OKLAHOMA CORPORATION COMMISSION The Agency was established by the - PowerPoint PPT Presentation

D ANA M URPHY C OMMISSIONER O KLAHOMA C ORPORATION C OMMISSION C HANGING D YNAMICS IN O KLAHOMA E NERGY : L OOKING B ACK TO G O F ORWARD M ARCH 7, 2018 www.occeweb.com

OKLAHOMA CORPORATION COMMISSION • The Agency was established by the Oklahoma Constitution at statehood (1907) • 3 Commissioners, elected statewide, head the agency • 504 employees, 2 main offices, 4 field offices • The Oklahoma Corporation Commission (OCC) has regulatory powers over: – T ransportation – O il and gas – P etroleum storage tanks – P ublic utilities 03/07/2018 03/07/2018 2

OKLAHOMA CORPORATION COMMISSION Jurisdiction • 8 Electric utility companies ● Wind power companies • 8 Gas utility companies ● Transportation network • 367 Telephone companies companies • 10 Water companies • 25 Cotton gins • 3,000 Oil and gas well operators • 249 Natural gas pipeline operators and 32 hazardous liquid pipeline operators operating over 40,000 miles of pipeline • 24 Railroads with over 4,100 public at-grade crossings • 7,473 For-hire and private motor carriers authorized to operate in intrastate commerce • 12,150 Petroleum storage tanks currently in use • 1,743 Owners of 2,925 active retail fueling stations 03/07/2018 3

TRANSPORTATION DIVISION 03/07/2018 4

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The Public Utility Division Regulatory Areas Energy   Telecom  Oklahoma Universal Services Fund  External Regulatory Affairs Utility and Telecom Enforcements   Consumer Services and Field Enforcement  Administration 8 03/07/2018

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Oklahoma Electricity Average Residential Prices OG&E PSO Empire Oklahoma National Avg. price 2017 10.12 � 10.1 � 9.10 � 10.56 � 12.90 � (per kWh) NG: 55.35% Avg. 2017 NG: 50% PP: 48% NG: 48% Coal: 25.99% price Wind Coal: 38% Wind PPA: 21% Wind: 28% Generation Wind PPA: (per kWh) Wind: 10% NG: 14% Coal: 22% Mix 15.10% 3 ‐ 6 � Solar: 2% Coal: 17% Hydro: 2% Coal PPA: 2.96% *AWEA *Est. 2017 Hydro: 0.95% Number of Q1 2017 rate price Solar regulated 771,427 550,022 3,776 (per kWh) customers 12.9‐16.7 � (OK) (> 150,000 MO) *NREL EIA 2017 data 03/07/2018 10

U.S. Regional Electricity Average Residential Prices West New Middle East West South East Mountai Pacific Pacific England South South Atlantic North North Atlantic n Contig Non- Central Central Central Central . contig . AR, CT, ME, NJ, IL, IN, IA, KS, DE, AL, AZ, CA, AK, LA, MA, NY, MI, MN, DC, KY, CO, OR, HI States OK, NH, RI, PA OH, MO, FL, MS, ID, WA TX VT WI NE, GA, TN MT, ND, MD, NV, SD NC, NM, SC, UT, VA, WY WV Avg. Price 2017 10.80 � 19.36 � 16.04 � 13.26 � 12.07 � 11.97 � 11.28 � 11.89 � 15.01 � 26.05 � (per kWh) 03/07/2018 11

RATE CASES Requested -vs- Granted 170.0 $170 149.5 $145 132.6 $120 110.3 $95 84.4 82.3 75.0 73.3 $70 66.1 59.3 54.5 50.4 47.9 $45 37.7 30.0 48.3 $20 16.0 30.3 16.2 14.5 9.8 13.7 8.8 0.9 4.3 0.0 -$5 0.9 9.5 1.5 PSO 0.5 PSO 0.0 OG&E ONG PSO OG&E 0.3 ONG 2006 PSO 0.0 2008 ONG 2009 CNP 2009 0.0 CNP 2010 2011 PSO 2012 ONG 2014 OG&E 2014 CNP 2014 ONG 2015 PSO 2015 2015 2015 2016 ted Rate Increase ($M) 2017 2017 Requested Rate Increase ($M) Granted Rate Increase ($M)

Oklahoma Wind Facts • Wind Projects Online: 45 • Installed Wind Capacity (MW): 7,495 • State Ranking for Installed Capacity: 2 nd • Number of Wind Turbines: 3,717 • Percentage of In-State Energy Production (2016): 25.1% • Wind Capacity Under Construction/Advanced Development (MW): 3,525 • Since 08/25/2016, the Oklahoma Corporation Commission has received 42 Notices of Intent to Construct a Wind Energy Facility in the State. 03/07/2018 13

Economic Benefits of Wind in OK • Employment: 8,000 – 9,000 • Manufacturing Facilities: 7 • Total Project Investment: $12.3 Billion • Annual Lease Payments to Landowners: $20-$25 Million 03/07/2018 14

