Experts say plunging oil prices putting thousands more Oklahoma jobs at risk

Erin Beu | KOCO Tulsa

Mike Fielder was laid off from his energy-sector job before the COVID-19 coronavirus pandemic hit.

“It’s never a good feeling to get laid off,” Fielder said.

He told KOCO 5 that the oil and gas industry has been hurting for a while, but he never expected the price to drop into the negatives per barrel.

“It was the same thing — lower oil prices, lower gas prices,” Fielder said. “It doesn’t make sense. Can I go sell my gas to somebody?”

But all joking aside, Fielder said the situation is dangerously bad for Oklahoma’s economy.

“You’re just facing layoffs everywhere,” he said.

Another man, who didn’t want to be identified, said six people at his small energy company were let go or furloughed as soon as the virus hit Oklahoma. Now that the price of oil is dropping so low, he knows there’s more layoffs coming.

He just prays he’s not next.

Dewey Bartlett, chairman of the Oklahoma Energy Producers Alliance, said 10,000 to 20,000 Oklahomans are predicted to lose their jobs in the next few months because of the pandemic and the low prices.

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Oil industry workers fear it may be 2021 before recovery is possible

Maureen Wurtz | KTUL Tulsa

The oil business accounts for one-third of Oklahoma’s economy.

When it’s having a problem, everyone is. If oil prices don’t come back soon, everyone in Oklahoma, no matter where they work, will likely feel the effects of the historic price drop.

2020 has become the year of uncertainty at ACS Steel.

“It’s the year of the unknown,” said Marti Coleman, the Vice President of Sales and Marketing. “No one really knows what’s going to happen right now. There’s a lot of quoting right now, as far as big products, but nothings busting loose right now.”

Coleman said the small company of forty employees builds parts for oil refineries and companies. However, business is down by 80 percent.

“We’re probably at 20 percent capacity,” said Coleman.

“20 percent?” asked KTUL reporter, Maureen Wurtz. “Normally at this time of year, would you be at full capacity?”

“Full capacity plus,” said Coleman.

It’s not just folks who build supplies for the oil industry feeling the hit, but folks in it as well.

“Well, we’re certainly down 20-25 percent production wise,” said Dewey Bartlett.

Bartlett’s family has been in the oil business as long as Oklahoma’s been a state. He knows that the oil industry helped build the city he was mayor of.

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Texas Railroad Commission Tables Mandated Oil Quotas by E&Ps until Early May

Carolyn Davis | Natural Gas Intel

Texas regulators tabled a decision Tuesday about whether to allow oil production quotas and instead are forming a task force to consider how to aid the state’s ailing energy industry.

During a hearing Tuesday, the Railroad Commission of Texas (RRC) was expected to rule on whether oil quotas should be mandated at 20% following requests led by Permian Basin pure-plays Pioneer Natural Resources Co. and Parsley Energy Inc.

The RRC held a 10-hour hearing earlier this month to hear from proponents and by opponents, who argued that free markets should dictate whether exploration and production (E&P) companies shutter wells rather than requiring prorationing.

Many E&Ps already are shutting in wells across the Lower 48 as low oil prices have decimated demand, in part because of Covid-19. Storage is nearing the top, and shut-ins began before the bottom fell out on Monday for West Texas Intermediate (WTI) prices.

The three-member RRC, led by Chairman Wayne Christian, was joined by Commissioner Christi Craddick, who each signaled at the previous hearing they were opposed to prorationing. The motion was tabled to ensure a decision would not be stymied by a lawsuit. Commissioner Ryan Sitton has been in favor of prorationing from the start.

Not so fast, Christian said.

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Texas postpones vote on oil production cuts

Eunice Bridges | Argus Media

Texas regulators postponed a vote on a proposal to cut the state’s oil output by 1mn b/d, saying they want to further explore legal issues.

But the Texas Railroad Commission, the top oil and gas regulator in the state, seemed open to some kind of proration plan in conjunction with cuts by other states and countries. A vote could come in two weeks.

Commission chairman Wayne Christian said he has been meeting with state officials in North Dakota, Oklahoma and Canada on how to address the current crisis in the oil and gas industry. The matter has become even more urgent after WTI Nymex benchmark crude futures tumbled yesterday to settle at -$37.63/bl, a historic first, as rapidly filling US storage created a panic, prompting traders to unwind their positions.

Commissioner Ryan Sitton was seeking a vote today on a proration plan to cut 20pc of Texas production, or 1mn b/d, starting in May. Cuts would be contingent on other states and countries, including members of Opec, curtailing a combined total of 4mn b/d. “I don’t believe that inaction on our part is acceptable,” he said.

