The Texas Railroad Commission spent most of Tuesday and well into the night hearing arguments for and against a request to adopt a mandated cut in oil production in the state. The decision was delayed and it’s not known at this time when the regulators might come to agreement on what to do.
As POLITICO reported, the commissioners became the center of a global debate on oil prices.
The unusual, all-day hearing by the Texas Railroad Commission was a sign of the deep financial pain that’s hit the U.S. oil industry. And it comes on the heels of the OPEC+ deal struck over the weekend to cut production by nearly 10 million barrels.
A decision on whether or not to impose quotas on the state’s drillers wasn’t made Tuesday. Instead, a discussion unfolded on how big an effect on global oil prices such a cut would have. Government-forced curtailments like the TRC could consider would mark a dramatic step for a U.S. oil sector traditionally opposed to intervention — an argument not lost on many oil company executives, who said market forces were already shutting in production.
But several small- and medium-sized operators contended the OPEC-Russia agreement still leaves the market with far too many barrels of oil, and they called on the commissioners to help reduce the pain on the industry supply chain.
“Nobody wants to give us capital because we have all destroyed capital and created economic waste,” said Pioneer Natural Resources CEO Scott Sheffield. He estimated shale drillers needed another 4 million to 6 million barrels per day in production declines.
His push for a state-ordered production had the support of Harold Hamm, founder of Oklahoma City’s Continental Resources Inc.