[Editor’s note: This interview was recorded prior to the Texas Railroad Commission withdrawing its proposal on mandating prorations.]
Jim Krane, Wallace S. Wilson fellow for energy studies at the Baker Institute for public policy at Rice University, believes there is reason for U.S. producers to cut, saying it may help the country’s reputation the next time a price war comes around.
“There are a lot of folks that think there is no sense in Texas producers and U.S. producers actually joining OPEC in those cuts. There is dubious legality there. There is the Sherman Anti-Trust Act, etc.,” Krane told Hart Energy’s Jessica Morales. “I would argue that actually there is reason for U.S. producers to consider cutting or some type of action. It would at least make them look like a responsible oil producer while the other OPEC and other OPEC+ countries are sacrificing and are cutting production.”
The Texas Railroad Commission was set to vote on May 5 to decide on mandating oil production cuts in the state. However, on May 4, Texas energy regulator Ryan Sitton abandoned the proposal citing a lack of leadership between the three railroad commissioners.
Krane foresees OPEC having an issue with U.S. shale producers relying on the organization cutting production to prop up oil prices, and believes the U.S. needs to find a way to try and cooperate with OPEC. However, he doesn’t see a great solution for this.
“Saudi Arabia and Russia have held their production flat since 2016, U.S. shale has gone up by about 4.5 million barrels a day. That business model I think, is unsustainable over the long term and that OPEC is not going to sit back and allow shale to steal market share, at least from their perspective, forever,” he said.
Saudi Aramco CEO Amin Nasser says his company is looking to acquire natural gas assets in the U.S. and is willing to spend "billions of dollars" there as it aims to become a global gas player.
Activist investor Elliott Management offered to buy oil and gas producer QEP Resources in an all-cash deal valued at $2.07 billion, saying that the company is "deeply undervalued."
Private equity firm KKR & Co. Inc. said in December that it and Alberta Investment Management Corp. would jointly buy the 65% Coastal GasLink stake from TC Energy.