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Energy & Water © 2003 The Oklahoma Academy Town Hall PERSPECTIVES - 1

Energy and Water

Our 2003 Town HallJulie Knutson, President and CEO, The Oklahoma Academy

John Feaver, 2003 Town Hall Chairman and President, University of Science and Arts of Oklahoma

Julie KnutsonPresident & CEO

Oklahoma Academy

John FeaverChairman

2003 Town Hall

Larry NicholsCo-Chairman (Energy)

2003 Town Hall

Howard Barnett, Jr.Co-Chairman (Water)

2003 Town Hall

Michael LapollaResearch Chairman

2003 Town Hall

This document was assembled to allow Town Hall members to educate themselves on the Energy andWater issues prior to our November Town Hall. It will help you become reasonably fluent and able toparticipate in informed group debate and discussions. And it will serve as a reference source for you.

We suspect that ... before August 14th ... some were wondering why we think that energy and water are soimportant to Oklahoma and the Nation. Then the lights went out in the Northeast. Our Research Chairmanwas in New York at the time. He reports that the most often uttered four-letter word was ... G-R-I-D ... asin power grid. He also reported that the most important short-term concern was “getting enough water.”He told us that one of the first things that came to mind was that we selected a wonderfully timed topicfor our 2003 Town Hall.

We have slightly reorganized our Town Hall. This year our Academy Vice-Chairman will be the presidingofficer over all Town Hall activities. And we have enlisted two experienced co-chairs; one for Energy andone for Water. They will help keep us on task and in focus as we conduct the Town Hall.

We also have done something else differently. We have included the public policy recommendations thatare a part of the state’s existing Energy and Water Plans. There are 51 Energy recommendations and 76Water recommendations. They are listed but not differentiated. That will be your job. We have alsoincluded policy recommendations from two New Mexico Town Halls. They are not intended to be pre-drawn conclusions ... they are intended to be a starting point for discussions. We hope you can synthesizethem and develop a dynamic direction for Oklahoma.

Finally, here are the Cliff Notes for the topics. When considering energy, think of (1) maximizing produc-tion our existing resources and marginal reserves (2) marketing our energy knowledge and (3) alternativeenergy sources. When considering water, think of (1) water quantity (2) water quality and (3) ownership.

Here’s trusting that you will have a great Town Hall experience. We’ll see you at Quartz Mountain.

2 - PERSPECTIVES © 2003 The Oklahoma Academy Town Hall Energy & Water

OUR TOWN HALLJulie Knutson, President and CEO, The Oklahoma AcademyJohn Feaver, 2003 Town Hall Chairman and President, University of Science and Arts of Oklahoma

PERSPECTIVES

NEW MEXICO FIRST TOWN HALLSWhy New Mexico? .....................................................................................................................................P-1

REVISITING “BUFFALO COMMONS”Deborah E, Popper, Associate Professor of Geography, College of Staten Island/City University of NewYork, Staten Island, NY; and Frank J. Popper, Professor, Bloustein School of Planning and Public Policy,Rutgers University, New Brunswick, NJ. During the Fall 2003 semester the Poppers will be VisitingProfessors in the Civil and Environmental Engineering Department at Princeton University. ..............P-2

FEDERAL GOVERNMENTCarl Michael Smith, Assistant Secretary of Energy for Fossil Fuels, USDOE andExecutive Summary, Western Water Policy Review Commission .............................................................P-4

STATE GOVERNMENTRobert J. Sullivan, Jr., Secretary of Energy, Keating Administration; Miles Tolbert, Secretary of theEnvironment; Kathy Taylor, Secretary of Commerce; and Denise Bode, Chairman, CorporationCommission ...............................................................................................................................................P-8

TRIBAL GOVERNMENTSOffice of Tribal Justice, U.S. Department of Justice (DOJ):DOJ Policy on Indian Sovereignty and Government-to-Government Relations with Indian Tribes .....P-13

MUNICIPAL GOVERNMENTSJess Nelson, Mayor, Guymon and Ken Vanderslice, City Manager, Duncan .........................................P-17

OTHERSMid-Continent Oil and Gas Association, Dr. Bruce M. Bell, Chairman ................................................P-19Nature Conservancy of Oklahoma, Tim Grogan, Executive Director ....................................................P-24Oklahoma Chapter of the Sierra Club, Tom Libby, Executive Director .................................................P-26

Oklahoma Resources

Energy and Water


A PROPOSED STRATEGY FOR ENERGY

WHY A TOWN HALL ABOUT ENERGY?Charles Mankin, PhD, Director, Sarkey’s Energy Center and the Oklahoma Geological Survey ...........E-1

A NEW MEXICO TOWN HALLExecutive Summary of a 2002 New Mexico First Town Hall:New Mexico’s Energy, Economics, and Environment ...............................................................................E-4

A PROPOSED STRATEGY FOR ENERGYRobert J. Sullivan, Jr., Secretary of Energy, State of Oklahoma

Executive Summary ...................................................................................................................................E-8

Introduction .............................................................................................................................................E-13Overview – Our Nation’s Energy Picture................................................................................................E-13Oklahoma’s Oil and Gas Sector ..............................................................................................................E-14Protecting Oklahoma’s Environment ......................................................................................................E-18Oklahoma’s Coal and Electricity ............................................................................................................E-22Oklahoma’s Energy Infrastructure – Rebuilding an Aging Network ......................................................E-23List of All Recommended Strategy Initiatives .........................................................................................E-27

MORE ABOUT ENERGY

OUR ENERGY INDUSTRIES

We Are An Oil A Natural Gas StateOklahoma Natural Gas: Past Present and FutureDan T. Boyd, Oklahoma Geological Survey ...........................................................................................E-30

The Changing Role of Oil and Gas in OklahomaMark C. Snead, Research Economist, Oklahoma State University ........................................................E-40

State Policy and the Private SectorThomas S. Price Jr., Senior Vice President, Chesapeake Energy ...........................................................E-44

Protecting Critical InfrastructureDenise Bode, Chairman, Oklahoma Corporation Commission .............................................................E-52


MAXIMIZING EXISTING RESOURCES

Energy Research and DevelopmentChristine Hansen, Executive Director, Interstate Oil and Gas Compact Commission ..........................E-53

MARKETING OUR ENERGY KNOWLEDGE

Capitalizing on Oklahoma’s Energy Complex: Robert Langenkamp, University of Tulsa College of Lawand Director, National Energy-Environment Law and Policy Institute..................................................E-56

The Energy Weather Project at OU: Institute for Energy Economics and Policy, University ofOklahoma. Students: Emmanuel Cabrera, Alicia Fitts, Reed Timmer and Xiaoyi Mu, Faculty Advisors:Peter Lamb, PhD CIMMS, Dennis O’Brien, PhD IEEP, and Mike Richman, PhD CIMMS ................E-61

LOOKING TO THE FUTURE: ALTERNATIVE ENERGY SOURCES

An Oklahoma PerspectiveMark Meo, PhD, Professor, Civil Engineering and Environmental Science and Fellow, Science andPublic Policy, University of Oklahoma, Norman; and Steve Sadler, PhD, Professor, Department ofGeography, Oklahoma State University, Stillwater ................................................................................E-65

Winds of Change: A Utility Perspective on Wind EnergyRichard P. Walker, Director, Business Development for AEP Wind Energy, LLC ..................................E-74

Forecast for New Wind Power InstallationAmerican Wind Energy Association: Provided by William R.McKamey, AEP-Public Service Company of Oklahoma.........................................................................E-76

Wind Power in Woodward, OklahomaRussell Ray, World Staff Writer, 08/17/2003, Tulsa World......................................................................E-78

Pricing Wind Generated Electricity in OklahomaTom Droege, World Staff Writer, 08/13/2003, Tulsa World.....................................................................E-79

OTHER PLACES

New Mexico: State Bets on Hydrogen Future ........................................................................................E-80Colorado: Business Empire Transforms Life for Colorado Ute Tribe ...................................................E-83Minnesota/Iowa/Texas: States Invest in Wind Power ............................................................................E-89


A PROPOSED STRATEGY FOR WATER

WHY AN OKLAHOMA TOWN HALL ABOUT WATER?“Lawmakers see need for major changes in water laws”, Ray Carter, The Journal Record .................W-1

A NEW MEXICO TOWN HALLExecutive Summary of a 2002 New Mexico First Town Hall:New Mexico’s Water: Perception, Reality and Imperatives.....................................................................W-4

A PROPOSED STRATEGY FOR WATEROklahoma Water Resources Board

Issues and Problems ..........................................................................................................................W-8Policy Recommendations.................................................................................................................W-39Acknowledgements and References .................................................................................................W-50

MORE ABOUT WATER

2003 WATER RELATED LEGISLATIONStaff, Oklahoma Water Resources Board ............................................................................................... W-52

10 MYTHS ABOUT WATERJohn Harrington, Director, Water Quality DivisionAssociation of Central Oklahoma Governments....................................................................................W-54

OKLAHOMA’S WATER QUALITYJon Craig, Water Quality Division, Oklahoma Department of Environmental Quality........................W-56

WHO OWNS THE WATER?Dean Couch, JD, Legal Counsel, Oklahoma Water Resources .............................................................W-59

AROUND THE STATE

Central OklahomaWater Policy Impacts of ArsenicJohn Harrington, Director, Water Quality Division and Zach Taylor, Executive Director,Association of Central Oklahoma Governments....................................................................................W-65


Southern OklahomaArbuckle - Simpson AquiferCitizens for the Protection of Johnston County Water,Dick Scalf, Ada Water Resources Board and Jack Money, Daily Oklahoman ......................................W-75

Southeast OklahomaSelling Water: The ProposalAbstract of Status Report to the Office of the Governor........................................................................W-77

Selling Water: A Supporting ViewOklahoma Water Resources Board.........................................................................................................W-83

Selling Water: An Opposing ViewJeannine Hale and Suzette Hatfield - Oklahoma Family Farm Alliance, Oklahoma Sierra Club andSouthern Oklahoma Water Alliance .......................................................................................................W-86

Southwestern OklahomaWater Use at Lake AltusDonna Kirby, Manager, Lugert-Altus Irrigation District ......................................................................W-89Jim Bevers, Vice President, Quartz Mountain Conservation Coalition ................................................W-92

Eastern OklahomaWater Planning in the Illinois River BasinMark Meo, Robert Lynch, Fedaku Moreda, Blake Pettus, Ed Sankowski, Zev Trachtenberg, and BaxterVieux of the University of Oklahoma, Norman and Lowell Caneday, Will Focht and Keith Willet ofOklahoma State University, Stillwater ...................................................................................................W-94

Northwestern OklahomaThe Ogallala AquiferJames E. Horne, President & CEO and Manjula V. Guru, Agricultural Policy SpecialistThe Kerr Center for Sustainable Agriculture, Poteau ...........................................................................W-99

OTHER PLACESKansas: New Thoughts About Water Policy ........................................................................................W-104Texas: Drafting a State Water Plan .....................................................................................................W-105


perspectivesENERGY AND WATER


Executive Summaries

New Mexico First Town HallsEnergy and Water

New Mexico First is a major statewide, non-profit, non-partisan membership organiza-tion which brings together a broad crosssection of citizens to address importantpublic policy issues facing all New Mexi-cans. New Mexico First seeks to be a“catalyst for positive action in NewMexico.”

The mission of New Mexico First is to effectpositive change in our state by addressingfundamental policy issues through the TownHall process, creating a statewide networkof informed and caring citizens, and leadingNew Mexicans to take action.

New Mexico First was formed to accomplishfive goals:

1. Identify fundamental policy issues.2. Find positive solutions to the problems

posed by those issues.3. Effect solutions through the

dissemination of information.4. Identify, inform and motivate leaders for

New Mexico.5. Create a statewide network of informed

and caring New Mexicans.

These goals are supported by thesponsorship of Town Hall meetings twice ayear, each on a single topic of statewideimportance. This forum is a model fordiscussion, cooperation, leadershipdevelopment, and consensus building onissues critical to our state. In June 1989 theBoard of Directors established theimplementation of Town Hallrecommendations as an organizational goaland policy.

Copyright © 2003 New Mexico First.All rights reserved

We have retrospectively discovered that the NewMexico First organization sponsored two TownHalls in 2002. One was on Water and the other onEnergy. As New Mexico is one of two other statewith organization similar to the Oklahoma Acad-emy, we thought it important that you review theirfindings.

The Town Halls were:

• New Mexico's Energy, Economics, andEnvironment, Carlsbad, NM, November 14-17, 2002

• New Mexico's Water: Perception, Reality andImperatives, Socorro, NM, May 16-19, 2002

The Executive Summaries, including public policyrecommendations, are at the beginning of ourEnergy and Water sections, respectively.


Reprising 1990

Revisiting “Buffalo Commons”Deborah E, Popper, Associate Professor of Geography, College of Staten Island/City University of New York,Staten Island, NY; and Frank J. Popper, Professor, Bloustein School of Planning and Public Policy, RutgersUniversity, New Brunswick, NJ. During the Fall 2003 semester the Poppers will also be Visiting Professors in theCivil and Environmental Engineering Department at Princeton University.

Oklahoma’s Wichita Mountains National WildlifeRefuge has one of the most historic bison herds inthe country, established in 1907 with some of thefew bison then remaining in the country. Buffalorepresent a significant heritage for Oklahoma,both real and symbolic.

In 1987 we published an article in Planning, themagazine of the American Planning Association,in which we explored the future of the GreatPlains, the meaning of its ongoing populationdeclines and the ways these intersected witheconomic and environmental pressures.

We suggested a new and mostly reversed coursefor the region’s future, one framed by themetaphor of the Buffalo Commons.

The idea was to rethink the resources thatsupported the area. Instead of continuing toorganize development around extraction, withconsequences like draw-downs on the OgallalaAquifer and increased agricultural subsidies forcrops that were then stockpiled, we suggesteddeveloping land uses that were more sustainable,restorative and regionally distinctive.

We wrote of tearing down fences, replanting thenative grasses, and letting native species such asbuffalo regenerate in larger numbers.

Town Hall Introduction

The Oklahoma Academy was five years oldin 1990. While initial Academy workemphasized economic development andeducation, we became intriqued with theemerging public debate over land use.

Concurrently, Deborah and Frank Popperintroduced a land planning theory thatdevelopment of sparsely populated westernregions should be purposely reversed.

As a centerpiece of our 1990 AcademyConference, the Poppers were invited toOklahoma to “debate the issue” as an after-dinner event. Rural and westernOklahomans were ready for a fight. TheAcademy arranged for Dr. Tom Hill of theUSDA to present an opposing point of view.In the end, we had a civil discourse leavenedwith humor and mutual respect.

When we decided upon our 2003 Town Halltopic, our first thoughts were to 13 yearsago and the Popper-led discussions aboutland, water and resources. It was natural forus to invite them to reprise their 1990 visitas the Academy had not significantlydiscussed these issues since then.

They have done so graciously and gratis.The Academy thanks the Poppers for theirparticipation, thinking, and good cheer.


The idea initially met with enormous skepticism,but the demographic, economic, andenvironmental pressures we identified havecontinued, and the new direction we suggested isclearly materializing.

Throughout the Great Plains there are now moreland conservancies dedicated to ecologicalrestoration, more bisonon public lands andprivate ranches, andmore ecotourism.

In November 1990 wespoke at the annualmeeting of theOklahoma Academy forState Goals about ourideas for the Great Plains. We learned a lot fromthat trip. One vivid memory is of the fissures inOklahoma’s natural resource community.

The pressures on the Plains were obvious to all,but where the harm or fault lay was in the eye ofthe beholder. Energy, row crops, and livestock allwere assigned or absolved of responsibility forbeing wasteful, or of garnering too muchgovernmental advantage. This current meetingputs the different interests together and isstructured around core concerns.

Water and energy organize all societies; they are atthe base of what can be developed and how manycan be supported, but they resonate differently inOklahoma than in our Eastern state where averagerainfall is higher and more regular and whereenergy has long come from elsewhere. ManyOklahomans’ lives have depended directly on theirlocal availability and wider markets.

The state participated exuberantly in the twentiethcentury’s assertive experiments in turning natureover to human needs. Its oil and gas were takenout of the ground, its sod turned over.

Technological innovations, often powered by evermore efficient energy sources, made much of theactivity possible. Energy and water came togetherespecially in the 1960s when cheap fuel supportedrapid expansion of irrigated agriculture, andcenter-pivots sprayed water across vast acres ofwestern Oklahoma that had previously beenconsigned to dryland agriculture or rangeland.

But water and fossilfuels are ultimatelylimited, andtechnological optimismis more tempered nowthan it once was.

This is where theBuffalo Commons

comes in. It emphasizes using the limitscreatively.

The Buffalo Commons land uses that haveemerged are only some of the many possible ones.Long-term sustainability suggests more emphasison renewable energy, like the wind that Oklahomahas in abundance, and fitting it into the landscaperather than overwhelming it. Long-termsustainability also implies agriculture that recyclesnutrients rather than overwhelming itsenvironment and that draws on reliablyreplaceable water.

As a flexible metaphor, the Buffalo Commonssuggests we can never know enough about wherewe are, but should nonetheless continue seekinganswers about our home places. Knowledge,imagination, and love of place are the keys. If wefit energy and water into that context, we shouldbe able to look back on this era as a fruitful one.

“In November 1990 we spoke at the annualmeeting of the Oklahoma Academy for StateGoals about our ideas for the Great Plains.We learned a lot from that trip. One vividmemory is of the fissures in Oklahoma’snatural resource community.”


Public Sector Perspectives

Federal Government (Oil and Gas)Carl Michael Smith, Assistant Secretary for Fossil Energy, U.S. Department of Energy

Town Hall IntroductionAssistant Secretary Smith served asOklahoma Secretary of Energy inthe Keating Administration beforeaccepting his current position withthe U.S. Department of Energy. Hewas succeeded in Oklahoma by Mr.Robert Sullivan, Jr.

IntroductionNatural gas and oil are the lifeblood of the U.S.economy. Together they account for more than 60percent of the energy consumed in the UnitedStates. Although the United States obtains lessthan half its oil from domestic fields (the rest isimported), two-thirds of all the oil discovered inthe country remains in the ground.

Natural gas is more plentiful than oil but asdemand increases, U.S. producers are turningincreasingly to deeper, more complex and difficult-to-produce gas reservoirs.

The federal government has responsibilities thatnecessitate the following roles relating to oil andnatural gas resources:

• Ensure energy security,• Maximize the public benefit of oil and gas resources,• Provide stewardship of federal lands,• Promote effective environmental protection,• Enhance U.S. global competitiveness, and• Protect critical infrastructure.

Recently, the federal Oil and Natural Gas programwas realigned to exclusively support three ofPresident George W. Bush’s top energy andenvironmental initiatives: Clear Skies, ClimateChange, and Energy Security. To achieve thePresident’s objectives, the federal Oil and NaturalGas program will be organized around threeresearch and development areas: Domestic

Resource Conservation, Future EnergyResources, and Energy Supply, Securityand Partnerships.

The U.S. Department of Energy, throughits federal Oil & Natural Gas program,does not have a direct role in finding andproducing hydrocarbons, but ratherpromotes the development of diverse

supplies of oil and natural gas. This isaccomplished through a combination of policy andtechnology development activities. The program’smission is to create public benefits by providingsound science for responsible decision-making,and investing in higher-risk research that industrycannot take on itself.

To achieve this mission, the Oil & Natural Gasprogram works closely with independent producersof oil and natural gas to respond to significantdomestic issues such as coalbed methaneproduction, hydraulic fracturing, land and resourceaccess, and reservoir efficiency. The program alsocollaborates with academia and larger producers toidentify significant new energy developments,such as methane hydrates, zero footprinttechnologies, and micro-drilling technologies thatwill allow the United States to bring previouslyuntapped resources to market.

To accomplish its international goals, the programteams with regulatory and international customers,and deals with significant international supply andregulatory issues such as LNG, transparency inforeign regulatory regimes, and greater access forAmerican investment abroad.

Natural Gas ResearchThe President’s Clear Skies Initiative provides therationale for most of the federal investment innatural gas research. Clear Skies legislation willlikely further increase demand for this clean-


burning fuel. In the absence of new environmental requirements,natural gas use in the United States is likely to increase by nearly 54percent by 2025.1

The federal program in natural gas research is directed primarily atproviding new tools and technologies that producers can use todiversify future supplies of gas. Emphasis will be increased inresearch that can improve access to onshore public lands. Animportant aspect of this research will be to develop innovative waysto recover this resource while continuing to protect theenvironmental quality of these areas.

Natural gas storage will also assume increasing significance in theUnited States as more and more power plants require consistent,year-round supplies of natural gas. Toward this end, the U.S.Department of Energy will initiate a nationwide, industry-led naturalgas storage consortium.

The consortium will emphasize the creation of a balanced researchportfolio of practical solutions, short-term projects, and basicresearch to improve the performance of the nation’s gas storageinfrastructure and explore opportunities for siting new liquefiednatural gas facilities.

The most significant change in the Oil and Natural Gas program isthe dedication of federal research funding toward hydrogenproduction from natural gas. Particularly, the program is developingnew technologies that lower the cost of producing hydrogen fromnatural gas in ways that permit capture of associated carbon dioxide.

Over the long term, the production of natural gas from hydratescould have major energy security implications. Hydrates – gas-bearing, ice-like formations in Alaska and offshore–– contain moreenergy than all other fossil energy resources. Hydrate production, ifit can be proved technically feasible, has the potential to shift theworld energy balance away from insecure sources of supply.

Oil Technology DevelopmentThe President’s National Energy Policy calls attention to thecontinued need to strengthen the nation’s energy security bypromoting enhanced oil (and gas) recovery and improving oil (andgas) exploration technology through continued partnerships withpublic and private entities.

One example is the use of carbon dioxide injection to enhance therecovery of oil from existing fields. Carbon dioxide injection is aproven enhanced oil recovery practice that prolongs the life of some

The most significant change inthe Oil and Natural Gasprogram is the dedication offederal research funding towardhydrogen production fromnatural gas.


mature fields, but the private sector has not applied this technique toits fullest potential due to insufficient supplies of economical carbondioxide. A key federal role will be to facilitate the greater use of thisoil recovery process by integrating it with carbon dioxide that will becaptured at, and delivered from fossil fuel power plants.

The Oil and Natural Gas program is also focusing much of its effortson a new domestic resource conservation effort that will targetpartnerships with industry and universities to sustain access tomarginal wells and reservoirs. A high priority in this area is thedevelopment of “micro-hole” technology. Rather than developingjust another new drilling tool, the federal program will integrate“smart” drilling systems, advanced imaging, and enhanced recoverytechnologies into a complete exploration and production system.

Micro-hole systems may offer one of the best opportunities forkeeping marginal fields active because the smaller diameter wellscan significantly reduce exploration costs and make new drillingbetween existing wells more affordable. Using breakthroughtechnology like this to keep marginal fields in production preservesthe opportunity to eventually apply even more advanced innovationsthat could recover even larger quantities of domestic crude thattraditional oil recovery methods currently leave behind.

ConclusionThe U.S. Department of Energy has been working with industry,universities, and States to ensure that the nation continues todevelop, enhance and deploy innovative and cost-effective naturalgas and petroleum technologies. With America’s oil productionincreasingly being supplied by small independent producers, the U.S.Department of Energy is continuing its efforts to help the smallest ofthese companies test higher-risk technologies that could keep oilflowing from thousands of U.S. fields.

The federal government continues to be a valuable partner inbringing unique technologies to the marketplace that can locatedifficult-to-find resources; improve natural gas storage and retrieval;extend the life of domestic energy resources; and reduce wellabandonments – all technologies that are essential to maximizingproduction of domestic resources while protecting the environment.

Footnotes1 Energy Information Administration, U.S. Department of Energy,Annual Energy Outlook 2003, Table A1, January 2003.

The Oil and Natural Gasprogram is also focusing muchof its efforts on a new domesticresource conservation effort thatwill target partnerships withindustry and universities tosustain access to marginal wellsand reservoirs.



Federal Government (Water)Abbreviated Executive Summary, Western Water Policy Review Commission

In directing the Western Water Policy ReviewAdvisory Commission (Commission) to makerecommendations about the proper role of thefederal government in western water managementfor the next 20 years, the Congress gave ourCommission a daunting task. For the past year anda half, we have labored to understand the details ofnumerous and often conflicting federal programswhile striving not to lose sight of the “big picture.”Though many previous studies have documentedthe chronic problems of water in the West, theconvergence of a number of trends makes this studyunique and timely.

Early in our tenure, we learned that western waterplanners for the 21st century must addressstaggering growth projections. For the past 15years, the West has been experiencing the mostdramatic demographic changes for any region orperiod in the country’s history. Should presenttrends continue, by 2020 population in the Westmay increase by more than 30 percent. The West israpidly becoming a series of urban archipelagos(e.g., Denver, Salt Lake City, Boise, Missoula,Portland, Phoenix, Albuquerque, Dallas, Houston,and Seattle) arrayed across a mostly arid landscape.

At the same time, reports to the Commissionidentified unhealthy trends in aquatic ecosystemsand water quality, pressing water supply problems,unfilled American Indian water claims, anagricultural economy suffering the stress oftransition, rapid conversion of open space to urbandevelopment, and rising drought and flood damageexacerbated by the potential for global warming.Additional population growth will only cause thesecrises to worsen unless bold action is taken.Population predictions underscore the urgency forwise long-range water policy planning, effectiveand efficient water management institutions, andconsistent enforcement of existing laws.

Part of the impetus for our Commission’sformation was the Congress’s finding that currentfederal water policy suffers from unclear andconflicting goals implemented by a maze ofagencies and programs. This finding was reinforcedand documented by the Commission’sinvestigation. Lack of policy clarity andcoordination resulting in gridlock was a consistenttheme of public testimony and scholarly research.

We have concluded that these problems cannot beresolved piecemeal but, rather, must be addressedby fundamental changes in institutional structureand government process. Moreover, our work ledus to an even more basic conclusion: that thegeographic, hydrologic, ecologic, social, andeconomic diversity of the West will requireregionally and locally tailored solutions toeffectively meet the challenges of the 21st centuryof water management.

The lives of westerners and the places we live arechanging so rapidly that irreversible developmentsare often not preceded by thoughtful policydiscussion and choices. In this report, we offersuggestions for addressing water problems in aproactive manner that will foster the necessarypolicy discussion and integrate the increasinglycomplex interests in western water. This summarydescribes the many recommendations offered bythe Commission. Two areas are highlighted firstbecause they received the widest support amongthe diverse group of Commission members—Principles of Water Management for the 21stCentury and New Governance of Watersheds andRiver Basins.

The entire 3,000 page report is available at http://www.waterwest.org/reading/readingfiles/fedreport.htm


EditorTulsa WorldPO Box 1770Tulsa, Oklahoma 74104 July 17, 2003

Dear World Editor:

I was pleased to see in the July 17 Tulsa World a prominent article highlighting theprospect of high-speed rail transportation in Oklahoma. I would hope that planners ofsuch ambitious projects, including our political leaders, would give serious considerationto designing such a system with wind energy as a possible power source.

The city of Calgary, Alberta (see next page) can demonstrate a successful commutertrain operation that is powered by a wind farm located at one end of the system. Oklahomaranks second in the nation by scientific measurement in per square mile windcharacteristics suitable for power generation. As hydrocarbon powered generation ofelectricity increases in cost, both wind and solar power are coming closer to economicviability. Planners of transit systems would be wise to consider these locally abundantfuels of the future in designing any new systems in our state.

Oklahoma is blessed with an abundance of natural resources. We have more remaining ,recoverable oil and gas reserves than have been produced since oil was discovered inour state over a century ago. These remaining reserves can and should be aggressivelypursued as wellhead prices improve and justify their development. In the meantime,Oklahoma would be underserving our next several generations of citizens if we ignoresimilarly abundant wind and solar resources

Sincerely yours,

Robert J. Sullivan, Jr.Oklahoma Secretary of Energy

RJSJr/sd


Oklahoma Secretary of EnergyRobert J. Sullivan, Jr., Secretary of Energy, Keating Administration


RIDE THE WINDA Wind-Powered Light Rail System

www.calgarytransit.com/environment/ride_d_wind.html

Calgary Transit is constantly in search of moreenvironmentally friendly products and services.One initiative has allowed CT to offer its customersthe opportunity to “ride the wind.” Calgary Transithas entered into a contract with Vision QuestWindelectric and Enmax to purchase electricalpower, supplied from their wind power farm, tooperate the C-Train.

Twelve wind turbines are required to power the C-Train system. It is expected that the "Ride theWind" program will increase power costs by lessthan one-half of one cent per passenger. This is asignificant step towards reducing the environmen-tal impact of transportation and makes Calgary’s C-Train the first North American wind poweredpublic transit system.

Although the C-Train operation does not producelocal greenhouse gas emissions, the purchase ofwind generated power will reduce Calgary Transit’scontribution of pollution to the atmosphere fromcoal fired and natural gas electricity generation byabout 26,000 tonnes.

Since the implementation of the Ride the Wind!initiative in the latter part of 2001, Calgary Transithas been the proud winner of two prestigiousawards. In 2001 Calgary Transit won a Federationof Canadian Municipalities CH2M HILL Sustain-able Community Award for its leadership inrenewable energy.

Most recently, Calgary Transit was the recipient ofa 2001 Pollution Prevention Award in the innova-tions category. The award is presented by theCanadian Council of Ministers of the Environment.

The C-Train is now 100 per cent emissions free. Itis the first public Light Rail Transit system inNorth America to power its train fleet with wind-generated electricity.

A three-car C-Train can carry over 600 passengers,equal to 545 private vehicle trips. And the greatthing about the C-Train it is 100% wind-powered.12 wind turbines were installed near Pincher Creekto produce enough electricity to power the entire C-Train system.



Oklahoma Secretary of the EnvironmentMiles Tolbert

Robert S. Kerr predicted that water would befor Oklahoma in the 21st Century what oil wasin the 20th Century. Can we apply the lessonslearned from our experience with oil and gas to ourincreasing valuable water resources?

We must first recognize that the supply ofwater, like that of oil, is finite. As a state wecurrently allocate some 5.8 million acre-feet ofwater every year. Of that, 55% is groundwater and45% is surface. There is no realistic possibility ofimporting additional water into the State. Ourcritical task will not only be to take steps, as wehave with oil, to use water more efficiently inorder to extend the lifetime of these resources. Itwill also be to plan for the time when the resourcesbegin to decline. The most recent ComprehensiveWater Plan predicts that we will begin to run out ofwater in parts of Western Oklahoma in the nextfew decades.

We must remember that oil has generatedwealth because we have done more than justpump it out of the ground. Oil made Oklahomawealthy because we did more than merely extractit and use it or sell it. We added value to itthrough refining. We built up companies thatmarketed and distributed it and provided supportservices to others in the industry. Theseenterprises provided large numbers of technicaland managerial jobs – many of which remain evenas the quantity of oil produced in the state isdeclining. We must do the same for water. Ourprimary use of it is for agriculture. We musttherefore move beyond the simple production ofagricultural commodities and invest in enterpriseswhich add value to agricultural products anddevelop skilled jobs in allied industries. This willgenerate broader wealth and will put us in aposition to continue to prosper even after we runinto the limits imposed by the finite resource.

We have been successful in the economicdevelopment of oil and gas in part because oflegal rules which provide certainty. Oil and gaslaw protects the property rights and economicinvestment of someone producing oil and gas byensuring that nearby production from the sameformation does not unfairly interfere with hisproduction.

As presently understood, our ground water lawprovides essentially no recourse when one person’swater supply is affected by another’s pumping.Uncertainty discourages investment. To resolvethat uncertainty we need legal rules whichrecognize the physical interactions between thegroundwater under one’s person’s property and thewater, whether ground or surface, belonging toanother. We will also need to resolve the(sometimes conflicting) tribal claims to surfacewater, claims which are being made withincreasing insistence and sophistication.

Finally, we must recognize that, unlike oil, nowater can be used for any consumptive purposewithout affecting the environment. Surfacewater bodies are not only economic andrecreational resources, they are critical ecologicalhabitat. Furthermore, although it is not widelyrecognized, the pumping of groundwater has adirect effect on surface water flows. Anysignificant reduction in surface water flows,whether through direct diversion or the pumping ofgroundwater, will reduce both the quantity andquality of habitat available. Many animal speciesare flow dependent. For these species, relativelysmall changes in flow can have dramatic effects ontheir ability to maintain a viable population. Wemust be careful to ensure that in developing ourwater resources we maintain sufficient reserves toprotect the wildlife species that are so heavilydependent on our streams and rivers.



Oklahoma Secretary of Commerce and TourismKathy Taylor

The responsibility of the Department of Commerceis to recruit, expand and sustain businesses inOklahoma. There are many factors that contributeto a decision to locate, expand or stay inOklahoma, and one of the principal concerns is theavailability and cost of energy. But the initial costof energy is only one aspect that businessesconsider when examining the cost of doingbusiness in our State. Forward-thinking businessesalways look at the long term reliability andprojected cost to ensurefuture growth andprosperity of theircompany.

The Department ofCommerce maintains thatenergy efficiency andrenewable energytechnologies offer themost cost-effective, short-and long-term routes to asafer, more reliable and more resilient energyinfrastructure. Development of an abundantdomestic renewable resource base providesimportant energy diversity, protects theenvironment, protects public health, and promoteseconomic development, while making ourcountry’s energy systems less vulnerable.Oklahoma needs an energy policy that reflectscreative and innovative use of all energy resources.This can be achieved through sustainedinvestments in traditional centralized energytechnologies, as well as energy efficient andrenewable technologies.

The U. S. Dept. of Energy has designated theOklahoma Department of Commerce as the StateEnergy Office (SEO) for developing and marketingenergy efficiency and renewable energy programs.Oklahoma is now developing its resources in theareas of wind power, biomass research, ethanolproduction, and promotion of alternative fuels.

To support these goals, the State Energy Office hasbeen instrumental in the formation of theOklahoma Renewable Energy Council withrepresentation from state agencies, highereducation, business and industry, farmers andenergy and environmental interest groups. Twolarge wind power farms are currently beingestablished in western Oklahoma which willeventually produce 175 megawatts of renewableenergy. The Oklahoma State Legislature

facilitated apartnership betweenthe OklahomaDepartment ofAgriculture and theOklahomaDepartment ofCommerce thatresulted in afeasibility study that

indicates that Oklahoma can support as many asthree ethanol production plants.

Funds from the State Energy Plan support twoClean Cities coalitions in Oklahoma that promotethe use of alternative fuels, including compressednatural gas and E85, in automotive fleets. Inaddition, the Office of Community Developmentadministers a Weatherization Assistance Programand Energy Star appliance program to encouragelow-income families to conserve energy anddecrease energy costs in their homes. Withcooperation with the Oklahoma Center for theAdvancement of Science and Technology, theDepartment of Commerce participates in theIndustries of the Future program which focuses onhelping Oklahoma’s forest industry become better,faster, cleaner, more energy efficient and morecompetitive in the global market.

A secure energy future is critical to our nation andthe competitiveness of our state. We all must doour part to ensure that we move in that direction.

Strategic Goals of the State Energy Office

• Reduce Oklahoma’s dependence on foreign oil• Reduce energy prices for the disadvantaged• Increase the energy efficiency of buildings• Increase the energy efficiency of industry and• Encourage wind power & biomass industry



Oklahoma Corporation CommissionDenise Bode, Chairman

The states, just as envisioned by the foundingfathers, are competing for their share of futuregrowth. States that identify their natural advan-tages, - their resource assets in our case - and moveaggressively to exploit them will prosper. Thosewho don’t will be left in the dust.

There are a number of factors that determine ourcompetitiveness: the tax burden (real and per-ceived), the quality of our education, investment inand access to transportation and our command andcontrol of regulatory policies.

The Commission has regulatory responsibility fortelecommunications, trucking, electric utilities, andthe oil and gas industry, all of which make upOklahoma’s economic foundation, and all of whichare undergoing significant change. And to compli-cate this mission, state commissions have now,since 9/11, been asked to address necessary defen-sive concerns regarding the critical infrastructurewe regulate. As a result, the Corporation Commis-sion must change as well.

In January, Commissioners Jeff Cloud, Bob An-thony and I commissioned a top-to-bottom auditand strategic plan for the commission, including aperformance-based budget. We have contactedhundreds of Commission customers for input onhow the Commission can cut the bureaucracy andstreamline our process. The Commission isaggressively moving to implement those efficiencymeasures to streamline processing in both the oiland gas area and in the public utilities area.

As the energy industry that we regulate has becomelean, mean and efficient, so must the Commissionin response. We must be flexible when all but twoof the top twenty producers in Oklahoma have 100employees or less. They don’t have deep pocketsfor paperwork so we have to learn to pick up thephone and work through problems. We are work-ing to reduce paperwork and unnecessary hearingsand to act for the benefit of our customers, notwhat is easy for us or because it has “always beendone that way.”

We are also preparing for change in the utility area.What has been one way for over 80 years, cradle tograve regulation is no longer necessary. If there iscompetition in utility services then governmentshould allow that competition to grow. A vigorouscompetitive marketplace can provide better tech-nology, more services, and better prices. Theregulation and the regulatory agency like theCommission must change. But the transition frommonopoly to competition is tricky. We must makesure that consumers are better off and there is realcompetition or we should not make the change.That is why you see the Commissioners involved inthese deregulation processes, taking over thedirection of policy from commission staff. We sureas heck better do it right, because telecommunica-tions, electric and natural gas services are funda-mental to our economy. And first rate, low pricedservices advantages Oklahoma in the game.

We favor new legislation that would provide for“one stop shopping” for the trucking industry thatwould make for more efficient regulation of thisvital industry and save over one million dollars.

Finally, as Americans we all need to understandthat security of our infrastructure is a new andpermanent cost of doing business and plan for it. Icurrently serve at the state and federal level,planning prevention and response to terrorism ofour critical infrastructure. We are working ontraining, information security, as well as strategiesand approaches to assure that appropriate, costeffective, measures are taken by the industries weregulate to reduce the risk and vulnerabilities todisruption to critical facilities.

For Oklahoma to beat our competition, governmentmust change. Although this agency is using lessstate revenue and has less staff than when I cameon board in 1997, we view the present reductions instate revenues as an opportunity to become evenmore efficient. We are not just talking aboutefficiency and reducing the size of state govern-ment ... we are actually doing it.



Tribal GovernmentsDepartment of Justice Policy on Indian Sovereignty and Government-to-Government Relations withIndian Tribes. Office of Tribal Justice, U.S. Department of Justice. www.usdoj.gov/otj/sovtrbtxt.htm

Purpose: To reaffirm the Department's recognitionof the sovereign status of federally recognizedIndian tribes as domestic dependent nations and toreaffirm adherence to the principles of government-to-government relations; to inform Departmentpersonnel, other federal agencies, federally recog-nized Indian tribes, and the public of theDepartment's working relationships with federallyrecognized Indian tribes; and to guide the Depart-ment in its work in the field of Indian affairs.

IntroductionFrom its earliest days, the United States hasrecognized the sovereign status of Indian tribes as"domestic dependent nations." Cherokee Nation v.Georgia, 30 U.S. (5 Pet.) 1, 17 (1831). Our Consti-tution recognizes Indian sovereignty by classingIndian treaties among the "supreme Law of theland," and establishes Indian affairs as a uniquearea of federal concern. In early Indian treaties, theUnited States pledged to "protect" Indian tribes,thereby establishing one of the bases for the federaltrust responsibility in our government-to-govern-ment relations with Indian tribes. These principlescontinue to guide our national policy towardsIndian tribes.

The Executive Memorandum on government-to-government relations between the United Statesand Indian Tribes.

On April 29, 1994, at a historic meeting with theheads of tribal governments, President Clintonreaffirmed the United States' "unique legal relation-ship with Native American tribal governments" andissued a directive to all executive departments andagencies of the Federal Government that:

As executive departments and agencies undertakeactivities affecting Native American tribal rights ortrust resources, such activities should be imple-mented in a knowledgeable, sensitive mannerrespectful of tribal sovereignty.

President Clinton's directive requires that in allactivities relating to or affecting the government ortreaty rights of Indian tribes, the executive branchshall:

1) operate within a government-to-governmentrelationship with federally recognized Indiantribes;

2) consult, to the greatest extent practicable andpermitted by law, with Indian tribal governmentsbefore taking actions that affect federally recog-nized Indian tribes;

3) assess the impact of agency activities on tribaltrust resources and assure that tribal interests areconsidered before the activities are undertaken;

4) remove procedural impediments to workingdirectly with tribal governments on activities thataffect trust property or governmental rights of thetribes; and

5) work cooperatively with other agencies toaccomplish these goals established by the Presi-dent.

The Department of Justice is reviewing programsand procedures to ensure that we adhere to prin-ciples of respect for Indian tribal governments andhonor our Nation's trust responsibility to Indiantribes. Within the Department, the Office of TribalJustice has been formed to coordinate policytowards Indian tribes both within the Departmentand with other agencies of the Federal Govern-ment, and to assist Indian tribes as domesticdependent nations within the federal system.


Federal Indian Self-Determination PolicyPresident Clinton's executive memorandum builds on the firmlyestablished federal policy of self-determination for Indian tribes.Working together with Congress, previous Presidents affirmed thefundamental policy of federal respect for tribal self-government.President Johnson recognized "the right of the first Americans . . . tofreedom of choice and self-determination." President Nixon stronglyencouraged "self-determination" among the Indian people. PresidentReagan pledged "to pursue the policy of self-government" for Indiantribes and reaffirmed "the government-to-government basis" fordealing with Indian tribes. President Bush recognized that the FederalGovernment's "efforts to increase tribal self-governance have broughta renewed sense of pride and empowerment to this country's nativepeoples."

Principles of Indian Sovereignity and Trust ResponsiblityThough generalizations are difficult, a few basic principles provideimportant guidance in the field of Indian affairs:

1) The Constitution vests Congress with plenary power over Indianaffairs;

2) Indian tribes retain important sovereign powers over "their mem-bers and their territory," subject to the plenary power of Congress;and

3) The United States has a trust responsibility to Indian tribes, whichguides and limits the Federal Government in dealings with Indiantribes. Thus, federal and tribal law generally have primacy overIndian affairs in Indian country, except where Congress has providedotherwise.

Department of Justice Recognition of Indian Sovereignity andFederal Trust ResponsiblityThe Department resolves that the following principles will guide itsinteractions with the Indian tribes.

The Sovereignty of Indian TribesThe Department recognizes that Indian tribes as domestic dependentnations retain sovereign powers, except as divested by the UnitedStates. The Department may take actions and positions affectingIndian tribes with which one or more tribes may disagree. In allsituations, the Department will carry out its responsibilities consistentwith the law and this policy statement.

Government-to-Government Relationships with Indian TribesIn accord with the status of Indian tribes as domestic dependentnations, the Department is committed to operating on the basis ofgovernment-to-government relations with Indian tribes.


Consistent with federal law and other Departmental duties, theDepartment will consult with tribal leaders in its decisions that relateto or affect the sovereignty, rights, resources or lands of Indian tribes.Each component will conduct such consultation in light of its mis-sion. In addition, the Department has initiated national and regionallistening conferences and has created the Office of Tribal Justice toimprove communications with Indian tribes. In the Offices of theUnited States Attorneys with substantial areas of Indian countrywithin their purview, the Department encourages designation ofAssistant U.S. Attorneys to serve as tribal liaisons.

In order to fulfill its mission, the Department of Justice endeavors toforge strong partnerships between the Indian tribal governments andthe Department. These partnerships will enable the Department tobetter serve the needs of Indian tribes, Indian people, and the publicat large.

Self-Determination and Self-GovernanceThe Department is committed to strengthening and assisting Indiantribal governments in their development and to promoting Indianself-governance. Consistent with federal law and Departmentalresponsibilities, the Department will consult with tribal governmentsconcerning law enforcement priorities in Indian country, support dulyrecognized tribal governments, defend the lawful exercise of tribalgovernmental powers in coordination with the Department of theInterior and other federal agencies, investigate government corruptionwhen necessary, and support and assist Indian tribes in the develop-ment of their law enforcement systems, tribal courts, and traditionaljustice systems.

Trust ResponsibilityThe Department acknowledges the federal trust responsibility arisingfrom Indian treaties, statutes, executive orders, and the historicalrelations between the United States and Indian tribes. In a broadsense, the trust responsibility relates to the United States' unique legaland political relationship with Indian tribes. Congress, with plenarypower over Indian affairs, plays a primary role in defining the trustresponsibility, and Congress recently declared that the trust responsi-bility "includes the protection of the sovereignty of each tribalgovernment." 25 U.S.C. . 3601.

The term "trust responsibility" is also used in a narrower sense todefine the precise legal duties of the United States in managingproperty and resources of Indian tribes and, at times, of individualIndians.

The trust responsibility, in both senses, will guide the Department inlitigation, enforcement, policymaking and proposals for legislationaffecting Indian country, when appropriate to the circumstances. Asused in its narrower sense, the federal trust responsibility may be


guided by the First Amendment of the UnitedStates Constitution, as well as by statutes whichprotect the exercise of religion such as the Reli-gious Freedom Restoration Act, the AmericanIndian Religious Freedom Act, the Native Ameri-can Graves Protection and Repatriation Act, andthe National Historic Preservation Act.

The Department also recognizes the significantfederal interest in aiding tribes in the preservationof their tribal customs and traditions. In performingits duties in Indian country, the Department willrespect and seek to preserve tribal cultures.

Directive to all Components of the DOJThe principles set out here must be interpreted byeach component of the Department of Justice inlight of its respective mission. Therefore, eachcomponent head shall make all reasonable effortsto ensure that the component's activities are consis-tent with the above sovereignty and trust principles.The component heads shall circulate this policy toall attorneys in the Department to inform them oftheir responsibilities. Where the activities andinternal procedures of the components can bereformed to ensure greater consistency with thisPolicy, the component head shall undertake to doso. If tensions arise between these principles andother principles which guide the component incarrying out its mission, components will develop,as necessary, a mechanism for resolving suchtensions to ensure that tribal interests are given dueconsideration. Finally, component heads willappoint a contact person to work with the Office ofTribal Justice in addressing Indian issues within thecomponent.

DisclaimerThis policy is intended only to improve the internalmanagement of the Department and is not intendedto create any right enforceable in any cause ofaction by any party against the United States, itsagencies, officers, or any person.

justiciable in some circumstances, while in itsbroader sense the definition and implementation ofthe trust responsibility is committed to Congressand the Executive Branch.

Protection of Civil RightsFederal law prohibits discrimination based on raceor national origin by the federal, state and localgovernments, or individuals against AmericanIndians in such areas as voting, education, housing,credit, public accommodations and facilities,employment, and in certain federally fundedprograms and facilities. Various federal criminalcivil rights statutes also preserve personal libertiesand safety. The existence of the federal trustresponsibility towards Indian tribes does notdiminish the obligation of state and local govern-ments to respect the civil rights of Indian people.

Through the Indian Civil Rights Act, Congressselectively has derived essential civil rights protec-tions from the Bill of Rights and applied them toIndian tribes. 25 U.S.C. . 1301. The Indian CivilRights Act is to be interpreted with respect forIndian sovereignty. The primary responsibility forenforcement of the Act is invested in the tribalcourts and other tribal fora. In the criminal lawcontext, federal courts have authority to decidehabeas corpus petitions after tribal remedies areexhausted.

The Department of Justice is fully committed tosafeguarding the constitutional and statutory rightsof American Indians, as well as all other Ameri-cans.

Protection of Tribal Religion and CultureThe mandate to protect religious liberty is deeplyrooted in this Nation's constitutional heritage. TheDepartment seeks to ensure that American Indiansare protected in the observance of their faiths.Decisions regarding the activities of the Depart-ment that have the potential to substantially inter-fere with the exercise of Indian religions will be



City of DuncanKen Vanderslice, City Manager

Maximizing opportunities to beeffective stewards of the waterresources within our State is aresponsibility common to all wholive, visit, or do business in Oklahoma. Thisresponsibility, when met, accrues benefits that farexceed our respective life times and if pursued witha sense of sharing, the result will benefit the long-term interests of all in Oklahoma and ourdownstream neighbors.

An idea, need, and on occasion ... a disasterprecedes our development of a plan.

In 1980, following attempts that date back to 1955,a Comprehensive Water Plan was adopted by theState Legislature. This Plan was last updated in2000 covering projections through 2050. TheOklahoma Water Resources Board is responsiblefor managing the Plan.

From my perspective as a City Manager in thesouth central region of Oklahoma, it is startling tofind that city engineers, consultants, local electedofficials, water district managers and their boards,development authority directors, manufacturers,businessmen, ranchers and farmers have little or noknowledge of a State Comprehensive Water Plan.

These people along with many others are front-lineSTEWARDS of Oklahoma’s water resource. Whenquestions or problems arise over the scarcity anduse (or export) of the water resource, conflict issure to follow. Conflict over water can beconstructive if a rational bottom-up plan exists, issupported with adequate resources (technical andmonetary), is current, and is persistently

communicated as the way we do(water) business in Oklahoma.

The State Legislature candelegate to the Water Resources Board and holdthem accountable for results IF they consistently,over the planning period, allocate sufficientresources to meet the assigned planning andimplementation responsibilities.

The State Legislature should be in the role of afacilitator by providing funds and assuringtechnical support to the Oklahoma WaterResources Board. Additionally, the StateLegislature can provide for a means of third-partymediation to assist in the inevitable conflict thatwill arise in developing the proper level of detail atthe river basin or watershed level of aComprehensive Water Plan.

An arbitration process could be established toassist in conflict or issues that arise that have aState-wide impact or may impact neighboringstates.

It is my understanding that the Oklahoma WaterResources Board is considering, as a part of the2005 Comprehensive Water Plan update, a shift inthe planning process to include a bottom-upapproach to the evolution of detail planning on ariver basin or watershed basis.

This change in the planning process along witheffective delegation and appropriate levels ofresource allocation to the Water Resources Boarddeserves strong support from front-line stewards ofOklahoma water.



City of GuymonJess Nelson, Mayor

Energy and Water pretty wellsums up what Guymon and TexasCounty are all about. We sit aboveone of North America’s largestaquifers, the Ogallala, and one of North America’slargest natural gas reserves, Guymon-HugotonField.

For many years, that abundant, and cheap, naturalgas has been used to bring up the abundant waterfor drinking and irrigation. Texas County hasbecome the number one county in Oklahoma, andin the top ten in the United States for grossagriculture receipts. If the energy or water supplywere interrupted, for whatever reason, theeconomy of Guymon/Texas County would bedestroyed.

Ninety five percent of the water from the Ogallalais used for irrigation and five percent, formunicipal and industrial use. According to theUnited States Geological Survey (U.S.G.S.), thelatest center pivot system has drastically reducedthe depletion of the Ogallala to negligible or inchesper year from up to 10ft. per year when floodirrigation was common practice.

The C.R.P. program has also helped by reducingthe number of acres in cultivation, thus reducingthe stress on the aquifer.

There has been great concern in recent yearsconcerning the transfer of groundwater from theTexas Panhandle to municipalities. This concern

led to new water rules in Texasthat are strikingly similar toOklahoma’s water rules.Oklahoma currently has strong

water laws that protect both, the long-termsustainability of our groundwater and the abilityfor the landowner to utilize the water to theirbenefit.

We need to be vigilant with current industries andselective with future industries as to water usageand possible contamination to the Ogallala. Yet, wemust also continue to allow this resource to beutilized for the betterment of our society.

The use of natural gas for irrigation faceschallenges from the volatility in the market priceresulting from increased East and West Coastdemands.

Northwest Oklahoma has the potential fordeveloping alternative sources of energy such aswind, biomass and ethanol. We should be lookingfor ways to encourage their development.I think we should remember Mexico City. Fivehundred years ago, Mexico City developed an“island paradise.” Today, the lake surrounding thecity is gone. All the ground underneath isirreversibly contaminated, and no potable water isavailable for miles around.

The future generations of Guymon/Texas Countyare depending upon our being good stewards ofour natural resources today.


Private Sector Perspectives

Mid-Continent Oil and Gas AssociationDr. Bruce M. Bell, Chairman, Mid-Continent Oil & Gas Association

Oil and natural gasindustry trade groups,such as the U.S. Oil &Gas Association andMid-Continent Oil & Gas Association of Okla-homa, since 1997 have been warning of significantupcoming problems due to inadequatedeliverability of natural gas. The warm winters of1998 and 1999 delayed the onset of problems, butthey also increased its severity once it hit in 2000.The lesson here is that industry spokespeople wereignored; their predictions were called self-servingby environmentalists and politicians alike.

Today our message is, “We are entering acrisis.” We are still being ignored. We are stillbeing investigated as conspirators!

Significant long-term supplies of natural gas lie offboth the East (31 TCF) and West Coast (21 TCF),off the eastern Gulf of Mexico (43 TCF), in theRocky Mountain basins (137 BCF) and in the northslope of Alaska, including the Alaskan NationalWildlife Refuge (313 TCF). Yet drilling is bannedor significantly restricted in all of these areas. If theU.S. wants an adequate supply of natural gas,industry must be allowed to drill where the reser-voirs are located.

Senator Tom Daschle of South Dakota, faced witha succinct explanation of this situation, said a fewweeks ago, “Well, we can compromise, find middleground, but we aren’t going to be able to go toextremes, such as drilling in ANWR.” How muchclearer can one say it? If we are not allowed to drillin those areas where adequate reservoirs arelocated, we will not be able to supply the gas.

Period!

Perhaps the most discour-aging aspect of preparinga detailed, statistic-filledand comprehensiveanalysis of the natural gas

situation and yet being completely ignored is thatthis is only one aspect of what the American publicneeds to understand if we are to avoid a growinglist of energy crises - and it is the easy one. Themore fundamental problem areas involve ongoingscientific research that will permit us to betterunderstand the planet on which we live. Globalclimate change is one of these areas - one that hasbecome totally politicized and governed by what isnow considered politically correct, ignoringrelevant science. If you do not agree with thoseself-professed experts who want to save ourenvironment, you are labeled “anti-environment,”greedy industrialists, etc.

Of greatest concern to the energy business is that acentral theme of the environmental movementembraces the idea that carbon dioxide, produced byburning fossil fuels, is a “greenhouse” gas that iscausing global temperatures to rise. This notion hasnow been discredited, but that does little to slowthe steamroller effect of what can only be termed“carbon hysteria.”

Global Cooling and Global WarmingIn the 1970s, a serious debate was raging over athen eminent global climate problem, globalCOOLING. Mean annual temperatures had beendropping from 1940 through 1970. It was fearedthat the climate was becoming significantly coolerand that we would soon return to another ice age,complete with glaciers covering much of theNorthern Hemisphere. Many of these same groupsof scientists are now proclaiming that humankind iscausing the planet to WARM. Perspective becomescrucial to understanding this contradiction.

Energy, Science and thePolitics of Carbon: The Crisis is Here

Reprinted from Energy Houston, Vol 4, No. 1: 2001


The most recent geological epoch, the Pleistocene,began about 1 million years ago and is generallyreferred to as the Ice Age. In fact, during thePleistocene there have been at least three majorglaciations, in which massive sheets of ice, 1,000-plus-feet thick, flowed down from the Arctic tocover much of the continental masses of theNorthern Hemisphere. (Ice flows like a viscousliquid when put under enough pressure, caused bythe weight of the great thickness of the ice sheetitself.)

The last of these great ice sheets receded (melted)only 10,000 to 20,000 years ago. We are now in themost recent interglacial. Geologically, nothing haschanged from the last inter-glacial, and thus there islittle reason not to believethat another glaciation willoccur, if left to naturalforces.

Times of glaciations requirea special set of geologicalcircumstances. Severalperiods of continentalglaciations have occurred in the history of theearth. The Pleistocene is merely the most recent.Today, the continental masses of the NorthernHemisphere surround the Arctic Ocean. Waterinflow to the Arctic is restricted to relativelynarrow straits.

Today, the onset of a glaciation requires first ageneral warming of the earth, which graduallymelts the mountain glaciers and the polar icecaps.As melting occurs, sea level gradually rises,thereby increasing the exchange of warmer equato-rial ocean waters with colder polar water. Sea levelhas risen about 6-inches during the last century.Eventually, the arctic icecap melts and warmwaters flow in from the Atlantic and PacificOceans, unrestricted, keeping the ocean ice free.

As long as the Arctic Ocean is frozen over, as it istoday, the area is an arctic desert, with little mois-ture and thus little snow. Glacier formation requireshuge quantities of snow to accumulate into the

massive ice sheets that flowed hundreds uponhundreds of miles southward. The secret to newglacier formation is to have a viable supply ofmoisture; in this case, evaporation from the openArctic Ocean. Ice buildup continues until so muchseawater becomes locked up in the glaciers that sealevel falls 200 to 300 feet, as it did during the lastmajor glacial advance, cutting off the flow of warmseawater into the arctic basin and thereby allowingthe Arctic Ocean to freeze over once again. Gradu-ally, the glaciers melt, sea level rises and the cycleis complete.

Note that the role of the sun is a crucial componentin the earth’s global temperature, one that is as yetlittle understood. Short-term global temperature

changes are tied to sunspot cycles and perhapsother solar phenomena.

Who cares about ancienthistory - about whathappened 20,000 yearsago? Everyone should!

Several generalizations about global climatechange are apparent from our recent geologicalpast. The earth’s mean annual temperature obvi-ously is much cooler (5-10 degrees Celsius) duringa continental glaciation, with huge land areascovered 365 days a year with ice, whereas theearth’s atmosphere is much warmer during theinterglacials.

Thus, as we are in an interglacial, the earth’satmosphere has warmed. We may be near themaximum average temperature fort his interglacial,or we may have more to go. Certainly, at today’stemperature, the polar ice caps and mountainglaciers are slowly receding (melting) and havebeen for a hundred years. The question is: Doesman have any effect on global temperatures? Morespecifically, does the release of CO

2 from the

burning of fossil fuels affect global temperatures?

When cooling vs. warming suppositions reversedin the mid-1970s and a group of environmentalists

Increased solar activity caused an in-crease in the earth’s mean annual tem-perature of a half degreeCelsius duringthe first 40 years of the last century -which, by the way, is the entire increasethat was recorded for the 20th century.


decided that we were experiencing global WARM-ING, the single biggest man-made influence thatcould be identified was the burning of fossil fuels.Carbon dioxide, as a part of Earth’s atmosphere,causes heat retention. Not nearly as much as watervapor, but it is still a significant factor. (Thankheaven, or the earth would be a frozen planet as areothers in our solar system.) Politically correctclimate change models postulated that CO

2 was a

major contributor to warming, and even thoughman’s total contribution is less than 1 percent of theatmospheric total, it was thought to be a criticalcomponent.”

“CO2 is a dangerous component of air pollution.”

This mantra has been repeated and repeated sooften for the last 25 years that the general publichas accepted it as a fact. The Kyoto Treaty em-braces this contemptible conclusion and carries itto the egregious extreme that it would cripple theindustrialized world, all in the name of protectingus from CO

2 emissions, which had only been

postulated to be harmful and now are shown not tobe so! Industry releases about 6 billion metric tonsof CO

2 per year versus 190 billion tons by respira-

tion and plant decay.

That’s right, the ever-increasing human populationand all the other higher animals on the planet areCO

2 generators.

CO2 is no longer considered a major contributor to

global warming by those very people who havebeen making the most noise about it for years.Their questions arose with research at NASA’sGoddard Institute for Space Studies, which hasbeen measuring atmospheric temperature fromsatellites for 20 years.

These temperatures have been verified usingweather balloon data. Whereas surface tempera-tures, often taken near “heat islands” (large citieswith massive expanses of concrete and blacktopthat hold heat), had suggested global warming,atmospheric temperatures show absolutely nochange in average mean temperature over the last20 years. In fact, current temperatures are actually

below the 20-year average! Yet this is the time inwhich man-released CO

2 from burning fossil fuels

has most added to atmospheric levels. If it has hadany significant influence, it would have shown upby now. In 1988, James E. Hansen, head of NASAGoddard Institute, testified to then-Senator AlGore’s environmental committee that the “accumu-lations of greenhouse gases were warming theplanet and to quit waffling.” Today, he has ac-knowledged that CO

2 at most plays a minor role in

climate change, and that other factors - such as soot- are being explored.

The energy industry immediately must spread theword about CO

2 and reverse the foolishness of

draconian constraints on burning fossil fuels. Littleelse can be as important for our industry thancorrecting this misconception. As those people whoare convinced that humans cause global warmingbegin to look for alternative culprits, the truthabout CO

2 must be emphasized.

Sensible Responses to Ongoing PhenomenaIn all likelihood, we are in a time of planet-widewarming, but one caused by an ongoing geologicphenomenon. Certainly temperatures have in-creased over the last 300 years since the Little IceAge, discussed below. Humans, it appears, havelittle if any influence. But either way, CO

2 is not a

major culprit. In fact, CO2 is fertilizer, causing our

diverse foliage to grow at faster rates. As we lookfor ways to lower high rates of human hungerworldwide, slightly higher CO

2 levels may be a

significant benefit.

Recently completed oxygen isotope studies showan interesting pattern of temperatures for the last6,000 years. The earth was 2 to 4 degrees Celsiuscooler for the first 2,000 years of this period,followed by 2,000 years of temperatures 1 to 2degrees Celsius above that of today. 2,000 yearsago, temperatures became more variable, withperiods as much as 2.5 degrees Celsius aboveaverage down to 5 degrees below current average.


The coldest time recorded was approximately 300years ago, a period referred to as the Little Ice Age.Recorded history confirms isotope data that 1,000years ago, the earth’s climate was mild, referred toas the Medieval Climate Optimum.

This mild time was followed by intense coolingfrom 1660-1710. It snowed for 18 months straightin Europe. Records indicate that sunspots, darkblotches on the surface of the sun, virtually disap-peared between 1645 and 1705, suggesting aprobable cause for the cooling. Obviously, the earthhas been warming since that time, again approach-ing the mean temperatures of the last 6,000 years.

Man must be vigilant to prevent damage to ourplanet. Humans needclean air and water and ahealthy ecosystem.Many environmentalconcerns are valid. Butwe must base conclu-sions on science, not on emotion. Conservationmakes sense. Obtaining ever-increasing fuelefficiencies preserves a finite resource for thefuture. Renewable fuels are also needed, but theirdevelopment and implementation will take manyyears. This is not due to a lack of funding, it’s dueto the time it takes to make significant break-throughs and then transfer that technology to aworkable mass-produced product.

The Kyoto Treaty is a stark example of politiciansusing extremist rhetoric to try to jockey for power.”Carbon sequestration” has become their mantra. Ifyou produce a lot of CO

2 , then you are harming the

earth and must pay those who are taking carbon outof the atmosphere, thereby helping the earth. Don’tlet facts get in the way.

The U.S. timber industry oversees vast reforestedareas, which are filled with young, fast-growingforests that take up a tremendous amount of CO

2.

Mature forests, including rainforests, have a hugeamount of litter on the forest floor that is consumedby termites and other creatures, thereby producingCO

2- that is, putting the carbon back in the atmo-

sphere. Our reforested areas, by contrast, are in fact“carbon sinks” - i.e., net carbon extractors.Rainforests may actually be neutral or even CO

2

contributors due to slow growth rate and high litterdecay. Likewise, our vast crop production eachyear” sequesters” large amounts of carbon.

Kyoto Treaty negotiations broke down last year,even though it was Clinton’s environmentallycorrect administration, because Europe and ThirdWorld countries would not accept the idea that theU.S., as amply shown by recent research, wasactually a net carbon reducer! This fact undercuttheir whole plan of the treaty: transfer wealth fromthe rich United States to the less developed coun-tries.

So pervasive has become thenotion that we must rigidlycontrol CO

2 that Oklahoma

passed a law to establish aCarbon Sequestration Board

to recommend how to implement carbon creditsand debits, which can be traded among producersand reducers.

The Kyoto Treaty would have required that CO2

emissions be reduced below 1990 levels in 10years, or that less industrialized countries beallowed to sell “carbon credits” to major nations.Fortunately, the exclusion of major nations such asChina, India and FSU countries led to the rejectionof Kyoto even before the latest data on the U.S.carbon sink status were apparent.

Further evidence of the absurd lengths to whichpeople are going to assuage environmentalistconcerns over CO

2 is documented by TransAlta,

Canada’s largest private electricity producer.TransAlta has signed a multimillion-dollar contractwith a U.S. company, Global Livestock Group, toprovide a feed supplement for Ugandan cattle.

The supplement is sprayed on hay and food stuffsand is supposed to reduce belching and flatulence.TransAlta maintains that this reduction in expul-sion of methane, another target “greenhouse gas,”

The energy industry immediately mustspreadthe word about CO

2 and reverse

the foolishness of draconian constraintson burning fossil fuels.


is equal to 30 million tons of carbon dioxide, forwhich the company would receive Kyoto Treatycarbon credits to offset its use of fossil fuels inpower generation. This foolishness is expensiveand dangerous.

A petition circulated by Dr. Arthur B. Robinson,president and research professor at Oregon Instituteof Science and Medicine, states:

We urge the United States government toreject the global warming agreement thatwas written in Kyoto, Japan, in December1997 and any other similar proposals. Theproposed limits on greenhouse gaseswould harm the environment, hinder theadvance of science and technology, anddamage the health and welfare of mankind.There is no convincing scientific evidencethat human release of carbon dioxide,methane or other greenhouse gases iscausing or will, in the foreseeable future,cause catastrophic heating of the earth’satmosphere and disruption of the earth’sclimate. Moreover, there is substantialscientific evidence that increases inatmospheric carbon dioxide produce manybeneficial effects upon the natural plantand animal environments on the earth.

Some 17,000 American scientists who hold univer-sity degrees in science, including many of our mosteminent scientists, have signed this petition,including 400 atmospheric scientists and meteo-rologists and 2,000 physicists. The CO

2 myth that

fossil fuels cause global warming has been de-bunked by many of those who created it. Theysearch now for alternative culprits.

The petroleum industry must fight to educatepeople about CO

2 . This is not a fight to end

environmental goals, it is a fight to identify factsand fight real problems rather than politicallymotivated untruths.



Nature Conservancy of OklahomaTim Grogan, Executive Director, Oklahoma Chapter

“It is one thing to find fault with an existing system.It is another thing altogether, a more difficult task,to replace it with a better approach.”Nelson Mandela, speaking of water resource management

During the 20th century, the conservationmovement in America focused primarily onkeeping nature and people separate. The resultswere impressive, as symbolized by the nation’sparks and wilderness areas, each with their ownstringent restrictions on humanuse.

But in the 21st century, thechallenge facing us all is exactlythe opposite – instead of keepingpeople and nature apart, how dowe best bring them together? Inother words, how do we integrate human needswith the needs of the environment in a way thatbenefits both?

Nowhere is that question more critical than withthe issue of fresh water. The purpose of this paperis to propose a process that, as part of acomprehensive, statewide water plan, can achievethat integration, creating a win / win result for bothpeople and the places they love.

Ecologically SustainableWater Management (ESWM)

ESWM is a process that systematically identifiesthe needs of both humans and natural ecosystems,and develops solutions that integrate those needs.Originally developed by the Nature Conservancy,the model has been tested and implementedsuccessfully a number of times across the country.ESWM is as simple as 1 - 2 - 3 ...

ONEIdentify Human Needs

The needs of local communities, cities, counties,industry, ranchers, agriculture, the environment,small business, and recreational users, amongothers, have to be heard and incorporated intowater decisions to gain public support andacceptance. Further, those needs have to beidentified in an open, collaborative process.

ESWM achieves this by creatinga coalition of all relevantstakeholders to address waterissues. For example, in responseto the controversy over aproposed water sale from theKiamichi River in Southeast

Oklahoma, the Conservancy helped organize acoalition of 22 public and private organizationsranging from federal agencies to citizens groups.This coalition is meeting to discuss its members’various needs and concerns, and identify solutionsthat address those concerns.

TWOIdentify Nature Needs

The needs of rivers center around their historicpattern of seasonal high and low flows, andoccasional floods and droughts, known as theirflow regime. These needs have to be considered inwater planning as aquatic and riparian organismshave adapted to these extremes over thousands ofyears and will often perish without them.

ESWM identifies these needs through scientificstudies of the flow regime and the plants andanimals dependent upon it. In the Kiamichi Riverexample above, four separate studies are currentlyunderway on this river system and its aquatic life.These studies are expected to produce a

OKLAHOMA CHAPTER


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“flow prescription” by next summer which willdefine the exact timing and volumes of waternecessary to sustain the health of the river.

Similarly, the needs of underground aquifers arecritical as they support the wells of innumerablehomes, farms, and ranches, as well as the flow ofnumerous rivers and springs. Overwithdrawalfrom an aquifer can destroy in one lifetime whatnature took many thousands of years to create.ESWM again uses scientific studies to identify theexact size, structure, and recharge rates of anaquifer to help define withdrawal rates whichsustain its long term health.

THREEIntegrate Those Needs

While the solution that best integrates human andnatural needs once they have been identified isdifferent for every water resource, a good exampleof how it might occur is dam management. Thefollowing chart illustrates the flow of the MountainFork River before and after impoundment by adam:

As the chart dramatically illustrates, traditionalwater management has generally sought to dampenthe natural variability of flows to attain steady anddependable water supplies. However, this radical

flattening of the historic “spikiness” of the flowregime can be devastating to the plant and animallife of the river.

With the scientific knowledge ESWM provides,flows can often be modified for human purposeswhile maintaining an adequate semblance of thecomposition, structure, and function of naturalecosystems. Dam releases can often be adjusted tomore closely mimic the historic needs of the riverwithout significantly affecting human needs for thewater.

Conclusions and Recommendations

In this paper, we have sketched what we believe tobe a useful roadmap for finding ecologicalsustainability in water management – ESWM.This model puts ecological considerations up frontalong with other goals for water managementplanning. As part of a statewide, comprehensivewater plan, it can provide an open, inclusivedecision making process that is science driven andconsiders the needs of all stakeholders.

We believe that ESWM is not only theright thing to do, but also thesmart thing to do to sustain our preciousfreshwater resources for the benefit of many futuregenerations of Oklahomans.

The Mountain Fork River



Oklahoma Chapter of the Sierra ClubTom Libby, Chair, Oklahoma Chapter

Oklahoma’s water resources may be adequate toprovide for the needs of Oklahoma citizens nowand in the future, but only if these resources aremanaged properly. The Oklahoma Sierra Clubwants to ensure that water quality, as well asquantity, is adequate to support all designatedbeneficial uses. Public and private water supplies,recreation, plants, fish and wildlife, municipalities,industrial uses, irrigation and aesthetics all benefitfrom clean water protections.

Our water resources must be protected for futuregenerations, for the ecological sustainability ofwatersheds and for the public right to sufficientquantities of affordable, clean drinking water.Furthermore public access to clean drinking watershould be recognized as a basic human right thatshould not be abridged by privatization of watersupply systems.

In years past, the public concern was to protectaccess to rivers for navigation and fishing. Toprotect these rights, navigable waterways andshorelines were held in the public trust. Today thepublic right to sufficient quantities of clean watermust be given equal stature.

The Oklahoma Sierra Club supports andpromotes the development of a newcomprehensive water plan based on soundscientific principles and comprehensive datacollection.

Oklahoma’s current water plan -

• fails to protect beneficial uses other than fordrinking water (such as fish and wildlife),

• fails to adequately reserve water sufficient tomeet all present beneficial uses and preservewater quality,

• fails to adequately address groundwater or theinteraction between surface water andgroundwater resources

• and fails to provide for future generations.

Work must begin immediately on a newcomprehensive water plan for Oklahoma whichwill:

• address the intimate interconnections betweensurface water and groundwater

• replace the concept of depletion schedules withsustainable usage rates

• protect ALL beneficial uses

• provide a new definition of excess water that

guarantees minimum water reserves tomeet all present and future beneficial uses,[guarantees minimum in stream flows]

preserves water quality

provides for future generations

• recognize public access to clean drinking wateras a basic human right that should not beabridged by privatization of water supplysystems.

• involve public participation in all phases of theprocess.

Until a new comprehensive water plan iscompleted there are many things that can be donenow.


• Existing Oklahoma Water Quality Standardsmust be utilized and enforced by all stateenvironmental agencies within their areas ofjurisdiction as directed in existing statutes.

• State agencies must develop and enforcedetailed water quality implementation plansand procedures as is already required byOklahoma law. These agencies include theDepartment of Agriculture, the Department ofEnvironmental Quality, the Oklahoma WaterResources Board, the Department of Mines,the Department of Wildlife Conservation, theConservation Commission and the CorporationCommission. Such plans must include howwater use permit applications will be reviewedto ensure compliance with water qualitystandards.

• Moratoriums should be placed on largeinterbasin transfers of water until adequateprotections are established.

• Moratoriums should also be placed on any newpermits for CAFOs (Confined Animal FeedingOperations), LMFOs (Licensed ManagedFeeding Operations) and any large animalfeeding operation.

• Require permits for all poultry operationsregardless of method of litter management andrestrict locations of houses, lagoons andnumbers of animals allowed.

• Discharge permits should not be issued unlessit can be proven that no harm to waterresources will occur.

• Streams should not be removed from the 303dlist of impaired streams unless all water qualitystandards, including anti-degradationstandards, are met.

• Federal agencies such as the Corps ofEngineers must also comply with OklahomaWater Quality Standards when issuing permitsfor dredge and fill activities, hydropoweroperation and other federally regulatedactivities.

Finally, the public must be educated about the needfor water conservation. Sound water use practicesreduce the amount of stress that is placed on ourexisting water resources, both by limiting waterwithdrawals and by decreasing wastewaterdischarges. Conserving water reduces wear andtear on major infrastructure such as water andwastewater treatment plants and the distributionsystems that deliver water to consumers, and canpostpone or eliminate the need for making majorinvestments in new infrastructure.

energyAN OKLAHOMA RESOURCE

A PROPOSED STRATEGY FOR OKLAHOMA

Energy & Water © 2003 The Oklahoma Academy Town Hall ENERGY- 1

Why An Oklahoma Town Hall About Energy?Charles Mankin, PhD, Director, Sarkey’s Energy Center and the Oklahoma Geological Survey

Town Hall IntroductionAs we began preparations for this document, wevisited with Dr. Mankin. We were intrigued with hisimpromptu discussion of Oklahoma’s “energyculture”. At the end of our meeting we asked himto put those thoughts in words, and he happilyagreed to do so. Upon receipt of Dr. Mankin’sthoughts, we believe they capture the tone andspirit of “why a Town Hall about energy?” Andthat is why we are using that text to open ourEnergy section. We hope you enjoy Dr. Mankin’sthoughts as much as we did.

PreambleOklahoma became a state on the back of one of thehighest risk businesses in the world - the petroleumindustry. Our State and the petroleum industrygrew up together, and “risk” was considered to bea positive word. Unfortunately, the “Dust Bowl”came along. The departure of many of our citizensfor greener pastures, attitudes in our State changeddramatically to becoming very “risk adverse.”

That change has not served us well.

While Oklahoma City was once larger than Dallas,that metroplex has a population that is roughlyequal to that of our State.

We need to restore “risk” as a positive word, andwork toward the conversion of our economy fromwhat is largely a resource-based activity (theexport of energy and agriculture) to a fullyintegrated effort that takes advantage of ourresources to generate employment opportunities inOklahoma. At present, we export almost all of ouragricultural products and two-thirds of our naturalgas production to other states for minimal value tofuel their industrial activities. Why not use someof that to fuel industry in Oklahoma?

The BeginningOklahoma became the 46th state to join the Unionon November 16, 1907, in large measure becauseof the discovery of crude oil some ten years earlier.In 1897, oil was discovered in what is nownortheastern Oklahoma with the drilling of theNellie Johnstone No. 1. Production was estimatedat 50 to 75 barrels per day, but the lack of amarket-together with other mechanical problems-prevented the well from becoming a commercialdiscovery. However, that discovery soon led to arush of other drilling activity in this part of IndianTerritory.

Ten years later, when Oklahoma became a state in1907, its annual production was 41 million barrels,making it the largest oil-producing entity in theworld. Such an achievement is difficult tocomprehend given the conditions under which itwas accomplished. Consider that a large numberof rigs needed to drill these wells had to be built orbrought in from other states. A large amount ofpipe had to be acquired and each successful wellhad to flow to the surface because pumps were notavailable to produce fluids from depths in excessof several hundred feet. Most importantly, drillingwas effectively random because knowledge abouthow oil occurred in the subsurface was not known.The first course in petroleum geology was notpresented until some five years later.

