More than 20,000 people from 86 countries and 49 states watched Tuesday’s proration hearing conducted by Railroad Commission of Texas. Fifty-five people testified during the 10-hour hearing on the contentious proposal to limit production and address falling crude oil prices amid global oversupply, increasing financial losses and the demand-killing coronavirus.
One of the biggest Texas shale producers, Midland’s Diamondback Energy, said it will halt all drilling if the state imposes production caps. One reporter said the testimony “stunned” observers of the hearing. Diamondback CFO Kaes Van’t Hof said the company already is starting to end 30 percent of its drilling and will stop all drilling if the state limits production. “If we are forced to prorate, we are going to cease all activity right away,” he said. “We’d let all of our service providers go through the period of proration. That turns that industry, the service industry, on to the same issues that the restaurant industry is facing today where they’re completely shut down with zero revenue and zero employment.” He said it “directly impacts the employment of almost 3,000 people.”
The hearing opened with support for proration by CEOs Scott Sheffield of Pioneer Natural Resources and Matt Gallagher of Parsley Energy (a former employee of Sheffield’s) to prevent deep, long-lasting damage to the industry and the economy. Speakers against included CEOs Jim Teague of Enterprise Products Partners and Lee Tillman of Marathon. “The best solution to our current crisis,” Tillman said, “is to get the world healthy and back to work while not abandoning the free market principles that have created U.S. energy independence.”
Other speakers included Don Sparks of Midland’s Discovery Operating, Cyrus Reed of Sierra Club, James Mann of Texas Pipeline Association, Ed Longanecker of Texas Independent Producers and Royalty Owners Association, Todd Staples of Texas Oil and Gas Association, Doug Suttles of Ovintiv, Mark Houser of University Lands, and Karr Ingham of Texas Alliance of Energy Producers.
The commission – chairman Wayne Christian and commissioners Christi Craddick and Ryan Sitton – wasn’t scheduled to vote at Tuesday’s hearing. Next scheduled meeting is April 21 after the March 31 meeting was cancelled. Oklahoma regulators reportedly are scheduled to conduct a similar hearing May 11.
Those who think the RRC should regulate production would be most likely to vote for Bernie Sanders!! That’s the worst that could happen. Diamondback is exactly correct in saying they’d stop all drilling as will all the drillers that have any left. Everything government gets involved in goes to shit very quick! Government is no good at running business and will tear down everything we’ve been working so hard to build. We could have been close to energy independent 40 years ago in the 80’s had it not been for government handling (or mishandling) issues with the Saudis which is what caused that crash and the failure of countless companies and jobs. STAY OUT OF OUR BUSINESS!!
This is worse than the oil bust of 1986 because the banks are using COVID19 pandemic lockdown
conditions and small business stimulus money withholding of loans to leverage buyouts of businesses
and employees homes for pennies on the dollar evaluation. This is being mishandled on purpose
to spite president Trump and cripple the USA permanently. Not only will the oil and gas businesses shut down and have to liquidate equipment, housing for former employees will be foreclosed on and evictions
rampant……Next comes FAMINE in the USA…the ‘land of plenty’.
ol’ Lawrence in Reeves county, Texas