Oklahoma Gov. Mary Fallin will be the featured speaker next month at the annual meeting of the Arkansas Independent Producers & Royalty Association (AIPRO) as her state faces a number of challenges tied to the recent decline of the oil and gas industry.
AIPRO is combining its annual event with the influential Interstate Oil and Gas Compact Commission (IOGCC), a multistate government agency comprised of the governors of oil and gas producing states and other appointed regulators and representatives state and federal agencies. Lawrence Bengal, executive of the Arkansas Oil and Gas Commission, is the official representative of the agency in Arkansas.
The IOGCC conference, called “Energy’s Future – State Challenges,” will to be held Oct. 2-4, at the Marriott Hotel in downtown Little Rock. Fallin’s address is scheduled for the second day of the three-day meeting in Little Rock whose sponsors include Southwestern Energy, Schlumberger, ExxonMobil’s XTO Energy, Chevron Corp, The Williams Companies, Stephens Production Co., and Marathon Oil.
AIPRO is the only nonprofit organization serving all segments of the state’s oil and natural gas industry.
OKLAHOMA INDUSTRY CHALLENGES
As outgoing chair of the IOGCC, Fallin will speak during the general session of the meeting on Monday, Oct. 3. Gov. Hutchinson, who is the incoming chairman of the group, will providing opening remarks. The Oklahoma governor’s address will be important because the Sooner State is facing a number of regulatory, fiscal and environmental issues tied to that state’s oil and gas industry, which has put Fallin’s administration in the state and national media spotlight.
Earlier this week, the first woman governor of Oklahoma declared a state of emergency for Pawnee County following a 5.6 magnitude earthquake over the Labor Day weekend. The earthquake was felt in multiple states and was the strongest the state has experienced since November 2011 when a magnitude 5.6 earthquake occurred in that state’s Lincoln County.
“I’m glad to hear no one was seriously hurt in the (Pawnee) earthquake and damage appears to be limited,” Fallin said in a statement on Sept. 3. “This emergency declaration will start the process to helping individuals, families and businesses impacted by the earthquakes and serves as a precursor to requesting any necessary assistance.”
In response to the September earthquake, the Oklahoma Corporation Commission’s Oil and Gas division (OGCD) is in the process of implementing a mandatory directive to shut down all Arbuckle disposal wells within a 725 square mile area near Pawnee. The area also wells includes 211 square miles in the expansive Osage County. That 2,300 square mile county is the largest in Oklahoma, and is home to the Osage National Reservation.
A few years ago, the OGCD set new rules requiring oil and gas operators of disposal wells in the Arbuckle formation — a deep underground layer situated above crystalline “basement” rock — to provide the agency with more detailed and frequent volume and pressure data. That occurred after a study by the University of Stanford led the Oklahoma Geological Survey (OGS) to issue a statement that said it was “very likely” that most of the state’s recent earthquakes are due to the injection of produced water into disposal wells that extend down to, or even beyond, the Arbuckle formation.
In July, Oklahoma regulators began investigating all oil and gas activity in the Arbuckle area in central Oklahoma in response to increased earthquake activity. OGCD is said it is working with the Environmental Protection Agency (EPA), which has confirmed there are 17 Arbuckle disposal wells in the 211 square mile area under federal jurisdiction in Osage County that are also being shut down.
ENERGY-RELATED BUDGET CUTS
Fallin is also dealing with a major budget cuts caused by declining revenues from oil and gas productions that has led to Oklahoma school districts cutting 4% of the state’s total workforce, or about 3,000 teacher positions.
At the start of school last month, the Oklahoma Education Association said school districts are scrambling to fill more than 500 teacher vacancies caused by budget cuts.
“Worse still is that the vacancies are those left after districts eliminated nearly 3,000 teaching and support professional positions. There is no use trying to fill positions for which there is no funding,” said OEA President Alicia Priest.
Fitch Ratings also recently assigned a “AA” rating and negative outlook on bonds for the state of Oklahoma, the Oklahoma Development Finance Authority (ODFA), the Oklahoma state system of higher education, and master real property lease revenue bonds.
“One-third of the state’s gross state product is attributable to the drilling, production, and economic multiplier effects of the oil and natural gas sectors,” Fitch said. “After consistently outperforming national growth trends coming out of the last recession, the state’s economy has weakened and employment has shown recent steady declines as the slumping natural resources sector has led to shuttered rigs, production declines, and layoffs.”
The AIPRO-IOGCC conference will also include remarks by Bengal and other state officeholders. The three-day event will also include a full agenda with breakout sessions on topics ranging from ongoing state and federal regulator matters and marginal well production to a discussion on the EPA’s Clean Power Plan.
AIPRO recently announced it has hired Capitol Concepts to manage its governmental affairs and association management services.
“AIPRO and its members will be well served and represented by Capitol Concepts and Rodney Baker, whose decades of experience in governmental affairs in the nonprofit arena will benefit the association,” said AIPRO President Andy Miller, with Southwestern Energy.
Capitol Concepts provides executive leadership, lobbying and management services. Capitol Concepts President Rodney Baker has more than 30 years of experience in governmental affairs and organizational management.
“I am honored to have the opportunity to direct AIPRO’s advocacy efforts and promote the state’s oil and natural gas community,” Baker said.