While oil had been discovered earlier inPennsylvania and was being discovered in otherstates, no region of the Nation was as active in thepetroleum industry as Oklahoma. Optimism ransupreme as discovery after discovery was heraldedacross the Nation. This led to a large influx ofpeople hoping to cash in on this bonanza. Tulsawould soon be known as the “Oil Capitol of theWorld” and Oklahoma City had a larger populationthan Dallas.


This rapid growth presented a fertile environmentfor innovations and improvements in drilling andcompletion technologies, and in understanding thereservoirs from which the oil was being produced.An array of tools and technologies were developedto improve the efficiency of the process, and ideaswere being developed about where oil might bepresent in the earth. These considerations led tothe development of a broad-based service industry,a number of whom are still in business today, andto educational programs to aid in the search for anddevelopment of this energy resource.

EducationIt is believed that the first course in petroleumgeology in the United States was offered at theUniversity of Oklahoma during this time. Thereflection seismograph, one of the most importanttools to be developed for the petroleum industrydid take place at OU by Dr. Clarence Karcher andhis colleagues. Variations of this innovationcontinue to be the single-most important tool inpetroleum exploration.

Natural GasBecause of a limited understanding about where oiloccurred in the subsurface and why it would flowto the surface in some instances and not in others,the presence of natural gas was not fullyappreciated. Given the fact that there were nopipelines to move the gas to a market, it wasconsidered to be a nuisance and was commonlyflared at the wellhead. Unfortunately, natural gaswas the reservoir energy that was causing the oil toflow to the surface. When wells were drilled intothe “gas cap,” the flaring of that gas depleted thegas contained at the top of the structure, and thusdepleted the reservoir energy that was causing theoil to flow to the surface. In addition, thedepletion of the gas cap caused oil to migrate intothat part of the reservoir, thus decreasing theamount of oil that could be produced through oilsaturation of the former gas cap.

As a result of these actions, the recovery factor formany of the fields that were developed during thistime is probably in the order of 12-15% of the

original oil-in-place. The very low recovery fromthese fields implies that there is a very largeamount of oil remaining in these “depleted”reservoirs. Is this oil a potential candidate forfuture enhanced oil recovery? The potentialvolumes would suggest that an examination clearlyis warranted.

In the early development of Oklahoma’s petroleumindustry, natural gas did not play an important role.Since natural gas can only be transportedefficiently through pipelines and cannot be easily“stored” above ground, the true value of naturalgas was slow to be realized. Most of the naturalgas produced in connection with crude oil wasflared. Limited amounts were used in closeproximity to the production. It wasn’t until theearly 1940s that natural gas began to be movedthrough pipelines across the continent.

It wasn’t until 1979 that natural gas was sold inOklahoma for $1.00 per thousand cubic feet (mcf).In 1981, the gross value of natural-gas productionexceeded that of crude oil for the first time. Thattrend continues today.

What is Oklahoma’s energy future? Is the industryin an inevitable decline or are there brighter daysahead? What do we need to know to make thatdetermination?

We know that crude oil has a pressure andtemperature limit. Thus, we know that its presencein deep sedimentary basins and in areas whererocks have been heated beyond the liquid stabilitylimit is very unlikely. Given the extensive shallowdrilling activities since 1897, it is unlikely that alarge amount of crude oil remains undiscovered inOklahoma. However, a large amount has beendiscovered in those past 105 years of productionbut, in many instances, has not been efficientlydeveloped.

Therefore, a large amount of oil remains inexisting and former fields that could be candidatesfor methods of enhanced recovery.


Enhanced RecoveryOne enhanced recovery method that has proven tobe very effective is injecting carbon dioxide intoreservoirs that have reached their economic limitson primary and even water-flooding efforts. Themajor limitation to date is obtaining a large volumeof carbon dioxide.

The initiation of a new federal program to removecarbon dioxide from the atmosphere over concernsfor global warming may be an opportunity toachieve two goals at the same time. If the carbondioxide that is extracted from sources that areproducing large amounts of this gas can be injectedinto these reservoirs, crude oil could be producedand the carbon dioxide could be separated andinjected again to recover more crude oil.

When the reservoir reaches the economic limit forsuch production, the carbon dioxide could be leftin the reservoir to keep it from reentering theatmosphere. Should such a program materialize,some of the fields mentioned earlier in thisdocument could be prime candidates for carbon-dioxide injection.

Natural gas, unlike crude oil, has no specificpressure and temperature limit. In the absence ofoxygen, the methane molecule is exceedinglystable at great depths and high temperatures. Also,unlike crude oil, natural gas is highlycompressible. So, a lot of natural gas can bepresent in a low permeability reservoir at greatdepth, and in reservoirs where the rock strata havebeen subjected to higher temperatures andpressures through deformation. Thus, the geologicenvironments where natural gas can be present issubstantially greater than those where crude oilmay be found.

So, deep sedimentary basins and regions where thestrata have been deformed through tectonicprocesses could well be candidates for natural gasaccumulations. In Oklahoma, those environmentswould include the deep Anadarko basin in westernOklahoma and the Ouachita fold belt in thesoutheastern part of our State.

Another unique environment where methane ispresent is in organic rich shales and coal seams.Oklahoma has a lot of coal in the eastern part ofthe State. Unfortunately, most of the coal is inrelatively thin seams and commonly has amoderate amount of sulphur. Consequently, it hasa limited market value. However, as a “reservoir”for natural gas, it represents another importantsource for the development of this commodity. Atpresent in Oklahoma, there have been about 2,000wells drilled for coal-bed methane production.This is but a small fraction of the opportunities forsuch development in our State.

Our FutureAs we look to the future, natural gas is viewed as agrowing source for this Nation’s energy supply. Atpresent, it is an important feed stock for thepetrochemical industry, a major source of heat forother industrial activities, a rapidly growing sourcefor commercial and residential heating, and agrowing source for electric power generation.

However, an innovation, while not particularlynew, may become one of the more important usesof natural gas. That is the conversion of naturalgas to a liquid transportation fuel. The idea of gas-to-liquids (gtl) has been known for some time, butthe large supplies of crude oil and the existingsystem of refineries have limited the interest in thistechnology.

However, as the US demand for transportationfuels has soared, the domestic supplies of crude oilhas markedly declined. We are now importing 60percent of our crude oil and refined products, muchof which are from increasingly unstable parts ofthe world. Given this trend, it is only a matter oftime until we will have to turn to this technology tomeet our transportation needs.

The natural-gas resource base in Oklahoma andthis Nation is very large. Expanding this view tothe rest of the world displays a resource base thatwill meet global needs for many decades into thefuture, well beyond the time when we should havedeveloped a hydrogen energy economy.


The Town Hall's goals were:

• to revisit the topic of energy;• to agree on its interplay with two vital ele-

ments: economics and the environment;• to use this opportunity to reduce the gap

between the opposing views on the subject; and• to find positive solutions to the challenges

posed by these issues.

The Town Hall is concerned that the New Mexicopublic takes energy for granted and may believeenergy shortages are someone else's problem.Some think that we can conserve our way out ofany energy shortage. However, not many peopleare willing to take individual action and responsi-bility even though they may believe that society ingeneral uses too much energy and causes environ-mental harm in doing so.

In addition to a lack of individual responsibility, itappears that there is a lack of sense of urgencybecause the public presumes that energy needs willbe met in the near-term, thus shifting the problemto future generations.

The Town Hall believes the general public lacks afull understanding of energy issues, includingenergy production, infrastructure, transportation,indirect costs, and indirect benefits, and about howenergy drives the economy. These issues areperpetuated by the lack of consensus among theexperts and a high degree of rhetoric. The TownHall seeks to avoid the extremes and to focusinstead on the middle ground in which mostthought and behavior occurs.

New Mexico has great potential to realize the fullvalue of its natural resources, by increasing devel-opment of value-added industries that produce andrefine natural resources and harvest renewableenergy. Despite the benefits, there are challenges

for new energy development, including landownership, inappropriate regulation, energysecurity, and demands on the state's water re-sources.

While extractive industries have finite resources,New Mexico has the opportunity to proactivelydevelop additional reserves and alternative formsof energy.

The Town Hall believes discussion of the relation-ship between energy development and the environ-ment is positive and that neither has to be sacri-ficed to achieve the other. There is a need forforums to reach science-based solutions to theseconflicts.

All energy development impacts the environment:land use, habitat fragmentation, air quality, waterquality, erosion, aesthetics, and noise. On the otherhand, it can also be argued that the health, wellbeing, and growth of the energy industry in NewMexico have had some positive impacts on theenvironment. The current standards for energydevelopment are significantly higher than in thepast, which has led to a decline in negative envi-ronmental impacts.

New Mexico has an abundant supply of resources,including wind, solar, biomass, oil, gas, coal,geothermal, and uranium deposits, as well ashuman capital. Given these resources, the TownHall envisions a future in which the interests ofenergy, economics, and environment are balancedin a proportion that allows for the responsibledevelopment of renewable and non-renewableenergy, quality economic development, and protec-tion of human health and the environment.

To appropriately balance energy, economics, andenvironment, the Town Hall believes that thefollowing pivotal issues must be addressed.

New Mexico FirstA New Mexico Town Hall About Energy

New Mexico's Energy, Economics, and Environment, Carlsbad, NM, November 14-17, 2002


Policy

a. Regulatory challenges: These include inefficientprocesses, inappropriate regulations, inconsistentdecisions, energy policies that can be subject tofrequent paradigm shifts, and frameworks that arenot based on sound science. In addition, there is noaccountability or consequence for misuse ofenvironmental statutes or scientific information.

b. Land: Access to land for energy infrastructurewill remain a critical issue in New Mexico, where alarge proportion of the state's lands are owned andmanaged by federal, state, and tribal governments.

c. Capital: Continued emphasis must be placed oncreating wealth in New Mexico by enhancing ouraccess to new and existing financial market net-works.

d. Infrastructure: Renewing and adding sufficientinfrastructure to accommodate new and existingenergy resources is vital. Specifically, emphasisshould be placed on the critical issue of energysecurity in New Mexico.

e. Tax structure and business climate: NewMexico's tax structure does not encourage theinvestment of capital funds, and there are no taxincentives to improve conservation or efficiency.Favorable tax policies, such as industrial revenuebonds and federal production tax credits, can serveto make investment more promising.

f. Price Stability

g. Diversification: There is a need to bring newindustries to New Mexico to reduce the effect ofenergy price volatility on state revenue. There isalso a need to diversify our energy portfolio toreduce our dependence on extractive industries andminimize impacts on our environment. Opportuni-ties to diversify may include renewable energy,nuclear energy, and water produced as a byproductof oil and gas extraction.

Education

a. Public education: New Mexico's public and itsleaders need better education about the interrela-tionship among New Mexico's energy production,sensitive environmental issues, and the economyand about available assets, potential technologies,and alternative energy supplies.

b. Workforce development: Options for developingour human capital include improving or developingconsistent statewide training materials with com-mon core curricula and increasing the effectivenessof energy-related educational programs at thetechnical-vocational level, community collegelevel, and university level.

Recommendations

1. New Mexico should lead in the reform ofregulatory policies at the state and federal levels toassure that:

a. standards, regulatory requirements, andagency policies are appropriate, reasonable,and based on sound science;

b. environmental standards are reviewed andupdated, if necessary, every five years;

c. time limits are set and enforced for energy andrelated environmental permitting, licensing,and right-of-way decisions;

d. streamlined procedures are established toobtain access to federal, private, and statelands; and

e. pueblos and tribal energy development andother related interests are sought and encour-aged.

2. Appropriate interim legislative committees andinstitutes should be established to review regula-tory departments, agencies, and commissions toinvestigate whether the intent of the law is beingproperly implemented and to ensure that the tax


structures will foster growth of the energy industryand related manufacturing.

3. New Mexico should prudently develop itsrenewable energy resources through production andother incentives with appropriate sunset provisionsto encourage economic development and to fosterlong-term price stability.

4. New Mexico should prudently develop andprovide incentives for production of alternativetransportation fuels.

5. New Mexico should be a strong energy leader inthe future through fostering existing energy indus-tries, nurturing new energy industries, and develop-ing energy-related industries by:

a. Attracting investment capital to expand exist-ing energy industries, enhance research anddevelopment for new and improvement energytechnologies, and expand development of newenergy sources in New Mexico. Actions to betaken include:

(i.) requesting the state and federal govern-ments to support stable prices that encouragedevelopment of energy sources;

(ii.) creating performance-measured incentivessuch as lower tax rates and tax benefits forinvestment in the state;

(iii.) leveraging existing financial resources toincrease energy development; and

(iv.) amending State Investment Council“return on investment” criteria to include allmonies returned to the state, such as employ-ment taxes and revenues to state trusts.

b. Diversifying New Mexico’s energy industry andenergy-related industries by:

(i.) broadening performance-based incentivesand support for renewable, alternative, andtransitional energy sources to assure eventualindependent profitability;

(ii.) supporting incentives for development ofsafe nuclear power and related industries inNew Mexico; and

(iii.) attaining legislative support and utilizingresearch and development to establish viabletreatment of energy-produced water for varioususes.

6. By June 2004, New Mexico should establish acomprehensive, long-term (through 2024), state-wide energy policy and strategic energy plan thatincorporates continued environmentally respon-sible energy development, encourages emergingenergy technology, and increases public awarenessby including:

a. a broad-based, coordinated, open process thatincludes key constituencies and technicalexperts;

b. public notification, education, consumerforums, dialog and collaboration among thepublic, industry and regulatory participants,and a regular update procedure;

c. optimization of all New Mexico’s energyresources to produce economic and environ-mental benefits through sustainable industriesand their associated products;

d. improved job opportunities and economicstability through workforce development;

e. increased access to public lands; and

f. programs to leverage existing financial re-sources.


7. To support development of a state energy plan,New Mexico should undertake a comprehensiveraw energy asset inventory.

8. The Governor should broaden and commit to anenergy agenda that includes all energy sources andincorporates mitigation of adverse environmentalimpacts by:

a. directing the Secretary of the Energy, Minerals,and Natural Resources Department to be theadvocate for energy development, to promoteenvironmentally friendly energy development,to identify key problems, and to shepherdsolutions to completion; and

b. coordinating New Mexico’s energy plan withother state and federal agencies.

9. The legislature should identify and appropriatefunds to develop and implement the energy plan.

10. New Mexico should improve its citizens’understanding of the energy industry, relatedenvironmental concerns, and their interplay withthe economy by:

a. creating a consortium of government officials,university and community college leaders, andexperts in the environment, economic develop-ment, and the energy industry to identify areasof tension, energy development issues, conser-vation opportunities, efficiency improvementstrategies, and regulatory reform concerns;

b. identifying key issues and background informa-tion to present to state and federal leadershipand legislators;

c. conducting a series of informational meetingsor town halls with recognized leaders;

d. encouraging direction to the Department ofEducation to include a statewide curriculumsection covering New Mexico’s energy heri-tage; and

e. developing a comprehensive workforce-training plan.

11. New Mexico should create a Center of Energy,Economics, and Environment run by a coalition ofthe academic institutions, government agencies,private industry, and the national labs.

a. The Center would bring new knowledge,education, and understanding to the environ-mental and economic issues involved inassuring that the state continues to meet itsenergy needs.

b. The Center would engage domestic and multi-national industries, governments, academics,and the general public in the formulation ofnew forms of analysis; balanced,multidisciplinary education and technologydevelopment; and innovative visions.

c. The Center would link state and federalregulatory agencies, research and developmentfacilities, industry information centers, andteacher resource centers.

d. The major components of this Center would beeducation, technology development anddeployment, public outreach, and public policy.



A Proposed Energy Strategy

An Executive SummaryRobert J. Sullivan, Jr., Secretary of Energy, Keating Administration, State of Oklahoma

The problems we face today cannot besolved with the level of thinking thatexisted at the time they were created -Albert Einstein

Our Oil and GasThe State of Oklahoma has been richlyblessed with an abundance of naturalresources. Since before statehood, thelands that now comprise Oklahomahave yielded billions of barrels of crudeoil and trillions of cubic feet of natural gas. Whilethese two prime energy resources have peaked inproduction (oil in 1967 and gas in 1990), thereremain large quantities of recoverable oil and gasreserves to serve Oklahoma’s citizens and ournational energy demand as well.

We must recognize, however, that the pattern ofdeclining production for oil and gas is inexorable,and we must strive to replace oil and gas as aneconomic engine if we are to prosper as a state inthe decades to come. Fortunately, Oklahoma isadditionally blessed with an abundance ofrenewable energy sources, as well as theintellectual resources needed to bring these newerenergy assets to the marketplace economically.

It is critical that the three principal players in thistransition process – the private sector, stategovernment, and our higher education institutions– work efficiently together and focus on thistransition, because it not only involves a shift fromhydrocarbon-based energy to non-hydrocarbonsources, but it will directly affect the economicbackbone of the state over the next quarter century,thereby directly affecting the quality of life forevery Oklahoma citizen.

Fortunately, we have virtually all the toolsavailable within Oklahoma’s borders to effect thistransition on a timely and efficient basis. We have

an active reservoir of private-sectorknowledge and experience, housed notonly in the multitude of energycompanies domiciled in the state, butin a growing number of energycompany retirees whose experiencecan be invaluable in maximizing therecovery of remaining oil and gas andthe transition to other energy sources.Additionally, Oklahoma is well knownfor having an energy-friendly

governmental environment in which the privatesector can work effectively. The cooperativeapproach well established in the OklahomaCorporation Commission, the state Legislature, theGovernor’s office and other relevant agencies iscritical to the implementation of the above-described transition of Oklahoma’s energy/economic base.

Finally, and most importantly, Oklahoma is wellendowed with a deep reservoir of knowledge inour higher education institutions (principally, theUniversity of Oklahoma, including the Sarkey’sEnergy Center, Oklahoma State University, and theUniversity of Tulsa) that can be brought to bear onboth the economic pursuit of remaininghydrocarbon reserves and the development ofmarket-based alternative energy sources. Atpresent, these academic resources are somewhatisolated from the private sector. It will be critical tothe task that far more extensive interaction andcommunication take place among our academicresources, private sector energy companies, andour state government.

If these private sector, governmental, and academicresources can be blended efficiently and directedthrough an orderly transition of energy bases,Oklahoma can achieve the value creation patternconceptually depicted in the accompanying graph,to include the following three elements of energyvalue growth:

Robert J. Sullivan, Jr.


ONERemaining Oil and Gas Reserves

Since the first oil discovery was made inOklahoma over a century ago, over 14 billionbarrels of oil and 87 trillion cubic feet of naturalgas have been produced. Oil production peaked in1967, gas in 1990, and the recent blended (oil andgas) annual production decline of about 10% canbe expected to continue, if not steepen over thenext several years.

Fortunately, Oklahoma can claim an abundance ofremaining oil and gas reserves — at least as muchas has been produced to date — but the cost offinding and producing these known reserves makesthem marginally economic.

The strategy for Oklahoma as to these abundantknown reserves is to create an economic,operational and attitudinal climate that will marrythe knowledge and experience in our oil and gasindustry with similar knowledge sources in ouruniversities to encourage industry’s aggressivepursuit of these reserves on an economicallyattractive basis.

The objective is to drive down finding andproduction costs, thereby allowing the economicharvesting of Oklahoma’s known remainingreserves. It is unlikely that we can reverse ourstate’s oil and gas production decline pattern, butwe can affect favorably and significantly the rateof decline, thereby allowing time for alternativefuels to be developed and become contributors toOklahoma’s energy-derived economic value.

TWO“The Place” for Energy Answers

Although Oklahoma for decades has enjoyed theeconomic benefits of produced energy reserves, asa state we have missed the opportunity to leverageour collective knowledge of energy by failing tomarket ourselves to a world-wide market rife withenergy related questions and problems. Thestrategy point here is to develop in a highlyorganized manner, a marketing program thatpresents Oklahoma as the single best place to gofor energy related answers. The marketing thrustshould include (but not be limited to):

(a) Assurance to a world-wide marketplace thatOklahoma has a deep pool of human resourcesin the oil and gas industry, in our universitiesand in our state government who can beaccessed for problem solving, advice and jointventuring.

(b) A vigorous effort directed at recruiting out-of-state companies whose value creation processrelies on resources and raw materials thatoriginate in Oklahoma. The often-citedexample is of the Michigan-based cerealmakers who use Oklahoma’s corn, wheat, andnatural gas to produce cereal. The value addedis all in Michigan. Such firms need to berecruited to domicile in Oklahoma.

(c) The development of a marketing thrust that isbased on Oklahoma’s unique combination andabundance of renewable natural resources(wind, solar, biomass). Although marginallyeconomic or non-economic at present,Oklahoma would be foolish to ignore this hugecombination of renewable natural resources, asthey very likely will be important elements in“tomorrow’s energy world” — and Oklahomais loaded with all three. The strategy pointhere is to focus on the research aspects of thesethree energy sources, primarily through ouruniversities, so that Oklahoma can bepresented to the energy world as a vast outdoorlaboratory where tomorrow’s energy resourcesare being made economic.


THREEDeveloping Oklahoma’s Renewable Resources

Although Oklahoma has been utilizing hydropower(our nation’s primary renewable energy source atpresent) for several decades, it provides only about4% of the state’s generated electricity. Therenewables in Oklahoma’s energy future are windpower, solar power and biomass related power.

Wind in Oklahoma, by observation and byscientific measurement, is clearly abundant, withthe western half of the state offering the bestconditions for wind power projects. The mainimpediment is the lack of an adequate electricitygrid to bring wind-generated power to market.

Similarly, although Oklahoma can claim over 300days of sunshine annually, solar energydevelopment in the state presently suffers fromgrid system access. Solar energy’s best use, atleast in its early years of development, is likely tobe for commercial and residential usage for onsiteheating, air conditioning and water heatingapplications.

Biomass has the potential to become a majorsource of global energy, especially in lessdeveloped countries. Given the state’s abundance

of hydrocarbon reserves, and the potential windand solar hold for Oklahoma, it is questionablewhether biomass will ever be a large contributor ofenergy to Oklahoma consumers. The research anddevelopment required to make biomass energyeconomic, however, can and logically should be afocus of attention by Oklahoma’s private sectorand universities.

These three energy-based contributors toOklahoma’s future economic value have thepotential collectively to reverse the decline patternwe have been experiencing from exclusive relianceon oil and gas production. This reversal of energyrelated economic fortunes, when added to anyeconomic benefits that are based on non-energyrelated initiatives, can justify a confident view ofOklahoma’s economic future over the next 25years.

At the heart of any energy strategy should be theeconomic effect on Oklahoma’s cities and towns.Having enjoyed the prosperity associated with ourabundant oil and gas reserves for over a century,Oklahoma needs to maximize its remaininghydrocarbon reserve value while aggressivelydeveloping tomorrow’s energy sources, all to thebenefit of Oklahoma’s citizenry.


Summary

An Energy Strategy for Oklahoma Robert Sullivan, Jr., Secretary of Energy, Keating Administration, State of Oklahoma

ExistingOil and Gas Activity Level

1Aggressive Program Aimedat Known but MarginallyEconomic Oil and GasReserves

2Marketing OklahomaWorldwide as an EnergyKnowledge Resource Base

3Harvesting Oklahoma’sVast Renewable EnergyResources

The Next 25 years

1

2

3

Drilling in Oklahoma Sarkey’s Energy Center Solar Collectors


Dear Governor Keating,

It is with pleasure and a strong measure of enthusiasm and satisfaction that I submit to you an EnergyStrategy for the State of Oklahoma for the next quarter century. As you will recall when we firstdiscussed this matter in March 2002, Oklahoma has never had an energy strategy, or any form ofvisionary road map, to assist private and public sector decision-makers in the all-important and ongoingprocess of effectively and efficiently harvesting our state’s abundance of natural resources.

The report contains fifty-one strategic initiatives designed to stimulate thought, discussion and, mostimportantly, action toward the ultimate goal of invigorating our state’s economy, thereby improving thequality of life for all Oklahomans. To accomplish this, aggressive action is suggested on three fronts.

Economically harvest Oklahoma’s vast known remaining oil and gas reserves.

Be energy leader by presenting and aggressively marketing Oklahoma as the single andbest place in the world to come for resolution of virtually any energy related problem.

Third, we must launch an all-out effort to bring Oklahoma’s unique and extensiverenewable resources (wind, solar, biomass) to economic viability.

It is my vision that implementation of this aggressive strategy can and should be undertaken without theneed for any significant state funding, because the main elements of the strategy are already in place(private sector players and knowledge base; research, data and knowledge imbedded in our universities;marketing capability in the Department of Commerce, etc.)

What is clearly required is a strong, visible leader of the implementation effort, an effective coordinatingprogram, and public and private leadership’s resolve to make it happen.

This report is not intended to be a comprehensive list of answers to energy problems, but rather astimulus for all of us in public and private positions of leadership to focus on a direction that is logicaland achievable, given the resources we are blessed to count as native to Oklahoma. There has been inputto this report from over two hundred public and private sector contributors, to whom I am very grateful,as they represent our state’s greatest resource—Oklahoma’s knowledge of the energy world and the workethic of our people.

Respectfully Submitted,

Robert J. SullivanSecretary of Energy

Robert J. Sullivan, Jr.Secretary of Energy

Frank KeatingGovernor

STATE OF OKLAHOMA

OFFICE OF THESECRETARY OF ENERGY

December 12, 2002


OKLAHOMA’S RESOURCESOklahoma’s most valuable resource is thecollective ingenuity, work ethic, and knowledge ofits citizenry. Oklahoma’s second most valuableasset is its abundance of primary natural resourcesthat are capable of providing its citizens with areliable supply of energy for a virtually indefiniteperiod of time.

Responsibly harvesting these energy resources anddelivering them safely and efficiently toOklahomans and to out-of-state consumers is theimportant responsibility of the state’s privatesector, as supported and encouraged by stategovernment and the considerable intellectualresources housed in our public and privateeducation systems.

The purpose of this statement of an energy strategyfor Oklahoma is to provide a conceptual, yetpractical, roadmap for all those involved in thebusiness of responsibly shepherding Oklahoma’senergy resources.

The focus of this document is on how best andmost efficiently to accomplish that importantundertaking. Accordingly, the recommendedinitiatives contained herein are directed at theprimary players involved in the energy equation:decision makers in private sector energycompanies, state government leaders, and theenergy sectors of our state’s universities.

Because the way we will manage our energyresources so dominates the future of Oklahomasociety, anything less than full cooperation andcoordination among these three sectors will crippleour state’s economy and negatively affect itscitizenry.

Oklahoma’s energy resources rank at the very topof our nation’s list of critical resources.Responsible stewardship and development of theseunique blessings will inure to the benefit of allOklahoma citizens and the nation at large.

OUR NATION’S ENERGY PICTUREAs a country, the United States has a voraciousappetite for energy. Americans are presentlyconsuming energy at a rate of approximately 100quads (quadrillion BTUs) annually. TheDepartment of Energy estimates that 20 years fromnow we will be consuming about 175 quads peryear. Our domestic supply of energy, including allsources, is growing at a rate of approximately2.3% per year. About two-thirds of our country’senergy consumption is satisfied by oil and naturalgas. The conclusion drawn by virtually allforecasters of energy supply and demand is that thegap between energy consumed in this country andenergy supplied within the United States willcontinue to widen, with an increasing amount ofimported energy making up the difference.

In the spring of 2001, Vice President Dick Cheneysubmitted to President George W. Bush the initialdraft of a National Energy Policy, as developed bya Cheney-headed task force that had worked forseveral months on the project. The focus of theNational Energy Policy was to take a balancedapproach to both the supply side and the demandside of the energy equation for our country.

On the supply side, a number of initiatives wererecommended to encourage more rapid andefficient development of our traditional fossil-based energy supplies, including oil and gasdrilling incentives, initiatives for increasing clean-burning coal as a fuel, and more aggressiveexploration of federal lands to develop newreserves. In addition, infrastructure initiatives weresuggested involving refurbishing our drilling rig

State of Oklahoma

A Proposed Energy StrategyRobert J. Sullivan, Jr., Secretary of Energy, Keating Administration, State of Oklahoma


fleet, updating and expanding our oil, refinedproducts, and natural gas pipelines, and increasingthe capacity of our electricity transmission grid.Also recommended was a new emphasis ontechnologies aimed at more efficiently finding,producing, and developing our hydrocarbonresources.

On the demand side, emphasis was placed oncommon sense conservation. Conservation wasdefined as a means of more efficiently consumingthe amount of energy needed by individual,institutional, and industrial consumers of energy,rather than forcing a curtailment of economicactivity by those three segments of society. Morethan half of the 151 recommendations made by theNational Energy Policy group dealt withconservation matters.

Despite the fact that our nation is consuming vastamounts of energy, we have actually become moreefficient since the early 1970s, when the first Araboil embargo jolted Americans into being moreresponsible as energy consumers. Over the past 30years, Americans have actually reduced by 40%the amount of energy spent per dollar of grossdomestic product. Energy use per capita hasremained about flat.

For at least the next several years, as viewed bymany knowledgeable energy forecasters, and asreflected in the Bush/Cheney National EnergyPolicy report, we can expect our nation to remain

heavily dependent on fossil fuels as our primaryenergy source. During that time period, however,technology should improve the basic economics ofseveral alternative energy sources that willeventually supplant hydrocarbon-based energysources in our supply profile.

The nation’s challenge will be to manage theorderly transition, with all its economic andsocietal stresses, from a hydrocarbon-basedeconomy to one with a much larger role of non-hydrocarbon-based energy sources. While such atransition is inevitable, estimates of the timing andduration of the transition period vary widely.Supplying the energy needs of our nation willnecessarily remain a top priority for large segmentsof private industry, academic institutions, andfederal, state, and local public policymakers.

The problem of meeting our country’s growingenergy needs is ongoing and critically important.Concentrated efforts on both the supply and thedemand sides of the problem will be required, andtroublesome dislocations resulting in brown outs,price hikes, and spot shortages are likely as thiscomplicated marketplace of energy suppliers andconsumers continues to evolve toward efficiencyand balance.

Oklahoma’s Oil and Natural GasSince the late 1890s when oil was first discoveredin what is now Oklahoma, our state has beenblessed with an abundance of oil and natural gas

Production of Oil in Oklahoma(millions of barrels)

1907 1927 1947 1967 1987 2007

300

200

100

0

Production of Natural Gas in Oklahoma(trillions of cubic feet)

1907 1927 1947 1967 1987 2007

3

2

1

0


resources. In the ensuing time period of just over ahundred years, 14 billion barrels of oil andapproximately 87 TCF of natural gas have beenrecovered from Oklahoma reservoirs. Whileannual oil production reached a modern dayproduction peak of 221.3 million barrels in 1967,gas production peaked much later, in 1990, at 2.3TCF. Both oil and natural gas have been on asteady decline since achieving those peaks.

The number of companies actively engaged inexploration and production activities in the statehas also dropped through corporate consolidationsand the departure from the industry of manyindependents due to the economic booms and buststhat have characterized the oil patch for decades.

It is encouraging to note that Oklahoma’sremaining oil and gas reserves approximate thestate’s total reserves that have been extracted overthe past 100 years, according to OklahomaGeological Survey estimates. Recovery of theseremaining reserves, however, will requireeconomically attractive wellhead oil and naturalgas prices as well as improved recoverytechniques. Technology will play a key role indeveloping these new and more efficientproduction and recovery methods and mustnecessarily require effective cooperation amongindustry, government, and educational institutionleaders and researchers.

Much of the state’s remaining oil reserves will berecovered through secondary and tertiary recoverymethods. Many of the enhanced recovery researchprojects undertaken by major oil companies and inour universities have started and stopped severaltimes over the past few decades due to widevolatility in oil prices and shrinking researchbudgets. Overall, the trend in such research hasbeen down. If Oklahoma is to benefit from thesevast oil reserves, a way must be found foraggressive laboratory and field enhanced recoveryresearch to take place aimed at reducing the costsof bringing these reserves to market.

Oklahoma’s natural gas reserves have been theprimary focus of most of the state’s explorationistsover the past two decades. Gas has generally beenperceived as somewhat easier to find than new oilreserves and less costly to produce with fewerenvironmental risks. Our state’s natural gasproduction has been declining over the past 12years as production from newly discoveredreserves has failed to offset natural decline.

Most of the remaining natural gas reserves in thisstate must necessarily come from reservoirs atdeeper depths than the reserves that have beenproduced in the past. Other, less conventionalsources of natural gas, such as natural gas fromcoal seams and shale gas, may help flatten theproduction curve as they come onstream with theircharacteristically low deliverability but long-livedproduction patterns. Like oil reserves, however,

Value of Oklahoma Natural Gas(billions of 1982-84 dollars)

1950 1960 1970 1980 1990 2000

$6

$5

$4

$3

$2

$1

$0

Value of Oklahoma Oil(billions of 1982-84 dollars)

1950 1960 1970 1980 1990 2000

$6

$5

$4

$3

$2

$1

$0


58 62 66 70 74 78 82 86 90 94 98 02

$700

$600

$500

$400

$300

$200

$100

$0

Oklahoma Gross Production Taxes(millions of dollars)

Oil

Natural Gas

1932 1942 1952 1962 1972 1982 1992 2002

50%

40%

30%

20%

10%

0%

Energy Taxes and State Tax Collectionsoil and gas production taxes as a percent of total taxes

OIL

The average price of oil as determined by theOklahoma Tax Commission is be based upon theaverage price paid per barrel of sweet crude oil bythe three (3) largest purchasers in Oklahoma. Thethree purchasers identified report to the TaxCommission each month on forms prescribedproviding the average price paid for sweet oil in theprevious month. The Tax Commission determinesan overall average and posts the applicable tax rateon the Tax Commission Internet web site atwww.oktax.state.ok.us and also made available bycalling (405) 522-5031.

The Gross Production Tax rate on oil is as follows:

• If the average price of Oklahoma oil equals orexceeds Seventeen Dollars ($17.00) per barrel, thetax shall be seven percent (7%).

• If the average price of Oklahoma oil is less thanSeventeen Dollars ($17.00) but is equal to orexceeds Fourteen Dollars ($14.00) per barrel, thenthe tax shall be four percent (4%).

• If the average price of Oklahoma oil is less thanFourteen Dollars ($14.00) per barrel, then the taxshall be one percent (1%).

NATURAL GAS

The average price of gas as determined by theOklahoma Tax Commission is computed eachmonth by using Oklahoma average pricing informa-tion published monthly according to appropriatereference material prescribed by the Tax Commis-sion. Each months applicable tax rate on gas willalso be posted on the Tax Commission Internet website at www.oktax.state.ok.us and also madeavailable by calling (405) 522-5031.

The Gross Production Tax rate on gas is as follows:

• If the average price of Oklahoma gas equals orexceeds Two Dollars and Ten Cents ($2.10) permcf, the tax shall be seven percent (7%).

• If the average price of Oklahoma gas is less thanTwo Dollars and Ten Cents ($2.10) but is equal toor exceeds One Dollar and Seventy Five Cents($1.75) per mcf, then the tax shall be four percent(4%).

• If the average price of Oklahoma gas is less thanOne Dollar and Seventy-Five Cents ($1.75) permcf, then the tax shall be one percent (1%).

Oklahoma’s Gross Production TaxThe tax rate is based upon the average monthly product price as determined by the Tax Commission.


Oil and Gas in OklahomaSource: Oklahoma Corporation Commission 2002 Annual Report

Leading Oil Producing CountiesTen Leading Oil Producing [2002] Counties in Oklahoma(each leading county produced more than 2 million barrels)

Source: Oklahoma Corporation Commission

County MBBLCarter 7.7Stephens 5.5Osage 4.1Grady 4.1Texas 3.9Garvin 3.3Pontotoc 2.5Creek 2.4Caddo 2.1Seminole 2.0

Oil Producing CountiesIn 2002, oil was produced in 66 of Oklahoma’s 77 counties.

(the 2002 production was over 66 million barrels)Source: Oklahoma Corporation Commission

Counties without oil producing wells: Adair, Cherokee, Choctaw, Delaware,Haskell, LeFlore, McCurtain, Ottawa, Pittsburg, Pushmataha, and Sequoyah.

Gas Producing CountiesIn 2002, natural gas was produced in 71 of Oklahoma’s 77 counties.

(the 2002 production was over 1.5 trillion cubic feet)Source: Oklahoma Corporation Commission

Counties without gas producing wells: Adair, Cherokee, Choctaw, Delaware,McCurtain, and Ottawa.

Leading Gas Producing CountiesTen Leading Natural Gas Producing [2002] Counties in Oklahoma

(each leading county produced more than 50 billion cubic feet)Source: Oklahoma Corporation Commission

County MMCFRoger Mills 124.0Latimer 118.0Caddo 102.4Texas 95.5Grady 93.0Beckham 87.6Washita 83.8Pittsburg 69.6Custer 69.4Beaver 63.0


these deeper and less conventional gas reservoirscan only be accessed at higher finding andproducing costs than industry has enjoyed in thepast. Accordingly, technology aimed at reducingfinding and production costs will be critical to thestate’s ability to harvest its remaining natural gasreserves.

Other factors will also affect significantly theamount and pace of oil and gas reserve recovery inOklahoma. An active, true market for the wellheadpurchase of crude oil is essential to encourageindustry to explore for and produce our remainingreserves. Over the past 25 years, the number offinancially stable crude oil purchasers active in thestate has fallen due to consolidations andpurchasers leaving the business, a condition that isof great concern to all Oklahoma oil producers. Inaddition, the state’s refining capacity has notgrown over the past 30 years and, indeed, is indanger of shrinking as our aging refineries in thestate face costly upgrades to comply with changingmarket needs and environmental regulations.

A large percentage of the state’s oil-productivewells fall into the “stripper” or “marginal” wellcategory. These oil wells are economicallyprofitable as long as wellhead oil prices remain atfairly high levels, but become unprofitable at lowerprice levels. It is essential to preserve these wells,even during periods of low wellhead prices,because they represent primary access into olderoil reservoirs that contain the bulk of the remainingoil reserves of our state. Accordingly, they are theaccess points for most of the future secondary andtertiary recovery projects that will be required torecover these reserves. To plug marginal oil wellsis to reduce greatly the economic attraction forfuture recovery of secondary reserves, because theadded cost of redrilling access holes into thesereservoirs is likely to be prohibitive.

Oklahoma’s natural gas production far exceeds gasconsumption within the state. The state istherefore a significant exporter of natural gas toother states, where it is consumed by residential,commercial and industrial end users. Oklahoma

would be well served to use this valuable resourceas a primary incentive to attract gas-consumingbusinesses to the state. Rather than export rawmaterials to other states where they are used invalue-added industrial operations to produce otherproducts, Oklahoma should seek to attract thoseindustries to our state so that value creation canoccur within our borders, thereby capturing therelated benefits of job creation and other social andsocietal improvements.

In summary, although Oklahoma remains asignificant producer of oil and natural gas in theUnited States, in order for its remaining reserves toreach market places efficiently and economically, acombination of forces must be in place so thatthose capable of harvesting these reserves will beencouraged to do so. These forces include agenerally favorable climate of wellhead oil andnatural gas prices, the availability of continuallyimproving technologies aimed at lowering thefinding and recovery costs of these reserves, andan industry-friendly environment that will assure asteady flow of financial and intellectual capitalinto the state’s already attractive mix of thesecritical capabilities.

RENEWABLE & ALTERNATIVE ENERGYOklahoma has long been recognized for itsleadership as an oil and natural gas producingstate. Although not widely recognized for itsunique, pristine environment, Oklahoma has one ofthe most diverse landscapes among all of the statesin the nation. From the arid, short grass prairies ofthe panhandle to the swampy lowlands ofMcCurtain County, Oklahoma’s biological and


ecological diversity represents a valuable andattractive asset for our citizens.

Many of today’s modern environmentalmovements find their roots in conservationprograms that were developed to address problemsof the Dust Bowl years of the mid-1930’s whenOklahoma landowners were devastated by brutalheat and wind damage. Although Oklahoma isseldom recognized for its environmentalaccomplishments, conservation and environmentalprotection have been addressed effectively byindustry and state government leaders since IndianTerritory first began maturing into the developedand economically successful state Oklahoma istoday. The fact that relatively few environmentalproblems of any scale have arisen in Oklahomawhere 550,000 oil and gas wells have been drilledover the past century is a testament to the axiomthat sound energy policy and sound environmental

policy are not mutually exclusive, but in fact gohand in hand.

To continue the harmonious co-existence of energydevelopment and environmental stewardship inOklahoma, key players in industry, government,and academe must take leadership roles in thedevelopment of environmentally friendly energyinitiatives, such as the development of bioenergy,ongoing research and development of wind andsolar energy, and the preservation and expansion ofhydropower — all naturally occurring,replenishable energy sources. Oklahoma is blessedwith an abundance of several of these sources.

BioenergyBiomass, or organic matter, presently representsthe fourth largest worldwide energy resource aftercoal, oil, and natural gas. In the future, biomasswill be used to produce a combination ofelectricity, food, feed, fuels, and a wide range ofindustrial materials. Biomass power is the largest

Owner Fuel Type Plant Name Cap (kW)Weyerhauser Co. Timber Weyerhauser Co. 35,000

Residues

USCE-Tulsa District Water Broken Bow Lake 100,000USCE-Tulsa District Water Eufaula Lake 90,000USCE-Tulsa District Water Fort Gibson Lake 45,000Oklahoma Municipal PA Water Kaw Hydro 25,600USCE-Tulsa District Water Keystone Lake 70,000Grand River Dam Authority Water Markham Ferry 120,000McGee Creek Authority Water McGee Creek 85Grand River Dam Authority Water Pensacola 96,500USCE-Tulsa District Water Robert S. Kerr Lake 110,000Grand River Dam Authority Water Salina Pumped Storage 288,000USCE-Tulsa District Water Tenkiller Ferry 39,100USCE-Tulsa District Water Webbers Falls 60,000

Solar Harmon Science Center 2Utility Solar Lawton EPA 18Utility Solar Tulsa PV-EV Parking 4

Bergey Windpower Co. Wind Bergey Windpower Co. 50J. Brown Wind Residential Wind Site 10Drapery Manufacturing Wind Drapery Manufacturing 170L. Dunn Wind Residential Wind Site 10CW Miller, Jr. Wind Residential Wind Site 10

Some Oklahoma Renewable Energy Applications(capacity = over 1 million kW)


source of non-hydro renewable electricity in theworld, with approximately 37 billion kWh ofelectricity produced each year. Generating thisamount of electricity requires around 60 milliontons of biomass per year.

Oklahoma is in an enviable position to marry thestate’s two top economic engines — agricultureand energy — while at the same time providingnational and international leadership in the areas ofdeveloping clean burning fuels and reducingdependency on foreign oil.

Oklahoma’s vast biomass resources can serve as arenewable source of energy that is environmentallyfriendly. Our state’s abundant supplies of cropresidues, grasses, trees, animal waste and otherbiomass resources should be exploited as they holdhuge economic potential. In addition, Oklahomahas the intellectual resources to serve in aleadership role in developing the bioenergytechnologies that will be required to bring biomassenergy to the marketplace as a competitivealternative. To accomplish this, Oklahoma’senergy sector, including industry, government, andour academic institutions, must work vigorouslyand effectively with others on a national level todevelop effective private sector partnerships andcoordinated research and development programs.

Wind EnergyWind has been a naturally occurring source ofenergy for thousands of years, from powering shipsails to mill grinding. Oklahoma, where “the windcomes sweepin’ down the plain,” is well positionedto take advantage of this abundant resource,ranking 8th in the U.S. in wind energy potential,with a projected average of 82,700 megawatts(MW) and 725 billion kWh annually. Wind energymay be used to generate electricity, pump water,and perform a variety of other tasks. TheAmerican Wind Energy Association estimates thatby the year 2020, 6% of the nation’s electricityneeds will be provided by wind energy. Somesources estimate Oklahoma has the potential toproduce as much as 9% of the nation’s electricityfrom wind.

Wind can be thought of as the next cash crop forOklahoma ranchers and farmers who can enjoyroyalties from the installation of turbines on theirland while suffering minimal disturbance to theirtraditional farming and ranching activities. Ourstate is in a position to leverage off of its collectivewind energy knowledge that resides in itsuniversities, particularly Oklahoma StateUniversity and Oklahoma University, where thebasic elements of wind energy application andeconomics are well established.

At present, however, our state does not have asingle large wind energy project (greater than onemegawatt), and we are falling behind ourneighboring states in the development of windenergy. Oklahoma must adopt a more aggressivepolicy supporting wind energy development in aneffort to tap this largely undeveloped resource sothat it can be added to a more diverse,environmentally friendly energy portfolio. Thenature of electric power generation by wind lendsitself to complementing other more traditionalenergy sources of electric generation. Forexample, wind and natural gas are highlycomplementary for electricity generation as gascan be used to take up the slack during times oflow wind production, while wind can serve toreduce the costs and environmental impact ofhydrocarbon-generated electricity.

The principal impediment to the development ofwind energy in Oklahoma for use in generatingelectricity is the lack of an adequate electricitypower grid in the western half of the state whereoptimum conditions for wind generation exist. Ifthis problem of adequate access to transmissionlines can be solved, Oklahoma stands to be in theforefront of wind-generated power in the nation.

SolarThe sun is another example of an excellent naturalenergy resource, and Oklahoma has tremendouspotential to develop this method of power, withsunshine approximately 300 days per year. Energyfrom the sun can be used for heating, cooling, andelectricity generation.


To access this renewable resource, solar connectorsutilizing mirrors to collect heat from the sun areinstalled to generate heat and electricity. Althoughthe state shows abundant resources for producingsolar power, the western half of the state has beenjudged to be the best region for the development ofsolar energy within our borders, with a potential of42.3 million kWh per year — enough to power4,249 homes.

Because access to transmission lines (sameproblem as with wind energy) is an impediment tolarge scale electricity generation, solar energy’suse in the state is likely to be confined to satisfyingmore local energy needs, such as residential waterheaters and perhaps residential lighting. If thestate is to capitalize on its abundance of sunshineto generate electricity, the transmission gridproblem must be solved and Oklahoma must be asignificant contributor to the ongoing internationaleffort to make solar energy competitive with otherenergy sources.

HydropowerHydropower accounts for approximately 4% ofOklahoma’s electricity generation (about 2 billionkWh), produced from seven of its almost 5,000dams. Oklahoma is the 21st largest producer ofhydropower in the U.S.

According to the Clean Energy Coalition,hydropower is a resource at risk due to theregulatory burdens and costs associated with thefederal hydro relicensing process. In the next 15years, over half of all federally regulated hydrocapacity must be relicensed. In Oklahoma, thisincludes the Markham Ferry and Salina projects,which represent 72% of the state’s non-federalhydro capacity. Oklahoma could lose a number ofprojects in the licensing process. The EnergyInformation Administration reports that hydrogeneration will decline through 2020, “asregulatory actions limit capacity at existing sites.”According to the U.S. Department of Energy,Oklahoma has a “moderate” hydropower resourceas a percentage of the state’s electricity generation.Oklahoma could produce an estimated 5,032,200MWh of electricity annually from hydropower.

Alternative Transportation FuelsAlthough Oklahoma is fortunate to have fewer airpollution problems than in more populated areas ofthe country, the state is not free of vehicular fuel-generated pollution problems, particularly in themajor metropolitan areas. The sizeable impact ofvehicles and other combustion engine generatorson air quality cannot be ignored. In addition toincreasing its commitment to reducing air pollutionfrom mobile sources by incorporating morealternative fuel vehicles into fleets andemphasizing ride-sharing programs, the state needsto emphasize other Clean Cities Programs in largemetropolitan areas.

To the extent that the ethanol initiative beingpushed nationally is implemented in Oklahoma,our state would have the added benefit of servingas a supplier of grain for the production of ethanol.Ethanol’s ability to compete economically withother energy sources is currently the subject ofseveral national studies.

Other Environmental ConsiderationsOklahoma can improve its already sound energyconservation program with an effort to encouragestronger participation in EPA’s Energy Starprogram, which is primarily aimed at energyefficiency through environmentally favorablearchitectural practices and education programs forbuilders and manufacturers.

Carbon sequestration is a fairly new concept that isbeginning to gain momentum in Oklahoma. Itinvolves sequestering carbon close to the point ofemission. Oklahoma’s enormous agriculturalcommunity stands to benefit from this practice,which involves planting certain crops in an effortto more effectively sequester carbon releases andlessen the air quality impacts of carbon emissions.

Finally, programs such as those developed by theOklahoma Energy Resources Board can serve asexcellent models for the enormous potential forenvironmental improvements that lies in voluntaryand cooperative industry/government jointventures aimed at maintaining and improvingOklahoma’s relatively clean environmental state.


OKLAHOMA’S COAL AND ELECTRICITYCoal is a major source of energy in Oklahoma andin the nation. In 2000, coal was the energy sourcefor 64% of the electricity generated in Oklahoma,with natural gas providing 31.6%. 1 Nationally,52% of electricity is produced by coal 2 and 16%by natural gas. 3

Oklahoma produced about 1.72 million tons ofbituminous coal from 12 mines in six counties in2001. Coal consumption in Oklahoma for 2001was approximately 15,000,000 million tons. 4 Mostof the non-Oklahoma coal used in the state comesfrom Wyoming. The subbituminous Wyomingcoal is low in sulfur content (0.4%) compared toOklahoma coal with a sulfur content ofapproximately 2.5%. There are six coal firedutility plants in Oklahoma.

Oklahoma coal production has declined from itspeak of 5.73 million tons in 1981, to a low of 1.59million tons in 2000. Between 1989 and 2001,annual coal production varied from a high of 1.91million tons to a low of 1.59 million tons. In 2001,the tonnage increased to 1.72 million tons. 5

The reasons for the relatively flat production rateof Oklahoma coal are numerous: reduced demandfor metallurgical coal, the loss of cement marketsin Dallas, increased demand for low sulfur coal tomeet emissions regulations, lower prices for coal,high transportation costs, lack of financialincentives, lack of available local investmentcapital, and lower prices for natural gas.

Until recent years, the major consumption ofOklahoma coal had been by out-of-state utilities.Major in-state use of Oklahoma coal has been bythe cement and lime industry, and utilities.

The use of Oklahoma coal at the Applied EnergyServices Cogeneration Plant (AES) near ShadyPoint, Oklahoma, has been vital to the industry. In2000, AES used more than 1,000,000 tons ofOklahoma coal to generate electricity and providefood-grade carbon dioxide. 6 The AES plant is acoal-fired, fluidized-bed combustion power plant,

which uses Oklahoma high-sulfur bituminous coaland limestone to generate electricity in anenvironmentally safe manner. The averagepurchases on an annual basis by AES Shady Pointis 65% of the total state coal production. 7

Commercial coal mining began in Oklahoma in1873 with the removal of bituminous coal fromunderground mines in eastern Oklahoma. Surfacemining began in 1915. Like the oil and gasindustries, the coal industry has experiencedproduction cycles. Since 1969, the coal industryhas had as few as eight active mines and as manyas sixty. There is potential for Oklahoma’s coalresources to provide the basis for economicgrowth; only the apex of coal resources has beenexploited. Large bituminous and metallurgicaldeposits remain to be produced, but require largecapital investments by sophisticated miningcompanies.

Identified coal resources are present in an area ofapproximately 8,000 square miles in easternOklahoma. The coalbeds are of Middle and LatePennsylvania age, 0.8 to 10 feet thick, 0.4% to6.5% in sulfur content, coking or noncoking, andcontain 11,500 to 14,500 BTU. Oklahomacontains 8.09 billion tons of coal classified asidentified coal resources determined by theOklahoma Geological Survey. The amount ofeconomically recoverable coal resources isestimated to be 1.58 billion tons of which 343million tons are strippable. 8

Production and market issues affect whether or notsome coal reserves are economical to produce.Regulations concerning mining and reclamationrequirements also play a role in limiting coalproduction. Federal regulations underdevelopment include a variety of measuresrequiring reductions in emissions of nitrogenoxide, sulfur dioxide, and mercury.

Future production of Oklahoma coal will hinge ondevelopment of additional markets for high sulfurcoal and the increased use and development ofclean coal technology at coal fired utilities both


within the state and in the surrounding area. Stateincentives will greatly enhance the present andfuture production of Oklahoma coal.

REBUILDING THE INFRASTRUCTUREOne of the greatest challenges facing Oklahoma inthe near term is the need to rebuild an aging energyinfrastructure. The energy infrastructure iscomprised of a wide variety of components, eachof which plays a role in the finding, producing,transporting and consumption of energy sources.Infrastructure includes not only such tangibles aspipelines and refineries, but also the basic humanskills required for identifying and producing theseresources.

The energy industry in Oklahoma has undergonemassive changes in the past 20 years. The industryitself has seen a wild roller coaster ride of pricechanges, regulatory restructuring, acquisitions,mergers, bankruptcies and changing consumptionhabits. Yet the fundamental elements of the energyinfrastructure have not kept pace with theincreased need to get various forms of energy to itsmarketplace for consumption on a timely andefficient basis when it is needed.

For example, Oklahoma, like the rest of thecountry, has not been able to add oil-refiningcapacity to match domestic demand. The result hasbeen the loss of market share to imported refinedproducts. The electricity market has undergoneradical changes as a result of partial deregulation.Natural gas has gone from a tightly regulatedenergy source to a largely deregulated commodity.Coal has come and gone in favor of other fuelsources.

It is important that as Oklahoma considers itsenergy future it takes into account theinfrastructure improvements and expansionsrequired to make energy available to its residentsand consumers in other states.

Oil and Natural Gas PipelinesThe infrastructure for Oklahoma’s oil and naturalgas industry is as old as the industry itself, which

dates back to 1897 when the first commercial wellwas completed in the state. Oil and gas travel bypipelines and trucks from widely scattered pointsof production through a series of refining, orpurifying, steps. The consumer-ready productultimately travels again by truck, rail or pipeline tothe point of consumption.

In many Oklahoma fields where oil and gasoriginate, production has been ongoing fordecades. In some of these older fields, the primaryproduction comes from marginally economicwells. As profit margins have grown thinner andthinner, maintenance budgets have been squeezed.There are continual challenges in ensuring theintegrity of pipelines and other facilities. Thesesystems themselves are a complex web of pumpstations or compressor stations, control systemsand thousands of interconnections, ownedprimarily by an army of small independentproducers. Maintaining and ensuring the securityof this complex structure will be an ongoingchallenge.

In addition, oil producers face the prospect ofincreases in demand and changes in thedestinations where petroleum must be delivered.Pipelines are inherently less flexible than otherforms of oil transport. They are fixed assets thatcannot be adjusted easily for capacity or changesin points of delivery. However, they are essential tothe efficiency of the oil production industry.Pipelines are very efficient ways to movepetroleum and petroleum products.

They are relatively inexpensive to operate and aregenerally quiet and safe. Insufficient domesticpipeline capacity has caused peak load problems inmoving oil and petroleum products such asgasoline from one region of the country to another.Similarly, natural gas pipelines in some instancesare insufficient to handle delivery of the growingdemand for natural gas.

Virtually all natural gas in the United States ismoved by pipeline. As Oklahoma strives to sustainand encourage economic development, thequestion of energy availability will become


increasingly important. The state’s private andpublic sectors must work together to ensure thatthe natural gas pipeline infrastructure is sufficientto meet not only Oklahoma’s consumption needsbut our need to export large volumes of gas to out-of-state markets. The future very well may requirethat new pipelines be sited in Oklahoma.

A variety of state and local government offices, aswell as the federal government, may control partsof pipeline siting. In some cases, siting a pipelinecan take years to accomplish as a myriad ofenvironmental, regulatory, and public perceptionchallenges are addressed. Despite some of thedifficulties in siting, these functions are bestregulated by the states, which are more closelyaligned with local interests.

Oil and Natural Gas RefineriesThe U.S. demand for refined petroleum products,such as gasoline and heating oil, currently exceedsthe domestic capacity to produce. Refineries in thestate are running at or near full capacity duringtimes of peak demand. Still, domestic refinerscannot fully supply the market. As a result, excessdemand has been met by increased exports.Refineries in the state are subject to significantenvironmental regulation and will face new cleanair requirements over the next decade.Requirements for lowering sulfur content ingasoline have caused substantial capitalinvestments, thereby endangering the economicviability of these facilities.

For example, Conoco announced the decision toinvest $146 million in its Ponca City refinery tocomply with new clean-air standards for fuel thattake effect in 2004. Under rules adopted by theU.S. Environmental Protection Agency, the sulfurcontent in gasoline must be lowered to 30 parts permillion (ppm) from about 300 ppm. Theconstruction project will create as many as 600jobs. Conoco said it secured $ 20 million of a tax-exempt bond allocation from the OklahomaEconomic Development Bond OversightCommission, which will lower the project’sfinancing costs.

Due to low profitability and rates of return, therehave been no major refineries built anywhere inthe country for the past 25 years. Growth inrefinery capacity has increased less than twopercent per year, as a result of de-bottleneckingand incremental expansion of existing facilities.

Oil and Natural Gas R&DIt is vitally important for the domestic oil and gasindustry to maintain a significant level of researchand development to remain competitive in theworld marketplace. This effort is an investment inthe state’s and the industry’s future. In fact,technological advances might be the mostimportant factor in ensuring America’s non-renewable resources are fully developed.Unfortunately, the oil and gas field services sectorranked last in R&D expenditures as a percentageof sales among 19 industries surveyed in 2001 bySchonfeld†& Associates, Inc.

Oil field service companies and others areconcentrating much of their research efforts ontechnology that make exploring for oil and gasmore cost effective. At the present time, however,there is a lack of research focused on innovativeways to increase production from existing wellsand reservoirs. This is of particular significance toOklahoma because it ranks second nationally inboth the number of and production from wells thatproduce 10 barrels of oil per day or less. At year-end 2001, there were more than 55,000 of these oilwells in the state.

In addition, Oklahoma ranks sixth in the number ofgas wells that produce 60,000 cubic feet (mcf) orless per day. The state ranks third in the total gasproduced from these low volume, marginallyprofitable wells.

Conventional, secondary and tertiary recoverytechnologies have improved recovery rates overthe years. However, nearly two out of every threebarrels of oil discovered in the United Statesremain trapped underground after conventionalrecovery operations. This staggering amount ofremaining oil – approximately 200 billion barrels


nationwide – can be one of the state’s best sourcesfor additional production.

New technologies are required to recover oil leftbehind because it is difficult to access or is heldtightly in place within tiny rock pores.Programs that create technology to improverecovery rates and lower finding and productioncosts translate into reasonable energy costs forconsumers.

However, R&D cannot be turned on and off, but isa continuous process that builds upon its previoussuccesses and failures. If the United States is tomaintain its ability to produce its domesticsupplies of oil and natural gas at a reasonable costto consumers, state government, working with ouruniversities and interested private companies, mustfill some of the void left by major oil-producingand service companies, in particular the largemulti-national companies, who have left thedomestic oilfields.

Oil and Natural Gas ManpowerIn the past 20 years, the oil and gas industry hasfaced great difficulties in finding and retainingadequate manpower to function safety andefficiently. The difficulty is traced to the uncertainnature of the industry itself. Boom and bust cycleshave resulted in uncertain employment prospectseven for the most skilled oilfield workers.Research cutbacks have eliminated many of thescientists associated with oil and gas explorationand production.

Competition in technical fields such as geology,geophysics, and engineering has resulted in adramatic decline in the number of studentspursuing petroleum engineering degrees.

These challenges and others have made it difficultfor companies to find and retain the qualityemployees necessary for efficiently exploring for,producing and refining oil and gas.

The issue has grown too complex and too critical for the industry to solve on its own.Solving the problem will require more thansimplistic solutions aimed only at finding workers.

SecurityThere are thousands of miles of unguarded pipelinescrisscrossing Oklahoma. There are several, well-litrefineries and oil-storage facilities in the state. Thereare in fact billions of dollars in assets at risk.

Since the Sept. 11, 2001 attacks, the industry hasimplement heightened security procedures thatrestrict access to certain facilities, increasingsurveillance at key facilities, increasing the use ofemployee access cards and control and stepped upthe dialogue with appropriate law enforcementagencies.

On the other hand, some energy producers have nosecurity measure whatsoever. Protecting theinfrastructure of the energy industry is fundamentalto energy security.

Public EducationAt the risk of redundancy, a key to the state’senergy future is a citizenry well educated in theissues surrounding the oil and gas industry andother slices of the total energy pie. Energy is thesingle largest contributor to the state’s economyand has been a cornerstone of the state’sdevelopment for more than 100 years.

It would be difficult to “over-educate” the publicon the challenges facing the state in terms ofretaining its leadership position in the nation’s oiland gas industry. Oklahoma can ill afford to losethe billions of dollars that oil and gas pump intocities and town, farms and schools and trickledown to virtually every retail sector in the state.Constantly educating the public is essential to thetask of implementing any strategic energyinitiatives.

Ensuring that Oklahomans of all ages recognizethe value of a vital oil and gas industry is good forthe state.


ElectricityThe electricity infrastructure includes a number ofgenerating facilities located throughout the stateand a grid of transmission lines that moveelectricity intrastate and to the national grid forregional delivery. Oklahoma generating plants arefueled by natural gas, coal, oil and hydropower.Fossil fuel-powered plants need a reliabletransportation system that permits the delivery offuels as necessary. A transportation network forwaste disposal is also necessary for power plantsthat create by-products.

Major restructuring has occurred within theelectricity industry over the past 20 years.Vertically integrated electric utilities that providedgeneration, transmission and distribution servicesto distinct areas have begun to change. In manyparts of the country, utilities have “unbundled” thegeneration, transmission and distribution services.The result has been the creation of competition anduncertainty in an industry that had been tightlyregulated.

More electricity is being shipped longer distancesover a transmission system that was initiallydesigned only to provide limited power and reservesharing among neighboring utilities. Independentpower producers have stepped into the market andnow compete with established generating facilitiesoperated by utility companies.

Oklahoma appears to be well positioned as alocation for independently owned, gas- poweredgenerating facilities. Within the past two years,there were 16 gas-fired power plants either underconstruction or in the permitting process, althoughconstruction on only six is being continued.Theseplants were intended to convert some ofOklahoma’s abundant supply of natural gas toelectricity for export to out-of-state markets.

These options seemed viable as long as energytraders such as Enron were present in themarketplace to link generators with end-users.Independent generators have recently had torethink business strategies and subsequently have

cut back on aggressive plans for adding generatingcapacity. Until stability returns to the electricityindustry, there will be little incentive to buildadditional generating capacity.

Electricity - TransmissionElectricity transmission constraints have led topower disruptions at several locations in thecountry. With deregulation have come questionsabout transmission reliability and the impacts on asociety that has become increasingly dependent onelectricity at both work and home.

Power availability and reliability are veryimportant concerns for the state’s economicdevelopment. Transmission facilities are a key toreliability and flexibility. Under current law, thesiting of transmission facilities is a function ofstate and local government entities where theviews of local citizens can be raised. Thesefacilities must be adequate not only to provideintrastate electric power delivery, but also permitexports to other states.

ACKNOWLEDGMENTS

Hon. Frank Keating, Claudia Antezana, Hon. Bob Anthony, Hon. Ed Apple, Keesa Avery,Gerry Baker, Howard Barnett, Charles Barney, Dewey F. Bartlett, Jr., Michael H. Bernard,Hon. Denise Bode, Arthur Breipohl, Ph.D., David Brown, F.W. “Pete” Brown, Tod Bryant,Robert P. Cooper, William J. Cooper, Hon. Tom Daxon, Shirley Dickinson, Rhonda Dossett,Liz Fajen, Larry Fiddler, Alicia Fitts, Randy Foutch, Rick Frederick, John Godwin, Hon.Brian C. Griffin, Christine Hansen, Kent Harrell, Tim Hughes, Richard Hutton, Patrick B.Keegan, Steve Kelley, Webster, C. “Cal” Kilgore, H.G. “Buddy” Kleemeier, ChrisKnowles, Julie Kruger, R. Dobie Langenkamp, Charles J. Mankin, Ph.D., CharlesMcNamara, Mark Meo, Ph.D., Dennis J. O’Brien, Ph.D., Stephen M. Oxley, Hon. W.Arthur “Skip” Porter, Mary Ann Pritchard, William W. Pritchard, Rama Ramakumar,Ph.D., Larry Regens, Ph.D., Cesar Santa Gadea, Octavio Santa Gadea, Hon. Carl MichaelSmith, Bruce Stallsworth, J.D. Strong, Hon. Robert J. Sullivan, Jr., Michelle Summers,Mike Terry, Warren Thomas, Mickey Thompson, Lou Volberding, W. Bland Williamson, Jr.

REFERENCES

Commission on Marginally Producing Oil & Gas Wells, Energy Institute of the Americas,Environmental Verification and Analysis Center, Grand River Dam Authority, IndependentPetroleum Association of America, Interstate Oil and Gas Compact Commission, Mid-Continent Oil and Gas Association, National Association of Royalty Owners, OklahomaCorporation Commission, Oklahoma Department of Environmental Quality, OklahomaDepartment of Mines, Oklahoma Energy Resources Board, Oklahoma Geological Survey,Oklahoma Independent Petroleum Association Oklahoma, State University, Oklahoma TaxCommission, Sarkey’s Energy Center, Southern States Energy Board, U.S. Department ofEnergy, University of Oklahoma, University of Tulsa, Kansas Energy Policy Report,National Energy Policy Report, “New Mexico’s Energy, Present and Future”

FOOTNOTES1 Center for Energy and Economic Development, 20022 Coal Age, Aug. 1, 20023 Center for Energy and Economic Development, 20024 Robert Cooper, Farrell-Cooper Mining Company5 Oklahoma Department of Mines, 20026 Robert Cooper, Farrell-Cooper Mining Company7 Robert Cooper, Farrell-Cooper Mining Company8 Oklahoma Geological Survey, 1998


Recommended Strategic Initiatives Robert Sullivan, Jr., Secretary of Energy, Keating Administration, State of Oklahoma

Oklahoma’s Oil and Natural Gas

1. State government should strengthen old incentivesand develop new ones for the oil and gas industryto initiate and apply new technologies that willlower finding and producing costs of our extensiveknown remaining oil and gas reserves.

2. Oklahoma’s energy industry, state government, andacademic institutions should improve and developinteractive programs that will result in the moreeffective application of technologies to the pursuitof new oil and gas reserves and production.

3. A critical review of taxes of all kinds should takeplace with an eye toward ensuring that Oklahomais a tax-friendly environment for energy companiesto pursue the state’s energy resources. Tax itemssuch as credits for capital investment on energyprojects, accelerated depreciation for energy-related capital expenditures, tax credits for fuelefficiency programs, and a review of ad valoremtax treatment for producing facilities are examplesof areas that should be considered forimprovement.

4. Strong incentive programs for secondary andtertiary oil recovery projects should be establishedor improved to encourage the recovery ofadditional oil reserves known to exist in olderreservoirs.

5. The Oklahoma Corporation Commission’sexclusive jurisdiction over all oil and gasregulation should be clarified to ensure thatproducers can interact with a single agency in allregulatory matters that affect their operations.

6. Legislation should be adopted to assure thatrecently deregulated natural gas gathering facilitiesare operated in a manner that does not curtailproduction or penalize gas producers. Producersshould have access to gatherers’ information thatwill allow a review process through the OklahomaCorporation Commission if producers candemonstrate that gathering rates are punitively highin a specific locale.

7. All plugging and other regulations governingmarginally productive oil and natural gas wellsshould be reviewed to provide, to the extentpossible, for the extended lives of these assets sothat enhanced oil recovery projects in the futurecan be encouraged.

8. Creative incentives should be developed toencourage large-scale projects on both state-ownedand privately-owned minerals designed to developexploratory activity on heretofore dormantproducing areas.

9. Private sector stakeholder groups (producerassociations, royalty groups, and surface ownerrepresentatives) should strive to achieve a betterunderstanding of each other’s respective needs andconcerns in order to reduce potential conflicts inthe pursuit of the state’s resource developmentgoals.

10. The state should take the lead in resolving agrowing number of issues involving water rights soas to reassure the energy industry that suchconflicts will not impede the state’s private sectorresource development goals.

Renewable & Alternative Energy

11. Encourage the development of the electricity gridsystem to serve areas of the state where windenergy and solar energy are abundant.

12. Given its vast wind and solar resource base,Oklahoma should encourage and lead research inthese fields to make them economicallycompetitive with other energy sources.

13. Private/public consortiums should be developed,with our higher education institutions taking thelead, to accelerate the establishment of Oklahomaas a vast “outdoor laboratory” for wind and solarenergy development.

14. The state should establish a competitive incentivepackage designed to attract and grow wind powercompanies to Oklahoma.


15. Oklahoma should strive to establish itself as aresearch base for the growing solar power industry,given the knowledge base housed in the state’suniversities and our 300+ days per year of solarsourcing.

16. Oklahoma should take an active role in assisting inthe federal relicensing process of its sevenhydropower plants in the state as they come up forrenewal.

17. The state should seek private sector involvement indeveloping an aggressive plan for capitalizing onthe huge state potential for biomass-basedelectricity generation.

18. An effort should be made to expand Oklahoma’sBioenergy Initiative with an emphasis on forgingpartnerships with Oklahoma’s private energysector, as well as agriculture producers, forestrycompanies, and other natural resource industries todevelop effective partnerships with new,coordinated R&D programs.

19. Oklahoma needs to develop a sound strategy foradvancing both bioenergy and wind energy projectsin Oklahoma with particular emphasis oncomplementing and augmenting existing electricitygeneration from coal and natural gas fuels (e.g., co-firing, supplementing and peaking, etc.).

20. The state would be wise to develop aneconomically based program for increasing demandfor alternative fuel vehicles, including the demandfor Oklahoma- produced alternative fuels (ethanol).

21. The advent of national, even global, RenewableEnergy Credit (REC) programs is imminent. IfOklahoma is to compete in the markets forrenewable energy and RECs, we must cause in-state transmission grid upgrades and encourageregional upgrades in transmission connectivity.

22. Oklahoma should pursue and establish a carbonsequestration program to reduce the levels ofharmful carbon compounds in the atmosphere.

23. As a state, we need to foster the expansion andcreation of organizations that accomplishsignificant environmental enhancement throughvoluntary/public-private partnerships, using theClean Cities programs and the Oklahoma EnergyResources Board as models.

Rebuilding the Infrastructure

24. It is suggested that the governor initiate efforts toorganize and expedite the activities of all state andlocal pipeline permitting entities for the purpose ofcoordinating and monitoring the permitting processand encouraging prompt approvals.

25. The state should consider a lead agency that wouldhave authority to monitor permit processingschedules.

26. The state’s Department of Commerce should beinvolved with the coordination effort andrecommendations to streamline permittingprocesses.

27. The state should consider establishing a specialtask force of environmental experts to focus andcoordinate all environmental issues stemming froma proposed major pipeline.

28. The state should encourage research spending,including public and private dollars, to improveand develop pipeline installation techniques thatcause minimal surface damage, and are safer andquicker.

29. The state should encourage increased educationand information sharing with the public regardingpipeline issues.

30. The state should support research and developmentefforts directed at issues of pipeline maintenanceand safety, such as corrosion prediction, protectionand mitigation; inspection methods and tools;defect detection; and pipeline data management,integration and analysis.

31. The state should review pipeline ad valorem taxeswith an eye toward providing incentives forpipeline owners and operators to maintain andmodernize this key infrastructure system inOklahoma.

Oil and Natural Gas Refineries

32. The state should work toward providing moreregulatory certainty for refinery operators andstreamline permitting processes where possible.

33. The state should assist the refining industry whenappropriate in educating the public regarding thecritical natural of refinery operations in providingenergy products for the country.


Oil and Natural Gas R&D

34. Re-energize the research and developmentcomponent of the oil and gas industry in Oklahomaby playing a leadership role in finding appropriateR&D funds, promotion and provision of taxincentives.

35. The state should encourage cooperative private-public research and development to address reserverecovery issues is the oilfield.

36. The state should consider supplying seed ormatching monies for projects that encouragemaximizing oil-recovery rates or minimizeproduction costs for marginal wells.

37. Through the university system, Oklahoma shouldencourage applied research on oil and gasproduction challenges and cost barriers.

Oil and Natural Gas Manpower

38. As part of a broader energy strategy, the governorshould consider creation of a blue-ribbon task forceto study the personnel situation in Oklahoma anddevelop ways to combat the effects of theindustry’s cyclical nature upon the workforce.

39. The state should encourage the industry toimplement non-traditional programs to generateinterest in careers in the energy industry.

40. Our major universities must find ways to encouragethe creation of research opportunities for studentswho are interested in the petroleum sector bycreating meaningful internship programs at ouruniversities.

Security

41. Oklahoma must develop cooperative efforts toimprove the security of energy facilities byworking with appropriate law enforcementagencies and industry.

42. We must create a heightened sense of awarenessamong the public concerning the threats to energyfacilities and providing appropriate responsemechanisms.

43. Public/private education efforts, such as thosepresented by the Oklahoma Energy ResourcesBoard, should be created and encouraged. Privatesector leadership is critical to the success of theseefforts.

Electricity

44. Oklahoma needs to continue to work towardestablishing an electricity regulatory climate that isstable, considers the needs of industry andconsumers, and fits the regional and nationalpicture.

45. We should promote Oklahoma’s strength in termsof gas supply for potential new generatingfacilities.

46. We should reexamine the status of deregulationnationally and its impact on Oklahoma’s generatingcapacity.

Electricity Transmission

47. State leaders need to be certain that Oklahoma ismoving toward increased transmission linereliability.

48. Oklahoma must work with neighboring states onthe issue of interstate connectivity andcompatibility.

49. We must preserve the state’s authority over sitingissues.

Coal and Electricity

50. Oklahoma’s state leaders should work with theDepartment of Mines and private miningcompanies to encourage market development ofhigh sulphur coal uses.

51. State officials should provide assistance toOklahoma coal producers to mitigate severalfederal regulations that presently curtail the state’scoal production.


Our Energy Industry

Oklahoma Natural Gas: Past Present and FutureDan T. Boyd, Oklahoma Geological Survey. Reprinted with permission

from Oklahoma Geology Notes, Winter 2002, pages 143-155.

Editor’s Introduction:Natural gas surpassed oil in economic valuedecades ago. It is the principal driver and bedrockof Oklahoma’s energy industries.

This published article is the definitive examinationof the role of natural gas in our state culture,economy and ethos. This article has been editedfor this Academy Town hall. We have eliminatedsome of the scientific and technical discourse thatwould be difficult for the layperson; and we haveeliminated a significant number of charts forpublishing practicality.

Nevertheless, the text published here will provideample information concerning natural gas.

Oil ... and Gas

Oil put Oklahoma on the map.

This is true both figuratively and literally, as in1907 oil was the driving force behind turning theOklahoma Territory into the State of Oklahoma.Industry’s early success in finding abundant oil,and later natural gas, has made these our primarysources of energy. Relatively inexpensive energy isone of the largest factors responsible for theunprecedented levels of prosperity now enjoyed bythe United States and the rest of the developedworld. Although both U.S. and Oklahoma oil andgas production are past their peak, we continue tobe a key producing state, ranking fifth nationally inoil and third in natural gas.

Natural gas is especially important to Oklahomabecause it alone maintains a positive State energybudget that would otherwise be strongly negative.In spite of our national ranking, oil consumption inOklahoma is about 50% higher than production,

and local coal production accounts for less than10% of State consumption. For oil, the possibilityof discoveries that could significantly impact Stateproduction declines (Boyd, 2002a). Coal inOklahoma is another resource that has largely beendefined, but in order to meet strict sulfur-emissionrequirements, the vast bulk of coal burned in theState now comes from Wyoming. In markedcontrast, gas exploration and development canbring large rewards.

Oil and gas are formed by alteration ofmicroscopic organisms that are deposited with thesediment that composes sedimentary rocks. Thesediment and organic remains reach maximumthickness where they accumulate in large,gradually subsiding depressions called geologicbasins. With increasing temperature and pressurethat result from increased burial depth, organicremains slowly change into oil and natural gas.

Those compounds consist dominantly of hydrogenand carbon, and hence are called hydrocarbons. Asoil and gas are less dense than the water in whichthe sediment was deposited, where permeable rockpermits they migrate upward. The upwardmovement ends where impermeable rock blocksthe migration path, creating a seal that may form ahydrocarbon trap. A key factor in the extent andsealing ability of the petroleum accumulation thusformed is the extent and sealing ability of theimpermeable rock.

