201cWe&#8217;re for horizontal drilling,\u201d member Pete Brown of energy firm Brown & Borelli said at an OPEA media event this week. \u201cWe just want to do it where we&#8217;re fairly compensated.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Oklahoma oil executives have argued for years over a new law that would let companies drill and frack longer horizontal wells in new areas.<\/p>\n","protected":false},"author":36,"featured_media":28279,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[490],"tags":[679,238,564,704],"acf":[],"_links":{"self":[{"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/posts\/28277"}],"collection":[{"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/users\/36"}],"replies":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/comments?post=28277"}],"version-history":[{"count":32,"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/posts\/28277\/revisions"}],"predecessor-version":[{"id":28313,"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/posts\/28277\/revisions\/28313"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/media\/28279"}],"wp:attachment":[{"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/media?parent=28277"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/categories?post=28277"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/tags?post=28277"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}