As the novel coronavirus (COVID-19) 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. In an energy update released March 24, 2020, we noted that the Texas Railroad Commission (RRC) had made public comments with respect to potential proration of oil production in Texas, and we provided a high-level analysis of RRC’s jurisdiction and authority to do so.
Since that update, on March 30, Pioneer Natural Resources U.S.A., Inc. (Pioneer) and Parsley Energy Inc. (Parsley Energy) jointly filed a Motion Requesting a Market Demand Hearing and Market Demand Order Effective for May 2020 Production with the RRC (the Motion), which requested that the RRC conduct a hearing (a) 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 (b) 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. A copy of the Motion can be found here.
The RRC held an open meeting via teleconference on April 14 to consider the Motion (the Meeting). Some key points from that Meeting, along with potential next steps for the RRC in the consideration of the Motion, are briefly summarized below.
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