Gas is almost always associated with oil, as itrepresents the lighter chemical fraction (shortermolecular chain) formed when organic remains areconverted into hydrocarbons. Therefore, inaddition to being found underground as discretegas reservoirs, much natural gas is also founddissolved in subsurface oil. As this oil is brought


from reservoir conditions to the surface, and itspressure is reduced to the atmospheric level,dissolved gas comes out of solution much likecarbonation from a soft drink when the cap islifted.

Section omitted.

Regardless of the type of source rock involved orthe relative volumes of oil and gas that are initiallygenerated, temperatures and pressures invariablyrise with increasing burial depth. As the thermalenergy in a subsurface system increases, thelonger-chained hydrocarbons present in oil beginto break into progressively smaller pieces.

Eventually a critical depth is reached below whichliquid hydrocarbons are no longer stable. Althoughoil cannot exist anywhere below this critical depth,natural gas can still be present in large quantities.This is important for Oklahoma because many ofthe State’s source rocks and reservoirs are, or werein the geologic past, located below the depth atwhich oil is stable. The combination of deepsedimentary basins and a source rock chemistrythat is dominantly gas-prone has made large partsof Oklahoma almost exclusively gas producing.

Section omitted.

Early History

Natural gas has always been found in conjunctionwith oil exploration, which in Oklahoma beganlate in the 19th century. In the early days, gas wasusually looked upon as a nuisance or a drillinghazard, and when encountered it was vented until itwas determined whether oil lay below the gas. Ifonly gas was produced, the well was usuallyplugged and abandoned. (Plugging usually meansplacing cement in a borehole to keep subsurfacefluid from moving to the surface or from onepermeable rock layer to another.) Abandonment isthe final act in the life of a well, and usuallyensures that the well can never be used again.

However, if the well eventually started producingoil as well as gas, it was treated as an oil well, withany associated gas either vented into theatmosphere or flared (i.e. burned). It is impossibleto say how much gas was lost then, but Beebe(1962) has estimated the volume vented or flaredin Oklahoma at 500 billion cubic feet (BCF).

Initial gas activity in Oklahoma was restricted tothe northeastern part of the State. It began in 1894when Cudahy Oil Company drilled two wells inthe Muskogee area, each with commercial gasshows. Neither well produced gas, for no localmarket existed. However, in 1901 gas from twowells completed in the Red Fork and was sold to abrick plant in Tulsa, marking the first commercialuse of natural gas in Oklahoma. After thismilestone, gas production was added inBartlesville-Dewey Field (1904), Glenn Pool Field(1905), Hogshooter Field (1906), Boynton Field(1910), and Cushing Field (1912). Depew Field,which began producing gas in 1912, was convertedto storage in 1951. With 63 BCF of capacity, it wasthe largest gas storage facility in the United States(Koontz, 1962).

In 1906 the Oklahoma Natural Gas Company,today the State’s dominant supplier, was formed todeliver gas to the Oklahoma City Market (Moore,1962). At the time, gas fields were near the townsthey served, but, as demand climbed and nearbywells were depleted, the industry was forced torely on more distant sources of supply. Despite arapid increase in gas drilling and reserve additionsdue to a spate of discoveries in the late 1920’s, itwas not until the Anadarko and Arkoma basins andshelves (including the panhandle) were exploitedin the middle of the 20 th century that reservesbegan to grow exponentially.

The earliest years of the Oklahoma gas industrywere sustained by small accumulations associatedwith shallow oil fields on the Cherokee Platform inthe northeastern part of the State. Throughout mostof Oklahoma’s history an abundance of cheap oilmade it the fuel of choice, keeping the demand fornatural gas low, and thus its price and drilling


activity. Another factor was the regulation theregulation of natural gas by the federal governmentthrough 1978, which kept oil prices low relative tooil. Also underlying low demand in the early dayswas a lack of pipelines. Although crude oil can betransported anywhere there are roads, gas requiresa gathering system that usually entails huge up-front costs.

In a classic Catch-22 scenario, the economicjustification for a pipeline requires that a thresholdof production rate and reserves be met, and that, inturn, means money must be spent in drilling wells.However, even if the wells justify the expenditure,they must remain shut-in (generating no cash flow)for a prolonged period during construction of thegathering system. Once this hurdle is overcomeand pipelines are in place, drilling and productioncommonly increase exponentially. Drilling successthen spurs expansion of the system, which in turnopens more-distant areas to exploration anddevelopment.

Despite early difficulties, all major gas fields in thegreater Anadarko and Arkoma Basins werediscovered before natural gas deregulation. Someof the fields were discovered quite early, but theywere not close to main populations centers. As aresult they were usually not fully developed (ortheir size appreciated) until much later, when gasbecame a primary drilling objective rather than anunintended consequence of oil exploration.

Recent History

Although commercial gas production in Oklahomabegan in 1901, annual production did not begingrowing until the 1940s (Claxton, 2001). Growthcontinued through the early 1960s, with productionrates more than doubling between 1960 and 1970.As measured by the standard average energyequivalence of 6 thousand cubic feet (MCF) perbarrel (42 U.S. gallons) of oil, Oklahoma’s primaryproduction shifted in 1963 from oil to gas. Thechange occurred despite the fact that oil productionin 1963 was still well over 500,000 barrels per day.In the year 2000, Oklahoma’s cumulativeproduction of gas (measured in sales) exceededcumulative oil for the first time. Although these areimportant milestones, the critical point is thatnatural gas has been Oklahoma’s primary energyresource for almost 40 years. In addition, becauseoil production has declined to one third of the levelin 1963, and is still falling, the importance of gasin the State’s energy mix continues to increase.

As is true of any commodity, the effort expendedin the search for natural gas has increased as itsvalue increased. The wellhead price (the pricereceived by the operator) remained low andchanged little during the first 73 years ofcommercial production in the State. Then in 1974,for the first time, the price of natural gas beganrising more than a penny per year. The changeresulted from the deregulation of gas prices, which

Price of Crude Oil(average annual price, dollars per barrel)

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hitherto had been part of an elaborate system thatkept interstate below intrastate prices. This causedshortages to develop in gas-importing states, whilesurpluses were generated in major gas-producingstates such as Oklahoma.

In response, the Natural Gas Policy Act wasenacted in 1978 to deregulate the price thatpipeline companies paid for gas, and the averageannual price of gas rose from 23 cents per MCF in1974 to $1.49 in 1980. The rapid increase issignificant because it encouraged gas-targetedexploration and development and because the 1980price has essentially remained the floor price forgas ever since. In the succeeding 21 years, theaverage annual wellhead price for Oklahomanatural gas was lowest in 1995. The value, $1.43per MCF (unadjusted for inflation), is about thesame as in 1980. Even in constant dollars thishistoric low still exceeds the price through most ofthe State’s history.

However, it must be emphasized that the averageannual price is not the net value realized by gasproducers, and it in no way conveys the degree ofvolatility with which operators must contend. Inany given year, the price low can be a fraction ofthe annual value shown. Although they average outin the long term, successful operators must be ableto weather many short-term dips in price.

As we might expect, the number of wells drilledfor gas has closely tracked the gas price. After theArab oil embargo of 1973, which sent oil prices torecord highs, the resulting increased demand forgas helped push prices higher for this commoditytoo. A combination of domestic deregulation andinternational politics precipitated a large increasein completions of gas wells from 1977 through1985, a peak period in the last important drillingboom (Boyd, 2002a). However, with deregulationand eased political tension, market forces graduallyhave resumed control – resulting in moderate tolow prices that suppressed gas drilling activityfrom 1986 through 1999.

Mirroring a dramatic rise in gas prices in 2000(above $3.50 per MCF) and 2001 (above $4.00),the number of gas completions recorded for thosecomplete calendar years was the highest in theState since the early 1980s. Many factors wereresponsible for this increase, primarily themarkedly higher oil prices in the same period.Upward pressure on the price of natural gascontinued as the industry found itself unable tokeep pace with peak seasonal demand. Becausegas storage facilities and their high delivery ratesare key to meeting demand in winter, when storagelevels drop significantly, concern for supply isheightened, and prices rise.

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Section omitted.

Potato HillsAn example of an important conventional gasdiscovery in Oklahoma is the Potato Hills Field,which is in a structurally complex area ofsoutheastern Oklahoma. It was a marginalproducer from its discovery in 1960 throughJanuary 1987, when it went off production aftermaking less than 1BCF of gas. There was nofurther activity in the area until 1997, when a welldrilled in the same section as a dry hole drilled in1961 established new gas production in theJackfork Sandstone and initiated a spate of drillingthat continues today. Since recently drilled wellssent on lone in late 1998, Potato Hills hasproduced more than 100BCF of gas. Althoughproduction appears to be in decline, in the first 4months of 2002 the field still produced an averageof 61 million cubic feet (MCF) per day.The production added by Potato Hills Field isamong the most significant in decades. As the Statehas nearly 500,000 wells, entirely new discoverieshave become increasingly rare. However, this fieldshows that Oklahoma’s gas potential, even in areasthat have been drilled intensively, is still far fromfully defined.

Coalbed MethaneA non-conventional gas resource, coalbedmethane, is a comparatively recent addition toOklahoma’s energy mix. As plant material isheated and compressed into what will eventuallybecome coal, methane is released. The generationof methane turns coal into a source rock fromwhich gas sometimes migrates into adjacent,permeable rock (such as sandstone) where the gascan be produced as in a conventional reservoir.More often, the gas has no way to escape and stayslocked in the coalbed.

Section omitted.

The coalbed-methane play in Oklahoma is littlemore than 10 years old, and continues to be quiteactive. Because the productive coals have beenpenetrated may times by deeper wells targeting

conventional oil and gas, the location, depth, andthickness of prospective coals are usually wellestablished. The principal unknown isproducibility – the rate at which gas will flow fromthe coal – but cannot be ascertained until the wellhas been drilled and completed.

Section omitted.

At mid-2002, about 2,000 coalbed-methane wellshad been drilled in Oklahoma (Cardott, 2002), withnew ones being added at a rate of about one perday. As coalbed methane is not distinguished fromconventional gas, it is difficult to estimate itscontribution to State production. However, if initialproduction is 60 MCF per well per day (Cardott,2002), Oklahoma’s production at the end of 2002is about 120 MMCF per day, or about 44 BCF peryear. Although this represents slightly less than 3%of the total gas production for the State, largeprospective coalbed-methane areas remainundrilled or under-drilled. Consequently, coalbedmethane’s share of the State’s natural gasproduction will undoubtedly continue to increase.Shallow, low-cost coalbed-methane wells aresuited to the small operators that dominate inOklahoma. Although stabilized production ratesare typically low (50-100 MCF per day), risk of adry hole is low because the targeted coals arepervasive. In addition, coal acts as both reservoirand source rock, so areas with methane potentialare vast. Another incentive for some operators is afederal tax credit applied to coalbed methane. Aspart of the Crude Oil Windfall Profits Tax Act of1980, the credit (Section 29) was designed toencourage production of non-conventional fuels.These include shale oil, tar sands, tight gas, andcoalbed methane.

Areas that produce coalbed methane in Oklahomainclude parts of 15 counties on the eastern marginof the Cherokee Platform and the northern half ofthe Arkoma Basin. IN 1995 the USGS estimatedthe mean, proved coalbed-methane reserves for theCherokee Platform and Arkoma Basin at 4.6 TCF.Although these provinces (and reserves) are sharedby Kansas and Arkansas, the estimate demonstrates


the magnitude of the coalbed-methane play.Judging by experience in other basins, as drillingand production continue, estimates of coalbed-methane reserves will likely rise markedly.

Drilling and completion activity is an excellentindicator of the industry’s focus on addingreserves. Changes in price, success rate,economics, tax incentives, and technology are allreflected in these data that show where the moneyhas gone. In the last half century, the percentage ofwells completed as dry holes in the State has fallenfrom almost 40% to under 10%. This shows that aswell density has increased and the number and sizeof productive fields has grown, dry-hole risk hasfallen and drilling has become more developmentalin nature.

We could infer from the current dry-holepercentage that the areas with the lowest risk havebeen drilled, and that risk-to-reward analyses makemost of the undrilled areas unappealing. Exclusiveof enhanced recovery projects, the reserve size ofnew oil prospects is almost universally low.However, because gas can exist at greater depthsthan oil and flow from less-permeable rock, it isstill possible to find important new reserves ofnatural gas in densely drilled areas. Also, the valueof gas, relative to oil, has increased, prompting thepercentage of gas-well completions in the State torise dramatically, from less than 5% in 1957 tonearly 70% today. Well completion statisticsclearly show that the industry in Oklahoma hasundergone a pronounced change in focus, mostlyin the last 15 years, from oil to gas.

If completion marks the birth of a productive well,then abandonment marks its demise. From 1971through 2001, former oil wells accounted for morethan 80% of all abandonments. In that period about47,000 oil wells were plugged and abandoned,compared with about 11,000 gas wells. Not onlyare more gas wells being drilled each year inOklahoma, but proportionately fewer are beingabandoned. However, past drilling was so stronglydirected toward oil that, despite recent activity, atthe end of 2001 the ~84,000 active (unplugged)

oil wells in the State still greatly outnumbered the~33,000 active gas wells.

Section omitted.

Clearly, in order to maintain production volume,wells must be kept active as long as possible. In1992 the Oklahoma Legislature created theOklahoma Commission on Marginally ProducingOil and Gas Wells for the express purpose ofhelping producers manage marginal oil and gaswells. The program was designed to help operatorsweather the inevitable price dips, and to minimizethe long-term production decline. In addition, theOklahoma Geological Survey offers low-costgeologic-play-based workshops and otherprograms to aid operators. Survey programs helpidentify practical techniques and technology forfinding new fields, as wells as means of efficientproduction in existing fields. They give localoperators access to regional studies, technicalinsights, and resources usually available only tolarge companies. An example is the series ofworkshops coordinated by Brian Cardott designedto benefit Oklahoma’s numerous small coalbed-methane operators.

Where Do We Stand Now?

The bulk of Oklahoma’s energy production andmore than 70% of its drilling focus on natural gas.Drilling in the State today, especially exploratory,is dominated by wells with gas objectives. Theresult is that from 1901 through mid-2002 astaggering 90 TCF of natural gas was producedand sold. However, the health of the industry mustbe measured by the volume of hydrocarbons thatremain to be produced – the remaining reserves.

That leads to the question: How much is left?

Estimating ultimate remaining reserves is difficultbecause it requires accurate knowledge ofresources in the ground, as well as long-term priceforecasts. This requires foreknowledge of demand,technical innovation, political stability, and otherfactors that may affect economics and is why


predictions of remaining reserves can changedramatically from year to year . This complexityhas led the industry to use a tiered system ofestimates designed to convey differing levels ofuncertainty. Although names and definitionscommonly vary from company to company (avariety of subcategories also exist), reservescommonly comprise three tiers.

ReservesThe top tier is called proved reserves; it is the keyvolume because its low technical and economicrisk allows it to be given a monetary value. Provedreserves are defined by the EIA as the volume thatgeological and engineering data demonstrate withreasonable certainty to be recoverable from knownoil reservoirs under existing economic andoperating conditions. Other reserve categories thatmay eventually be upgraded to proved are, inincreasing degree of uncertainty, probable reservesand possible reserves. Because all reservecategories are defined by analog production andsubsurface data, they are understood better thanany of the statistically defined categories under theheading of resources.

Because of the volume and complexity of datainvolved in thoroughly analyzing the thousands offields and hundreds of formations that produce gasin Oklahoma, the EIA calculates remainingreserves by simply asking operators for theirreserve volumes and then totaling the numbersreported. Assuming that operators do not invokeunrealistic recovery assumptions or price forecasts,such an analysis should give the minimum volumerecoverable based on wells producing from knownreservoirs in a particular year. However, theestimate reveals nothing about the impact of newdiscoveries, increased drilling, higher recovery inlow-permeability reservoirs, new technology (indrilling, completion, and production), non-conventional gas such as coalbed methane, orchanging prices.

We must remember that remaining (proved)reserves, when added to cumulative production,are not meant to approximate ultimate recovery.

All types of reserves change continuously, the onlycertain reserves being those that have already beenproduced. To give an example, in 1946Oklahoma’s estimate of proved gas reserves was10.1 TCF, an estimate that rose steadily to 18.3TCF in 1962. But since 1962 more than 72.5 TCFhas been produced, four times the proved reservesestimated in 1962. Clearly, the gas resourcevolume from which reserves come is finite.However, from year to year a combination offactors including new discoveries, greaterefficiency in recovery, and higher prices, hasrepeatedly forced upward revisions in estimates.From 1977 through 2000, reserves ranged from12.5 to 16.7 TCF, with peak years in the 1980s,during and just after the last major drilling boom.For the same period, gas production ranged from1.6 to 2.3 TCF per year.

Where proved reserves go up from one year to thenext, the volume increase is in addition to thatyear’s production. The actual swing in ultimate-recovery estimates from one year to another ismuch larger than the graph suggests. ThroughoutOklahoma’s history the estimates of ultimate gasrecovery have always gone up. However, whenestimates rise more slowly than production, provedreserves go down, and this is shown as a netnegative year for the State. For example, incalendar-year 1999 additions totaled 0.5 TCF.Because production for the year was 1.6 TCF. Inthe following year, reserve additions totaled 2.7TCF; when offset by that year’s production ofabout 1.6 TCF, the net-reserve addition was 1.1TCF, essentially balancing the previous year’s net-reserve loss.

A common measure of reserve life is a comparisonof reserve volume to production rate, usuallyexpressed as the R/P ratio. This is the length oftime that proved reserves can sustain the currentproduction rate with no decline. For example, astate with 10 TCF of reserves that is currentlyproducing them at 1 TCF per year has an R/P ratioof 10. Since 1977 for Oklahoma the ratio hasaveraged 7.7 years, ranging from a high of 9.3years in 1983 to a low of 6.6 years in 1993. Based


on the most recent reserve estimate (year-end2000), Oklahoma’s R/P of 8.5 years is above the25-year average. However, we certainly have noreason to become complacent, as the main factorkeeping reserve life stable is the State’s decliningproduction rate. With production always at 100%of capacity, gas rates have slid from 1.9-2.3 TCFper year in the 1980s to 1.6-1.8 TCF per year since1995.

Gas, unlike oil, has had no discernible long-termdecline in annual estimates of the State’s reserves.Although Oklahoma’s production rate is clearlydeclining in the long term, two years of increasedprices and attendant higher drilling activity have,at least temporarily, slowed the decline. How longcurrent production rates can be maintained isimpossible to determine, but if prices stay high,drilling should increase, and the inevitable long-term decline in production should be reduced.Price reductions do not usually cause gas wells tobe shut-in, but they do slow the rate at which newwells are drilled. Because a new well typically hasa steep initial production decline, less drillinginvariably leads to lower gas deliverability. Theresulting reduction in supply then pushes priceshigher, usually dramatically so.

In 2001, Oklahoma’s annual gas production ofwas about two thirds of the peak rate in 1990.However, because the gas price in 2001 was morethan two and a half times that in 1990, its grossvalue of $6.5 billion far exceeded 1990’s $3.5billion. Even adjusted for inflation, 1990’s recordgas production was worth $1.9 billion less than2001’s production. This illustrates how the annualvalue of gas to the State of Oklahoma depends farmore on its average price than on how much isproduced. Much of the fall in State revenue for2002 (relative to 2001) can be directly attributed tolower gas prices and proportionately lower taxrevenues. The price of oil and gas, especially gas,is critical to Oklahoma’s economic future.

The Future

The continued vitality of Oklahoma’s natural gasindustry relative to oil is due to many factors. Theinitial large-scale exploration of gas occurred morerecently than for oil, so proportionately more gas isleft. From a regional perspective the State hasmore gas-than oil-prone areas, and many areaswhere drilling is sparse also tend to be stronglyfavorable for gas. In addition, gas can exist atmuch greater depths and flow through less-permeable rock, so that even where drilling isdense there are large areas in which deeperreservoirs are incompletely evaluated. At shallowdepths in the eastern part of the State are manyproductive coal seams that have been penetrated bythousands of wells with deeper objectives.Although once ignored, the coal has now addedimportant reserves and production to our natural-gas mix.

The primary factor affecting the health ofOklahoma’s natural gas industry will always beprice. Although we have little control over thevalue of gas, we can influence how much weproduce. The most direct way to increase gasproduction is to discover large, long-lived fields.As history has shown repeatedly, in the earlystages of exploration in a hydrocarbon-rich statelike Oklahoma new discoveries are not difficult.Then, as more wells are drilled, large discoveriesbecome less frequent. But even now the industry isnot so mature that large gas reserves cannot beadded.

In some parts of the State, both productive andunproductive, reservoirs with gas potential remainunderexposed or underdeveloped. Due to theirgeologic complexity and corresponding high risk,they may be largely untested. Or they may requireonly proper techniques of drilling, completion, orproduction to become viable. Although the State’sgas production and reserves are declining, both


conventional and non-conventional additionscontinue to be made. The Potato Hills Field is anexample of a large, conventional accumulation,recently identified. Coalbed-methane recovery is anon-conventional play that is adding importantreserves.

So new reserves continue to be added. However,generally low production rates for individual wellsand steep declines mean that high levels of drillingactivity are necessary to sustain Oklahoma’s gasproduction. When drilling declines, reserves andproduction rates drop, as they did after 1990. In2001 the EIA estimated proved reserves for theentire Mid-continent at 58 TCF. Perhaps moreimportant, the agency also estimated andtechnically recoverable gas resources (bothconventional and non-conventional) in the sameregion at 250 TCF. Although not all of this can beassigned to Oklahoma, the estimate does suggestthat our area has at least four times as muchundiscovered, recoverable gas as proved reserves.

These facts are encouraging, but as with any othercommodity the primary driving force in theOklahoma gas industry is economics.

Any forecast presupposes that the industry will notbe hurt by a price reduction that suppresses drillingfor an extended period of time. Increases indemand show no sign of abating, and national andState production, even when drilling activity ishigh, struggles to stay flat. Even if we disregardwarm winters, global warming, and fluctuations ingas storage volumes, a large long-term price dropseems unlikely. Although such an occurrence coulddevastate the gas industry, as well as the State’soverall budget, the resource must be producedeventually.

Gas is environmentally friendly, relativelyabundant, and its infrastructure can supportsubstantial growth in the market. Oklahoma’slocation, geology, resource estimates, pipelinesystem, and the energy industry’s strong history, allensure that gas will be a key component of theState’s economic future will into the 21st century.

Acknowledgments

Charles Mankin, Robert Northcutt, Neil Suneson, and Brian Cardottread the manuscript and provided valuable input. Max Tilford (ofTilford Pinson Exploration LLC) carried out the formal review andmade many useful suggestions. Wendell Cochran did the technicalediting. Data used came primarily from the Oklahoma CorporationCommission, the Energy Information Administration of the U.S.Department of Energy, and the International Oil Scouts Association.

References Cited

Beebe, B.W., 1962, Problems in exploration of natural gas: TulsaGeological Society Digest, v. 30, p. 138-145.

Boyd, D. T., 2002a, Oklahoma oil: past, present, and future:Oklahoma Geology Notes, v. 62, p. 97-106.

______ 2002b, Map of Oklahoma oil and gas fields-distinguished byG.O.R. and conventional gas vs. coalbed methane: OklahomaGeological Survey Geological Map 36, scale 1:500,000.

______ (in press), Map of Oklahoma oil and gas production andinfrastructure, in Johnson, K.S.; and others, Earth sciences andmineral resources of Oklahoma: Oklahoma Geological SurveyEducational Publication 9.Cardott, B.J., 2002, Coalbed methane activity in Oklahoma, 2002update, in Fourth Annual Coalbed Methane Workshop: OklahomaGeological Survey Open-File Report 9-2002, p. 56-82.

Claxton, Larry (ed.), 2001, Oil and gas information: OklahomaCorporation Commission, Web site:http://www.occ.state.ok.us/text_files/o&gfiles.htm

Hansen, W.R. (ed.), 1991, Suggestions to authors of the reports of theUnited States Geological Survey (7th edition): U.S. GovernmentPrinting Office, Washington, D.C., p. 59.

Harland, W.B., Armstrong, R.L.; Cox, A.V.; Craig, L.E.; Smith, A. G.;and Smith, D. G., 1990, A geologic time scale: Cambridge UniversityPress, Cambridge, England, 263 p.

Hinton, David (ed.), 2001, Petroleum profile: Oklahoma: U.S.Department of Energy, Energy Information Administration, Web site:http://tonto.eia.doe.gov/oog/info/state/ok.htm

Koontz, Terry, 1962, History of natural gas in Oklahoma: TulsaGeological Society Digest, v.30, p.116-120.

Lay, Marilyn (ed.), 2001, Annual review of oil and gas production byfields in the United States and Canada: International Oil ScoutsAssociation, v.70, p.173-221.

Moore, L.E., 1962, Natural gas in Oklahoma: Tulsa GeologicalSociety Digest, v.30, p.116-120.

Northcutt, R.A.; and Campbell, J.A., 1995, Geologic provinces ofOklahoma: Oklahoma Geological Survey Open-File Report 5-95,scale 1:750,000.

Witt, W.J.; and others, 1971, Cross-section of Oklahoma from SW toNE corner of State: Oklahoma Geological Society, StratigraphicCommittee.

U.S. Geological Survey, 1995, National assessment of United Statesoil and gas resources-results, methodology, and supporting data:U.S. Geological Survey Digital Data Series DDS-30.


Our Energy Industry

The Changing Role of Oil & GasMark C. Snead, Research Economist, College of Business Administration, Oklahoma State University

IntroductionThe historical dependence of the state economyupon the oil and gas industry cannot be overstated.Towns such as Tulsa, Cushing, Ponca City,Bartlesville, Enid, and others, owe much of theirheritage and current economic clout to the boom ofthe oil and gas industry in the twentieth century.

Just how important was the oil patch to stateprosperity in its heyday? In a word, vital. From1975 to the height of the boom in 1982, oil and gascompanies operating in Oklahoma increased theirpayrolls from about 40,000 to nearly 120,000employees while riding the wave of high prices inthe energy complex. In 1982, 1 in 12 state workerswere employed in the oil patch. (Figure 1documents employment trends in the industrysince 1939.)

The unusual profitability of the oil and gascompanies not only allowed them to pay wellabove state average wages, but also provided thewherewithal to fund an enormous number of citydevelopment and philanthropic activities. Thesecompanies, along with their well-paid employees,were the financial engines behind the expansion ofmany Oklahoma cities.

The state’s economic health also compared muchmore favorably with the nation during this period.After lagging the nation for decades in per capitapersonal income, the state jumped from a mere85% of the national average to near parity with thenation in relative per capita income in 1982.

Figure 2 highlights this remarkable reversal thatwas due in large part to the unusually good healthof the oil and gas sector.

Current TrendsUnfortunately the boom is over in Oklahoma,leaving the oil bust of the 1980s as arguably thedefining economic event in Oklahoma the past 50years. Oil production within the state has declinedsteadily to less than 40% of 1986 levels, withnatural gas faring better but now producing only65% of 1990 levels. Figure 3 documents the steadydecline in both gas and oil production within thestate’s borders.

The trend in employment, however, is much moretroubling than the production numbers. Only25,000 oil and gas workers remain in the state, orapproximately 20% of the peak hiring levelreached in 1982. More than 90,000 workers have

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Figure 2


been forced out of the industry less than 20 years,leaving only 1 in 60 state workers in oil and gasrelated jobs today.

In the Tulsa metro area alone, long known as the‘Oil Capital of the World’, oil and gas-relatedwage and salary workers now number less than7,000, down from a peak of nearly 29,000 in 1982.The percentage of total Tulsa area workersemployed in the oil and gas sector has droppedfrom approximately 10% of the workforce in 1982to only 1.7% forecasted for 2001. Several smallerOklahoma cities including Bartlesville, Enid, andPonca City continue to struggle against the declineof large oil patch-related paychecks.

Possibly most troubling is the decline inOklahoma’s per capita income relative to thenation since 1982. Not only has the state givenback all of the gains enjoyed in the boom,but has fallen below the pre-boom level to only80% of U.S. per capita income.

ForecastsWhere is the industry headed from here? In ourmost recent forecast in the Oklahoma EconomicOutlook, we project that the industry will benefittemporarily from the recent rise in oil and gasprices and remain mostly steady in 2001, but likelyhas not yet reached a long run bottom. Figure 3highlights the downward trend we see forproduction in the industry through 2004. Annual

oil production is forecasted to fall below 55million barrels, and annual gas production below1,530 billion CF, by 2004. The employmentforecast in Figure 4 shows a similar pattern. Weproject a -2.4% decline in oil and gas related wageand salary employment for all of 2000, a modestdecline of -0.4% in 2001, and then declines of -3.0% in 2002 and -3.8% in 2003.

The relatively stable employment forecast for 2001reflects the expected stimulus to the state economyfrom the spike in both oil and gas pricesexperienced in 1999 and 2000 (see Figure 5).Prices are expected to moderate through 2004 fromthe peak levels posted this year, but should remainabove 10-year average levels. These forecasts areprovided by The Standard & Poor’s DRI Divisionof the McGraw-Hill Companies (Lexington, MA)and are used as inputs to the Oklahoma StateEconometric Model.

The projected continued downturn in the oil andgas sector will likely contribute to a further declinein the state’s per capita income relative to thenation. Our forecast calls for Oklahoma per capitaincome to fall to 77% of the national average by2004. The loss of jobs at the high end of the wagescale will inevitably pull down the state average.

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SummaryIt has been a long, bumpy road to recovery fromthe collapse of the state energy sector, and ourrecent forecast suggests more contraction ahead.The industry should hold its ground in 2001,but look for continued weakness in production andhiring as energy prices moderate once again. Theoil and gas industry, nevertheless, will remain animportant component of the Oklahoma economy.

The sector pays the highest average wages amongall major industries in the state and will continue to

play an important, though diminishing, role acrossthe state. The industry also is not likely todisappear altogether in the near future given thatthe state possesses significant refining capacity andvast natural gas reserves. But the excessivewindfall profits enjoyed during past energy pricespikes will instead produce merely a modesttemporary bonus to the state.

At least there is a silver lining in this story. Wenow have a much less oil and gas-dependentOklahoma that is more representative of thenational economy. No longer will the excessivevolatility of the energy sector transmit suchtremendous shocks through the state economy. Ithas been a gut-wrenching two decades in reachingthis point, but that is the price of having a morediversified, insulated, and stable Oklahomaeconomy in the long run.

Mark C. Snead, Research EconomistBusiness and Economic ResearchCollege of Business AdministrationOklahoma State University(405) [email protected] 2000The article is available online at http://economy.okstate.edu

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Our Energy Industry

State Policy and Energy ProducersThomas S. Price Jr., Senior Vice President , Investor and Government Relations, Chesapeake Energy

INTRODUCTIONNot since the drilling boom of the late 1970’s andearly 1980’s – when high oil and gas pricescoincided with readily accessible credit to attractmassive capital inflows to the state – hasOklahoma had such an exceptional opportunity tocapitalize on its vast natural gas reserves. Withenormous levels of untapped deep natural gasdeposits, available public and private capitalsources, and a supportive legislative and regulatoryenvironment, Oklahoma’s natural gas industry hasthe potential to continue as the state’s premiereconomic catalyst for at least the next decade.

However, without focused action from our stateleaders, Oklahoma’s window of opportunity willrapidly close. As justified public concerns aboutthe shortage of natural gas continue to rise,massive investments are being considered forextracting stranded Arctic natural gas by pipelineand for the building of new liquefied natural gas(LNG) import terminals. For this reason,Oklahoma’s leaders should prioritize theencouragement of energy investment in our statebefore potential increased supplies of Arctic gas orLNG rise to meet demand, thereby reducing gasprices to levels that make Oklahoma’s deep gasdrilling less attractive and accordingly less prolific.

TRUE MARKET VALUEGas Pricing in the “New Era” of ProductionNatural gas continues to be recognized as a clean,efficient and versatile fuel. At the same time, it isbeing highly valued as a scare resource.Fortunately for Oklahoma’s natural gas producersand state gross production tax receipts, it is nolonger a world of $3.00 natural gas.

Today’s $5.00 gas price illustrates the growingdisparity between natural gas supply and demand.It is the combined result of a continued rise in U.S.reservoir depletion rates, the degradation of

Town Hall IntroductionOur Town Hall will focus upon three key themesconcerning energy resources: (1) maximizingexisting energy resource production (2) marketingour collective energy knowledge to the world and(3) consider the potential of alternative energysources.

Regardless of future wind, hydrogen, solar andother applications ... it is clear that the existing oiland gas extraction industries are the current andnear-term bedrock energy industries in Oklahoma.Their activities will provide the jobs and publicrevenue needed as a base to propel Oklahomaforward.

We are seeing a slow out-migration of oil and gascompanies. Consider the Phillips-Conoco mergerand the consideration of Citgo to move to Houston.

We thought it important to know the thinking andperspective of a leading energy producer inOklahoma who is solidly committed to our stateeven though they could locate anywhere. Wesought to know what opportunities they see in thefuture and why they believe Oklahoma is a goodplace to do energy business.

Chesapeake was selected because of the size oftheir Oklahoma-based business portfolio in bothgas and oil. They are the leading producer ofOklahoma natural gas and rank in the top 10 in oilproduction.


Producer MCF1 Chesapeake Energy Corporation 89,157,9112 Apache Corporation 85,766,8653 Marathon Oil Company 64,725,3674 Amoco Production Company 54,332,8505 Vastar Resources Inc 54,183,8726 Kaiser-Francis Oil Company 53,558,5787 Burlington Resources Oil & Gas Company 47,822,4488 Samson Resources Company 47,222,5229 Dreyfus, Louis Natural Gas Corporation 35,088,13210 Sonat Exploration Company 34,492,731

11 Sanguine Ltd 32,899,14912 GHK Company (The) 27,054,71013 Texaco Exploration and Production Inc. 24,776,52414 Oxley Petroleum Company 23,622,15115 Questar Exploration & Production Inc 22,338,44616 Helmerich & Payne Inc 21,847,98517 Enron Oil & Gas Company 21,572,52418 Ocean Energy Inc 21,432,09319 Anadarko Petroleum Corporation 21,173,37420 Phillips Petroleum Company 19,491,477

21 Cross Timbers Operating Company 19,008,24222 Chevron USA Inc 17,217,23023 St Mary Operation Company 16,703,46324 Crawley Petroleum Corporation 14,397,06225 OneokResources Company 13,999,10126 Unit Petroleum Company 13,656,42627 Kerr McGee Oil & Gas Onshore LLC 13,171,13128 Mobil Oil Corporation 12,974,20529 New Dominion LLC Corporation 12,184,46730 Ricks Exploration Company 11,909,765

31 OXY USA Inc 11,167,77632 XTO Energy Inc 11,163,96433 Ward Petroleum Corporation 10,098,93534 Exxon Company USA 10,065,18335 JMA Energy 9,998,63336 Gungoll Carl E Exploration Inc 9,925,86637 Newfield Exploration Mid-Continent Inc 9,247,70238 Chaparral Energy Inc 9,124,17439 Cabot Oil & Gas Corporation 8,997,66440 Conoco Inc 8,364,112

2001Leading Gas Producers in OklahomaOklahoma Corporation Commission 2001 Annual Report

domestic drilling prospects, the increase inindustry finding and development costs, thereduced capital allocation to U.S.-focused drillingprospects and most importantly, the voraciousappetite of industrial fuel users at sub-$5.00 gas.These simultaneous factors are helping keep clean-burning natural gas valued at a premium to itsBTU energy equivalent value.

In the 1990s, natural gas prices at the wellheadaveraged $2.19 per mcf, only 1/8th of average oilprices ($18.10 per barrel) during the same period.On an energy equivalent basis, natural gas shouldbe valued at approximately 1/6th the price of oil, ifit is priced equal to its per-unit energy production.This is the case today, with the forward 12 monthnatural gas “strip” (i.e., the average of the next 12months natural gas prices) selling over $5.00, justover the 6:1 ratio, with the oil “strip” selling at $29per barrel.

The change in this ratio has a significant effect onOklahoma. If the Btu equivalent pricingrelationship in existence today had held true duringthe 1990s, Oklahoma producers would havereceived and paid taxes on gas averaging $3.02 permcf. This is $0.83 in excess of the amountactually received. Considering the 18.7 billioncubic feet (bcf) produced in Oklahoma during the1990s, this ten-year “mis-pricing” of Oklahoma’snatural gas cost the state $1.118 billion in lostgross production tax receipts.

During the first three fiscal years of this new erafor natural gas pricing (2001, 2002 and 2003),wellhead natural gas prices averaged $3.52 permcf. Over the same period, Oklahoma grossproduction tax (GPT) receipts from natural gasproduction averaged $419 million per yearcompared to $232 million per year during the priorsix years (1995-2000). This extra $187 million peryear was important to the state, but these highprices proved even more significant in fiscal 2003.Actual 2003 GPT collections for natural gassurpassed estimates by 32%, contributing a total of$426 million during a year with a state budgetshortfall from other revenue sources of $539million!


Producer Barrels1 Coho Oil & Gas Inc 2,342,9852 Kerr McGee Oil & Gas Onshore LLC 2,110,6113 Texaco Exploration & Production Inc 1,677,2134 Anadarko Petroleum Corporation 1,662,6415 Marathon Oil Company 1,651,4166 Mobil Oil Corporation 1,476,6127 Dreyfus, Louis Natural Gas Corporation 1,357,7288 New Dominion LLC 1,342,8089 Chesapeake Energy Corporation 1,317,78310 Citation Oil & Gas Corporation 1,228,339

11 Belco Operating Corporation 1,087,71512 Calumet Oil Company 923,90713 Altex Resources Inc 836,90014 Samedan Oil Corporation 766,12615 Enron Oil & Gas Company 707,85316 Mack Energy Inc 656,98517 Centana Energy Corporation 650,38118 Hyperion Energy LP 606,89919 Exxon Company USA 600,79720 Henry Corporation of Oklahoma 567,637

21 Ensign Operating Company 552,95422 Apache Corporation 530,15123 Jones L.E. Operating Inc 525,50824 Stephens & Johnson Operating Company 525,04925 Marjo Operating Company Inc 522,87126 Lamamco Drilling Company 521,65027 Kaiser-Francis Oil Company 514,17628 Lariat Petroleum Inc 489,24129 Vintage Petroleum Company Inc 464,52430 Continental Resources Inc 463,711

31 Questar Exploration & Productiong Inc 427,03232 Maynard Oil Company 419,13133 Cross Timbers Operating Company 406,35534 Samson Resources Company 391,92035 Ward Petroleum Corporation 390,18236 Crawley Petroleum Corporation 376,51437 Prime Operating Company 356,73238 Berexco Inc 354,95939 Harmon C.E. Oil Inc. 332,50840 Chaparral Energy Inc 329,150

2001Leading Oil Producers in Oklahoma

Oklahoma Corporation Commission 2001 Annual Report

Oklahoma’s July 2003 tax collections clearlydemonstrate not only the increased contributionhigher gas prices are making to the state but theneed to encourage even more energy industrycapital investment. Total July state tax collectionswere $343.2 million, $40.5 million of which camefrom GPT collections or 12% of state tax receipts.These GPT receipts were up $19.3 million fromthe prior year and were $14.6 million or 56.4%higher than the state’s estimate.

THERE’S MORE TO COMEOklahoma’s Vast Remaining Gas ReservesLots of natural gas still exists in the Oklahoma.This is good news for Oklahoma, its economy andits near-term budget needs. Not only is there anestimated 13.6 trillion cubic feet (tcf) of remainingproven reserves to be produced, but the PotentialGas Agency, an industry study group associatedwith the Colorado School of Mines, reports “mostlikely, probable and possible” Oklahoma reservestotal an additional 62.7 tcf, an amount over 4 timesthe size of currently booked reserves. If only halfof these projected gas reserves are discovered andsold at $4 per thousand cubic feet (mcf), stategross production tax receipts would grow by anadditional $9 billion!

While the future looks promising for Oklahoma’senergy industry, the state has few alternativeeconomic drivers in other industry segments. Theproblem is further exacerbated by the exodus ofsuch high-profile public companies as PhillipsPetroleum, Parker Drilling, and Noble Affiliates.Today, Oklahoma is home to less than one-tenth ofone percent of the headquarters of the nation’spublic companies (109/13,903), with energy-related companies comprising approximately 40%(42/109) of this total.

Unquestionably, Oklahoma must broaden itseconomic base beyond the energy industry.However, we are fortunate to have the opportunityover the next ten years to use a very strong energysector as a bridge to future economic development.


COUNTY Producing Non-Prod Total % ProdTEXAS 2,588 1,305 3,893 66%BEAVER 2,488 2,456 4,944 50%MAJOR 2,330 2,186 4,516 52%KINGFISHER 1,979 2,757 4,736 42%PITTSBURG 1,713 478 2,191 78%GRADY 1,678 1,528 3,206 52%CANADIAN 1,637 1,398 3,035 54%GARVIN 1,632 2,990 4,622 35%STEPHENS 1,605 2,403 4,008 40%CREEK 1,500 4,351 5,851 26%GARFIELD 1,489 2,455 3,944 38%ROGER MILLS 1,330 429 1,759 76%CARTER 1,317 2,116 3,433 38%OSAGE 1,150 1,821 2,971 39%CADDO 1,089 1,306 2,395 45%BLAINE 1,041 924 1,965 53%LATIMER 1,038 290 1,328 78%CUSTER 1,037 376 1,413 73%SEMINOLE 1,018 3,864 4,882 21%HARPER 1,003 987 1,990 50%HUGHES 958 2,542 3,500 27%HASKELL 933 316 1,249 75%DEWEY 923 1,210 2,133 43%LINCOLN 907 2,648 3,555 26%LOGAN 882 2,361 3,243 27%OKMULGEE 875 3,969 4,844 18%ELLIS 868 772 1,640 53%MCCLAIN 861 1,135 1,996 43%WOODS 861 699 1,560 55%WOODWARD 834 795 1,629 51%OKLAHOMA 786 2,338 3,124 25%LEFLORE 699 318 1,017 69%PONTOTOC 688 2,021 2,709 25%POTTAWATOMIE 688 2,451 3,139 22%NOBLE 638 1,814 2,452 26%PAYNE 595 2,194 2,789 21%WASHINGTON 582 1,215 1,797 32%OKFUSKEE 562 2,546 3,108 18%ALFALFA 541 886 1,427 38%BECKHAM 530 461 991 53%WASHITA 489 253 742 66%GRANT 433 1,103 1,536 28%KAY 421 1,924 2,345 18%NOWATA 417 1,147 1,564 27%PAWNEE 373 1,430 1,803 21%TULSA 369 1,777 2,146 17%MCINTOSH 353 396 749 47%CLEVELAND 294 765 1,059 28%LOVE 282 449 731 39%COAL 203 249 452 45%MUSKOGEE 199 929 1,128 18%MARSHALL 192 155 347 55%COMANCHE 182 459 641 28%CIMARRON 168 441 609 28%SEQUOYAH 154 73 227 68%ROGERS 146 704 850 17%COTTON 115 401 516 22%JEFFERSON 87 336 423 21%KIOWA 85 326 411 21%WAGONER 62 960 1,022 6%GREER 58 167 225 26%MURRAY 44 148 192 23%JACKSON 43 79 122 35%BRYAN 39 60 99 39%ATOKA 30 24 54 56%TILLMAN 24 142 166 14%PUSHMATAHA 18 6 24 75%MAYES 10 48 58 17%CRAIG 9 73 82 11%HARMON 3 11 14 21%JOHNSTON 3 5 8 38%ADAIR 0 0 0 0%CHEROKEE 0 0 0 0%CHOCTAW 0 0 0 0%DELAWARE 0 0 0 0%MCCURTAIN 0 5 5 0%OTTAWA 0 0 0 0%TOTAL 51,178 84,156 135,334 38%

2001Oil & Gas Leases by County


It is important to remember Oklahoma is the thirdleading natural gas producer in the U.S., with anestimated 1.5 tcf produced in the state during 2002.This represents approximately 8% of total U.S.consumption. According to a recent study by MarkSnead (see preceding section, page 41), in 2000there were more than 2,100 firms engaged in oil &gas production and drilling in Oklahoma. Thesefirms employed an estimated 58,000 people. Ofthat total, 27,300 (47%) were employed in theexploration and production segment. According tothe 2000 Bureau of Labor statistics, these are someof Oklahoma’s best and highest paying jobs. Theincomes averaged $53,151 per year, almost doublethe $27,000 average for all Oklahoma industries.

Given our state’s large remaining natural gasreserves – and gas prices that are more than doublethose of the 1990’s – Oklahoma should beattracting drilling dollars in large quantities. Yetfew public companies have chosen to focus theirefforts in our state. U.S. drilling has been de-emphasized by the major oil companies, and evenmost of the larger independents find offshore andforeign drilling more profitable. This has leftrelatively few companies with the required capitalto successfully exploit Oklahoma’s plentifuldrilling opportunities.CHESAPEAKE ENERGYTapping Oklahoma’s Exploration OpportunitiesOne company that has recognized the advantagesof drilling in Oklahoma is Chesapeake EnergyCorporation. Headquartered in Oklahoma City,Chesapeake was incorporated in 1989 with nooperated wells, zero oil and gas reserves, less than$50,000 in total invested capital and only 10employees. Today, Chesapeake employsapproximately 1,100 people and is the nation’sbusiest driller with 44 active rigs. The company isthe fifth largest natural gas producer in the U.S.and now operates 5,650 wells – 4,400 inOklahoma. Chesapeake also has estimated naturalgas equivalent reserves of 2.9 trillion cubic feet ofnatural gas and has an enterprise value ofapproximately $4.6 billion.


COUNTY Oil Gas TotalMAJOR 561 655 1,216CARTER 971 92 1,063STEPHENS 813 198 1,011GARVIN 827 180 1,007CREEK 746 110 856GRADY 313 477 790BEAVER 128 581 709KINGFISHER 433 170 603SEMINOLE 508 67 575OKLAHOMA 444 120 564ROGER MILLS 57 498 555CADDO 297 217 514CANADIAN 155 320 475PITTSBURG 0 464 464LATIMER 0 432 432OKMULGEE 308 114 422NOWATA 355 52 407PONTOTOC 383 19 402PAYNE 360 32 392HUGHES 147 229 376BLAINE 118 257 375WOODS 151 222 373GARFIELD 253 115 368LINCOLN 280 86 366MCCLAIN 283 79 362OKFUSKEE 285 75 360POTTAWATOMIE 339 11 350WASHINGTON 254 85 339CUSTER 20 318 338NOBLE 282 53 335HARPER 43 278 321KAY 255 58 313TEXAS 111 189 300LOGAN 212 73 285DEWEY 106 162 268PAWNEE 239 7 246TULSA 190 51 241WOODWARD 32 205 237ELLIS 56 141 197BECKHAM 43 151 194LEFLORE 0 192 192WASHITA 7 173 180GRANT 139 34 173ALFALFA 128 45 173HASKELL 1 164 165COMANCHE 95 49 144ROGERS 119 16 135CLEVELAND 126 6 132WAGONER 88 30 118MARSHALL 85 31 116MUSKOGEE 55 34 89COAL 18 58 76MCINTOSH 2 71 73MURRAY 63 3 66LOVE 53 7 60COTTON 51 5 56CIMARRON 23 27 50JEFFERSON 48 1 49TILLMAN 48 0 48OSAGE 41 5 46KIOWA 35 3 38SEQUOYAH 0 29 29MAYES 20 0 20BRYAN 13 7 20GREER 9 5 14JACKSON 13 0 13ATOKA 3 7 10CRAIG 6 2 8HARMON 4 0 4PUSHMATAHA 0 2 2ADAIR 0 0 0CHEROKEE 0 0 0CHOCTAW 0 0 0DELAWARE 0 0 0JOHNSTON 0 0 0MCCURTAIN 0 0 0OTTAWA 0 0 0TOTAL 12,651 8,649 21,300

2001Active Oil & Gas Wells by County


Chesapeake has become Oklahoma’s dominantnatural gas producer and explorer, currentlyaccounting for 14% of the total natural gasproduced and 28% of the drilling being conductedin the state. Thirty-seven of the 130 active rigsdrilling in Oklahoma are on Chesapeake operatedleases. In fact, Chesapeake’s total Oklahomadrilling activity exceeds that of the next eight mostactive operators in the state combined. InOklahoma alone, Chesapeake employees 900people directly and 2,775 people indirectly throughits drilling activities.

Chesapeake’s ability to access the nation’s capitalmarkets to import much-needed financial resourceshas been a tremendous benefit to the state. Sincethe company’s initial public offering in 1993,Chesapeake has raised $4.2 billion in public debtand equity offerings. The majority of this capital,along with the company’s internally generated cashflow, has been invested in Oklahoma.

Approximately $2 billion has been invested in 3-Dseismic, Oklahoma leasehold acquisition and thedrilling of 1,140 Chesapeake operated wells. Inaddition, Chesapeake has invested approximately$3 billion in acquiring smaller undercapitalizedcompanies and under-exploited producing oil andgas properties in the state.

REDEFINING AN INDUSTRYChesapeake’s Competitive Advantages

Chesapeake’s principal competitive advantage isits scale. It is the largest producer in the Mid-Continent, which is the third largest gas supplyregion in the country. Through the 4,400 wells itoperates, the 37 company-operated drilling rigsand the additional 5,100 wells the companyparticipates as a non-operator, Chesapeake hasbuilt an unparalleled geological database and fieldoperations base. This gives Chesapeake what itbelieves to be the lowest unit operating expensesand highest cash margins of any operator in thestate.

Another competitive advantage Chesapeakepossesses in Oklahoma is its deep drilling


capability. Although everyone from the coffeeshop crowd to Federal Reserve Chairman AlanGreenspan is talking about the declining naturalgas supply these days, few energy companies aredoing anything about it. Chesapeake is asignificant exception! On average, the companydrills the deepest wells in the United States, and iscurrently drilling 16 wells in Oklahoma deeperthan 15,000 feet. This represents 50% of all deepdrilling occurring in the state.

An additional competitive advantage isChesapeake’s commodity price risk managementprogram. During the past two years the company’shedging efforts have increased the company’sprofitability by over $200 million. Because of itspremium cash flow generation, the company hasconsistently kept its Oklahoma rig count at levelsapproximately four to five times greater than itsnearest competitors.

Equally important to Chesapeake’s success is itsfamiliarity with Oklahoma’s operating andregulatory environment. The company’s 20-plusyears of experience in Oklahoma – a state withrelatively small surface tract ownership(historically 640 land allotments), minimalfederally-owned land, multiple “severed” mineralowners, and a unique “force pooling” regulatoryenvironment – offers a significant advantage overthose competitors with less experience in thisenvironment.

Finally, Chesapeake has built a businessenvironment and company culture that attracts thebest and brightest geologists, geophysicists,engineers, landmen, accountants and supportprofessionals in the industry. The company’ssubstantial investment in building the premierwork environment in Oklahoma has enabled it toattract hundreds of professionals from surroundingand competing states. Furthermore, Chesapeake’scommitment to community involvement has builtan unequaled esprit-de-corps and a great sense ofpride among the company’s 1,100 employees.

PREDICTING THE FUTUREThe Long-Term OutlookFor Oklahoma’s Energy ExplorationToday’s high natural gas prices reflect thedifficulty of finding new supplies of natural gas inthe United States. Despite a 30% increase in thetotal number of active U.S. drilling rigs year-over-year, publicly owned U.S. energy producersreported an approximate 1-2% decrease indomestic production in the second quarter of 2003.In fact, domestic U.S. gas supplies have declinedthe last eight consecutive quarters.

At the same time, Oklahoma’s estimated 14 tcf ofproven reserves, and 60 tcf of probable andpossible reserves, make it one of the largestpotential gas supply basins remaining in the U.S.The state’s two major basins, the Arkoma andAnadarko, are projected to hold over 90% ofOklahoma’s deep hydrocarbon accumulations.However, the technical and financial challengesassociated with profitably extricating these deeperdeposits are many, including poor quality seismicresolution of deep reservoirs and traps; higherformation pressures and temperatures that makedrilling costs substantially higher; and the highprobability of encountering significant impuritiesin the gas which reduce overall wellhead pricerealizations.

For these reasons, few of Chesapeake’s U.S.competitors have focused their drilling budgets onexploration of Oklahoma’s remaininghydrocarbons. While Chesapeake has 84% of itsrigs currently drilling in Oklahoma, the rest of thenation’s 25 most active operators, together, haveonly a total of 37 active rigs in the state, a modest9% of their total U.S. rig count.

What can be done to create a more attractiveinvestment environment in Oklahoma? Asignificant number of measures are already inplace. The Oklahoma legislature has created asfavorable and hospitable drilling environment asanywhere in the nation. It has recently supportedlegislation providing ultra-deep (over 15,000 feet)drilling incentives, and has included energy jobsunder the state’s “Quality Jobs” classification.


Population Estab Employees Payroll Prod Wkrs Val Added IndexUnited States...........281,421,906............... 25,000...........509,006............$20,798............389,232..........$133,636............18.09

Wyoming ........................493,782.................... 669.............15,436...................723..............12,367................5,395..........312.61Alaska ............................626,932.................... 141.............10,137...................672................7,585................9,565..........161.69West Virginia...............1,808,344.................... 766.............23,927................1,042..............20,450................4,161..........132.31Louisiana....................4,468,976................. 1,608.............52,816................2,302..............38,255..............21,889..........118.18New Mexico ................1,819,046.................... 606.............14,600...................574.............. 11,520................5,336............80.26

OKLAHOMA .............3,450,654................. 2,271.............25,976...................967..............16,957................5,509............75.28

Nevada........................1,998,257.................... 250.............14,035...................626..............12,451................1,959............70.24North Dakota.................642,200.................... 227...............4,098...................176................3,361................1,017............63.81Montana.........................902,195.................... 294...............5,328...................216................3,864................1,047............59.06Kentucky .....................4,041,769.................... 691.............22,400...................832..............19,413................3,297............55.42Texas .........................20,851,820................. 6,412...........105,492................4,334..............73,686..............32,485............50.59Utah............................2,233,169.................... 316...............8,134...................335................6,593................1,875............36.42Kansas ........................2,688,418................. 1,026...............7,998...................245................5,993................2,178............29.75Colorado.....................4,301,261.................... 885.............12,263...................522................7,881................2,872............28.51Arizona .......................5,130,632.................... 206.............12,889...................510..............10,699................2,171............25.12South Dakota .................754,844...................... 67...............1,837.....................67................1,635...................166............24.34Idaho...........................1,293,953.................... 118...............3,021................... 118................2,418...................291............23.35Alabama......................4,447,100.................... 291...............9,066...................371................7,421................1,775............20.39Virginia .......................7,078,515.................... 417..............11,711...................429................9,860................1,449............16.54Minnesota ...................4,919,479.................... 145...............7,154...................348................6,071...................954............14.54Mississippi ..................2,844,658.................... 368...............4,096................... 115................3,100...................531............14.40Pennsylvania ............12,281,054.................... 914.............17,522...................677..............14,262................ 2,411............14.27Arkansas .....................2,673,400.................... 307...............3,250.....................98................2,602...................704............12.16Vermont..........................608,827...................... 52..................658.....................22...................538.....................72............10.81Ohio.......................... 11,353,140.................... 828............. 11,997...................454................8,961................1,746............10.57Indiana........................6,080,485.................... 347...............6,007...................241................5,013...................795..............9.88Illinois.......................12,419,293.................... 650.............10,798...................437................8,557................1,381..............8.69Missouri...................... 5,595,211.................... 306...............4,561...................146................3,645...................503..............8.15Tennessee....................5,689,283.................... 221...............4,473...................137................3,614...................479..............7.86Georgia.......................8,186,453.................... 205...............6,354...................233................4,984................1,024..............7.76Michigan.....................9,938,444.................... 445...............6,687...................271................5,030................1,182..............6.73California .................33,871,648.................... 910............. 22,110...................945..............16,908................7,497..............6.53Nebraska..................... 1,711,263.................... 150...............1,078.....................31...................858...................104..............6.30Iowa............................2,926,324.................... 177...............1,700.....................55................1,428...................217..............5.81Oregon........................3,421,399.................... 134...............1,739.....................61................1,216...................161..............5.08Washington .................5,894,121.................... 154...............2,890................... 114................2,170...................349..............4.90Wisconsin....................5,363,675.................... 147...............2,304.....................92................1,598...................312..............4.30Florida......................15,982,378.................... 225...............6,688...................249................5,424................1,009..............4.18North Carolina ...........8,049,313.................... 171...............3,231................... 118................2,644...................533..............4.01South Carolina............4,012,012...................... 74...............1,388.....................44................1,099...................166..............3.46Maryland ....................5,296,486...................... 93...............1,771.....................64................1,429...................257..............3.34New Hampshire ..........1,235,786...................... 32..................396.....................18...................293.....................44..............3.20New Jersey..................8,414,350...................... 95...............1,864.....................84................1,350...................243..............2.22New York...................18,976,457.................... 359...............3,879...................142................2,819...................474..............2.04Connecticut.................3,405,565...................... 62..................626.....................27...................467...................105..............1.84Massachusetts.............6,349,097...................... 72...............1,063.....................42...................704................... 110..............1.67Delaware .......................783,600...................... 11..................107.......................4.....................90.....................15..............1.37Rhode Island...............1,048,319...................... 16..................120.......................5.....................82.....................13..............1.14Hawaii ........................ 1,211,537........................ 7..................120.......................6...................100.....................22..............0.99Maine..........................1,274,923...................... 21....................76.......................1.....................50.......................4..............0.60Offshore .............................................................. 41............. 11,135...................455................9,717................5,782....... #DIV/0!

No.865.Mining Summary by State:1997[The mining sector comprises establishments that extract naturally occurring mineral solids, such as coal and ores; liquid mineralsand gases, such as natural gas. The term mining is used in the broad sense to include quarrying, well operations, beneficiating(e.g., crushing, screening, washing, and flotation), and other preparation customarily performed at the mine site, or as a part ofmining activity] 1 For pay period including March 12. 2 Covers production, development, and exploration workers. For pay period includingMarch 12. 2 District of Columbia is included with Delaware. 3 Not associated with a state. Source: U.S. Census Bureau, 1997 Economic Census,Mining, Series EC97N21S-GS, issued April 2001. Index provides relative scale of employees in population working in the mining industry.

Energy Employment

The Mining Sector by State: 1997U.S. Census Bureau, 1997 Economic Census


The Oklahoma Corporation Commission (OCC) isthe regulatory body charged with preventing wasteof the state’s natural resources and assuringmaximum recovery of oil and gas reserves. It isalso comprised of knowledgeable energy industryexperts whose prompt adjudication of industrydisputes facilitates the drilling of wells across thestate. The Commission recently reduced the Oiland Gas Division’s budget by 7%. This resulted instaff reductions. It is imperative that thesepositions be restored in order to maintain anaggressive drilling program in the state.

The principal remaining issues are environmentaland legal. In the environmental arena the issues ofregulatory issues and permitting burdens dominate.Concerned Oklahoma natural gas producers andothers across the country are well aware of theneed to be attentive to environmental issues, suchas preserving clean water and clean air. In fact, thenatural gas we produce emits 99% less sulfurdioxide (SO2), 80% less nitrogen oxide (NOX),100% less mercury, and up to 50% less carbondioxide (CO2) than the largest power generationfuel, coal. Natural gas producers are alsoconcerned about the impact caused to industrialconsumers, their customers and their employees ofrising natural gas costs. In Oklahoma alone,hundreds of jobs have been lost or suspended dueto the rise in natural gas prices during the pastseveral years. Lower income families andindividuals on fixed incomes have also beenadversely impacted. If Oklahoma’s natural gasproducers are going to be responsive to increasingthe drilling for and supply of natural gas, theremust be a reasoned debate on the environmental/energy cost issue.

While our society at-large may be willing to paythe increased energy costs and accept themanufacturing jobs lost to overseas competitorsfrom higher energy input costs, such decisionsshould be made in a reasoned atmosphere with asobjective a discussion of the tradeoffs as politicallypossible.

In Oklahoma specifically, energy producers aredealing with many issues, including limitedscientific study and arbitrary enforcement of analleged “endangered specie” the American BuryingBeetle; a vague and broad definition of the “watersof the U.S.” and an unreasonable attempt toenforce onerous stormwater permitting regulations,in spite of a clear statutory exemption for the oiland gas industry. Each of these issues has causedneedless uncertainty and delay in the prosecutingof drilling operations.

Also of concern in Oklahoma is the need for legalreform. Although not unique to this industry,lawsuits plague oil and gas producers. Inparticular, virtually every major operator in thestate has been named in one or more class actionsuit, primarily involving royalty payment disputes.Most of these cases settle, but few truly benefitanyone but the lawyers and serve only to strainoilfield relations and delay development.

EXTENDING OUR HERITAGEContinuing the Contributions to OklahomaThis “new era” for natural gas pricing should be aboon for Oklahoma’s economy. The natural gasand oil (in that order) exploration and productionindustry can provide an important economic bridgeuntil the state’s economic strength is enhanced andother industries can provide similar high-quality,high-paying opportunities for Oklahoma’s best andbrightest. Until that time, the state’s leaders shouldbe encouraged to review any and all policies,taxes, regulations, and other environmental andlegal obstacles to attracting outside drilling capitalto our state.

Since statehood, the economic contribution,corporate commitment and philanthropy ofOklahoma’s energy producers has created animproved quality of life for all Oklahomans. ManyOklahoma communities owe much of theirheritage to the risk taking, job producing andwealth enriching efforts of Oklahoma’s energyproducers. We at Chesapeake are proud tocontinue that tradition of commitment to the state’scontinued cultural and economic improvement.


Our Energy Industry

Protecting Critical Infrastructure Denise Bode, Chairman, Oklahoma Corporation Commission

Our job at the Corporation Commission is first andforemost to ensure that Americans are better off as aresult of our oversight of the various market playersthat we regulate. My job at the Oklahoma Corpora-tion Commission is an integral part of insuring thatOklahomans are better off because of the breadth ofour regulatory control over everyday life, almost 70percent of the state’s economy is impacted-everytime you turn on your computer, cook a meal, take adrink of water, make a call or fill up your car. Wehave regulatory responsibility for telecommunica-tions, trucking, electric utilities, and the oil and gasindustry, all of which make up Oklahoma’s economicfoundation, and all of which are undergoing signifi-cant change. And to complicate this mission, statecommissions have now, since 9/11, been asked toaddress necessary defensive concerns regarding thecritical infrastructure we regulate. As a result, theCorporation Commission must change as well.

Critical infrastructures are those physical and cyber-based systems essential to the minimuym operationsof the economy and government. They include, butare not limited to, telecommunications, energy (oiland natural gas, electric power), banking and finance,transportation, water systems and emergency ser-vices, both governmental and private. Many of thenation’s critical infrastructures have been seen asseparate systems in the past with little interdepen-dence. However, as a result of the internet and othernew information technology these infrastructureshave becom increasingly automated and interlinked.

These same advances have created new vulnerabili-ties to equipment failures, human error, weather andother natural causes, and physical and cyber attacks.In addition, with greater market competition intraditional monopoly utility services, efficiencies andcost-cutting may impact cost recovery and thuswillingness to upgrade necessary security of ourcritical infrastructure.

As Americans we all need to understand thatsecurity of our infrastructure is a new and perma-nent cost of doing business and plan for it. Icurrently serve both on the board of the NationalHomeland Security Training Center and helpedcoordinate the planning of a response to terrorismon Oklahoma’s infrastructure.

At the national level I serve with other stateregulators on a new Committee for Critical Infra-structure to develop strategies and approaches toassure that appropriate, cost effective, measures aretaken by the industries we regulate to reduce therisk and vulnerabilities to disruption to criticalfacilities.

Issues we are highlighting include how to commu-nicate Homeland Security threats and warning -What type of information is reported to the com-mission and where is that information channeled?We are identifying and working with the U.S.Department of Homeland Security (DHS) andindustry to identify best security practices as aguide for regulators and utilities as they seek torecover prudently incurred costs necessary tofurther safeguard the reliability and security of ourenergy supply and delivery infrastructure.

How critical infrastructure protection informationcan or should be exempt from disclosure underfreedom of information acts is another area ofdiscussion. We are also working with industry,DHS and other colleagues in state government toundertake a comprehensive review and updating ofplans, rules, orders, and programs designed toassess the vulnerability of energy supply anddelivery infrastructures and respond to supplydisruptions when they occur. Again, how wemanage these new responsibilities organizationallyis a new challenge for state commissions.


Maximizing Existing Resources

Energy Research and Development Christine Hansen, Executive Director, Interstate Oil and Gas Compact Commission

IntroductionThe combination of advanced research and hightechnology is the single greatest contributor to lowconsumer natural gas and oil prices. As with mostindustries, the greatest technological advances areahead of the petroleum industry, not behind it.

Many of the significant natural gas and oiltechnology breakthroughs were developed inOklahoma, a state facing choices. Oklahoma couldchoose to continue leadership in petroleumtechnology advances. It could choose to continueits history of training the world’s petroleumscientists. It could look at the natural gas and oilindustry as a vital cog in the international economyand continue to play a huge role in world energy. Itcould see itself as the center of petroleumtechnology advancement in the world. OrOklahoma could turn its back on the industry thatmade it a great state and pronounce the petroleumindustry “one that is dying.”

The broader vision of the state as a world energycenter is set out in the Oklahoma Energy Strategyprepared by Energy Secretary Robert Sullivan. Itis an innovative and highly possible scenario ifOklahoma embraces its petroleum legacy ratherthan turning its back on this critical industry.

The Interstate Oil and Gas Compact Commission(IOGCC) strongly supports research and works topromote increased government funding of this re-search. The IOGCC, representing governors of 30natural gas and oil pro-ducing states, has foundthat funding for petroleum technology research isbeing reduced drastically at the very time theindustry needs more research. While thegovernors of the IOGCC have tried to focusnational attention on the issue and have endorsedproper funding of important state and nationalinstitutions, inadequate funding for research anddevelopment continues to be a grave concern.

Sarkey’s Energy Center, University of OklahomaPoro-Mechanics Institute • Institute for Science and Public Policy • Institute for Energy and the Environment • Institute for Exploration andDevelopment Geosciences • Energy Institute of the Americas • Institute for Reservoir Characterization • Institute for Energy Economics and

Policy • Institute for Gas Utilization Technologies


Rather than expanding research to recoverdomestic natural gas and oil resources, industryand government are reducing research. There is acontinuing gap between research dollars thepetroleum industry spends versus outlays by otherindustries. There also is a gap in federal fundsallocated through the U.S. Department of Energyversus other research funding agencies.

Since being formed by the governors and charteredby Congress in 1935, the IOGCC has been abooster of programs that create new technology toincrease environmental protection, improverecovery rates, and lower exploration andproduction costs. Such research and developmentis an investment in the country’s future and itsenergy security. Technological advancement mightbe the most important factor in ensuring that thenation’s non-renewable resources are fullydeveloped and the principles of resourceconservation are served, while achievingreasonable prices for consumers.

Research is not instant. It cannot be turned off andon like a water tap. The acquisition of newknowledge and the embodiment of that knowledgein new products and services for the benefit of theeconomy is a cumulative process requiringcontinuous effort to sustain it. Accumulatedcutbacks in public and private research in thenatural gas and oil sector could set the stage for amajor shortfall in development of this vital energysource.

When E. W. Marland brought the first geologist toPonca City to help him find the big new fields inOklahoma, the industry worldwide began tounderstand the need to employ scientists and to usetechnology. (Marland Oil Company precededConoco-Phillips. E. W. Marland was the 10thgovernor of Oklahoma, serving from 1935 to 1939,and was the founder of the IOGCC.) For decadesfollowing that early use of scientists andtechnology, research expanded. States committedincreased funding for geology and petroleumengineering departments at their universities, andstate geological surveys were expanded to help

serve the oil industry. Because of the recognitionof the importance of scientists and researchspending, the scientists were revered in theindustry.

The oil price collapse of the 1980’s quicklyreversed that situation. Scientists were laid off andresearch departments were closed. Funding foruniversity research was curtailed and even theprestigious United States Geological Surveysuffered cuts. That downward trend continuestoday.

Research and development spending by thepetroleum industry continues to lag behind otherindustries. Simultaneously, federal support forresearch and development is being reduced,creating an outlook even more bleak and settingthe stage for a major energy crisis.

Research and development is widely recognized asthe key to economic growth. Decisions about howmuch the petroleum industry spends on researchand development, how the industry spends thatmoney, and how technologies are deployed are allcritical to the nation’s energy security and to thefuture of the U.S. economy. Alan Greenspan,chairman of the U.S. Federal Reserve, recentlystrongly reiterated the connection between the U.S.economy and the price and availability of energy.

Examination of Effectsof Corporate Mergers on R&D Expenditures

R&D Expenditures in Millions of Dollars

1997 1998 1999 2000 2001Chevron Texaco $209Texaco Inc. $147 $138 $96 $108Chevron Corp. $179 $187 $182 $171Total $326 $325 $278 $279 $209

1996 1997 1998 1999 2000 2001ExxonMobil $630 $564 $603Exxon Corp. $520 $529 $549Mobil Corp. $206 $234 $204Total $726 $763 $753 $630 $564 $603

Source: 10K Annual Reports filed with the U.S. Securities and Exchange Commission


If research has been identified as the tasknecessary to consistently lower energy prices, andif lower energy prices have a potent effect on thenational economy, it makes sense for the country todevote national resources to energy research. Italso makes sense for individual states to devote re-sources to such research. Support should start withsufficient funding for state geological surveys andshould be expanded to provide special petroleumresearch money; similar to the allocation enactedin North Dakota this year.

Our nation has seen a dramatic increase in mergeractivity in recent years in all areas of the industry.The desire for reserves, cost-cutting and higherrefining/marketing share has fueled those mergersand created consolidated balance sheets. Thoseconsolidated balance sheets show that researchdepartments have been the biggest losers in themergers.

The $81 billion merger between Exxon and Mobil,for example, formed the world’s largest privatelyowned petroleum company in terms of revenue.But research and development expenditures byExxonMobil decreased by 16.3 percent in 1999,the year of the merger, and, in 2000, by another10.5 per-cent from the 1999 level.

Research for natural gas and oil fares no better inthe public sector. Of course, states have hadextremely constrained budgets recently and havebeen unable to expand any expenditures, let alonea “frill” like research spending. At the federallevel, research spending for energy is the smallestof the nation’s research budgets.

R&D by Federal Agency, 1997-2001(Budget Authority in Thousands of Dollars)

Agency 1997 1998 1999 2000 2001Defense 34,788,263 35,286,223 35,645,859 36,875,907 36,396,615HHS 12,785,262 13,901,663 15,915,736 18,140,350 19,234,564NASA 9,327,300 9,568,029 9,525,693 9,568,073 9,602,367ENERGY 5,603,506 5,873,804 6,009,730 6,305,572 6,793,467Agriculture 1,388,619 1,441,046 1,614,133 1,752,045 1,779,318Interior 57,901 5,531,969 641,542 565,974 619,387

Source: U.S. National Science Foundation/Division of Science Resources Studies, Survey of Federal Fundsfor Research and Development. Total Department of Energy Research and Development for FY 2002 was $8.1 billion.

Five federal agencies account for 90% of thefederal government’s research and developmentfunding – the Departments of Defense, Health andHuman Services, National Aeronautics and SpaceAdministration (NASA), Energy,and the National Science Foundation. TheDepartment of Energy spendingon research and development consistently hasranked at the bottom of thescale among the top five research fundingagencies.

Research spending has continued to decrease withrecessionary pressures. While this is true acrossindustry sectors, the domestic natural gas and oilsector has taken the largest hit. Reversing thistrend in Oklahoma would make a difference to thestate, the nation, and the world.

CONCLUSIONResearch and development in the natural gas andoil industry is critically important to Oklahoma fortwo reasons. First, research and developmentextends the productive life of Oklahoma’sabundant natural resource of petroleum. Second,research and development is a key economicdevelopment factor as it can spawn new industriesand attract additional research and development.Investments in research and development now willpro-vide jobs in Oklahoma for decades.

Oklahoma should look for economic developmentopportunities first in the industry that it knows thebest– natural gas and oil.


Marketing Our Energy Knowledge

Capitalizing on Oklahoma’s Energy ComplexR. Dobie Langenkamp, Director

National Energy-Environment Law and Policy Institute, University of Tulsa College of Law

R. Dobie Langenkamp is Professor of Law andDirector of the National Energy-Environment Law& Policy Institute at The University of TulsaCollege of Law. Langenkamp served as DeputyAssistant Secretary of the U.S. Department ofEnergy from 1977-1981 and 1997-1998. From1981 through 1996 he was president and owner ofCherokee Operating Company, an Oklahomaexploration and production company. He is agraduate of Stanford University and the HarvardLaw School.

NELPI’s primary objective is to strike a balancebetween material abundance and environmentalprotection. It is doing so through teaching,research, scholarship, publications, and effectivecommunication about energy and the environmentwithin interdisciplinary frameworks of policy,science and law.

IntroductionOklahoma’s energy future can be as bright as itspast. The mistake is to believe that Oklahoma willcease to be an energy center merely because its oilproduction has declined and gas production is in amature and steady phase. To an extent notappreciated, the Oklahoma City/Tulsa corridorsupplemented by other state areas constitutes animpressive energy complex of internationalsignificance. With the exception of Houston, nocity can surpass this aggregation of energyexpertise.

The strength and potential of this state as an energycenter is based on its skills, its people, and itsbusiness climate. No other Oklahoma sectorprovides such an opportunity for growth.

THE ENERGY COMPLEXThe building blocks of Oklahoma’s energycomplex consist of its exploration and service/supply companies, its refineries, its engineering

and geological consultants, its universities andprofessional organizations, its energy-relatedassociations and the many independent experts atboth ends of the turnpike and elsewhere in thestate. Oklahoma City and Tulsa alone have almost300 “oil producers,” 366 “exploration anddevelopment” companies and 180 “service anddrilling companies.” Oklahoma is home to one ofthe major integrated oil companies—Kerr-McGee—and one of the largest independents,Devon Energy. Oklahoma has more than 130drilling rigs drilling at this time at depths of up tofive miles. By way of comparison, all of Mexicohas less than 75. Oklahoma operating companiesoperate six times as many producing oil wells(85,837) as Venezuela (15,580). Although theproduction is minimal in comparison, the numberof active producing oil and gas wells in Oklahomafar exceeds the number of wells in all of OPECcombined. This high level of activity, albeit at alower production level, results in a substantiallygreater body of experienced workers and servicecompanies. An assessment of the energyinfrastructure must not omit the comprehensivesystem of oil pipelines that makes Cushing,Oklahoma one of the world’s true oil transportationcenters.

Oklahoma has two superb petroleum engineeringschools at OU and TU. There are hundreds ofenergy-producing companies, from Devon with$12 billion capitalization to small, one-man E&Pcompanies. Oklahoma is the headquarters of theInternational Society of Petroleum Geologists andthe National Energy-Environment Law and PolicyInstitute at The University of Tulsa College ofLaw. Oklahoma University operates theinternationally known Sarkeys Energy Institute.The National Association of Royalty Owners(NARO) representing royalty owners around thecountry is located in Oklahoma. Also important isthe Oklahoma Society of Petroleum Accountants,


EDUCATIONAL

University of Tulsa• College of Petroleum Engineering,

Department of Geosciences

• College of Law (National Energy-Environment Law and Policy Institute)

• Petroleum Abstracts

University of Oklahoma• Sarkeys Institute-Institute for Energy &

Economic Policy/Energy Institute of theAmericas

• College of Petroleum Engineering, School ofGeology & Geophysics

Oklahoma State University• Department of Electrical Engineering and

Energy Laboratory

GOVERNMENTALInterstate Oil & Gas Compact CommissionNational Petroleum Technology Office (U.S.Department of Energy)Oklahoma Corporation CommissionOklahoma Marginal Well CommissionOklahoma Geological SurveyOklahoma Energy Resources Board (OERB)Grand River Dam AuthoritySouthwest Power Administration (US DOE)Oklahoma Municipal Power Authority

HEADQUARTERS COMPANIESKerr-McGee Corporation; Devon EnergyCorporation; CITGO; Vintage Petroleum,Inc.; Samson Resources Co., UnitCorporation, Helmerich & Payne, Inc.,Williams Companies, Inc., Transok Inc.,

THE OKLAHOMA ENERGY COMPLEX(partial listing not intended to be all-inclusive)

Chesapeake Energy Corporation, APCO, AmericanCentral Gas Technologies, Inc., ONEOK, Inc.,Oklahoma Natural Gas, Continental Resources,Inc., Ward Petroleum Corporation, Kaiser-FrancisOil Company, Explorer Pipeline Company, RamEnergy, Inc., LeNorman Energy Company, JolenOperating Co., Nadel & Gussman, Lumen Energy,and Primary Natural Resources.

