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.