Sitton said his plan would cut production by operator, not by lease, with a base set at the highest producing month from October to December. The plan would be temporary and end when global market demand rises above 85mn b/d. He also said cuts would only apply to producers with output exceeding 1,000 b/d.

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Explainer: Antitrust law will not get in the way of U.S. acting to raise oil prices

Diane Bartz | Reuters

It is illegal for oil producers to meet to discuss pushing up oil prices under U.S. antitrust law, but perfectly legal if state regulators or the federal government set lower production levels for them, legal experts said.

Oil and gas companies have been gushing red ink and cutting tens of thousands of workers as prices tumble, prompting regulators in Texas, the largest U.S. oil-producing state, to consider calling for a production cut.

On Monday the May futures contract for U.S. crude closed at minus $37.63 a barrel as traders desperate to avoid owning oil paid others to take it. Global oil demand has fallen by as much as a third as the spread of the new coronavirus has forced more than 3 billion people to go into lockdown.

In response, U.S. President Donald Trump on Tuesday called on the federal government to come up with a way to bail out the U.S. oil and gas industry.

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OEPA Asking The OCC To Curtail Production Of Oil

As you all know, the OEPA recently sent a letter to the Oklahoma Corporation Commission and filed an application for hearing. The hearing date has now been set for May 11th at 9:30am.

We are asking that each OEPA member contact the Corporation Commissioners in support of our application filed at the OCC to support President Trump’s efforts to curtail U.S. production of oil. We are NOT asking them to prohibit the sale of oil under conditions of waste. We are asking them to support the President by using allowables, pro-rationing, or other means available to them.

Please send a letter/email and/or call each commissioner asking for their support. Please send a receipt of your message to OEPA at oepa@okenergyproducers.org.

The 3 Commissioners are listed below with their contact information.

 

Sample text:
Dear Commissioner,

My company, my family and my employee’s families are hurting. We desperately need you to take action that is already set in your statute. We believe it is necessary to support our action filed to support President Trump’s efforts to curtail U.S. production of oil.

Sincerely,
-your name/company/city

 

Written comments should include Cause CD No. 202000984 and be copied and sent to: Court Clerk’s Office, Oklahoma Corporation Commission, P.O. Box 52000, Oklahoma City, Oklahoma, 73152-2000

Corporation Commissioners

Todd Hiett
Chairman
(405) 521-2264
ContactToddHiett@occ.ok.gov

Bob Anthony
Vice-Chairman
(405) 521-2261
Bob.Anthony@occ.ok.gov

Dana Murphy
Commissioner
(405) 521-2267
ContactDanaMurphy@occ.ok.gov

‌  ‌  ‌

State Producers Call For Oil To Stay In Ground As Prices Plummet Amid Pandemic

Dana Hertneky | News 9

Oil prices had their worst day ever Monday plunging into negative territory. Now some Oklahoma oil producers are asking the state Corporation Commission to step in. The Oklahoma Energy Producers Alliance (OEPA) is asking the Corporation Commission to mandate oil stays in the ground, something that hasn’t been done in decades.

Oil Storage, including at the largest facility in the world in Cushing Oklahoma is now reaching capacity. A decrease in demand because of the coronavirus and an increase in supply due to a fight between Russia and Saudi Arabia means producers Monday would have had to essentially pay someone to take their oil.

“When some country or countries have an expressed purpose of putting us out of business we need help,” explained Dewey Bartlett, with the OEPA.

So, the OEPA has filed a petition with the Corporation Commission asking them to hold a hearing to determine economic waste is occurring and limit production.

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OIL BELOW ZERO: U.S. crude prices plummet to negative $37 amid COVID-19 concerns

Daisy Creager | The Journal Record

Oil futures dropped below zero for the first time in history Monday as the coronavirus pandemic continues to weaken demand amid concerns U.S. storage is near capacity.

Not surprisingly, shares of several publicly held oil and gas producers in Oklahoma fell Monday. Shares of Devon Energy fell 0.65% to $9.16; Continental Resources shares fell 4.46% to $10.72; Chesapeake Energy shares fell 0.48% to $14.38; and SandRidge Energy stock fell 10% to $1.08 per share.

West Texas Intermediate, the benchmark grade for U.S. crude, fell $55.90 a barrel for May to negative $37.63 on the New York Mercantile Exchange, while June WTI fell $4.60 to $20.43 a barrel. July WTI fell $3.14 to $26.28 a barrel.

Analysts consider the June price of $20.43 a barrel to be closer to the “true” price of oil. Crude to be delivered next month, meanwhile, is running up against a stark problem: Traders are running out of places to keep it, with storage tanks close to full amid a collapse in demand as factories, automobiles and airplanes sit idled around the world.

