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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