Oil producers and pipeline operators in Texas went on a standoff over oil shipments in the weekend, prompting Ryan Sitton, a commissioner of the state energy regulator, Texas Railroad Commission, to renew his call on mandated cuts to address the growing crude glut.
On Monday, executives from Pioneer Natural Resources and Parsley Energy wrote in a joint letter to the commission urging a large-scale production cuts. The group asked the commission to meet sooner instead of the planned meeting on April 21 and curb production as early as May.
The group suggests a uniform 20% output cut in the state, but leave the state’s smallest producers. Parsley CEO Matt Gallagher said that mandated cuts could avoid the collapse of the shale industry.
However, the mandated output cut idea has been opposed by several top producers in Texas.
Chevron CEO Michael Wirth said last week that the cut in export quotas on Texas producers could penalize the most efficient producers.
Karr Ingham, executive VP of the Texas Alliance of Energy Producers, which represents more than 3,300 small and midsize oil and gas companies, also opposed the idea as it could lead to less cash for the producers who are already hurting.
Meanwhile, the state’s two other regulators have not publicly endorsed cuts.
