Here are 10 Things You Should Know About Oil and Gas Today:
Railroad Commissioner asks state officials to extend oil & gas tax deadlines – Where states like Wyoming and Louisiana are suspending severance tax obligations for an industry under attack, Texas officials only consider an extension of filing deadlines. It’s a half-measure to be sure, but a half-measure is better than no measure at all.
For decades in the tiny Texas panhandle town of Perryton, John Bozeman has bought oil and gas wells from companies and says he operated them for a lower cost and with better efficiency.
“And I produce the wells until they’re no longer capable of producing,” Bozeman said, “and then I plug them up.”
Recently, he’s been forced to plug some up even before they’ve produced all the oil they can. The far north Texas Panhandle is a world away from Saudi Arabia and Russia, yet the two leading oil-producing countries have been locked in an oil price dispute, leading the Saudis in March to ramp up oil production and export it into an oversupplied market — gutting oil producers in places like Perryton, population 8,802.
Meanwhile, almost no one wants to buy oil and gas these days. People have not been flying, commuting or traveling due to the novel coronavirus pandemic that has kept millions of people at home, and it has led small, independent oil producers like Bozeman to make difficult choices.
Exxon cuts $10 billion in capital spending, mostly in Permian Basin – When the nation’s largest oil company cuts out $10 billion in capital spending, mostly in Texas and New Mexico, it’s a big deal. Given that every dollar in oil and gas capital spending creates $3-4 in ancillary economic impact, the ripple effects will have a big impact on the economies of those states.
Pandemic is affecting flaring in Permian. But for better or worse? – Interesting piece from the Houston Chronicle’s excellent energy reporter, Sergio Chapa.
Producers say 2020 is year to produce more while spending less – If this is anything like “work smarter, not harder,” then color me skeptical.
Trump on oil production cuts: ‘Maybe we will’ – Excerpt: President Trump yesterday didn’t rule out asking U.S. oil and gas producers to throttle back production if it means the United States can reach a deal to resolve a price war between Russia and Saudi Arabia threatening to bankrupt some U.S. energy companies. Trump’s remarks came as reporters asked him about a Reuters report that major global oil producers would be likely to agree to cut production if the United States joins the effort. Trump said he hadn’t heard about the request for the United States to chip in, but he didn’t take it off the table. “Maybe we will, maybe we won’t,” he said. “We’ll have to make that decision.”
Concerns are mounting that the U.S. soon may not have enough oil storage to absorb a collapse in demand caused by the coronavirus that has started to ripple through the supply chain, with consequences for producers, pipelines, refiners and consumers.
Oil market experts do not expect international prices to move into negative territory, but they said an overflowing storage situation could shut down pipelines, shut in wells and destroy billions of dollars in value that would take years to recover.
At the heart of the problem is evaporating transportation fuel demand. People across the world are sheltering in place at the same time that Russia and Saudi Arabia have launched an oil price war and are increasing supply into an oversaturated market.
Court revives anti-fracking effort – Almost unbelievable stupidity continues apace in the midst of a global crisis. A pox on all these people’s houses. Or perhaps a virus.
In Montana, a father and son running a small oil business are cutting their salaries in half. In New Mexico, an oil truck driver who supports his family just went a week without pay. And in Alaska, lawmakers have had to dip into the state’s savings as oil revenue dries up.
The global economic crisis caused by the coronavirus pandemic has devastated the oil industry in the U.S., which pumps more crude than any other country. In the first quarter, the price of U.S. crude fell harder than at any point in history, plunging 66% to around $20 a barrel.
As oil prices suffer amid coronavirus outbreak, New Mexico offers relief to shut-in wells – Smart move here by New Mexico regulators – A move to allow wells on state-owned lands to be temporarily shut-in without incurring penalties.
NOTE: Not to be overly-critical of Texas policymakers, but they really need to start acting with some urgency to provide relief to Texas oil and gas producers. Texas, by far the leading producer of oil and gas in the U.S., should not be lagging so far behind these other states in taking proactive measures, especially as they relate to the state’s thousands of small producers. This is a true existential crisis for the most important industry in Texas, and it is time for everyone to start acting like it.
That’s all for today.