Texas energy regulators Tuesday mentioned they wouldn’t follow oil production reductions, ending a month-long debate about whether they would wade into global oil politics for the first time in 50 years as crude prices crater to historic lows.
Global energy demand has tanked amid coronavirus-related travel and business restrictions and a glut of oil from shale. U.S. crude fell to minus $37 a barrel on April 20. Even with recent increases in futures to $24, local prices are nonetheless beneath the price of production for some oil firms.
The turmoil triggered State Railroad Commissioner Ryan Sitton in April to push the concept after Parsley Energy and Pioneer Natural Resources asked regulators to mandate 20% curtailments or 1 million barrels. Sitton promoted the bans on Twitter and TV and won audiences from OPEC Secretary-General Mohammad Barkindo and Russian Energy Minister Alexander Novak.
However, a motion to consider widespread production curbs, called proration, was dismissed on Tuesday by a 2-1 vote.
Other states and countries haven’t acted to cut additional production, which would have Texas “on our own with this,” Commission Chair Wayne Christian stated.
Many firms, along with ng Chevron, Exxon Mobil and Occidental Petroleum Corp, have taken steps to cut millions of barrels per day (BPD) of shale output, ahead of any state action.
Texas is the biggest U.S. oil-producing state, producing about 5.4 million BPD of crude. In 2019, its output climbed by 600,000 BPD, to nearly 41% of the nation’s total.