DIVISION OFFICES:XTO Energy, Inc., Apache Corporation,ConocoPhillips, EOG Resources, Inc., HalliburtonEnergy Services, Marathon Oil Corporation, andBJ Services Co.

Schlumberger Oilfield Co., Service Drilling Co.,Weatherford International, Coral Energy-ShellTrading, AEP-PSO, Florida Power and Light(Oklahoma Wind Energy) and Zilka RenewableEnergy.

ENGINEERS AND CONSULTANTSKWB Property Management, Inc., Lee Keeling &Assoc., Oil and Gas Consultants International,Ellis-Johnson Engineering, EnvironmentalRemediation Specialists, Inc., and DavisEnvironmental Drilling LLC.

ASSOCIATIONSAmerican Association of Petroleum GeologistsAssociation of Desk and Derricks ClubsNatural Gas Association of OklahomaNational Association of Royalty OwnersOklahoma Landmen’s AssociationSociety of Petroleum Evaluation EngineersPetroleum Equipment InstituteSociety for Sedimentary GeologyOklahoma Independent Petroleum AssociationInternational Society of Energy AdvocatesOklahoma Bar Association–Mineral Law SectionOklahoma Renewable Energy Council


which has played a large role in the developmentof standards and practices for petroleumaccounting around the country. Leading energyassociations in Oklahoma include the Society ofPetroleum Engineers, the Society of ExplorationGeologists, the Society of SedimentationGeologists, the Natural Gas Association ofOklahoma and the Oklahoma Society of PetroleumLandmen.

The US Department of Energy has located itsNational Petroleum Technology office in Tulsa.The world’s largest collection of energy-relatedinformation is collected and catalogued daily andmade available worldwideby Petroleum Abstracts atthe University of Tulsa.When assistance was neededin restoring Iraqi crudeproduction, the Corps ofEngineers staff from Tulsawas among those doing thejob.

GOVERNMENTOklahoma City is thepermanent home of the Oil and Gas CompactCommission, which provides background andsupport to producing states all over the US.

The Oklahoma Corporation Commission with itsOil and Gas Division provides a body of expertswho supervise drilling, completion andabandonment of wells. It is one of the most activeand competent of such regulatory agencies in thenation and is a model for the regulatory agencies ofnewly developing countries, which frequently sendrepresentatives to observe the commission in itsregulatory function. It has through the yearsproved to be not only a regulator of the industrybut an asset to its sensible development.

The US Department of Energy’s Southwest PowerAdministration is located in Tulsa and isresponsible for the marketing of 445 MW ofhydropower from six dams located in the region.It is one of only 5 federal power marketingagencies in the US.

ACADEMICPerhaps most important to the energy complex arethe educational institutions based in Oklahomathat are involved in training for the worldwidedevelopment of energy resources. The Universityof Tulsa Petroleum Engineering School and Schoolof Geosciences draws students from around theworld, as does the University of Oklahoma Schoolof Petroleum Engineering and the Oklahoma StateElectrical Engineering Laboratory and Department.The key to growth and development in energy inOklahoma is the knowledge and experience base,the skilled engineers and geologists and drillingtechnicians. There are over 100 petroleum

consultants listed in theTulsa and Oklahoma Citydirectories.

But the petroleum businessis changing and Oklahomamust change with it. Moreand more petroleumdevelopment is occurringoverseas or in previouslyunexplored areas in NorthAmerica. As a result, we see

Tulsa’s Vintage Petroleum with substantialholdings in Argentina, Helmerich & Payne drillingin Venezuela, Samson investing in Russia, Kerr-McGee drilling in the Bohai Bay off China’s coastand Devon spreading its exploration wings aroundthe globe (from the Caspian sea to Canada).Syntroleum is licensing its gas-to-liquidstechnology in Latin America and Europe, amongother places. In the upstream arena we see PDVSAin Venezuela relying on Tulsa people to operateCitgo. There are five refineries in Oklahomahandling almost 500,000 barrels of crude perday—almost twice the state’s daily production.

Other companies supply drilling and otherequipment worldwide: Ramsey Winch, Bovaird,CRC Evans Pipeline International, SheehanPipeline Construction., T.D. Williamson andWoolslayer Companies. Globalization is a realityin the petroleum industry perhaps to a greaterextent than any other.

How many know that as many rigs aredrilling in Oklahoma today as in SaudiArabia, Iran and Venezuela combined?How many are aware of thesignificance of the Cushing terminal inworld petroleum markets? How manyare aware of the extent of theOklahoma energy complex?


ELECTRICITYWith its abundant gas resource, easy siting andpipeline network, Oklahoma is well placed tobecome one of the several electricity exportingstates. As of this year approximately 9 megawattsof new power production is under construction oron the planning board. Oklahoma could become aleading state on a per capita basis in electric powerproduction. In short, Oklahoma is an electricenergy exporter and should continue to increasecapacity for export.

ALTERNATIVE ENERGY Oklahoma companies have already movedaggressively into the field of wind powerdevelopment. Numerous good sites have beenlocated in western Oklahoma and plans have beenmade for the construction of wind farms. This is anarea of potential growth in the coming decade thatshould be encouraged. Western Oklahoma is oneof the premier areas for wind power development.At present there are five small projects inOklahoma with a capacity of about 200 KW.

Oklahoma with its Grand River Dam Authority andCorps of Engineers is 21st of the 50 states in hydroproduction.

Power generation from the burning of biomasssuch as wood chips and chicken litter is also on thedrawing board in Oklahoma. At presentWeyerhauser has a 35,000-Kw plant near Valliant,Oklahoma.

But more importantly, Oklahoma has a product tosell in addition to oil, gas and electric power.Oklahoma has experience, skill and expertise fromits century-long involvement as one of the world’senergy centers. The task we have is to capitalizeon this experience and knowledge in a worldwidemarketplace. Oklahoma’s energy future is notbased only on MCFs but on the talent and expertiseof its energy industry. Abundant natural gas andthe transportation system to move it is one of thestate’s greatest strengths.

What is it that draws the companies and skilledprofessionals—engineers, geologists, computerprogrammers, executives—to Oklahoma? What isit that keeps people and companies in Oklahoma?Good schools, good cities, a clean environment, agood business climate, good transportation and agood quality of life.

RECOMMENDATIONSThe following is an approach for strengthening theOklahoma Energy Complex and, thus, energy jobs:

1. Appreciate and support the existing energyindustry and organizations. Be sensitive tothe needs of the many energy companies andconsultants that operate out of Oklahoma orhave district offices here. Do not take them forgranted.

2. Take the offensive. Begin a campaign to bringenergy company and energy organizationheadquarters to Oklahoma. The same effortthat Houston made to try to get Citgo torelocate should be made by Tulsa with regardto target companies in Wichita, Topeka,Wichita Falls, Amarillo, Lubbock, Ft. Smithand Dallas-Ft.Worth. All of these cities arecloser to Oklahoma City and Tulsa thanHouston. We should concentrate initially onthe smaller independents and domesticallyoriented exploration companies. Houston’sadvantage regarding the offshore industry andMexico is irrelevant to those seeking toexplore in the mid continent, New Mexico, theRockies or Canada.

3. Use Oklahoma’s political clout. Oklahoma isfortunate to have two very senior U.S.Senators, both of whom are trusted friends ofthe energy community. Both should beregularly called upon to help accomplish theabove objectives. In years past the Oklahomadelegation was a leading supporter of theenergy industry here. Mike Smith, formerOklahoma Secretary of Energy, is now theAssistant Secretary for Fossil Energy at the US


Department of Energy, one of the morepowerful positions in the energy department.The Oklahoma congressional delegation iswell placed to be of assistance and should beregularly called upon.

4. Coordinate the efforts of the energycommunity. The Oklahoma IndependentProducers Association, OU’s Sarkeys, TU’sNational Energy-Environment Law and PolicyInstitute, NARO, the Interstate Oil and GasCompact Commission, the OklahomaCorporation Commission, the OklahomaGeological Survey and the Oklahoma MarginalWell Commission are all important players.The office of the Secretary of Energy shouldbe the coordinator and the cheerleader for thisvital industry.

5. Recognize the importance of critical mass.Every component of the energy economy ishelpful or supportive of other components.E&P companies need to have drillingcompanies, a community of investors and theassistance of professional engineers andinformation technology companies. Everytime a company or energy group is lost, theenergy complex is weakened. The reverse isalso true.

6. Support the energy component ofOklahoma higher education. This meanssupporting NELPI and Sarkeys. This meansmaintaining the strength of the TU and OUPetroleum Engineering and GeologicalSciences programs. This means broadeningthe business schools’ curricula to includecourses on international petroleum businessand transactions. This means calling to theattention of companies everywhere theresearch capabilities of the PetroleumAbstracts division at TU. This means keepinga large suite of energy courses at the three lawschools.

7. Publicize Oklahoma’s expertise in theenergy area. How many know that as manyrigs are drilling in Oklahoma today as in SaudiArabia, Iran and Venezuela combined? Howmany are aware of the significance of theCushing terminal in world petroleum markets?How many are aware of the extent of theOklahoma energy complex?

8. Keep the National Petroleum TechnologyOffice open and in Tulsa. Each year there arethose in the federal government who attempt toterminate this essential function of the USDepartment of Energy. We need to let ourrepresentatives know how important this officeis for Tulsa. (The U.S. has had only onefederal petroleum energy research facility andit is in Tulsa. It has a budget of approximately$50 million per year and a large number ofhighly skilled energy experts on the staff.)

9. Continue to improve the state’s educationalsystem and quality of life. Make this state theplace to maintain an office or laboratory.Establish better airline service. In a worldwideenergy economy, the ability to travel easily andefficiently is key to remaining a technologycenter. We could attract many of thecompanies located elsewhere if we couldprovide direct air service.

CONCLUSIONOklahoma energy companies have a long historyof involvement around the nation and abroad.From the wells drilled in Sherwood Forest bydrillers from Ardmore that helped fuel the Britishfighter planes in WWII to the pipelines laid in Iranby the Williams Company, Okie oilmen, engineersand investors have played a major role in thedevelopment of energy resources around the nationand the world. In the process, they have builtOklahoma and they have assembled knowledgeand expertise on a world-class basis. In aknowledge-intensive world, this expertise is a statetreasure. We must remember that Silicon Valleydeveloped not because of any tangible naturalresources, but because of the skilled andentrepreneurial people assembled there.


Marketing Our Energy Kowledge

The Energy Weather Project at OUInstitute for Energy Economics and Policy, University of Oklahoma

Students: Enmanuel Cabrera, Alicia Fitts, Reed Timmer and Xiaoyi MuFaculty Advisors: Peter Lamb, PhD CIMMS, Dennis O’Brien, PhD IEEP, and Mike Richman, PhD CIMMS

Executive SummaryIn June of 2002 the Energy Weather Project (EWP)began its research into the correlation betweenweather and energy commodity prices. Theproject’s objective was threefold.

First, the project provided an opportunity for aninterdisciplinary approach to research and learningfor a team of four graduate students.

Second, the project afforded the team and theuniversity an opportunity to research a relationshipthat is critical to the operations and finances of theglobal energy sector.

And third, the research undertaken could beutilized to develop forecast models which wouldlikely hold some commercial value within thesector.

The research would support the publication of aSeasonal Outlook with monthly updatesthroughout the Season to be distributed toindividuals and companies within the sector.

The team has already established a strongcorrelation between weather, demand, and energycommodity prices. Our experience suggests thatadditional research into this correlation and intothe correlation between weather, supply and energycommodity prices would support numerousadditional research topics for graduate students aswell as meeting a growing need for this data withinthe energy industry.

Further, our research suggests that weather mustnot only be forecast over the longer term in orderto provide seasonal price trends, but also must beforecast on a shorter term basis in order to betterpredict prices in the daily and weekly spot

Town Hall IntroductionThe University of Oklahoma provides nationalclass programs in several academic and researchareas. Two that are especially noteworthy are theprograms in energy and meteorology. This samplereport illustrates how “energy knowledge can bemarketed”.

This abstarcted report was provided by TheUniversity of Oklahoma Sarkeys Energy CenterInstitute for Energy Economics & Policy (IEEP).The mission of the Center is to develop qualityresearch and technical understanding of energysystems, organization, and global supply anddemand. IEEP is an experienced facilitator andprovider of strategic advice for energyorganizations, boards and management.

Directed by Brock Chair and Professor, Dr. DennisO'Brien, formerly Deputy Assistant Secretary forInternational Energy Security for the U.S.Department of Energy and an executive withCaltex Petroleum Corp., the IEEP focuses on theglobal energy industry and its relationship withnational and state energy industry issues andpolicy.

The institute brings together the extensiveresources of the University of Oklahoma inbusiness, economics, and energy sciences, as wellas external resources to address key economic,technology, geopolitical, political, and socialpolicy issues related to energy.

In addition, IEEP focuses on important energyrelationships in the Middle East, Latin America,Asia-Pacific, and their relationship with the UnitedStates and Oklahoma.


markets. Future research will therefore be directedtowards the development of weather forecastswhich offer ten to fourteen day predictions and thedevelopment of energy models which relate bothdemand and supply with energy commodity prices.

The following report provides an introduction tothe EWP, background on the need for research, asummary of accomplishments, an analysis of theresearch thus far completed, and the team’sthoughts on future research necessary to further theEWP’s work, along with some conclusionsregarding the project.

IntroductionWith the threefold objectives of providing aninterdisciplinary learning and research opportunityfor four graduate students, providing research on acritical issue for the energy sector, and developinga commercially viable product for that sector, theEWP began its work in June of 2002.

The EWP’s primary goal was to research andanalyze the correlation between weather andenergy commodity prices. Research would includethe development of models which would in turnsupport, along with analysis of weather,macroeconomic and geopolitical issues, thepublication of a Seasonal Outlook, along withmonthly updates. This publication would be sharedwith the energy sector.

A secondary and longer term goal was to researchthe potential impacts of Climate Change on theenergy sector. The research was to utilizeUniversity of Oklahoma’s expertise in bothmeteorology and energy. It was also intended tosupport a growing commercial demand for aproduct that relates weather to energy.

The EWP’s team is composed of four members,each representing a different academic discipline,and is guided by Dr. Dennis O’Brien, EnergyEconomics, and Dr. Peter Lamb, Meteorology andDr. Mike Richman, Meteorology.

BackgroundAs the energy sector’s understanding of the impactof meteorology, including both weather andclimate change, on its operations and finances hasincreased, the demand for products which provideweather and energy commodity pricing analysishas increased. It is estimated that weather aloneimpacts some twenty percent of the nationaleconomy. Over seventy percent of all businessesacross a wide range of sectors face some degree ofweather risk. The energy sector is no exceptionwith weather affecting each and every componentof the value chain.

With technological advances in informationgathering and sharing, there has been enormousgrowth in the development of products whichattempt to provide data and mitigate the associatedrisks. For example, weather derivatives allowcompanies within a variety of industries to offsetsome of this risk. While the first weatherderivative transaction occurred only in 1997, theseproducts have become the fastest growing of allderivatives globally. Weather derivatives aredependent upon an understanding of the risksinherent in both weather and energy and of therelationship between the two variables. They areeven more dependent upon weather and energydata, in any number of forms and from any numberof sources.

Initial research into this information suggested thatwhile there are numerous sources of weatherinformation and an equal number of sourcespertaining to energy commodity pricing, there arevery limited sources of information which analyzethe correlation between these two variables andwhich also take into consideration non weathervariables such as macroeconomic and geopoliticalissues.

Additionally, sources which provide an analyticalmodel that could be used by the industry as a basisfor operational or financial planning are far lessnumerous, pointing to the need for a concise andcomprehensive forecast mechanism, supported bystate of the art research and analysis. One of the


EWP’s objectives was to develop a product thatcould meet this need.

The EWP initially chose to focus its research onthe four commodities most impacted by weatherduring the Winter Season (November throughMarch) and utilized by the highest number ofconsumers, both residential and commercial.These commodities were crude oil, heating oil,propane, and natural gas. The degree to whichweather and other variables such as geopoliticaland macroeconomic considerations affects each ofthese commodities differs as a result of the varyingdemand and supply relationships for eachcommodity. For the purpose of this brief overviewof those relationships, it is important to realize thatheating oil and propane are products refined out ofcrude oil. Natural gas can be a by product of crudeoil or can be produced independently of crude oil.

Crude oil prices are driven not only by nationaldemand impacted by weather and macroeconomicvariables but also by supply variables impacted bygeopolitical dynamics such as the war in Iraq.Demand is across both residential and commercialsectors and is distributed across the country. Thesevariables all affect prices on a year round basis.

Additionally, prices can be influenced by therefining sector’s forecasts of demand for particularproducts which can be produced out of crude oil.For example, during the Winter Season, refinersfocus on maximizing production of heating oilwhile during the summer the focus is onmaximizing production of gasoline.

The refining sector can also influence prices basedupon their forecasts of stock or inventory levelsrelative to past years’ demand and supply. Forexample, if weather forecasts suggest that demandwill be exceptionally high but refiners forecaststocks to be at historically low levels, prices willrise and vice versa. These forecasts of supply canbe based less on actual physical inventories thanon perceptions of demand and the ability of themarket to supply that demand.

Heating oil prices are driven by regional demand(the Northeast) impacted significantly by weatherespecially during the Winter Season and affectedby the price of crude oil. Heating oil isapproximately twenty five percent of a barrel ofoil; its price tends to follow that of crude oil. Foreach dollar increase in a barrel of crude oil, heatingoil prices tend to increase about twenty cents.

Additionally, heating oil prices can be significantlyimpacted by supply interruptions due to severeweather and unrelated to crude oil supply. Forexample, while refiners may produce adequateamounts of heating oil to meet demand, hardfreezes on rivers in the Northeast have been knownto slow or stop the movement of heating oil bybarge. Demand is largely residential and is skewedto heavier population areas within the Northeast.These variables affect heating oil on a seasonalbasis.

Propane prices are driven by weather relateddemand in the Midwest and Great Plains primarilyin the residential sector. While these areasrepresent a broader geographic area than theNortheast and often have similar Winter Seasonweather to the Northeast, propane prices tend to beless volatile because these areas have lesspopulation and thus less demand. Demand tends tobe seasonal.

Natural gas prices are driven by weather relateddemand across the nation and across residentialand commercial sectors. Supply can be impactedby severe weather in producing regions such as theGulf Coast. For example, tropical storms havebeen known to shut down operations for severaldays. Prices are somewhat seasonal as a result ofhigher demand in the Winter Season. However,this seasonal price swings have been alleviated asmany utilities switch to natural gas to produceelectricity, for which demand peaks in the SummerSeason. Prices can also be impacted by thedistribution system for natural gas. Because mostnatural gas is produced in the Mid-Continent andthe Gulf of Mexico and most demand is in thepopulation centers in the Northeast and on the


West Coast, it must be transported across anelaborate network of pipelines, all of which aresubject to weather. An additional variable whichcan impact natural gas prices is tied to fuelswitching. Once natural gas prices or crude oilprices hit certain levels, commercial consumerswill switch from one to the other depending onwhich is cheaper. Fuel switching has had less ofan impact on prices in recent years because most ofthe commercial consumers who are capable ofmaking the switch did so in earlier years when thegap between natural gas and crude prices wasmuch more significant.

As the brief overview above suggests, the variablesaffecting energy commodity prices can becomplex. What is apparent, and what is supportedby the EWP’s research is the correlation betweenweather and demand, especially on a regionalbasis, and between weather and supply.

ConclusionsIt is apparent from the EWP’s interactions with theenergy sector that there is an increasing demandfor the research currently underway. Changeswithin the energy industry, whether it is the impactof shifts amongst the trading companies orderegulation in the electricity markets, all forcecompanies to operate with an increasingly heavyemphasis on risk management. The EWPcontinues to offer the University of Oklahoma aunique opportunity to provide many of itscorporate supporters and other companies with thecombination of interdisciplinary expertise from anationally renowned university and a databasemanagement system currently not matched in themarket to help companies better evaluate andmanage risk related to weather and energy.

It is also apparent that there are numerousopportunities both within the university andoutside of it for cooperative research using as afoundation the research that the EWP has begun.For example, Dr. Daniel Sutter, Economics, has

met with the EWP to discuss the development of acase study format which would enhance hisresearch into the value of weather forecasts for theenergy sector, and particularly for utilities. CalKilgore, an alumnus of the University ofOklahoma, of the EAI, has indicated his supportfor the inclusion of the EWP’s weather analysis ontheir website if we can provide it in a formatconsistent with their current reports. Don Murry,Vice President, CH Guernsey, has met with us todiscuss and compare the forecast models andanalysis currently being undertaken at his firm andsynergies with the EWP.

Further, there is continued corporate interest in theEWP’s research. For example, Samson, a largeindependent energy company based in Tulsa, hasrequested that the EWP meet with them to shareour results. JM Huber, another independent energycompany, based in Houston, is also interested.

However, just as the market in which thesecompanies operate is undergoing constant change,so the research that the EWP is undertaking willneed to evolve. The EWP should continue to buildupon not only its own research but also that withinthe university both from faculty and students inorder to develop results which can be effectivelyutilized within the energy sector. In order toevolve, additional resources are necessary.Qualified graduate students who bring the benefitsof interdisciplinary and diverse background to theproject are critical as is continued funding tosupport these students and the research of whichthey are capable. The EWP estimates thatexcluding start up expenses, average monthlyoperating expenses are approximately $4,000 permonth during the Fall and Spring semesters and$6,000 per month during the Summer.

The EWP has clearly demonstrated the value of aninterdisciplinary approach to research as well asthe potential value of that research in themarketplace.


Renewable Alternative Energy Sources

Looking to Oklahoma’s Energy FutureMark Meo, PhD, Science and Public Policy Program & School of Civil Engineering and Environmental Science,

University of Oklahoma; and Steven J. Stadler, PhD, Department of Geography Oklahoma State University

IntroductionAlmost three decades ago, the United States wasconfronted with a national energy crisis that drewpainful attention to the nation’s growingdependence on imported petroleum and theunpleasant impacts associated with escalating costsand sudden interruptions in supply. In relativelyshort order, public interest was captivated byalternative energy sources that were domesticallyabundant yet relatively undeveloped andunderutilized.

Federal research and development was begun inearnest to capture the energy available from suchfamiliar and omnipresent renewable resources asthe sun, the wind, and the crops and trees thatflourished on the bountiful plains and forests thatcovered the land. Although subsequent declines inthe real cost of imported petroleum heralded theend of large-scale government developmentprograms such as the Synthetic Fuels Corporationby the early 1980s, interest in developing moreaffordable renewable energy technologiescontinued, albeit at a much reduced level offunding and political support.

Today, the level of public interest in renewableenergy has been reawakened, and the prospects forOklahoma to become involved with the expandeduse of innovative technologies that were onceperceived as distant dreams are emerging rapidly.

Not only has the nation once again been remindedof the perils of international political unrest and thereal risks of domestic terrorism, but nation states,energy industries, and concerned citizenseverywhere have become more aware of thenegative potential that over-reliance on carbon-intensive energy resources portends for the futureclimate of the planet. In addition, the decades-longeffort to reduce costs and develop more

Town Hall CommentsThis section is about renewable energy resources,one of the three major sections of SecretarySullivan’s proposed Energy Strategy for Oklahoma.

Dr. Meo and Dr. Sadler are university-basedproponents of alternative energy sources. theywere asked to contribute this piece and to discussthe several forms of alternative energy sources.

You will notice that this section emphasizes windpower while also discussing biomass, solar andother forms. This emphasis upon wind power is forpractical reasons.

First, there is a great potential in Oklahoma.Second, two major wind farms will be operation bythe end of 2003. And third, the OklahomaCorporation commission has officially adopted arate structure for in generated electricity. In otherwords, wind power is here in one form or another.

Lastly, wind generated electricity seems to be themost cost effective alternative energy sourceavailable today and the trend is for it to be moreeconomical in the future.

For these reasons we also solicited theperspectives of AEP, a major national producer ofelectricity. AEP is very active in wind powergeneration in the private sector.

Oklahoma has already adopted tax incentives forthis form of energy. The next step will be toaccelerate this progress and tackle the physics ofelectricity storage and transmission of windgenerated electricity.


economically competitive technologies has begunto bear fruit. Wind power today is commerciallycompetitive with electricity produced from naturalgas [see Renewable Energy Cost Trends]. And asthe price of natural gas continues to rise andremain high, a larger number of renewable energytechnologies will become more commerciallycompetitive.

As cumulative scientific evidence tilts the balanceof informed opinion toward the national benefits ofattaining a more sustainable society, governmentand industry leaders have begun to re-think therole of renewable energy systems to provideenhanced security, a cleaner environment, and amore sustainable economy.

To this end, the United States and Europe haveboth announced a shared commitment to develop acleaner hydrogen-powered future complete withthe energy infrastructure needed to produce,distribute, and consume the fuel. In a parallelmanner, all of the world’s major automotivemanufacturers have begun to invest billions ofdollars into the development of hydrogen-poweredvehicles as well as stationary power plants thatemploy fuel cells which convert hydrogen intoelectric energy and harmless water vapor. Thebreadth and depth of this commitment tosustainable energy is very likely to reduce the costof these technologies and foster their widespreadadoption and use in the near future.

For Oklahoma, the pace of change is alreadynoticeable. By the end of this year, the state willsee the opening of its first utility-scale wind farmslocated in the Slick Hills near Lawton (at BlueCanyon) and the Woodward area. With a combinedtotal of 175 megawatts (MW) of power producedat these wind farms (with the potential for more inthe future), Oklahoma Gas & Electric customersfor the first time will be able to purchase “green”electrons from the utility. In addition, the stateDepartment of Commerce announced in July theopening of Oklahoma’s first “E-85” ethyl alcoholfuel filling station in Oklahoma City. With theequally rapid development of renewable energy

systems in the neighboring states of Kansas, NewMexico, and Texas, it is becoming more evidentthat the future of alternative energy has finallyarrived.

In this review, we will discuss two forms ofrenewable energy that have been the subject ofstudy at the University of Oklahoma andOklahoma State University.

(1) First, we address the prospects of ethyl alcohol(ethanol) production in the state and the multipleenergy products that can be produced frombiomass (i.e. grassohol made from plant matter).

(2) Next we will review the approach taken by theOklahoma Wind Power Initiative (OWPI) to assessthe potential for wind power development in thestate. Following this discussion, we summarize theinfluence of current and future policy onOklahoma’s renewable energy resources, anddiscuss the implications for the future.

Economics of an Oklahoma Ethanol IndustryEthanol is the third largest use of corn cropaccounting for approximately 7% of the nation’scorn crop. Ethanol production has increased over500% in the last 10 years and there are over 30plants now under construction. Farmer-ownedcooperatives account for over 50% of ethanolproduction. Currently, the major use of ethanol isfor blending in cities designated as EPA “non-attainment” areas. Ethanol also functions as anoctane enhancing blending agent. The possibleelimination of the popular petroleum based octanebooster (MTBE) and increased interest in bio-based fuels has stimulated this rapid industrygrowth.

Ethanol prices depend upon the price of feedstuffs(mostly corn) and the price of unleaded gas. Theten year average wholesale price (before all taxeffects) of ethanol is around $1.10/gallon which issignificantly higher than the before-tax price ofunleaded gasoline which has averaged around$.70/gallon. The viability of ethanol production istherefore dependent upon federal tax incentives


(around $.50/gallon) and additional state taxincentives.

The major cost factors of ethanol are grain, naturalgas, labor and transportation. Each $.25 increasein grain price impacts the costs and profitability ofa typical 30 million gallon per year (MPGY) plantby over $3M. The availability and price of thedistiller grain by-products is also an importantconsideration. A 30 million gallon\year plantproduces over 93 million tons of wet distillersgrain by-product, or an amount sufficient for a175,000 head cattle feeding operation. Natural gasinputs account for $.10-$.20 gallon of ethanolproduction cost. Each $1/MCF change in naturalgas price will impact the costs of a typical 20MPG/Year plant by over $1.3M.

The outlook for ethanol depends on whether theanticipated increased utilization outpacesproduction growth. The establishment of anOklahoma ethanol production industry would havea positive impact (5-10¢/bu) on the grain feedstuff.

Local communities could also benefit since over80% of revenue generated by an ethanol plant islikely to be expended within a 50mile radius of theplant. Oklahoma is a feed grain deficit state. Inthe absence of other advantages, Oklahoma isunlikely to be a competitive (least cost producer)ethanol producer using corn or milo feedstuff.Oklahoma does have potential advantages innatural gas prices and in utilization of the distillersgrain by-products. The profitability of Oklahomaethanol plants will be impacted by grain, naturalgas, distillers grain and unleaded gasoline prices.

Currently, interest in Oklahoma ethanol productionis focusing on the use of a new hulless barley.Barley would provide a better agronomic fit withOklahoma, particularly if winter grazing isfeasible. It is difficult to determine whether thehulless barley can provide sufficient returns to theproducers and be a cost competitive feedstuff forthe ethanol producer. New technologies forethanol production are focusing on the use of bio-fuels such as switchgrass, wheat or rice straw, corn

stalks or municipal wastes. The realization ofthese technologies would pose threats to existinggrain based plants as well as opportunities for newbio-fuel based production.

The Oklahoma GRASSAHOL InitiativeMost of the ethanol produced in the U.S. is fromfermentation of corn grain. Conversiontechnologies used in the grain-based fermentationsystems are approaching their inherent theoreticallimits. Alternative methods for producing ethanoland other biobased products have been developedthat are based upon the use of low-valuedlignocellulosic biomass such as crop residue andperennial grasses. One of the alternativetechnologies is gasification-fermentation.

The primary mission of the Oklahoma/MississippiConsortium (consisting of Oklahoma StateUniversity, University of Oklahoma andMississippi State University) is to further developthe gasification-fermentation technology toproduce ethanol and other valuable products. Inthe proposed bioconversion process, biomass iscombusted in a gasifier under conditions ofcontrolled oxygen supply where all of thecomponents (cellulose, hemicellulose, and lignin)are pyrolized to a gas known as synthesis gas(primarily CO, CO

2, and H

2).

The syngas then flows through a cleaning andcooling system, and is subsequently directed to abioreactor where it is microbially catalyzed to amixture of ethanol, inert gases, water, and otherpotentially useful products such as acetic acid.From the bioreactor, the mixture is furtherprocessed to separate and recover the essentialproducts, especially ethanol which is then distilledinto a fuel grade product. This bioconversionprocess utilizes the total biomass, including lignin,thereby increasing ethanol yield by more than 20percent over the corn starch fermentation process.

Preliminary production cost estimates are less than$1.00 per gallon, significantly less than currentindustry capabilities. In addition, much higher


carbon conversion efficiencies are realized in thisprocess over other processes.

It is envisioned that this work could result in theestablishment of numerous centralized, small tomedium scale ethanol production facilities that canbe located throughout cultured biomass productionand waste biomass generation areas which will beused to convert these biomass sources into autilizable and profitable fuel source. Additionally,since many areas in both Oklahoma andMississippi are among the poorest regions of theUnited States, this project will stimulate economicdevelopment with the realization of the vision.Additionally, a significant portion of the industrialbase in or near Oklahoma and Mississippi isheavily oriented toward petroleum refining,allowing for easy implementation of ethanol-gasoline blending as policies and incentiveschange.

Oklahoma Wind Power AssessmentAs the fastest growing renewable energy resourcein the world, wind power has become an attractiveenergy option for turbine manufacturers, such asGE Wind Energy, as well as for energydevelopment companies concerned aboutproviding power that is clean, inexpensive, andsustainable. In the Great Plains region, Oklahoma’swind resource holds promise for developers andlandowners who wish to benefit from the nation’sgrowing desire to secure reliable energy suppliesfrom domestic resources.

Many facets of wind-farm development—permitting, land leasing, and construction, to namea few—involve aspects that oil and gas industryprofessionals are well equipped to handle.However, wind-resource evaluation is quitedifferent from typical oil and gas exploration.Hence, a need was perceived for developingproducts and services for locating and evaluatingwind resources to aid those who are interested indiversifying their energy sources but who lackexperience in wind-resource assessment.Furthermore, because an in-state ownershipscenario returns economic benefits to Oklahoma

that are many times the economic returns fromownership by out-of-state concerns, these productsand services are thought to be an importantstepping-stone toward promoting economicdevelopment in the state.

The Oklahoma Wind Power Initiative (OWPI)began in July 2000 with a mission to provide wind-resource information and outreach to stimulatewind-power development in the state. OWPI’sprincipal products include long-term wind-energyclimate products and statewide wind-resourcemaps (see http://www.ocgi.okstate.edu/owpi ).

One of OWPI’s many goals is to develop andimprove high-resolution (1 km or better) wind-power maps for Oklahoma at heights of 50 m andmore, corresponding to hubheights of manymodern wind turbines.

Prior to this study, the best resource map availablefor Oklahoma was developed by the U.S.Department of Energy and Pacific NorthwestNational Laboratory in 1987 as part of theirnationwide assessment. The model grid fromwhich this map was generated had a resolution ofone-third degree longitude by one-fourth degreelatitude, or approximately 25 to 30 km in eachdimension (Elliott and others, 1987). At the time ofits development, the primary source of wind datawas from National Weather Service and militaryweather stations, which are spaced relatively farapart.

The creation of a wind-resource map for the entirecountry was ambitious and offered very goodinformation for the time, but the resolution was toocoarse to permit discernment of localized favorableterrain and vegetative features. Hence, this map isnot practical to use for highly localized wind-farmprospecting or for development of state-scaleeconomic models.

To provide maps with improved resolution andaccuracy, OWPI investigated the use of simplemodels that could be run on personal computers.OWPI planned to use these models with input data


from the Oklahoma Mesonetwork (Mesonet), anetwork consisting of 114 environmentalmonitoring stations. These stations measureparameters from the soil and atmosphere; the datacollected include readings of wind speed anddirection at a height of 10 m.

On the basis of 12 months of data collected from a40-m tower in northwestern Oklahoma (nearBuffalo), the wind resource for the tower’s locationwas calculated to be 500 W/m2 at the 40-m level.To determine if this value represents a long-termaverage value, it was benchmarked against anearby Mesonet station and found to be quiteclose. That is, the WPD value was calculated forthe benchmark station over the same data-collection period and was found to be within 0.5%of that station’s average WPD, calculated by using7 years of data.

Hence, the value of 500 W/m2 could be assumedrepresentative of long-term values. Then, using the

power law and average measured wind shearbetween 10 and 40 m, the 50-m WPD wasestimated to be 550 W/m2. According to theadjusted NN model’s output (with correction factorapplied), the 50-m WPD for the grid cellcontaining the tower was 477 W/m2, whereas theWindMap model estimated a 50-m WPD of 456W/m2. WPD estimates from both models appear tobe quite conservative, especially for ridges andhills. Although one validation point is not enoughto justify a conclusion, informal discussions withwind-farm developers seem to substantiate thatOWPI’s models may underestimate true WPD by>10%.

Economic Analysis Using OWPI’s Products

After obtaining a reasonable model of Oklahoma’swind resource, GIS tools were used to approximatepotential economic development from this energysource. Oklahoma has several prime areas forpotential wind-energy development. Starting with

a b c dRegion Capacity Investment GAR EALP

1 Texas/Cimarron Counties 4,910 $3,928 $405 $12.12 Beaver County 1,890 $1,512 $156 $4.73 Woodward-Buffalo-Alva 2,320 $1,856 $191 $5.74 Cheyenne-Arnett 2,460 $1,968 $203 $6.15 Weatherford-Hobart 1,970 $1,576 $162 $4.06 Slick Hills 240 $192 $20 $0.6

a Capacity Estimates for installed megawatt capacityb Investment Capital Investment (in millions of dollars)c GAR Gross Annual revenues (GAR) from sale of electricity (in millions of dollars)d EALP Estimated annual lease payments (EALP) to local landowners (in millions of dollars)

1 2 3

45

6

Six Prime Areasfor Wind Development

in OklahomaSource: Oklahoma Wind Power Initiative

Neural Network-Model, Oklahoma GeologyNotes, Winter 2002, page 140


the neural-network-model resource map, sixregions were identified [Figure next page] and GIStools were used to evaluate the land area in thoseregions. The accompanying table [next page] liststhe six prime areas and gives an approximation forwind-power development potential in each, as wellas the total for all six areas.

The following are important assumptions for thisdevelopment model: (1) transmission capacity isnot a limiting factor; (2) 30% of the area with aclass 4 or better (good to excellent) wind resourceis developed; (3) 9 MW of rated wind-generatorcapacity will be installed per square mile ofdeveloped area, on average; (4) capital investmentsare based on $0.8 million per MW installednameplate capacity (Wayne Walker, ZilkhaRenewable Energy, LLC, Houston, Texas, personalcommunication, 2001); (5) gross annual revenues(GAR) are estimated, using benchmark figuresfrom wind farms in existence and scaled by MWnameplate capacity; (6) GARs are based on a $30per MW-hour wholesale rate, assuming a 33%-capacity factor and a 95% turbine averageavailability; and (7) estimated annual leasepayments are calculated by assuming 3% of GAR.

Under these assumptions, OWPI’s resource mapgives an estimate of total developable wind powerof 13,790-MW nameplate capacity, correspondingto a capital investment of >$11 billion, >$1.1billion in GAR, and >$34 million per year inlandowner payments.

Assuming a 33%-capacity factor and a 95%availability, a 13,790-MW nameplate capacitycorresponds to almost 4,400 MW of averageproduction, which would provide >38.5 billionkilowatt-hours every year. This amount ofelectricity corresponds to roughly two-thirds ofOklahoma’s entire electricity generation in 2000(see’http://www.eia.doe.gov/cneaf/electricity/epav1/ta7p2.html ). Clearly, this demonstrates apotential for Oklahoma’s winds to deliver atremendous amount of power for sale here and outof state, but only under special conditions.

For one thing, the estimate assumes notransmission constraints, and this is far from thecase for Oklahoma. Without improvements totransmission facilities, Oklahoma will see less than1,000-MW nameplate wind-generation capacityinstalled. Still, this model provides a useful figureto help estimate the potential development ifmeans for transmission of electricity, or hydrogenfuel, are significantly upgraded.

Indicators forWind’s Future Role in Energy Diversification

It is expected that the future development ofOklahoma’s wind resource will unfold in a varietyof ways, depending on what happens in the Federaland state capitals. If Federal energy policy createsa national renewables portfolio standard (RPS),mandating that utilities provide a predeterminedpercentage (e.g., 10%, the rate in the U.S. Senate’sversion of the current National Energy Bill) ofelectricity from renewable sources, wind powerwill become immensely attractive to developers.

Should the Oklahoma Legislature promulgate astate-based RPS, such as the one now in place inTexas, the competition to develop the mostattractive local sites will likewise quicken. Otherissues that are likely to influence the developmentof Oklahoma wind resources include (1) transitionto a competitive market in electric power, (2)growth in distributed energy resources, (3) growthin demand for hydrogen fuel to power fuel cells,(4) development of an emissions trading scheme toreduce carbon dioxide emissions from fossil-energy combustion, and (5) economic-development benefits that will accompany thegrowth of a new industry in the State.

Transition to a Competitive (Deregulated) Market.While the transition to a more competitive marketin electric power has been put on hold by manystates in the wake of California’s recent energycrisis, Congress has been deliberating theprospects for facilitating the development of amore competitive market in power supply.


Since policy makers recognize that the nationalelectric grid was never envisioned to transferpower from a large number of generators to anequally large numbers of consumers, widespreaddevelopment of wind power may have to wait untilthe grid is improved. Advocates of wind-energydevelopment are now actively pushing for grid-improvement plans that pay attention to utilizingthe tremendous wind resource available in theGreat Plains and moving its energy to largemarkets across the country. With fair access to animproved nationwide grid, and hence to distantareas with large appetites for energy, wind’senvironmental and competitive advantage(including its value as a hedge against fuel-costspikes) will spur development immensely.

Distributed Energy.Continued reductions in the cost of wind powerhave made it economically attractive to developerswho may wish to enter a distributed market forenergy supply. Distributed generation offersopportunities for small wind farms to serve localusers directly, and small wind farms offeropportunities for local ownership, therebyincreasing economic returns to in-State concerns.

Furthermore, while feeding into electricaldistribution systems offers technical challenges,one large advantage is that wind-farm developmentwill not be restricted to proximity to transmissionlines with capacity. This offers more opportunityfor economic development in remote ruralcommunities. Small, locally owned, utility-scalewind farms (with 1–10-MW capacity) have been inplace in Europe for some time. Minnesota offers arecent model for such development that is workingin the United States (Miller, 2002); owners of largewind turbines there expect to earn 10 to 15 timesthe income they would realize as landownersselling wind rights, or up to $30,000 per year perturbine. After loans are retired, the annual incomefrom each turbine jumps to $80,000.

Production of Hydrogen for Fuel Cells.In addition to producing electricity, developers inwindy regions in the Great Plains may also find itattractive to store energy in the form of hydrogen,

made by splitting water into its componentelements. With the emergence of hydrogenpowered fuel cells for mobile as well as stationarypower use, parts of the Great Plains could emergeas important sources of fuel for automobiles andfor fuel cells sized to provide power to houses. ForOklahoma, the rapid emergence of fuel-cell usageover the coming decade would lead the next boomin a storied history of energy supply.

Carbon Dioxide–Emissions Trading.Growing concern about global climate change hasled a number of companies to search for ways toreduce their emissions of carbon dioxide. Whilemany strategies exist for sequestering carbondioxide, such as pumping it underground forstorage in partly empty oil and gas reservoirs, thelack of gaseous emissions associated with windpower makes it especially attractive to industriesthat are looking for cost effective ways to purchasecarbon credits. The emergence of a national marketin carbon credits, similar to the internationalmarket that was created by the Kyoto Protocol,will enhance the domestic appeal of wind-powerdevelopment.

Economic Development.Wind-power development has direct localeconomic benefits that can be captured bylandowners and communities where land is leasedby developers. For landowners, annual royaltypayments in the range of $2,000 to $5,000 perturbine can be realized. Communities may seeincreased revenue from property taxes—revenuesthat would benefit their schools, roads, and otherinfrastructure needs.

Because wind-power systems are the mostcompetitive of the renewable-energy technologies,wind-rich regions also have the potential tobecome key sites in the design and development ofthe next generation of these systems. In Oklahoma,the success of Bergey Windpower Company inNorman, a manufacturer of small wind turbinessold throughout the world, is a good example ofthe economic-development opportunities that canaccrue to proactive planning and management. Animportant state policy incentive is now in place to


boost production and sales of small turbines. If aneffective policy incentive is also put into place inOklahoma to promote wind-farm development,Oklahoma’s rural landowners and communitieswill reap immediate economic gains.

Furthermore, the demand for wind turbines in thisarea will make Oklahoma more attractive to thewind-turbine industry when it comes to locatingfacilities for the manufacture and maintenance ofturbines and turbine parts.

Summary and ConclusionsThe future of Oklahoma’s energy industry ischanging rapidly and renewable energy resourcescan be expected to play a larger role in it. As thecosts of production continue to decline, windpower and liquid fuels from biomass can providenew economic development opportunities for thestate. With a national commitment to develophydrogen fuel and the vehicular infrastructureneeded to use it, Oklahoma is well-positioned toengage in the future transition to cleaner burningfuels and sustainable energy systems. As concernabout the potential impact of carbon dioxide on theatmosphere grows, we can expect to see increasedinterest in technologies that can safely sequestercarbon dioxide from the atmosphere, or don’tproduce it at all.

With the emergence of a fuel cell-oriented future,we can expect the combined efforts of the publicand private sector to continue to drive down thecost of innovative technologies and enhance thecommercial appeal of Oklahoma’s resources.Results from joint OU and OSU research clearlyshow that significant parts of western Oklahomaand the Panhandle have wind resources that makethe development of large utility-scale wind farmseconomically feasible. These wind farms couldpotentially bring billions of dollars to Oklahoma ineconomic development. In view of finite fossil-fuel

reserves, an expected increase in demand forhydrogen fuel, and expected advances in wind,solar, and bioenergy technologies, renewableenergy appears as a viable and sustainable path forenergy diversification.

Acknowledgments

This review draws heavily upon the ongoing workreported by Profs. Ray Huhnke and Philip Kenkelat Oklahoma State University, which theygenerously shared with the authors. We gratefullyacknowledge their contribution. It is also based onthe wind resource assessment work reported inOklahoma Geology Notes, v. 62, no. 4, Winter2002 by Timothy W. Hughes, Mark Meo, TroySimonsen, Steven J. Stadler, and Jeremy Traurig(Developing Oklahoma Wind-Resource Modelsand Products: Opportunities for EnergyDiversification by the Oklahoma Oil and GasIndustry). For his pioneering work in windresource assessment, Tim Hughes received theAmerican Wind Energy Association’s AcademicAchievement Award for 2003.

References Cited

Elliott, D. L.; Holladay, C. G.; Barchet, W. R.;Foote, H. P.; and Sandusky, W. F., 1987, Windenergy resource atlas of the United States: SolarEnergy Research Institute, Golden, Colorado,DOE/CH 10093-4, 210 p.

Miller, Dan, 2002, Making money out of thin air:Progressive Farmer, v. 117, no. 2 (January 2002),p. 14–16.

Rohatgi, J. S.; and Nelson, Vaughn, 1994, Windcharacteristics: an analysis for the generation ofwind power: Alternative Energy Institute, Canyon,Texas, 239 p.

Biomass

1980 2000 2020

15

12

9

6

3

0

Wind

1980 2000 2020

40

30

20

10

0

1980 2000 2020

70

60

50

40

30

20

10

0

Solar Thermal

Photovoltaic

1980 2000 2020

100

80

60

40

20

0

1980 2000 2020

100

8

6

4

2

0

Geothermal

Background• The Cost Curves are expressed in constant, 2000 year dollars and based on a uniform set of

financial assumptions consistent with Generating Company Ownership (balance-sheetfinancing).

• Actual project costs can vary substantially – not only over time, but from project to project–– based on variables such as siting and permitting costs, land costs, transmission access,labor costs, and financing terms.

• The Cost Curves are not based on specific project data, but are composite representationsderived from a variety of sources outlined below.

• Historic costs from 1980 to 1995 generally reflect costs that were published in various DOERenewable Energy Program plans such as five-year program plans, annual budgets, andother program publications.

• The Future Cost Curves generally reflect how the DOE Renewable Energy Programs expectthe costs of renewable energy to decrease through lowered technology costs and improvedperformances, resulting from R&D efforts and other factors.

• Projections of cost to 2020 for biomass, geothermal, and photovoltaic energy technologiesare based on the DOE/EPRI Renewable Energy Technology Characterizations published in1997. Wind and solar thermal costs represent more recent DOE Renewable Energy Programprojections.

• The Cost Curves generally assume the availability of high-quality resources. This is animportant point because systems using lower quality resources are being built, in some caseswith costs as much as double those shown.

• The Cost Curves do not include the effects of tax credits or production tax incentives.

General Observations• The renewable technology cost trends typically show a steep decline from 1980 to the

present. Projections show this decline to continue, but at a slower absolute pace as thetechnologies mature.

• Historic cost of energy trends reflected in this chart are in broad agreement with the trendspublished in “Winner, Loser, or Innocent Victim? Has Renewable Energy Performed asExpected?“ Renewable Energy Policy Project, Report No. 7, April 1999.

Technology Specific Notes• Wind technology cost projections represent wind power systems in locations with Class 6

resources. Low wind-speed turbine technology is under development, which will makeavailable large amounts of usable wind resources that are closer to transmission. Lowercosts will result from design and technology improvements across the spectrum fromfoundations and towers, to turbine blades, hubs, generators, and electronics.

• Biomass cost projections are based on gasification technology. Lower costs will result fromtechnology improvements indicated by current pilot plant operations and evaluation,including improvements in feedstock handling, gas processing/cleanup, and overall plantdesign optimization.

• Geothermal cost projections are for Flash technology. Cost reductions will result from moreefficient and productive resource exploration and characterization as well as from continuedimprovements in heat exchangers, fluid-handling technologies, turbines, and generators.

• Solar thermal cost projections are for Parabolic Trough and Power Tower Technologies andare based on a detailed due-diligence study completed in 2002 at the request of DOE. Costreductions will result from improved reflectors and lower-cost heliostat designs, improvedsolar thermal receivers, heat exchangers and fluid handling technologies, and turbines andgenerators, as well as from volume manufacturing.

• Photovoltaic cost projections are based on increasing penetration of thin-film technologyinto the building sector. Likely technology improvements include higher efficiencies,increased reliability (which can reduce module prices), improved manufacturing processes,and lower balance of system costs through technology improvements and volume sales.

USDOE National Renewable Energy Laboratory

Renewable Electricity Technology Cost Trends(costs in cents per kWh in constant 2000 dollars)

Source: www.nrel.gov. These graphs are reflections of historical cost trends NOT precise annual historical data. Updated: 10/02

This chart does not display properlyin shades of gray. It is roughly thesame slope as the others below it.



Winds of Change: A Utility Perspective on Wind EnergyRichard P. Walker, Director, Business Development for AEP Wind Energy, LLC

IntroductionAmerican Electric Power has been active in thedevelopment of wind energy resources since 1993,when it initiated its Renewable EnergyDevelopment Research Project, which included anassessment of wind and other renewable resourcesin Oklahoma, Texas, and Arkansas. Concurrently,it embarked upon an investigation of availabletechnologies to convert these resources into usableelectrical energy.

Preliminary findings identified the existence ofabundant renewable resources as well assignificant technological developments leading tosteady cost reductions and efficiencyimprovements.

AEP now owns two of the largest wind energyprojects in the world, both completed in 2001, andhas been involved with two other wind projectscompleted in previous years. It continues to workon greenfield development of other wind sites, andhas evaluated several opportunities to purchasewind projects being developed by other companies.

Technological Advances in Wind EnergyNumerous advances in wind technology have beenaccomplished since the early 1980’s when large-scale wind projects first began appearing in theUnited States. These advances have helped reducethe cost of wind energy from 30 to 40 cents perkWh in the early 1980’s to as low as 4 to 5 centsper kWh currently at good wind sites.

Including the value of the Federal wind energyproduction tax credit (PTC) reduces the cost ofenergy to somewhere around 3 cents per kWh,which is very cost competitive with traditionalgeneration sources, particularly with gas prices inthe range of $5 to $6 per MMBtu. The substantial

increase in the size of wind turbines and the heightof the towers being utilized has been a large part ofthe decreasing cost of wind energy, as well as theeconomies of scale gained from much largerprojects being constructed today.

Technological advances in materials andequipment have resulted in much higherefficiencies, better availability, longer turbine life,and greatly reduced maintenance, which alltranslates to improved economics.

Reasons for AEP’s Interest in Wind EnergyAEP is the largest owner of electric generatingcapacity in the United States, and it relies on avariety of resources including coal, lignite, naturalgas, oil, nuclear energy, hydroelectric energy, solarenergy, and wind energy. All of these resourcestend to have some environmental issue associatedwith them, but coal, lignite, and nuclear energytend to draw the largest amount of scrutiny fromthe public and regulators.

Wind energy is generally regarded very favorablyby the environmental community and thus helpsbalance the environmental risk associated with theoverall fleet of generation. Natural gas pricevolatility and, more recently, escalating prices,makes wind generation a very attractive supplyoption since contracts for wind energy generallyhave fixed prices of anywhere from 10 to 20 years.

This certainty is valued both from the standpoint ofan owner of generation and a buyer of the output.Customer, shareholder, and regulator support isanother important factor to the increased use ofwind energy by AEP. Several polls conducted byAEP and other companies in recent years showhigh levels of support among these groups forincreased use of renewable energy resources.


Potential Barriers to Consider

1 The PTC is currently scheduled to expire at theend of 2003, and if Congress chooses not toextend this tax credit, the competitiveness ofwind energy versus traditional resources willbe negatively impacted.

2 Lack of transmission capacity in windy areasalso is a problem that must be dealt withbefore wind energy can provide large amountsof the electricity needs of Oklahoma and theU.S.

3 In addition, the electric industry needs to havea better understanding of how an intermittentresource such as wind will affect theoperations of the electric grid when introducedin large volumes. In the past, this wasgenerally ignored as projects were in the 5 to50 MW range. Now, projects of 200 to 400MW are becoming more common, and electricsystem operators are now starting to take noteof this resource and its impact on the system.

4 The wind industry needs to be aware of theseconcerns and engage in dialogue withtransmission grid operators to understand theirconcerns and to help the grid operatorsunderstand how wind turbines perform.

Oklahoma’s Unfulfilled PotentialU.S. Wind Energy: Potential and Installed

Shown below are the top 20 states' wind energy

potential, as measured by annual energy potential in

billions of kilowatt-hours, factoring in environmental

and land effects. In the “installed column is the

megawatts of wind power installed as of 8/1/2003.

Potential Installed

BKW MW

1 North Dakota 1,210 4.8

2 Texas 1,190 1,095.5

3 Kansas 1,070 113.7

4 South Dakota 1,030 3.0

5 Montana 1,020 0.1

6 Nebraska 868 14.0

7 Wyoming 747 140.6

8 OKLAHOMA * 725 0

9 Minnesota 657 360.6

10 Iowa 551 422.7

11 Colorado 481 61.2

12 New Mexico 435 1.3

13 Idaho 73 0

14 Michigan 65 2.4

15 New York 62 48.5

16 Illinois 61 0

17 California 59 1,832.2

18 Wisconsin 58 53

19 Maine 56 0.1

20 Missouri 52 0

Source: Potential - An Assessment of the Available

Windy Land Area and Wind Energy Potential in the

Contiguous United States, Pacific Northwest Labora-

tory, 1991. As cited at www.seic.okstate.edu/owpi/

About/windresource.htm. Installed - American Wind

Energy Association as of August 1, 2003.

www.awea.org.

* Note: There will be two wind farms installed in

Oklahoma in late 2003. The estimated capacity will be

175 megawatts.



Forecast for New Wind Power InstallationsAmerican Wind Energy Association: Provided by William R. McKamey, AEP-Public Service Company of Oklahoma

The American Wind Energy Association (AWEA)reported today that the U.S. looks likely to install1,400-1,600 MW of new wind power this year,reducing demand for natural gas and bringing newjobs and tax revenues to cash-strapped states, whileat the same time helping to achieve cleaner air.While the outlook for the balance of the year isstrong, AWEA warned that the wind industry'sfuture beyond year's end will be strongly influencedby whether Congress extends the wind productiontax credit (PTC) scheduled to expire Dec. 31.

According to AWEA's quarterly assessment of thewind energy market, the wind project developmentsthat are underway could increase the cumulativetotal of U.S. installed wind capacity to over 6,000MW. That level of wind capacity will be able toproduce approximately 16 billion kWh of pollution-free electricity, enough to serve 1.57 millionaverage U.S homes.

In the past month, a number of large projects havebeen announced that will increase the year-endtally. AWEA Executive Director Randall Swishercommented, "We see more reason for optimismthan we did three months ago. The market appearsto be firming as the end of the year draws nearer."Developers are pushing to complete projects by theend of the year in order to qualify for the PTC. Aquick extension of the credit is urgently needed,Swisher said, to ensure that the momentum gainedtoward industry growth is not lost as it has been inthe past when the credit expired: "The PTCprovides a simple, yet powerful and necessary,boost to the development of clean, renewable windpower.

"The industry's growth continues to be hamperedby a wide range of market barriers, from utilityunfamiliarity with the technology to problemsobtaining fair access to transmission lines. The

PTC provides the stimulus needed to overcomethese barriers and open the market, and its exten-sion is critical to the industry's future."

A three-year extension of the PTC is included inboth the House and Senate versions of comprehen-sive energy legislation now pending in Congress.Swisher also called on energy bill conferees tosupport Senate-passed provisions that wouldestablish a national Renewables Portfolio Standard(RPS) requiring that 10% of the nation's electricitycome from renewable energy sources by 2020 anda Small Turbine Investment Credit for homeownerswho install residential wind machines.

Conservation of Natural GasAcross the country, customers are facing electricityand natural gas rate hikes due to the natural gassupply shortage. Every unit of electricity that isproduced by a wind farm is one for which thecountry does not have to burn natural gas or otherresources. AWEA estimates that an installedcapacity of 6,000 MW of wind power will saveapproximately 0.5 billion cubic feet of natural gasper day (Bcf/day) in 2004, alleviating 10-15% ofthe supply pressure that is now facing the naturalgas industry.

For example, FPL Energy is now putting thefinishing touches on the largest wind power projectto be installed in the U.S. this year -- the 204-MWNew Mexico Wind Energy Center. At averageproduction rates, that project will produce energyto supply more than 51,000 homes. More than sixBcf of natural gas per year would be needed togenerate the same amount of electricity.

AWEA believes that more wind plants providewhat is potentially the quickest and best supply-side option to ease the natural gas shortage(www.awea.org/newsroom)


Economic DevelopmentThe best wind power resource in the country is inrural areas, where it is a welcome source of skilledjobs, income to farmers, and taxes to the commu-nity. New wind facilities are adding high-tech jobsin places where the economy continues to stagnate.

Wind farms also expand the local tax base, andkeep energy dollars in the local community insteadof spending them to pay for coal or gas producedelsewhere.

A consortium of wind power leaders -- includingShell WindEnergy, Padoma Wind Power, GreenMountain Energy Co., TXU Energy, Cielo WindPower, and Orion Energy -- recently announcedthat it would build a 160-MW project in westernTexas.

The consortium will lease the land for the projectfrom private farmers and ranchers, who can receive$2,000 to $3,000 per turbine annually, with nomore than 2.5 acres per turbine removed fromproduction for turbines, access roads, and otherequipment.

WIND POWERU.S. Installed Capacity (Megawatts) 1981-2002Sources: U.S. Department of Energy Wind Energy Program & AWEA

1981 1986 1991 1996 2001

5k

4k

3k

2k

1k

0

SW Oklahoma

Blue Canyon Wind Farm© 2002 Zilkha Renewable Energy. (www.zilkha.com/whatweredoing.asp?id=3)

The Blue Canyon Wind Farm, to be built inpartnership with Kirmart Corporation, will belocated on one of the best wind sites in Okla-homa. Located approximately 15 miles northwestof Lawton, Oklahoma, Blue Canyon will offerrobust transmission resources to areas served byall the major utilities and electric cooperatives inthe state.

Western Farmers Electric Cooperative (WFEC)will buy all 74.25 megawatts (MW) of theelectricity produced from the first phase of BlueCanyon, enough to power approximately 22,300Oklahoma homes.

This is the first such agreement to purchaseenergy produced from an environmentallyfriendly wind farm in Oklahoma. The 20-yearpurchase agreement will provide wind power toWFEC’s 19 rural electric cooperatives that servefarms, rural residences, towns, and commercial/industrial customers in approximately two-thirdsof rural Oklahoma.

Zilkha has been developing the Blue Canyonproject for over 18 months and has made majorprogress on several fronts, including securingmore than 16,000 acres of land for the project,acquiring interconnection to the regionaltransmission system, and performing numerousvoluntary environmental studies to ensure thatlocal area will not be adversely impacted.

The Blue Canyon Wind Farm Project willproduce as much as 300 megawatts of affordablepollution-free electricity when all phases ofconstruction are complete. In addition to powergeneration, the Project will bring new jobs andtax revenues to surrounding counties.

Southwestern Oklahoma has long been knownfor its vigorous wind resource. The Blue CanyonWind Farm will be built on a geological featureknown as the Slick Hills. The hills rise above thesurrounding plains, 300 feet in less than two anda half miles.



Wind Power in Woodward, OklahomaRussell Ray, World Staff Writer, 08/17/2003, Tulsa World

WOODWARD -- Giant cranesplod from field to field,assembling the state's firstwind farm north of thiswestern Oklahoma town offOklahoma 34.

Workers with Florida Powerand Light, the nation's topwind farm developer, carefullyhoist an 87,500-pound propeller into the air, usinga large crane and some rope guides. Minutes later,the fiberglass creation is bolted to a 210-foot-hightower as cattle and horses graze among the cedartrees below.

About 50 of the 68 wind turbines planned forconstruction have been completed. They dominatethe horizon, each standing 310 feet tall at the rotor'stip, as tall as a 20-story building.

"I haven't had anybody comment negatively aboutthe way they look," said Project Manager GaryBouska. "In fact, most people are surprised at howgraceful they look. People are very impressed withthe size."

The company expects to complete the $102 millionproject late next month, and utilities may startshipping the power to Oklahoma customers byearly October, officials said. Capable of producing102 megawatts, the wind farm will generateenough electricity to power about 30,000 homes.

Last week, state regulators approved a rate plan forpower produced by the wind farm. Customers ofOklahoma Gas & Electric Co., the state's largestelectric utility, can purchase the wind-generatedelectricity for an additional 2 cents per kilowatthour. “We'll start enrolling customers in Septem-ber," said Brian Alford, a spokesman for OG&E.The surcharge, however, is offset to some extent

because customers whochoose the "green power"option don't have to pay thefuel costs associated with coalor gas-fired power.

Construction of the wind farmbegan in mid-May. Sincethen, company officials haverecorded wind speeds as high

as 65 mph. Several ravines within the 1,200-acresite help create the stronger winds. Like water in awaterfall, the wind currents pick up speed as theybreak down the ravines. "We've had wind speedsover 8 mph almost every day," Bouska said.

Half of the plant's capacity -- 51 megawatts -- isdedicated to OG&E. The other half belongs to theOklahoma Municipal Power Authority, whichprovides power to 110,000 customers in 35 citiesand towns.

"It's clean. It's good for Oklahoma, and it providesOklahoma an option to have green power," he said.However, backup generation from conventionalpower plants must be secured by wind powerproviders because the wind doesn't blow all of thetime. "One of the problems with wind is you can'tcount on it," Bouska said.

For the wind farm's landowners, the project willcreate a significant source of additional income."On average, I would guess they make somewherebetween $3,000 and $4,000 a year per turbine,"Bouska said.

Known as the Oklahoma Wind Energy Center, thewind farm will employ six people permanently andwill be operated by Florida Power and Light. FPLfacilities accounted for 40 percent of the windpower produced in the United States last year, saidcompany spokesman Steve Stengel.


Some OG&E customers will be able to buy "greenpower" solely or in blocks.

Wind-generated electricity blew into the state in abig way Tuesday when the Oklahoma CorporationCommission approved a rate plan for a majorutility company to provide the alternative energy tosome of its customers.

Oklahoma Gas and Electric Co., the first regulatedutility in the state to offer wind-generated electric-ity, received permission from commissionersduring the hearing to move ahead with its renew-able energy rate plan.

The 34-turbine wind farm where the electricity willbe made is under construction near Woodward andis expected to be finished by December. It willgenerate about 50 megawatts of electricity, enoughto power as many as 15,000 households in the area,said OG&E director of public affairs Paul Renfrow.

"As of today, we are in the wind business,"Renfrow said. "This is going to test the appetiteOklahomans have for wind power."

Under the approved plan, customers will have theoption to buy 100-kilowatt blocks of "green power"at a rate of 2 cents per kilowatt. Or, customers canbuy green power for 100 percent of their electricalusage at 2 cents per kilowatt, he said.

Customers who opt for wind -generated electricitywill pay a surcharge for the service. But they willbe exempt from the fuel adjustment charge --currently about 1.4 cents per kilowatt -- the costutilities pay for fuel used to make electricity.

So for every 100 kilowatts of wind-generatedpower OG&E customers buy, they will pay $2 andbe credited $1.40 for the fuel adjustment cost. Thenet result is a charge of 60 cents for 100 kilowattsof wind-generated electricity. The average homeuses about 1,000 kilowatts of electricity a month.


Pricing Wind Generated Electricity in OklahomaTom Droege, World Staff Writer, 08/13/2003, Tulsa World

"The pricing concept is going to be tough toexplain," Renfrow said. It boils down to greenpower costing the consumer an average of about $6a month more than traditional, fuel-generatedelectricity, he said.

OG&E expects to roll out a marketing campaignfor its wind-generated electricity in the next monthand customers in the Woodward area will be able tosign up for the service as early as September.

Florida Power and Light is building and willoperate the wind farm, with half of the energyproduced going to OG&E and half going to theOklahoma Municipal Power Authority.

With about 700,000 customers around the state,OG&E is the largest electricity provider in Okla-homa. AEP-PSO, which has about 500,000 custom-ers and serves Tulsa, is unsure about the demandfor wind-generated electricity in the area.

"We've not had much customer demand for it," saidAEP-PSO spokesman Jeff Rennie. "We're unsureabout the market, but we are monitoring it."

Nonregulated electric utilities in Oklahoma also areworking on wind-power projects around the state,including one near Lawton run by Western FarmersElectric Cooperative.

Representatives from Zilkha Renewable Energy,the developer on that project, were in OklahomaCity on Tuesday along with several other windpower developers, manufacturers and advocacygroups to promote the use of wind-generatedelectricity. Cleanliness and availability were toutedas the advantages wind power has over the morevolatile fuel-generated electricity.

"Betting on natural gas right now is like betting onthe stock market," said Zilkha spokesman MichaelSkelly.


New Mexico

HyTeP Hype: State Bets on Hydrogen FutureAndrew Webb, New Mexico Business Weekly Staff, © 2003 American City Business Journals Inc.

Not since the fuel crisis of the 1970s has there beenso much public and private interest in poweringcars and generating electricity with hydrogen fuelcells, the only byproducts of which are pure waterand heat.

International events of the last couple of years havedemonstrated the United States' shaky relationshipwith the Middle East, the source of most of theworld's oil. Moreover, pollution concerns and theknowledge that fossil fuel production cannot besustained indefinitely, at current levels havebrought a new urgency to the development ofhydrogen as an alternative. As the drumbeat growslouder -- President George W. Bush recentlyannounced $1.2 billion in funding for hydrogenresearch over the next five years -- New Mexicobusiness and political leaders say the state is poisedto leverage its natural resources, fledgling fuel cellbusinesses and federal lab connections to be at thecenter of the new industry.

But to be ready for an industry some predict willhit full swing in a decade, the state will have somecatching up to do.

"If we start paying attention in 2006, we're toolate," says state Economic Development SecretaryRick Homans.

That in mind, a consortium of industry, businessand political leaders from New Mexico and aroundthe nation gathered in Santa Fe last week to lay outan ambitious roadmap aimed at helping the statecapitalize on its fuel cell heritage and future. Thatplan would prepare the state's infrastructure andgrow its small cadre of fuel cell-related businessesto coincide with expected increases in hydrogenresearch at Los Alamos National Laboratory andthe fledgling industry's early steps towards com-mercialization, which are expected within a fewyears.

"New Mexico has many of the assets needed," saysKenneth Freese, a program manager at Los AlamosNational Laboratory's industrial business develop-ment department. Freese is on loan to the Eco-nomic Development Department to coordinate theHydrogen Technology Partnership, or HyTePproject, a group of about 10 industry and politicalleaders charged with working with the state at largeto grow a fuel cell cluster. "We have research, wehave hydrogen, we have an unusual constellation ofbipartisan political support that is bringing togetherthe private and public sector to identify where theopportunities lie.

"We're talking about 10 to 15 years before this is afully developed industry. That means we have timeto put in place the business infrastructure before it'sneeded."

Freese says New Mexico's natural resources --abundant natural gas and sun -- are its key assets inthe race to become what the economic develop-ment department calls the "hydrogen state." Amongseveral current methods of deriving hydrogen,about half of it is produced by reforming it fromnatural gas. Freese says scientists believe futuremethods will include cracking water moleculeswith electricity to obtain hydrogen -- a task thatcould be performed with solar power.

Hydrogen is the most prevalent element in theuniverse. Called the "forever fuel" by some propo-nents of alternative energy, some scientists say itstores energy more effectively than conventionalbatteries, and it burns twice as efficiently in a fuelcell as gasoline in a regular internal combustionengine.

Hydrogen fuel cells were first developed in themid-19th century, but due to a lack of necessity, thetechnology hibernated until the U.S. space pro-grams in the 1960s breathed the first life into such


systems. Though the materials used to make themwere then, and remain, very expensive, they provedthemselves capable of providing dependable, long-lasting power -- and producing drinkable water toboot.

Fuel cells are manufactured as flat plates, eachcapable of producing a specific amount of current.The plates are stacked to produce more power.Hydrogen and oxygen are fed into the cells, wherethey are combined to make electricity in a processsimilar to a car battery.

But unlike a battery, which is thrown away at theend of its life, fuel cells can be resupplied indefi-nitely.

Researchers and supporters envision a world filledwith fuel cell-powered devices -- from homes tocars, that can plug into the commercial energy gridwhile not in use, to sell power.

"This fuel could make obsolete our big-scale oil-polluting network, through a locally-based system,"writes Jeremy Rifkin, president of the Foundationon Economic Trends and author of the book "TheHydrogen Economy: The Creation of the World-wide Energy Web and the Redistribution of Poweron Earth," in an article in the January 2003 issue ofEnvironmental Magazine.

New Mexico boasts a small group of companieseither fully or tangentially involved in the produc-tion of fuel cell components and related technol-ogy, including MesoFuel, Superior Micropowdersand Surfect in Albuquerque, as well as Los Alamos'Energy Related Devices. They were joined at lastweek's workshop by representatives from largenational and international corporations working todevelop hydrogen fuel cell products, including asGeneral Motors, Motorola and UTC Fuel Cells, aConnecticut supplier of hydrogen fuel cells forstationary power and the space program.

Citing the state investment council's recent authori-zation to invest state funds directly into companies,Homans says he envisions existing firms, new

companies, and fuel cell research from the labscoalescing to create a hydrogen economy clusterthat could attract even more companies to the stateto help commercialize the technology.

"We want to use the resources we just got out ofthe Legislature," he says.

HyTeP officials are eying several key stages in thecoming timeline of fuel cell commercialization,Freese says. The first is the development of station-ary fuel cells -- small, semi-portable units thatcould provide uninterrupted power to homes andcommercial buildings, among other things. UTCand other companies already market such systems,he says. Next are smaller, more portable powersystems for two markets -- civilian uses such ascell phones and radios, and military systems, toreplace batteries for long-term power supply in thefield.

Finally, he says, will be what many consider theholy grail of fuel cell application -- transportation.

But fuel cell cars are at least a decade from theshowroom floor, says former Los Alamos NationalLaboratory scientist Byron McCormick, who nowserves as executive director of fuel cell research atGeneral Motors. Though several automotive giantsare working on fuel cell-powered cars -- GM had acouple mockup examples of its futuristic-lookingAUTOnomy in the parking lot -- actually sellingthem presents a confounding chicken-and-eggquestion: Where will owners get the hydrogen?

There are only a few hydrogen providers aroundthe country, and major fuel companies have balkedat the cost and perceived danger of providingcompressed hydrogen without many potentialcustomers. There are a few -- several fuel cellbuses operate in the United States and Europe, andHonda last year leased a handful of its 80-horse-power, Ford Festiva-sized FCX vehicle to the citygovernments of Los Angeles and Tokyo, where thefirm will build compressed hydrogen fuelingfacilities. The company currently has no plans tomass-market the vehicles, or any fuel cell cars,


anywhere, citing infrastructure and cost problemsthat still must be solved before such commercial-ization is feasible.

Until there are hydrogen stations on every corner,fuel cell transportation development is likely tocenter around reforming readily available gasoline,a process which does reduce pollution, but still putscarbon into the air and fails to solve the fossil-fueldependence problem.

For now, McCormick says, key markets might liein developing countries where fossil-fuel-burningvehicles are less ubiquitous -- allowing for "top-down" development of a hydrogen provisioninfrastructure.

"There are 6 billion people, and only 700 millioncars," McCormick says, noting that currently, only12 percent of the world's population has access toautomobiles.

The trick, he says, will be bringing the costs down.Though hydrogen itself isn't inherently expensive,making, transporting and storing it is, and fuel cellcomponents include pricey, precious metals.

McCormick says General Motors and its fuel cellresearch partner Toyota continue to work to refinefuel cell technology with Los Alamos NationalLaboratories, which has a 27-year history inhydrogen research.

"New Mexico has the leadership and the technol-ogy to be a real player in this," he says.

New Mexico isn't the only state whose leaders haverecognized the potential importance of the hydro-gen industry. Ohio recently opened its first hydro-gen fuel station for cars, and a $100 million, three-year fuel cell initiative will include three more. Thestate of Michigan is developing a 700-acre, state-owned campus to provide tax-free research spacefor hydrogen innovators. Texas and California arealso exploring the fuel cell industry, Homans says.During an afternoon brainstorming session, inwhich the 150 workshop attendees broke up intogroups to hash out the various challenges andsolutions to fostering New Mexico's hydrogenindustry, several brought up the topic of differenti-ating the state from others gunning for "hydrogenstate" status.

Economic Development Department Office ofScience and Technology Director Randy Burgesays the 10-person HyTeP team will spend the nextfew months disseminating the input receivedduring the workshop and developing a businessplan for growing the fuel cell industry in the state.

"The Economic Development Department willinvite you with your ideas, we'll invite you to feedthem to us," Burge says, noting the developmentteam hopes to have planning wrapped up by theend of the summer.

Andrew Webb, NMBW [email protected] | 348-8324© 2003 American City Business Journals Inc.http://albuquerque.bizjournals.com/albuquerque/stories/2003/05/05/story2.html


Colorado

Business Empire Transforms Life for Colorado Ute TribeIanthe Jeanne Dugan, Staff Reporter of The Wall Street Journal

IGNACIO, Colo. (June 13, 2003) -- On a coolTuesday morning last fall, hundreds of SouthernUte Indians headed for the bank.

The Wells Fargo drive-through in this speck of acity was swamped by tribal members cashingchecks for over $10,000, prompting a teller to rushoutside and tape up a sign: "No cash transactionsover $3,000 through the drive-up." Customersparked their new Cadillacs and pickup trucks andstrutted inside.

It's become an annual ritual for a tribe that couldn'tafford indoor toilets and electricity until the 1950sand had few jobs until the mid-'90s. Each year, theSouthern Utes , whose reservation rings this tinytown, get a cut of the profits from a series ofunique business ventures run by the tribe. Theenterprise has made each of its 1,384 members amillionaire on paper and transformed the tribe intoa powerful force shaping the future of the "FourCorners" junction of Colorado, Utah, New Mexicoand Arizona.

A decade ago, the tribe, which sits on one of thebiggest supplies of natural gas in the U.S., foughtenergy companies to open one of thefirst Native American gas-productionoperations. Then it fought its ownmembers to reinvest most of the profitsinto real estate and energy ventures asfar away as Hawaii and Canada.

Now the tribe is a conglomerate with$1.45 billion in assets, making it one ofthe richest tribes in history and one ofthe few whose wealth doesn't hinge ongambling. It has new sewers, anelementary school, a lavish college-scholarship plan and the only triple-Abond rating among tribes. When the

local phone carrier buckled under the rapid expan-sion, the tribe built its own fiber-optic network.

"Everyone wants to keep up with the Joneses," saysthe 54-year-old tribal chairman, Howard RichardsSr., whose childhood home had dirt floors. "Well,now we are the Joneses."

But the road to riches has taken some dark twists.The tribe's business plans and newfound wealthhave led to environmental controversies, racialtensions, even a murder. And many Southern Utesare uneasy and resentful about how the tribe'swealth is distributed, a topic that inspires shoutingmatches at tribal meetings and requests for ordersof protection.

Once a year, the tribe splits 10% of its profitsamong the 600 members between 26 and 60 yearsold; elders get $54,500 apiece annually. Theremaining profits go into businesses mainly chosenby white executives, who dominate the tribe's topbusiness posts.

Many tribal members say they aren't getting a fairshare of the profits. Some gripe that they learn

about business deals after the fact,in the local newspaper. "We'vefound out that the old saying is true-- money is the root of all evil," says79-year-old Annabelle Eagle, herdiamond tennis bracelet resting on ahand-made skirt. Her son, SageDouglas Eagle Remington, 60, fearstribal leaders and white executivesare gaining too much power, creat-ing a "nouveau riche banana repub-lic."

Tribal leaders argue that the invest-ments will ensure riches for genera-


tions to come. "One day, we might wake up and saythere's no income from oil and gas," says LeonardBurch, who retired as tribal chairman in November,after serving most of 30 years. "People say, 'Weneed more money.' We say, 'No, you don't. Youneed to invest.' "

For all the controversy, the Southern Utes’ successis unfolding as a model in Indian country. Leadersof other tribes are trekking here to learn how toduplicate the Southern Utes’; achievements. Andthe larger Ute tribe in eponymous Utah, which alsohas natural gas reserves, has hired away one of theSouthern Utes’; financial advisers. "They see theircousins coming to powwows in nice cars," says theadviser, John Jurrius, "and they want to know howthey can work that magic."

