–Waives Fees, Relaxes Regulations To Support Companies And Boost Storage Capacity
By Brai Odion-Esene, SW4 Insight, for Mace News
WASHINGTON (MaceNews) – Texas’ oil regulator Tuesday decided against imposing limits on production by the state’s energy industry, but approved financial and regulatory relief to struggling oil companies.
The measures passed by the Texas Railroad Commission focused on measures with broad-based industry support, including waiving application fees, and relaxing rules to free up additional storage capacity in the face of excess oil supply.
Speaking for the majority, before the vote was 2 to 1 against limiting production, TRRC Chair Wayne Christian argued that “proration is not the magic bullet that will save the [oil] industry.”
“The price of oil is not going to stabilize until the pandemic is behind us, and the world is once again open for business,” he said. “This problem is 90 percent demand.”
Texas also controls just roughly five percent of the world’s oil supply, he noted, meaning a government-mandated cut in production would not have a significant impact on global oil output.
Another major factor behind Christian’s reluctance was the absence of an agreement with other oil-producing states – and other countries – to follow suit. He cited conversations with his counterparts across the country, as well as Canada’s oil-rich Alberta region, and his conclusion is “I don’t see how we can reach the 4 million [barrels per day] cuts necessary.”
Going it alone would condemn any motion passed by the TRRC to languish in limbo, plagued by regulatory uncertainty for the foreseeable future, Christian warned.
Instead, “by allowing the free market to work, producers can determine for themselves what level of production is economical,” he said, adding that providing regulatory relief based on industry recommendations is likely to be more effective in helping the industry weather the storm.
Geared primarily towards small oil companies, these steps include lowering fees, easing reporting requirements, deadline extensions for applications, and mechanisms to provide additional storage capacity.
Specifically, the TRRC voted to waive application fees and surcharges for oil and gas projects for the rest of 2020.
It also approved a one-year exemption to allow the storage of crude oil in non-salt underground formations. This allows oil companies to store crude in all formations possible, and once the one-year period is over, they have five years to move the oil back to a salt formation.
“The industry does a lot better job, and can live with the results, if they come up with the solutions rather than government telling the industry what to do,” Christian said.