Any argument that the Texas Railroad Commission (RRC) should not even consider proration is simply misinformed.

That’s what RRC commissioner Ryan Sitton believes, according to a statement posted on the RRC’s website prior to the group’s virtual hearing concerning proration, which is scheduled to take place on Tuesday.

“The fact is we are charged with this duty in Texas’ state laws,” Sitton said in the statement published Monday.

“Some say that this duty doesn’t make sense, that the Railroad Commission should never do this, and just let the market play out. That is a point worth considering, but not on Tuesday,” he added.

“If someone believes that this statutory framework is wrong, then they should take that up with the Texas legislature, and amend our state laws,” Sitton continued.

In the statement, Sitton said he has not advocated for Texas to prorate, but rather “that we consider it”.

“I still have many reservations, and I will be examining heavily if and how proration could be done,” he said.

On March 30, Pioneer Natural Resources U.S.A., Inc. and Parsley Energy, Inc. filed a motion requesting a market demand hearing and market demand order effective for May 2020 production. A virtual hearing is now set to take place today at 9.30am CDT. If the commission finds at the hearing that oil production “waste” is taking place or is reasonably imminent, it will adopt an order to correct, prevent, or lessen the waste.

What to Consider

In Monday’s statement, Sitton outlined that three questions should be weighed at the hearing; is waste occurring? If so, is that waste due to production in excess of market demand? If so, can that waste be effectively reduced by the RRC systematically prorating Texas production?

“As I consider the testimony, I will be working to find the answers to these three questions. If the answer to any of these is ‘no’, then I will vote against proration. If the answers are all ‘yes’, then I may vote for it,” he stated.

“I look forward to the testimony from all those who have come forth willing to provide insight on these issues, and I look forward to discussing this issue with my fellow commissioners,” he added.

Several comments have already been received by the RRC concerning the hearing. While some support the idea of proration, others do not.

Sitton, who was elected to the RRC in 2014, is one of three commissioners at the organization. Christi Craddick and Wayne Christian are the other two commissioners.

To contact the author, email andreas.exarheas@rigzone.com