[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.
RELATED:
Texas Energy Regulator Drops Plan for Oil Production Cuts
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.
Recommended Reading
Enbridge Advances Expansion of Permian’s Gray Oak Pipeline
2024-02-13 - In its fourth-quarter earnings call, Enbridge also said the Mainline pipeline system tolling agreement is awaiting regulatory approval from a Canadian regulatory agency.
Moda Midstream II Receives Financial Commitment for Next Round of Development
2024-03-20 - Kingwood, Texas-based Moda Midstream II announced on March 20 that it received an equity commitment from EnCap Flatrock Midstream.
Bobby Tudor on Capital Access and Oil, Gas Participation in the Energy Transition
2024-04-05 - Bobby Tudor, the founder and CEO of Artemis Energy Partners, says while public companies are generating cash, private equity firms in the upstream business are facing more difficulties raising new funds, in this Hart Energy Exclusive interview.
JMR Services, A-Plus P&A to Merge Companies
2024-03-05 - The combined organization will operate under JMR Services and aims to become the largest pure-play plug and abandonment company in the nation.
Chesapeake Slashing Drilling Activity, Output Amid Low NatGas Prices
2024-02-20 - With natural gas markets still oversupplied and commodity prices low, gas producer Chesapeake Energy plans to start cutting rigs and frac crews in March.