North Dakota became the latest state to discuss the idea of issuing government-mandated production cuts following the recent oil price collapse amid the coronavirus pandemic and COVID Shutdown.
Regulators received a mix of views on the issue, with many stating they would prefer to leave the decision to the market and producers. Some, like Continental Resources, would like to continue to conversation of government intervention.
Industry’s ideological crossroads of whether to allow government intervention or not has been percolating since this past March. On one spectrum, Mike Sommers, president, API, immediately shuts down bail outs and government intervention. On the other hand, Parsley Energy CEO Matt Gallagher publicly discusses government intervention on CNBC.
Since then, the Texas Railroad Commission has had several meetings discussing the idea of government-mandated production cuts. So has Oklahoma.
During the public meeting in the Bakken on May 20, Blu Hulsey, Continental Resources, said that utilizing government-mandated production cuts will allow industry to be more “economic and proper”.
“When the industry as a whole creates patchwork reduction and does it on their own, individually without coordination, we become uneconomic as an industry,” Hulsey said.
The majority of the mineral owners who testified were opposed to the imposition of government-mandated production cuts because many oil leases contain provisions that allow for the termination of the contract if an oil well stops producing for an extended period of time.
The North Dakota Industrial Commission meets on May 29.
The Crude Life Podcast can be heard every Monday through Thursday with a Week in Review on Friday.
Spread the word. Support the industry. Share the energy.
