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OIPA represented at crude oil hearing

July 29, 2009
TOPICS: OIPA, Crude oil
Members of the Oklahoma Corporation Commission were told an increased flow of crude oil into Cushing could have a major impact on Oklahoma producers, and OIPA leaders spelled out the potential problem during a special meeting called by Commissioner Jeff Cloud. Harold Hamm, a former OIPA chairman and current CEO of Continental Resources, shined a light on the impact of crude oil from Canada's tar sands production two years ago. He led off the most recent meeting warning that larger pipelines under construction could and would bring more oil to Cushing, further inflating a crude oil differential for Oklahoma producers. Current OIPA Chairman Mike McDonald pointed out the state has a vested interest in the price of crude oil, telling the Commission that every $1 drop in Oklahoma crude equates to $8 million lost in gross production taxes and other state revenue. Other OIPA leaders who spoke included board member Bob Sullivan and former association president Mickey Thompson, who now serves as the OIPA's crude oil committee chairman. Board member Kevin Cantrell and Vice PResident of Regulatory Affairs Angie Burckhalter were also in attendance. From the Tulsa World:
"It can get upside down really quickly," Harold Hamm, CEO of Enid-based Continental Resource Inc., told commissioners during a meeting in Oklahoma City. "It makes us wonder what we're looking at in the future." Cushing is the West Texas Intermediate price delivery point for the New York Mercantile Exchange. A variety of companies, from infrastructure outfits such as Matrix Service Co. to midstream operators like SemCrude, are centered at the hub. Pipelines owned by Enbridge Inc. and others can bring more than 1 million barrels daily into the interchange, according to reports. Cushing has about 50 million barrels of storage capacity, with close to 40 million used these days. Those eye-catching numbers are what's bothering producers who normally take a hands-off approach to government involvement in the oil industry. They are concerned that too much Canadian crude is flowing in and not enough Oklahoma product can flow out to other potential markets. "The commission ought to use whatever authority it has to make sure that we who are in the state are not disadvantaged," Hamm said.
 
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