Here are 10 things you should know about oil and gas today:

The big story – Momentum behind a move by the Texas Railroad Commission that seemed to exist a few days ago has waned as the week has progressed. Four stories out today tell us why:

Exxon Mobil opposes Texas production cuts: letter – No surprise here, as fully integrated companies have little incentive to favor artificial controls over production levels.

TXOGA’s Staples responds to Pioneer CEO – Again, no surprise here, as TXOGA weighs in against the Railroad Commission imposing artificial limits on oil well production. This is a position TXOGA has consistently held for decades, and is a major reason why the RRC has not attempted to exercise this authority since 1973.

U.S. oil firms likely to ‘organically’ cut four million barrels per day: regulator – Railroad Commissioner Ryan Sitton signals that his initial enthusiasm for the RRC moving to limit Texas oil production is waning, and that organic cuts to come due to market conditions will be very significant.

…All of which led me to write this piece at Forbes.com:

Russia’s Skepticism Over U.S. Oil Production Cuts Is Well-GroundedExcerpt:

The problem is, as I pointed out over the weekend, is that, absent quick and certain action by regulators in Texas and other states or an emergency declaration by the Trump Administration designed to shut down production in the Gulf of Mexico and on federal lands, any U.S. contribution to a global supply reduction deal must by law be market-based, and thus, temporary. Unlike Russia, Saudi Arabia and many of the OPEC nations, the U.S. oil industry consists of thousands of companies competing in a free market, and the national government cannot cause production to rise or fall on a whim. The situation is further complicated by the fact that any such move by the federal or state governments would be politically controversial and opposed by certain segments of the U.S. industry itself.

There is little doubt that, should current market dynamics persist into the third and fourth quarters of this year, overall U.S. crude production will drop dramatically, with Citigroup, Inc. projecting it to be down by over 1 million barrels per day by October. Frankly, that seems to be a conservative estimate.

In other news….

TCEQ approves state permit for controversial LNG project – Not sure why this project is deemed “controversial”, other than the fact that it has been opposed by some anti-oil and gas activist groups. This was a good move by the TCEQ.

America must take steps now to sustain its energy dominance – Good op/ed piece here by Bernard Weinstein.

US crude oil stocks rise by 15 mn bbl in week to Fri, output slipsExcerpt: In the week to Friday, petrol inventory increased by 10.5 mln bbl to 257.3 mln bbl and distillate stocks rose 500,000 bbl to 122.7 mln bbl. Inventory of crude oil and petroleum products, including strategic reserves, surged by 33 mln bbl to 1.955 bln bbl. Refinery utilisation slipped to 75.6% from 82.3% in the previous week as refiners cut processing of crude oil amid plunging prices due to the coronavirus crisis.

House Republicans threaten pushback on Saudi Arabia amid oil market slumpExcerpt:

A number of House Republicans are warning Saudi Arabia to ease oil production as a trade war between the kingdom and Russia has flooded markets and depressed oil prices.

Lawmakers, led by House Minority Whip Steve Scalise (R-La.), said they were concerned “with the Kingdom’s actions to artificially distort global crude oil markets as countries around the world struggle to address a growing economic and health crisis fueled by the COVID-19 novel coronavirus pandemic.”

The letter to Crown Prince Mohammed bin Salman comes as the Organization of the Petroleum Exporting Countries (OPEC) prepares to meet Thursday to discuss production levels.

Oil companies warn of ‘massive’ bankruptciesExcerpt:

Nearly 40% of oil and natural gas producers from seven key energy-producing states said they would face insolvency in the next year if crude prices were to stay at $30 per barrel, according to a survey of companies released this week by the Federal Reserve Bank of Kansas City. The Kansas City Fed — whose district covers seven states including Colorado, Oklahoma, Wyoming and northern New Mexico — said energy activity in the region declined at “a steep pace” in the first quarter of 2020 and that expectations for future activity dropped further. The bank’s survey of firms ran March 16-31. Sixty-four percent of respondents said they expected to stay solvent if the national crude benchmark price — West Texas Intermediate — were at $40 per barrel, according to the survey. 

Boulder City Council extends seven-year oil, gas drilling moratorium – The People’s Republic of Boulder extends a stupid, counterproductive policy, because of course it did. No surprise here.

That’s all for today.

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