Here are 10 Things You Should Know About Oil and Gas Today:
The Big Story
After a 10-hour-long hearing during which over people offered verbal testimony, the Texas Railroad Commission on Tuesdayleft pending the decision on whether or not to attempt to restrict Texas oil production via its prorationing authority.
RRC hears views on prorationing – Good summary of the hearing from the Midland Reporter Telegram.
After taking more than 10 hours of verbal testimony from more than 50 witnesses at Tuesday’s hearing, the three members of the Texas Railroad Commission tabled any decision on whether to move to limit oil production from Texas wells through its power of prorationing. During the course of the hearing, Commissioner Christi Craddick hit on the fundamental impediment that will likely prevent the RRC from any quick implementation of limits: There is no institutional memory on how to do it.
“We don’t know how to do it at the agency anymore,” Craddick said to one witness who was around during the last time the RRC enforced prorationing back in 1972. “Do we start on Jan. 1? Where do we start? How do we start?”
Exactly. As much as many struggling independent producers would like to think the Commissioners possess some magic bullet power that would boost prices and help them survive the most severe oil industry downturn in modern times, reality tells a different story. No one working at the RRC today was there in 1972, and even if they were, the industry the Commission regulates has fundamentally reinvented itself at least half a dozen times since then. The Commissioners and their current staff can read all the history books on the market about the golden age of prorationing, but that wouldn’t be much help to them in implementing new production limits soon.
Pioneer Natural Resources Co. President and CEO Scott Sheffield, one of the loudest proponents of proration, said the commission was within its bounds to enact mandatory restrictions due to the “waste” created by reckless producers.
“As I understand, under the law, waste occurs when oil production is in excess of reasonable market demand. Waste is occurring today and is expected to continue, and the Railroad Commission of Texas is obligated by law to lessen the waste,” he said. Sheffield said the waste created by the industry had led to billions of dollars in wasted capital, both internal and money from lenders.
Opponents of Texas oil output cuts say they’ll be used to void contracts – Excerpt: Without naming specific companies or executives, Enterprise Products Partners Co-CEO Jim Teague suggested at a state hearing Tuesday that advocates of mandatory output cuts may be just asking for a government order that will allow them to negate contracts. Marathon Oil Corp.’s Lee Tillman voiced similar concerns.
U.S. Oil Well Shut-Ins Forecast to Gig Natural Gas Prices – Good analysis here from NGI.
Gulf Of Mexico Oil Operators Seek Federal Royalty Relief With Louisiana’s Support – Texas operators aren’t the only industry segment seeking relief from regulators.
Virginia Passes New Law Aimed at Stopping Atlantic Coast Pipeline – In the best of times or the worst of time, the forces of anti-development never ease up.
Prime Minister Justin Trudeau says more information on a financial aid package for the struggling oil and gas sector is coming, although a firm timeline still has yet to be released.
Earlier this month, Trudeau said his government was looking for a way to help. That promise came nine days after Finance Minister Bill Morneau said an aid package for the oil sector was “hours, potentially days” away.
US confident of ‘fundamental shift’ in oil politics – Excerpt: The US energy secretary says Washington’s success in pushing Russia and Saudi Arabia to end their oil price war marks a “fundamental shift” in global oil politics, which has been made possible by its own self-sufficiency. Dan Brouillette told the Financial Times in an interview that the shale energy revolution had “dramatically” elevated the US’s negotiating power compared to its position in dealing with previous global crises. “That doesn’t make us . . . an 800-pound gorilla but it does fundamentally change the politics,” he said. “When we were wholly dependent upon oil being imported into the country, we could not have brought these two major oil producers to the table to resolve their dispute.”
That’s all for today.