(Reuters) – North Dakota’s oil regulator on Tuesday said it would evaluate providing financial aid to producers to allow them to restart shut-in wells in the future, as oil output in the second-largest producing state fell by nearly a third.
U.S. oil prices were trading around $13.89 a barrel on Tuesday after falling into negative territory a day ago. The prices, below many producers’ cost of output, reflect a collapse in demand from coronavirus-related business restrictions and surplus of supply.
North Dakota has already seen roughly 5,000 wells shut-in, accounting for about 300,000 barrels per day (bpd) of production, regulators said on a call. They estimated 40,000 bpd to 60,000 bpd was shut-in over the last 24 hours as prices cratered.
President Donald Trump on Tuesday called on his administration to make funds available to the U.S. oil and gas industry.
In a virtual meeting, the North Dakota Industrial Commission evaluated financial measures that could be used to assist the ailing industry, including loans to help operators restart wells or a tax holiday for wells brought back online.
They also discussed paying operators to restart wells, which they estimated can cost $25,000 to $50,000 per well.
While the Commission pushed back on the idea of limiting output, it does plan to hold a hearing to consider whether production in the state could be considered economic waste.
“I think it a bridge too far at this point,” said Lynn Helms, director of the state’s Department of Mineral Resources, of output limits. Regulators expressed concern that such a move could hurt midstream companies that have invested heavily to build pipelines.
Like Texas and Oklahoma, North Dakota has the authority to prorate production, but has not done so since 1965.
On Tuesday, Texas energy regulators delayed a vote on a proposal by two large shale producers calling for a 20% production cut by larger producers under a policy that allows state cuts when the oil could be considered economic waste.
Oklahoma this week will consider an application to classify production in the state as economic waste, a move that would allow producers to shut-in wells.
North Dakota’s commissioners also discussed a proposal to use stimulus money to pay recently laid off oilfield service workers to plug the thousands of abandoned oils wells across the country.
(Reporting by Liz Hampton and Gary McWilliams; Editing by Will Dunham and Richard Pullin)