Oklahoma will let struggling oil producers halt output without breaking contracts

[turbinetree]

Source: Reuters

BUSINESS NEWS APRIL 22, 2020 / 11:08 AM / UPDATED 14 MINUTES AGO

(Reuters) - Oklahoma’s energy regulator on Wednesday ruled in favor of an oil company’s emergency application to classify unprofitable production as economic waste, enabling producers to maintain leases when output is halted due to low prices.

The decision represents the first win by oil groups seeking regulatory relief to oil and gas prices that have tumbled to levels not seen in decades. New Mexico on Tuesday agreed to allow producers to apply to shut in oil wells on state lands for at least 30 days.

Crude supplies have overwhelmed global demand, which has fallen more than 30% due to the coronavirus outbreak that limited business openings and travel. This week, U.S. crude futures traded negative for the first time in history, and on Wednesday were around $14.60 a barrel.

In Cushing, Oklahoma, the largest U.S. oil storage depot with room for about 76 million barrels, traders this week said 100% of capacity was contracted, leaving U.S. producers with few choices to sock away new production.

Read more: https://www.reuters.com/article/us-oil-usa-oklahoma-cuts/oklahoma-regulators-approve-application-classifying-oil-output-as-economic-waste-idUSKCN2242DR?il=0

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So food for thought is the legislature going to help the farmers and home owners and renters in the state...........or all they on there own........

[Newest Reality]

1. Priorties!

They are taking care of whom and what are the priorities.

I guess that answers the question and YAOYO. However, taxes will still be due. Call them dues.

[Igel]

2. Don't know.

If you lease land from the state as an oil producer, then this says you can shut down and not be in violation of the contract.

If you leased land from the state as a farmer or homeowner or renter and are expected to return money to the state in exchange--non-production is a violation of the terms of the contract. All this does is say that considering the exceptional circumstances holding just now if you need to shut down it won't be considered a violation of those terms.

That agency has no say over most farmers or homeowners or renters.

What the legislature does is what the legislature does.

[ProfessorGAC]

3. Well, Duh!

There's no place to put it. Of course they're shutting down production.
I doubt the production quotas in the contract permit force majeure.
Clearly that applies if storage is full for reasons they can't control!