Texas oil drillers prepare to halt production
Texas oil companies may soon cut back production, both because of a looming lack of available storage space and because wells are becoming uneconomical at $20 per barrel WTI.
Many regional grades are trading lower than that--approaching negative territory.
“Large-scale production interruptions appear inevitable and imminent,” according to Pioneer Natural Resources and Parsley Energy executives, who wrote to the Texas Railroad Commission asking the industry body to order a production cut, Reuters reports.
One commissioner, Ryan Sitton, already suggested cuts, possibly in partnership with OPEC, earlier this month, before the crisis really hit.
Now, the cuts, with or without OPEC, seem inevitable, and the industry is eager to start cutting, calling on the regulator to effect the cuts beginning in May.
Meanwhile, pipeline operators in Texas are asking producers to stop pumping oil because storage space is filling up.
The storage problem is becoming critical on a global scale. According to the chief analyst of data analytics firm Kayrros, if storage continues to fill up, oil prices could fall close to zero.
This zero space available could happen in months, if not weeks.