American Oil and Gas Reporter - May 2015 - 126

ations on the issue."
Negotiations on well spacing requirements have been ongoing for years, the
association points out, adding that it believes more discussions are needed before
it can support any such legislation.
"There has been a lot of work done at
the Oklahoma Capitol on this among our
members-big, medium and small," Terry
said in late April. "Some of our members
were able to negotiate for some language
in an amendment that would have helped
protect uphole rights and reserves in the
vertical spacing, but the majority of
OIPA's directors in attendance thought
that did not go far enough to protect vertical legacy properties, and so OIPA opposes HB 2177 in its current form. We
are hopeful negotiations can continue in
conference committee before the end of
the session."
A.J. Ferate, OIPA vice president of
regulatory affairs, adds that if that bill
passes, the oil and gas industry will face
a number of regulatory issues, many of
which are likely to emerge only after the
Oklahoma Corporation Commission crafts
a rule to implement it. He says the association is more concerned about what is
on the horizon that what is being debated.

"Any rule making that affects OIPA
members will depend on what comes out
of the legislature," Ferate said in April.
"If HB 2177 emerges in its current form,
the OCC will have to make some rule
changes and adjustments on how the state
deals with unitization and pooling. All
those issues are going to have to be considered, thought out and deliberated as
we figure out what this next rule making
is going to look like."
Dealing With OCC
OIPA continues to monitor regulatory
activities regarding multiunit drilling and
other issues before the OCC, Ferate says.
The commission began working on a
number of initiatives related to HB 2177
last June, he adds, and completed much
of that by December.
"Unfortunately, a lot of those issues
did not necessarily have OIPA's active
support, most typically because they
would have altered the ways an operator
would have been required to interact with
mineral owners in relation to pooling,"
Ferate says. "It really would have made
the landscape for drilling a well and permissions to do so a lot more difficult.
OIPA wanted to put a hold on those
things, particularly in light of oil prices."

126 THE AMERICAN OIL & GAS REPORTER

In the end, OCC declined to move on
most of those issues, which Ferate calls
a positive step for oil and gas operators.
Nevertheless, the commission is likely
to make regulatory changes this year.
"So, if the state had made changes in the
rules during the past few months, very
likely those changes would have had to
be remade in the coming year, in light of
the new legislation," he says.
OCC also revised aspects of the state
regulatory code that dealt with oil and
gas provisions, Chapter 5, Rules of Practice, and Chapter 10, Oil and Gas Conservation, that became effective Sept. 12,
Ferate says.
"There was a lot of cleanup language,
but nothing that significantly alters the
way an operator does business," he reports.
"There are a couple things regarding
pipeline safety, which OIPA obviously
supports. Operators now can file electronically and pay OCC fees with credit cards
from their desks, rather than having to
walk into the OCC offices. Those are
some positive things in this rule making."
Overall, OIPA enjoys a positive relationship with state regulators, Ferate assesses. He says they may not always
agree with the industry's position on
issues, but regulators are willing to listen

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American Oil and Gas Reporter - May 2015

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