SHOULD TEXAS PRORATE OIL

TEXAS SHOULD NOT PRORATE OIL, BUT MAYBE U.S. OIL STATES SHOULD?

As you also know, proration has a long history in many States to manage waste and product costs.  It may be time to implement a nationwide system in order to stabilize the industry.

I am not interested in Texas working with other governments to alter supply.  I am very much interested in examining the possibility of forming an Interstate Proration Board, as detailed below.  Such a system could:

1)   gain the US a seat at the table with OPEC and Russia

2)   smooth pricing variability and all positive factors that attend thereto

3)   increase EUR worldwide

4)   build international relationships that could be leveraged for international good and to promote US interests

5)   utilize existing reporting establishments and procedures

6)   address internationally the absolute need to limit methane escape

For example, we have a system in Texas that could easily be expanded to the appropriate handful of prolific States.  Texas, New Mexico, North Dakota, Oklahoma, Colorado, and Alaska would cover all 70% of US crude.  Federal offshore would get it up to 85%.  This may be a Federal effort, but we have the opportunity to get Rick Perry (or whoever has the drive) to get this done.  Or maybe it is an agreement between the States.  I bet a 15" exploratory call with regulatory contemporaries in those States would tell you if it might work.  All these States have the people in place to do this.  There should be very little if any increase in costs.

RRC Chairman Wayne Christian said a few days ago “"From a practical standpoint, the Railroad Commission has not prorated oil in over forty years; we do not have staff at the agency with experience in this process and our IT capabilities to handle this process are limited at best.”

Not does not sound much like a can do attitude.

Some preliminary fooling with the numbers suggests that restricting US production by 10% could increase prices by more than 15%.  In what world would we not take action to increase revenue?   Whether a person is pro or anti oil, production cuts should work for you.  And if cuts do not work, or the situation changes, this Board goes back to 100%, disbands, or whatever is in the best interest of the public.

This is what good government is about regardless of party affiliation.