Tanks at a key energy hub in Oklahoma could hit their limits within three weeks, according to Chris Midgley, head of analytics at S&P Global Platts. Because of that, traders are willing to pay others to take that oil for delivery in May off their hands, so long as they also take the burden of figuring out where to keep it.

“Almost by definition, crude oil has never fallen more than 100%, which is what happened today,” said Dave Ernsberger, global head of pricing and market insight at S&P Global Platts.

“I don’t think any of us can really believe what we saw today,” he said. “This kind of rewrites the economics of oil trading.”

Jake Dollarhide, chief executive officer of Tulsa-based Longbow Asset Management, said while the drop is certainly driven by recent COVID-19 market forces, it is possibly an artificial price drop driven by a technical problem or single bad trade, causing a “flash crash” that will recover quickly.

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Global oil production to witness 20 Mln Bpd drop due to OPEC

Scott Gibson | Stock News Press

The worldwide oil benchmark, Brent crude, wobbled on Monday, despite the historic oil production cut deal sealed by the Organisation of Petroleum Exporting Countries and its allies on Sunday.

This weekend’s OPEC+ deal to slash production by 9.7 million barrels a day amounts to the largest coordinated cut in history, but the decision doesn’t go into effect until May and is still dwarfed by the decline in oil consumption as the coronavirus pandemic keeps multiple countries in lockdown.

“This historic action will help almost 11 million American workers who are supported by the U.S. oil and gas industry”. “Even after the tentative reopening of economies, it is still going to be quite challenging for OPEC to match their supply to the actual demand for oil”. Oil prices ended up falling again on Tuesday, as did the value of Norway’s currency, after widespread criticism that the cuts already agreed aren’t big enough.

“The big Oil Deal with OPEC Plus is done”, Trump tweeted on Sunday.

“Providing our storage for these US companies will help alleviate some of the stress on the American energy industry and its incredible workforce”.

How significant is the USA involvment?

Will OPEC deal be respected? . The kingdom released May’s prices earlier this week, deepening the discounts to most markets, especially Asia, where the cut was greater than expected.

WASHINGTON-Oil-producing nations reached an agreement over the weekend to reduce output by a record amount, ending a weeks-long price war between Saudi Arabia and Russian Federation that devastated oil markets.

What exactly did the United States bring to the table?

Trump said Monday that the cuts may be deeper than the headline figure – with top producers considering slashing output by 20 million barrels a day under the deal.

“But Yergin said: “(Trump) came to see this as a national security issue, also an employment issue, and a very important factor in the USA economy … and he just jumped in”. The U.S. was conspicuous as a hold-out on global output curbs, instead leaving it up to individual companies to steer production decisions.

The next major focus for markets will be numbers from the U.S. Department of Energy on its strategic petroleum reserves (SPR). “I think it will serve the president well on every count”, including border issues, she said.

“If they lose that group of senators you start to see veto override majorities on legislation that deals negatively with the Saudis”, Sullivan told a small group of congressional reporters. In brokering this deal, he proved that the U.S. President can still convene powerful countries around a table to make a deal.

Could force production cuts work in the US?

America’s Energy Information Administration (EIA) forecasts that USA “crude oil production will average 11.8 million b/d in 2020, down 0.5 million b/d from 2019”. But this grand bargain won’t help oil producers as much as they would like.

According to Yergin, the national security implications of the price war on the US oil industry have prompted Trump to step in.

“We’re not suggesting that Oklahoma can balance the market, we can’t do that”, said Mike Cantrell, owner of Cantrell Investments LLC, an oil and gas investment group based in Oklahoma. But statewide, production has declined about 20% this year, the equivalent of about 100,000 barrels a day – a cut similar to Mexico’s. If sustained, “that would be a cut that would be a significant cut in the world scheme of things”, he said.

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Oklahoma judge to recommend regulators rule oil production ‘economic waste’

Liz Hampton | Reuters

An Oklahoma Judge will recommend the state’s oil and gas regulator approve an emergency order declaring oil production in the state could constitute economic waste, a spokesman for the state’s Corporation Commission (OCC) said on Friday.

The administrative law judge intends to write the recommendation in response to an application submitted by producer LPD Energy Company, the OCC said. If approved by regulators, the motion could allow companies to shut-in wells without losing leases that sometimes require drilling.

Oil prices have plunged some 60% since the start of the year and on Friday were trading under $19 a barrel – far below most companies’ cost of production. Oil producers in Texas and Oklahoma have urged state regulators to use their authority to help stabilize prices through production limits and other measures.

Oklahoma regulators could issue a ruling on LPD’s application as soon as next week, the OCC said.

Trade group Oklahoma Energy Producers Alliance also filed a separate application that asked regulators to set limits on oil production. The OCC will hear arguments on that application on May 11.

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