Texas, Oklahoma mulling state cuts to oil, gas production
Texas and Oklahoma are both looking at cutting production of crude oil and natural gas because of low prices tied to the coronavirus pandemic and the oil price rout.
On Tuesday, the Texas Railroad Commission held a 10-hour video hearing with 55 witnesses including energy companies and trade groups on a possible 20% cut in production within the state, Kallanish Energy reports.
No decision was reached by the three-member commission that oversees oil and natural gas operations in the state.
There has been no indication on when a decision might be reached.
It is an issue that finds some energy companies supporting the mandatory Opec-style cuts and others totally opposed.
The lengthy Texas debate came only days after Opec+ finalized a deal to reduce oil production by 9.7 million barrels per day.
Officials said the Texas virtual hearing was viewed by more than 20,000 people from 49 states and 86 countries.
Cutting Texas production was officially requested by two companies: Parsley Energy and Pioneer Natural Resources, both active drillers in the Permian Basin of West Texas and New Mexico.
They said temporary supply cuts would protect oil and gas companies from a major crash.
Continental Resources founder Harold Hamm supported the cuts in a letter, while ExxonMobil was opposed to the move, as were Marathon Oil and Ovintiv (formerly Encana).
One company, Houston-based Diamondback Energy, told the commission that it would cease all drilling activity immediately if forced to cut production, and that would impact nearly 3,000 workers, the Texas Tribune reported. The company has already cut 2020 drilling by 30%, it said.
Opponents including Enterprise Products Partners co-CEO Jim Teague and Marathon Oil’s Lee Tillman both suggested that such cuts were being supported by some selfish energy companies as a way to void contractual obligations.