Energy companies’ requests to be excused from insurance requirements denied

Jan. 26--NORMAN -- The Norman Board of Adjustment has unanimously struck down two energy companies' requests to be excused from Norman's insurance requirements related to oil and gas drilling activities in the city.

The city requires a spill pollution policy of $1 million, a general liability policy of $1 million and workers' compensation policy of $1 million.

It also requires an umbrella insurance policy of at least $2 million over all of those.

Representatives from Magnum Energy and Green River Resources sought a variance from the requirements, claiming their wells were too low-volume to require such a high insurance policy.

Both said their wells produce less than 10 barrels a day.

Their arguments centered on Senate Bill 809, which allows for "reasonable" municipal restrictions on drilling activity but prevents cities from banning oil and gas exploration.

"There's no basis for requiring these burdensome costs on operators," Magnum Energy President Bob Campbell said. "It's going to cause no damage. It never has, never will. It's just a fear people have.

"Norman is the only city not in compliance with SB 809, which passed a year and a half ago. That bill says specifically cities cannot regulate the oil and gas business."

City oil and gas inspector David Woods said the city has never had a major incident. He said there have been some small leaks that were caught quickly and, in those cases, he said the cleanup costs were lower than the insurance deductibles.

Campbell said that fact is a good argument for why he shouldn't have to pay for so much insurance coverage.

Board member James Howard said if the board were to approve the variances, it would effectively rewrite the city's ordinance. He said that's not the board's role.

Board member Brad Worster said any time the board makes a decision, it sets a precedent. If the board were to have granted the variances, it would be difficult to justify denying future variances, even for larger drilling operations.

Indigenize OU co-founder Sydne Gray chalked Wednesday's decision up as a win for environmentalists but said there are more battles ahead and Norman should strive to be a leader in environmental policy.

"I am pleasantly surprised," she said. "We haven't had a very great track record with the Norman Board of Adjustment voting in favor of the health and well-being of the citizens of Norman and future generations."

The companies can appeal the decision, and Campbell said he intends to. Ronald Crowson, of Green River Resources, did not comment on whether he intends to appeal the decision but said he thinks wells should be viewed on an individual basis. He said denying the variance is restrictive to business and harmful to the local and state economy.

At Wednesday's meeting, the five-member board -- Andrew Seamans, Curtis McCarty, Brad Worster, James Howard and Mike Thompson -- also postponed a decision on Arrowhead Energy's 2017 request for a variance allowing it to drill two new horizontal wells within the Stream Planning Corridors near 168th Avenue and Rock Creek Road.

Ward 5 council member Sereta Wilsons said she believes Arrowhead may be exploring options and could decide to move its operation outside of the 300-feet requirement set by the city. Doing so would allow the company to continue with its plans without seeking a variance.

Area resident Michael Delaney, who has frequently registered his objections to the site, said it doesn't really matter to him if the site is relocated.

"The existence of the site is our issue, not whether it's put 30 meters to the right or to the left. We don't want it, either in our neighborhood or on the planet," he said.

Wilson said she wishes the city could do more to address residents' environmental concerns, but she has been advised by city and legal staff that ordinances on the books go about as far as the city can with SB 809's restrictions.

"Like it or not, we are hamstrung as a municipality with what we can do because of state laws," Wilson said. "I believe [SB 809] is meant to protect the oil companies and the access to the minerals.

"I understand the spirit of wanting to do that at the state level, but it really creates a tough situation for us at the city level to manage these wells within our boundaries without being able to make ordinances to address them.

"I think when the ordinance was written, city staff was as diligent and robust as they could be in creating something they feel can be defended in court."

Wilson said the city can create ordinances, but it's up to administrators to uphold them. Still, she said there are ways the city can exert its will.

"There's nothing in the law that says we have to give you the cheapest or the easiest path," she said. "It just says we can't prohibit. We don't have to make it easy for them. We don't have to make it cheap for them. My goal is to make sure that we hold on to every thread of any ordinance we can enforce."

Mack Burke

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