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McGirt decision impact on state oil and gas industry examined during OEPA briefing with state legislators
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McGirt decision impact on state oil and gas industry examined during OEPA briefing with state legislators

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The McGirt decision’s impact on the oil and gas industry was a major topic Wednesday at a briefing held for state legislators by the Oklahoma Energy Producers Alliance.

OEPA President Dewey Bartlett Jr. presided over the roughly 100-minute online event, during which Oklahoma Attorney General Mike Hunter spoke at length about the state’s economic future.

“One of my most important responsibilities is protecting the state’s economic activities,” Hunter said. “There’s no more important stream of commerce in this state than the exploration and production of hydrocarbons.”

The OEPA, which has about 560 members in 100 communities, promotes and protects the rights of vertical oil and gas producers in Oklahoma.

Regarding McGirt v. Oklahoma, the Supreme Court in July ruled that major crimes committed by or upon American Indians within the 1860s-era boundaries of the Muscogee (Creek) Nation should be tried in federal rather than state court because Congress never disestablished the reservation.

The high court’s confirmation of the Creek reservation and those of the other Five Tribes (Cherokee, Choctaw, Chickasaw and Seminole) clouds how the energy industry could be regulated within those boundaries.

Hunter said he would take an aggressive stance against any attempt to interfere with that sector not consistent with state or federal law, adding that the state needs to pursue compacts with the tribes regarding regulation and taxation on reservation lands.

“We can’t function in a way that is consistent with the responsibilities that we all have as citizens to each other — Indians and non-Indians alike — if we’re not participating as citizens of the state collaboratively and cooperatively when it comes to regulation and taxation,” the attorney general said.

Prior to McGirt, the largest reservation in the country was the Navajo in New Mexico and Arizona, Hunter said.

“Ninety percent of the inhabitants of the Navajo Reservation are Indians,” he said. “So, reservation law and the autonomy that it provides and independence it provides on reservation land makes sense when you have that kind of homogenous population.

“The Oklahoma lands, which are about to become reservations, 90 percent of those who reside on these lands are non-Indians. So, attempting to exercise reservation law in a way that’s practical is just a problem … I’m just hopeful that all five of the tribes are going to be able to sit down with us, the governor and the Legislature and start looking at not only criminal justice compacts but compacts to ensure the state and the tribes can work together on the regulation and taxation front with regard to their citizens and their interests.”

Also speaking at the briefing was OEPA President David Little, who, while acknowledging the industry’s difficult 2020, was optimistic about oil prices. Benchmark West Texas Intermediate was trading at about $52 on Wednesday.

“… Once the vaccinations reach 150 million people, probably when get into the spring and warmer temperatures … I anticipate demand to go up and supply to continue to decline,” he said. “Oil could reach a level well into the $60 range.”

Mike Cantrell, of Ada-based Cantrell Investments, addressed methane rules and how they will be handled under President Joe Biden’s administration. Methane often leaks from oil and gas wells and pipelines, exerting a warming effect on the atmosphere.

Under then-President Barack Obama, oil and gas facilities were mandated to inspect equipment built or modified after 2015 twice a year for methane leaks and fix leaks that they found. Former President Donald Trump softened those rules. Biden could restore Obama-era methane regulations and extend those to older wells, threatening the bottom line for some independent operators.

“Right now, I think that it is our No. 1 threat from the Biden administration, even bigger than losing percentage depletion (another small producer issue),” Cantrell said. “Think about it, every little well that we got that emits a puff of gas, we have to do something with that gas. It’s going to be cost-prohibitive and extremely expensive.”


Featured video

Oklahoma Gov. Kevin Stitt on Oct. 22 talked about how the state will move forward after the McGirt decison

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