Osage oil producers seek support from county commission

Mike ErwinJournal-Capital

Osage County’s oil and gas industry could be irreparably damaged unless action is taken to revive its well-drilling activities, spokesmen for the Osage Producers Association said at last week’s meeting of the Osage County Commission.

The producers went to the commission seeking official support for efforts aimed at jump-starting regional oilfield operations. In recent months, drastic reductions in the number of new wells being drilled in Osage County have begun to take a toll on the area economy, they said.

“We know it’s going to get worse because the service industries are already laying off — there will definitely be a trickle-down effect,” said James Sicking, a member of the association.

Sicking warned commissioners that the county may suffer some severe economic consequences as a result of the drilling curtailment, which he said started months before plummeting oil prices compounded the situation.

“Life has been hard for us (in the oil business) for some time and it’s going to get hard for everybody,” he added.

Producers placed total blame for the drilling inactivity on the federal Bureau of Indian Affairs, which is responsible for administering the development of oil and gas resources for the benefit of the Osage tribe.

“It’s all because of decisions being made by the BIA,” Sicking said. “That’s what has been choking out the drilling in Osage County.”

Under a unique agreement made prior to Oklahoma statehood, the Osage Nation retained ownership rights to sub-surface minerals within the boundaries of its former reservation — which are generally contiguous to those of Osage County.

A year ago, predictions were calling for the county to have 500 new oil and gas wells a year.

“Instead, only 24 have been drilled since last August,” said Rob Lyon, the Association president.

Sicking said BIA decisions have resulted in “a big, complicated mess” which involves fallout from two federal lawsuits. One of those suits was filed last year and brought a suspension of new drilling permits until environmental assessments could be completed under a 1969 law, the National Environmental Policy Act (NEPA).

Thrown into the mix as a result of the NEPA-related lawsuit were concerns for the American burying beetle, a federally-protected endangered insect that is found in Osage County. Commissioners could sympathize with the oil producers about the burying beetle, which has also caused delays and added expenses for county building projects.

The Osage Producers speculated that the drilling problems may actually be “collateral damage” caused by resentment over another lawsuit. In 2011, the U.S. government paid the Osage Nation a $380 million settlement agreement on a suit alleging decade of federal mismanagement of the tribe’s mineral estate.

“That’s what led to the renegotiation of the regulations,” said Sicking, referring to a proposed updating of oil and gas procedures as part of the settlement. “This (drilling) situation may just be collateral damage from it.”

Another of the association representatives, Shane Matson, said it appears to be a case of BIA payback.

“We feel that it was nothing more than a petty, vindictive attack upon the Osage Minerals Council,” Matson said.

Formed in 1991, the Hominy-based Osage Producers Association has been active in its efforts to promote oil and gas well drilling in the county. Its members participated throughout the recent rules negotiations. A month ago, the association sponsored a discussion session at Woolaroc attended by numerous state and tribal leaders.

“We’ve been fighting a battle with the BIA for quite some time,” said Lyon.

When members of the group went to Washington, D.C., to meet with top BIA officials of the about the drilling situation, the results proved unsatisfactory, he said.

“Osage County oil production is declining because of the lack of drilling,” said Sicking. “There is no drilling because we cannot get a permit from the BIA.”

Eventually, current well production also will be affected “if we can’t get a working permit,” he said. Recent departures of service-industry providers from the county are signal bigger problems lie ahead.

“That’s when you’ll have to call someone in from someplace else, like Seminole — and, you can imagine how costly that might be.”

The Osage Producers are planning to send out two letters — one to Oklahoma Attorney General Scott Pruitt and the other to Secretary of the Interior Sally Jewell — and told the county commissioners they would like “to have your signatures next to ours.”

“We need to have a unified front,” Lyon said.

Commissioners agreed to consider the group’s proposition when the letters are completed.

Other business conducted by the county commission in the past two meeting included:

— Conditional approval for Skiatook’s Sky Lodge Estates subdivision to be built by the Osage Nation. Carolyn Back of Wallace Engineering obtained the approval contingent on a plat being vacated for a development that was planned, but never started, by the previous owner of the property.

— Commission Chairman Scott Hilton paid a brief tribute Monday to his predecessor as District 2 Commissioner, Virgil L. Williamson, who he learned had died earlier that morning at the age of 76.

“If it wasn’t for him, I probably would be here today,” said Hilton, who has served on the county board since 1996.