Oklahoma’s largest oil and gas operators are lining up to claim a new $50 million state fund created to cut methane emissions from legacy infrastructure. What began as a quiet rebate program tucked into a 2022 law has quickly become a battleground between corporate giants, state regulators, and federal oversight.
Continental Resources, ONEOK, Devon Energy, and several other major producers have already submitted applications to the Oklahoma Department of Environmental Quality. These companies are seeking partial reimbursement for projects that aim to reduce methane venting and leakage from well sites, pipelines, and processing plants. Rebates can cover up to 25 percent of the cost to retrofit or install emissions-reducing equipment, and approvals are being handled on a first-come, first-served basis.
That setup has raised concerns that well-capitalized operators will dominate the fund while smaller, independent producers get squeezed out. There are no carve-outs or protections based on company size, meaning the rebate structure favors those with the staff and financial bandwidth to act quickly.
Emissions Cuts and Legal Strategy Collide
The backdrop for this incentive program is the Biden administration’s methane rule, which targets emissions from both new and existing oil and gas infrastructure. Methane is significantly more potent than carbon dioxide as a greenhouse gas and is often released during routine drilling, well completion, and processing activities. The federal rule sought to sharply limit emissions through tougher reporting standards, leak detection protocols, and updated equipment mandates.
But the rule has faced legal resistance from Oklahoma and other oil-producing states. Continental Resources, joined by a coalition of Republican attorneys general, filed suit in federal court, arguing that the Environmental Protection Agency overstepped its bounds. The lawsuit claims the methane rule infringes on state authority, imposes excessive costs, and undermines regulatory flexibility already present in local statutes.
While the court case unfolds, companies are pursuing rebates under Oklahoma’s incentive program, which operates independently from federal law. Even if the EPA rule is delayed or struck down, the rebate money remains accessible to those completing qualifying projects.
The idea behind the incentive was partly shaped by industry fear that strict federal rules would force older wells offline. Oklahoma lawmakers used that concern to build support for a state-level policy that gives operators a reason to upgrade equipment before being forced to do so by Washington.
State officials formalized the program with the Oklahoma Tax Commission, which began funding two separate rebate pools last year. The Department of Environmental Quality evaluates applications, and the Tax Commission releases funds only after projects are completed and verified.
Winners, Losers, and a Look Ahead
ONEOK Field Services applied for $859,000 in rebates for upgrades at a Garvin County gas processing facility built in 1948. The project took four months to complete and resulted in a 39 percent drop in methane emissions compared to a 2019 baseline. According to the company, the installation was complex, but the design could now be replicated across other legacy assets in Oklahoma and beyond. The company also reiterated its 2030 target to cut greenhouse gas emissions by more than two million metric tons.
Continental Resources, one of the state’s largest producers, submitted five projects for consideration. Four were approved, earning about $137,000 in rebates. The fifth project, a $10.6 million upgrade, was rejected because the application arrived a few days past the deadline. Despite its size and impact, it was deemed ineligible due to the strict timing rules written into the program.
Other applicants include Mewbourne Oil, Canvas Energy, and Ovintiv USA. Most proposed projects target gas venting and equipment leaks—two of the most common sources of methane release. While the rebate is designed to reward these improvements, some firms are finding the process less straightforward.
One Elk City-based software company, GAS AI, was denied a $284,000 rebate request for a $1.14 million project focused on auditing and emissions tracking. The DEQ said the project did not show a direct reduction in emissions since no physical upgrades were involved. GAS AI’s CEO argued that better monitoring and compliance would result in long-term reductions and that the state should embrace artificial intelligence as a core part of future emissions management.
State lawmakers have since revised the rebate framework. A bill signed by Governor Kevin Stitt this April adjusted the timeline for applications and gave the program a hard end date of July 1, 2027. Companies must submit all rebate claims by the end of 2026.
Even as the Trump administration reopens the methane rule for review, Oklahoma’s rebate program continues to operate as a separate channel for incentivizing environmental compliance. Delaying federal enforcement may work in the industry’s favor, but state officials and industry advocates argue that reducing waste is already good business. Methane, after all, is a valuable commodity when captured and sold rather than lost to the atmosphere.
Brook Simmons, president of the Petroleum Alliance of Oklahoma, said that the rebate program helps producers avoid regulatory whiplash while encouraging smart investment. Simmons believes most operators want to run cleaner and more efficiently, regardless of federal rules. The program, he says, simply provides a little added motivation to follow through.
As emissions reduction efforts move forward, Oklahoma’s rebate model could offer a glimpse of how conservative states are navigating the crossroads of environmental regulation and energy economics. Whether the effort leads to meaningful climate gains or simply helps producers maintain the status quo remains to be seen. But the money is moving, and the oil patch is paying attention.
