Are the policies imposed on oil and gas by producing states in the U.S. impacting the industry?

[JoMack + 549]

Since the creation of this Green New Deal by AOC, States with oil and gas production seem to be making policies to undermine their own cash cow, oil and gas.  An article here discusses OPEC deciding to overproduce to kill shale production, but hasn't that been tried.  It hurt OPEC and non-OPEC countries before it  destroyed the shale production.  However, new regulations by the Governor of New Mexico, for example,  turned the oil and gas rules and the companies who violate any rules in the Oil and Gas Act from the courts, where the industry could argue the merits of the violation, over to the OCD(Oil Conservation Division) without recourse.

 Fines for violations are progressive and penalties are assessed at $2,500 a day up to $250,000.  Royalties paid to the state will go from 18.78% to 25.0%.  So, the producer receives 75% of the revenue back from the wells drilled and producing.  An average horizontal well at 8,000' is approximately $9 to $11million dollars.  Violators can have their permits revoked so the producing wells must be plugged and best of all if a violation cannot be satisfied for whatever reason, it is a 3rd degree felony and will result in jail time.

So, is this what will actually kill the oil and gas industry?  Unfortunately, as the Democrats embrace the love of renewables and hate for fossil fuels, will this actually result in  the demise of the industry.  As an example listed here on New Mexico, there is a strong reason to believe this might.  The state runs its education system on revenue from oil and gas.  It has a $2Billion surplus.  The state was run by Republicans.  Now, as more and more people who are Hispanic arrive in the State, they vote Democratic.  Is this the common denominator.  Does OPEC matter anymore? I think not.

[Jan van Eck + 7,558]

If the drillers' Permit is revoked administratively, without recourse, then the investors are out their $11 million dollar deal. Who wants to place risk capital under those circumstances?  Nobody. 

The producers in New Mexico should get together and decide to shut in operations for six months to let the legislature know that their new ideas about violation penalties is not reasonable.  Once the cash flow to the State shuts down, just watch how fast they change their tune. The problem, no surprise, is that independent drillers are notoriously stubborn and will never do it.  And the Majors are too risk-shy as to having to deal with lawyers from the State to attempt a cartel  (the threat comes from the Sherman Anti-Trust Act).  

[JoMack + 549]

6 hours ago, Jan van Eck said:

If the drillers' Permit is revoked administratively, without recourse, then the investors are out their $11 million dollar deal. Who wants to place risk capital under those circumstances?  Nobody. 

The producers in New Mexico should get together and decide to shut in operations for six months to let the legislature know that their new ideas about violation penalties is not reasonable.  Once the cash flow to the State shuts down, just watch how fast they change their tune. The problem, no surprise, is that independent drillers are notoriously stubborn and will never do it.  And the Majors are too risk-shy as to having to deal with lawyers from the State to attempt a cartel  (the threat comes from the Sherman Anti-Trust Act).  

There are too many operators in New Mexico who you would get to join in a cooperative measure to shut-in the wells they produce.  In New Mexico 2/3rds of the minerals are owned by the federal gov't.  You cannot shut-in wells longer than 3 months or they'll call it abandoned.  They're now discussing NM regs.  with the API and , AAPL, APG, etc. that are the main organizations that many states have and companies and their employees join and engage with to fight but in NM where regulation enforcement is  held by one government state agency and no recourse is impossible to deal with.  When other states start imposing such onerous rules that an industry must adhere to, OPEC won't need to increase production to crush US oil production, regulations such as the ones now beginning in NM  will do the trick.

[Justin Hicks + 162]

9 hours ago, Jan van Eck said:

If the drillers' Permit is revoked administratively, without recourse, then the investors are out their $11 million dollar deal. Who wants to place risk capital under those circumstances?  Nobody. 

The producers in New Mexico should get together and decide to shut in operations for six months to let the legislature know that their new ideas about violation penalties is not reasonable.  Once the cash flow to the State shuts down, just watch how fast they change their tune. The problem, no surprise, is that independent drillers are notoriously stubborn and will never do it.  And the Majors are too risk-shy as to having to deal with lawyers from the State to attempt a cartel  (the threat comes from the Sherman Anti-Trust Act).  

Operations will never be shut in to that degree. Got to remember almost everyone in New Mexico is playing on someone else's money. Shut it in to prove a point( which won't happen without a board decision) and the cash flows elsewhere.