Oil Producers Feel Shut Out By SemGroup

Independent oil producers are starting to feel SemGroup's bankruptcy closing ranks.  The Tulsa energy company is the second largest buyer of oil in Oklahoma.  The News On 6's Dan Bewley reports oil producers are coping with a tremendous loss in business.

Oklahoma oilmen are definitely a breed apart, but many are saying their voice is being shut out as corporate big wigs fight for SemGroup's money in a Delaware courtroom.

Wilson Lease Well #3 has been pumping oil on the outskirts of Bristow since the 1920's.  But, for the last four decades it's been in the Earnhardt family.

"We're oil," said Stan Earnhardt.

Stan Earnhardt is now in charge of the operation.  He is running his oil company along a brick road near downtown Bristow. For the last month, he's been trying to figure where his family business is headed because SemCrude is the company that buys his oil, to the tune of more than $150,000 a month.  Most of that is for upkeep of the well, royalty owners, and taxes.

Earnhardt's been following SemGroup's bankruptcy, hoping the court will protect independent producers. Not even a month into the process, that hope is gone.

"After listening to the hearing yesterday in Delaware it was obvious that there's no intention by people in that company to provide us not even protection, but not even information," said Stan Earnhardt.

Earnhardt even sent the federal judge in Delaware his own letter, explaining why he thinks protection for independent producers would help SemGroup in the long run. But, on Monday, the judge gave SemGroup two months to prepare financial information.  That is two months Earnhardt doesn't have.

"They're asking the little producers, the big producers, whoever, to continue to deliver oil to them with no lien protection and with no financial information well, duh," said Stan Earnhardt.

Mike Terry of the Oklahoma Independent Petroleum Association says Earnhardt's story is being played out all over the state, but finding a new purchaser is not as easy as it sounds.

"You've got to find a purchaser that has trucks available in your area, where your remote location is located to be able to get the trucks in and out to deliver the crude oil," said Mike Terry with the OIPA.

Earnhardt was lucky, Sunoco just agreed to buy his oil.

"We're going to change to Sun and Sun's a good company and we're going to keep doing what we've been doing for forty years," said Stan Earnhardt.

Earnhardt is expecting a check later this week from SemCrude for the oil he has produced since the bankruptcy filing, but he's not sure if it will come.

However, a SemGroup spokesman told The News On 6 that the company is still paying its customers regardless of the bankruptcy.