Reuters – Continental Resources, one of the largest U.S. shale oil producers, on Wednesday urged North Dakota energy regulators to intervene in the oil market through steps such as limiting output or restricting flaring of unwanted natural gas.
Continental, the state’s largest producer, argued at a hearing that operators are hurting even though state production has fallen more than half a million barrels per day (bpd) since prices crashed in March.
U.S. oil prices have plunged to around $32 a barrel, about half the level of January. The price collapse has prompted producers to urge regulatory action from states to help the ailing industry.\
FILE PHOTO: Birds fly over storage tanks on a Continental Resources oil production site near Williston, North Dakota January 23, 2015. REUTERS/Andrew Cullen
“North Dakota can be a leader as far as action is concerned,” said Blu Hulsey, a Continental vice president, who added the state does not need “to take large action to make a difference.”
Production has exceeded “reasonable market demand,” he said.
However, Dean Foreman, chief economist for trade group American Petroleum Institute, asked regulators to resist the urge to intervene.
The North Dakota Petroleum Council also opposed regulatory measures.
“When there is one action by the government, there are three or four unanticipated actions,” said President Ron Ness.
North Dakota is the third U.S. state to evaluate helping the oil industry. Crude oil production in the state has fallen by 510,000 bpd since prices crashed, according to the latest state report.
Texas earlier this month dismissed a motion to implement output limits, while Oklahoma approved an emergency order in April calling some oil production in the state waste, a move that allows some producers to shut wells without losing leases.
Oklahoma is considering two separate applications for intervention to stabilize markets.
In April, North Dakota weighed financial help for the state’s oil industry, including paying operators to restart wells. Commissioners at the time pushed back on limiting production, calling it “a bridge too far.”
