Task Force Hears Testimony on Oil Crisis, Statistics Paint Bleak Picture for Industry

Oklahoma's oil industry, already reeling from a lengthy price slump, is in danger of losing tens of thousands of wells and energy-related jobs if it doesn't receive speedy assistance from the state. That was the testimony of industry leaders who appeared before a special task force at the State Capitol today.

"The testimony tells me we're in crisis mode right now. If we don't act and act quickly, we're going to see thousands of energy jobs and millions of dollars in oil revenues go down the drain with no hope of recovery. In the absence of a national energy policy, Oklahoma has to take the lead and do something to keep the oil industry contributing to our economy," said Senator Kevin Easley, co-chairman of the Oil Industry Stabilization Task Force.

"When you see the statistics spread out before you on paper, you really get the sense that the Oklahoma oil industry is at a crossroads. If we don't help push it in the right direction, it may never recover and our economy will have lost one of its key components forever," said Representative Larry Rice, task force co-chair.

"Even though we've diversified, our economy depends on the fortunes of the energy industry. If we ignore it in its time of need, we put our entire economy and the well-being of our state at risk. We can't afford to do that," said Oklahoma Corporation Commissioner Denise Bode, task force co-chair.

The task force was formed by Governor Keating and legislative leaders two weeks ago to address the crisis in the Oklahoma oil fields. At the panel's first formal meeting today, representatives of the oil industry detailed the problems stemming from the lengthy slump in crude prices. Those facts included:

• Crude prices are at their lowest levels since the 1950's, remaining below $12 a barrel for the past six-months;
  
  
• The average oil well needs to earn $13-$14 per barrel to cover expenses such as labor, taxes, utilities, maintenance, etc.;
  
  
• Oklahoma has 90,000 oil wells, many of which have been losing money for the past six to eight months;
  
  
• As many as 10,000 of the 40,000 oil industry-related jobs in Oklahoma are at risk because of the recent price slump;
  
  
• As many as 8,000 wells may be plugged or abandoned in the next 12-18 months if the price slump continues, triple the typical plugging rate;
  
  
• The decline in gross production taxes on oil production is costing the state $4 million a month in the current price environment.

"The statistics paint a very bleak picture, there's no question about it. Now that everyone knows the facts, it should be easier to move forward and do what we need to do to address the situation," said Commissioner Bode.

"If anything, the testimony underscored the fact that there is a very real urgency to this situation. It's critical that we work quickly," said Representative Rice.

"For anyone who doubted the severity of the crisis, I think the testimony served as a wake-up call. We've taken a good first step in recognizing the problem, but it's critical that we follow up with substantive action," said Senator Easley.

The special task force is expected to hold meetings through the holidays in hopes of drafting legislation as soon as possible.