The Southern Ute model could prove as lucrativeas gambling to some tribes. Native lands contain10% of the known onshore supply of natural gas,but most of it is mined by non-Native entities thattypically pay royalties of 12.5% of sales. Tribes'royalties totaled $200 million last year. The South-ern Utes , meanwhile, pulled in $100 million onprofits from their gas-production company. Theyalso collected half of all the natural-gas royaltiespaid to Indian tribes.

In the late 19th century, the Utes were driven out ofthe gold-rich San Juan Mountains and into theterritory that now bears their name. A chunk of thetribe, now the Southern Utes , was relegated to thehigh desert in Colorado. Halfthe land was opened to non-Indian settlers, who grabbedchoice tracts, creating acheckerboard of a reservationthe size of Rhode Island. Nowthere are 1,000 Southern Utesand 15,000 others within thebounds of the reservation,including U.S. Sen. BenNighthorse Campbell, aNorthern Cheyenne.

The Southern Ute land was too arid for farming.But "the government didn't know there was gold inthem thar hills," says Mr. Burch, 69. "We had noidea what was sitting right under us."

The first glimmer came in the 1950s, when energycompanies found natural gas in the area. Thecompanies cut deals with the Bureau of IndianAffairs, which handled leases for tribes, to mine thegas from sandstone. But the royalties were someager that in the mid-'60s the tribe suspended its$100-a-month stipend to members for two years. Ittried to boost revenue with a restaurant, a hotel anda marina on Navajo Lake, Southeast of Ignacio, butthey all flopped. Its casino survived, and takes in$9 million in profits annually, but is too remote todraw hordes of high rollers.

Then, in the late 1980s, energy companies came upwith new technology to extract natural gas fromcoal. The Southern Utes had coal in abundance.But this time the tribe didn't want outside compa-nies to extract the fuel. Mr. Burch, who had workedfor the Bureau of Indian Affairs' realty office, cameto a simple conclusion. If the tribe controllednatural-gas production, it would keep all theprofits.

The tribe began buying back leases and existingwells. In 1991, it sued Amoco Co., two dozen otherenergy companies and 5,000 non-Ute landownerswho lived on tribal land. The companies had signedleases with the landowners to extract gas from the

coal on their property -- 200,000acres that homesteaders took acentury earlier. The tribe owns thecoal on that land, and argued in itssuit that it also owned the gas in thatcoal. The Southern Utes also hiredengineers to assess how much fuelcompanies were drawing fromexisting leases and making sure thetribe was being paid in full. With thehelp of one of those engineers, theystarted building their own produc-tion company.


Robert Zahradnik, formerly of Exxon, helped draw up a business plan for RedWillow Production Co., calling for $8 million in start-up capital, the tribe'sannual revenue at the time. Given the tribe's history of failed businesses, it wasa tough sell. But proponents won out, and in 1993 Red Willow was launched.

Still, the tribe struggled for respect. Mr. Zahradnik recalls a well owner, basedon Manhattan's Park Avenue, rejecting him "with amused condescension"when he proposed buying the wells. "We could buy their building now if wewanted to," he adds.

In the late 1990s, the tribe got a huge boost when Amoco, now part of BritishPetroleum, agreed to turn over a 32% working interest in 400 wells on thereservation to settle the lawsuit. That move, along with acquisitions, helpedthe tribe leap from the reservation's 62nd biggest production company to thesecond, behind only BP. It now has stakes in pipelines controlling 1% ofAmerica's natural gas. (The U.S. Supreme Court ultimately ruled against theSouthern Utes in the suit.)

As the tribe's coffers swelled, the battles began, first with the tribe's youths.Like most tribes, the Southern Utes set aside a portion of their wealth in atrust that children begin to get when they turn 18. But they saw the dangers ofthat arrangement in 1995, when a Southern Ute girl was shot dead, and herfriend wounded, by robbers seeking the friend's "18 money," which she hadreceived that day. The friend started the night with $6,000, and was down to$2,700 by the time the criminals caught up with her.

The tribe decided to distribute the 18 money in eight annual installments,instead of four, so the teenagers wouldn't get so much at once. Teenagersprotested to the tribal council, to no avail.

Another alarm went off in 1997, during a retreat at the Rolling Thunder Hall,a conference room at the casino. The tribe's Department of Energy presentedcharts projecting that natural-gas profits would begin to decline in 2002, andthat the tribe would eventually slide back into poverty. They needed a financialadviser.

Enter Mr. Jurrius, a self-described "tough-talking Texan in a suit," whom thetribe plucked from a Houston energy company. Mr. Jurrius was paid a retainer,plus a bonus if he exceeded projected profits. Neither he nor the tribe willdisclose his salary.

Mr. Jurrius set up an office in a basement that had been the tribe's morgue.Working with Andersen Consulting, he came up with a plan. The tribe wouldestablish two funds to underwrite investments and support tribal members.

The Permanent Fund would take 75% of energy royalties, and the profits fromthe Sky Ute Casino, and invest the money in securities. This would fund the


tribal government and pay monthly allotments of $520 to tribal members. Therest of the royalties, and all of the profits from the tribe's energy and real-estateholdings, would go into the Growth Fund. This would distribute 10% ofprofits to adults under 60 and underwrite the annual elder pension. The rest ofthe money would be earmarked for investments, with a goal of a 15% return orbetter.

Tribal leaders pushed through the plan over strong opposition. Some memberswere still leery of big business ventures. Others questioned the fairness of theincome distribution. Indian tribes consider property communal, and profits areshared equally. "I'm a capitalist working for a bunch of socialists," says Mr.Zahradnik, the Growth Fund's operating director.

The Growth Fund, which has averaged a 30% return annually, poured thetribe's natural-gas profits into far-flung real-estate and energy ventures.Recent deals include a $123.4 million cash purchase of a Hawaiian oil andgas company and $85 million in real-estate deals that made the Southern Utesthe landlord of the Federal Aviation Administration in Kansas City and TRWin Denver.

But since big business moves were made without the input of tribal members,they began to suspect they weren't getting their fair share of the profits. Thefact that outsiders served as presidents of each of the tribe's seven businessesadded to the alienation. "There's a communication problem," say Tara Vigil, a33-year-old mother of four who works for the Growth Fund. "People aresaying, 'We have money, why don't we see it?' "

Members drive nice cars but park them in front of modest homes and double-wide trailers. On the big payday last fall, many members headed straightfrom the bank to a pawnbroker, where they retrieved $20,000 of saddles,blankets, tools, chainsaws, jewelry and even cars.

At council meetings, tribal members accused council members of lining theirpockets. (Council members won't disclose their salaries.) Occasionally,screaming matches broke out and fistfights were threatened. By far the biggestcritic has been Mr. Remington, who has a shock of white hair and is summedup by the bumper sticker on his 1999 Chevy Cavalier: "Tribal Elder WhoKicks Butt." At one meeting, he demanded of Pearl Casias, the tribe's vicechairman: "Did John Jurrius buy you that car?" Ms. Casias recalls telling himshe bought her convertible BMW with her own money.

"It seems like the more money we have, the less people get along," says Ms.Vigil.

During the last election, candidates opposed to the business plan appeared onthe ballots in droves. But members voted in Mr. Richards, a proponent.


The grumbling goes beyond tribal members. The taxes paid on gasthat comes out of the reservation account for a quarter of the taxes inLa Plata County, where the tribe is now the biggest employer. But thetribe doesn't pay property taxes on land within the bounds of thereservation, and area residents fear the tribe will pull land off the taxrolls as it snaps up real estate.

Another fight centers on the tribe's plans for 1,400 acres nearDurango. Area residents say that building 2,000 residential units anda half-million square feet of medical offices, stores and a new hospi-tal will choke roads. Mr. Zahradnik expects people to both live andwork in the development, thereby lessening traffic.

That is just one of several environmental battles that the tribe faces.Area residents are complaining about the environmental damage thenatural-gas wells cause, which Mr. Zahradnik says the tribe hascorrected.

The money has also attracted hordes of gold-diggers. Every week, thetribe shoos away people falsely claiming to be Southern Ute to get acut of the cash, outside entrepreneurs looking for investors andromantic suitors. Hal Koenig, the tribe's criminal investigator, saysthat suspects frequently tell him they moved to the reservation to finda rich spouse. One such suspect landed in custody for beating hisSouthern Ute wife. Another stabbed someone in the street.

Some Southern Utes worry that the money will erode their culture."Before the money, everything was easier, simpler," says EverettBurch, brother of the former chairman. People have lost their huntingskills, he says, and wouldn't know how to survive without "luxuries"such as electricity.

Tribal leaders argue that the money will help preserve the culture:With profits from its funds, the tribe has built an elementary school toteach the Southern Ute language and traditions. Meanwhile, Ms.Casias says a new apprenticeship program will elevate more mem-bers to leadership spots in the tribe's businesses. And the investmentfunds have begun circulating a newsletter to communicate their plansbetter.


Proposal Stirs Sharp DebateTHE DENVER POST

07/28/2003

WASHINGTON — Sen. Ben NighthorseCampbell’s plan to deregulate gas drilling, powerplants and other energy projects on Indian land hassparked a heated debate in Indian country aboutthe federal government’s obligations to tribes.

Campbell, the only American Indian in the Senate,says his proposal would bring badly needed jobsand development to severely depressed reservationeconomies. The proposal is backed by the Bushadministration, at least three tribes and the staff ofa leading Indian energy group, the Council ofEnergy Resource Tribes.

The plan would allow tribes to develop their ownenvironmental regulations, which would have to beapproved by the Interior Department.

Once approved, tribes wouldn’t have to wait forthe federal government to do environmental impactstatements — which take a year or more and costhundreds of thousands of dollars — to do energyprojects.

But the nation’s biggest tribe, the Navajo Nation, isleading a host of others in a fight against theproposal, comparing it to the Navajo’s disastrousentry into uranium mining during the Cold War.The mining sickened thousands of Indian minersand scarred Navajo lands with abandoned mineshafts.

Navajo President Joe Shirley Jr. says Campbell’splan would let the federal government out of itslegal “trust” obligation to look out for the interestsof tribes.

“I view the trust relationship between the Navajoand the U.S. government as a sacred relationship,”Shirley said in an interview. “This is an issueresounding through Navajo Country.”

Another leading group, the National Congress ofAmerican Indians, is in the middle, expressing“concern” that the relationship between tribes andthe federal government would be reduced.

Campbell’s deregulation plan — supported byColorado’s Southern Utes, the Cherokee Nationand the Jicarilla Apache Nation in New Mexico —is part of the massive energy bill moving throughCongress. The Indian energy measure could be thefirst item up for a vote this week.

The tribes’ deregulation is “totally voluntary,”Campbell stressed in an interview.

Under the current system, wealthy tribes canorganize their own energy deals without theoversight of the Bureau of Indian Affairs or costlyenvironmental impact statements, Campbell said.

“The real disparity comes in where wealthy tribescan just do it on their own. Tribes with less moneyhave to go through the federal government.”

Indian land is believed to include about 10 percentof the country’s domestic energy resources.

The Navajo have been joined by numerous othertribes, including the 19-tribe Inter Tribal Councilof Arizona, in saying that Campbell’s plan wouldfundamentally alter the relationship between thefederal government and tribes.


Minnesota - Iowa - Texas

Other States Investing in Wind Power Generation Oklahoma WinCharger, May/June 2003

MN Wind Projects Boosted by New ApprovalsThe Buffalo Ridge wind project in Minnesota got aboost when the state Public Utility Commissionapproved a new transmission line to carryelectricity from the project to the Minneapolis-St.Paul metroarea. Xcel Energy hopes the newtransmission linewill be in place by 2006.

For the PUC to approve the transmission upgrade,Xcel Energy had to agree to install a total of 825MW of wind energy on the same timetable as theupgrades to the transmission. Xcel Energycurrently has about 460 MW of wind energyinstalled or under development. The decision bythe PUC means that some 365 MW of additionalwind must be built in the state in the next fouryears.

WinCharger Editor’s Note: The transmission upgrade effortsin Texas and Minnesota clearly demonstrate those states’commitments to further development of windpower. WhileOklahoma can develop a fair amount of wind farms (but lessthan 1000 MW) before transmission constraints stop theprogress, upgrades to transmission take a long time toimplement. Therefore, it is important to plan early forovercoming future transmission shortfalls.

Texas Considers Upgrading Transmission LinesThe Texas House Regulated Industries Committeerecently passed a bill (HB 2548) that wouldencourage the development of transmission lines toWest Texas wind-facilities. Wind farmdevelopment in West Texas has been slowed andmuch of the power produced from the windfacilities in the region is not reaching itsconsumers because of a lack of transmissioncapacity.

This bill would hopefully encourage further winddevelopment by increasing the transmissioncapacity in West Texas. The bill now awaitsconsideration of the full House.

Iowa to Build Largest Wind Farm in the WorldMidAmerican Energy, Iowa’s largest utility,recently announced it will build a 310-megawatt(MW) wind facility somewhere in the north centralor northwest part of the state. The project willbecome the world’s largest land-based wind farm ifcompleted before the expansion of the Statelinefacility currently in operation in the PacificNorthwest.

At the same time, Iowa’s governor, Tom Vilsack,signed into law a bill to allow investor-ownedutilities to receive a state tax credit for buildingand owning wind facilities - something previouslyreserved for those companies that boughtrenewable energy from other sources.The new wind farm will consist of 180 to 200turbines, with a rated generating capacity of 1.5 to1.65 MW each. When the wind project iscomplete,

MidAmerican Energy will own or have undercontract in Iowa more than 435 megawatts ofwind, biomass or hydroelectric energy - or 43percent of Governor Tom Vilsack’s goal of 1,000megawatts of renewables by 2010. Iowa hosts 423MW of wind power generating capacity, the thirdlargest amount in the U.S. after California andTexas.

WinCharger Editor’s Note: The WinCharger applauds MNand IA for developing significant amounts of wind power. It isworth noting that studies rank MN and IA no. 9 and 10,respectively, among the states for potential wind energy

waterAN OKLAHOMA RESOURCE

A PROPOSED STRATEGY FOR OKLAHOMA

Energy & Water © 2003 The Oklahoma Academy Town Hall WATER - 1

OKLAHOMA CITY [May 20, 2003] - While thebudget shortfall has dominated much of this year’slegislative session, water issues have also been arecurring theme as lawmakers have discussed banson the sale of water, restrictions on temporarywater permits and the need for scientific study ofOklahoma’s water resources.

Water issues – and the fine line between the privateand public property rightsinvolved – may be revisited forseveral years to come, statelawmakers say.

Sen. Jay Paul Gumm, D –Durant, believes the Legislaturewill have to retool state law tochange the way undergroundwater is treated as privateproperty under existing law. “Alot of Western states havealready gone through thedifference between ground andsurface water, and I suspect that in time Oklahomawill have to go through that as well. And at thatpoint, we’ll have to make a policy decision as towhat’s best for the entire state. Again, that’s goingto be a complicated, controversial, difficult issue totackle and we just don’t have time to do it rightnow.”

Gumm, who authored a bill this year to prohibitthe sale of water from the Arbuckle-SimpsonAquifer in southern Oklahoma until acomprehensive study of the aquifer is completed,said he believes state law currently draws anarbitrary line between groundwater and surfacewater.

Under current law, a property owner cannot takeactions that prevent surface water from travelingdownstream to neighbors in most circumstances –but groundwater can be depleted without as muchconcern to the impact on neighbors, he said.

“If it were surface water doing the same thing, theycouldn’t dam it up and take it somewhere else, “Gumm said.

Gumm and people in thesoutheast feel individualproperty owners can now sellgroundwater that flows into localstreams and serves as the onlysource of water for severalcommunities without regard tothe impact of water sales onthose communities.

“Given the fact that this waterdoesn’t stay under this property,it’s almost like they’re taking

advantage of a loophole in the law thatgroundwater is different,” Gumm said.

Other lawmakers also say the Legislature mayeventually re-examine property rights issuesassociated with groundwater.

“Currently, in our water law, we have noconnection between groundwater and surfacewater,” said Sen. Bruce Price, D- Hinton.“Protection spring flow is not a beneficial useunder the list, so if we need to do anything, weneed to address that.”

Issues and Problems

Why An Oklahoma Town Hall About Water?“Lawmakers see need for major changes in water laws” by Ray Carter, The Journal Record

While the budget shortfall hasdominated much of this year’slegislative session, water issueshave also been a recurringtheme as lawmakers havediscussed bans on the sale ofwater, restrictions on temporarywater permits and the need forscientific study of Oklahoma’swater resources.


However, Price said developing state policy toprotect water flow may be difficult. He said newlaw would have to set specific criteria to determinewhen a change in water flow is caused bydepletion.

“It’s affected by seasonal changes,” Pricesaid,”“How are you going to tell whether thepumping has an effect or whether the weather hasthe effect?”

Although officials refer to the Arbuckle-SimpsonAquifer as a “single source” aquifer, Price notedthat, “it all comes from rainfall and riverflow.”

“There’s a lot of ways they recharge,” he said.

And studies have shown that theArbuckle-Simpson recharges ata very high rate, perhaps five tosix times the amount needed tooffset current proposedpermitted uses of water from theaquifer.

“I’m not too concerned about itbeing overproduced at theminute,” Price said.

Prohibiting the sale of watermay also equate to wasting theresource, he said.

“We’ve got water that is wasted and goes on downthe river to the Gulf of Mexico, basically – runofffrom aquifers, if you will, in the spring flow,”Price said.”“You might ask the question, ‘Whyshould we allow waste to occur when the resourceis vitally needed for development use?”

He also warned that any change in law could haveserious financial consequences for property ownersin the state.

“When we buy our surface land, knowing that thatresource is under there, that’s part of the purchaseprice that we pay for that land and the right to

produce that water if we get a permit to do so,”Price said.

Sen. Owen Laughlin, R-Woodward, said Gumm’sbill and other proposed bans on the sale ofgroundwater – even on a temporary basis – couldessentially represent an unconstitutional–“taking”of private property without compensations.

“In Oklahoma right now, we have property rightsin water that lies beneath our land,” Laughlin said.“You can buy and sell those. It’s transferable. Andto me this bill really strikes at the heart of thoseproperty rights, because there’s some sort of aquasi-government property right, it seems to me, tobe created if the government can come in and say

we have some property rightinterest here; it’s not defined,but we’re going to put amoratorium on you transferringyour vested property rightinterest in water by someoverreaching governmentownership interest. Thatconcerns me a lot.”

Laughlin said the governmentlegitimately regulates waterquality to prevent one personfrom polluting another person’swater,’“but to impose somearbitrary moratorium based onwhat seems to be some sort of

ownership interest by the public is troubling tome.”

He said the state can already prevent pumping ifofficials believe that depletion will cause long-term problems.

“A temporary water permit is just that,” Laughlinsaid. “It does not vest anything in the owner of thatpermit. It is temporary. It can be removed withoutdue process as a matter of fact, as I understand it.So even if there is inadequate water there, thepermits are only temporary.”

Lawmakers on all sides of thewater issue agree that athorough assessment of thestate’s water supply and futureneeds should be conducted.

“We need to do acomprehensive plan for thewhole state,” said Rep. DebbieBlackburn, D- Oklahoma City.“Texas has done one. That’s thereason they’re coming up heretrying to get our water.”


Lawmakers on all sides of the water issue agreethat a thorough assessment of the state’s watersupply and future needs should be conducted.

“We need to do a comprehensive plan for thewhole state,” said Rep. Debbie Blackburn, D-Oklahoma City. “Texas has done one. That’s thereason they’re coming up here trying to get ourwater.”

In recent years, officials in north Texas tried toenter a contract with southeastern Oklahomaentities for the long-term rights to water in thatarea, which would have been piped to water-starved Texas communities.

Blackburn said it doesn’t makesense for’“a state that wentthrough the Dust Bowl not toprotect our most preciousresource.”

She said federal money isavailable to help begin a statewidewater study and suggested statemoney should also beappropriated for that purpose, inspite of this year’s budget shortfall.

“There are some things you just have to put asidein order to do something that to me is just critical,”Blackburn said.”“And to do just theArbuckle-Simpson because ‘that’sall we can afford’ is foolish.”

Blackburn said the OklahomaWater Resources Board estimates atrue statewide study of Oklahoma’swater resources would cost $6million and could take “at least fiveto ten years to do flow studies.”

She said a study is more sensiblethat efforts to prevent the sale ofwater.

“You can’t stop sales forever, indefinitely,”Blackburn said.

Price said a thorough study is needed if lawmakersseriously intend to alter Oklahoma’s water law.

“Our water law has been developed over severaldecades and I think it’s extremely good water law,”he said. “And before we change anything we needto be very aware of all the ramifications and notjust shoot from the hip because of a currentperception. And probably, rather than piecemeal itone aquifer at a time, we ought to look at thewhole state and how we deal with groundwater andsurface water and how those resources interact.”

Price said any attempt atrevising the state’s water lawsshould rely on data collectedthrough extensive monitoring“and not just react fromemotions, which we seem to bedoing right at the minute.”

Blackburn said her “immediategoal” does not involve revisingthe way Oklahoma’s propertyrights laws treat groundwater.

But she suggested water issues may pit individualproperty rights against the desire to maintain waterresources for the good of the state.

“Groundwater does affectsurface water,” she said. “Theyare interconnected. They’re notseparate. It’s all a part of thesame thing and it is possible todrain so much water out of anaquifer (that) it is absolutelynon-replenishable. It can neverbe replenished in a lifetime.That is the kind of informationwe do not have.”

“ ... the Oklahoma WaterResources Board estimates atrue statewide study ofOklahoma’s water resourceswould cost $6 million and couldtake “at least five to ten years todo flow studies.”


New Mexico FirstA New Mexico Town Hall About Water

New Mexico's Water: Perception, Reality and Imperatives, Socorro, NM, May 16-19, 2002

A New Mexico where water is valued as thelifeblood of the state's rich cultural diversity andthe basis for its economic engine.

This is the vision of the 28th New Mexico FirstTown Hall. Establishing a framework for policydecisions that involve tough trade-offs is impera-tive, the attendees agreed, as is identifying institu-tional, technological and behavioral changes thatwill optimize the availability and quality of water.

New Mexico's water supply is finite and highlyvariable. Furthermore, in many areas it is notsustainable given present use levels, much lessfuture needs. Also, most of the state's surface wateris already spoken for, although most water rightsclaims have not been adjudicated. In some areas,legal rights to appropriate water exceed the amountof water available.

The Town Hall articulated four questions that posesignificant challenges and offer opportunities tomove New Mexico into a new era of active watermanagement. The Town Hall declared that balanceis a fundamental guiding principle: balance be-tween sustainable supply and demand, growth andenvironmental protection, agricultural and munici-pal/industrial uses and rural & urban communities.

New Mexico's Water RightsKnowing who has the rights to use what water isessential for planning; yet the current adjudicationprocess is slow, cumbersome and expensive.Increased funding for the Office of the StateEngineer could allow for staff increases anddatabase development. Further, parties should beencouraged to enter into negotiated settlementsinstead of litigation.

How Do Additional Factors Relevant to NewMexico Affect Our Water Resources?Among other obligations, we must comply withEndangered Species Act standards on riparianhabitat maintenance, honor Native American rights,honor the legal standard of prior appropriation ofrights, conform to treaties with Mexico and meetrigid delivery schedules to fulfill our interstateriver compacts. These factors are often the sourceof litigation; instead New Mexico should fosteralternative, collaborative ways of handling suchdisputes. In addition, New Mexico should explorerenegotiating interstate compacts, treaties andobligations. We must also find ways to store excesswater above external delivery obligations in wetyears.

How Will We Plan for the Future?Planning for New Mexico's water needs is compli-cated by water supply variability from region toregion, year to year and season to season. Thisreality is being addressed by current regionalplanning efforts, which engage stakeholders at alllevels. The challenge will be to integrate regionalinitiatives into a statewide plan. Information is keyto planning, and New Mexico needs additionalresources to complete a water rights database.Finding funds to support these projects is a signifi-cant challenge, as is creating a plan that willbalance the benefits of economic growth with theimperative to preserve traditional cultures andquality of life while remaining within projectedsupply.



How Can We Involve the Public in AddressingCritical Water Issues?Diverse groups of people must be engaged; deci-sion makers must be given tools; scientists must betrained. Agricultural users must be given resourcesand incentives to implement conservation andwatershed rehabilitation programs. Better-informedcitizens are more likely to participate in planningprocesses and help garner the support of others fordecisions they help to make. Universities, the NewMexico Department of Education, the national labsand others might jointly convene public forums todebate priorities for regional and statewide wateradministration.

Recommendations

1. Adjudicate water rights for the entire state withthe goal of completion within the next 10-15 years.

Enforcement of water rights and usage, protectionagainst losing New Mexico's water to neighboringstates and Mexico and an effective system fortransferring water rights and for water banking alldepend on an accurate accounting. To date, only asmall portion of water rights claims have beenadjudicated, so the Town Hall urges the followingactions:

• The governor, legislature and judiciary shouldestablish and fund procedures to determine thevolume and priority dates of water rights,including Native American rights, by 2018,with first priority given to interstate streams.

• The legislature should authorize and fund thecreation of New Mexico water courts to allowspecialized judicial consideration of complexwater rights cases and to improve the efficiencyand timeliness of adjudications and administra-tive appeals from the State Engineer.

2. Aggressively develop, preserve and protect NewMexico’s water resources.

The growing demand for water in New Mexicomakes it imperative to supplement our finite supplywith new sources and protect existing resources.

• Adequate resources should also be provided forNew Mexico's legal defense against externalthreats.

• The legislature should authorize and fund theOffice of the State Engineer to provide acomprehensive water model to determinequantities and projected longevity of our waterresources.

• An entity, preferably already existing, shouldbe designated to coordinate and implementwater-related activities. A dedicated revenuestream should be established for this purpose.

• Conservation should be aggressively promoted;strategies could include tax incentives, waterbanking, public education and involvement,structuring water rates to provide incentivesfor conservation and conservation technolo-gies.

• Watersheds and riparian areas should berehabilitated, protected and maintainedthrough comprehensive management.

• Current and developing technologies should bedeployed for the purification of water ofimpaired quality.

• Methods for reuse of treated effluent forbeneficial use should be researched andimplemented.

• Building codes should be revised to encouragewater saving and harvesting designs, such aswater-collecting gutters, storm sewers andlandscaping.

• Infrastructure and systems for conservationand more efficient distribution and wastecollection and disposal should be upgraded.


• Existing consortiums of research institutionsshould be developed and enhanced to work ondeveloping technology in evaporation, sensortechnology, real-time data collection, desalin-ization, reinjection, watershed rehabilitationand weather modification.

• Water law should be aggressively enforced bypriority and amount and those who illegallyuse water as well as those who damage waterinfrastructure should be prosecuted.

• Loss of entitlements should be prevented byplacing full allocations to beneficial use of theSan Juan-Chama Project water and Gila Riverwater.

3. Provide adequate funding, appropriate organiza-tional structure, and necessary statutory languageto ensure implementation of all aspects of NewMexico’s active water resource management.

The Town Hall sees an urgent need to adequatelyfund and coordinate the activities of all stateagencies and other entities involved in watermanagement, including:

• water rights adjudication: administration andmediation

• water resources: data collection, supplydetermination

• water planning: regional, drought, conserva-tion compliance issues (e.g., interstate rivercompacts, ESA, NEPA)

• interaction and cross-agency coordination

• providing accountability to the legislature

• providing technical assistance to communitiesto secure water rights and water supplies

These elements of water management currently areassigned to specific agencies. For those that arenot, the Town Hall recommends:

• Add to the Interstate Stream Commission'sstatutory mandate to include explicit authorityto acquire and manage water for environmen-tal and quality of life uses.

• Support a State Engineer's forum to developlegislation in 2003 to address current loop-holes in the permitting process, includingunregulated domestic well development, lack ofrequired metering for surface and groundwater diversions and clarifying the purpose ofimpounding water for unregulated uses.

• Provide adequate funding of existing agenciesto allow them to fulfill their statutory authori-ties.

• Provide resources to the OSE to exercise itsauthority to limit ground water diversions andrequire metering of domestic well use.

• Adequately endow the Water Trust Board andappropriate funds for water projects, especiallyto leverage federal funds.

• Avoid costly and lengthy litigation by havingthe 2003 legislature consider a joint memorialto the U.S. Congress asking that judicialagencies emphasize settlement of NativeAmerican water claims.

• Ask the state legislature for a joint memorial toencourage our congressional delegation tosecure additional federal funding for ournational labs and universities for water-relatedresearch and development.


4. Create a State Water Plan, integrating regionalplans, no later than December 31, 2004.

The Town Hall believes a comprehensive statewater plan, reflecting significant public involve-ment, is a central tool for actively managing waterresources. To this end, the Town Hall agrees thatthe legislature should mandate the creation of astate water plan, with its content elements defined,utilizing completed regional water plans to theextent practical.

The Town Hall makes these further recommenda-tions:

• Include in the mandate adequate funding forstaff, consultants, quantification, databasedevelopment and other expenses.

• Include in the plan mechanisms for implemen-tation of recommendations, ongoing manage-ment of the resource and regular revisions andupdates.

• Incorporate concepts of sustainability toensure that short-term uses do not compromiseour ability to meet long-term needs.

• Strengthen the existing regional water-plan-ning template and create a state water-plan-ning template to ensure stakeholder-drivenpublic participation.

• Use the state water plan as a strategic um-brella, placing regional plans under it togenerate a list of projects within the stateframework, followed by prioritization offunding for projects.

• Provide in the plan model ordinances for smallcommunities and templates for drought plans.

• Make public education an integral part of thestate water plan.

The Implementation Team should also:

• Work with the media to ensure comprehensive,timely water-issue coverage.

• Recommend funding for public informationofficers and legislative liaisons at the Office ofthe State Engineer and the Interstate StreamCommission.

• Work with other entities in the state that canassist with public awareness.

5. Create a recurring revenue source for fundingthe Office of the State Engineer, Interstate StreamCommission and Water Trust Fund.

The Town Hall believes that a long-term revenuesource, in addition to general funding, is needed formanaging the state's water.


INTRODUCTIONPresented here are statewater issues identifiedby the Citizens’ AdvisoryCommittee and Techni-cal Advisory Sub-Committee as a result ofnumerous meetings ofboth groups held fromJanuary 1994 throughMarch 1995. The 20-member OCWP Citizens’Advisory Committee brought a grass-roots per-spective to the formation of state water manage-ment and protection strategies while the TechnicalAdvisory Sub-Committee facilitated the involve-ment of 23 relevant state and federal agencies. Thetwo groups also reviewed updated water useprojections for Oklahoma.

This section highlights substantiating discussion ofeach water issue and/or problem. Prescriptiveoptions developed by the committees to deal withthese issues-i.e., recommendations-are presented inthe following section.

Water Rights

Stream Water Rights & AdministrationWhile problems related to state water rightsmanagement arise from time to time, the generalabundance of supply (though unevenly distributed)and relatively strong legal foundation upon whichOklahoma water law is based preclude manypotential conflicts surrounding administration ofthe current system. State laws relating to non-useand forfeiture of water rights generally serve theirintended purpose-i.e., to ensure that Oklahoma’swater resources are used beneficially and for thegood of the public. The current system also benefitsthe state by encouraging small-scale water rights

Issues and Problems

State Water Plan: Issues, Problems and RecommendationsDuane Smith, Executive Director, Oklahoma Water Resources Board

Town Hall Introduction

Oklahoma has a Water Plan.

That’s the good news. The bad news is that thePlan is outdated; and the plan is not robust enoughto resolve contemporary issues; nor is it fundedwell enough to perform basic statewide planningand survey functions.

Meanwhile, our southern neighbors have recentlyinvested considerable political capital and cur-rency in creating an effective statewide water planand accompanying political, regulatory andplanning infrastructure. As a result, Texas hasdeveloped a new appreciation for their need forreliable water supplies.

Coincidentally and illustratively, it is this new-found need that has resulted in Texas asking to buyOklahoma water. This proposed water sale, in turn,has set off Oklahoma’s most bitter internal waterdispute in many years. And to complete the circle,the proposed sale of water to Texas amplifies ourweak Water Plan.

The following section is the “Issues, Problems andRecommendations” section of the existing StateWater Plan. The Plan was published in 1995.Therefore the data in this section needs revision.The Plan is to be revised every 10 years with 2005being the next target date for revision.

This section is presented to provide an overview ofstate issues and recommendations to provide amore responsive and effective water policy.

While a decade has elapsed since the Plan wasdeveloped, it is believed the major issues remainunaddressed and unresolved.

Duane Smith


marketing agreements and local transfers whichprotect often costly investments made in puttingstate water to beneficial use. Without forfeitureproceedings or related measures to manage andcontrol use, “stockpiling” of rights could result,leading to the inefficient use and development ofwater resources.

Still, stream water rights and administration couldbe improved through judicious revision of OWRBregulations. Because original Oklahoma water lawswere not specifically designed to promote conser-vation of supplies, there is room to modify theexisting system to maximize efficiency of use. Thesystem could also be improved through morejudicious enforcement, expansion of data collectionand management programs (including hydrologicstudies), and development of educational programs.

It has been argued that the prior appropriationsystem of water rights may encourage the uneco-nomic use of water and many question the need forstatutes relating to water usage and forfeiture ofrights, especially in significantly under-appropri-ated stream systems where these regulations mayencourage permit holders to waste water anddeliberately over-report use. Also, in streamsystems where relatively little water is available forappropriation, criticism has been directed at lenientschedule of use provisions that allow water re-sources and rights to be tied up for 50 years ormore. In addition, regular permits issued under thecurrent permitting system appropriate stream wateron a year-round basis. As a result, the system doesnot take into account seasonal climatic variations(i.e., regional rainfall totals) or varying seasonaluses of water (for example, increased irrigationduring the summer months) which affect immedi-ate water availability.

Few problems exist with current forfeiture andcancellation/reduction laws. However, it is likelythat other measures or regulations could be imple-mented in conjunction with, or in place of, existinglaws to better ensure the intelligent and optimumuse of Oklahoma’s water resources while stillprotecting prospective water users (for example,

Table of ContentsWATER-RELATED ISSUES AND PROBLEMS

Water RightsStream Water Rights & Administration ......................W-8Instream Flow Protection ........................................ W-10Indian Water Rights ..................................................W-11Groundwater/Stream Water Relationships .............. W-12

Water QualityGroundwater Protection .......................................... W-13Groundwater Quality Standards.............................. W-14Nonpoint Source Pollution ...................................... W-15Stream Water Quality Standards ............................. W-17

Water & Wastewater SystemsMunicipal & Rural Water/Wastewater Systems ...... W-18Financing ................................................................. W-20

Reservoir OperationsAllocation & Control ............................................... W-22Maintenance & Renovation ..................................... W-23

Water MarketingWater Transfer.......................................................... W-24

Water Supply AugmentationWeather Modification............................................... W-26Groundwater Recharge ............................................ W-26Reclamation & Reuse............................................... W-26Chloride Control ...................................................... W-27

Water ConservationWater Conservation ................................................. W-29

Water Resource PlanningBasin/Watershed Management ................................ W-30Drought Preparedness ............................................. W-31Wetlands Protection & Management....................... W-32Endangered Species ................................................. W-32

Floodplain ManagementFloodplain Protection & Preservation.................... W-33

Problem Mediation/ArbitrationWater Resource Dispute Resolution ........................ W-34Local Empowerment ................................................ W-34Interstate Water Disputes ........................................ W-35

Data Collection & ManagementStream Gaging Network........................................... W-35Water Well Measurement ......................................... W-36Water Quality Sampling & Monitoring ................... W-36Oklahoma Mesonetwork .......................................... W-38Water Resource Data Management ......................... W-38


allowances for cases where no other user is de-manding water on a particular stream). Futureefforts to improve this situation will be directed atmore accurate accounting of water supply and useand more realistic determinations of “beneficialuse” and “present or future need” in permit applica-tion proceedings.

Currently, the OWRB lacks administrative enforce-ment authority to prohibit violations of permittedwater use and is required to petition district court toimpose compliance measures. Such problemshinder enforcement efforts and give added cre-dence to an alternative system that providesfinancial and other incentives in exchange forcompliance.

Finally, as competition increases for water re-sources, reliable information on the amount ofwater available for appropriation will be critical toensure that the optimum amount of water is used tobenefit the state’s economy. While hydrologicsurveys have been completed on virtually all statestream systems, it is essential that these investiga-tions are continually updated. In addition,Oklahoma’s current system of water use reportingrequires some modification to better facilitate thecollection of accurate, dependable data on usage.

Instream Flow ProtectionInadequate instream flow adversely affects allbeneficial uses, including aquatic life, recreationalactivities, aesthetics, hydropower generation andnavigation. Low flows can be caused by climaticand hydrologic conditions, diversions or operationof reservoir storage for offstream project purposes. Water quality problems that can result frominsufficient streamflows-many of which could alsobe addressed through potential watershed manage-ment or non-consumptive use permitting initia-tives-include inadequate dilution of point andnonpoint pollution discharges and damagingchanges in water temperature and dissolved oxygenlevels.

Excessive flows can be equally damaging. Highflows may result from natural causes, such as stormevents, or man-induced causes, such as reservoirregulation, causing adverse impacts on aquatic life,recreational activities and other instream uses.Instream flow is indirectly recognized inOklahoma’s laws governing stream water use.However, several provisions in laws relating towater and water rights could provide specificopportunities to assure protection of stream flows.In general, some streamflow is protected by therequirement in the law relating to appropriationpermits that prohibits interference with domesticuses.

When the Oklahoma Water Resources Boardconsiders appropriation permit applications, it mustdetermine that the proposed appropriation use willnot interfere with domestic uses. Board rulesprovide that for every affected household down-stream of the proposed diversion point, it is pre-sumed that 10 acre-feet of water per year is neces-sary to protect the domestic use of each household,unless there is evidence showing otherwise. Thistotal of domestic use water must be allowed to“flow by” the point of diversion, thereby providingincidental protection for instream uses. Secondly,OWRB rules state that lowflow averages (i.e.,“flows available less than 35 percent of the time”)will not constitute water available for appropria-tion.

A mechanism established by the Legislature toprovide general protection of instream flows is theScenic Rivers Act. Under the Act, and for desig-nated “scenic river areas” listed therein, there is aprohibition against state agencies approving plansto construct, operate or maintain any dam withoutlegislative consent. There is an exception formunicipal or domestic use, but only when thestructure would not interfere with preservation ofthe free-flowing stream. In addition, the OWRBhas implemented low-flow restrictions on theBaron Fork River, one of six scenic rivers in thestate.


Many states that follow the appropriation doctrineare facing similar instream flow questions. Somestate legislatures have elected to adopt laws speci-fying flows for specific streams or segments ofstreams at which no further diversions may takeplace. Other states have adopted the approach ofallowing instream flows for beneficial use forrecreation and fish and wildlife protection; thesestates either allow any person to apply for aninstream appropriation or have limited the kind ofentity that can apply (such as the state fish andgame agency), but only for certain streams. Also,water rights agencies in some states may declarethat certain minimum flows are not water availablefor appropriation on a real-time basis (cubic feetper second) and require that appropriation rights beconditioned accordingly.

A very controversial method to protect instreamflows involves the “public trust doctrine.” Thatdoctrine has been adopted to address the appropria-tion of water from a reservoir, declaring that allappropriations-regardless of their priority dates-areconditioned on water being available by the publictrust to protect that which is owned by the public(i.e., fish and wildlife). Water banking and “dona-tion” of existing water rights toward instream flowprotection are additional alternatives.The Franco case touched upon the use of water inthe stream for aesthetics and minimum flowsneeded for recreation use and whether such usesmight be considered reasonable. However, theextinguishment of riparian rights (except domesticuse) by Senate Bill 54 in the 1993 legislativesession appears to have eliminated the possibilityto argue that a riparian rights claim could be usedto protect instream flows.

The OWRB has not issued any water use permitsexpressly for protection of instream flows orinstream flow maintenance. It can be argued thatallowing water to flow downstream and, eventu-ally, out of state does not promote the Legislature’spolicy of optimum beneficial use in the state andmay not be a “beneficial use” as required underappropriation law. That legal point has never beentested in a court, although there have been several

water rights issued for recreation, fish and wildlifeuses, most of which are reservoir-related or involvea specific point of diversion.

Establishing minimum instream flows on a particu-lar stream segment is a very difficult and contro-versial proposition involving numerous biological,hydrological, economical and legal factors. Toconscientiously address the instream flow issue, thestate must first decide if there is a need to providewaters with additional protection to that currentlyoffered under state law and then, if necessary,develop a methodology for actually determiningminimum instream flows. However, if the stateresolves to pursue an instream flow protectionstrategy, it will be imperative to have accurateinformation on the amounts of water available forappropriation in each stream system. This goal willbe contingent upon proper maintenance andexpansion of data collection/management pro-grams, especially OWRB hydrologic investiga-tions.

Indian Water RightsIndian water rights in Oklahoma concern bothfundamental sovereignty and water quantity andquality. Indian claims to water rights could have asignificant effect on existing state water law as wellas the current system of water rights administrationand water quality regulation in Oklahoma.Winters v. U.S., often called the foundation uponwhich the issue of Indian water rights rests, andsubsequent court cases (including U.S. v. GrandRiver Dam Authority) have generally determinedthat the federal government’s establishment ofIndian reservations implicitly reserved relevantwater as well as land. In addition, Winters assertsthat federal reserved rights cannot be lost by failureto put the associated water to beneficial use. Thiscase law of Indian property rights, which extendsto other federally reserved water rights, presents achallenge to any water resource project that in-volves disturbance of the beds and waters of staterivers, streams or groundwaters to which NativeAmerican claims might extend. In addition, thefederal Clean Water Act recognizes Indian tribes onthe same level as state government entities indevelopment of water quality standards.


As a result, there is a need to resolve Indian andother reserved water rights claims, whether theyinvolve court action or negotiated settlements.However, to date, involved parties have beenreluctant to put the issue to a definitive test in stateor federal court, primarily due to the potentiallydamaging financial, legal and political ramifica-tions of litigation. Recent state laws dealing withstate-tribal relations have encouraged mutualagreements. Similarly, to avoid potential legalconflicts, it will be essential for the state to work incooperation with Oklahoma’s Indian tribes toresolve related water rights issues. In order toresolve the Indian water rights issue in a non-confrontational manner, it is imperative for thestate to first develop a level of trust with the Indiantribes. One of the most effective ways to foster thistrust is for state water resource agencies to identifyspecific projects through which the state and Indiantribes can cooperate, then develop a responsiblework plan to complete each project.

Groundwater/Stream Water RelationshipsBecause nearly all alluvial aquifers in the statedischarge to or are recharged by a surface waterbody, conjunctive use of stream and groundwaters,at least on a case-by-case basis, has potential toaugment and conserve state water supplies. Al-though current state water law does not recognizethis hydrologic connection, the Oklahoma WaterResources Board has attempted to consider bothstream and groundwater resources when appropri-ating water in areas where each could be affected.The natural relationship between groundwater andstream water is extremely complex. The uppermostportion of the water table lies anywhere from a fewfeet to several hundred feet below land surface.During periods of high streamflow, significantaquifer recharge can occur. During other periods,the discharge of a shallow aquifer into the streamchannel can provide a large portion of the waterflowing in that stream.

In some areas or during certain periods of time,pumping groundwater from wells may reduce theamount of water flowing in a stream. When wateris diverted from a stream for irrigation purposes,

deep percolation losses could result in inadequateaquifer recharge. In addition, current Oklahomagroundwater law allows the withdrawal of waterfrom an alluvial aquifer to exceed the recharge rate,possibly leading to the loss or depletion of baseflow in an overlying stream.

Conjunctive use of stream and groundwaters couldprove valuable in areas where both sources may bein short supply but together constitute sufficientsupply to meet anticipated demands. However,while there are benefits to conjunctive stream andgroundwater use, their joint management is com-plex. For example, water used for irrigation is indemand only part of the year while the majority ofthe streamflow passes downstream the remainderof the year. The maximum benefit would result ifexcess stream water flowing in the non-growingseason could be stored for use when it is neededthrough artificial recharge or related storageprojects.

In areas where stream or groundwater quality isrelatively poor and substandard for economicaltreatment and potable use, it may be possible toblend to an acceptable level, prior to distribution,those poorer quality supplies with higher qualitywater from alternative sources. This would increasethe overall availability of usable water and avoidthe development of new and costly supply sources.A number of different management plans havepotential, depending on aquifer and stream charac-teristics, beneficial use, water need and othercircumstances. Whatever management plan isimplemented, the impact will affect the rights of allstate water users, especially groundwater rightholders who are afforded use privileges due tobasic statutes related to private property rights.However, regulations that unduly infringe uponprivate property rights should be avoided to thegreatest extent possible.


Water Quality

Groundwater ProtectionAlthough the quality of groundwater in Oklahomais generally very good, some problems exist inindividual groundwater basins. Abandoned, im-properly plugged oil, gas and water wells; chemicalwaste and brine disposal wells; poorly designedsanitary landfills; and nitrates from rural and urbanrunoff are potential sources of pollution to stategroundwaters. Due to these problems, and becauseincreased population and economic pressures haveproduced greater demands for good quality ground-water, the need to protect groundwater resources isbecoming a major state priority.

Successful efforts by the state to protect groundwa-ter supplies include the Well Drillers and PumpContractors Licensing Program, created to ensurethe proper construction and plugging of waterwells, and the state Wellhead Protection Program inwhich local communities voluntarily implementmanagement and contingency plans to reduce oreliminate the risk of polluting local public watersupplies. While the licensing program has beeneffective, studies indicate that inadequate wellborings and casings are still allowing numerous

contaminants to reach state aquifers. As a result,strengthening of the program may be necessary.Oklahoma’s groundwater basins are assigned to athree-tiered classification system based on theirrespective current or future economic and ecologi-cal value. Basins are designated as either SpecialSource (groundwaters considered very vulnerableto contamination; basins of exceptional waterquality or ecological and environmental impor-tance; or those necessary to maintain an outstand-ing resource), General Use (capable of being usedas a drinking water supply with no treatment orwith conventional treatment methods; those whichhave the potential for agricultural, industrial,recreational or other beneficial uses) or LimitedUse (those of poor quality, probably requiringextensive treatment for use as drinking watersupply).

The existing comprehensive classification systeminvolving groundwater use, if coupled with anaquifer’s specific vulnerability to contamination,could be an effective tool for optimizing groundwa-ter protection efforts. This system would allow thedevelopment of a different protection strategy foreach aquifer class. In addition, groundwater qualitystandards (discussed in detail under its respectiveheading), remediation, permitting requirements andenforcement activities could be designed specifi-cally for each basin or groundwater class. Thedevelopment of aquifer cleanup standards couldfurther facilitate this protection effort.

Through its Comprehensive State GroundwaterProtection Program guidance document, the U.S.Environmental Protection Agency encouragesstates to establish groundwater management effortsbased on a local understanding of the relative use,value and vulnerability of the underlying ground-water and threat of contamination. The programitself consists of strategic activities that foster moreefficient and effective protection of stategroundwaters through improved operation of allrelevant federal, state and local programs. TheOklahoma Department of Environmental Qualityhas fostered developed of these activities throughthe Comprehensive State Groundwater Protection.


This effort-designed to coordinate federal, state andlocal groundwater protection efforts-is guided bythe relative use, value and vulnerability of ground-water resources, including the relative threat of allactual or potential contamination sources.

The federal program is intended to empower stateswith the primary role in coordinating all federallyfunded groundwater programs. However, Okla-homa must ensure that sufficient flexibility is builtinto its program and the state should prioritizegroundwater protection programs and activities tomost efficiently utilize limited financial resources.And, although it has its liabilities, risk assessmentcould have promise in identifying safe, feasible andrealistic groundwater protection measures. Inaddition, to properly address the state’s uniquegroundwater resources and protection needs andrecognize the significant climatological andhydrological differences between west and east,Oklahoma should seek to avoid broad-basedregulations, especially those which unduly infringeupon individual groundwater property rights.Information and technical support, rather thanregulation, should be the primary emphasis ingroundwater protection. Reliable background data,in particular, is essential to implementation of asuccessful and comprehensive state groundwaterprotection program. Revival of the state water wellmonitoring network, discontinued in 1992, orestablishment of a comprehensive data collectionprogram could be especially useful in obtainingwater quality (as well as quantity) information onstate aquifers. While regulatory measures can beeffective, public education efforts and best manage-ment practices may be the most useful protectiontools.

Groundwater Quality StandardsServing several functions, groundwater qualitystandards are one of the most important mecha-nisms to protect groundwater resources. Theyspecify a maximum concentration of a contami-nant, describe an acceptable level of quality ordefine a specific groundwater use. Standards canalso be used to establish limits on contaminants ineffluent, evaluate ambient groundwater quality,

establish a goal for remedial cleanup, triggerenforcement and help establish preventive pro-grams to protect groundwater.

The Oklahoma Water Resources Board is autho-rized to promulgate standards of quality for watersof the state and to classify water bodies accordingto their best uses in the interest of the public underconditions the Board prescribes for the prevention,control and abatement of pollution. In accordancewith provisions of the Clean Water Act and statestatutes, Oklahoma has prepared and adopted waterquality standards for stream waters of the statewhich are updated at least every three years.Formal adoption of groundwater quality standardsoccurred in 1982. However, unlike stream waterquality standards, EPA does not approve or disap-prove state groundwater standards.

The standards apply to all fresh groundwater(defined under state law as groundwater with amaximum total dissolved solids concentration ofless than 5000 parts per million) in the state. Theyset forth that groundwater basins with an averageyield of at least 50 gallons per minute are desig-nated major groundwater basins. In general, thestandards require that groundwater be maintainedto prevent alteration of its chemical properties byharmful substances not naturally found in ground-water. This is accomplished by utilizing narrativecriteria, 36 numeric standards for organic com-pounds, and a three-tired classification systembased on the resource characteristics of eachindividual groundwater basin (as discussed underthe Groundwater Protection issue). Future efforts toestablish the vulnerability of these individualbasins could improve this system.

The two principal uses of standards are reactionaryand preventive management. If the standard is setat a level where contamination of an aquifer couldoccur, it becomes a reactionary mechanism thatdoes little to protect groundwater quality, althoughit may prevent further degradation and initiatecleanup activities. If the standard is set at a morestringent level (an anticipated percentage of theenforcement level), then its breach signals the need


for regulatory action to prevent contamination. Inbasic form, Oklahoma has reactionary groundwaterstandards. If a listed level is exceeded, it may beconsidered pollution and corrective action could berequired. Numeric standards offer a specificdefinition of the expected level of protection andserve as an trigger mechanism for preventive orremedial actions. Also, enforcement tends to bemore effective when citation to specific numericlimits can be made. However, because there are somany substances in commercial usage, it is imprac-tical to set numeric standards for them all. Inaddition, it is extremely difficult to gather suffi-cient information on the health or environmentaleffects of a contaminant at a specific concentrationlevel in groundwater. Risk assessment has beenutilized, on a case-by-case basis, to measureassociated threats to human health.

The goal of narrative standards is to establishreference points for judging whether groundwaterquality is being protected. While narrative stan-dards afford the state discretion in regulating adischarge, they sacrifice clear enforcement criteriawhen contamination is suspected. The matterbefore the state is whether or not existing narrativecriteria are sufficient to protect groundwaterquality. The current general wording of the stan-dards is sufficient to encourage, though not ensure,groundwater protection.

DRASTIC, developed by the National Water WellAssociation for EPA, is a mapping system thatevaluates the most important factors controllinggroundwater pollution potential. These factorsinclude depth-to-water, recharge, aquifer and soilmedia, topography, impact of the vadose zonemedia and conductivity. A modified version of themethodology could be used to delineate the varyingvulnerabilities of each groundwater class. Based onevaluation of a groundwater basin, differentDRASTIC indices could be divided into DRASTICranges-i.e., slightly sensitive (SS), moderatelysensitive (MS) and very sensitive (VS). The aquiferclass, combined with the DRASTIC pollutionvulnerability index, yields the complete classifica-tion of an aquifer.

Creation of an organizational framework to sepa-rately administer groundwater quality standards,apart from stream water, would not only facilitatestronger protection of state groundwater basins butsimplify the rulemaking/revision process of eachaspect of water quality standards. However,implementation of groundwater quality standards,as with stream water quality standards, will requirereliable background data. Creation of a centralizedambient stream and groundwater quantity andquality monitoring program in Oklahoma wouldprove invaluable to the administration of both setsof standards. In addition, future standards revisionsshould consider the significant quality/quantityrelationship between stream and groundwaterresources.

Oklahoma Water Quality Standards contain ageneric non-degradation policy statement definedto include both groundwater and stream water.Adoption of a specific groundwater protectionpolicy statement would at least demonstrate to thepublic that the state is serious about protectinggroundwater resources.

Nonpoint Source PollutionThe contribution of point versus nonpoint pollutionsources varies by waterbody, although, in general,nonpoint sources account for the majority ofpollutants present in the nation’s waters. Whilefederal and state programs have implementedsignificant controls upon the contribution of pointsource discharges, relatively little has been accom-plished in similarly addressing nonpoint pollution.Throughout the country and especially in Okla-homa, which is sparsely inhabited in comparison tomany other states, nonpoint source pollution isreceiving significant attention by numerous agen-cies, special interest groups and the public.

Excessive nutrients and sediment are generallyaccepted to be one of the most prolific sources ofnonpoint pollution, especially to surface waters inboth rural and urban areas of Oklahoma. Nutrientpollution has been closely linked to municipalwastewater treatment facilities although it is nowrecognized that nonpoint sources are probably the


most likely source of nutrients, especially in ruralstates. A recent study that examined the trophicstatus of small lakes in Oklahoma revealed thatmore than 50 percent could be classified aseutrophic, indicating a high level of nutrientloading. Given that these lakes are not subject topoint source discharges, the nutrient loading ismost likely tied to nonpoint sources. In addition,sediment pollution is almost entirely linked tononpoint sources. In western Oklahoma, numerousstreams suffer from the effects of excessive sedi-mentation.

Oklahoma’s Nonpoint Source Assessment docu-ment provides an inventory of areas where impair-ment of beneficial uses has occurred due tononpoint source pollution and identifies causativeagents and their sources. The most frequentlyidentified categories of nonpoint sources includeagriculture, silviculture, urban areas, abandonedrefineries, rural roads, mine lands, hydrostructure/tailwaters, in-place contaminants, industrial parks,septic systems and recreation.

Oklahoma has established an ambitious approachto nonpoint source management. The Office of theSecretary of Environment serves as the coordinat-ing body for nonpoint source activities conductedunder the CWA Section 319(h) Grant Program,which promotes voluntary approaches to nonpointsource pollution control. The Oklahoma Conserva-tion Commission (OCC), which authored theNonpoint Source Assessment document, serves asthe lead technical agency for nonpoint sourceprograms and cooperates with state and localagencies, as well as both major state universities,on individual projects. The OCC also developedthe state’s five-year plan for implementingNonpoint Source Management Program projects.

The effectiveness of best management practices(BMPs) and other voluntary water quality improve-ment efforts has been demonstrated through therelative success of state nonpoint source mitigationprojects. However, funding for BMP implementa-tion is relatively meager compared to fundspledged for implementation of point source con-

trols. Oklahoma has received less than threemillion dollars for nonpoint source controls whilehundreds of millions have been allocated towardpoint source controls. The scarcity of both state andlocal funds precludes implementation of manynonpoint mitigation projects, which are funded by a60/40 federal/state cost-share.

Despite the success of individual Section 319projects, the overall scope of the state’s nonpointsource control program is inadequate to addressspecific problem areas which are often impacted bynumerous pollution sources. In addition, althoughEPA generally encourages the development ofinnovative practices (such as whole basin/totalwatershed planning, which must be included toreceive priority funding for Section 319 nonpointsource projects), current policy restricts the fundingof certain point source reduction practices that havedemonstrated past success but involve problemareas which fall outside of Section 319 programeligibility requirements.

The implementation of total maximum daily loads(TMDL’s) — the sum of all point source wasteloadallocations and nonpoint source load allocations-into Oklahoma’s water management strategy willprovide improved monitoring of nonpoint sourcepollution. Although it is now recognized thatnonpoint sources are an integral part of overallstream loading, the traditional TMDL process hasincluded only point sources.

TMDL’s are currently being used as a tool todevelop nonpoint source management options inOklahoma’s 303(d) priority watersheds. In addi-tion, the Watershed Strategy Committee of theWatershed Nonpoint Source Working Group-acoalition of numerous state and federal agencies,sub-state planning districts and universities whooversee and coordinate many state nonpoint sourceactivities-is now developing a TMDL process foruse on 319(h) watershed projects.

Assessment of nonpoint source impacts, an integralpart of the TMDL process, is very limited undercurrent guidance. Expansion of Section 319


protocols to increase assessment would facilitatemore effective prioritization of project areas fordemonstration projects. In addition, as stateNonpoint Source Assessments become outdated,efforts should be made to update these documents.While the voluntary approach to problem-solving isgenerally preferred-as compared to regulatorycontrols-it is unrealistic to expect this cooperativestrategy to be successful, or desirable, in all cases.Individual cost-share burdens, reluctancy tocooperate, expensive controls or the extent of aparticular problem may inhibit implementation ofvoluntary measures. However, in many cases,regulatory and enforcement measures provide thenecessary incentive to encourage participation involuntary programs.

Stream Water Quality StandardsAccording to Oklahoma law, “the Oklahoma WaterResources Board is authorized to promulgatestandards of quality for state waters and classify thewaters according to their best uses in the publicinterest under conditions prescribed for the preven-tion, control and abatement of pollution.” Inaccordance with provisions of the Clean Water Actand state law, the State of Oklahoma has preparedand adopted water quality standards for intrastatewaters. Under these statutes, the OWRB is alsoauthorized to classify the state’s waters withrespect to their best present and future uses and setwater quality standards.

Standards are designed to enhance the quality ofOklahoma’s waters, protect their beneficial usesand aid in the prevention, control and abatement ofwater pollution in the state. Water quality standardshave been established for all state waters throughthe assignment of beneficial uses and the develop-ment of criteria designed to protect these beneficialuses. Additionally, the standards assign additionalprotection to waters whose quality exceeds thatnecessary to protect beneficial uses and waterswhich are considered outstanding resources(through an Antidegradation Policy). State-adoptedstandards and implementation policies must satisfypublic participation requirements (including publichearings).

They also must be adopted by the Governor andState Legislature and reviewed and approved bythe U.S. Environmental Protection Agency, atwhich point they become effective as federal law.State water quality standards may be revised at anytime, but must be updated at least once every threeyears.

Significant advances have occurred in Oklahoma’sWater Quality Standards since the original docu-ment was promulgated in 1968. The currentdocument (revised in 1994) contains numericalaquatic life criteria; numerical criteria to protecthuman health for the consumption of water, fishflesh, and fish flesh and water; dissolved oxygencriteria; narrative aquatic life criteria which preventacute and chronic aquatic life toxicity; and relatedcriteria designed to protect aquatic life and humanhealth. Additional criteria protect the beneficialuses of state waters: agriculture (including cropirrigation and livestock watering), body contactrecreation (swimming and wading), aesthetics,public and private water supply, municipal andindustrial process and cooling water, navigationand hydropower.

Oklahoma’s Water Quality Standards documentcontinues to evolve and improve. Narrative andnumerical criteria to protect human health, wildlifeand aquatic life are constantly being added andmodified. Specifically, criteria for fish flesh havebeen developed utilizing risk assessment methodol-ogy, a potentially valuable water resource protec-tion tool. Other recent activity in this area includesthe addition of metals criteria to protect humanhealth and aquatic life, new wildlife criteria andmodifications to existing silver criteria.

Oklahoma’s Antidegradation Policy recentlyexperienced changes related to stormwater dis-charges and anticipated language regardingstormwater discharges into Outstanding ResourceWaters could affect Oklahoma’s currentAntidegradation Implementation Policy. Theprinciples involved in the implementation ofcriteria into discharge permits will continue to be amajor area of emphasis, as recently cited in the


1994 Continuing Planning Process (CPP) docu-ment. The CPP formalizes the process throughwhich Oklahoma prevents and controls pollutionfrom toxic substances, primarily from point sourcedischarges. Oklahoma has become nationallyrecognized in this area and will continue to main-tain that status by refining mixing zone policies andmodels and testing and sampling requirements.Recent work in the area of biological criteria(biocriteria) by other states and EPA is currentlybeing evaluated for broadened inclusion in thestandards. This may involve modifications toexisting biocriteria-narrative and/or numericalexpressions used to evaluate the structure andhealth of aquatic communities-through the delinea-tion of ecoregions and reference streams. Develop-ment of biological criteria is being stressed by EPAdue to its potential value in water quality manage-ment.

The concept of total maximum daily loads(TMDL’s) is receiving a great deal of attentionnationally. TMDL’s are the sum of all point sourcewasteload allocations and nonpoint source loadallocations, with an appropriate safety factor. Theimplementation of TMDL’s into Oklahoma’s watermanagement strategy will facilitate the develop-ment of more accurate waste discharge permits andimprove monitoring of nonpoint source pollution.However, this strategy is very complex and expen-sive, requiring a significant commitment of bothstaff and monies. Currently, TMDL implementationis impeded due to the lack of background waterquantity and quality information, a situation thatwill likely worsen due to cut-backs in programs forthe collection of ambient water quality data.Creation of a centralized state water quantity andquality monitoring network could also help identifypotentially impaired waters and generally ensurethat site-specific decisions are made on the basis ofreliable data.

Other stream water quality standards issues thatshould receive consideration and/or refinement inthe next decade include measures to protectinstream habitat; improved protection of Outstand-ing Resource Waters; nutrient criteria; measure-

ment of metals criteria (total versus dissolved);groundwater vulnerability assessment and cleanupstandards; assignment criteria for Cool WaterAquatic Communities; High Quality Waters andAppendix B areas; criteria which protect theagriculture beneficial use; and default and regula-tory flows. In addition, protection of stream waterson a regional or site-specific basis will also be aprimary focus of future standards revisions. Properattention to these matters will be determined, inpart, by the significant amount of time and moneyrequired by the state in addressing federal man-dates. Regardless, future development and imple-mentation of water quality standards must beguided by sound, scientifically-based evidence onindividual sites, conditions and species.

Water & Wastewater Systems

Municipal & Rural Water/Wastewater SystemsMost Oklahomans depend upon either a municipalor rural water system for clean, potable drinkingwater. According to 1990 census data for Okla-homa, 1,223,121 housing units (87 percent) wereon a public or private water supply system, 177,074(12.5 percent) were on individual wells, and 6,304households (0.5 percent) obtained water from someother source.

Unfortunately, many water systems in the statesuffer from old age, too rapid growth and a varietyof related problems which are exacerbated bycurrent funding restraints, unfunded federal man-dates and increasingly stringent environmentalregulations. An April 1986 report by the Depart-ment of Community and Economic Affairs(DECA) on Oklahoma infrastructure revealed thatdistribution facilities are inadequate in nearly one-half of the municipal and rural water systems inOklahoma; storage facilities are inadequate in 35percent of the state’s water systems; and more than26 percent of municipal water systems are operat-ing at greater than 70 percent of capacity.

Forty-four percent of the municipal wastewaterplants in Oklahoma, including the majority of citiesserving relatively large populations, discharge


effluent to waters of the state. These dischargesinclude wastewaters from domestic sources (suchas residences and commercial and institutionalfacilities), industrial operations, infiltration/inflowentering sewer systems, and stormwaters. DECA’sreport states that almost all Oklahoma municipali-ties with a population of 10,000 or more operatetheir own sanitary sewer systems, as do a largemajority of cities less than 2,500 in size. However,while virtually all cities of 10,000 or more possesstheir own storm sewer systems, many smaller citiesand rural water districts do not.

DECA estimated that total water system needs overthe period 1985-2000 will be approximately $4billion while sanitary and storm sewer needs willexceed $3.4 billion. Water user fees-the principalsource of revenue for municipal and rural water/wastewater systems-are generally insufficient torecover actual costs associated with operations,maintenance and capital.

Also, many smaller systems lack a reserve fund tofund minor emergencies and repairs. State andfederal grant and loan programs (including thepopular State Financial Assistance Program and itssource, the Statewide Water Development Revolv-ing Fund) have stepped in to fund numerous systemimprovement projects. However, due to federalbudgetary restrictions and economic difficulties atthe state and local level, financing of water/wastewater facility needs will become increasinglydifficult. Therefore, investigation of alternativestrategies is required to meet current and futureinfrastructure needs.

Regional systems, where customers from manytowns and water districts are served by a commonsource, are often able to provide the most efficient,economical and reliable water supply.

Regionalization can also help lessen the potentiallydevastating impacts posed by stringent waterquality regulations as well as funding constraints.In addition, regional systems promote unity amongmembers and help avoid unnecessary-though alltoo common-disputes over water, typically afford-

ing all members an equal say in system operation,maintenance and overall administration. Factorsthat can impede regionalization include the poten-tial loss of autonomy than can accompany consoli-dation of systems as well as differences in fundingcapabilities, system densities, service area size andmethods of operation.

The 1980 Oklahoma Rural Water Survey, currentlybeing updated by the OWRB, will be a useful toolin identifying potential regionalization opportuni-ties. The survey contains valuable information toguide the operation, expansion and maintenance ofOklahoma’s rural water systems. In addition, therevised data will help facilitate economic develop-ment in rural areas by linking sources of watersupply to new or expanding businesses and indus-try.

Privatization of water and wastewater facilities is away for the private sector to work with localgovernments in obtaining and/or operating neededfacilities. Privatization can take several forms,including “contracting out” the financing andownership of facilities and providing servicethrough contracts. Some of the advantages ofprivatization include construction savings, quickerprocurement and scheduling activities, risk reduc-tion, operational savings, tax benefits, debt capac-ity benefits and availability of financing. Disadvan-tages relate primarily to a perceived loss of controlby municipalities, the potential negative aspects oflong-term contracts, and uncertainties relating tolegal and regulatory issues.

In the early and mid-1980’s, several factors con-tributed to the emergence of privatization as anattractive alternative to traditional methods ofproviding public services. Federal and state grantfunding for public infrastructure facilities haddeclined significantly while, at the same time, taxlaws were passed to make private ownership ofcertain capital facilities much more attractive. TheEconomic Recovery Act of 1981 was the firstmajor tax act to encourage capital investment byprivate investors.


Tax law amendments in 1982 and 1984 specifiedconditions and constraints on leasing and privatiz-ing activities. However, they still provided a meansby which the private sector could profitably enterinto a service relationship with public entities. Theprovisions of the Tax Reform Act of 1986 and theDeficit Reduction Act of 1987 served as furtherconstraints on privatization of water and wastewa-ter treatment facilities since the private sector couldno longer utilize the advantages of tax-exemptfinancing, accelerated depreciation and investmenttax credits to cut the costs of environmentalinfrastructure projects. However, where the privatesector has proprietary technologies or is better ableto handle risks associated with facility operation,full privatization still occurs, despite the 1986 TaxReform Act.

Technical assistance is currently available throughthe Oklahoma Rural Water Association and U.S.Environmental Protection Agency funding to helpstate communities identify system design, manage-ment and consolidation alternatives. Unfortunately,many communities with outdated or insufficientwater and/or wastewater systems are reluctant toseek help through the state because of their fear ofpossible consent orders or related regulatorymandates. An expanded, non-regulatory statetechnical assistance program could help promoteprivatization and regionalization, where appropri-ate, and the implementation of other concepts tostretch financial resources and improve manage-ment of Oklahoma’s water/wastewater systems.

(May 1997) The U. S. Environmental ProtectionAgency (EPA) recently released the results of itsfirst nationwide survey of drinking water needs.This survey estimates how much water systemsneed to spend now and in the next 20 years to meetcurrent and future federal regulations. Four thou-sand water systems participated in the survey.The survey showed estimated total infrastructureneeds in Oklahoma of $2.031 billion. $399 millionis needed for large water systems, $543.9 millionfor medium systems, and $1.088 billion for smallwater systems. An estimated $1.3 billion is neededin Oklahoma to meet existing current needs. 233.5

million dollars is needed just to meet the require-ments of the federally mandated Surface WaterTreatment Rule requirements in Oklahoma. Anadditional $106.6 million will be needed to meetthe requirements of the federally mandated En-hanced Surface Water Treatment Rule and $140million will be needed to meet the federallymandated Disinfectant By-product Rule which willsoon be in place. It is estimated that there is a $604million need to upgrade distribution and storage inOklahoma water systems.

EPA sent questionnaires to the nation”s 794 largewater systems and to a random sample of 2,760water systems serving between 3,301 and 50,000people. In addition, 537 small water systems weresurveyed and the results used to estimate the needsof all water systems. EPA will use the results of thissurvey to allocate funding for each state for theDrinking Water State Revolving Fund.

The survey showed nationwide infrastructure needsof $138.4 billion for the twenty-year period begin-ning in 1995. An estimated $76.8 billion is need forcurrent infrastructure improvements to protectpublic health. The remaining $61.6 billion is forprojects needed to provide safe drinking waterthrough the year 2014.

The Oklahoma legislature recently authorized theDrinking Water State Revolving Fund to provide alow-interest source of funding to water systems tomeet help meet these infrastructure needs in thestate. The Department of Environmental Quality isworking directly with public water suppliesthroughout Oklahoma to help them meet therequirements and obtain needed funding throughthe program from the OWRB.

FinancingThe primary state financing provider for commu-nity water and wastewater projects is the StatewideWater Development Revolving Fund (SWDRF),created by the State Legislature in 1979 andconfirmed by popular vote in 1984. The corpus ofthe SWDRF provides a reserve for the OWRB’sbond issues. Due to the excellent credit ratings on


the issues, the Board’s bond program offers smallborrowers lower interest rates than could beobtained if they marketed their own bonds. Interestearned on the Revolving Fund is the source offunds for the OWRB’s emergency grant program.Qualified projects can apply for up to $100,000 ingrant money. The program is based on a prioritypoint system, with the type of emergency being theprimary factor.

Also, in response to the 1987 amendments to theClean Water Act, which contain provisions for atransition from the traditional method of directfederal grant awards to communities for assistancein the construction of sewage treatment facilities toa new method of repayable loans, the Legislaturemore recently established the Wastewater FacilityConstruction Revolving Loan Account StateRevolving Fund (SRF) Program. The Act requireseach state to provide a 20 percent match in order toreceive Environmental Protection Agency SRFcapitalization grant monies. Together, these pro-grams make up the State Financial AssistanceProgram (FAP), administered by the OklahomaWater Resources Board.

Other major sources of loans and grants are:

Rural Development (RD) — (formally FarmersHome Administration)

RD provides funding for both municipal and ruralprojects related to watershed protection and floodprevention/control; water conservation, develop-ment and storage; and water treatment, pollutioncontrol and wastewater disposal. To qualify for RDloans or grants, communities or rural areas musthave a population of 10,000 or less. While the RDloan program has recently grown stronger, thegrant program has not experienced similar growthand grant requirements have become more strin-gent. Funding levels are expected to remainrelatively constant over the next several years.Oklahoma Department of Commerce (ODOC)The purpose of the Community DevelopmentBlock Grant (CDBG) program, administered by theODOC’s Division of Community Affairs and

Development, is to assist in developing viableurban communities by providing decent housing,suitable living environment and expanding eco-nomic opportunities, primarily for persons of lowand moderate income. Grants are provided only tocities and towns under 50,000 in population andcounties under 200,000.

Indian Health Service (IHS)The IHS offers a grant program for water andsewer projects. However, qualifying criteria arevery stringent and funded projects are limited tothose which benefit significant Indian populations.There is currently a lack of reliance on individualbond issuances as a source of funding for watersystems; only 3.5 percent of municipalities andpractically no rural water systems obtain revenuefrom this source. The absence of debt issuancerelative to other revenue sources may be explainedby the lack of a market for these issuances, particu-larly for small municipalities and most rural waterdistricts.

Many of these jurisdictions have low credit ratings,or no ratings at all, in the market for local govern-ment issuances. Debt issuances from these jurisdic-tions are regarded as relatively risky, thus resultingin higher interest rates which can price manysmaller entities out of the debt market. Also, bondsissued by municipalities in Oklahoma are subject totax exemption only by the federal government;exemptions for state, as well as federal, taxeswould allow local governments to issue bonds atlower interest rates.

Due to the inability of small borrowers to markettheir bonds at an attractive rate, the OWRB issuedpooled revenue bonds with the “pool” consisting ofmany small borrowers. The advantage to this typeof financing is that the ratings on the bond issuesare not based on one small borrower, but rather thepool of borrowers. As a result, ratings are muchhigher and interest rates much lower. In addition,the Board’s pooled revenue bonds are double taxexempt, making for an even lower interest rate thancould be obtained by an individual borrower.The Statewide Water Development Revolving


Fund, which hundreds of Oklahoma communitieshave turned to for infrastructure needs, has beenutilized for many other purposes (especially TarCreek remediation and Sardis Reservoir waterstorage payments) in addition to its original pri-mary function as a water/wastewater projectfunding source.

The remaining balance of the SWDRF has beenobligated as the required state match forOklahoma’s SRF Program. It has been estimatedthat a minimum $8 million recurring annualdemand could be placed on the Fund. Complicatingthis situation, Oklahoma and other states have beenforced to assume greater responsibility in both theplanning and financing of water resource develop-ment projects due to the federal government’srecent declining role in this area. Due to the state’ssignificant infrastructure needs, significant capitali-zation of the Revolving Fund is needed, not only tomeet upcoming unfunded federal mandates but tosatisfy existing 1987 mandates related to point andnonpoint source discharges, water quality standardsand related programs.

Also, additional funding will be needed to providethe state match to allow establishment of thefederal Drinking Water State Revolving Loan FundProgram. It is anticipated that this loan programwill be fully functional and providing drinkingwater loans by mid-year 1997.Several dedicated revenue sources have beenformally or informally proposed to capitalize theSWDRF so that it can remain responsive toOklahoma’s future water resource developmentneeds. These include water user fees, groundwaterand stream water permit renewal fees, a waterdevelopment fee (similar to the Oklahoma Depart-ment of Environmental Quality’s solid waste fee),reapportionment of existing taxes (such as theMotor Fuel Special Assessment Fee) and directlegislative appropriation.

Reservoir Operations

Allocation & ControlWithin the past four decades, an impressive num-ber of reservoirs and lakes have been constructed inOklahoma. While smaller lakes primarily servelocal water supply and flood control needs, mostfederal projects are utilized for additional multiplepurposes such as flood control, water supply,irrigation, power, navigation, recreation, fish andwildlife and water quality enhancement.Undoubtedly, some federal reservoirs in the stateare not being managed to their full potential or tothe maximum benefit of Oklahoma citizens; othersmay have allocations of storage that are insufficientfor water supply or other current or projectedneeds. Occasionally, the difficult task of operatinga reservoir for numerous purposes-especially inregard to releases for flood control, navigation andhydropower-leads to conflict and necessitates areassessment of the current operational plan andproject benefits. Exploration of opportunities toenhance the operations and benefits of existingreservoirs will become an increasingly attractiveplanning option, especially due to the current costsand environmental restraints associated with newproject construction.

Although most reservoirs in Oklahoma have beenplanned, constructed and operated on an individualbasis, past experience indicates that implementa-tion of system operating plans can significantlyincrease the benefits of one or more projects in aparticular stream system. These plans can beformulated, especially for larger reservoirs locatedin the same basin, to achieve a reasonable balanceof purposes for which a project is operated and tomaximize benefits without significant adverseimpacts on aquatic life, recreation or existing waterrights holders in a stream system.

Flood control, the primary benefit of the majorityof the state’s 34 major reservoirs as well as hun-dreds of upstream detention projects constructed bythe SCS/NRCS, is a purpose that has generatedconsiderable controversy in Oklahoma. As demon-strated by numerous flooding disasters throughout


state history, intelligent and responsive floodcontrol operation is essential to the safety andeconomic viability of Oklahoma citizens. Espe-cially in eastern Oklahoma, improvement ofexisting project operation plans or implementationof system operating plans could likely enhance theoverall effectiveness of federal flood controlefforts. However, the most significant impact uponflooding problems will be achieved throughcontinuation and strengthening of existing flood-plain management and hazard mitigation programs.(Floodplain management strategies are discussed indetail under Floodplain Management-FloodplainProtection and Preservation.)

