(Reuters) - North Dakota regulators plan on May 20 to consider whether oil production at low prices represents a waste of resources, according to a notice published by the North Dakota Industrial Commission.
Deciding that oil output at certain prices is economic waste could allow regulators and operators to take drastic actions to help stabilize oil prices, including mandating production cuts or allowing operators to shut wells without losing valuable leases.
Regulators in North Dakota, the second-largest oil-producing state, last week said they thought production cuts would be “a bridge too far” at this point.
The hearing comes as U.S. oil prices have collapsed to under $13 a barrel from $61 a barrel earlier this year as the coronavirus pandemic crushes demand and oil floods global markets. Thousands of wells across North Dakota have been shut since oil prices began a free-fall in early March.
Two other oil-producing states, Oklahoma and Texas, have held or plan to hold similar hearings to weigh regulatory action to address prices that have pushed smaller producers to the brink.
Oklahoma’s regulators last week approved an emergency order calling some output in the state “economic waste” and will hold a hearing in mid-May on whether it should implement output limits.
Texas next week will vote on a motion submitted by one regulator seeking to curb output in the state by 20% until oil demand recovers.
Reporting by Liz Hampton; Editing by Cynthia Osterman