OK Solar Data • OG&E, PSO, WFEC, Oklahoma Electric Cooperative, Central Electric Cooperative, Tri-County and perhaps other co-ops have some solar of their own installed and operating. However, this solar installation is small scale community solar that is interconnected directly to the utilities distribution system. 03/07/2018 15

OK Solar Data • Solar Installed (MW): 21.75 – WFEC: 18 MW – OG&E: 2.5 MW – PSO: 0.3 MW – OEC: 0.2 MW – CREC: 500KW 03/07/2018 16

OIL AND GAS CONSERVATION DIVISION Tim Baker, Director FIELD TECHNICAL POLLUTION OPERATIONS DEPARTMENT ABATEMENT DEPARTMENT DEPARTMENT Virginia Hullinger Jim Marlatt Underground Engineering/ Injection District 1 Control Geology Hydrology Compliance/ District 2 Proration/ Production Brownfields District 3 Document Handling Seismicity District 4 03/07/2018 17

Oil and Gas Division District Offices 03/07/2018 18

OKLAHOMA OIL AND GAS INDUSTRY • Active wells: 64,000 Natural gas 115,000 Oil 11,663 Injection/disposal 190,663 Total active wells • ~350,000 plugged and abandoned wells • ~500,000 wells drilled in Oklahoma history • ~3,010 active operators of oil and gas wells (2/2018) • ~41,000 miles of gathering/transmission pipelines • ~257 pipeline operators 03/07/2018 19

Approved Intent to Drill Applications (1945 ‐ 2017) 25,000 22,500 20,000 17,500 15,000 Intents 12,500 10,000 7,500 5,000 2,500 0 * Data for 1961-1966 is Estimated Calendar Year 03/07/2018 20

Intents to Drill: 2008 – 2018 Comparison 800 700 600 500 Intents to Drill 400 300 200 100 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 03/07/2018 21

Statewide OCC Well Completions All OCC/IHS Wells 01/01/11‐11/30/17 Updated to include May 2013 03/07/2018 22

Oklahoma Corporation Commission Horizontal Wells 01/01/11‐11/30/17 03/07/2018 23

Well Completions 4500 Horizontal 4000 Non‐Horizontal 3,938 3500 3,654 3000 2500 2,237 2000 2,046 1,947 1,917 1,901 1500 1,648 1,515 1,334 1,266 1000 929 798 770 746 736 500 644 588 343 190 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 03/07/2018 24

OGS Uses about 100 Stations to Locate Oklahoma Earthquakes 03/07/2018 25

Human Activity Can Induce Earthquakes Fluid Pressure increase from injection Figure modified from: http://www.earthmagazine.org/article/ground-shaking-research-how- humans-trigger-earthquakes 26 03/07/2018

Earthquake magnitude & frequency Magnitude Earthquakes Energy Equivalents 10 Chile (1960) Largest recorded earthquakes <1 Alaska (1964) Vast destruction Sumatra (2004) 9 Massive loss of life Chile (2010) Krakatoa eruption Great earthquake 1 New Madrid (1812) Severe impact 8 World’s largest nuclear test (USSR) San Francisco (1906) Large loss of life Mount St Helens eruption Charleston SC (1886) Strong earthquake 18 Haiti (2010) Damage in $Billions 7 Richter Scale (logarithmic) Loma Prieta (1989) Some loss of life Northridge (1994) 150 Hiroshima atomic bomb Moderate earthquake 6 Property damage Long Island (1884) 1,500 Average T ornado Light earthquake 5 Some property damage Average tornado 10,000 Minor earthquake 4 Large Lightning Bo Felt by humans lt Injection induced earthquakes Large lightning bolt 100,000 Typical <3.5 (Highest recorded = 5.6) 3 Oklahoma city bombing Frequency of Moderate lightning bolt Occurrence 2 Avg. per year (est.) Magnitude 2.0 and below = typical micro-seismic events 27

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Enhance Recovery Low Risk 29

Disposal Low Risk 30

Disposal into basement High Risk 31

SEISMICITY ISSUES –LOGAN COUNTY TREND AREA 32 03/07/2018

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FAIRVIEW TREND AREA 34

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OCC W ELL & S EISMIC M ONITORING (O.W.S.M.) 44

Earthquake Count 2.7+ OGS Catalog Year to Year 2015 ‐ 2018 Statewide EQ/day 250 Year to Year a.o. February 26, 2018 2015: 5.41 2016: 3.62 2017: 1.66 200 2018: 1.18 150 2015 2016 2017 2018 100 50 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 03/07/2018 45

*Source: OMES State of Oklahoma FY-2018 Revenue Certification Presentation February 21, 2017 46

*January 2018 47

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D ANA M URPHY C OMMISSIONER O KLAHOMA C ORPORATION C OMMISSION C HANGING D YNAMICS IN O KLAHOMA E NERGY : L OOKING B ACK TO G O F ORWARD M ARCH 7, 2018 www.occeweb.com