Storage reallocation-in most cases, where a certainamount of storage originally allotted to a specificproject purpose is increased, reduced or exchangedwith storage set aside for another purpose-presentsan opportunity to place under-utilized storage to amore currently needed beneficial use. Due to theconsiderable effects that reallocation of a majorreservoir can have on operation of that project oran entire stream system, the process may requireCongressional review and approval. However, theState of Oklahoma must take all appropriatemeasures to protect current project benefits as wellas the water rights of existing users. A potentialdeterrent to reallocation is the Corps’ current policywhich requires water reallocated from existingstorage to be repaid at updated, rather than original,construction costs

While there is normally no set priority for federalproject purposes, water for water supply, floodcontrol, irrigation or other uses which justify themajority of the project’s cost (as well as thosewhich constitute the majority of storage) normallyprevails during drought episodes or other tempo-rary water emergencies. Other times, for variousreasons, these “primary” project purposes areunder-utilized and, as a result, “secondary” (non-consumptive) uses-such as recreation or fish andwildlife-become increasingly important as theproject matures. In such circumstances, these usesmay require and deserve similar protection asprovided to the original, major project purposes.

However, state law does not acknowledge protec-tion of such uses through allocation of water rights.It could prove advantageous for the state to studythe potential for requiring certain exempt water useinterests to obtain appropriate water rights and/orstorage for their specific uses.

Regardless of the method desired to maximizereservoir storage and/or uses, reaching consensusamong affected parties will remain a critical factorin preventing or solving reservoir operation dis-putes. At Lake Texoma, where various interestsclashed over operation of the lake, an advisorycommittee of water supply, hydropower, floodcontrol, recreation and fish and wildlife advocateswas created to resolve the issue. After considerablestudy, these parties conceded to a seasonal opera-tion plan which facilitates all reservoir uses andbenefits. In addition, at Broken Bow Reservoir, theOklahoma Water Resources Board, State Depart-ment of Wildlife Conservation, Southwest PowerAdministration and Corps entered into an agencymemorandum of understanding that set temporaryconservation pool releases to facilitate operation ofa downstream trout fishery. Although developmentof fair and mutually beneficial operation plans canbe a difficult and arduous task, these successesdemonstrate the value of dialogue, compromise andconsensus building in satisfying competing uses inOklahoma’s lakes and reservoirs.

Maintenance & RenovationStructural, as well as operational, modification is acost-effective method of maintaining a particularreservoir project, producing additional storage/yield and increasing existing benefits-especially inlight of difficulties related to new construction.Prior to consideration of physical improvements,appropriate measures must be taken to ensure thatstructural modifications are sound and existingproject purposes are maintained.

One maintenance problem that will impact thefuture beneficial uses of Oklahoma reservoirs,especially as they increase in age, is sedimentation.Studies can identify reservoirs experiencingaccelerated sediment loading as well as potential


mitigation measures that can stretch the watersupply potential of existing projects. A coordinatedand expanded state bathymetric mapping programcould improve sediment monitoring as well asprovide updated information on reservoir yield.In discussing maintenance and renovation ofreservoirs in Oklahoma, it is extremely importantto consider the locks, dams and river channelwhich constitute the McClellan-Kerr ArkansasRiver Navigation System. Opened for navigation inthe early 1970’s, the system is vital to the economicdevelopment of Oklahoma as well as the entireArkansas River Basin region. However, recurringlow water levels on the Mississippi River haveresulted in the loss of considerable revenuesthrough delays to the Waterway’s ports, customersand shippers along with increased operation andmaintenance costs due to dredging.

Of the waterway’s 445 miles, the first 10 miles aredependent upon the Mississippi River’s elevationwhile the remainder of the system is controlled by17 locks and dams. When the Mississippi waterlevel drops, loaded barges cannot enter or leave thewaterway. Consequently, many customers are oftenforced to ship by other modes of transportation,causing significant losses of time and money.These unnecessary market losses and widespreadeconomic dislocations could be avoided throughconstruction of Montgomery Point Lock and Damon the White River, the final lock and dam envi-sioned in the original system plan. Otherwise, theuncertain flow levels of the Mississippi River willcontinue to make navigation on the McClellan-Kerrincreasingly difficult and jeopardize the $1.5billion already invested in the waterway.

Navigation on the system has also experiencedsignificant periods of high flows in recent yearscausing disruptions and delays in barge move-ments. These high-flow conditions result in in-creased fuel, labor and capital costs due to theadditional time required for movements, reducedtow sizes and increased accident rates. The reces-sion of high-flow events also causes periodicdelays and blockages due to shoaling. The Arkan-sas River Basin Study, completed in May 1991,

investigated opportunities for improvements to theMcClellan-Kerr System. The two primary mea-sures analyzed to address the high-flow problemswere increasing the available storage in the basinand/or modifying the system operating plan tomore efficiently utilize existing storage.

Water Marketing

Water TransferWater transfer and marketing, a strategy whichallows water to be used where it is needed most orhas the greatest economic value, can be beneficialfor all of Oklahoma. Because water is a somewhatrenewable resource and has value as a commodity,water and water rights/storage transactions cancreate attractive investment opportunities as well asassist in repaying the debt of many communitieswho have entered into federal water storagecontracts. Other benefits include conservation ofsupplies, especially during times of drought;protection of habitat for fish and wildlife; andpreservation and enhancement of water quality.

The ease in transferring rights under the priorappropriation system facilitates economic transac-tions that promote optimal development and use ofboth stream and groundwater resources. If waterrights are transferred in an open market, they tendto migrate from the least efficient uses to moreefficient and economically productive uses. Itappears that the transfer of water rights fromdecreasing agricultural needs to escalating munici-pal use will become more widespread, leading tothe growing emergence of water markets. However,water rights transactions should be limited to someextent to preserve the social, economic and politi-cal diversity of rural areas, especially in Oklahomawhere agriculture is of such importance to theeconomy. Individual marketing projects must beachieved in a manner that balances existing usesand avoids excessive reservoir fluctuations.The expense, legal complications and politicalobstacles which frequently accompany large-scalewater transfers often preclude those projects. Whilesafeguards, such as the requirement of legislativeauthority for the interstate transfer of water, help


ensure that water transactions are conducted fairly,they may also hinder projects which appear to bebeneficial to all involved parties.

Many states have created “water banks,” entitieswhich oversee and control water sales as well asbuy available water and storage rights, holdingthem in trust for potential future users. An Okla-homa water bank could provide for better conser-vation of water resources and more efficientadministration of state water law (such as grantingthe purchase/loan of portions of water rights,thereby allowing users to avoid reduction orforfeiture of their rights). In addition, the bankcould facilitate discussions related to protection offish and wildlife resources through establishmentof minimum lake levels and/or instream flowmaintenance.

However, above all, Oklahoma requires a coordi-nated water marketing policy or system to facilitateboth the large- and small-scale lease and transfer ofwater and water rights.In Oklahoma, only two major transfer projects havebeen seriously considered-the statewide transferplan proposed in the 1980 OCWP and, morerecently, an attempt to lease surplus water from theKiamichi River Basin to North Texas MunicipalWater District. The OCWP conveyance plan,although a potential long-range option, has beenjudged economically unfeasible and updated waterprojection figures indicate that the major importa-tion of water will not be necessary to meet needs ofthe state’s eight planning regions in the near future.And, although the Kiamichi project yielded towidespread local opposition and substantial politi-cal pressure, it brought to light many issues that, ifaddressed, should benefit future intrastate andinterstate transfer efforts.

The statutory definition of “surplus water,” set outin 1974 legislation authorizing the original OCWP,is critical to the implementation of individual watertransfer projects and in protecting future needs anduses in the area of origin. Determinations ofsurplus water will also help identify amounts ofwater needed for future beneficial use in each ofOklahoma’s eight planning regions.

HB 2036 requires the OCWP update to review thedefinition of “excess and surplus water of thisstate” and consider a procedure for determiningthis water to ensure that areas of origin will neverbe made water deficient. Surplus water is currentlydefined in the Oklahoma Administrative Code as“that amount of water which is greater than thepresent or reasonably foreseeable future waterrequirements needed to satisfy all beneficial useswithin an area of origin.” In fact, one of the majorwater marketing requirements prior to any long-term agreement for the sale or lease of water is theaccurate assessment of local needs-i.e., a fair andfactual definition of surplus water. In regard to theplanning horizon utilized for the OCWP, “reason-ably foreseeable” is considered to be 50 yearsbecause it represents the outer limits of reliablepopulation and water requirement forecasting and itencompasses the minimum life span of most majorwater supply projects in Oklahoma. However, themost accurate method to determine surplus water ina basin may be on a case-by-case basis.

To ensure future supply for the state’s planningregions and to better facilitate future intrabasinwater transfers, forecasted estimates of surpluswater in Oklahoma must be conservative onavailable water and liberal on needs. Numerousuntapped sources of water throughout the state canbe secured and utilized through development ofsystem operating plans, reallocation of reservoirstorage, utilization of unneeded sediment storageand administrative actions, such as the cancellationand reduction of unused water rights. However, tobe more accurate, future estimates of surplus watercould consider the percent of time reservoir storageis reliably available for varying uses. For example,the yield for municipal supply is calculated to beaccessible 98 percent of the time while moresupply from the same source would be available forirrigation use, but for a lesser percentage of time.As a result, the amount of surplus water availablefor large-scale transfers could vary according to itsproposed use in the receiving area.


Water Supply Augmentation

Weather ModificationWeather modification is considered by many to bean effective and promising water resource manage-ment tool. Interest in enhancing rainfall by artificialmeans prompted the Oklahoma Legislature to passthe Oklahoma Weather Modification Act. The Actprovided for the encouragement and regulation ofweather modification activities and, as amended in1973, assigned the responsibility of its administra-tion to the Oklahoma Water Resources Board.While moderate success of test programs haveproponents convinced of the effectiveness of thetechnology, others remain skeptical.

In an effort to alleviate uncertainties surroundingthe use of weather modification technology, the1980 Oklahoma Comprehensive Water Planrecommended that the Governor and Legislaturesupport the development and implementation of acomprehensive weather modification program forthe State of Oklahoma. As a result of this recom-mendation, the OWRB, Bureau of Reclamation andTexas Water Commission joined forces during themid-1980’s under the Southwest CooperativeProgram to demonstrate state-of-the-art cloudseeding technology and its promise in increasingsummertime rainfall in the Southern Plains region.Findings from that multi-year effort, combinedwith more recent results from other programs,suggest that increases in summertime convectiverainfall of 10 to 30 percent and reductions in hailloss on the order of 25 to 45 percent are achievablethrough carefully planned and conducted programs.

Groundwater RechargeArtificial groundwater recharge-i.e., diversion ofrunoff into groundwater basins for storage and lateruse-could be an effective tool for managing declin-ing or limited groundwater resources. The technol-ogy can lessen pumping costs, provide additionalwater supplies during drought and help use streamwater that may otherwise be lost during wet years.

In 1984, the Bureau of Reclamation, in conjunctionwith the U.S. Geological Survey and Environmen-

tal Protection Agency, initiated a feasibility studyto demonstrate the potential of artificial groundwa-ter recharge technologies in stabilizing and replen-ishing declining aquifers under a variety ofhydrogeologic conditions. The Bureau, in coopera-tive agreement with 17 western states, selected 21sites to test various artificial means of supplement-ing groundwater supplies. As part of this study, theBureau, Southwest Soil and Water ConservationDistrict and the Oklahoma Water Resources Boardare cooperating in a five-year, $2 million effort torecharge the Blaine Aquifer which provides irriga-tion water to a 1,500 square-mile area in southwestOklahoma and adjacent parts of Texas. Centerednear Hollis, the Blaine Recharge DemonstrationProject includes five recharge wells, a rechargedam and 25 monitoring and observation wells. Thisprogram supplements an existing, private project,initiated in 1968, of 45 recharge wells operated bythe Southwest Soil and Water Conservation Dis-trict.

A second state groundwater recharge demonstrationproject, near Woodward, has been proposed toincrease water supplies in alluvium and terracedeposits of the North Canadian River. The planconcept involves installation of an undergroundbarrier down-gradient of an existing municipalwater well. It is presumed that the barrier damwould increase the production of water from theexisting well, resulting in reduced demand on theOgallala Aquifer.

Reclamation & ReuseFuture water shortages and cost considerations willgenerate increased pressure to reclaim and recyclewastewater. In many areas of the country, wastewa-ter reclamation-the reuse of highly treated effluent-has become an important source of water forlandscape and agricultural irrigation, aquiferrecharge, industrial cooling, power generation,paper production and food processing. The centralissues preventing full utilization and acceptance ofreuse techniques include health concerns and therights to reclaimed water, especially when thewater is used to maintain streamflow (i.e., instreamflow and/or water quality problems could result in


removing effluent from stream systems).In agriculture, reuse of municipal and industrialeffluent for irrigation, as well as the reuse ofirrigation tailwater or drain water through installa-tion of pumpback systems or planting of salttolerant crops, is gaining greater acceptance. Insome situations, agricultural return flows arealready reused simply because downstream agricul-tural appropriations depend on upstream returnflows. However, salinity buildups and the existenceof trace elements can be limiting factors in agricul-tural recycling.

Additional research is needed to determine thepossible health and environmental effects of reuseand land application of wastewater.Industries-such as food processing, paper manufac-turing, and other industries that have a heavydemand for water-could defray some of the cost ofproduction by selling treatment services to sur-rounding communities. In addition, significantsavings in water use can be accomplished bysubstituting lower quality reused municipal waste-water for fresh water during the cooling andmanufacturing process. In closed cooling systems,water is returned to a tower, pond or lake to becooled and reused.

These cooling lakes can also be used for recreationand fish farming. Another industrial practiceinvolves combining industrial waste flow thatrequires high nutrients for treatment with municipalwastewater containing those nutrients. Recycling ofprocess water by Oklahoma industries has beenlimited because of the relative availability andabundance of high quality, generally inexpensivemunicipal water.

For homeowners, a number of residential on-sitewater reuse (gray water) systems are technicallyfeasible and environmentally sound. However, thispractice is not yet accepted by most householdwater users.

Chloride ControlWater quality problems, both natural and man-made, affect many of Oklahoma’s stream and

groundwater resources. Natural dissolved solidsand salinity problems, in particular, impede thedevelopment and maximum use of water resourcesin much of western Oklahoma. High concentrationsof minerals, primarily chlorides, are emitted intostreams from salt springs and salt flats, oftenrendering both the stream and adjacent alluviumand terrace groundwaters unfit for use. In addition,many of the carbonate aquifers in the regioncontain naturally occurring salts that impairgroundwater quality. In some areas, this problemhas been aggravated by oil and gas exploration andproduction activities.

Chloride control and desalinization have been usedwith some success to cope with salt contamination.Desalinization, which involves treating salt-concentrated water until it is suitable for beneficialuse, is being utilized to treat water at Foss Reser-voir, on the salty Washita River. Chloride controldoes not alter the quality of the water at its source,but rather diverts fresh and usable water aroundidentified salt flats and natural brine springs bymeans of dikes, dams and retention structures.The ongoing Red River Basin Chloride ControlProject, located in southwest Oklahoma and Texas,is a pilot project authorized by the Flood ControlActs of 1962, 1966 and 1970 and Water ResourcesDevelopment Act of 1986. In the project region, 10natural salt source areas contribute some 3,600 tonsof salt to the Red River each day. The ArkansasRiver and its two principal tributaries in northOklahoma, the Salt Fork of the Arkansas andCimarron Rivers, also exhibit chloride problems,although a Corps study determined that project tobe economically infeasible based on federalresource planning guidelines.

With the Red River Basin Chloride Control Projectfully operational, an estimated 65 percent of thechlorides emitted from the 10 major source areaswould be controlled. At Lake Texoma, a potentiallyvaluable water supply, water meets the Environ-mental Protection Agency’s dissolved salt standardfor municipal water only three percent of the time.It is anticipated that the project would reduce thelake’s chloride levels by some 45 percent, making


Lake Texoma water useable 94 percent of the time.Formal study of the Red River chloride situationwas initiated in the late 1950’s. Actual developmentof dams, dikes and diversion structures to controlan anticipated 65 percent of the chlorides wasinitiated in 1964 by the U.S. Army Corps ofEngineers; operation of the project continues todayat full federal expense. The total project cost isestimated to be approximately $262 million with areturn on investment (cost-to-benefit ratio) of 1.3 to1.

To initially determine environmental impacts of theproject, numerous studies were conducted by theCorps as part of the final environmental impactstatement (FEIS) which was filed with EPA in1977. Due to changes in project design and in theexisting environmental setting, the Corps’ TulsaDistrict reevaluated the project for compliance withcurrent environmental laws and regulations in1991. They determined that a supplement to theFEIS would be required to assure compliance withthe National Environmental Policy Act (NEPA) andother environmental laws. As a result, the Districthas conducted four additional environmentalstudies which address various concerns related tothe project.

Natural resource agencies and recreational interestshave expressed serious concerns regarding con-struction of the remaining portions of the project.Specific major concerns include the potentialimpact of decreased chloride concentrations in theRed River basin on primary production and sportfish abundance in Lake Texoma; impacts onfederally listed threatened and/or endangeredspecies; potential impacts of selenium concentra-tions in brine storage lakes; indirect impacts of theproject on streamflow and riparian corridors;impacts of flow modification on fishes of the upperRed River; fish and wildlife mitigation features;land use changes at the Area VI disposal site inOklahoma; and preparation of the FEIS supple-ment.

A major environmental, as well as economic,concern surrounds the Lake Texoma fishery whichcontributes some $22.7 million annually to localand state economies in the two-state area. Aminimum eight percent decline in the overall sportharvest has been predicted, although further studiesof the extent of this particular impact are ongoing.Environmental agencies-in particular, the U.S. Fishand Wildlife Service and Oklahoma Department ofWildlife Conservation-have expressed concernsthat the Red River Chloride Control Project willadversely affect water quality conditions that havemaintained the long-term productivity of LakeTexoma. Increased turbidity in the lake, a conditionwhich could result from the decreased salinitylevels, could prove detrimental to the profitable andthriving Texoma striper fishery. Also, increasedwater withdrawals and consumptive water use,especially in Lake Texoma, could impact nationalwildlife refuges and state wildlife managementareas/parks in the region.

In July 1994, the Corps and USFWS completed aformal consultation which resulted in an agreementthat includes a number of measures to conserve andavoid impacts to the Interior least tern, Bald eagleand Whooping crane, although concerns remainabout potential changes in the habitats of thosespecies. Impacts to these and other threatened and/or endangered and related sensitive species whichoccur in the project area are also being re-evalu-ated.

In addition to potential environmental concerns,increased irrigation resulting from the project couldhave an adverse cumulative impact on flow withincertain segments of the upper Red River during dryperiods. However, careful regulation of area waterresources, facilitated through information obtainedfrom gaging and monitoring stations established torecord changes in flow and water quality, couldhelp diminish this problem.


Water Conservation

Water ConservationWater conservation measures have promise to savesignificant amounts of water and, as a result, foregothe need for new water supply construction anddevelopment. In the home (including public andprivate buildings), primary conservation measuresinclude efficient water-using equipment, changes inplumbing codes and, especially, modifications ofbehavior and habits affecting water use. Whilerevised building codes that require installation ofwater-saving devices transfer the additional costfrom the builder to home buyer, this equipment canprovide various economic benefits as well as assistin preserving supplies for future use.Within the home, about three-quarters of water useoccurs in the bathroom where toilets alone con-sume an estimated 40 percent of all water used. Inoffice buildings, schools and public buildings,toilet flushing is the predominant water use.Substantial water savings can be realized byinstalling low-flush toilets that use 1.6 gallons ofwater per flush, as compared to 3.5 to 8.0 gallonsper flush for conventional toilets. Toilets usinghigher volumes of water can also be modifiedthrough the installation of certain devices in thetank to reduce the flush volume.

Bathing accounts for 34 percent of water consumedin the home, with 60 percent of this total used inthe shower. Many companies manufacture showerheads or adapters that conserve water by reducingthe maximum flow rate or producing a low-flowshower spray. Since conventional showers use upto 10 gallons per minute, and showers average fiveminutes in duration, water use can be reduced up to70 percent by utilizing a flow control device whichreduces the rate of flow to three gallons per minute.The benefits of water conservation are many. Inaddition to the obvious benefit of conserving thestate’s limited and precious water supply, theenergy savings achievable through the use of thesefixtures and overall consumer cost savings can besubstantial. A major concern regarding municipalwater conservation measures is the potentialfinancial impact on utility revenues that could

result from the sudden, reduced volume of utilityrevenue when the fixed costs of the utility have tobe met regardless of sales. However, phasing-in ofconservation programs and practices could addressthose concerns. The availability of water-efficientfixtures and appliances at costs comparable to morewasteful fixtures, as well as the ease of their use inconstruction, make a statewide effort governing thesale and use of efficient fixtures and appliances aviable way to achieve substantial in-home watersavings. On a larger scale, this particular method ofwater conservation can help avoid costs associatedwith development of new supplies and, because ofreduced flows, can decrease the price of wastewa-ter treatment. However, full implementation ofwater-saving plumbing fixture standards could takelong to achieve.

Each year, Oklahoma’s rural water systems collec-tively lose millions of gallons of treated drinkingwater through water line leaks and malfunctioningmeters. To address this problem and identify energyand water losses that diminish the profits andefficiency of these smaller systems, the OklahomaWater Resources Board proposed creation of theStatewide Rural Energy and Water Conservation(Oklahoma Leak Detection) Program. Created in1993 and funded by $300,000 in federal oil over-charge monies from the U. S. Department ofEnergy, the program allows the OWRB to offerinterest-free loans up to $30,000 for water audits,leak detection surveys and to make associatedrepairs. The Oklahoma Rural Water Associationcoordinates those activities. The initial water auditand leak detection survey identifies and assesseswater, energy and revenue losses while resultinginformation determines what projects can mosteffectively reduce those losses. Eligible entitiesinclude rural water districts, non-profit corpora-tions, municipalities and public trusts who providewater service to a maximum population of 10,000.Program funding is scheduled for termination inMarch of 2003.

The key to water conservation-applying to in-homeas well as agricultural and industrial water use-iseducation. The environmental movement of the


1960’s and 70’s spawned widespread publicawareness of environmental problems, especiallythe importance of conservation and protection ofour water resources. Today, citizens are aware ofthe benefits in preserving, protecting and conserv-ing valuable stream and groundwaters and they areequipped with the knowledge necessary to makeintelligent decisions regarding water use andprotection. However, there remains a need todevelop and foster additional respect forOklahoma’s water resources through education ofadults as well as children.

Although education is important, perhaps the mostpowerful incentive for conservation is price. Theprice of water should reflect the actual costs of thewater itself, plus costs associated with treatmentand distribution. In far too many communities,however, water is practically a free resource withits price bearing little resemblance to the actualcost of treatment and delivery-a fact which oftenescapes the citizen consumer. Furthermore, small-volume users typically pay much more by volumethan do large users and there is little incentive toindustry, a major water user, to conserve.

The general function of prices is to assert checksand balances on production and consumption in aneconomy. In this role, prices have two functions: todiscourage excessive consumption of a commodityand to induce the desired supply of that commod-ity. Prices can play this role not only in the privatesector of the economy, but also in regulating theproduction and consumption of certain commodi-ties produced by governments and local entities.

The price of water generally represents the amountnecessary to cover a utility’s capital and operatingcosts, including allowances for rehabilitation andreplacement. The typical rate structure is thedeclining block rate system under which there is acharge per gallon for the first block of use which isgreater than the charge per gallon for the nexthigher use category. In effect, the declining ratesystem subsidizes the larger user at the expense ofthe small user and is often used to attract industryto an area. However, under this system, there islittle incentive to conserve.

It is the pricing of this additional amount of waterthat has potential for conservation because most ofit is used for less critical tasks such as lawn water-ing. Increasing the price of the initial block willincrease revenue but not discourage use. Increasingblock rates are more effective. As larger quantitiesare used, the consumer has to pay an increasedcost. Increasing the price of additional blocks-atleast to reflect the full incremental cost of delivery-may alter use patterns in cases where water ispriced below this level.

Water Resource Planning

Basin/Watershed ManagementThe traditional data-gathering approach to waterresource management and planning has beencontrolled by political, rather than geographical,considerations-and for good reason. The obser-vance of political boundaries facilitates the flow ofinformation and data from the source entity (suchas the U.S. Census Bureau) to water resourceagencies who require and depend upon this infor-mation to administer numerous state and federalprograms.

Today, however, it can be argued scientifically thatwatersheds constitute the most sensible hydrologicunit within which to manage stream water re-sources and, especially, protect and enhance waterquality. The majority of current watershed manage-ment studies are (and likely will be) driven by thenature of the individual problem at hand. Undoubt-edly, increased attention to nonpoint source pollu-tion will result in unprecedented incorporation ofwatershed management techniques.

Watershed management tools can be used toidentify holistic cause-and-effect water qualityrelationships, link upstream uses or problems todownstream effects, develop reasonable watercleanup plans and educate the public. By cuttingcosts and focusing limited staff and resources onthe most important water quality problems, basin-wide watershed management enables a state toprotect waters in a more effective and consistentmanner. Adoption of watershed management


approaches in Oklahoma could also facilitateelimination or consolidation of the many time-intensive federal reporting, or “list-making,”requirements. Similarly, a strategy to managegroundwater could be based upon the uniquecharacteristics of a specific basin or aquifer.Coordination of geographic-based water planningincludes components of planning and implementa-tion, data collection and dissemination, informationand research, and public education and informa-tion.

While numerous federal and state agencies (such asthe Oklahoma Water Resources Board, U.S.Geological Survey, U.S. Environmental ProtectionAgency and Natural Resources ConservationService) currently utilize various aspects of water-shed planning and management, many recognizeconflicting watershed boundaries. For example, theOWRB, through its stream and groundwatermanagement and permitting programs, conductsstudies of water availability in state stream systemsand groundwater basins.

Water quality standards and related studies areimplemented on a primarily local, watershed-oriented basis while Oklahoma’s interstate streamcompacts recognize large river basins. However,more recent water resource planning activities haveemphasized political boundaries. Population,economic and other societal information that iscritical to water resource planning must be com-piled with consideration for municipal, county andstate boundaries-an approach that limits the institu-tion of watershed planning which recognizesnatural geographic boundaries.

This political/geographical overlap has traditionallyposed problems for water resource planners whomust extrapolate redundant, and often incomplete,water quality/quantity data.

A holistic water resource planning and manage-ment approach is needed to merge political andgeographical differences. Recently, EPA providedthe state with funds to develop a Whole BasinProtection Approach (WBPA) Implementation Plan

for addressing water pollution on a watershedbasis. This effort will include delineation andprioritization of watershed planning units as well asmethods for synchronizing National PollutionDischarge Elimination System (NPDES) permits,nonpoint source implementation activities andrelated pollution prevention programs.

Geographic information systems (GIS) technology-which involves the use of computers for mapping,management and analysis of spatial information-exhibits much promise in watershed management.These systems possess capabilities for the encod-ing, storage, processing and display of computer-ized maps and images. Geographic informationsystems are beginning to emerge in Oklahoma andmost other states. A consensus among state andfederal agencies of watershed planning boundarieswould greatly facilitate the exchange of informa-tion within the state GIS program.

Drought PreparednessDrought, which is all too frequent in Oklahoma,has serious social, economic and environmentalrepercussions. Particularly damaging to the state’sagricultural industry, drought has been character-ized as a “creeping phenomenon,” making anaccurate prediction of either its onset or end adifficult task. To most observers, it seems to startwith a delay in the timing (or a failure) of the rainsnormally expected. A major problem in respondingto drought lies in the fact that it has a differentmeaning to different people, largely dependent ontheir particular background and interest. Essen-tially, there are meteorological, agricultural,hydrologic and socioeconomic droughts, allrelating to some shortfall in water.

Critical to determinations of drought’s probability,however uncertain, is the existence of a system tofacilitate the long-term, reliable and continuousmonitoring of hydrometeorological conditions.According to a 1991 National Research Councilreport, which discussed the importance of identifi-cation and analysis of hydrologic extremes (includ-ing both drought and flood), “Estimation of theseverity and interval of likely recurrence for this


drought [the 1985-86 drought in the southeasternU.S.] was made possible by the availability ofhigh-quality hydrometeorological records main-tained continuously for a site since 1934. An evenlonger precipitation record, 110 years, was locatedfor a nearby station.

Whereas the drought was the most severe in the 53-year record, the 110-year record revealed fiveperiods of even less rainfall before 1934. Thisinformation substantially altered the interpretationand implications of the 1985-86 drought, showingit to be a much more common event than firstconsidered.”

Past efforts in Oklahoma to deal with episodes ofdrought, both on the state and local level, is bestdescribed as crises management. The state mustrecognize that planning for Oklahoma’s critical andemergency water resource needs should not becarried on only during times of drought crises.

Wetlands Protection & ManagementWetlands protection and management is one of themost divisive water policy issues and, as a result,federal regulation of wetlands has experiencednumerous recent changes. Developers and farmershave protested the various wetland rules andregulations as being onerous land use requirementswhile environmentalists insist that more regulatoryaction is needed to sufficiently protect wetlands.

The state must develop balanced policies thatbridge the gap between these interests.Because no individual entity has either the mandateor resources to provide adequate wetlands protec-tion in Oklahoma, wetlands conservation andmanagement are the shared responsibilities ofnumerous federal, state and local agencies as wellas conservation organizations, private corporations,landowners and special interest groups.

However, in May 1990, the State Legislaturedirected the Oklahoma Conservation Commissionto prepare a wetlands management strategy for thestate in cooperation with numerous state andfederal agencies, including the U.S. Environmental

Protection Agency, which has granted funds tostates for wetlands conservation planning purposes.Also on the federal level, the National Academy ofSciences has been directed by Congress to reviewthe wetlands definition and delineation issue.Because the wetlands issue has such potential toinfluence private, state and federal land ownershipand administration in Oklahoma, development ofwetlands management strategies should be acooperative effort that assures wetlands protectionwhile balancing economic concerns and interests.

Endangered SpeciesThe Endangered Species Act (ESA) was passed in1973 “...to provide a means whereby the ecosys-tems upon which endangered species and threat-ened species depend may be conserved, to providea program for the conservation of such endangeredand threatened species, and to take such steps asmay be appropriate to achieve the purposes of[several International] treaties and conventions.”The ESA, which has been amended several timessince initial passage, provides for a comprehensiveapproach to identifying species in need of specialattention, conserving species and the habitats uponwhich they depend and recovering species to thepoint of delisting.

Congressional policy states “...that all Federaldepartments and agencies shall seek to conserveendangered and threatened species and shall utilizetheir authorities in furtherance of the purposes of[the ESA].” Furthermore, the ESA requires thatfederal agencies shall, in consultation with the U.S.Fish and Wildlife Service, ensure that any actionauthorized, funded or carried out by such agencydoes not jeopardize the continued existence of anylisted species or result in the destruction or adversemodification of designated critical habitat.

However, many environmental organizations andagencies believe that federal and state agencieshave failed to fully consider the potential impact ofindividual water resource development projects andrelated activities on endangered/threatened species.Nationwide, more than 800 species of plants andanimals have been listed as threatened or endan-


gered under authority of the ESA. In Oklahoma, 21species are currently listed, with one presentlyproposed for addition.

Because the life cycles of many threatened/endan-gered species in Oklahoma depend, at least in part,upon the aquatic habitats provided by state streams,rivers, lakes or ponds, these species can be pro-foundly affected by changes in water levels, flowsand quality. While both the ESA and OklahomaWater Quality Standards (through the state’sAntidegradation Policy) provide protection to statespecies classified as threatened or endangered bythe U.S. Fish and Wildlife Service, development ofwater projects or use of water within key riverbasins may adversely affect critical habitat orotherwise impede plans for species recovery.However, while conflicts between water’s environ-mental value and agricultural, urban and other usesof water could potentially result in expensive andtime-consuming litigation and/or prohibit imple-mentation of important water projects, to date, theESA has been a factor in the development of onlyone water project in Oklahoma (Lukfata Reservoir,in southeast Oklahoma).

Recently, the U.S. Fish and Wildlife Serviceproposed to list the Arkansas River shiner-a smallfish peculiar to much of the Arkansas River Basinwhich has disappeared from over 80 percent of itshistoric range-as an endangered species. There areunanswered questions related to decline of theshiner and past water development. On the otherhand, there is concern regarding the possibleeffects the listing may have on future water devel-opment and use (including implementation ofpotential low flow requirements and restrictions ongroundwater pumping) in the Canadian River,North Canadian River and Cimarron River Basins.Reliable, long-term hydrologic information will berequired to resolve this and future issues related towise water management and protection of endan-gered/threatened species.

In some surrounding states, judicial decisionsrelated to the needs of federally-listed species haveresulted in changes in the administration of stream

and groundwater resources. In response to the U.S.Court of Appeals, the Texas State Legislature hasruled that enforcement of the ESA has priority overthe groundwater rights of Texas landowners whenthe two are in conflict. This major water rightsdecision in Texas merits careful examination for itsapplicability to Oklahoma and accentuates the factthat the sometimes competing needs betweenenvironmental and non-environmental water usesmust be given serious consideration by the statewhen formulating the wide range of water manage-ment options.

Floodplain Management

Floodplain Protection & PreservationIn the wake of the 1993 Mississippi River flood,the federal government has made a renewed effortto promote floodplain management, includinginvestigation of options to return floodplains totheir natural condition, and prevent recurring floodproblems. Oklahoma should keep abreast of federalactivities in this area as well as continue currentfloodplain management efforts related to theNational Flood Insurance Program (NFIP), federalHazard Mitigation Grant Program (HMGP) andrelated programs that have resulted in reducedflood damages throughout the state.

Since Oklahoma joined the NFIP in 1975, theprogram has been directly responsible for mitigat-ing state flood losses and associated costs. Cur-rently, 358 communities, including 47 counties,have enrolled in the NFIP. However, 16 countiesand 79 cities and towns not participating in theprogram have been identified as having floodhazard areas; 20 additional non-participatingcounties are unmapped, yet most are suspected ofpossessing flood-prone areas. Expansion of statemapping efforts, in cooperation with the federalgovernment, could improve this situation, espe-cially considering that increased development inmany regions has caused significant alterations infederally-delineated, 100-year floodplain eleva-tions.


While the Hazard Mitigation Grant Program hasprovided much-needed assistance to many Okla-homa communities in decreasing future floodlosses, many elect not to participate due to theprogram’s required 25 percent match. Identificationof a funding mechanism that would assist commu-nities with the required cost-share money couldprovide a boost to program participation. Inaddition, cities and towns with frequent floodingproblems should be encouraged to participate inhazard mitigation planning efforts prior to disastersrather than during post-disaster recovery periods.Improved education, training and planning isneeded to reduce the flood risk at the local leveland prevent repetitive flood damage.The availability of long-term and reliable hydrom-eteorological data is just as important to floodplanning as it is to drought planning and otherwater resource management efforts. For example,precise delineation of the 100-year floodplainrelies, to a great extent, upon accurate and acces-sible streamflow data, especially estimates ofextreme discharge and stage (elevation of thewater). Also, the existence of a real-time monitor-ing network, utilizing U.S. Geological Surveystream gage information, is vital to development ofeffective flood forecasting and warning systems,such as that implemented by the City of Tulsa. Inthis regard, there is a need to update and improvethe current USGS stream gaging network as well asperform maintenance on individual stream gagesthroughout the state.

Other methods through which state and/or localgovernments could reduce flood damage andmitigate related hazards include stormwatermanagement planning; development of alternativemethodologies for determining flood elevations;improved enforcement; increasing public aware-ness and education; implementation of stateGeographic Information Systems; and investigationof a system that limits future development where ahigh ratio of impervious to pervious land exists.

Problem Mediation/Arbitration

Water Resource Dispute ResolutionActivities surrounding the utilization and protec-tion of water are frequently debated and manytimes litigated. As a result, resolution of disputesinvolving these issues is growing in importance.Through consensus building techniques, a knowl-edgeable facilitator, perhaps one authorized stateagency, can bring affected parties to the table to airconcerns in a non-litigation setting. Such a mecha-nism-as currently employed by the OklahomaWater Resources Board in its effort to mediatedisputes involving the state’s rural water systems-could produce an atmosphere conducive to prob-lem-solving and one that avoids costly and lengthylitigation which many times results in undesirableresults for all involved parties.

Other potential avenues to solve water use andmanagement disputes include creation of a statearbitration panel and implementation of advisorycommittees to increase awareness and understand-ing among parties involved in individual disputes.In addition, there is a need for the state to reevalu-ate current water law and policy to ensure that it isset forth in a clear and concise manner.

Local EmpowermentCitizens in many areas of the state believe that stateregulation of water quantity and quality, especiallygroundwater, should be curtailed to the greatestextent possible and that the role of the state inaddressing water problems should be as facilitatorand educator, rather than as manager. Empower-ment of local entities with decision-making respon-sibilities through creation of groundwater manage-ment districts (such as those implemented in theState of Kansas), watershed management districtsand related organizations, if done responsibly,could benefit water management agencies as wellas local water users who are directly impacted byregulation of their water resources. However, localleaders must be equipped with sufficient equipmentand education to make informed decisions andagree to be held accountable for those decisions.


In addition, increased accountability at the locallevel would undoubtedly short-circuit manypotential water resource disputes and problems-relieving both the frequently back-logged statecourt system of unnecessary legal cases andinvolved parties of the exorbitant costs of litigation.As unfunded federal mandates continue to increaseand emphasize the need for local (as well as state)funding sources for water/wastewater projects, therole of local governments in the control andmanagement of stream and groundwater resourceswill similarly evolve. Finally, current and upcom-ing funding restraints will necessitate a comprehen-sive review and prioritization of water quality andquantity management programs in which the stateparticipates, then possible elimination of thoseprograms deemed to be redundant and/or wasteful.

Interstate Water DisputesResolution of interstate water issues and problemsis currently facilitated through the four existinginterstate stream compacts to which Oklahoma is aparty. These compacts are important to Oklahomato assure receipt of adequate surface flows/releasesfrom upstream states. Generally, the compactsprovide a means of working out problems betweenstates in an orderly manner, preventing the likeli-hood of litigation in most cases. Recently, theArkansas-Oklahoma Arkansas River CompactCommission has begun to address some waterquality issues, along with traditional water quantitymatters, and the Red River Compact Commissionhas already established a standing environmentalcommittee.

Groundwater basins, like their stream watershedcounterparts, often extend beyond the geographicoutline of a state’s boundaries. Through formationof groundwater compacts with neighboring states,Oklahoma could not only improve the planning,development and management of sharedgroundwaters, but be part of a forum to facilitatethe resolution of conflicts involving groundwaterallocation, pollution and related problems. How-ever, any interstate groundwater agreement orcompact must be in harmony with state waterpolicy, applicable laws and the public interest.

Data Collection & Management

Stream Gaging NetworkIn order for the state to manage its water resources,appropriate data must be properly collected andanalyzed. According to the National ResearchCouncil, which discussed the role of data collectionin 1991, “Detection of hydrologic change requiresa committed, international, long-term effort andrequires that the data meet rigorous standards foraccuracy... The absence of supporting facts doesnot lead to understanding and can result only inconjecture.”

While the U.S. Geological Survey has collectedstream gage data nationwide since 1888, the Stateof Oklahoma has participated with the federalagency in cooperative stream gaging programssince 1935. The USGS provides federal matchingfunds for one-half the program cost, enabling state,local and tribal agencies to acquire reliablestreamflow data. The Oklahoma Water ResourcesBoard, as the primary state cooperator in theprogram, depends heavily on this data to determineamounts of water available for use. In addition,there are numerous communities and organizationsin Oklahoma-including the National WeatherService, Federal Emergency Management Agencyand many state and local disaster agencies-whocurrently use the program’s real-time data for floodforecasting, flash flood warnings, regulation ofreservoir discharge and emergency management.USGS stream gaging data is also used in Oklahomato provide valuable information related to flood-plain development; water supply forecasting,planning and research; construction and design ofbridges and dams; and facilitation of interstatestream compacts to which the state is a party. Inaddition, during periods of extensive drought, real-time data can be valuable in monitoring diversionsof water. This is especially critical in areas of directdiversion for irrigation when users desire water atessentially the same time.


Water Well MeasurementThe state water well measurement program wasinitiated in 1937 by the U.S. Geological Surveyand, since 1950, has been conducted jointly by theUSGS and Oklahoma Water Resources Board. Theobjective of the annual statewide effort is to gatherhistorical records of groundwater level fluctuationsand, from them, predict water use trends and futureavailability of groundwater supplies. Specifically,resulting data is utilized by the OWRB in determin-ing the maximum annual yields of stategroundwaters.

Although most of the wells in the network areirrigation wells, those supplying municipal, indus-trial and domestic water are also included. Typi-cally, some 1,200 wells are measured throughoutthe state. Because of the great reliance on ground-water for irrigation in the Panhandle and to facili-tate cooperative federal/state efforts to track waterlevel changes in the Ogallala Aquifer, more than200 wells are measured in Texas, Cimarron andBeaver Counties. Some wells are equipped withinstrumentation that provides a continuous recordwhile others are measured by hand. Becausedepletion of groundwater is a serious problem insome areas of the state, well measurement andmonitoring will provide the state and local land-owners with the necessary information to bettermanage this resource.

Water Quality Sampling & MonitoringWater quality monitoring, including observance ofbiological communities, is an integral tool indetermining the current status of stream andgroundwater resources and effectively managingtheir future use. Monitoring provides a means toidentify the presence and extent of contamination,recognize regional trends and correlate knowncontamination problems with suspected healthproblems.

State water quality sampling activities are directedby several state agencies, including the Conserva-tion Commission, Water Resources Board, Depart-ment of Health, Department of EnvironmentalQuality and Department of Wildlife Conservation.

These agencies receive assistance from federalagencies (especially the U.S. Geological Survey),state universities and citizens.

Historically, the majority of water quality data onOklahoma’s stream water resources has beenobtained through the National Stream QualityAccounting Network, maintained and primarilyfunded through the USGS for more than a decade.However, insufficient funding has resulted in theabandonment of many state water quality monitor-ing stations which are part of this and other federalprograms. The nine remaining USGS stations arescheduled to be discontinued when the NationalStream Quality Accounting Network comes to aclose. The two water quality sites funded throughthe USGS Benchmark network will likely continue.In addition to USGS efforts, DEQ maintains astatewide ambient trend monitoring network. Thenetwork, in place since the mid-1970’s, oncecontained 100 stations throughout Oklahoma whichwere sampled on a monthly basis. Unfortunately,the program has not been maintained and noambient water quality data is presently collectedfor the network.

As part of a separate program, the OWRB conductssampling studies on numerous publicly-ownedlakes with assistance from federal Clean LakesProgram grants. Through the State Lake WaterQuality Assessment Program, approximately 120 ofOklahoma’s largest lakes are sampled at least onceevery five years to determine their trophic status. Inaddition, more than 80 smaller urban lakes areperiodically sampled by OWRB staff or “Okla-homa Water Watch” program citizen volunteers.This valuable program provides physical, chemicaland biological data for use in identifying pollutionproblems, recommending solutions and implement-ing restoration measures. Reservoir water qualityinformation is also gathered by the OklahomaDepartment of Wildlife Conservation through itsfish monitoring efforts.

The USGS, OWRB and other state and localagencies also cooperate in water quality monitoringprograms on specific projects and the USGS


monitors surface waters for additional federalprograms, such as the National Water QualityAssessment (NAWQA). However, NAWQAmonitoring sites are normally established for aspecific purpose and may not be entirely useful forstate ambient water quality data needs.Although Oklahoma contains more than 3,500generally recognized waterbodies, less than 500have been assessed for water quality. While sam-pling of all stream waters is unrealistic, additionalsampling stations are required for the state toestablish an adequate database for planning activi-ties and the monitoring of pollution control mea-sures. A regional approach to sampling wouldallow for determination of baseline water qualitywithout monitoring of individual resources. Okla-homa requires a plan-perhaps established inconjunction with, or as a result of, coordinated statewatershed planning efforts-for determining whatwaterbodies should be measured, the location ofsampling points and frequency of assessment.Biological assessment techniques augment andenhance traditional measures of water qualitywhich have historically focused upon chemicalanalysis. Biological assessment can establishreference criteria upon which regional assessmentsof water quality conditions may be based and canprovide long-term information on conditions atindividual sites to enable monitoring of qualityover time. This form of assessment can also detectthe effects of those chemicals that are either nolonger present or are not normally tested for inroutine analysis. In addition, tissue analyses ofspecimens from the biological community candetect chemicals that are accumulated or magnifiedat levels below what can be detected throughconventional analytical procedures. Finally,analysis of the biological community enables rapidscreening of water quality so that resources can bedirected where they are needed most.

In 1983, the OWRB began an extensive annualgroundwater quality sampling program of 21 majorgroundwater basins in the state. The purpose of theprogram was to obtain ambient, or natural, ground-water quality data in an effort to characterize thebasins in Oklahoma. The program was refined to

include only wells on which information about wellconstruction, location and surrounding land use isavailable. Individual water samples were analyzedby the State Department of Health laboratory for awide range of metals and chemical pollutants.The monitoring network, discontinued severalyears ago, was designed to obtain water qualitydata over large representative areas for the majorstate aquifers. However, while providing goodareal coverage and potential trends over time foraquifers with the greatest use, the network ne-glected many small aquifers used for domesticsupplies as well as specific areas that may havebeen experiencing significant water quality degra-dation. These deficiencies should be corrected inthe event the sampling program is reinstated.The USGS has also sampled and analyzed waterfrom approximately 25,000 wells and springs inOklahoma. These data have been collected prima-rily through special projects, including cooperativeefforts with the OWRB.

In addition to past and present water qualitymonitoring and sampling programs, water quantityprograms-such as the state’s well measurement andstream gaging efforts-provide valuable informationvital to development of accurate and effectivewaste discharge permits and related water qualityconsiderations.

Because of the number of state agencies withlegislatively assigned responsibilities for water-related issues, coordination of water qualitymonitoring activities has been a historical problemin Oklahoma. Communication between agencies,including development of uniform methods ofcollecting samples, would ensure the consistencyand effectiveness of individual water-relatedsampling programs Coordination would eliminateor reduce duplication in project identification andplanning, as well as in information gathering andanalysis. Taken one step further, development of acentralized stream and groundwater monitoringnetwork and/or expansion of current programscould provide more reliable background data withwhich to improve administration of the state’svarious water management programs.


Oklahoma MesonetworkThe Oklahoma Mesonetwork (MESONET) is partof a recent initiative to place timely and highlyuseful weather information in the hands of statecitizens. A joint effort between the University ofOklahoma and Oklahoma State University,MESONET consists, in part, of 111 automatedobserving stations located throughout Oklahoma’s77-county area that continuously monitor a numberof important weather and soil conditions.

Every 15 minutes, data observed over five-minuteintervals are relayed from each remote station to acentral processing site which receives, qualitycontrols, stores and disseminates the observations,as well as value-added products, to a large state-wide community of users-all within minutes ofeach observation.

MESONET, in conjunction with the NationalWeather Service’s Next Generation Weather Radar(NEXRAD) program’s network of operationaldoppler radar systems, has facilitated remarkableimprovements in remote sensing of the environ-ment. These radars provide high-resolution dataand products which, in the past, have been avail-able from only a few research meteorologicalradars during limited time periods. This newpartnership enables MESONET users to accessadditional cutting-edge, value-added weatherproducts.

Beneficiaries of MESONET data include waterresource planners, farmers, ranchers, foresters,educators, transportation officials, emergencymanagement officials, energy officials, meteorolo-gists, weather sensitive businesses and the generalpublic. Because MESONET has been designed fora variety of purposes and utilizes several mecha-nisms to disseminate information, the OklahomaMesonetwork may represent one of the mostsignificant improvements ever in environmentaldata collection.

Water Resource Data ManagementThe current wealth of water resource informationavailable from state and federal agencies, munici-palities, universities and other research centers, andrelated sources is invaluable in the administrationand management of Oklahoma’s stream andgroundwaters. Unfortunately, much of this data iswidely scattered and exists in a variety of formats.Consequently, procurement of this data by a singleindividual, agency or organization is often difficult,expensive and time-consuming.

Establishment of a central depository for waterresource data would be very costly and inefficient.A more viable approach would be to establish acentral contact station with the ability to accesswater related data banks at all relevant state andfederal agencies. The creation of a state waterresource computer network and data bank, avail-able to all participating water agencies, wouldfacilitate the more efficient, economical andresponsive administration of Oklahoma’s waterresources. Utilization and/or expansion of theInternet system could be a promising tool to accessand disseminate water resource data.

Geographic information systems (GIS) — whichinvolve the use of computers for mapping andanalysis of spatial information-are a promising toolin the research, planning and management of waterand other natural resources. GIS possesses variouscapabilities for the encoding, storage, processingand display of computerized maps and images andthe manipulation of socioeconomic data which isvital to holistic water resource planning. Currently,more than one dozen state agencies and academicinstitutions are working independently to imple-ment GIS technology in Oklahoma. However, onlya small portion of the existing data is available foruse beyond the agency or institution where it wasdeveloped and costs to create system data sets arefar in excess of the costs of hardware and software.Recent legislation established a council of agenciesand universities whose mission is to develop astrategy to implement a state GIS and coordinatestate GIS efforts.


WATER RIGHTS

Stream Water Rights & Administration

1 The Oklahoma Water Resources Board should,within current statutory guidelines, seek toemphasize conservation and efficient use ofstream water resources through improvementof the current system of water rights forfeiture/reduction and schedule of use. The OWRBshould consider:

(a) allowances for a permit suspension period,rather than actual cancellation of water rights,if a concerted effort is demonstrated to marketthe rights;

(b) forfeiture exemptions for conserved water,perhaps through allowing water users to use,sell or lease the water they conserve;

(c) establishment of more stringent limitationson the state’s schedule of use provision, unlessa significant investment is made, to preventdelays in putting water to beneficial use; and

(d) implementation of administrative fines forfailure to report water use or falsification ofwater report forms.

2 The OWRB should, within current statutoryguidelines and accounting for the inherentinefficiencies associated with the various typesof water systems, provide for the properenforcement of conservation measures whereexcessive waste takes place through leaks,evaporation or other problems occurringduring the use and distribution of permittedwater.

3 The OWRB should study the implementationof a permitting system to account for seasonalchanges in water availability, includingdevelopment of guidelines for seasonal ormonthly allocations and withdrawals thatcould free-up additional sources of water.

4 The Oklahoma Water Law AdvisoryCommittee should explore potential OWRBrule revisions and/or statutory amendmentsthat would provide for:

more realistic and fair determinations of“beneficial use” and”“present or future need”in cases of water rights adjudications; andassessment of administrative fines for flagrantor repeated violations of permit limits.

5 The OWRB should implement a system toperiodically check the accuracy of reportedwater use and consider the implementation ofrequirements to emphasize accountability forwater, perhaps through threat of perjury(including potential development of affidavitreport forms) or initiation of water usemetering for right holders who knowinglyfalsify or consistently fail to file reports ofwater use.

6 The OWRB should complete and provide forcontinuous update of hydrologic surveys toaccurately determine the amount of wateravailable in Oklahoma’s rivers and streams.

7 The OWRB should improve education ofpermit holders regarding water use andconservation through agency-sponsored publicworkshops and related efforts involving directinteraction with the public.

Issues and Problems

Public Policy Recommendations for Water


Instream Flow Protection

8 The Oklahoma Water Resources Board shouldwork with other appropriate state and federalenvironmental and natural resource agencies todevelop an implementation strategy thatprovides instream flow protection for thestate’s designated scenic rivers.

9 The OWRB and Oklahoma Department ofWildlife Conservation should work with theU.S. Army Corps of Engineers, Bureau ofReclamation and Grand River Dam Authorityto ensure that existing and modified reservoirreleases are managed to provide dissolvedoxygen concentrations that maintain orimprove downstream conditions for aquaticlife and recreation.

Indian Water Rights

10 The Oklahoma Water Resources Board shouldrequest the Oklahoma Water Law AdvisoryCommittee and selected tribal representativesto explore Indian water rights and qualityissues in Oklahoma. Specifically, the groupshould:

(a) study formation of a permanent committeeconsisting of local, state, federal and Indianrepresentatives to address appropriate waterrights issues;

(b) develop a mutually acceptable negotiationsystem or process to fairly resolve current andfuture water rights issues; and

(c) identify water resource projects warrantingcooperative action.

11 The State Legislature should considerappointing qualified Indian representatives toappropriate boards, commissions and othergoverning bodies of the State of Oklahoma.

WATER QUALITY

Groundwater/Stream Water Relationships

12 The Oklahoma Water Resources Board should:

(a) identify and quantify impacts that canresult from the interaction betweengroundwaters and stream waters, especiallythe quality and quantity effects of groundwaterwithdrawal on stream water base flow;

(b) identify the potential benefits of the jointmanagement and conjunctive use of statestream and groundwater supplies and developpotential management schemes which consideropportunities for watershed planning; andidentify specific areas or watersheds/basinsthat could potentially benefit from conjunctivemanagement and promote the formation oflocal advisory committees to guidemanagement programs.

Groundwater Protection

13 The Oklahoma Water Resources Board shouldinitiate studies to establish individual aquiferclassifications based upon each aquifer’svulnerability to contamination.

14 Appropriate state environmental and naturalresource agencies should adopt and implementa flexible, comprehensive state groundwaterutilization plan that:

(a) prioritizes groundwater protection/utilization programs and activities; and

(b) avoids regulations which unduly infringeupon individual property rights whileprotecting legitimate public interests.

15 Appropriate state environmental and naturalresource agencies should evaluate the use ofrisk assessment methodology as a groundwaterprotection and cleanup tool.


16 The OWRB should coordinate efforts ofappropriate state and federal environmentaland natural resource agencies, universities andorganizations to establish a comprehensivestate water quantity and quality data collectionprogram to monitor the condition ofOklahoma’s stream and groundwaterresources.

17 Appropriate state environmental and naturalresource agencies should encourage statecommunities utilizing groundwater as a majorwater supply source to participate in voluntarystate programs to protect local groundwatersupplies.

Groundwater Quality Standards

18 The Oklahoma Water Resources Board,through the Water Quality Standards process,should further develop and upgradeOklahoma’s groundwater quality standards asboth a protection and cleanup tool.Consideration should be given to:

(a) development and implementation ofnumeric groundwater quality standards;

(b) development of a narrative standardsstatement prohibiting discharges of pollutantswhich result in contamination that couldimpair human health;

(c) use of risk assessment methodology;

(d) development and implementation ofrealistic, site-specific cleanup criteria to guideremediation of polluted groundwaters;

(e) further development of the groundwaterclassification system through adoption of avulnerability mapping program utilizingDRASTIC or other appropriate methodology;

(f) creation of an organizational frameworkallowing the OWRB to separately administerstream and groundwater quality standards;

(g) the quality/quantity relationship andinteraction between stream and groundwaterresources; and

(h) adoption of a specific groundwaterprotection policy statement that indicates whattype of protection (i.e., non-degradation,limited degradation and differential protectionpolicy statements) the state will implement orachieve.

19 The OWRB should coordinate efforts ofappropriate state and federal environmentaland natural resource agencies, universities andorganizations to establish a comprehensivestate water quantity and quality data collectionprogram to monitor the condition ofOklahoma’s stream and groundwaterresources.

Nonpoint Source Pollution

20 The State Secretary of Environment should:

(a) encourage implementation of innovativenonpoint source reduction and managementpractices while also stressing use of provenmeasures;

(b) assure that state programs incorporate anadequate level of watershed planning, bestmanagement practice design, water qualitymonitoring and assessment of progress;

(c) assure that state projects are focused onidentified nonpoint source priority areas;

(d) study implementation of a comprehensivestate program that accentuates voluntarynonpoint source control measures throughdevelopment and implementation ofappropriate management plans for operationswhich manage nonpoint pollution sources; and

(e) encourage development of technicalassistance programs that promoteestablishment of pollution prevention plans bylandowners.


Stream Water Quality Standards

21 The Oklahoma Water Resources Board should:

(a) increase efforts to implement water qualitystandards, especially biological criteria andtotal maximum daily loads, on a watershedbasis, including additional protection forOutstanding Resource Waters;

(b) utilize the input of appropriateenvironmental and natural resource agenciesto evaluate the use of risk assessmentmethodology as a water resource protectionand cleanup tool; and

(c) bring together appropriate state andfederal environmental and natural resourceagencies, state universities and other involvedorganizations to assess current state effortsrelated to the collection and dissemination ofwater resource data and determine the needfor a centralized ambient stream andgroundwater quantity and quality monitoringnetwork in Oklahoma. The OWRB should thensubmit study findings and recommendations tothe Governor and State Legislature.

22 Oklahoma’s Congressional Delegation shouldencourage the federal government to:

(a) limit federally mandated actions andpromote promulgation of water qualitystandards by individual states to allow statesgreater flexibility in addressing state-identifiedpriorities and regional and/or local standardsissues;

(b) continue refinement of the Total MaximumDaily Loads concept; and

(c) require water quality standardsimplementation procedures that consider notonly criteria and permit development, but alsofield validation of discharge permits whichprotect human health and aquatic life.

WATER/WASTEWATER

Municipal & Rural Water/Wastewater

23 The State Legislature should capitalize theStatewide Water Development Revolving Fundto a level that will help ensure a continuingsource of funding for water/wastewater systemprojects which will result in a higher qualityinfrastructure system for economicdevelopment and environmental protectionactivities.

24 The Oklahoma Water Resources Board andState Department of Commerce shouldidentify and implement incentives throughwhich state financial assistance programs canencourage local interest and cooperation inregional planning projects.

25 The OWRB and State Department ofEnvironmental Quality-in cooperation with theOklahoma Municipal League, Oklahoma RuralWater Association and other appropriateagencies and organizations-should develop acoordinated technical assistance strategy topromote interest in regionalization amonglocal water/wastewater systems and encouragecooperation among potential regional entities.The strategy should define appropriate state,local and federal roles in regional water systemplanning-establishing the state as a facilitatorof regional planning activities and as theprimary source of information (especiallythrough the updated Oklahoma Rural WaterSurvey and local needs assessments) onmunicipal and rural water/wastewater systems-and emphasize improved education of localwater system decision-makers.


26 The OWRB, Department of EnvironmentQuality, State Department of Commerce andother appropriate state and federalenvironmental/financing agencies shouldinitiate a cooperative effort to promoteprivatization opportunities and assist inestablishment of private/public partnerships,where appropriate, that will minimizeregulation and result in decreased costs forgovernmental services.

Financing

27 The State Legislature should capitalize theStatewide Water Development Revolving Fundto a level that enables the Fund to meetOklahoma’s annual recurring waterdevelopment needs.

28 The Oklahoma Department of Commerceshould ensure that the CommunityDevelopment Block Grant program continuesto provide priority funding to water andwastewater projects that pose a serious orimmediate threat to the health or welfare ofcitizens.

29 Oklahoma’s Congressional Delegation shouldencourage the federal government to establishfunding levels sufficient to satisfy upcomingClean Water Act mandates and provide stateswith the maximum flexibility possible toadminister state Revolving Fund programs.

RESERVOIR OPERATIONS

Allocation & Control

30 The Oklahoma Water Resources Board, Corpsof Engineers, Bureau of Reclamation, NaturalResources Conservation Service and otherappropriate federal, state and local entities,should initiate a cooperative effort to improveand enhance the various benefits of statereservoirs through:

(a) evaluation of individual project operationsin basins throughout the state to identify wheresystem operating plans could be implementedor existing plans improved; and

(b) pursuit of cost-effective opportunities forstorage reallocation in existing projects.

31 Oklahoma communities should participate infloodplain management and flood preventionopportunities offered under the HazardMitigation Grant Program, including channelimprovements, construction of dikes and otherdiversion structures, acquisition/relocationprojects, and the return of land to thefloodplain and/or its natural state.

32 The Oklahoma Congressional Delegationshould amend the Water ResourcesDevelopment Act of 1986 so that reallocationof storage is based on original constructioncosts, as provided in the Water Supply Act of1958.

33 The OWRB, Corps of Engineers and otherappropriate state and federal agencies shouldstudy the potential for establishing a system tomanage and administer important non-consumptive water uses, such as navigation,fish and wildlife and recreation. Considerationshould be given to obtaining water rights orstorage and entering into memoranda ofagreement for these uses.

34 The OWRB, Corps of Engineers, Bureau ofReclamation, Natural Resources ConservationService and other appropriate federal, state andlocal entities should develop a mechanism-such as creation of advisory committees,consisting of representatives of appropriatewater uses, or development of agencymemorandums of understanding - to facilitatethe implementation of modified systemoperating plans, where needed, and addressdisputes related to reservoir operations.


Maintenance & Renovation

35 The Oklahoma Water Resources Board, Corpsof Engineers, Bureau of Reclamation, NaturalResources Conservation Service and otherappropriate federal, state and local entitiesshould undertake appropriate studies-includingpreliminary cost/benefit estimates-to identifypotential reservoir candidates for physicalmodification.

36 The OWRB, Oklahoma Department ofTransportation, State Legislature andOklahoma’s Congressional Delegation shouldcontinue to support construction ofMontgomery Point Lock and Dam by the U.S.Army Corps of Engineers with a scheduledcompletion date of September 2001.

WATER MARKETING

Water Transfer

37 The State Legislature and Oklahoma WaterResources Board should review existing waterstatutes and identify barriers to watermarketing and measures that could beinstituted to better facilitate voluntary watermarketing and transfers and protect affectedparties, including negotiations with the federalgovernment to avoid purchasing reservoirstorage at updated costs.

38 The OWRB should develop a state watermarketing and transfer policy, includingguidelines to accomplish individual marketingprojects. The policy should strongly considerproblems and issues identified by the OWRBin its effort to lease surplus Kiamichi RiverBasin water, including:

(a) satisfying, to the greatest extent possible,public concerns on mitigating potentialimpacts on local economic development;

(b) protecting the most locally important usesof the transferred water; and

(c) providing compensation, such as paymentsin lieu of ad valorem taxes (existing statutesprovide for this form of restitution), to the areaof origin.

39 The OWRB should study the feasibility ofcreating a state water bank to:

(a) locate and purchase sources of available orsurplus water rights and storage;

(b) evaluate all opportunities for waterimportation and transfer;

(c) coordinate the sale and/or loan of availablesupplies and water rights to prospectivecustomers, including transfers through theestablishment of regional systems; and

coordinate efforts to educate the public onwater transactions.

40 The OWRB should identify and investigatemethods to utilize untapped sources of usablewater in Oklahoma through:

(a) development of system operating plans;

(b) reallocation of reservoir storage;

(c) utilization of sediment storage;

(d) administrative actions, such as thecancellation and reduction of unused waterrights;

(e) greater consideration of reservoir storageyield that will vary according to proposed usein the receiving area; and

(f) consideration of additional reservoirproject construction.


WATER SUPPLY AUGMENTATION

Weather Modification

41 The Governor and State Legislature shouldidentify the state’s need for (and subsequentrole in) a carefully focused, multi-year cloudseeding demonstration program to determinethe ultimate utility of weather modification asa water resource management tool.

Groundwater Recharge

42 The Oklahoma Water Resources Board shouldinitiate a comprehensive study to identifyadditional potential artificial recharge areas inthe state, including a detailed assessment of theBlaine Recharge Demonstration Project.

43 The OWRB, through the Water Law AdvisoryCommittee, should review state water rightsand water quality laws to determine what, ifany, additional legislation is needed to addressthe various water rights and qualityconsiderations of artificial recharge.

Reclamation & Reuse

44 The State Department of Health and/orDepartment of Environmental Quality shouldtake an active role in establishing guidelinesfor the safe and authorized use of recycledwastewater, identifying programs where reuseshould be automatically considered as analternative, investigating technologicalopportunities for efficient water reuse andexamining the effects of an expanded reuseprogram which considers the effects of waterwithdrawals on downstream users.

45 The Oklahoma Water Resources Board shoulddevelop measures to encourage water suppliersand individual permit holders to implementconservation/management plans-includingconsideration and use of return flows andtreated effluent-to reduce consumptive use ofstream and groundwaters.

Chloride Control

46 Until potential environmental impacts areresolved, Congress should not support fullimplementation of the Red River ChlorideControl Project, as presently designed.

WATER CONSERVATION

Water Conservation

47 The State Legislature should promotestatewide water conservation by:

(a) encouraging cities, water supply districtsand other entities to develop and implementwater conservation programs that include theaddition of water-saving plumbing fixtures andhousehold appliances in new construction andas replacements for existing fixtures;

incorporating water conservation policy goalsinto all appropriate activities and programs ofstate government; all agencies responsible forconstructing, leasing, or maintaining statefacilities and property should be directed touse water-conserving plumbing fixtures anddevices, water efficient landscape practicesand other programs to maximize water useefficiency; and

(b) providing appropriate funding to affectedstate agencies to retrofit existing state facilitieswith water-conserving devices.

48 The Governor and State Legislature shouldcreate a permanent funding source to allowcontinuation of the Oklahoma Leak DetectionProgram.

49 The Oklahoma Water Resources Board andOklahoma Rural Water Association shouldfacilitate public education efforts to encourageparticipation in the Oklahoma Leak DetectionProgram by rural communities and waterdistricts.


50 The State Secretary of Environment shouldappoint a task force of appropriate stateagencies to develop a state water conservationplan that incorporates all aspects of public,agricultural and industrial water use. The planshould identify educational opportunities aswell as potential incentives to encourageconservation.

51 The OWRB, Rural Development, OklahomaDepartment of Commerce, Indian HealthService and other appropriate funding entitiesshould consider incorporating incentives fordevelopment of individual water systemconservation plans into their requirements forwater/wastewater project financial assistance.

52 The OWRB and other appropriate stateagencies should study establishment of atechnical assistance program to assistindustries in implementing water conservationmeasures.

53 The OWRB should continue to promoteinformation among water suppliers regardingprice structuring options, including theincreasing block rate structure, that promoteconservation while recognizing thesocioeconomic requirements of Oklahomacommunities. This effort should be expandedto include improved public educationregarding the factors that determine the “true”cost of water (i.e., costs associated withdelivery, treatment, etc.).

WATER RESOURCE PLANNING

Basin/Watershed Management

54 All appropriate state and federal waterresource agencies should develop andimplement watershed planning andmanagement strategies by:

(a) delineating uniform, manageablewatershed planning boundaries, such as thosecurrently recognized by the U.S. GeologicalSurvey, that incorporate distinct hydrologicunits of both stream and groundwaterresources;

(b) identifying and incorporatingmethodologies that facilitate the evolution oflocal, state and federal water resourceprograms to a watershed managementapproach;

(c) studying creation of local watershedmanagement organizations for problem-solving and issue resolution; and

(d) coordinating implementation ofGeographical Information System technologyat the local, state and federal level.

Drought Preparedness

55 The Secretary of Environment should appointa State Water Resource Drought Coordinator tocoordinate federal, state and local droughtresponse efforts in Oklahoma. The StateDrought Coordinator should be charged withdeveloping a comprehensive droughtpreparedness plan for mitigating the effects ofdrought episodes in Oklahoma. Such an effortshould include the investigation of:

(a) a monitoring/early warning system-including the development and implementationof drought indices that signal the onset and/orvarying stages of drought-to provideinformation about the timing and severity ofdrought episodes;

(a) techniques to assess the probable impactsof prospective drought episodes;

(b) approaches to coordinating governmentalactivities including information exchange anddrought declaration/revocation criteria andprocedures;


(c) assistance programs with pre-determinedeligibility and implementation criteria;

(d) financial/research resources needed toimplement drought assessment and responseactivities; and

(e) educational programs designed to promotedrought mitigation/ preparedness among theeconomic sectors most impacted by drought.

Wetlands Protection & Management

56 State and federal environmental and naturalresource agencies should continue efforts todevelop a state comprehensive wetlandsprotection and management strategy thatincludes:

(a) defining wetlands;

(b) designating beneficial uses of wetlands;

(c) identifying and inventorying wetlandswithin Oklahoma;

(d) identifying measures to mitigate losses ofwetlands, protect wetlands and manage themon a watershed or hydrologic unit basis;

(e) developing standards for critical wetlands;

(f) recommending measures to ensure theprotection of landowner property rights whileprotecting legitimate public interests; and

(g) defining the roles of appropriate stateagencies in wetlands protection andmanagement.

Endangered Species

57 Appropriate state and federal environmentaland natural resource agencies should facilitateincreased public involvement in theEndangered Species Act administration anddecision-making process.

58 The Oklahoma Water Resources Board shouldensure that future state water quality standardsrevisions consider the comments and policiesof other state and federal environmental andnatural resource agencies to achieve areasonable and environmentally-sensitivebalance between protection of endangered andthreatened species, economic concerns,consumptive water uses and relatedconsiderations.

59 The Oklahoma Department of WildlifeConservation and other appropriate state andfederal environmental and natural resourceagencies should improve coordination, duringthe planning stages, in assessing the effect ofexisting and potential water resourcedevelopment on the state’s endangered andthreatened species. This effort should includeidentification of the status of rare, threatenedand endangered species in proposed projectareas and development of measures to avoidpotential adverse impacts.

FLOODPLAIN MANAGEMENT

Floodplain Protection & Preservation

60 The Oklahoma Water Resources Board andState Office of Civil Emergency Managementshould establish a committee-includingrepresentatives of the Oklahoma ConservationCommission, Oklahoma Department ofEnvironmental Quality, Office of the StateSecretary of Environment and otherappropriate agencies-to consider the need for aunified statewide flood control plan thataddresses such issues as National FloodInsurance Program community participation,Community Rating System participation, floodhazard mitigation, dam safety, floodplainmapping, wetlands protection, and relatedfloodplain protection/preservation measures.

61 The State Legislature should considerenactment of:


(a) a state Emergency Disaster Response andRecovery Act to facilitate state response tomajor flooding and other natural disasters;and

(b) legislation to mitigate the effects ofstormwater diversion projects on theregulatory floodplain, including damages toadjacent property resulting from divertedrunoff.

62 The OWRB and Office of Civil EmergencyManagement should encourage Oklahomacommunities to:

(a) develop and maintain a priority list ofeligible hazard mitigation projects;

(b) participate in pre-disaster planning efforts;

(c) create a training program, with stateassistance, for community officials to educatetheir residents on flood disaster preparedness;

(d) develop local stormwater managementplans;

(e) strengthen enforcement of localordinances;

(f) develop and implement responsible floodalert systems; and

(g) consider, where possible, enactment ofordinances requiring an appropriate increasein local base-flood elevations.

PROBLEM MEDIATION/ARBITRATION

Water Resource Dispute Resolution

63 The Oklahoma Office of PersonnelManagement should develop and offer trainingin dispute resolution to all EnvironmentCabinet agencies.

64 The Office of the Secretary of Environmentshould:

(a) evaluate the Administrative Procedures Actand other applicable Oklahoma laws toidentify any impediments to the use of disputeresolution techniques in resolving waterresource disputes; and

(b) direct all agencies under the EnvironmentCabinet to promulgate rules of procedure foralternative dispute resolution methods in theirrespective areas of jurisdiction.

Local Empowerment

65 The Oklahoma Water Resources Board shouldfacilitate creation of a task force of citizensand appropriate agencies to reassess state,federal and local roles in water resourcemanagement to identify areas which couldfacilitate greater control of water resources bylocal entities and increased local input intostate administration of Oklahoma’s stream andgroundwaters.

66 The State Secretary of Environment shouldform a citizens-based task force to assess therelative value and effectiveness of state andfederal water quality and quantity managementprograms.

Interstate Water Disputes

67 The State of Oklahoma should continue toutilize interstate stream compacts as a majorvehicle to address and resolve interstate streamwater problems with neighboring states.Specifically, the Oklahoma Water ResourcesBoard should:

(a) review the provisions of each of the fourinterstate stream compacts to ensure that theysufficiently respond to Oklahoma’s waterresource needs;


(b) explore the potential for addressinginterstate environmental and water qualityissues, including project construction, underthe compacts; and

(c) propose necessary changes in the compactsto the appropriate state and federal legislativebodies.

68 The State of Oklahoma should cooperate withneighboring states to investigate establishmentof interstate groundwater compacts to resolvepotential future disputes involving sharedgroundwater resources.

DATA COLLECTION/MANAGEMENT

Stream Gaging Network

69 The Oklahoma Water Resources Board, U.S.Geological Survey and other appropriate stateand federal agencies, communities andindividuals should seek to improve theefficiency and effectiveness of the state streamgaging program. This effort should include:

(a) identification and encouragement ofpartnerships and other measures to helpdefray costs associated with the state streamgaging network;

(b) identification of opportunities to improveeducation on the value of stream gage dataand the benefits it provides to water resourcemanagers and the general public; and

(c) a determination of the benefits of programexpansion or potential integration into a statestream and groundwater quantity and qualitymonitoring network.

70 The State Legislature should continue financialsupport of current stream gaging programs sothat agencies can better manage waterresources, especially during periods ofdrought.

Water Well Measurement

71 The Oklahoma Water Resources Board andU.S. Geological Survey should:

(a) update and restrict the state water wellmeasurement network to those with known,reliable information on construction history,depth of completion and location;

(b) re-evaluate the distribution of wellsincluded in the network and refine the networkaccordingly;

(c) refine measurement procedures to improveaccuracy of the well measurement program,such as testing selected wells periodically todetermine their response to water levelchanges; and

(d) ensure that all water well measurementinformation is readily available and publishedon a regular basis.

Water Quality Sampling & Monitoring

72 The Oklahoma Water Resources Board shouldidentify and recommend to the StateLegislature a mechanism-which operates inconcert with the federal Clean Lakes Program-to fund water quality assessment of Oklahomalakes.

73 The OWRB should bring together appropriatestate and federal environmental and naturalresource agencies, state universities and otherinvolved organizations to assess current stateefforts related to the collection anddissemination of water resource data anddetermine the need for a centralized ambientstream and groundwater quantity and qualitymonitoring network in Oklahoma. The OWRBshould then submit study findings andrecommendations to the Governor and StateLegislature.


Oklahoma MesoNet

74 All appropriate state and federal waterresource agencies and entities should workclosely with MESONET project leaders toexplore opportunities for additional datacollection activities and value-added productsapplicable to water resource managementactivities. These agencies and entities shouldalso identify measures to improve delivery anddissemination of MESONET data.

75 MESONET supporters should coordinateefforts to provide public education on theavailability, use and access of the system.

Water Resource Data Management

76 The Oklahoma Water Resources Board shouldform a committee consisting of representativesof the State Department of EnvironmentalQuality, Oklahoma Conservation Commission,U.S. Geological Survey, Bureau ofReclamation, U.S. Army Corps of Engineersand other appropriate state and federalenvironmental and natural resource agencies toinvestigate options-including possible use ofthe Internet system-to create, fund and managea coordinated water resource computernetwork and data bank that is compatible withthe state Geographic Information System. Thiscommittee should also coordinate publiceducation efforts related to availability andaccessibility of water resource data.

BIBLIOGRAPHY

Decision Focus Incorporated, Fourth Biennial Electric System Planning Report,October 1991.

Huitt-Zollars, Inc.; United States Department of the Army, Tulsa District,Southwestern Division, U.S. Army Corps of Engineers, Evaluation of Groundand Surface Water Supplies in Oklahoma, Planning Assistance to States Study,July 1995.

Lurry, D.L., Tortorelli, R.L., United States Department of Interior, United StatesGeological Survey; Oklahoma Water Resources Board, Estimated FreshwaterWithdrawals in Oklahoma, 1990, Water Resources Investigations Report 95-4276, 1995.

Oklahoma Conservation Commission, Oklahoma’s Comprehensive WetlandsConservation Plan (Public Meeting Draft), January 1996.

Oklahoma Cooperative Extension Service, Oklahoma State University,Oklahoma Department of Wildlife Conservation, U.S. Environmental ProtectionAgency, Oklahoma Department of Agriculture Plant Industries Division,Oklahoma Natural Heritage Inventory Program, U.S. Fish and Wildlife Service,Endangered and Threatened Species of Oklahoma, April 1993.

Oklahoma Department of Commerce; Center for Economic and ManagementResearch, College of Business Administration, University of Oklahoma,Statistical Abstract of Oklahoma, 1993, 1994.

Oklahoma Department of Libraries, Oklahoma Almanac, 1995-96, 1995.

Oklahoma Department of Libraries, Oklahoma Almanac, 1993-94, 1993.

