Perhaps he took a cue from Continental Resources founder Harold Hamm who used the same claim in ending oil production contracts in North Dakota. But Oklahoma Gov. Kevin Stitt is calling on U.S. President Donald Trump to declare the coronavirus pandemic an “act of God,” a step to help oil-producing states contend with a crude glut that caused futures prices to close below $0 last week for the first time.
“Over-production of oil continues to threaten the economy,” Governor J. Kevin Stitt said in a letter to Trump that Stitt posted on Twitter late on Saturday.
Declaring a “force majeure” or “act of God” would allow oil companies to halt operations without risking that land leases will be canceled for stopping production, Stitt said.
It’s the same claim made by Continental Energy Resources last week to end an oil production contract.
Oklahoma’s Corporation Commissioners said on Wednesday that producers could close money-losing wells without losing their leases, the first victory for struggling U.S. oil companies seeking relief from states after the market crash.
U.S. production reached a record-high of near 13 million barrels per day late last year, but the pandemic has cut global consumption by 20% to 30%, or up to 30 million bpd.
Source: Reuters