In Governor's "Act Of God" Request, Oklahoma Oilmen See Good Intent But Split On Necessity

Apr 28, 2020

In a letter to President Donald Trump on Friday, Oklahoma Governor Kevin Stitt requested that the White House declare an "Act of God," a legal maneuver the governor said is "a necessary step to encourage and support those operators who choose to stop production until demand returns and storage becomes readily available." 

Oil and gas industry insiders are split on whether that's true. 

In a statement, the Petroleum Alliance of Oklahoma said they fully support the letter.

"Without immediate relief," the statement reads, "many Oklahoma wells may never recover."

Tulsan Lee Levinson, attorney and owner of LPD Energy Company, said on a Tuesday phone call that he supports the governor's letter, but doesn't view it as a legal necessity.

"I think [Stitt] was just doing that to put, to be honest, a religious overtone on it, that it was something unexpected that only God could have created, and just another reason for the circumstances we're in," Levinson said.

Levinson said that an emergency application he filed with the Oklahoma Corporation Commission last week, which the regulatory agency subsequently approved, is legally sufficient in its order to allow producers to constitute drilling as "economic waste" and not be penalized for not producing on their leases.

"He basically just expounded on what we did," Levinson said. "I think with the state finding that it's waste is sufficient, in my opinion."

Still, Levinson said he didn't disapprove of the letter being sent, saying that the letter signals to the federal government and to Oklahomans just how vital the oil and gas industry is to the state's economy. 

"The intent of the governor, I think, is very, very good," said Dewey Bartlett, president of Keener Oil & Gas and former Tulsa mayor. "I certainly applaud that."

But, like Levinson, Bartlett said he isn't sure of the legal validity or necessity of either the . 

"I'm not an attorney," Bartlett said. "I do wonder if a regulatory agency like the Oklahoma Corporation Commission has the ability to change a contract, even if there's no force majeure [or 'act of God'] clause, or even if there is one. That question has not been answered to me."

West Texas Intermediate crude prices dipped below zero dollars a barrel last week for the first time in history. Producers, with storage scarce or nonexistent, were being forced to keep drilling despite having nowhere to keep their oil because of lease clauses requiring the continuation of drilling. 

"It’d be like if you quit paying rent on a commercial lease," Levinson said. "You could lose your lease."

Levinson says the media attention around the letter is a success in itself. Does he think the White House will grant Stitt's request?

"No, I don't," he said. "But I do think the White House knows, and President Trump and his cabinet, they are aware of the oil industry's plight. They know they have to have help."

"I think the White House realizes that. And I do think they'll come up with a plan, I hope," said Levinson.