As the novel coronavirus continues to spread, and market conditions continue to deteriorate, we are helping our clients navigate the potential consequences to energy markets and attendant legal risks. We recently noted that the Texas Railroad Commission, or RRC, made public comments with respect to potential proration of oil production in Texas, which is within the RRC’s jurisdiction and authority to do.
On March 30, Pioneer Natural Resources USA Inc. and Parsley Energy Inc. jointly filed a motion with the RRC requesting a market demand hearing and market demand order effective for May 2020 production.
The motion requested that the RRC conduct a hearing (1) to determine whether waste of oil and gas is taking place in Texas or is reasonably imminent and, if so, to adopt an order to prevent waste, and (2) to inquire as to the reasonable market demand for oil pursuant to Section 85.058 of the Texas Natural Resources Code, and to issue any order, effective for May 2020 production, as the RRC may deem appropriate in response to its findings.
The RRC held an open meeting via teleconference on April 14 to consider the motion. Some key points from that meeting, along with potential next steps for the RRC in the consideration of the motion, are discussed here.