Oklahoma Water Resources Board, Annual Report of the Oklahoma WaterResources Board, Publication 136, 1994.

Oklahoma Water Resources Board, Appraisal of the Water and Related LandResources of Oklahoma, Volumes 1 through 11, Publications 17, 19, 23, 24, 27,29, 34, 36, 40, 43 and 44, 1967-73.Oklahoma Water Resources Board, Oklahoma Comprehensive Water Plan,Publication 94, April 1980.

Oklahoma Water Resources Board, Oklahoma’s Water Atlas - Publication No.120, 1984.

Oklahoma Water Resources Board, Oklahoma Water Atlas - Publication No. 135,1990.

Oklahoma Water Resources Board, Overview of the Western States’ WaterResources Planning Activities, December 1992.

Oklahoma Water Resources Board, Preliminary Report on the Update of theOklahoma Comprehensive Water Plan, State Water Issues and Updated WaterUse Projections, Developed and Reviewed by the OCWP Citizens’ AdvisoryCommittee and Technical Advisory Sub-Committee, December 1995.

United States Department of the Army, U.S. Army Corps of Engineers, TulsaDistrict, Civil Works Projects - Pertinent Data, September 1993.

United States Department of the Army, U.S. Army Corps of Engineers, TulsaDistrict, Forecasting Water Needs for Oklahoma Using the IWR-MAIN Model:Statewide Demand by County and Planning Regions, 2000 to 2050, 1994.

United States Department of Interior, Bureau of Reclamation, Great PlainsRegion, Oklahoma-Texas Project Office, Agriculture Water Demand Forecasts,Oklahoma, Technical Assistance to States Report, October 1993.

United States Department of Interior, United States Geological Survey, NationalWater Summary 1985, Hydrologic Events and Surface Water Resources-Oklahoma, Water Supply Paper 2300, 1986.

United States Department of Interior, United States Geological Survey, NationalWater Summary, 1986, Groundwater Quality-Oklahoma, Water Supply Paper2325, 1987.

United States Department of Interior, United States Geological Survey, NationalWater Summary, 1987, Water Supply and Use-Oklahoma, Water Supply Paper2350, 1988.

United States Department of Interior, United States Geological Survey, NationalWater Summary, 1988-89, Floods and Droughts-Oklahoma, Water Supply Paper2375, 1990.

United States Department of Interior, United States Geological Survey, NationalWater Summary, 1990-91, Stream Water Quality-Oklahoma, Water Supply Paper2400, 1992.


HB 1146Confidential WaterVulnerability Assessments:This legislation, actually an OpenRecords Act amendment, relatesto terrorism and directs certainstate environmental agencies andpublic utilities to keep informationrelating to vulnerabilityassessments of water andwastewater systems confidential.Information may be used forinternal and for survey purposes only.

HB 1219Tourism and Recreation Loan RepaymentThe Oklahoma Tourism and Recreationappropriations bill creates a—“Tourism andRecreation Environmental Loan ProceedsRevolving Fund ” for administering OWRB CleanWater SRF Loan proceeds for wastewaterinfrastructure improvements at several statelodges. It appropriates $477,674 for the purpose ofrepaying the OWRB Clean Water SRF loan.(Related language contained in HB 1478.)

Travertine Creek, which flows within theChickasaw National Recreation Area, nearSulphur, Oklahoma, is one of the manywatercourses supported by springs emanating fromthe Arbuckle-Simpson Aquifer. Senate Bill 288places a moratorium on the issuance of permitsfrom the groundwater basin for uses outside thebasin area until and if an OWRB study determinesthat sufficient yield is available.

HB 1256Mandatory Zero-baseBudgetingThis legislation spells out thespecifics on a mandatory zero-base budgeting process (more ofa performance-base budgetingconcept) to be implementedthroughout state governmentnext year.

HB 1478Tourism and Recreation Loan RepaymentThis bill contains a listing of capital projects withcosts that are authorized for funding by theOklahoma Tourism and Recreation Commissionfrom revenue bond proceeds.

The bill also authorizes the Commission to repayan OWRB Clean Water SRF loan from annuallegislative appropriations on a year-to-year basisfor wastewater infrastructure improvements atseveral state lodges that are under consent ordersby the Oklahoma Department of EnvironmentalQuality. (Related language contained in HB 1219.)

This legislation requires the Secretary ofEnvironment, in consultation with the Secretary ofAgriculture, to prioritize the disbursement offederal funds received by the Secretary ofEnvironment pursuant to the Federal WaterPollution Control Act. It also requires the Secretaryof Environment to submit an annual report to theLegislative Leadership detailing the disbursementof these federal funds.

2003 Oklahoma Water LegislationStaff, Oklahoma Water Resources Board


SB 154OWRB AppropriationThis bill appropriates $4,028,476 from the StateGeneral Revenue Fund to the OWRB for programduties and activities. It includes, for the first timesince inception of the program, $1,000,000 in theagency’s base appropriation for the Beneficial UseMonitoring Program (BUMP). Also included is$169,578 pass-through funding to the OklahomaRural Water Association for technical services andtraining to rural water and wastewater systemoperators and board members. It also appropriates$2,200,018 from the General Revenue Fund to theRural Economic Action Plan (REAP) Program andsets OWRB employee limits at 91 FTEs. Theoverall appropriation represents a 22.8% decreasefrom last fiscal year (includes this year’s previouscuts).

SB 155OWRB Gross Production Tax REAP Approp:This bill authorizes the expenditure and transfer offunds from the gross production tax REAP WaterProjects Fund for the following:

(1) OWRB - $535,000 for water studies, damrepair, rural development issues and otheractivities;

(2) Conservation Commission - $160,000 forsection 319 match, $500,000 for Cost-ShareProgram, $500,000 for Upstream WatershedRehabilitation Program, and $118,000 forConservation District operations; and

(3) Oklahoma Rural Water Association —$118,000for technical assistance and training to rural waterand wastewater system operators and boardmembers. The Oklahoma Tax Commissionestimated $5.17 million would be available to theFund from gross production taxes. HB 1207, theappropriation bill for the Oklahoma CorporationCommission, directed $3,260,000 from the Fundbe transferred to the Commission to pay foradministration expenses.

SB 288Arbuckle Simpson Aquifer MoratoriumThis legislation imposes a moratorium on theissuance of any temporary groundwater permit formunicipal or public water supply use outside ofany county that overlays, in whole or in part, theArbuckle Simpson Aquifer. The moratorium alsoapplies to municipal and political subdivisionsoutside the basin from entering into contracts foruse of such water. The moratorium would alsoapply to pending applications and any revalidationof existing temporary permits. The moratoriumsare to remain in effect until such time as theOWRB conducts a hydrologic study of the aquiferand approves a maximum annual yield that will notreduce the natural flow of water from springs orstreams emanating from the aquifer. Thelegislation also adds another requirement forgroundwater permit approval for use within thebasin. The Board must find that the proposed useis not likely to degrade or interfere with springs orstreams emanating from the aquifer.

SB 408Grand Lake Water Studies:This legislation mandates numerous administrationand operation initiatives to the Grand River DamAuthority. Of importance to the OWRB is acomprehensive study of Grand Lake. The billdirects the Secretary of Environment, withassistance of state environmental agencies, toconduct a comprehensive study of Grand Lake toidentify factors that may impact the economicgrowth and environmental beneficial use of thelake and its tributaries for area residents and theexpected population growth of the area. As part ofthe study or as a separate study, the OWRB is toconduct a Clean Lakes Study and produce abathymetric map of the lake for assessment ofcurrent capacity and the amount and location ofdeposited sediment. Studies proposed would befunded at least in part with $125,000 appropriatedin the legislation.


Ten Myths About Water in OklahomaJohn Harrington, Director, Water Quality Division, Association of Central Oklahoma Governments

Aquifers are underground lakes - Aquifersare areas that contain potable water in thepore space of the rock. An actual undergroundlake is a rare geologic item. Thismisunderstanding probably stems from thefact that most people associate large bodies ofwater with lakes and streams.

Aquifers do not behave like lakes, and wellsare not like straws sucking up the water.Think of an aquifer as a sponge rather than alake. A pumping well will cause the areaaround the well to dry up. This will lower thestatic water level immediately next to the wellbut affect the water level less and less thefarther the distance from the well. The staticwater level of an aquifer can be differentacross the area of an aquifer, unlike a lake thathas the same surface level no matter whereyou are on the lake.

A corollary to this idea is that groundwaterflows in underground rivers. Again, a trueunderground river is a geologic rarity andmost groundwater flows very slowly, usuallyat velocities of inches or feet per year.

River pollution is mostly from industrialsources - Only 15 percent of respondents in arecent National Geographic Society Poll knewthat the greatest source of river pollutioncomes from the actions of individuals, usuallyin the form of some nonpoint sourcepollution.

Storm drains go to the sewer plant - Theguys down at the treatment plant are busyenough treating sewage without worryingabout stormwater. Storm drains usually end atthe nearest creek, where the dischargebecomes part of the ecosystem. Thatdischarge can include motor oil, antifreeze,and other household waste that makes the fish

and fauna extremely uncomfortable. Findsomeplace else to dump your oil – preferablyat a recycling center.

Water is a renewable resource -Unfortunately, the hydrologic cycle is a closedloop and thus the amount of potable waterremains fairly constant. Water is not created,but potable water can be destroyed, usuallythrough contamination of some sort. Andalthough two-thirds of this planet is water-covered, less than 2.5% is potable. With morepeople and industry, demands on water areincreasing and the supplies in some parts ofthe world are shrinking.

Water is free (or very inexpensive) - Itisn’t!! Getting it to your house costs bigbucks!! According to the OklahomaDepartment of Environmental Quality(ODEQ) Needs Survey, Oklahoma has anestimated $2.3 billion in drinking waterinfrastructure need over the next 20 years.The need for fiscal year 2002-03 drinkingwater projects is $124 million. Thewastewater picture is even more dismal: $1billion over the next 20 years with a fiscalyear 2002-03 need of $223 million. Withincreasing demand from an increasingpopulation, plus costs from tighterenvironmental regulations, the price of wateris heading towards blue sky.

The taste of water is a good indicator ofwater quality - I have tasted somegroundwater that could gag a horse, while theowners of the well praised it for the sparklingtaste. It all depends on what you get used to.Taste, odor, and clarity are very much in theeye (or mouth) of the beholder and do notreflect the purity of the water. Water that iscontaminated with bacteria or chemicalpollutants can often taste perfectly fine. Only

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laboratory testing can conclusively determinethe quality of water.

Incidentally, the majority of people who havetasted chemically pure water don’t like thetaste; they claim it tastes “flat”.

Using a home water treatment device willmake tap water safer or healthier to drink -Some people use home water filters toimprove the taste, smell, or appearance oftheir tap water, but it does not necessarilymake the water safer or healthier to drink.The treatment system may not treat tracesubstances such as metals. Additionally, allhome treatment devices require regularmaintenance. If the maintenance is notperformed properly, water quality problemsmay result. Common carbon adsorptionfiltration systems can actually harbor bacteriaif the filter is not replaced at regular intervals,especially if the source water is notchlorinated.

Bottled water is safer than tap water - Notnecessarily. The strong underpinning for thesuccess of bottled waters is their perceivedsafety compared to ordinary tap water. Butunlike tap water, the quality of finishedbottled water is not government monitored.

A March 1999 study by the U.S.-basedNatural Resources Defense Council (NRDC)that found that one-third of the 103 brands ofbottled water it studied contained levels ofcontamination, including traces of arsenic andE. coli. One-quarter of all bottled water isactually taken from the tap, though it isfurther processed and purified to somedegree, said the NRDC study, and in manycountries, bottled water itself is subject to lessrigorous testing and lower purity standardsthan tap water. ‘One brand of ‘spring water,”reported the NRDC ... actually came from awell in an industrial facility’s parking lot,near a hazardous waste dump, andperiodically was contaminated with industrialchemicals at levels above FDA standards.”

You don’t need to buy bottled water for safetyreasons if your tap water meets all federal,state, or provincial drinking water standards.If you want water with a different taste, youcan buy bottled water, but it costs up to 1,000times more than tap water. Of course, inemergencies, bottled water can be a vitalsource of drinking water for people withoutwater.

Spring water or artesian water comes fromdeep within the Earth - All ground wateroriginates as rain that has infiltrated throughthe soil and into the saturated zone. Once inthe ground, the water can have differentresidence times from the point where itoriginates as precipitation recharge to whereit reaches wells, springs, and surface water. Aspring is just where the water table intersectsthe ground level. So the residence time canbe days, weeks, or hundreds of years,depending on the groundwater system.

The 100-year flood happens every 100years - The term “100-year flood” is(hopefully) being phased out of existencebecause of the huge amount ofmisunderstanding here. The truth is that anuncommonly big flood can happen any year.The term “100-year flood” is really astatistical designation, and there is a 1-in-100chance that a flood this size will happenduring any year. Perhaps a better term wouldbe the “1-in-100 chance flood.”

This becomes more meaningful to theaverage person when we start thinking aboutthe chances of a 100 year flood comingduring the time you own that 30 yearmortgage on that house in a flood plain.Works out to be around a one-in-four chanceof finding your house somewhere in Arkansasone wet spring day….

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Oklahoma’s Water QualityJon Craig, Water Quality Division, Oklahoma Department of Environmental Quality

Scientist have been aware of the adverse impacts ofwater pollution for centuries. The average citizenof the United States has only been interested for afew decades. Only recently has the issue shown upon our public policy radar screens.

Professional marketers, politicians, and the newsmedia are all aware of our seemingly limited abilityto deal with more than one national issue at onetime. When such an issue is identified, they willride the crest as long as possible. An issue of primenational interest may be short lived, with publicconcern waning as citizens tire of all of the rhetoricand seek other problems to worry about.

During “sweeps week,” television news programsfrequently develop “special” weeklong newsstories to draw viewers to the nightly newscasts.Like the cliff hanging serials shown on moviescreens in a by-gone era, a new installment of the“hot” news item is shown each day. With the intentof drawing the same viewers back to the screen foreach new revealing episode.

Clean Water Act of 1972When Walter Cronkite of the CBS TelevisionNetwork presented a series of daily segmentsrelated to the state of the environment on the 5:30news report entitled “Can the World be Saved?”citizens became alarmed about the condition of theenvironment. At the time, Walter Cronkite wasperhaps the most respected and trusted man inAmerica. When Walter spoke, we paid attention.

Concern was raised further by reports of a river inOhio catching fire due to solvents being mindlesslydumped into by an unregulated industry.

News reports of a lifeless Lake Erie, devoid of fishconfirmed that the Great Lakes had become vastcesspools for municipal sewage and discharges ofindustrial wastes.

For many Americans, scenes of dead fish along theshore of streams and lakes, along with photographsof commercial fishermen catching fish marred withskin ulcers ratcheted concern about water pollutionto a new high.

Because of the alarm expressed by citizens, sup-ported by any number of studies and reports byrespected scientists supporting the concerns,Congress made a major effort to address the waterpollution so evident in the United States by devel-oping the Clean Water Act of 1972.

The Act contained a host of provisions, many ofwhich have yet to be fully achieved.

While the Act had many supporters, it was alsocontroversial not only because it set a national planfor restoration of the nation’s waters, but alsobecause it called for a massive influx of federaldollars to achieve the restoration. While it wouldappear that federal legislation to make all of thewaters of the nation suitable for fishing and swim-ming would be consistent with the desires of theaverage citizen, it was controversial enough towarrant a veto by President Nixon. Congressmustered enough votes to override the veto and theClean Water Act became the law of the land onOctober 18, 1972.

BenchmarksThe restoration of national water quality requiredbenchmarks, or standards against which progress ismeasured.


The scope and purpose of the Clean Water Act wascontroversial. The Act would classify most surfacewaters in lakes and streams as national waters, andestablish a national policy for restoring and protect-ing them. This would be regardless if they weretotally within a single state occupied a multi-stateregion. This “nationalization” of waters causedconcern. The Act would certainly decrease a state’sauthority and responsibility, abdicating the respon-sibility to protect the streams and lakes from waterpollution to the federal government.

To allay this concern, the Clean Water Act speci-fied that each state was required to develop waterquality standards for all of the waters within thatstate’s borders. These standards were then tobecome the goal.

While the Clean Water Act clearly recognized eachstate’s responsibility to establish water qualitystandards, the Act specified the federal governmentwould be the ultimate approving authority. Thefederal agency tasked would be the federal Envi-ronmental Protection Agency.

The Act contained additional provisions that thefederal government could promulgate water qualitystandards ONLY if a state failed to do so, or if thewater quality standards developed by that statewere deemed to be inappropriate for the particularbody of water. Thus, states retained the ultimateresponsibility for establishing quality benchmarks.

The Act specified the components of water qualitystandards that must be established for each body ofwater. The two components most often associatedwith determining the “cleanliness” of a body ofwater are (1) designated uses and (2) criteria.

Designated UseThe designated use, or “beneficial use”, is the useto which the body of water would normally be usedif it were not polluted by human activity.

For instance, a lake might be of such quality as toserve as a source of raw water for a public watersupply. That is to say that the natural quality ofwater in that lake is adequate for use as a publicwater supply, with only conventional treatment

prior to its being served to the public. Otherpotential designated uses might include uses suchas irrigation, water for cattle, swimming, fishing,and the like.

It is obvious that all waters, even in their naturalstate are not suitable for all designated uses. Abody of water may naturally contain so muchdissolved salt that it cannot be used for a source ofdrinking water for a public water supply. Anexample is the Cimarron River. A large quantity ofsalt enters the river as it flows through MajorCounty, rendering it unsuitable for human con-sumption even after treatment provided by aconventional water plant.

In this case, the concentration of salt in a waterbody can dictate whether or not the designated usecan be achieved. Since the salt found in theCimarron River is naturally occurring, it is notconsidered to be pollution, as pollution is onlyassociated with mans’ activities. Because thenaturally occurring salt renders the water in theCimarron River unusable as a domestic watersupply, it is generally accepted that the designateduse of “public water supply” is probably inappro-priate for the Cimarron River.

The chemical, which is salt in the case of theCimarron River, or physical condition, such aswater temperature, which is critical in achievingthe designated use is referred to as the criteria,which is the second component of water qualitystandards.

In summary, a “designated use” is one that shouldbe achievable naturally, if mans’ activities were notpresent to impair that use. If a designated usecould not be achieved, even if mans activities werenot present, then the designated use is probably toostringent.

Shortly after the passage of the Clean Water Act,states began a program of sample collection andanalysis to establish a base level of information forthe bodies of water within the state. The data wasused to establish an overall view of the quality ofthe individual water bodies, and to establish andverify the designated uses of that water body.


If the criteria for a designated use, such as theconcentration of salt in a stream, exceeds thatwhich is identified as necessary to meet a desig-nated use is not met, then the designated use is saidto be impaired. For instance, if the criteria for saltare 250-PPM chloride for a public water supply,and activities of man have caused the chlorideconcentration to be 600 PPM, that designated usecannot be met and is impaired.

Now, monitoring programs by the Oklahoma WaterResources board, the Conservation Commissionand other groups measures the criteria in the waterbodies of the state. An evaluation of those mea-surements, compared to the criteria established fora designated use in the water quality standards canidentify those water bodies that have impaireddesignated use. This impairment is generallycaused by water pollution or other activities ofman.

It is important to recognize that all bodies of waterin Oklahoma were NEVER of the same quality,even long before the state was open to settlement.Natural conditions restrict the designated uses ofmost water bodies, which is why it would beinappropriate to establish a designated use whichwould support a year round population of rainbowtrout for most streams in Oklahoma.

In western Oklahoma, perhaps the most commonpollutant impacting surface waters is sediment,which is carried to the streams by rain-inducedrunoff from farmland, construction sites, andparking lots. Fertilizers are carried by suddenshowers, not only from vast cultivated farmland butalso from the lawns of the city dweller. Failingseptic tanks and improperly operated municipalsewage treatment plants may also contribute vastquantities of nutrients to a stream, thereby encour-aging algal blooms which can choke the stream andsuffocate fish due to an almost total absence ofdissolved oxygen in the pre-dawn hours.

In eastern Oklahoma, the activities of man impactthe quality of the adjacent surface waters in muchthe same way as occurs in the west, except thatchanging agriculture methods have resulted in aboom in the production of poultry, confined inhouses with controlled temperature and the result-ant concentration of waste litter.

The waste litter from poultry production is used asa fertilizer for the growth of crops, such as hay orpasture land. Unfortunately, the ratio of phospho-rous to nitrogen required by the crop as comparedto the ratio of nitrogen to phosphorous available inthe litter means that application rates are often outof balance. In order to meet the nitrogen require-ments of the crops, poultry litter must be applied ata rate that may supply from three to five timesmore than the amount of phosphorous, which thecrop can use. The surplus phosphorous can then becarried to adjacent streams and lakes, resulting inalgal blooms, odors, tastes, and even fish kills.

Major efforts are underway nationwide to developsolutions to the problems associated with the landapplication of poultry litter.

What is the quality of the waters of Oklahoma?

In some cases, the water quality is vastly improvedover what it was just a few decades ago. Bestmanagement practices have reduced pollution fromfarming operations. The construction of vastlyimproved municipal wastewater treatment plantshas greatly decreased pollutant loadings. Fundingfor these construction projects was often providedthrough the Clean Water Act and other state andfederal assistance programs. Now, industries tooare required to produce an effluent from theirwastewater treatment plants, which is protective ofthe designated uses of the water quality standards.

Where is the proof?

In the United States, rivers no longer catch fire dueto solvents being dumped indiscriminately into thewater. The Great Lakes are no longer dead, andprovide commercial fisherman with an adequatesupply of lake trout. Drive along the Cross-townExpressway in downtown Oklahoma City someweekend. Note the number of individuals fishingfor - and catching - healthy, edible fish from theCanadian river. That was not the case just thirtyyears ago.

Water Quality? Overall, it is improving.


The issue of who owns the water could be quitesimple. No one does. That is a surprisingly briefanswer to a rather complex issue. But notsurprisingly, a further explanation may be helpful.This paper will address the issue from theperspective of the non-Indian law.

Common Law - To put it simply, water itself, thephysical molecules of water in nature, are ownedby no one, or so was the legal view based inRoman law, which was extensively consulted by 19thcentury courts to develop the “common law”, andlater by legislatures in developing early statutes onwater law. Professor Dan Tarlock, Professor of Lawat the Chicago Kent College of Law in Illinois,explains it this way in his treatise on water law:

“Roman law, with its penchant for completeclassification, divided things into two categories,owned or unowned. Things common to all such asair and running water were variously classified as rescommunes or res nullius, things owned by no one.

“Res communes or res nullius were part of thenegative community. Things in the negativecommunity were incapable of private ownershipwithout some further act of appropriation [citationomitted]. The common law adopted the Roman law[citation omitted] classifications to establish theprinciple that no one could obtain title to the corpusof water but could only obtain a usufructory privilegeto the use of the water of a stream [citation omitted].Water was often analogized to animals ferae naturaeto justify property rights based on capture [citationomitted].” 1 Emphasis in original.

In other words, centuries ago, the Romans treatedwater in nature like wild animals; no one can claimownership to water until the water is captured.After its “capture”, water can be consideredpersonal property. Before its capture, only the“right” to appropriate the water can be owned.Several years ago, a lawyer working with an Indian

Who Owns The Water?Dean Couch, JD, Legal Counsel, Oklahoma Water Resources Board

tribe in Oklahoma advanced his view that thecorpus of the water, i.e. the physical molecules ofwater, was owned by the Indian tribe wherever thewater was found within the historical boundaries ofthe tribe. That view has not been presented to anycourt for adjudication.

Classifications of water - Before reviewingownership laws of the State of Oklahoma, onemust first consider the three fundamental physicalclassifications of water.

1. Stream water - surface water flowing in naturalwaterways or impounded in ponds or lakes;

2. Groundwater - percolating underground water(all water under the land surface is presumedto be percolating groundwater); and

3. Diffused surface water – sheet water that flowsover the land surface.

State of Oklahoma ownership laws - In 1890,seventeen years before statehood, the OklahomaTerritory legislature adopted the following statuterelative to ownership of water:

“The owner of the land owns water standingthereon, or flowing over or under its surface, butno forming a definite stream. Water running in adefinite stream, formed by nature over or under thesurface may be used by him as long as it remainsthere; but he may not prevent the natural flow ofthe steam, or spring from which it commences itsdefinite course, nor pursue nor pollute the same.”2

Now, 113 years later, the property rights law of theState of Oklahoma says the same thing, with a fewembellishments.

A. The owner of the land owns water standingthereon, or flowing over or under its surface butnot forming a definite stream. The use of


groundwater shall be governed by the OklahomaGroundwater Law. Water running in a definitestream, formed by nature over or under the surface,may be used by the owner of the land riparian tothe stream for domestic uses as defined in Section105.1 of Title 82 of the Oklahoma Statutes, but hemay not prevent the natural flow of the stream, orof the natural spring from which it commences itsdefinite course, nor pursue nor pollute the same, assuch water then becomes public water and issubject to appropriation for the benefit and welfareof the people of the state, as provided by law;

Provided however, that nothing contained hereinshall prevent the owner of land from damming upor otherwise using the bed of a stream on his landfor the collection or storage of waters in an amountnot to exceed that which he owns, by virtue of thefirst sentence of this section so long as he providesfor the continued natural flow of the stream in anamount equal to that which entered his land lessthe uses allowed for domestic uses and for validappropriations made pursuant to Title 82 of theOklahoma Statutes;

provided further, that nothing contained hereinshall be construed to limit the powers of theOklahoma Water Resources Board to grantpermission to build or alter structures on a streampursuant to Title 82 of the Oklahoma Statutes toprovide for the storage of additional water the useof which the landowner has or acquires by virtueof this act.

B. All rights to the use of water in a definitestream in this state are governed by this sectionand other laws in Title 82 of the OklahomaStatutes, which laws are exclusive and supersedethe common law.”3

Reviewing the three classifications of water andthe state’s property ownership law reflected instatute quoted above, the issue of who owns thewater can be broken down as follows:

1. Stream water is “public water”;

2. Groundwater is owned by the owner of thesurface of the land;

3. Diffused surface water is owned by the ownerof the surface of the land.

Although the ownership provisions of this onestate law might seem straightforward, there areother laws on use and other matters that should beconsidered in answering the question of “whoowns the water”.

Stream water

Riparian versus appropriation – The Oklahomaproperty statute quoted above declares that streamwater (water in a “definite stream” which isrecognized to include lakes and ponds) is “publicwater” subject to appropriation. The appropriationsystem of water use regulation relies on the “first-in-time” priority system whereby in times ofshortage, the most recent appropriator must reduceor cease diversions so more senior appropriatorsmight have water. A person does not have to ownland adjacent (riparian) to a stream or lake toobtain an appropriation right. While recognizingthe appropriation doctrine as controlling,Oklahoma’s statutes go on to recognize thatriparian landowners can use water flowing in astream for’“domestic use” (defined narratively ashousehold use and cattle watering and other minoruse) without an appropriation permit. Also, theappropriation law specifies that a permit toappropriate cannot interfere with “domestic use”.Together, these laws mean that riparian domesticuse has a “superpriority” over appropriations.

A cloud in state law on this point was created bythe Franco case. In a 1990 opinion issued in early1993, the Oklahoma Supreme Court declared thatin addition to the riparian domestic use protectionrecognized in the statutes, riparian rights to areasonable use must also be considered andprotected by the appropriation law.4 The Courtlisted factors to consider to determine whether a


non-domestic riparian claim was reasonable,including size of stream, custom, climate, seasonof the year, size of diversion, place and method ofdiversion, type of use and its importance to society(beneficial use), needs of other riparians, locationof the diversion on the stream, the suitability of theuse to the stream, and the fairness of requiring theuser causing the harm to bear the loss.5 As can beseen, these factors are so wide open that riparianlandowners claiming a non-domestic use of watermight find it difficult to show that their claim isreasonable.

To cloud this whole situation further, theOklahoma Legislature in 1993 reacted quickly tothe Court’s opinion and attempted to nullify whatthe Court ruled by enacting a new law expresslydeclaring legislative intent to extinguish unusedriparian rights to future use except for domesticuse. 6 There has been no controlling court decisionto guide us on whether the 1993 statute is effectiveto nullify the Franco court opinion.

Public trust – The priority in time concept is thefoundation of appropriation rights, giving suchrights stability and certainty. In a controversialcase, the California Supreme Court decided in a1983 case that an after-the-fact condition could beplaced on a 1940s vested appropriation right heldby the City of Los Angeles to preventenvironmental harm to Mono Lake and wildlifethat relied on certain minimum lake levels. 7

In other words, despite reliance on the stability of astate issued appropriation right in the 1940s, anddespite millions of dollars spent on pumps andpipelines to use the water, the California courtmade L.A. go to replacement sources of water at acost of millions of more dollars. The Courtrecognized a “public trust” over water in Californiaexisted for the benefit of the people long beforeL.A.’s appropriation right was issued and thatcontinued exercise of the water right was alwaysconditioned on complying with the public trust.,Because the vested right had always beenconditioned, there was no taking and norequirement for the state to pay L.A. any “just

compensation” for taking the vested right. TheOklahoma Legislature has not so far expresslyrecognized a public trust relative to water. But if itever does, we must all watch out. The range andextent of the public trust and how it may impactwhat is otherwise viewed as vested property rights(the taking of which requires payment of justcompensation) would be left up to long-term,expensive and uncertain litigation. Come to thinkof it, maybe the lawyers would welcome adeclaration of the public trust in Oklahoma.

Anti-export and interstate commerce – Theinterstate commerce clause is applicable toownership and use of stream water andgroundwater. In a 1982 case 8, the United StatesSupreme Court declared that water is an article ofinterstate commerce, thereby establishing theapplicability of many Supreme Court decisionsthat address a state’s sovereign ability to regulateor interfere with interstate commerce andimplement anti-export laws. Interestingly, theSupreme Court in the 1982 case rejectedNebraska’s argument that the public ownership ofthe water subject of Nebraska’s anti-export lawgave the state greater authority to restrict out ofstate use. The Supreme Court relied in part on aprevious decision of the Court against Oklahoma’sattempt to restrict the export of minnows caughtand sold out of state. Currently, Oklahoma statuteshave imposed a moratorium on the out of state saleand use of water. 9 The moratorium was a reactionto proposals by Governor Keating’s office to havethe state enter into a compact with the ChoctawNation and Chickasaw Nation and to considermarketing water from southeast Oklahoma to theDallas-Fort Worth Metroplex. In view of the U.S.Supreme Court’s position on a state’s anti-exportlaws for water, it is not clear how the moratoriumwould fare in a court challenge.

Use-it-or-lose-it forfeiture – A fundamentalprinciple of the appropriation doctrine is that theappropriator must beneficially use the water. Theperson who obtains an appropriation right cannotjust tie get a permit and then speculate thatsomeone else will need the water and pay holder of


the permit to use the water or transfer the permit.This forfeiture concept is an off-shoot of therequirement to beneficially use the water and iscommon to most appropriation laws.

In Oklahoma, an appropriation right is not“vested” unless and until it is used in seven years.After first use begins and the right becomes vested,the right remains subject to forfeiture if the fullamount authorized is not used for the purposeauthorized at least once every seven years. Failureto use the full amount results in the forfeiture ofthe amount not used (and corresponding reductionof cancellation of the water right). If theappropriation right authorizes use from a lake, theforfeiture of the appropriation does not directlyaffect rights to storage, which is a separate matter.

Rights to storage distinguished – A final clarifyingpoint about “who owns the water” relates to whoowns the bucket if the water is stored. WhileOklahoma state law clarifies that water moleculesin definite streams is “public water” subject toappropriation (with limits for riparian domesticand perhaps riparian reasonable use), a storageright is a completely separate matter. In view ofthe potentially intermittent flow of most Oklahomastream sources (even the Arkansas River and RedRiver have recorded near zero flows occasionally),surface water users who need water in low or noflow periods must store water in off-stream or on-stream impoundments (lakes).

To impound water, a person must obtain rights touse the surface of the land where the impoundmentwill be located. Such rights can include flowage orflood easements or outright fee ownership of theland. It can be problematic if the mineral interestsare severed and access to extract the minerals willbe restricted, as demonstrated by the Osage Nationclaims concerning the once-proposed Candy Lakein Osage County where the Osage Nation owns themineral interests.

The state water ownership statute indicates that ariparian landowner may use the bed of a stream onowner’s land (for a pond or gully plug) to store a

domestic amount of water. The state’s streamwater use statute clarifies the ownership statuteand says that water for domestic use may be storedin an amount not to exceed two years supply. 10

If a water user cannot build his or her ownreservoir, the user may contract to use storage at areservoir owned by some other person. This is thetypical situation involving the large reservoirsconstructed by the U.S. Army Corps of Engineers(e.g. Lake Texoma, Canton Reservoir, Tenkiller,Hugo Reservoir) or Bureau of Reclamation (e.g.Fort Cobb, Lugert-Altus).

Persons who wish to divert water from thosereservoirs must enter into contracts with theappropriate federal government entity for use ofthe storage (that impounds the water) created bythe dam. The contracts usually call for thecontracting party to repay the federal governmentthe proportionate costs of construction of thereservoir and the annual ongoing maintenanceexpense.

The user of the storage (and water from thestorage) obtains only a contract right from thefederal government. The user does not obtainownership of the dam or the lake, or the recreationareas, or the land inundated by the water. Thefederal government retains the title to the land.However, the federal government when it buysland and builds and dam to impound water is notautomatically issued a state water right authorizinguse of the water in the reservoir. Therefore, thefederal government does not assign or delegateauthority to use the water from the storage when itenters a storage contract with a water user. Theuser must get a separate appropriation permit fromthe state.

Groundwater

Ownership versus use regulation - As indicated inthe discussion about ownership interests,percolating underground water is “owned” by theowner of the land. However, the state ownershiplaw clarifies that the “use” of groundwater is


governed by the Oklahoma Groundwater Law.Domestic use of groundwater is exempt from thepermit requirement of the Oklahoma GroundwaterLaw. However, domestic use is subject to theprohibition against “waste”. In this context,domestic use relating to groundwater from wells isdefined identically to “domestic use” relating tostream water (household and cattle watering). Forother than domestic use, any person wishing to usegroundwater must obtain a permit from theOklahoma Water Resources Board.

Permits issued by the Oklahoma Water ResourcesBoard quantify the amount of water that is ownedand that can be withdrawn by pumping wells. TheOklahoma Groundwater Law adopted by the stateincorporates an allocation system whereby theamount of groundwater that can be withdrawn bylandowners is based on the number of surfaceacres that the landowner owns. Permitsthemselves are owned and may be transferred, butsubject to conditions primarily related toownership of the land.

Surface ownership or lease – Although theownership statute concerning water quotedpreviously indicates that the owner of the landowns the groundwater under the surface, theownership right to groundwater can itself besevered and held by a person who does not ownthe surface. State property statutes indicate thatthe right of taking water can be a “burden orservitude” that can be either attached to the land ornot attached to the land. 11 In other words, alandowner can carve out the right to own and takegroundwater from under the land and either reservethe groundwater when transferring title to the restof the surface, or the landowner can transferownership rights to another person while retainingall remaining rights to the surface. A personholding the right to groundwater can apply for apermit to use the groundwater, or can lease theright to another person. In all these transactions,the documents should address the potential fordomestic use and whether a domestic use rightremains with the other surface rights.

Use of groundwater for oil and gas recovery – Intwo cases, the Oklahoma Supreme Court addressedthe issue of whether a mineral interest owner (orthe mineral interest owner’s lessee oil company)had a separate’“right” to use groundwater for oiland gas production. The Court did decide that asevered mineral interest has a common law right toa reasonable use of groundwater to enjoy themineral interest. After this court case, theLegislature amended the statutes relating to theauthority of the Oklahoma Water Resources Boardto issue permits to use groundwater by clarifyingthat a permit applicant must either own the surfaceor hold a lease from the surface owner. In achallenge to that law, the Court said that the lawcould apply only to mineral interests that weresevered from the surface after the passage of thatlaw (May 28, 1985). Even if a mineral interestowner or lessee can rely on a pre-1985 severanceof the mineral interests, a permit from theOklahoma Water Resources Board to use thegroundwater is still required.

Tribal Nations Water Claims

Last but not least, a paper on who owns the waterin Oklahoma should mention Indian water rightsclaims. For an issue on which two-day and three-day symposia are held, a half page discussioncannot do justice to the issue, particularly with 39federally recognized tribes in this state.

In a more traditional situation in the westernUnited States, Indian tribes were moved to or wereotherwise gathered together in designated areas asdescribed in treaties made by the federalgovernment or through Executive Orders of thePresident. The designated areas were set asidefrom non-Indian settlement, or “reserved” from thepublic domain as white settlers moved west, andtherefore became known as “reservations”. In1908, the United States Supreme Court held thatwhen the federal government created a reservationfor an Indian tribe in Montana, an implied right touse water in a river that bisected the reservationarea was established. The Court also said that thefirst-in-time priority component of the


appropriation doctrine applied, and the priority ofthe implied right was the date the reservation wascreated. That priority was earlier and superior tothe non-Indian appropriations Montana had issuedupstream from the reservation. The non-Indianinterests were junior. The implied water rightsrecognized for the Indian tribe which are based onthe creation of the reservation are referred toas”“Winters Rights”. Using only the WintersRights principle, most tribes were located inOklahoma long before statehood and would have asenior claim to most all non-Indians.

However, that is only the beginning of the story.Other matters to consider involve the shiftingfederal policy of assimilation of the Indians, thento a policy of self-governance. Much of the landin what is now the state of Oklahoma has beenallotted to individual tribal members, then sold tonon-Indian interests. Just before statehood, inanticipation of merging Indian Territory andOklahoma Territory into the 46th state of theunion, a Dawes Commission was created to speedup assimilation of Indians and extinction of tribalgovernments.

But the Enabling Act from Congress thatestablished the framework to create Oklahomadirected that nothing in a State of Oklahomaconstitution could limit or impair the rights ofpersons or properties pertaining to Indians, andsure enough, the State of Oklahoma Constitutiondisclaims all right and title to all lands lying withinthe state owned or held by any Indian, tribe ornation.

Finally, unique in the United States are the FiveCivilized Tribes of Oklahoma who were grantedland patents from the U.S. for the lands transferredto them in consideration of the lands given up inthe eastern U.S. The U.S. Supreme Court held thatthe State of Oklahoma or its agencies cannot claimimplied property interests in those lands becausethe state never received an interest because theU.S. had previously transferred such lands to theFive Civilized Tribes through the patents.

The implications for water rights are substantial.The Choctaw Nation and Chickasaw Nation haveclaimed all the water found in the 22 counties insouthern and southeast Oklahoma. There has beenno court challenge to address those claims.

ENDNOTES

1 Tarlock, Law of Water Rights and Resources ,£3:3, p. 3-4.

2 Terr. Okla. Stat.£ 4162 (1890); taken fromDakota Terr. Comp. Laws£ 2771 (1887).

3 Section 60 of Title 60 (on Property) ofOklahoma Statutes.

4 Franco-American Charolaise, Ltd. v. Okla.Water Res. Board, 1990 OK 44, 855 P.2d 568.

5 Supra, 1990 OK 44, ¶14 and footnote 40,citing Restatement (Second) of Torts£850A[1979].

6 Section 105.1A of Title 82 of the OklahomaStatutes.

7 National Audubon Society v. Superior Court ofAlpine County, 33 Cal. 3d 419 (Cal.1983)(Mono Lake case).

8 Sporhase v. Nebraska, 458 U.S. 941 (1982).

9 Section 1B of Title 82 of the OklahomaStatutes, effective June 6, 2002.

10 Section 105.2A of Title 82 of the OklahomaStatutes.

11 Sections 49 and 50 of Title 60 of the OklahomaStatutes.


Central Oklahoma

Water Policy Impacts of ArsenicJohn Harrington, Director, Water Quality Division and Zach Taylor, Executive Director

Association of Central Oklahoma Governments

1998The year was 1998. In Samta Village in the JessoreDistrict of Bangladesh, a poor young girl namedShakti lay dying. The cancer was slowly eatingaway at her liver, and the resulting muscle spasmshad kept her bed ridden for months. Her parents,far too poor to afford medical help, watched herhopelessly as she wasted away. Rumors had madetheir way through the village that she was one ofmany afflicted – there was something in the wellwater….

2003Five years later, a gavel pounded on a table in theOklahoma State Legislature. Senate Bill 288 hadpassed over the objections of water ranchers insoutheastern Oklahoma. The state’s onlydesignated sole source aquifer, the Simpson-Arbuckle, was to have a moratorium on waterpermits until hydrologic studies had been made.The water ranchers – individuals who own largeareas of groundwater rights over the Simpson-

Garber-Wellington

Aquifer

Town Hall IntroductionThis section was solicited to examine theunintended consequences of public policy actions.

In the final days of the Clinton Administration, afederal regulation was approved requiring thelowering of acceptable arsenic levels in drinkingwater. The levels were reduced from 50 to 10 partsper billion (ppb). The rationale was based upondebatable science.

Few noticed.

If they did, the assumption was that the regulationswould be rescinded. Two months later the newBush Administration proposed rescinding theregulations. The young administration wasimmediately subject to the political claims theywere “poisoning children.” The proposal waswithdrawn.

The curtains of political theater were opened, andanother set of unintended consequences beganplaying out.

We may think this is a funny political story ofpolitical “gotcha” nonsense. Well ... that policy iscausing nightmares for a host of central Oklahomacommunities west of I-35 whose water sources(The Garber-Wellington Aquifer - see right) have30 parts per billion of arsenic.

Now they have to find alternate sources of water.Where to look? How much to pay? This is wherethe major problems start! Then we find out thatour state water laws and state water plan don’thelp. Planning and dispute resolution are notimmediately possible.

So we delay. And communities such as Piedmont,Yukon, and Mustang have nowhere to turn.


Arbuckle aquifer–– would be unable to acquiretheir permits. Thirsty cities in Central Oklahomawould have to wait, or find other sources to tap fortheir growing populations.

Global ConnectionThe two incidents just described are literallyworlds away, yet are intimately connected by asingle word: arsenic. The story of arsenic in thepast decade weaves a trail around the world, fromSoutheast Asia to Chile to southern Utah. It alsotouches the daily routines of the poorest people inthe world while influencing the administrativepolicy of two US presidents. It will touch you andme as we pay for our water and place our trust inpolicy makers as they struggle between theproverbial rock and hard spot – public safety vs.price.

Arsenic – Some Basic FactsWhile arsenic and its associated compounds havelong been the mainstay of a good murder mystery,the element itself is a mundane steel gray or yellowsemi metallic solid; it tarnishes in air, and whenheated is rapidly oxidized to arsenous oxide withthe odor of garlic. The thirty-third member of theelemental table was so named from the Greekarsenikon, identified with arenikos, the word formale, from the belief that metals were differentsexes. Arsenic is used in bronzing, pyrotechny, andfor hardening and improving the sphericity of shot.The most important compounds are white arsenic,arsenic sulfide, Paris green, calcium arsenate, andlead arsenate; the last three have been used asagricultural insecticides and poisons. It is fourtimes as poisonous as mercury.

Most fruits, vegetables, meats and fishes containsome arsenic, especially sea fishes and shell fish.Most of this arsenic is organic in nature and is nottoxic. Nonorganic arsenic is found in volcanicrocks and sediments derived from volcanic rocksand is generally toxic to humans; arsenopyritebeing the most common mineral form. It istypically present in groundwater in large deltasystems whose river sources originate in volcanicrocks, or the sandstones of ancient river systems,

such as the Garber-Wellington aquifer in CentralOklahoma. The Ganges River that flows throughthe country of Bangladesh is one such system. It ishere that the modern day arsenic story begins.

A Good Idea Gone Bad….The decade of the 1980’s brought a large-scaleeffort to provide the Bangladesh people drinkingwater. Hundreds of thousands of “tube wells”provided new groundwater supplies to thirsty areasof the country. Agribusiness in the area boomed,providing food and cash.

However, a new health problem began to emerge –arsenicosis, or arsenic poisoning. This came inseveral forms, such as hyperpigmentation (darkspots), hypopigmentation (white spots) andkeratoses of the hands and feet. Internal cancers ofthe kidney and liver showed up later. While theworld focused on the radioactive effects of theChernobyl disaster in Russia, a disaster far largerwas quietly taking place among the indigenouspoor landless farmers on the Ganges delta.

Risky BusinessIn America, public water systems are required byfederal law to provide a safe product to theconsumers. The United States EnvironmentalProtection Agency (EPA) lists minimumcontamination levels (MCLs) for many organic andinorganic elements. The water provider mustadhere to these levels and heavy administrativefines are levied when the operator is found to beout of compliance.

These levels are set by risk factors. Our daily livesare permeated with risk factors – we all run a riskof being killed in a car accident on the way towork, but the comparison benefit of drawing apaycheck usually makes this risk well worth taking.To produce water that is absolutely pure, safe andfree of any contaminants would be hideouslyexpensive, so public policy allows thesecontaminants, but at a very low level.

For water, the very low level is a quantitydetermined by the fatality of an “average’’ personweighing 70 kilograms and consuming


approximately 2 liters of water per day for alifetime (70 years). The risk then assigned to thisindividual would be a 1 in 10,000 chance of dyingfrom this particular element. In other words, if atown of 10,000 people lived 70 years drinking twoliters per day of the public water, only 1 personwould die of a disease related to that contaminant.Note that is a general policy and not a statutorymandate.

Arguably, this is a very low risk. For acomparison, let us look at other risks we take forgranted in our normal lives. The first table showsseveral activities with the lifetime risk associatedwith them. For example, the chances of a fataldrowning for an individual in the US is on theaverage 1 in 7,683 over that individual’s lifetime –a fairly small risk. The chances of fatally drowningare about ten times larger than being hit bylightening. But being hit by lightening is abouttwice as common as fatally being bit by a dog.

Lifetime Death Risks in the U.S.

Incident RiskCar occupant 242Uncontrolled fire in building or structure 1,290Fall on and from stairs and steps 2,739Drowning 7,683Lightning 71,601Bitten or crushed by reptiles 115,486Bitten or struck by dog 137,694

Although we can quantify risk, to the averageindividual risk has an emotional element that defieslogic. In some areas of our lives we demandextremely small risks, especially when it comes toour health and our children’s health. Hence thechanges in public attitude in the last generationover the issues of automobile seat belts andcigarette smoke. On the other hand, risk factorsmean seemingly nothing while we eagerly spendour money at the lottery in hopes of becomingmillionaires, when we would be far more likely tobe struck by lightning on a summer day.

Finally, one must realize that with a demand forless risk comes the corollary of fewer options. Thisis best illustrated in the financial sector, where adirect relationship exists between the types offinancial instrument one invests in versus theamount of risk associated with that instrument.Those people who rely on steady protected interestincomes have only a small number of investmentsto choose from, usually Treasury notes andcertificates of deposit. People who are morewilling to accept larger risks with their investmentshave a smorgasbord of opportunities to makemoney, from oil investments to pork bellies toswamp land in Florida….

Although we can quantify risk, to the averageindividual risk has an emotional element that defieslogic. In some areas of our lives we demandextremely small risks, especially when it comes toour health and our children’s health. Hence thechanges in public attitude in the last generationover the issues of automobile seat belts and ciga-rette smoke. On the other hand, risk factors meanseemingly nothing while we eagerly spend ourmoney at the lottery in hopes of becoming million-aires, when we would be far more likely to bestruck by lightning on a summer day.

Finally, one must realize that with a demand forless risk comes the corollary of fewer options. Thisis best illustrated in the financial sector, where adirect relationship exists between the types offinancial instrument one invests in versus theamount of risk associated with that instrument.Those people who rely on a steady, safe interestincomes have only a small number of investmentsto choose from, usually Treasury notes and certifi-cates of deposit. People who are more willing toaccept larger risks with their investments have asmorgasbord of opportunities to make money, fromoil investments to pork bellies to swamp land inFlorida …


We May Have a Problem Here…Back in Bangladesh, World Health Organizationscientists and government officials were assessingthe effects of the arsenic problem. The surveyindicated arsenic contamination in at least 46districts out of 64. Out of 30,000 samples, arseniccontamination occurred in about 20% of thesamples. The acceptable level of arsenic in drink-ing water was 0.050 milligrams per liter (mg/l) forBangladesh, the same regulatory level as theUnited States had since the 1940’s. With a largenew database regarding the effects of arsenic onhuman populations, scientists were able to re-evaluate the risk level for arsenic in water. Theconclusions:

“Considering other data and the fact that theconcentration of arsenic in drinking-water at anestimated skin cancer risk of 10-5 is below thepractical quantification limit of 0.01 mg/l (10 partsper billion or ppb) as well as a view to reducing theconcentration of arsenic in drinking-water,provisional guideline value of 0.01 mg/l isrecommended. The guideline value is associatedwith an excess life-time risk for skin cancer of 6x10-4 (i.e. six persons in 10,000).” (WHO 1996)

Language such as this got the ear of EPA officials.At one-fifth the current maximum contaminationlevel, the risk level calculated by WHO was still sixtimes greater than acceptable public policy!! Thefederal government sprang into action and thearsenic question was top priority. Other arsenicstudies came forward and were reviewed. Soonscientists had a plethora of arsenic data, but sometroubling issues came with the data. These issues

could be grouped under two headings: dose-response and comparative populations.

Are We in a Straight Line??The WHO statement above alludes to the firstproblem with the words “practical quantificationlimit”. In plain English, this means that the itemwe are measuring is so small that we are havingproblems finding a tool to measure it! Mostarsenic analyses with dates in the 1990’s wereaccurate only to 10 ppb. The technology simplywas not in place and the need to analyze arsenic to1 ppb was not present. As a result, scientists hadplenty of arsenic data at concentrations well abovethe newly proposed contamination level, but noneat or below the level. This wreaked havoc on thedose-response analysis.

Dose-response analysis is exactly what it soundslike – I give you so much of this stuff and then Iwatch to see what happens. If you are a laboratoryrat and I give you enough arsenic, you will die. If Igive you only half the dose, perhaps you will notdie as fast. And so on.

A linear dose-response curve implies that there is adirect relationship between the dose and theresponse. If I plot the amount of dosage against theamount of response (lifetime), the relationship willbe a straight line. One can then predict the reactionto the dosage at any point along the line and caneven project the relationship into areas where thereis no response data if one is confident of that linearproperty between dose and response.

Similar Lifetime Risks in the United StatesArsenic in Water at 50 PPB

Incident RiskOccupant of pick-up truck or van...............................1,095Fall on and from stairs and steps ...............................2,739Accidental drowning and submersion ........................1,028Uncontrolled fire in building or structure ..................1,290Poisoning ....................................................................1,400Assault by sharp object...............................................1,983Motorcycle rider .........................................................1,295

Similar Lifetime Risks in the United StatesArsenic in Water at 10 PPB

Incident RiskExposure to electric current,radiation, temperature, and pressure .........................8,544Fall on and from ladder or scaffolding ......................8,689Inhalation of gastric contents.....................................9,372Drowning and submersion in bathtub ......................10,499Accidental suffocation and strangulation in bed .....10,948Accidental Poisoning by Alcohol.............................. 11,854Exposure to excessive natural heat .......................... 11,894


However, most of the arsenic data was in the 50-500 ppb concentration range. Although the dataseemed linear at those ranges, projecting the lineover one order of magnitude to 5 ppb made manyscientists nervous. No dose response data existedat 5 or 1 ppb to draw the line at theseconcentrations. Is it safe to assume the relationshipwas the same at these low levels?

Several scientists pointed out that certainrelationships may look linear at highconcentrations, but are actually exponential;assuming these relationships are linear at lowconcentrations would lead to highly erroneousconclusions. Other scientists argued that there maybe a “threshold point” where the concentration ofarsenic is so small that the human body just ignoresthe contaminant as if it did not exist and thereforethere is no response. Could there be a thresholdpoint, and if so, at what level?? There was no data.

Are You Like Me?The second major problem was comparativepopulations. Simply put, are the people inBangladesh going to react to arsenic in the samefashion as John Q. Public in Peoria. Arsenic datain the United States was limited; the EPA reliedheavily on a peer-reviewed report from theNational Academy of Sciences National ResearchCouncil (NRC). The report by the NRC notes somedeficiencies in the data it reviewed: “the statisticalissues surrounding risk assessment for arsenic indrinking water are challenging… the best available(arsenic) data are from ecological studies, whichare not ideal for risk-assessment purposes.”

In the Federal Register June 22, 2000, EPAdefended their position when the 10 ppb standardwas proposed:

In response to the comment that there is alack of evidence for health effects below 50ppb, we note that the National Academy ofSciences’’ National Research Council(NRC) has categorically determined, basedon their review of the most recent data and

information concerning the health effectsof arsenic, that the current standard of 50ppb is not protective and should be reviseddownward as soon as possible (NRC,1999).

However, the EPA itself conducted a small study inUtah that was not part of the NRC report. Theirconclusions, published in the Federal Register,raised a few eyebrows:

EPA scientists conducted an epidemiologicalstudy of 4,058 Mormons exposed to arsenic indrinking water in seven communities inMillard County, Utah (Lewis et al., 1999). The151 samples from their public and privatedrinking water sources had arsenicconcentrations ranging from 4 to 620 mg/Lwith seven mean (arithmetic average)community exposure concentrations of 18 to191 mg/L and all seven community exposuremedians (mid-point of arsenic values) <200mg/L.

Observed causes of death in the study group(numbering 2,203) were compared to thoseexpected from the same causes based upondeath rates for the general white male andfemale population of Utah. Several factorssuggest that the study population may not berepresentative of the rest of the United States.The Mormon Church, the predominantreligion in Utah, prohibits smoking andconsumption of alcohol and caffeine. Utahhad the lowest statewide smoking rates in theU.S. from 1984 to 1996, ranging from 13 to17%. Mormon men had about half the cancersrelated to smoking (mouth, larynx, lung,esophagus, and bladder cancers) as the U.S.male population from 1971 to 1985 (Lyon etal., 1994). The Utah study population wasrelatively small (~4,000 persons) andprimarily English, Scottish, and Scandinavianin ethnic background.

… Millard County subjects had highermortality from kidney cancer, but this was notstatistically significant. Both males and


females in the study group had less risk ofbladder, digestive system and lung cancermortality than the general Utah population.The Mormon females had lower death ratesfrom breast and female genital cancers thanthe State rate. These decreased death rateswere not statistically significant. Althoughdeaths due to hypertensive heart disease wereroughly twice as high as expected in bothsexes, increases in death did not relate toincreases in dose, calculated as the years ofexposure times the median arsenicconcentration. The Utah data indicate thatheart disease should be considered in theevaluation of potential benefits of U.S.regulation.

The EPA rejected the Mormon data while acceptingdata from Bangladesh, Taiwan, and later Chile asrepresentative populations. The basis for Utah datarejection was on diet, behavior, and ethnicbackground as being different from the generalpopulation of the United States.

The EPA was also required to set up the SmallBusiness Advocacy Review (SBAR) Panel asrequired by section 609(b) of the RegulatoryFlexibility Act, to obtain advice andrecommendations of representatives of the smallentities that potentially could be affected by thisregulation. The panel response in the FederalRegister was succinct:

Regarding health effects, the Panel recommendedthe following: Further evaluate the Utah study andits relationship to the studies on which the NRCreport was based and give it appropriate weight inthe risk assessment for the proposed arsenicstandard; and examine the NRC recommendationsin the light of the uncertainties associated with thereport’s recommendations, and any new data thatmay not have been considered in the NRC report.

However, the EPA stuck by the NRCrecommendation and the 10 ppb standard wasrecommended. Three days before the Clintonadministration ended, the recommendation wassigned into law.

Whoa There!!Two months later, the Bush administration put thenew arsenic standard on hold. “The scientificindicators are unclear as to whether the standardneeds to be as low as 10 parts per billion,” the newEPA Administrator Christie Todd Whitman stated.

This incensed certain elements of theenvironmental movement, including the NaturalResources Defense Council. “This outrageous actis just another example of how the polluters havetaken over the government,” said Erik D. Olson, anattorney for the environmental group, referring tothe mining interests involved in arsenic production.The NRDC also targeted the city of Norman,Oklahoma as having the highest arsenic content ofany well system in the country in 1996, a statementpicked up in a journal no less respected thanScientific American. Somebody didn’t do theirhomework – nine of the wells with reported arsenicwere not public supply wells and were scheduled tobe plugged and abandoned. The public worksdepartment was never contacted by eitherorganization. Seems that the information camefrom the EPA database….

By this time, public works departments in arsenic-prone areas were beginning to take the issueseriously. In Oklahoma, the news was not verygood. The Oklahoma Department of EnvironmentalQuality estimated statewide that 40 systems wereaffected, with about 120 wells not able to meet the10 ppb standard. The bad news did not fall in aneven fashion – for example, in central Oklahomathe Garber-Wellington aquifer had arsenic, but onlyin areas west of Interstate 35 where the aquifer wasdeeper and the water softer. With over four dozenwells, the city of Midwest City had no arsenicproblem; twenty miles to the west in CanadianCounty, the city of Yukon had an average arseniclevel of 36 ppb. In fact, three of the largercommunities in Canadian County – Piedmont,Yukon, and Mustang – were facing a very bleakfuture in terms of water supply.


Options, Please!The reality came quickly, painfully, and with ahefty price tag. A city had three options.

The first option was the engineering solution.Treat the water. This developed into two lines ofthinking. The first was to use reverse osmosis toremove the arsenic. The good news was that it wasa tried and true method that worked. The downside was that it was a very expensive process andthe waste stream may actually be classified ashazardous waste. For a small utility, this was notpractical. The second line of thinking was thecoagulation-filtration method. The waste streamwas not hazardous, but required some pretty fancychemistry with some hefty investment. The pricetag for the city of Norman was estimated at $17million for capital investment, with operation andmaintenance running at $2.2 million annually on asystem presently worth $42 million. Again, notpractical for a small utility.

The next option was the geologic solution. Thisalso had two lines of thinking. The first was to gointo each arsenic-producing well and seal off withcement the sandstones that had unacceptable levelsof arsenic. Since each well usually had severalsandstones with different arsenic concentrations,the result would be a well that would have a lowerwater yield, but with acceptable water quality. Thisoption is currently being used in several well fieldsin central Oklahoma today.

The second line of thinking was to find areaswithin the aquifer where there is no arsenic in thewater. Two geologic mapping projects arecurrently underway in the Garber-Wellingtonaquifer focusing on this option. Once completed,water right leases may be purchased in areas wherethe water is determined to be of better quality.

The third option was to buy water from some otherentity or source. In some instances, water underthe control of outside interests is available.However, depending upon a water supply that isunder the control of others without good financialplanning may jeopardize an asset that is vital tomany communities. The ability of a community to

operate and control its water system is of criticalimportance because it represents a stable future andis one of the few available secure revenue sources.When a community is forced to rely upon anoutside provider for water, both those vitalelements may be impacted, requiring strategies tosecure the future growth and direction of thecommunity.

Bell, Round 2Meanwhile, in Washington the Bush administrationwas reviewing the science behind the new arsenicregulation. The American Water WorksAssociation noted the cost of this rule wasstaggering -

“The rule is expected to impact about 10 percent ofthe nation’s community drinking water providers,and the expensive new treatment processes itrequires makes the arsenic rule one of the mostcostly drinking water regulations ever. Complyingwith the new standard could cost individualratepayers in the desert Southwest, Midwest andNew England as much as $2000 a year.”

The NRC formed a new subcommittee to updatethe 1999 Report. The subcommittee reviewed datafor dose-response assessment and risk estimationand determined whether EPA’s risk estimates for 3,5, 10, and 20 ppb of arsenic were consistent withavailable scientific information, includinginformation from new studies. Although the Utahreport was reviewed, the subcommittee againrejected the report.

“…the Utah study used a comparison groupwith differences in life-style characteristicsfrom the study population. The studypopulation was composed of individuals withreligious prohibitions against smoking, andthe unexposed comparison group was theoverall population of Utah, where suchreligious prohibitions are not practiced by allresidents.”

In the review, a new set of data from Chile was alsopresented. The conclusions from the University ofSantiago report was devastating to the water supply


community – at the accepted risk factor, the arsenicconcentration in water would have to be 3 ppb.

In September 2001, the review panel presented thefindings:

“There is a sound database on thecarcinogenic effects of arsenic in humans thatis adequate for the purposes of a riskassessment… The available data on the modeof action of arsenic do not indicate what formof extrapolation (linear or nonlinear) shouldbe used below arsenic concentrations atwhich cancers have been observed in humanstudies. As discussed previously, there are noexperimental data to indicate theconcentration at which any theoreticalthreshold might exist. Therefore, the curveshould be extrapolated linearly from the EDto determine risk estimates for the potentialconcentrations of concern (3, 01 5, 10, and 20µg/L). The choice for the shape of the dose-response curve below the ED is, in part, apolicy decision.

… even at the highest risk estimates made bythe subcommittee, the increases in cancer dueto arsenic in drinking water would be difficultto detect statistically in the U.S. population.For example, a lifetime excess risk of bladdercancer incidence in males of 45 per 10,000would represent only 13% of the total risk formale bladder cancer in the United States fromall causes.

…The results of this subcommittee’sassessment are consistent with the resultspresented in the NRC’s 1999 Arsenic inDrinking Water report and suggest that therisks for bladder and lung cancer incidenceare greater than the risk estimates on whichEPA based its January 2001 pending rule.”

The new Bush administration had no choice butaccept the findings. With the aftermath ofSeptember 11, 2001, there were other prioritiesnow, such as homeland security. EPA

Administrator Christine Todd Whitman noted inher press release:

“Throughout this process, I’ve made it clear thatEPA intends to strengthen the standard for arsenicby substantially lowering the maximum acceptablelevel from 50 ppb. This standard will improve thesafety of drinking water for millions of Americansand better protect against the risk of cancer, heartdisease and diabetes”.

Others, such as the NRDC, were going for the extramile. “It’s clear that the handwriting was on thewall, that the EPA could not adopt a weakerstandard than the Clinton standard. But thescientific evidence now proves we need a standardof 3 ppb to protect health.’’ said Erik D. Olson.Even Congress was taking notice now. “Theadministration had no choice,’’ Sen. Barbara Boxer,D-Calif., said, adding she would now push for alower standard. “Their own study undermined theirdangerous position that the 50 ppb standard couldcontinue until further notice. They had no choicebut to do this, but now the bar is higher because thestudy said that even at 3 ppb the arsenic is verydangerous.’’

Back at the Ranch…Small communities with arsenic issues were now ina panic. Staring at a 2006 deadline to get theirwater supplies to conform to the new 10 ppbarsenic regulation, each one of the basic threeoptions were evaluated and re-evaluated. Thosecommunities who had the ability to rework theirwell fields and geologically evaluate new areas forgroundwater exploration started their programs.Those communities that did not have the potentialto explore for new groundwater sources started tocast their nets wider. And the direction they werelooking was in south-southeast Oklahoma.

Between Sulphur and Ada, Oklahoma, lies an areaof complex geology. A drive along Interstate 35through the Arbuckle Mountains shows one thedifficulties of understanding this part of the world –limestone beds stand on end, or are folded andtwisted in fantastic shapes. In this area is theSimpson-Arbuckle formation, a prolific aquifer that


is little understood and less developed. On thesurface are several large ranches, whose ownershold the groundwater rights. And the groundwaterhas virtually no arsenic.

The basic idea is classic supply and demand.Certain municipalities in central Oklahoma neededarsenic-free water. The water ranchers werewilling to sell the water. But navigating thisprocess proved no easy sailing.

The first issue was one of scale. Simply put, werethere enough customers to make the initial capitalinvestment for lease purchase, well drilling, pumps,pipeline, and maintenance worth the effort? Andwould it be at a price that was competitive withother available sources of water?

The answer to the first issue was not easy. To becost-competitive according to their studies, about100,000 customers needed to be found. A regionalwater association was formed in Canadian Countyto recruit member cities, but even with most of themunicipalities in the county on board, the numberof customers was a little over half the amountneeded. Communities in Cleveland County wereapproached, but with large areas of the Garber-Wellington aquifer east of Interstate 35 stillundeveloped for arsenic-free groundwater,Cleveland County communities had differentagendas.

The second issue was even tougher. Let’s label itas a resource management question. Municipalitiesin southeastern Oklahoma looked at the proposalwith alarm. Would the demand from centralOklahoma affect their water supplies? TheSimpson-Arbuckle aquifer is also home to severalhigh-quality bass streams. Would additionaldemand on the aquifer affect the flow to thestreams and change the ecosystem? There were noimmediate answers from the geologic andenvironmental scientists. The area was complex,little studied, and up until now no funding or needsfor research had been recognized.

The Oklahoma Water Resources Board (OWRB) isthe designated authority in Oklahoma to review

and decide groundwater allocations. As the projectcame to review, the OWRB was flooded with callsand letters from concerned citizens from southeastOklahoma. The first public hearing was postponedwhen the administrative judge was injured in a caraccident. Before the meeting was rescheduled,however, the Oklahoma legislature began to move.

Senate Bill 288A flood of groundwater bills swept through thestate capitol at the start of the legislative session.Proponents of the water ranchers argued that thesale of water would have no impact on either thewater supplies of southeastern Oklahoma cities orthe ecosystem. Opponents wanted to place amoratorium on all new water permits across thestate until geologic studies had been done on allaquifers. To everyone, it was evident that a newday was coming for the groundwater community inOklahoma.

By May 2003 the legislature had crafted a solution.The Simpson-Arbuckle aquifer had beenpreviously declared a sole-source aquifer by thefederal EPA, a designation unique to this area inOklahoma. Using this designation as a tool to limitthe bill’s effect only to the Simpson-Arbuckleaquifer, the legislature declared a moratorium onwater permits for sole-source aquifers untilgeologic and environmental studies had determineda safe yield. The bill also included language thatprotected the surface water flow as well.

Opponents of the bill immediately criticized thebill as being unfairly focused on just one aquiferand discriminatory with respect to the waterranchers who should be able to enjoy the benefitsof their groundwater rights. Legal actions may bepending.

Where Are We Now?The 2003 Oklahoma legislature has gone home. InBangladesh, Shakti’s parents buried their daughterand live out the life of landless farmers. InWashington, the clock is ticking towards 2006,when the 10 ppb arsenic regulation will beenforced.


Oklahoma cities are growing, with a thirstypopulation looking for new water sources. Eachsource comes with a set of technical, political, andlegal issues. The Kiamichi River Basin – a hugesource of surface water in southeast Oklahoma – isstill undeveloped due to questions about Indianownership and the cost of Sardis Reservoir. Futuregroundwater exploration in Oklahoma may have toaddress more closely the impact of developmentupon surface water sources and the ecosystems thatdepend on them.

Our clean water sources–not requiring treatmentare limited. New regulations generally have atendency to set otherwise potable water sources outof reach, or make these water sources moreexpensive to develop and maintain. Waterinfrastructure is expensive to build and maintain.

Public policy regarding the development of watersources must be based on sound and reasonablescience. The costs the public bears to minimize therisks to public health must be made with a definedcost-benefit in mind. Protecting the populationfrom arsenic poisoning in Oklahoma has had theundesirable effect of eliminating the water supplyfor whole towns.

Information necessary to make good decisions atthe right time is often expensive to get, untimely, orsimply unavailable. Our public policy shouldencourage supporting the research necessary tomake these decisions in water management andplanning. The arsenic story shows that the processis still far from ideal.


The Arbuckle-Simpson aquifer is in an area ofabout 800 square miles in the Arbuckle Mountainsand the Arbuckle Plains of south-central OklahomaThe area includes parts of Carter, Coal, Johnston,Murray, and Pontotoc Counties. Average annualprecipitation is about 34 to 39 inches. The aquifersupplies small, but important, quantities of water,mainly for public supply.

HydrogeologyFreshwater may extend to depths of greater than3,000 feet. Wells completed in the Arbuckle-Simpson aquifer commonly yield from 100 to 500gallons per minute and locally yield as much as2,500 gallons per minute. Springs that issue fromthe aquifer discharge from 50 to 18,000 gallons perminute. The water is a calcium bicarbonate typeand commonly is hard but has a dissolved-solidsconcentration of generally less than 500 milligramsper liter.

Recharge to the aquifer occurs from precipitationthat falls on the higher elevations of the aquiferoutcrop areas and is estimated to be 4.7 inches peryear. Intense faulting of the rocks affects theground-water flow system because faults might actas barriers to ground-water movement or as con-duits through which water travels to the surface.

Water is discharged naturally from the aquifer bynumerous springs and seeps; much of this dis-charge becomes the base flow of streams. The baseflow of streams that drain the aquifer is estimatedto be about 60 percent of the total annual runofffrom the Arbuckle-Simpson outcrop area.

Ground-Water DevelopmentThe largely undeveloped Arbuckle-Simpsonaquifer is estimated to have 9 million acre-feet offreshwater in storage. The water is usually acalcium-magnesium bicarbonate type that issuitable for most uses. An estimated 8 milliongallons per day of freshwater was withdrawn fromthe Arbuckle-Simpson aquifer during 1985. About5 million gallons per day was withdrawn for publicsupply, and about 2 million gallons per day waswithdrawn for agricultural purposes. About 1million gallons per day was pumped for industrial,mining, and thermoelectric-power uses, and about200,000 gallons per day was withdrawn for domes-tic and commercial uses.

web: sr6capp.er.usgs.gov/gwa/ch_e/E-text9.html#arbsim

Southern Oklahoma

The Arbuckle-Simpson AquiferCitizens for the Protection of Johnston County Water


October 2, 2002Citizens for the Protection of Johnston CountyWater

Minutes of Board Meeting, October 2, 2002, BestWestern Inn, Tishomingo

The meeting was called to order by Earl Brewer,Chairman, at 7:30 pm. Attending were Brewer,John Bruno, David Brown, Ray Lokey, GaryGreene and Floy Parkhill. Bruno moved andGreene seconded to circulate a petition (Attach-ment 1) at the Chickasaw Festival on Saturday. Approved unanimously. Brown announced that$654 would be contributed by the Southern Okla-homa Water Alliance. Bruno moved and Brownseconded motion to have the Chairman send a letter(Attachment 2) to the editors of the Oklahoma andTulsa newspapers. Approved unanimously.

Attachment 1: PETITION

To Oklahoma Elected Officials:I am an Oklahoma resident who is gravely con-cerned about our water resources. The plan tocommercially pump water from the Arbuckle-Simpson aquifer could cause an economic, envi-ronmental, ecological and cultural disaster inseveral southern Oklahoma counties. Please useyour good offices to ensure that this disaster doesnot occur.

Attachment 2: Editor - The Sunday OklahomanOctober 2, 2002

A number of stories have recently appeared in TheOklahoman related to water issues facing the state.The Sunday Oklahoman editorial of September 1was prescient in its contention that water disputeswill intensify. A dispute over a plan to pump waterfrom the Arbuckle-Simpson aquifer in southernOklahoma is now underway.

Springs from this aquifer fill streams that are hometo Turner Falls Park, Chickasaw National Recre-ation Area, Blue River Public Hunting and FishingArea, Tishomingo National Fish Hatchery,Tishomingo National Wildlife Refuge, SlipperyFalls Boy Scout Ranch, Camp Simpson Boy ScoutCamp, Camp Bond Church Camp. These spring-fed waterways are also the primary source formunicipal water for the cities of Ada, Sulphur,Tishomingo and Durant.

Under current state water law, all surface water isowned by the state but the landowner owns under-ground water. This creates a dilemma for the state.The springs create state property (surface water)but the state would be denied that property ifcommercial pumping from the aquifer depletes thesprings. Should private property rights supercedestate property rights? Does assertion of privateproperty rights prevail if such assertion causes abroad economical and ecological disaster?

Abundant excess surface water exists within thestate's boundaries. Governor Keating's office statedthat around 6 million acre-feet (about 2 trilliongallons) of water annually flows out of Oklahomaunused. This is two-thirds the estimated totalvolume of water in the Arbuckle - Simpson aquifer!

It is difficult to understand why we as a state wouldallow possible destruction of our natural waterwayswhen we have viable alternatives available. Whymust citizens of the state have to choose betweenpristine natural resources and water supplies forpopulation centers when we can have both? As weroll into the future, efficient and smart utilization ofour state's resources is not only desirable, it isessential to our future progress.

Floy Parkhill, Secretaryhttp://www.arbsimaquifer.net/citizengroup/boardminutes10032002.htm


HCR 1066

In part to address the outstanding paymentsituation involving Sardis Reservoir and inquiriesby north Texas entities to purchase water, theOklahoma Legislature adopted HCR 1066 in 1999.The legislation directed the Oklahoma WaterResources Board (OWRB), in cooperation withrepresentatives of Choctaw Nation and ChickasawNation, to prepare a Kiamichi River Basin WaterResources Development Plan, which wasmandated to be consistent with cornerstoneprinciples for water resources development setforth in HCR 1066. A Working Group wasestablished and public hearings were held. Afteranalyzing potential development in light of thecornerstone principles, the February 2000Kiamichi River Basin plan made tworecommendations: (1) the State of Oklahomashould continue to pursue formal development of acompact with the Choctaw and ChickasawNations, and (2) the State and the two TribalNations should invite comment from the publicinto any process that allows water to be transferredout of the Kiamichi River basin.

HCR 1109

Following up on HCR 1066, in May 2000, theLegislature adopted HCR 1109, which containedtwo major directives for the OWRB: (1) coordinatewith the Corps of Engineers on a study ofsoutheast Oklahoma’s water resources, and (2)bring proposals for development of those waters tothe State Legislature for consideration. HCR 1109required all valid proposals to be consistent withthe cornerstone principles set forth in HCR 1066and all principles established in the February 2000Kiamichi River Basin Water ResourcesDevelopment Plan (including the recommendationto compact with the Tribal Nations).

Memorandum of Understanding (MOU)for Draft Compact and Draft Contract

Following the HCR 1109 directives, GovernorKeating, Chief Pyle of the Choctaw Nation, andGovernor Anoatubby of the Chickasaw Nationsigned a Memorandum of Understanding inOctober 2000 that established a timeline fornegotiating a draft compact among the threegovernments, and for soliciting and reviewingproposals for the development of water insoutheast Oklahoma.

Proposals toDevelop Southeast Oklahoma Water

Pursuant to the October 2000 MOU, and as aninitial step in soliciting water developmentproposals, OWRB staff and representatives of theTribal Nations prepared and distributed Requestsfor Qualifications to interested entities. Threeresponses were received. The proposal submittedby Central Oklahoma Water Authority, apparentlya proposed brokerage entity, was rejected. Furtherdiscussions and negotiations were conducted withrepresentatives of the remaining entities, the NorthTexas Water Agency (NTWA) and Oklahoma CityWater Utilities Trust (OCWUT).

Draft State/Tribal Water Compact

1. The draft State/Tribal Water Compactaddresses three major subjects: (1) water rightsadministration, (2) water quality standardsadministration, and (3) economic development.The Tribal Nations claim ownership andsovereign authority to regulate all water(surface water and groundwater) within theiroriginal tribal boundaries (all or parts of 22counties in southeast Oklahoma).

Southeastern Oklahoma

Selling Water: The ProposalAbstract of Status Report to the Office of the Governor

Joint State/Tribal Water Compact & Water Marketing Proposals SE Oklahoma Water Resources Development PlanPrepared by Oklahoma Water Resources Board


2. The Compact, as drafted, would have theTribes agree to delegate whatever authoritythey may have over surface water andgroundwater in southeast Oklahoma to theState. Also, current state law and water rightspermitting would continue to control water usein the 22-county area. Citizens in the areawould not notice any change in water rightsadministration and the Tribes would releaseclaims to previously issued state water rights(such as those granted to Oklahoma City).Groundwater is included solely to remove thecloud on title. The Compact expressly statesthat groundwater, private property under statelaw, cannot be sold.

3. The Compact would also have the Tribes agreethat the State’s water quality standards apply inthe 22-county area, and that if the Tribesadopted their own water quality standards, asallowed under federal law, their standardswould be limited and could not affect water onnon-tribal land.

4. Concerning economic development, theCompact, as drafted, would have the State andTribal Nations agree to limitations andconditions on selling water from the Compactarea out of state. Net revenues would be split50/50 between the State and Tribal Nations.The Compact would also create a State-TribalIntergovernmental Compact Commission(STICC) consisting of an equal number ofState and Tribal members. The CompactCommission would only administer out ofstate water sale contracts. The CompactCommission would not administer waterrights.

