YALE, Okla. – Customers of utility companies that serve the Oklahoma City and Tulsa metropolitan areas weren’t the only ones who received exorbitant gas and electric bills from the arctic winter storm a year ago.
The City of Yale, a Payne County town of about 1,150 residents, received a $1.4 million bill from BlueMark Energy for natural-gas consumption during the two-week winter storm in February 2021. That’s equivalent to $1,217 for every man, woman and child who lives in Yale, or $2,947 for every one of the town’s 475 utility customers.
“There’s no way that much gas could come through our line,” City Manager Phillip Kelley said.
“We know how much gas was consumed last February, because everybody has a meter,” Mayor Richard Adsit said. “We figured what we used for that two-week period and took the rate they were charging for gas at that time; it came to $211,000. We wrote BlueMark a check for that amount as a good-faith payment.”
The balance is in contention. “I’m not in favor of government regulations,” Adsit said. “But what occurred” during the winter freeze last February “was pure old gouging.”
The City of Yale received $106,000 in federal aid last July, but whether that money could be applied to the BlueMark debt is unclear. “There are a lot of restriction on how we can use that money,” Kelley said, “although we do know it could be used for water and sewer upgrades.”
“We still have several months left in this winter,” Adsit noted. “What happens if we have another storm like that?”
BlueMark buys and markets natural gas for more than 100 producers in the Mid-Continent Region. The Tulsa-based company has other municipal customers “and they’re in the same boat we are,” Adsit said.
Neighboring Oilton, a Creek County town of approximately 980 people, “signed off on an agreement to pay BlueMark $9,300 a month for the next 10 years,” Adsit said. Oilton’s utility customers are paying $35 each month to retire a debt that was incurred during a period of about two weeks in February last year, Kelley said. Southwest Ledger left a message for Oilton Mayor Steve Arnold, but he never responded.
BlueMark Energy sued Alma, Kan., a town of 800 population, in federal district court in the Sunflower State over a disagreement arising from its gas bill in February 2021. The feud stems from a sales agreement the two parties inked on March 9, 2020.
Alma was billed $638,190 for natural gas used in mid-February 2021, but paid $465,750. The unpaid balance of $172,440 is approximately what BlueMark says it spent in excess natural gas costs when frigid temperatures in mid-February 2021 sent natural gas prices skyrocketing.
The Alma/BlueMark case was still pending in Kansas federal court on February 1. Attorneys representing the town and the company did not respond to media requests for comment.
City sues Keystone
In a related matter, while contending with the extraordinary BlueMark invoice, the City of Yale filed a $1.27 million lawsuit against Keystone Gas Corp. in Payne County District Court.
Keystone apparently is based in Tulsa. Its president is Rick Sellers of Drumright.
OilMonster website says Keystone Gas Corp. “operates low-pressure and extremely low-pressure natural gas gathering systems across the Cushing Field with extensions in Creek, Payne, Pawnee, Lincoln and Osage counties…” Keystone “specializes in purchasing gas streams from stripper oil and gas wells.”
Yale’s natural-gas line extends south along Norfolk Road for about seven miles, to a gas measurement meter known as the City Gate, near the Dripping Springs area. The Yale Water and Sewage Trust previously bought natural gas from Keystone Gas Corp. at the City Gate in accordance with a contract dated December 22, 2004.
The Trust contends that Keystone acquired gas from BlueMark for resale to Yale under the terms of the 2004 contract. Keystone denies that claim.
The city accuses Keystone of fraud, alleging that natural gas Keystone acquired from BlueMark, ostensibly for distribution and resale to Yale from October 2020 through June 2021 – gas that the City of Yale paid Keystone for – instead was diverted elsewhere.
That lawsuit, too, is still pending.
BlueMark Energy and Keystone Gas Corp. aren’t regulated by the Oklahoma Corporation Commission the way residential utility companies such as Oklahoma Natural Gas, Public Service Co. of Oklahoma, and Oklahoma Gas & Electric are.
Town’s reserves drained
Yale’s $1.4 million gas bill from BlueMark had immediate repercussions.
The City of Yale had approached American Heritage Bank’s local branch about a loan to construct a pipeline to connect Yale with the distribution system of Oklahoma Natural Gas Co., and the bank gave its preliminary approval, Mayor Adsit said.
The city hired a contractor to build the gas line extension “and he started buying materials,” Adsit recalled.
However, after the staggering BlueMark gas bill from February 2021 was delivered, the bank informed the city that its loan application was being re-evaluated. Consequently, the city didn’t receive the loan and had to pay for the line extension from its “rainy day” account, Adsit said.
City Manager Kelley said the extension is a 4-inch-diameter pipeline that continues from the City Gate substation south for approximately two and one-half miles to a site north of SH-33, where it connects to ONG’s natural-gas distribution system.
That extension was completed last July and cost the City of Yale approximately $245,000, which depleted the town’s municipal reserves, Adsit said. In addition, the extension crossed state school land that’s leased. The School Land Commission “charged us $23,000 to go across that pasture,” Adsit said, “and they wouldn’t budge” on the price.
(Editor’s note: Yale, Okla., is the hometown of Mike Ray.)