A state audit questions more than $10,000 in costs incurred by a small state agency focused on Oklahoma's marginal oil and gas wells.
The Commission on Marginally Producing Oil and Gas Wells supports and promotes some of Oklahoma's small oil and natural gas producers with a focus on wells that are producing small amounts of oil and gas, called stripper wells.
The agency is funded by a voluntary fee assessed on oil and gas gross production. Those in the industry not wishing to fund the agency can file for reimbursement of the extra tax on their gross production.
State Auditor and Inspector Gary Jones released an audit of the agency in mid-October finding that negligent management has “allowed for widespread abuse and potential fraud, resulting in questioned costs of $10,028.”
The audit suggests a number of controls that could help prevent future abuses at the agency, but also suggests possible consolidation of the agency with another state entity.
“We're trying to maximize resources,” Jones said.
Senate President Pro Tem Brian Bingman said the audit caught his eye.
“What's been disturbing is there's been a previous audit raising concerns and nothing was done,” Bingman said. “That's what gets the Legislature's attention, is it doesn't seem to be cleaned up.”
Bingman said the agency provides an important service to Oklahoma's small oil and gas companies, but said lawmakers are always looking for ways to make government more efficient.
“We're trying to do more with less, less people, less commissions … it's always an issue for the Senate,” he said.
The agency itself operates on roughly $700,000 a year in revenues from taxes on the gross production of oil and gas, and spent about $600,000 in fiscal year 2011.
Of that. it found that the public information officer had made questionable purchases on her state credit card of almost $3,000 including a $1,300 charge to Orbitz, the online travel site, and more than $500 at Hertz Rental Car and Walmart. The employee resigned in May and state records indicate the position was held by Crystal R. Townsend up to that date.
Townsend could not be reached for comment.
The audit also criticized “the extensive out-of-state travel” conducted by public affairs officer Rick Torix.
Several calls over two days to the state agency phone number went to a voice mail that was full and unable to accept messages. No one responded to an email sent to the agency requesting comment for this story.
Executive Director James Revard also could not be reached for comment.
The agency spent almost $50,000 in travel expenses in the 2011 fiscal year, the audit notes, and there are discrepancies in several claims for reimbursement for travel as well as charges to state credit cards.
A nine-member panel, the Commission on Marginal Wells, oversees the agency.
Paul Bruce, the chairman of that commission, said it has now discussed moving forward with better oversight and tighter controls of the agency.
“We are probably going to restrict some of the travel,” Bruce said. “We're so short staffed we're not going to send them on as many trips. We're doing some things to maybe tighten some controls and reduce some costs.”
“It's a very small agency and therefore it's somewhat difficult to make sure you've got the proper duplication and documents that document everything the way it should be,” he said.
“Having said that, I think it's still the commissioners' and the agency's desire and plan to do everything they can to maintain good records and good financial controls.”
Bruce said he thought the audit was conducted with some bias and does not represent a full picture of the agency.
“There was a long interview at the beginning of the audit with an employee that was very disgruntled, and she has since left,” Bruce said.
Jones said that kind of attitude is part of the problem at an agency that has had serious issues in three consecutive audits.
“This audit is the result of what our auditors discovered,” Jones said. “It's based on fact.”