5. The draft Compact expressly provides that thefull Oklahoma Legislature, not just theLegislature’s Joint Committee on State-TribalRelations, would have to approve the Compactbefore it would be presented to the UnitedStates government (Secretary of Interior orCongress) for final ratification.

North TexasWater Agency (NTWA) Proposal

1. The North Texas Water Agency, consisting offive large public entities that supply water tomore than five million customers in the northTexas area, proposes to use up to 320,000 acre-feet of water per year from two of the sixmajor river basins in southeast Oklahoma. Asmore fully explained in the draft contract, theState-Tribal Compact Commission and NTWAwould be parties to the contract wherebySTICC would supply water to a point ofdelivery in Texas just across the south bank ofthe Red River (which forms the Oklahoma-Texas boundary). The system to supply waterwould be owned entirely by STICC anddeveloped in three phases over a 20-yearperiod. No Texas entity would own anyproperty in Oklahoma. STICC would holdwater rights authorized or granted by theOklahoma Legislature. The NTWA would payall costs associated with the water supplyproject (except for any minor separate costs forlocal entities to tie into pipelines and relatedprojects). Absolutely no new reservoirs wouldbe built to supply water to Texas. Texas wouldrely only on available run-of-the-river waterand only under strict conditions for diversion.All of Oklahoma’s present and future needswould be protected, including local uses andpotential use by central Oklahoma. Droughtprotections for Oklahoma would be recognizedand NTWA would expressly waive any and allclaims to downstream dependency.

2. The first phase of the system would divertwater from diversion works (not a reservoir)on the Kiamichi River between HugoReservoir and the Red River where up to120,000 acre-feet of water per year would beavailable. Phase 2 of the system would allowSTICC to deliver up to a total of 180,000 acre-feet of water per year, including the KiamichiRiver amount plus water from another point ofdiversion on the Little River downstream fromPine Creek Reservoir. Finally, phase 3 of the


system would have STICC divert a total of320,000 acre-feet of water (120,000 acre-feetfrom the Kiamichi and 200,000 acre-feet fromthe Little River and Mountain Fork basinsdownstream from where the Mountain Forkflows into the Little River). The diversionworks on the Little River would consist of alow water dam that would not impede naturalflows or cause additional flooding outside theriver banks or an off-stream diversionstructure.

3. On average, more than six million acre-feet ofwater flows out of Oklahoma from the sixmajor river basins located in the southeastregion. The Kiamichi River Basin aloneproduces more than 1.4 million acre-feet ofwater in an average year while the Little/Mountain Fork River Basins collectivelyproduce more than 2.4 million acre-feet. TheNTWA proposal would use only about 7percent of the average annual flows from thesethree basins.

4. The draft contract provides a three-year periodwithin which STICC would have to completeenvironmental studies and obtain all necessarylicenses and permits before it could begin tobuild the water transfer system. The NTWAwould pay all costs of such studies.Endangered and threatened species would haveto be protected. Low flow needs of theKiamichi River, Red River, and Little Riverwould have to be addressed. The EPA and U.S.Fish and Wildlife Service would be consulted.

5. The NTWA would pay for pipelines,easements, STICC overhead costs, and allenvironmental studies required for systemdevelopment. The NTWA would also pay a“commodity charge” for the intrinsic value ofthe water; Oklahoma citizens and entitieswould not pay any commodity charge to usewater. Differences in valuing the commoditycharge caused negotiations with the NTWA tobreak down in January 2002. Oklahomacalculated the present value at $339 million

(amortized over 100 years to produce morethan $5 billion) while the NTWA estimated thepresent value at approximately $174 million(to produce about $1.4 billion over 100 years).A portion of the proceeds could be used to paythe Sardis Reservoir repayment contract,which has a current outstanding balance ofapproximately $38 million.

6. The draft contract could not become effectiveuntil the Water Compact becomes effective andthe full Oklahoma Legislature approves thecontract.

Oklahoma CityWater Utilities Trust (OCWUT) Proposal

1. The Oklahoma City Water Utilities Trust isinterested in securing a long-term futuresupply from southeast Oklahoma. OCWUTcurrently relies on Atoka Lake and McGeeCreek Reservoir for approximately one-half ofits total supply. OCWUT pumps water fromMcGee Creek Reservoir to Atoka Lake andfrom Atoka Lake to Lake Stanley Draper,where it is treated and distributed throughoutthe Oklahoma City area. OCWUT hasindicated that Kiamichi River water would bepumped approximately 20 miles to McGeeCreek Reservoir. OCWUT’s response to theRFQ contained two options for development,both of which anticipate a low water damdiversion point on the Kiamichi River, nearMoyers, or from a point closer to theheadwaters of Hugo Reservoir: (1) use ofSardis Lake storage as backup supply,amounting to approximately 150,000 acre-feetof water per year, and assumption of the SardisLake contract from the State, or (2) use of run-of-the-river flows of the Kiamichi River forabout 50,000 acre-feet of water per year(leaving at least 10 cubic feet per second lowflow protection and no impact on HugoReservoir yield). OCWUT discussed thepossibility of a hybrid of these two options.Analysis of the NTWA proposal indicates noimpact to water that may be used by OCWUTunder either of OCWUT’s options.


2. OCWUT’s proposal would satisfy thecornerstone principle that waters from theKiamichi River should be used for local andstate uses before being considered for use outof state. OCWUT already possesses thenecessary infrastructure to utilize waters of theKiamichi River for the very long-term needs ofcentral Oklahoma communities, includingNorman, Edmond, El Reno, Yukon, Mustang,and others if those entities can reachintergovernmental agreements with OCWUTas to the cost of storing and pumping the water.

3. OCWUT’s Option 1 (assumption of the SardisReservoir repayment contract with the Corpsof Engineers) would relieve the state of the$38 million conditional obligation to thefederal government.

DevelopmentIn Southeast Oklahoma

1. The economic situation in southeast Oklahomahas generally lagged behind the rest of thestate for a variety of reasons. Local citizenspoint out that there has been comparativelyless oil and gas activity in the region. Somesay that no water from the area should be soldto boost economic development; instead,industries will eventually come to the water insoutheast Oklahoma. Two related viewpointson this issue are that: (1) southeast Oklahomapossesses significant water resources, yetindustries have not located there (unlike thenorth Texas area), and (2) many southeastOklahoma residents do not want the air andwater pollution, congestion and related

environmental and social problems oftenassociated with large metropolitan areas, butinstead would prefer to develop less obtrusiverecreation and tourism opportunities.

2. Water marketing could provide much-neededcapitol for infrastructure improvements, tofoster tourism, and perhaps attract lightindustry and other employment opportunitiesto southeast Oklahoma. There is a current needof more than $90 million for water andwastewater improvements in the southeastwhile much more is needed for roads andrelated projects key to future development. It isappropriate that areas producing marketedwater should be appropriately compensatedand have priority in obtaining funds for much-needed infrastructure.

3. Because a substantial majority of the TribalNation members reside in southeast Oklahoma,most of the Tribes’ net water marketingproceeds (pursuant to the Compact, as drafted)would be utilized in southeast Oklahoma. Inaddition, the State could establish a public trustwith membership from a cross-section ofinterests in southeast Oklahoma to setpriorities for expenditure of the State’sproceeds. Funds could be used for grants andas security and collateral to leverage bondissues for loans. The state public trust coulduse the existing experience of the OWRB andOklahoma Department of Commerce toprovide guidance in coordinating theextremely large amount of public infrastructurefinancing that could be possible frommarketing available surface water resources.


The Honorable Frank Keating CMRRR 7001 1940 0000 3808 9804Governor’s OfficeState Capitol Building, Room 212Oklahoma City, OK 73105

Re: Water Marketing Partnership

Dear Governor Keating:

On behalf of the North Texas Water Agency (NTWA), I want to express ourappreciation for being invited to submit a proposal for the beneficial use ofexcess water in southeast Oklahoma. Also, I want to thank the State ofOklahoma as well as the Choctaw and Chickasaw Indian Nations for the timeand effort spent over the past 12 months meeting with NTWA, discussingarrangements for a beneficial, long-term water marketing partnership. All fivemembers of NTWA, which include the North Texas Municipal Water District,Tarrant Regional Water District, City of Dallas, Upper Trinity Regional WaterDistrict, and City of Irving, want to reassure you that we remain ready tocontinue these talks.

We recognize the importance of all of the Cornerstone Principles as developed incompliance with House Concurrent Resolution (HCR) 1066 and 1109 andfurther agree that protective measures concerning drought, the environment,flooding, downstream dependency and future partnership. Each of these issueshave been thoroughly discussed and in principal agreed to by both parties.Protection for Oklahoma is priority “Number One.”

The State of Oklahoma has been blessed with an abundant supply of water, somuch so that enormous volumes of flow through Oklahoma each year and leavethe state unused. Records indicate that an average of two trillion gallons flow outof Oklahoma each year. The volume alone from only six river basins inSoutheast Oklahoma, not counting all of the water supply still held in existingreservoirs, is almost four times the amount of water used each year by New YorkCity with a population of over 8 million. It is a small portion of this enormousvolume of water that NTWA is interested in purchasing at a fair and reasonableprice to both parties. To date both sides have expended a great deal of energyanalyzing the very complex issue of water pricing. We believe that both sides

NORTH TEXAS

WATER AGENCY

AGENCY MEMBERS

CITY OF DALLAS

CITY OF IRVING

NORTH TEXAS MUNICIPAL WATER DISTRICT

TARRANT REGIONAL WATER DISTRICT

UPPER TRINITY REGIONAL WATER DISTRICT

C/O NTMWD505 E. BROWN STREET

PO BOX 2408WYLIE, TEXAS 75098-2408

972/442-5405972/442-5405/FAX

February 1, 2002


have negotiated in good faith and that our meetings have been most productive.Currently, we believe we are very close to a mutually agreeable level ofcompensation for water from southeast Oklahoma.

The benefits to be gained from a water marketing partnership are numerous andof historic proportions.

• The North Texas area can gain a supplement water supply to complimentexisting and future Texas water supply projects.

• The People of Oklahoma can receive a revenue stream fro water unusedand currently leaving the State without compensation that could be used tohelp stimulate economic development and create new jobs.

Additionally, the revenue could provide a funding source for some ofOklahoma’s ongoing programs to upgrade public water supply and wastewaterinfrastructure, improve existing roads, add to existing health care facilities andother similar programs.

We have a historic opportunity to show the rest of the Nation that by workingtogether in partnership great benefits can be achieved for the people we serve.The members of the North Texas Water Agency are ready and willing to resumetalks with Oklahoma immediately. It would appear to be a great loss to bothsides to miss this opportunity; however, we must soon turn our attention to otheropportunities if there is no desire to continue discussions. Let’s not let thishappen.

Again, let me thank our Oklahoma friends and counterparts for the opportunityto explore this partnership. I want to leave you with the hope that we will begintalks again soon and that by working together we can achieve the benefits thatlie ahead.

Sincerely,

James M. ParksChairman, North Texas Water Agency

NORTH TEXAS

WATER AGENCY

AGENCY MEMBERS

CITY OF DALLAS

CITY OF IRVING

NORTH TEXAS MUNICIPAL WATER DISTRICT

TARRANT REGIONAL WATER DISTRICT

UPPER TRINITY REGIONAL WATER DISTRICT

C/O NTMWD505 E. BROWN STREET

PO BOX 2408WYLIE, TEXAS 75098-2408

972/442-5405972/442-5405/FAX

page 2 ...


State/Tribal Water Compact & Southeast OklahomaWater Resources Development Plan

What is the State/Tribal Water Compact andwhat are its primary provisions?

The State/Tribal Water Compact, currently in thedraft stage, is an agreement between the State ofOklahoma and Choctaw and Chickasaw TribalNations to address water rights administration,water quality standards administration, and devel-opment and use of water in the 22-county area ofsoutheast Oklahoma comprising the territories ofthe two Tribes.

Why did the State choose to compact with theTribes?

Based upon independent analysis of water rightsclaims made by the Choctaws and Chickasaws theState chose to compact with the Tribes, rather thanlitigate. Similar cases in the U.S. where Indianwater rights have been litigated have involvedlengthy and expensive court battles.Eventual legal decisions rarely resolve all thepertinent issues regarding Tribal water rights, oftenresulting in a further clouding of the situation andthreatening potential economic developmentopportunities related to water use. Under the draftState/Tribal Water Compact, the Tribal Nationsexpressly release all claims to water rights issuedby the State, including Oklahoma City’s rights toAtoka Lake and McGee Creek Reservoir.

Can the State/Tribal Water Compact or apotential water sales contract be approvedwithout consent of the Oklahoma State Legisla-ture?

No. Both the Compact and a water contract must beapproved by the full vote of the State Legislature.

In particular, Oklahoma law prohibits the interstatesale of Oklahoma water across the state’s borderwithout consent of the Legislature. The draftCompact also provides that a water sale contractmust be approved by full vote of the State Legisla-ture and cannot be materially amended withoutapproval of both the Oklahoma Legislature andChoctaw/Chickasaw Tribal legislatures.

Does the Compact transfer water rights andsubsequent decision-making power to theTribes?

No. The draft compact states that all existingappropriation rights to stream water, water in lakes,and water in farm ponds are protected, as they areunder Oklahoma law, and parties to the compactresolutely agree that the agreement will not impactprivate property rights. Provisions of the compactensure that the state’s existing water rights admin-istration process will proceed as normal.

Does the Compact provide for marketing ofgroundwater?

No. The draft compact specifically declares thatgroundwater will not be sold. Furthermore, aprovision of the compact states that a potentialwater marketing contract must expressly providethat groundwater, a private property right underOklahoma law, will not be used to supplement anthe out-of-state sale.

What benefits and projects would be enabledthrough a potential water marketing agree-ment?

In addition to resolving the state’s $38 millionobligation related to construction of Sardis Lake,the people of Oklahoma stand to benefit greatlyfrom the $339 million (estimated at $5.1 billion


Selling Water: A Supporting ViewOklahoma Water Resources Board


over 100 years, including an up-front payment ofmore than $35 million) offered by the North TexasWater Agency, according to terms of the lastcontract proposal. State funds (50 percent of therevenues, which could be optimized throughleveraging) are proposed for uses exclusivelyrelated to water, wastewater and other economicdevelopment need in southeast Oklahoma, espe-cially in providing water to rural areas in need ofsupply. The Choctaw and Chickasaw Tribes willutilize their shares for a variety of purposes,including (according to terms of the Compact)economic development, education, tribal govern-ment programs, social service programs, roadprograms, tribal infrastructure development, healthcare, senior citizens programs, youth programs,housing programs, acquisition and management ofreal property, culturally relevant programs, andsimilar programs. Among various indirect benefitsprovided through the agreement are the resolutionof Tribal water rights claims that could detereconomic development in southeast Oklahoma,ensuring future use of Atoka and McGee CreekReservoir by Oklahoma City, and avoidance ofmillions of dollars in court costs.

Would removal of water from the KiamichiRiver or elsewhere negatively impact the envi-ronment or endangered species?

Because no plan for the development of southeastOklahoma waters has been formally introduced, noofficial environmental studies have yet beenconducted. However, such studies would bemandated, both by Oklahoma officials and underrequirements of the Endangered Species Act andrelated state and federal laws, to determine envi-ronmental impacts, if any, of proposed projects andnecessary mitigation. These detailed analyseswould contemplate, among other issues, theimpacts of releases from Hugo Lake on theKiamichi and Red Rivers, specific stream flowrequirements of the endangered Rock Pocketbookmussel in the Kiamichi River, flow requirements inthe Little River downstream from its confluencewith the Mountain Fork, and potential impacts ofproposed diversion points. Under terms of the latest

contract proposal from the North Texas WaterAgency, no new reservoirs would be constructed onthe Kiamichi, Little, Mountain Fork, or GloverRivers, including Tuskahoma and Lukfata Reser-voirs. Avoidance of potential environmentalimpacts, especially those related to endangered andthreatened species, has been a vital consideration inthe investigation of water development opportuni-ties in southeast Oklahoma.

If a water marketing agreement is effectuated,should the State be concerned about potentialdownstream dependency claims by Texas?

No. Among the parameters for any out-of-statewater sale contract stated in the draft State/TribalWater Compact is that the contract must contain anexpress waiver of downstream dependency. Judi-cial precedent indicates that such express provi-sions in agreements between two or more partiesare upheld in a court of law. In addition, the RedRiver Compact (between the States of Oklahoma,Texas, Arkansas, and Louisiana), which apportionswater in the Basin to member states, limits theamount of water a Texas entity(s) could legallyclaim to that amount specifically apportioned toTexas under the agreement, regardless of the needsthat develop in Texas.

Would the potential water marketing agreementviolate terms of the Red River Compact with theState of Arkansas?

Terms of the Red River Compact require Oklahomato allow 40 percent of the total runoff produced inthe watersheds downstream from Pine Creek,Broken Bow, and the authorized (but not proposedfor construction) Lukfata Reservoir sites to flowdown the Little River into Arkansas. However,most of the 2.4 million acre-feet/year of waterproduced in the watersheds originates upstream ofthose sites and is thus not subject to 40-percentflow obligation.

Would the marketing of state water resources makeOklahomans vulnerable to water supply shortagesin the event of an extreme drought situation?


Although no one can accurately predict the exactlevel of future development in a specific regionover time, studies conducted for the 1995 Updateof the Oklahoma Comprehensive Water Planforecast that total water usage in the 22-countysoutheast Oklahoma region will be 375,600 acre-feet per year by the year 2050 (including approxi-mately 70,000 acre-feet in McCurtain Countyonly). Considering, for example, that the minimumannual streamflow ever recorded at Hugo, in theKiamichi River Basin alone, is 716,585 acre-feet, itappears that there should be ample water availablefor even unanticipated, extreme population growthand future development in the region. In addition,the draft Compact states that a water sale contractmust contain specific water diversion limits toclearly indicate when out-of-state taking must bereduced or terminated.

Would a water marketing agreement limitfuture growth in southeast Oklahoma?

No. All planning and hydrologic analyses con-ducted to date indicate that southeast Oklahoma’sabundant water resources should provide generoussupply for even the most optimistic future growthin the region and entire state, even with the pos-sible sale of up to 320,000 acre-feet of water peryear (see above). Contrary to limiting development,a water marketing agreement would in fact enablelong-term economic growth in the region and state,especially considering that a contract for out-of-state sale of water will contain escalation provi-sions relating to its price. Total revenues projectedover the 100-year term of the latest proposed NorthTexas Water Agency deal could amount to $5.1billion.



Selling Water: An Opposing ViewJeannine Hale and Suzette Hatfield

Oklahoma Family Farm Alliance, Oklahoma Sierra Club and Southern Oklahoma Water Alliance

The State-Tribal Compact and Texas water saleis dead.

It’s obvious that negotiations are continuing. TheChoctaws are spending BIG BUCKS on newspaperand radio advertising to promote the deal. A Texasspokesman, quoted in the Dallas Morning News,said the contract is 90% complete.

Water Compacts must be approved by theOklahoma Legislature.

According to House attorneys, a Compact involv-ing Indian tribes may only have to pass the State-Tribal Relations Committee and be signed by thegovernor.

We have to include the tribes in any water deal-they own streams.

The law firm of Ryley, Carlock and Applewhite,expert in tribal water rights, was hired by the Stateof Oklahoma to analyze the validity of tribalclaims. The conclusion of attorney MichaelBrophy, was that “Neither the Choctaw Nation northe Chickasaw Nation owns the water in the(Kiamichi) Basin.”

But...by including the Indians in the deal, wecan stay out of court. They won’t litigate toassert tribal claims.

There are worse things than going to court. Thecurrent Compact offers the Choctaws 37 1/2% ofany net revenues and the Chickasaws 12 1/2%.Let’s look at some numbers. ALL Indian tribes inOklahoma together with allottees own 2.5% of theland in the state. Tribal governments own about97,000 acres, or 151 square miles. Oklahoma’ssmallest county is Marshall County, with 371square miles. The population of ALL tribes consti-tutes 7.9% of the state’s people. The Choctaws andChickasaws form 3%. How can the Oklahoma

Water Resources Board possibly justify a giveawayof HALF the potential revenues from a water saleas a bribe for this small population?

Another problem is precedent. Our state wouldhave to buy off tribes in 74 out of 77 counties to doother inter-basin water transfers-even within ourstate! And. we won’t stay out of court. Groupsrepresenting environmental, agricultural andindustry interests are poised to sue to protect theirwater claims.

A water compact and sale would bring muchneeded development to southeastern Oklahoma.

All revenues from a sale would pass through aCompact Commission. This unelected group wouldhave authority to spend or invest monies, buildwater storage structures and incur indebtedness. Nodistributions to anyone are guaranteed-not forschools, not for roads, not for water supplies.Any new industry would be crazy to locate insoutheastern Oklahoma after establishment of thisCompact. By attributing ownership of half thewater to the tribes, the State of Oklahoma would begranting tribal governments jurisdictional authoritythat they currently do not have. How so?

Water permitting can be stymied pursuant to atribal protest by claims of violations of tribalsovereignty, tribal political integrity or tribaleconomic security. (State-Tribal Water CompactSect. 4.5.b) Such situation is not unprecedented.The State of Montana is currently enjoined fromissuing water permits until all the water needs ofthe local tribes can be quantified.Tribes are preparing to become environmentalregulators. Under an EPA provision called “Treat-ment as States”, tribes that can show jurisdictionand ability may be delegated regulatory authorityfor Clean Water Act, Safe Water Drinking Act andClean Air Act programs currently administered byour DEQ.


The Chickasaw tribe has already applied fortreatment as a state.

Overlapping jurisdictions and conflicting environ-mental programs would be major hurdles forindustries and would discourage development.In a landmark case, “Montana v United StatesEPA”, tribes were granted the right to regulateactivities of non-members if they could show thatactivities would affect the “political integrity,economic security, or the health and welfare of thetribe.” According to the 9th Circuit Court ofAppeals, that’s easy.

Cities would not be exempt from the headaches,either. The Isleta Pueblo tribe in New Mexico wasgranted EPA delegation as a state. The tribe estab-lished Water Quality Standards so strict that theCity of Albuquerque had to spend more than $200MILLION in additional water treatment in year2000 so that the tribe would have ceremoniallyclean water.

Groundwater uses won’t be affected. TheCompact says that groundwater sales are notauthorized.

While it is true that no marketing of groundwater isauthorized by the Compact, groundwater is clearlypledged to meet the State’s obligations under anysale.

Section 3.1 states, “The water rights and waterquality administration provisions of this Compactare applicable to all stream water and groundwaterfalling on, flowing in, under through or borderingall or portions of the following 22 counties withinthe State...”So, the Compact even includes rain and farmponds!

The Pecos River Compact of 1948 between NewMexico and Texas serves as an example of a boon-to-bust water deal.

When New Mexico entered into the agreement todeliver a stated annual amount of water to Texas,there was plenty of fresh water flowing in thePecos River. A water sale looked like an economic

windfall. After all, near the state line, the sweetwater was sullied by the Malaga Spring as itbrought briny water up from the salty Rustleraquifer.

As years passed, irrigation draws and municipaluse, combined with years of drought, reduced theflow in the Pecos to a trickle. New Mexico wasunable to meet its commitment to Texas.Texas sued.

The U.S. Supreme Court fined New Mexico $14million for the shortfall in water deliveries andordered compliance.

A state body, the Ad Hoc Pecos River BasinCommittee, has proposed a plan that includescurtailment of municipal water supplies andpurchase of $68 MILLION in water rights fromfarmers so that New Mexico can pump groundwa-ter into the Pecos River to make it flow over theborder.

The Committee plan states, “The overall situationto maintain compliance with the Compact is verydifficult and has the potential to cause substantialeconomic harm, including harm to the State ofNew Mexico as well as its citizens through reducedeconomic activity.”

The Pecos River Compact serves to warn us ofwhat could happen with Arkansas in the future ifwe give half our water to the tribes, then we runshort and can’t send enough downstream. The Stateof Arkansas will surely be suing the State ofOklahoma, not the tribes.

We need the Texas water sale to pay for SardisReservoir.

The State of Texas violated their Canadian RiverCompact with Oklahoma by constructing anunauthorized lake, thereby stopping water flowsinto Oklahoma. Let’s use the proceeds from a suitagainst Texas to help pay for Sardis.


If we don’t use the water or sell it, the Feds willseize it and give it to Texas. After all, we willonly have 5 Congressmen and Texas will have30!

This is one of the most bizarre statements we’veheard. The Tenth Amendment to the Constitution ofthe United States reads: “The powers not delegatedto the United States by the Constitution, notprohibited by it to the States, are reserved to theStates respectively, or to the people.” That in-cludes administration of water rights and a wholelot more.

Oklahoma would only be selling EXCESS waterto Texas. It’s just water that goes over the HugoDam, turns salty in the Red River and is lostforever.

How do we know it is excess? We have no long-term plan for Oklahoma’s water uses. The currentso-called “Comprehensive Water Plan” is only anincomplete inventory of water resources for aninadequate 10-year horizon. The Texas sale wouldcommit Oklahoma water for 99 years.Without a REAL plan and a better definition ofexcess, we can’t ensure that we will have enoughwater in our streams to protect all beneficial usesfor the future.

The Hugo Dam only captures the flow in theKiamichi basin. It’s not the end of the line. Thereare many Oklahoma water users downpipe fromHugo. Five other major basins are pledged in thisCompact as well.

It’s hard to look around southeastern Oklahomaand find any sign of excess water in the summer-time. The McCurtain County Fire Department hasbeen hauling hundreds of thousands of gallons ofwater every day for the past four summers toreplenish farm ponds and dry groundwater wells.

Our Federal government has appropriated $21million in drought relief for the very counties thathave been designated as donors for the Texas waterdeal. Many rural Oklahomans still have no runningwater or access to rural water systems. Have theirneeds been enumerated?

The rhetoric about salty water echoes the emptypromises made to New Mexicans 54 years agoabout the Pecos River sale. And, they are simplyNOT TRUE.

According to Dwayne Raper, chairman of the LittleRiver Conservation District in Ashdown, Arkansas,downstream farmers use the Red River water forirrigation. Salinity studies done by the Universityof Arkansas Water Laboratory and the NRCS showthat the saltiest samples are only 25% of thethreshold value for salinity. The sample site hadbeen irrigated with Red River Water for 20 years.Oklahoma has long-standing obligations under theRed River Compact with Texas, Arkansas andLouisiana to guarantee flow. An acknowledgementby Oklahoma that tribes own rights to part of thisflow would modify that agreement between thestates - but Arkansas and Louisiana have not beenconsulted and the legal process for modifying aninterstate compact is not being followed. We canexpect those states to go to court to secure theirshares.

Even so, this is a regional problem, not a Stateproblem. We should let the folks in the 22 (or29) affected counties make the decision aboutthe Compact and sale.

The State-Tribal Water Compact is just the firstdomino to fall. Other tribes are waiting for theiropportunities to Compact for water resources (suchas Grand Lake, Tenkiller and Kaw Lake) andassume regulatory authority. If you live in anycounty other than Cimarron, Texas or Beaver, thereare century-old tribal claims on your land. Thereare aboriginal claims on the Panhandle.All water users upstream of any tribal jurisdictionwould be subject to that tribe’s regulatory agencies.

The Oklahoma Legislature represents ALL Okla-homa citizens, including members of Indian tribes.The people of Oklahoma, through these electedrepresentatives, should decide whether watershould be used in state or sold.

Source: http://oklahoma.sierraclub.org/chapter/watersale/myths_and_truths.htm


Southwestern Oklahoma

Water Use at Lake AltusDonna Kirby. Manager, Lugert-Altus Irrigation District

Jim Bevers, Vice President, Quartz Mountain Conservation Coalition

Managing Lake AltusDonna Kirby, Manager, Lugert-Altus Irrigation District

I have been the manager Lugert-Altus Irrigation Districtfor 19 years. Over the years, we have dealt with a myriadof issues as the District has matured. One of the mostdifficult is to balance the uses of the water. SouthwesternOklahoma is not blessed with abundant supplies; and it isfor that reason that water for irrigation is a primaryconcern. Others have needs and wants but we cannotmake more water. We have to do the best we can withwhat we have. Given potential misunderstandings, it willbe helpful if we review the history of the development ofthe District. Once we appreciate that, it is much easier todiscuss current areas of debate and concern.

Authorization and CreationThe federal authorization for the W.C. Austin Project wasthe Flood Control Act approved on June 28, 1938, PublicLaw 761, 75th Congress, 3rd session, and signed by thePresident on February 13, 1941. The original federalauthorization designated all waters of the north fork of theRed River for this project. The stated purposes wereflood control, irrigation and municipal water supply only.Other uses such as tourism, recreation, fish and wildlifeare secondary to the original federal authorization.

Lake LevelsWhy does our lake level fluctuate so much? The W.C.Austin project is the only irrigation project in the state ofOklahoma. That is why we see seasonal fluctuations ofthe lake level. Other lakes that are designated for floodcontrol or municipal water supply in Oklahoma, showsmall amounts of fluctuations in their lake levels.

Town Hall IntroductionThe Oklahoma Academy first held ourTown Hall at Quartz Mountain Resort inOctober 2002. Many remarked at the“low” lake level and wondered why. Whenthe Academy rescheduled our Town Hall atQuartz Mountain - and selected “water”as a topic - it was a no-brainer to considerusing the varied uses of Lake Altus as acase study.

As we asked knowledgeable parties tocontribute to this research, it was clearthat there are - at best - misunderstandingsabout the uses of the lake. At worst, thereare intractable counter claims that requireresolution.

We thought it odd that there would becontention after almost 60 years of opera-tion in a water-scarce part of the state. Wealso found it revealing that there is seem-ingly no institution (outside of the courtsystem) to resolve such disputes.

By requesting contributions from theManager of the Lugert-Altus IrrigationDistrict, and an officer of the QuartzMountain Conservation Coalition, we willleave it to you to consider policy changesthat could remedy the dispute.


ImprovementsThe District has been operating for 57 years. Wehave been pursuing every opportunity to try andhelp improve our situation. The District has spentsignificant time and money on issues such as:

(1) the Chloride Control Project that would help put waterinto the canal and could possibly decrease the amountwe would have to withdraw from the lake at times, and

(2) the Sweetwater Creek Dam that the District has beenfighting for over 40 years that would take water awayfrom the lake, and

(3) the Mangum Lake Project that could help to supplementour water, and

(4) the Red River Compact trying to get rules andregulations to protect the lake from upstreamdevelopment and also when a hydroelectric powercompany filed for a permit to do a study on putting in ahydro-electric plant that would need water released toproduce electricity at all times.

There is no telling how much money has beenspent by the district on all of these issues thatcould affect the water in the lake and could havebeen used for conservation measures for thedistrict.

Ownership/ManagementThe District has always stated that the federalgovernment is the owner of the complete W.C.Austin Project including the dam, LugertReservoir, canals, etc., and the District and city ofAltus own the water rights by permit from theOWRB.

We are not a private contractor. We have boughtout our contract with the federal Bureau ofReclamation and can transfer title of all facilitiesbelow the dam if we so desire. No vendor at thereservoir has the right to do that. But we can nottransfer title of the reservoir because of the floodcontrol mission, uses by the City of Altus, and ourleases with the state for tourism and recreation andwildlife. Our contract is perpetual for operationsand maintenance even though we have completedour repayment portion.

Conservation ProjectsThe federal Bureau of Reclamation and the Districtwork with the Oklahoma Fish and WildlifeDepartment upon request. An example was theproject that allowed the OFWD to install brush inthe lake to improve fish habitats. Another exampleis when aerators were installed in the lake. TheOFWD selected the aerators, the federal Bureau ofReclamation purchased them and the District paidfor the electricity to run them.

The federal Bureau of Reclamation only hasirrigation projects in the 17 “western” states plusKansas, Texas and Oklahoma. Some districts haveall underground pipe, some get all of their waterfrom a river system, some districts havewastewater that goes back into their main channeland is re-used, and some get their water out ofreservoirs. Consider these excerpts of a reportpublished by Tom McGuckin (Forest Guardian)that covered 1978 to 1992.

“Consider the farmer, right now, without established propertyrights, there is a potential threat that environmentalregulation could deprive farmers of water during theirgrowing season. If, however, the farmer owns a propertyright to the water, no one can take the water without justcompensation….What about protecting the environment andendangered species? The marketplace is the great equalizer:non-owners of water can compete in the market place forsellers with all other potential buyers. Let the highest valueduse win. For example, if we as a society want to save theminnow then we must be willing to pay the cost by purchasingwater from those who own it….if saving the minnow requirespurchasing “50,000 acre feet at $1,500 per acre foot, this is atotal cost of $75 million.”

Since that report, many conservation-related taskshave been accomplished in the District Theyinclude:

(1) borrowing $1.4 million from the Oklahoma WaterResources Board to concrete and rip-rap the areaaround Bird Mountain

(2) buying a clay-rich farm near the Magnum Y to providesoil to build the toe up around Bird Mountain and toclay-line several miles of dirt canals to reduce waterseepage


(3) installing over 10 miles of pipe, installing 8 pumps tolower the canal levels, and installing around 2400 ft. ofterrranap liner.

(4) farmer-built tailwater pits

(5) installation of concrete ditches, drip systems andsprinkler systems.

We have goals and a long range plan to keep onimproving the district. In the next 10 years we planto install another 25 to 30 miles of pipe in ourlaterals. We also may install more pumps. We willput in more clay liners. We are looking at manydifferent ways to increase the watershed andworking with the bureau on different ways toimprove the district.

By federal law, operators of federal water projectsreceive reimbursement of operating costs allocatedfor flood control. Many years we spend anaverage of $100,000. Our allocation for floodcontrol is 22% and in the past it has averagedapproximately $20,000 which is a reimbursementof money already spent by the District. TheDistrict has a public audit done every year which isfiled with all proper agencies.

The lowest point that water could ever run out ofthe lake or the lowest discharge point is the bottomof our gates. Without the permission from the cityof Altus to use their water allocation, would haveto leave their 10,000 A/F of water. It is thefiduciary responsibility of the board of directors todeliver all water necessary to meet the croprequirements. They have no legal responsibility toleave water at the lake.

City of AltusThe city of Altus has a right to storage of 10,000A/F of water at the lake. The city has the sameright as the District has to use their water. Bothentities use the same facilities: Lake Lugert andthe canal to the Altus Reservoir Turnout.

The district can not charge the city for their water.It belongs to them. The district bills the city forannual operation and maintenance charges at apreset percentage rate by contract with the federal

Bureau of Reclamation whether or not the city usestheir allotment. Many years this O&M charge hasbeen forgiven. This O&M amount can vary fromyear to year. It has been $0.00 to last years amountof $30,320.16.

TourismTourism enhancement is the responsibility of thestate of Oklahoma. The fact is that the lake wouldof never been built solely for tourism. And itwould not have been built if it were not for theDistrict being formed, and the District stepping upand signing the contract, and the farmersmortgaging their land.

In other words, if not for the District, all the peoplethat are benefiting and profiting from the lakewould not have so benefitted.

SummaryThe District will receive criticisms at times for themethods and manner in which the lake is managed.

We respond, “if the District is not managing thelake properly, why is there still irrigation going onafter 57 years?”

The District does believe that the management is awater-use and conservation issue. That issue iswhy the District has been spending many dollarsover the years taking the steps to conserve thewater that we have. The producers (farmers) of theDistrict produce over $30 million worth of grossamount of products annually with an economicimpact of over $210 million. There are over 100producers from the area, over 400 landowners,many families, businesses, banks, cities and othersmaller towns, counties, schools and also manyother people over southwest Oklahoma and manyother parts of the United States that reap thebenefits from the District. After all we all eat andwear clothes.

The irrigation district, producers and manylandowners would like to thank the Academy forgiving us this time to present the facts.


IntroductionIf Lake Lugert-Altus contains no water, is it stillconsidered a lake?

Recently, this is just one of many disturbingquestions that citizens in southwest Oklahomabegan asking themselves. During the drought-plagued summer of 2002, local individuals beganto ask questions as we watched the rapid depletionof the lake’s water. Consequently, we found theanswers to be quite disturbing. Our most shockingdiscovery was this: The lake can be legallydrained.

According to sources at the Lugert Altus IrrigationDistrict and the Bureau of Reclamation they haveNO legal responsibility to keep any water in thelake. That means that the environmental and otherpublic values of the lake can be disregarded for theexclusive use of agriculture. Citizens who foundthis completely unacceptable banded together toform the Quartz Mountain Conservation Coalition.

What Is At Stake?We have three areas of major concern.

First, the public’s interest in the lake is completelyunprotected. There are no safeguards to shield thelake’s public resources from being usurped byprivate irrigators.

Second, there is the wildlife issue. A wonderfulvariety of fish, birds, mammals, and reptiles callthe lake and the Quartz Mountain Nature Parkhome. To drain the lake would create a devastatingloss of habitat and bring certain death anddecimation to many species.

Third, there is the eco-tourism issue. With aburgeoning tourist industry in the area, localproprietors and business owners understand thatwithout water in the lake, the tourists will notcome. The newly built lodge and conference

center will become nothing more than a dwindlingenterprise among the ruins. A vanquished outpostthat declares, “No one is watching the lake.”

A History Of The ProblemLake Lugert-Altus was built in 1927 before theauthorization of the W. C. Austin Project in 1941.

The original purposes ascribed by the land deedsthat allowed the creation of Lake Lugert specifywater uses to be “domestic, industrial, and otheruses; for irrigation purposes and for storagepurposes; for recreation, sport, fishing, hunting,and fish propagation, or either of Said purposes,and to control of Said Reservoir.”

(1) The Rivers and Harbors Act of 1938, thelegislation which was passed to construct the W. C.Austin Project, states clearly that “due regard shallbe given for wildlife conservation.”

(2) In addition, the 1943 contract between theBureau of Reclamation and the Lugert AltusIrrigation District also states that beyond irrigation,flood control, and municipal water usage, the lakewas also to be used for “other purposes.”

(3) These “other purposes” are defined by theoriginal land contracts and legislation whichestablished Lake Lugert. Unfortunately, thecurrent water management disregards the “otherpurposes” of the lake and only recognizes thepurposes of irrigation and flood control.

(4) Furthermore, the construction cost of the W. C.Austin Project was $12.8 million. Of that total,$9.8 million or 76% of the total cost was paid bythe American taxpayer. The Lugert AltusIrrigation District paid $2 million or 16%. TheCity of Altus paid $1 million or 8%. This clearlydemonstrates that the majority of the cost for LakeLugert-Altus was paid by the general public.

Who Is Watching The Lake?Jim Bevers, Vice President, Quartz Mountain Conservation Coalition


A Current AssessmentThe existing management has changed little sincethe 1940’s. The population of southwestOklahoma has increased and the economy hasdiversified from the 30’s and 40’s and nowencompasses a variety of businesses and industriesother than agriculture. The management of thesenatural resources has not undergone the samediversification or modernization as the surroundingareas. The irrigation methods and managementhave changed little since the 1940’s. We believethat irrigation experts would conclude that thecurrent practices are not sustainable.

It is significant to note that all maintenance andmanagement of Lake Lugert-Altus has beenassigned by the Bureau of Reclamation to theLugert Altus Irrigation District. The QuartzMountain Conservation Coalition advocates a newmanagement structure that represents all the usersof the lake.

The lake and its many uses have become a veryintegral part of our lives. According to theOklahoma Department of Recreation and Tourism,tourists generated $3.8 billion to our state economyin 2002.(5) Quartz Mountain State Park averages750,000 tourist days annually.(6)

A SolutionThe Quartz Mountain Conservation Coalitionbelieves that a significant upgrade of the lake’smanagement plan is mandatory. We advocate thecreation of a new long range, comprehensivemaster plan that equitably meets the needs of allusers of the lake. The policy should be created bythe federal government and implemented by stateand local partners.

Specifically a minimum lake level should bedetermined and enforced. This minimum levelshould provide a safe haven for fish and wildlife,one serviceable boat ramp at all times, and areserve water allotment for times of drought. TheQuartz Mountain Conservation Coalitionrecognizes and endorses the principle that themajority of water should still be used for irrigation;

however, the public’s interest should berepresented as well. According to a 1994Congressional Study on natural resources, thefollowing statement lends a perspective on thisissue: ’“Participants in the debate over naturalresource policies often lose sight of the fact thatuse of federal land is a privilege. The governmentpermits a variety of commercial ventures on publiclands to support broader public purposes.Although contracts allowing these activities maylast for several years, the use of federal propertynever becomes a permanent right or entitlement. Acommercial interest that uses land for several yearsshould receive no special prerogatives because ofits traditional association with the property. Withthe exception of lands that pass out of federalpossession through sale or exchange, all publiclands retain an overriding public ownership.”(7)

The resources of the Quartz Mountain Regionbelong to all of us. We need to work together tomake this area an even greater place to live.

(1) Land Deed: by and between Ruby Maxey; andWalter Maxey, and The City of Altus, a municipalCorporation; party of the Second part. Filed forRecord April 1, 1929 and recorded in Book 192, atpage 39. (2) The Rivers and Harbors Act of 1938(3) United States Department of the Interior,Bureau of Reclamation, Contract No. Ilr-1375dated January 12, 1942 (4) “Taking From theTaxpayer: Public Subsidies for Natural ResourceDevelopment”, Democratic Staff Report,Subcommittee on Oversight & Investigations,Committee on Natural Resources, U.S. House ofRepresentatives, One Hundred Third Congress,Second Session, August, 1994, Washington, D.C.(5) Oklahoma Department of Tourism Director,Direct Impact of Travel (6) W. C. Austin Project,Southwest Region Bureau of Reclamation, RegionRevision 8/83, Project Data Book (7) “TakingFrom the Taxpayer: Public Subsidies for NaturalResource Development”, Democratic Staff Report,Subcommittee on Oversight & Investigations,Committee on Natural Resources, U.S. House ofRepresentatives, One Hundred Third Congress,Second Session, August, 1994, Washington, D.C.


IntroductionThe overall objective of this project is to identifyand compare different environmental and socialvalues held by stakeholders in the Illinois Riverwatershed, and test a management protocol that istechnically effective, economically efficient, andsocially and politically acceptable.

In the first phase of the project, baseline technical,economic, and socio-political assessments wereconducted that served as the basis for subsequentinteractive computer visualization presentationswith policy makers to define alternativemanagement policies that meet these three criteria.

Eastern Oklahoma

Water Planning in the Illinois River BasinMark Meo, Robert Lynch, Fedaku Moreda, Blake Pettus, Ed Sankowski, ZevTrachtenberg, and Baxter Vieux of the University of Oklahoma, Norman and LowellCaneday, Will Focht and Keith Willet of Oklahoma State University, Stillwater

Town Hall IntroductionThe water uses in the Illinois River Basinhave been contentious for years. Thetension has been between states, andbetween commercial users. Almost alldisputes are being resolved in the courtsrather than through an effective planningprocess.

This section was chosen to illustrate themechanics and principles of advancedand sophisticated water use planning. Theprocess was developed in Oklahoma byprofessionals at OU and OSU. Theprocess was described in a peer-reviewedjournal article. That article is abstractedhere. The original article has been heavilyedited; much of the technical detail andlength has been omitted.

The Illinois River Basin has multiple usesfor its water. Industrial, commercial, andrecreational uses often conflict. How bestto resolve these conflicts? At one level, acollaborative planning effort is essential.But immediate difficulties arise whencomplex water planning is reduced to text,often laced with emotion and self interest.

How best to depict the “cause-effect” ofany impacts on the water. The answer isvisually ... and interactively.

This model is offered to suggest that evenif Oklahoma adopts a formal andprogressive regional water planningprocess, there must be tools available toprovide the best decision support; itserves as a national example of 21stcentury water planning tools.


In the second phase, policy alternative-specificassessments were conducted and visualizationsprepared for presentation to stakeholders as avehicle for designing and developing consensusabout alternative land and water uses throughfacilitator-assisted interactive policy dialogues. Theresults of two rounds of asynchronous negotiationsessions that alternated between policymakers andstakeholders were presented to policy makers for athird time to help finalize their policy proposals. Inthe final phase of the project, the acceptability ofthe proposals was tested through a telephonesurvey of basin stakeholders. The overalleffectiveness of the protocol was judged successfulwith the results of the telephone survey and theviews of project participants.

Socio-Political AssessmentThe socio-political assessment team wasresponsible for two major components of theresearch project. The first involves theidentification of stakeholders’ concerns about theIllinois River, preferences for river basinmanagement, and knowledge of the causes andeffects of river basin activities. Its secondresponsibility was to design and conduct anasynchronous policy dialogue betweenpolicymakers and stakeholders that yieldedconsensus policy outputs that are judged legitimateby both the participants and the larger stakeholderpopulation.

Baseline Socio-Political AssessmentIn the first phase of the project, the Socio-PoliticalAssessment (SPA) team completed the baselinesocio-political assessment. Interviews (n=330) ofstakeholders, interested parties, and policy makerswere completed in Spring, 1999. Three rounds ofinterviews were conducted involving 270participants.

Data AcquisitionIn the first round, 150 face-to-face interviews,lasting from 2-4 hours each, were held withparticipants residing, recreating, doing business, orhaving regulatory jurisdiction over activities in theIllinois River Basin.

In this first round, an extended discussion ofparticipant concerns about activities adverselyaffecting the Illinois River Basin.

Next, each participant was asked to completeLikert scale items inquiring into trust andpreferences for policy making.

Next, the participant was asked to rank order eightalternative policy making strategies, ranging fromtechnocratic expert-based policy making to fullyparticipatory third-party facilitated policy making.

Finally, the participants were asked to conduct acognitive mapping exercises re: their concernsabout river basin impacts.

In the second round, 120 additional face-to-faceinterviews (two-thirds of which were with personsnot participating in round one) were conducted.

In the third round, 60 more face-to-face interviews(again, only 1/3 of which had been interviewed ineither round one or two) were conducted usingmental modeling.

Data Analysis.The questionnaire data, Likert scale data, and cardranking data were analyzed using descriptivestatistics.

The cognitive maps were recorded electronicallyinto Visio 5.0 software databases.

Negotiation WorkshopsThe asynchronous policy dialogue was conductedin three rounds, beginning with a 2-daypolicymakers’ workshop in October, 2000. Twoprofessional negotiation facilitators assisted withthe workshops. The policymakers initially focusedon phosphorus management and riparian areaprotection. After an educational session,stakeholders agreed to these two priorities but alsowanted alcohol and behavior control. Subsequentsessions produced a consensus on these threepolicies by both groups.


Test of LegitimacyA random sample telephone survey of 458stakeholders in the basin was conducted in April,2002. It confirmed that all provisions of the threepolicy proposals were highly satisfactory(Phosphorus management policy: 95% satisfaction;Riparian area protection policy: 91% satisfaction;Alcohol and behavior control policy: 85%satisfaction), with the exception of two tourist feeincreases that were added at the last workshop asrevenue generating mechanisms – despiteopposition by stakeholder participants. This robusttest supports the claim that the policy legitimationprotocol was successful.

The researchers believe that asynchronous policydialogues that are informed by intensiveassessments of stakeholders’ concerns,preferences, and knowledge, can be successful incontexts dominated by distrust, controversy, andfactual uncertainty. However, in other contexts,synchronous dialogues (with policymakers andstakeholders) may be better – in conformance withdemocratic norms of political participation.

River Recreation AssessmentThe goal of this project was to survey IllinoisRiver floaters regarding their knowledge of theenvironment, management strategies employed,and satisfaction with their respective recreationexperiences. Visitors were contacted on outfitters’buses prior to their float experience and wereasked to complete an “ecological and rivermanagement knowledge” test. Approximately fourhundred visitors completed the pre-test. Thesevisitors were then asked to participate in a mail-outpost-test on satisfaction with the managementstrategies and the float experience. Approximatelythree hundred visitors agreed to participate in thepost-test. Data were coded and analyzed. Findingswere subsequently utilized by the socio-politicalassessment team and the economic assessmentteam.

Major SPA Baseline Findings

• Disagreements exist over the magnitudesand causes of problems in the IllinoisRiver as well as over who is to blame andwhat should be done.

• Stakeholders trust government –particularly the federal government –much less than they trust independentexperts and each other. As a result,stakeholders express an overwhelmingpreference to participate directly in thepolicy making process as opposed todeferring to government discretion.

• Though stakeholders believe thatcontroversy and factual uncertainty ishigh and continuing, most are not soideologically committed to a position thatconsensus is impossible. The conflictsthat exist are not bipolar.

• Stakeholders are most concerned andknowledgeable about problems andassociated impacts that are visible, local,and have media attention – includingproblems with alcohol consumption,inappropriate behavior by tourists, andlittering. However, policymakers are mostconcerned about less visible, widespread,water quality-based problems andimpacts such as nutrient loading(phosphorus) from fertilizer over-application and municipal effluents andriparian area protection.

• Stakeholders prefer coercive policiesregarding enforcement of existing lawsand regulations, such as apply to pointsource discharges and violations of civillaw regarding behavior, drinking, anddrugs. However, they prefer educationaland voluntary strategies, withcompensation for economic losses, forimpact management from less regulatedactivities such as farming and other ruraland suburban land uses.


Economic AssessmentThis research was concerned with economic impactassessment activities. Economic impact analysis ineach of the relevant Illinois River Basin regionswas conducted in three stages: regional baselineimpact assessments, regional option-specificassessments, and refined basin-wide assessments.Early activities were concerned with completion ofdatabases and economic modeling structures. It isfair to assume that tourism/recreational activity isan important contributor to the economic base ofthe Illinois River Basin. The tourism/recreationallinkages in local economy were estimated with theinput-output model IMPLAN.

The impact of tourism/recreational activity isdriven by expenditures which constitute acomponent of final demand for the region. Thechanges in these final demand expenditures are thekey for motivating the economic impacts which areof concern in this research.

The first task in quantifying these linkages was toestimate the magnitude of recreationalexpenditures.

Nurseries and greenhouse operations alsoconstitute a significant portion of the region’seconomic activity. Likewise, this industry may playan important role in establishing the environmentalconditions within the Illinois River Basin area.

Broiler production has also become an importantcomponent of the economic basis in the IllinoisRiver Basin region. A corresponding by-product isthe generation of poultry litter. This litter is animportant source of crop nutrients, but highconcentrations of litter applications raise concernsabout the environmental impacts of increasednitrate, phosphorus, and bacteria levels in watersupplies. Among other things, the loss ofphosphorus in runoff from agriculture is thought tobe an important source of eutrophication.

Technical Assessment Team:Modeling and VisualizationThe objective of the modeling task was to developand apply a distributed parameter hydrologicalmodel that relates ecological and water qualityimpacts to current stakeholder managementpractices, and can be used to assess potential landuse alternatives. From the modeling results,scientific visualization techniques were applied toaid communication to stakeholders concerning theimplications of development and managementpractices in the basin. They included:

Basin property dataWater quality data analysisWater quality modelingScientific Visualizations

Scientific VisualizationsInitial efforts to visualize the simulation of waterquality and other issues in the Illinois basininvolved the transformation of the DEM into a datastructure required by Macromedia Directorsoftware. The work on this program has advancedand now four layers of information are integrated:A flight layer, a photo layer, a water quality layer,and an aquatic life layer.

The flight layer enables a user to experience avirtual flight over the watershed with a three-dimensional effect.

The photo layer enables the user to select a certainregion and have a close look at differentenvironmental concerns. Currently, about 72photographs with the description of each concernare available.

The water quality layer depicts the map of thegauging stations with historical data displayed foreach station on water quality parameters, includingphosphorus, nitrates, turbidity, etc. The graphs aresupplemented by a description of the critical issuesconcerning the status of each water qualityparameter.


The aquatic life layer shows the number anddiversity of selected species within the riversystem and Lake Tenkiller.

To facilitate understanding by stakeholders of thecomplex biological, physical, and socio-politicalrelationships in the watershed, interactiveinfluence diagrams of these systems used by theSPA team were developed along with the othervisual elements.

The resulting visualization vehicle is known as theWatershed Management Decision Support System(WMDSS) and was subsequently used in thepolicymaker and stakeholder negotiationworkshops. For reference, the WMDSS alsocontains the current Illinois River ManagementPlan, a Riparian Area Protection Handbook, and a20 minute video of the Illinois River Watershedand its history.

Technical Assessment Team:Ecological AnalysisThis effort focused on developing visualpresentation materials that would helpcommunicate the risks to biological communitiesin the Illinois River watershed and the health ofLake Tenkiller.

This topic represents information where differentstakeholder groups are likely to have differentviews of the meaning and importance of the sameinformation.

A significant challenge in this regard was thedevelopment of visual risk communicationmaterials that are scientifically valid yetmeaningful to all stakeholder groups.

Chemical Data In addition to the three USGS gauging stations,the Oklahoma Scenic Rivers Commission conductssampling at 7 locations along the river andmonitors for turbidity, total nitrogen, nitrate, ortho-phosphate, and total phosphorous. These data weregathered and graphed, with indications ofappropriate water quality standards, for the period

of record, although the time frame is too short tomake conclusions about water quality trends.

A significant concern of many stakeholders is theeffects of animal waste on water quality,specifically the over 45 million poultry producedannually. In order to address these concerns, wesought to develop a measure of the relativemagnitude of poultry and cattle waste in the basin.

Data on human and animal numbers were gatheredfrom the U.S. Census Bureau and the NaturalResource Conservation Service. Additional datawas gathered from NRCS and other sourcesconcerning the amount of nitrogen andphosphorous produced by humans and animals.

Based upon phosphorous and nitrogen production,it was calculated that the animals in the basin areequivalent to approximately 5 and 15 millionpeople, respectively. An additional concern hasbeen the effects of septic tanks on water quality. Itwas calculated that 72% of human generated wasteis discharged to septic tanks, which elevated theconcern over their influence, however, the amountof nutrients produced by humans is at most 1-2percent of that produced by animals.


The Ogallala (1) Aquifer (alsoknown as the High PlainsAquifer) is now facing decliningwater levels and deterioratingwater quality. More than 90% ofthe water pumped from theOgallala irrigates at least onefifth of all U.S. cropland. Thiswater accounts for 30% of allgroundwater used for irrigationin America.

Crops that benefit from theaquifer are cotton, corn, alfalfa,soybeans, and wheat. Thesecrops provide the Midwest cattleoperations with enormousamounts of feed and account for 40% of the feedlotbeef output here in the U.S.

Since the advancement of agricultural irrigation inthe earlier part of the 20th century, the Ogallala hasmade it possible so that states such as Nebraskaand Kansas can produce large quantities of grainrequired to feed livestock. (2)

If the High Plains Aquifer were unaffected byhuman activities, it would be in a state of equilib-rium in which natural discharge from the aquiferwould be approximately equal to natural rechargeto the aquifer. However, activities such as pumpagefrom wells, surface-water diversions for irrigationand hydroelectric-power generation, and cultiva-tion and grazing practices result in non-equilibriumin the aquifer. The result is that discharge does notequal recharge in many areas. This non-equilibriumresults in substantial changes in groundwaterlevels. (3)

Half of the U.S. population and almost all of thosein rural areas draw water from underground

aquifers for their domestic needs.Additionally farmers depend on itfor irrigation. Once thought anunlimited source of pure water,these sources are increasinglythreatened. While toxic wastedumps, cesspools, landfills, andseptic tanks contribute their share ofwastes to groundwater, agriculturalchemicals contribute the most insheer volume and affect the greatestarea. Excess nitrates from fertilizer(and manure), can leach into groundwater, and in high enough concen-trations make such water dangerousto drink. Other farm run-off canalso reduce water quality. Further-

more, some farm pesticides pollute ground water inagricultural areas. (4)

Conservation of water is therefore imperative. It isextremely important that we search for solutions todeal with the problem. We also need to urgentlyexplore the alternative approaches that could betaken instead of those being implemented now.

The OgallalaThe Ogallala ranges in thickness from less than onefoot to 1300 feet from one place to another. Theaverage depth, however, is 200 feet. The aquiferunderlies a considerable portion of the Great Plainsregion, particularly in the High Plains of Texas,New Mexico, Oklahoma, Kansas, Colorado, andNebraska (see Figure 1). The depth of the aquiferfrom the surface of the land, and its natural thick-ness, vary from region to region. (6)

As a whole the aquifer covers 174,000 square milesand has long been a major source of water foragricultural, municipal, and industrial develop-ment. The surface area of each state covered by the

Northwestern Oklahoma

The Ogallala AquiferManjula V. Guru, Agricultural Policy Specialist and

James E. Horne, President & CEO, The Kerr Center for Sustainable Agriculture. Poteau, Oklahoma


ted the federal government and society to takedrastic steps to keep farmers on the Plains. Themiracle of new irrigation technologies did much toprotect farmers from the harshness of droughtduring the 1950's, early 1970's, and in the late1980's. In addition it helped create today's highlyproductive industrial farming and feedlots in theplains.

Many people assume that large groundwaterformations may temporarily run low, but will fillagain when rainfall is plentiful - as do lakes, rivers,and reservoirs. However, unless the areas impactedare unaffected by the factors that contribute to highevaporation - such as minimal rainfall, abundantsunshine, low humidity, and periodic strong winds- this assumption is not even remotely correct.Therefore, it is imperative that we find solutionsthrough research to water problems and maintainthe aquifer as a continuing resource.

By the time we know whether today's conventionalHigh Plains farmers can live with less groundwater,it may be too late to save enough to keep them onthe land. Pumping the Ogallala is still a one-timeexperiment, unrepeatable and irreversible.

Case of the Oklahoma PanhandleThe Oklahoma Panhandle, which is composed ofCimarron, Texas and Beaver counties, is a 5,680square mile semi-arid area in western Oklahoma.Prior to 1950, crop production in the area wasalmost exclusively dry-land wheat and grainsorghum. However, with the introduction ofirrigation practices, principal crops in the area nowinclude grain sorghum, corn, and alfalfa which areproduced to supply feed for the large beef feedlotsin the area, and wheat which is produced primarilyfor the export market.

With the discovery of a significant quantity ofhigh-quality groundwater underlying most of theregion, came the development of irrigated produc-tion practices. Development of agricultural cropproduction under irrigated conditions has contrib-uted to increased economic activity in the Okla-homa Panhandle and surrounding regions. Acres

Ogallala formation varies in about the sameproportion as the volume of water in storage.Nebraska with 64,400 square miles and Texas with36,080 are the largest. New Mexico, Oklahoma,South Dakota, and Wyoming all have less than10,000 square miles of surface area underlain bythe Ogallala. (7)

The amount of water in storage in the aquifer ineach state is dependent on the actual extent of theformation's saturated thickness. In 1990, theOgallala Aquifer in the eight-state area of the GreatPlains contained 3.270 billion acre-feet of water.Out of this, about 65% was located under Ne-braska, Texas had about 12% of the water instorage or approximately 417 million acre-feet ofwater, Kansas had 10% of the water, about 4% waslocated under Colorado, and 3.5% was locatedunder Oklahoma. Another 2% was under SouthDakota and 2% was under Wyoming. The remain-ing 1.5% of the water was under New Mexico. (9)

The Ogallala Aquifer was formed over twentymillion years ago. The formation process beganwhen gravel and sand from the Rocky Mountainswas eroded by rain and washed downstream. Thosesediments soaked up water from rain and meltedsnow forming a sponge-like structure. (10) Most ofthe water has been held within the aquifer formillions of years. (11)

History of UseUse of the Ogallala began at the turn of the century,and since World War II reliance on it has steadilyincreased. The withdrawal of this groundwater hasnow greatly surpassed the aquifer's rate of naturalrecharge. Some places overlying the aquifer havealready exhausted their underground supply as asource of irrigation. Other parts have more favor-able saturated thickness and recharge rates, and soare less valuable.

Reasons to tap the water are many. Americanfarmers suffered and failed during the 1930'sbecause they did not have the technology to reachit. After the government's initial failure to getfarmers to move elsewhere, the New Deal commit-


irrigated in the Oklahoma Panhandle increasedfrom 11,500 in 1950 to 427,000 in 1973, andtotaled 405,700 in 1979 (see Table 2).

The primary sources of irrigation water in theOklahoma Panhandle is the Ogallala Aquifer, amajor underground aquifer supporting irrigationwater throughout much of the Great Plains. Contin-ued overdraft of the Ogallala Formation and waterlevel declines of two to three feet per year in manyareas, make physical exhaustion of the aquifer amajor concern. The characteristics of the aquifermake physical exhaustion a very real possibility -one that has already occurred for some irrigators inparts of the Oklahoma Panhandle.

The rapid development of irrigated crop productionhas resulted in overdraft of the aquifer, withwithdrawals greatly exceeding natural recharge andreturn percolation of irrigation water. The result hasbeen a gradual decline in the water table within theaquifer. The declining water table interacts withrapidly increasing costs of energy inputs, particu-larly natural gas being utilized by most irrigationsystems in the Oklahoma Panhandle and, otherthings being equal, reduces the profitability of

irrigated crop production. Continued declines in thewater level within the aquifer threaten the capital-intensive irrigated agricultural economy of thearea.

Several factors are interacting to reduce the eco-nomic life of the aquifer. One, rapid water with-drawals lower the water table and increase thevertical lift of the water to the surface. And two,declines in saturated thickness of the aquiferreduces the well yield, measured in gallons perminute, which increases the time required to applya specified quantity of water onto the crops.Reduced well yield and increased feet of liftinteract with the cost of pumping irrigation waterand reduce the profitability of irrigated cropproduction.

In a study conducted over the period 1978-80 byOklahoma State University and the OklahomaWater Resources Institute, the economic life of theunderground water supply in the Oklahoma Pan-handle was analyzed. Economic exhaustion is saidto occur when net returns from the production ofthe best dry-land crop alternative exceeds the netreturns of the most profitable irrigated crop activ-ity. The study predicts that the decline in the

Table 2Irrigation Statistics for Oklahoma Panhandle area.

Total Gravity Systems Sprinkler Systems Irrigation Wells

Farms Acres Farms Acres Farms Acres Farms Acres1950......................53.............. 11,5001952..........................................13,0001954..........................................24,680.........................................23,758..............................................922.........................................23,5801955....................212..............34,247.........................................32,030...........................................2,317.........................................32,7971956....................266..............71,200.........................................64,700.....................41................6,500...................336..............70,1001957....................267..............76,500.........................................68,360.....................49................8,140...................359..............75,2251958....................279..............69,575.........................................62,623.....................53................6,960......................—..............67,3751959....................275..............71,500.........................................65,820.....................46................5,680...................365..............69,5201963....................304..............84,500...................241..............71,560.....................75.............. 11,940...................409..............83,0201965....................745............138,000...................586............122,000...................104..............16,000...................972............135,5001967.................1,150............263,000................1,010............224,850...................145..............38,150................1,358............261,0001969....................960............315,518...................835............282,618...................141..............32,900................1,634............213,5181971.................1,375............356,360................1,165............302,938...................255..............54,422................1,846............344,0401973.................1,530............427,000................1,360............324,500...................175............102,500................2,207............422,6801975.................1,094............404,610...................901............329,460...................193..............75,150................ 2,112............402,5501977.................1,155............385,900...................896............301,650...................259..............85,700................2,172............384,0001979.................1,223............405,679...................898............297,649...................350..............97,215................2,227............403,619

Source: Mapp, 1980.


underground water supply and conversion fromirrigated to dry-land production would be a part ofthe future of the Oklahoma Panhandle. The studydid not answer the question of exactly when thisconversion will occur and which crops will remainunder irrigated production until the economic lifeof the aquifer is exhausted for agricultural pur-poses. However, the study concluded on the notethat the eventual economic exhaustion of theaquifer appears inevitable unless dramatic andunforeseeable output price increases or institutionalor technological changes occur. (19)

An example of the aquifer's water depletion in theOklahoma Panhandle area is in Texas County.Texas County consumes almost all of its waterfrom the Ogallala Aquifer flowing some 200 feetbeneath the Panhandle. In 1990, approximately 363million gallons per day of groundwater werepumped from the High Plains Aquifer. Throughoutthe High Plains, the water table dropped 9.9 feetfrom predevelopment times to 1980, and thendropped another 3.05 feet from 1980 through 1995.Irrigation methods became increasingly efficientwith fully automatic center-pivot drop sprinklers.But as efficiency rose, crop acreage rose as well.While there were approximately 54,400 acres inirrigated corn in 1991, there were approximately90,000 acres in irrigated corn in 1998. (20)

Texas County has more than 380,000 head offeedlot cattle, a ready market for the corn. Whilecorn is a particularly thirsty crop unable to growwithout irrigation in Texas County, it yields up to200 bushels per acre with 22 inches of irrigatedwater. With an estimated 90,000 acres of corn in1998 and each acre using approximately two-acrefeet per year, (21) Texas County uses approxi-mately 58,653,180,000 gallons of irrigated water ayear on corn alone. Corn is fed to both cattle andhogs, and uses some of the nutrients in the hogmanure. While livestock water usage is 3% di-rectly, livestock feed requires all that irrigatedfields can produce, accounting for 92% of waterwithdrawal from the High Plains Aquifer in TexasCounty. (22) While hogs are not the sole cause ofwater depletion as well as water quality deteriora-

tion in the Panhandle, the large hog operationsincrease pressure on an already stressed ecosystem.The growth of intensive hog operations contributedto a 66% increase in livestock water use between1990 and 1995. (23)

Water Quality in the Oklahoma PanhandleIn the Panhandle of Oklahoma, the environmentalcapital can be easily overlooked with its treelessplains being open and wide as the horizon. But thiswide open space is a premier cattle raising anddryland farming area as well as a cornucopia ofirrigated corn thanks to the underlying OgallalaAquifer.

The increased use of confined animal feedingoperations for cattle, poultry, and hogs has raisedconcerns regarding the possibility of groundwaterpollution. Full-grown hogs, grown under confinedconditions, produce 15 pounds of waste per day.Since hog manure is disposed of as highly-liquidslurry in confinement operations, the cost totransport it are prohibitive. Therefore, it has to beused in the local area. Although there are manysystems to handle hog waste, lagoons are thecheapest and least efficient. The current regulationsallow lagoons to be constructed to hold the wasteand to seep at roughly one-quarter inch per day.The Oklahoma Department of EnvironmentalQuality translates that into a total of more than 500gallons per acre per day. (24)

Thus more area is put into irrigated corn which is ahigh user of nitrogen - a key component in manure.Irrigated corn, in the course of consuming enor-mous amounts of water, produces nutrient runoffparticularly high in phosphorous because of the useof animal manure as a source of nitrogen. Sun-flower, milo, and native grass also have effluentspread on them. There is no procedure in Okla-homa to monitor how much and where nutrients arespread on the various crops and grasses grown inthe Panhandle. And one does not need to speculateabout where this runoff finally travels, i.e., into theOgallala Aquifer. (25)


End Notes

1. N. H. Darton is credited with naming the aquifer in 1899after the town of Ogallala, Nebraska.

2. Aquifer Close Up. Published by Center for BiologicalComputing, Indiana State University, Department of LifeSciences. [http://mama.indstate.edu/users/johannes/aquifer/htm].

3. Precipitation is the principal sources of natural ground-water recharge in the High Plains. Recharge fromprecipitation is quite variable in the High Plains, both intime and in space. Factors that affect this variabilityinclude the precipitation regime, evapo-transpiration,soils, vegetation, and land-use practices, and thecharacteristics of the unsaturated zone between the soilzone and water table. In a few areas, however, naturalrecharge can result from seepage losses from streams andlakes. This recharge is particularly important along partsof the Platte River system in Colorado, Nebraska, andWyoming, where substantial seepage losses of stream floworiginating outside the High Plains result in recharge tothe High Plains Aquifer. (High Plains Aquifer Back-ground Information. http://www-ne.cr.usgs.gov/highplains/bckgrnd.html).

4. Cunningham, W.P., & B.W. Saigo. EnvironmentalScience: A Global Concern. William C. Brown publica-tion. Dubuque, Iowa. 1990.

5. The Ogallala Aquifer. High Plains Underground WaterConservation District No.1. [http://www.hub.ofthe.net/hpwd/ogallala.html].

6. Glantz, M. The Ogallala Aquifer Depletion. 1989.

7. See Note 3.

8. USGS. Characteristics of the High Plains Aquifer. [http://www-ne.cr.usgs.gov/highplains/hpchar.html].

9. Id.

10. The aquifer is porous and filled with water; lying betweena water table and a bedrock bottom.

11. The aquifer is replaced by precipitation and surfacestreams. It is recharged primarily by direct infiltration ofprecipitation falling on the overlying soils. When theamount of water withdrawn from the aquifer continuallyexceeds the recharge, a mining situation results.

12. Opie, J. OGALLALA: Water for a Dry Land. University ofNebraska Press. 1993, p. 294.

13. It has in fact been known to cause the "blue babysyndrome." Nitrates can be changed to nitrites bybacteria in our bodies and reduce the oxygen carryingability of blood especially in babies and young children.Also, nutrients can not only form nitrosamines that aresuspected of causing stomach cancer, but can causeexcessive algae growth in lakes and estuaries.

14. Non-point refers to sources of pollution that are scattered,with no specific place or point where they discharge intoa body of water. This makes them more difficult toidentify, monitor, and regulate. Such sources include runoff from farm fields, golf courses, lawns, roads, parkinglots, etc. Point sources, on the other hand, are specificlocations such as drainpipes, or sewers. (USGS. HighPlains Regional Ground Water (HPGW) Study. NationalWater-Quality Assessment (NAWQA) Program. [http://webserver.cr.usgs.gov/nawqa/hpgw/HPGW_home.html]).

15. Id.

16. Cash, D. Assessing and Addressing Cross-Scale Environ-mental Risks: Information and Decision Systems for theManagement of the high Plains Aquifer. GEA DiscussionPaper E-98-17.

17. See Note 13.

18. Id.

19. Mapp. H.P. Jr. Impact of Availability of Water and Cost ofEnergy Inputs on Agricultural Production in the Okla-homa Panhandle. Oklahoma Water Resources ResearchInstitute. 1980.

20. Oklahoma Agricultural Statistics Services, OklahomaDepartment of Agriculture. [http://www.usda.gov/nass/].

21. One acre foot equals 325,851 gallons.

22. Bringing Home the Bacon: The myth of the role ofcorporate hog farming in rural communities. Researchprovided by The North Central Regional Center for RuralDevelopment. Sponsored by The Kerr Center. 1999. p. 37.

23. Id. p.38

24. Schepers, J.S., D.D. Francis, and M.F. Vigil. Nutrientmanagement and utilization from manures. pp. 686-88.Proceedings of "Agricultural Research to Protect WaterQuality " Conference. Held in Minneapolis, MN onFebruary 21-24, 1993.

25. Id.


Kansas

New Thoughts About Water Policy

LAWRENCE -- Kansans have long struggled withthe best way to manage the state's water. Now anew book from the University of Kansas-basedKansas Geological Survey questions some of thetraditional ways state and local agencies havemade decisions about water.

Survey water specialist Marios Sophocleous editedthe book, "Perspectives on Sustainable Develop-ment of Water Resources in Kansas," which pointsout flaws in a traditional management conceptknown as safe yield.

Under a safe yield approach to water management,Sophocleous says, water use is limited to theamount of annual recharge -- that is, the amountreplenished naturally through precipitation andwater seepage from the surface.

Sensible as this simple formula seems,Sophocleous says, "if you use safe yield as adefinite recipe, you end up depleting other watersupplies." Like many simple concepts, safe yielddoesn't tell the whole story.

The problem is that safe yield ignores the complexrelationships between surface water (lakes,streams, springs and marshes) and groundwater(water found in underground rock formationscalled aquifers).

For example, under natural conditions, beforewells start pumping, aquifers discharge water tostreams, marshes and springs. The amount dis-charged equals the amount of recharge. This meansthat under a traditional safe yield approach,pumping removes groundwater that would other-wise be discharged at the surface. The streams,marshes and springs eventually dry up.

"This is what has happened to some perennialstreams in western Kansas," Sophocleous says.

Sophocleous says that a recognition of the connec-tion between surface water and groundwater isalready shaping the way water resources are

managed in Kansas. Two of the state's five ground-water management districts now factor in naturalground-water discharge when evaluating newapplications to use groundwater.

Promoting a better understanding of the complexi-ties of the water system was one of the goals withthis new book. Towards that end, Sophocleousasked nine other water scientists to write chaptersdiscussing issues of safe yield and sustainabilityfrom a variety of perspectives. In addition toSophocleous's chapters on Kansas water resourcesand sustainability issues, the book includes chap-ters on water chemistry, agriculture and climatechange. "The book presents the most up-to-dateviews on the subject and places the discussion on asound scientific footing," Sophocleous says.

Sophocleous admits that understanding the com-plex relationships between ground and surfacewater is just a first step down the path towardssustainable development, managing the state'swater so that both current and future needs are met."As a concept," Sophocleous says, "sustainabledevelopment is still pretty vague. No one knowsfor sure exactly what it means or how it can beattained."

How the concept will be applied in Kansas remainsto be worked out, but it will be different in differentparts of the state. In western Kansas, where irriga-tion sucks up 90 percent of the ground water,sustainability will be difficult to achieve. In centraland eastern Kansas, where there's less irrigationand more precipitation, "sustainability is a possibil-ity," Sophocleous says. But, he adds, "education isvital if consensus on these issues is to beachieved." Written in semi-technical language, thebook contains numerous illustrations and a lengthyglossary.

Story By Liz Brosiu. http://www.ur.ku.edu/News/98N/SeptNews/Sept15/water.html. Copies of thebook are available from the Kansas GeologicalSurvey at 1930 Constant Avenue in Lawrence (785-864-3965).


Texas

Drafting A State Water Plan

As part of the regional and state-level waterplanning process, the Texas Water DevelopmentBoard (TWDB) has created a policy stakeholders'group to assist in identifying significant waterpolicy issues and to make recommendations forappropriate actions by the board. These recommen-dations will take the form of issue papers (calledissue recommendation papers or IRPs), to bepresented at a September 18 meeting in Austin. Atthis meeting, the papers will be discussed and thestakeholders will vote on whether or not they can"live with"the papers' recommendations. Thegroup's work, it is hoped, will assist the board andagency staff to draft the 2002 State Water Plan, asdirected by 1997's Senate Bill 1.

The group is in the same mold as last year'sgroundwater stakeholders' group, also sponsoredby the TWDB. This summer, the board invitedsome 80 people representing water-related intereststo select and rank water policy issues. Thesepeople have now joined roundtable groups; theseare charged with identifying policy recommenda-tions for each identified policy issue. Participantsrepresent financial concerns, public interest groups,state agencies, law firms, environmental advocates,river authorities, water utilities, engineering firms,and groundwater districts.

These participants identified eleven water policyissues and ranked them in this order: surface water;the financing of water infrastructure; environmen-tal protection/flow maintenance; agriculture/rural;groundwater; water marketing; conservation/drought management; water quality; non-tradi-tional water management strategies (e.g., brushcontrol, desalinization); planning and implementa-tion; and data collection and information.

Within each of the policy issues identified, there isan entire subset of related questions. For example,within the issue of surface water policy, lie thesticky questions regarding the roles of re-use (andits impact on downstream water rights) and

interbasin transfers in meeting water needs. On thematter of financing water infrastructure, questionsabound: what is the proper role and goal of statefinancial assistance; what is the proper balancebetween local and state financing; and what is thefitting level of state assistance for large, rural,small, or economically disadvantaged communi-ties? As the cost for agricultural water increasesand its availability declines, what should be thestate's policy to ensure the viability and thesustainability of agriculture (and, it should beadded, to ensure the viability and sustainability ofcommunities significantly dependent on agricul-ture)? What role should water marketing play instate water policy and what level of governmentshould regulate it? How should concerns aboutthird party impacts and environmental degradationcaused by water marketing be addressed?

In a series of meetings throughout July and August,the roundtable groups convened in Austin todevelop these policy recommendations and attemptto answer the troublesome questions listed above.Ground rules established by TWDB staff state thatthe optimum goal for each roundtable group isconsensus support, but consensus is not narrowlydefined. If consensus is unattainable, it is to benoted in the issue paper ". . . and the degree ofsupport for each recommendation should beindicated."Any dissenting opinions will be repre-sented in the final issue paper and discussed at theSeptember 18 meeting. On September 19, theWater Development Board will meet and may ormay not select the issue topics and their proposedchanges to be included in the draft of the statewater plan. As noted in TWDB documents relatedto the process, "Neither the TWDB staff nor theBoard guarantees that all stakeholder recommenda-tions will be followed."

http://www.county.org/resources/library/cissue/LN/vol11no14/Record284758.html Vol. 11, No.14Published by Texas Association of CountiesAugust 31, 2001

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