[bratticus]

This thread is my scrapbook for evidence that the Texas Railroad Commission had OPEC-like powers within the US prior to OPEC.

It also aims to determine the start date for those powers. The end date is effectively 1971 when US oil production peaked making TRRC "allowable oil production" obsoleted by "nature-imposed allowable oil production."

$this->bbcode_second_pass_quote('', '[')b]An Echo from a Prior Peak

Reuters(?)
May 10, 2005

Up until 1974, the US was the world’s largest oil producer and the Texas Railroad Commission (TRC) was its OPEC.

The Texas Railroad Commission had a mandate from the government to match oil supply to demand (while maintaining a security reserve for times of crisis) by regulating Texas oil wells to a percentage of their capacity. Texas oil production so dominated the industry that this worked to manage oil prices—TRC was the predecessor of OPEC, in other words.

As Ken Deffeyes (Princeton geology professor and formerly a geologist with Shell who had worked with Hubbert) writes in his book, Hubbert’s Peak:$this->bbcode_second_pass_quote('', ' ') Hubbert’s prediction was fully confirmed in the spring of 1971. The announcement was made publicly, but it was almost an encoded message. The San Francisco Chronicle contained this one-sentence item: “The Texas Railroad Commission announced a 100 percent allowable [i.e., produce full out] for next month.” I went home and said, “Old Hubbert was right.”

With Texas, and every other state, producing at full capacity from 1971 onward, the United States had no way to increase production in an emergency. During the first Middle East oil crisis in 1967, it was possible to open up the valves in Ward and Winkler Counties in west Texas and partially make up for lost imports. Since 1971, we have been dependent on OPEC.

[bratticus]

Seems TRCC was awarded in 1928

$this->bbcode_second_pass_quote('', '[')b]Wildcatters
By Roger M. Olien, Diana Davids Hinton

... skip to page 48 - 49 ...

In contrast to the Yates field, the Hendrick field included scores of five- and ten-acre tracts, easily afforded by small independents. Though major companies acquired substantial Hendrick field acreage, they were far outnumbered by independents. As these small fry hastened to cash in on the Hendrick bonanza, production quickly surpassed the capacity of the pipelines. In December 1927, when Hendrick production reached a daily average of 50,000 barrels, the South Crude Oil Purchasing Company, then second to Humble as a Permian Basin crude oil purchaser, announced that it would buy oil not already under contract. This step should have slowed the pace of Hendrick development. It did not do so, primarily because independents with small Hendrick tracts continued to drill offset wells to keep owners of adjoining leases from producing their oil. Tow prolific wells on adjoining tracts owned by the independent partnerships of Cranfill and Reynolds and Collett-O'Keefe, for example, prompted nearby leaseholders to drill more than fifty offset wells. As drilling proceeded at a headlong pace, some large and intermediate independents stored oil, while others invested in pipelines to loading racks on the Texas and Pacific Railroad. These independent pipelines kept market outlets open for small independents despite Southern Crude's attempt to slow down production development. Prices for Hendrick crude dropped: by March 1928, posted prices averaged 60 cents a barrel, while spot market prices dipped as low as 10 cents less.13 So much oil was on the market that there were few bidders for it; no prudent purchaser bought and stored oil while prices were steadily falling.

The sharp drop in prices was not, however, the most serious problem producers faced in the Hendrick field. Late in 1927, some Hendrick wells were producing increasing quantities of water and diminishing quantities of oil. Though producers first thought the problem was caused by faulty casing on an abandoned gas well, by February 1928, when nearly half the field's wells were producing significant amounts of water, it was clear that water incursion was widespread. No one knew exactly what caused the problem, no one knew to a certainty how to stop it, and no one knew how much worse it might become. All producers, however, faced the immediate threat of seeing their crude oil displaced by sulfur water in the near future.14

The producers' immediate response was the time-honored step of producing as much oil as they could before water reached their various parts of the field, devil take the hindmost. This tactic alarmed major-company engineers; they were convinced that accelerated production would hasten water incursion, which would in turn lower the amount of oil that could be recovered. The engineers believed that aggressive drilling by independents and wanton flaring of gas by all producers were responsible for lower reservoir pressure and water incursion. Though existing engineering technology could not offer conclusive proof of this theory, the engineers' argument important justification for cutting back production. As the water problem worsened, the engineers' view gained acceptance among producers, who recognized that it was in their interest to support the basic principle of voluntary regulation.15 The engineers' theory also moved the Hendrick situation from the sphere of economics to that of conservation; on those terms, it was possible for the Texas Railroad Commission, legally charged with preventing physical waste in oil fields to intervene.16

In February 1928, representatives of the Hendrick field producers began a series of meetings with the railroad commissioners in Fort Worth; in April, the producers' representatives selected a six-man committee to work out a production proration plan for the Hendrick field. The committee, chaired by R. D. Parker of the Railroad Commission, included W. B. Hamilton, head of the oil and gas bureau of the West Texas Chamber of Commerce; major-company representatives W. S. Farish and Underwood Nazro; and three independent representatives. But because the independent representatives included C. F. Kelsey, of the large Independent Oil and Gas Company, and Ed Landreth, who was involved with Roxana in Winkler County, small independents were not given representation proportionate to their numbers in the Hendrick field. Only committee member Tom Cranfill, an intermediate-sized Dallas independent, was a small tract holder whose interests were akin to those of the many small operators. Not surprisingly, in committee meetings Cranfill was often a minority of one.17

---

Footnotes are currently unavailable to me.

13.

14.

15.

16.

17.

[bratticus]

My earlier claim that it was over for the TRCC in 1971 appears to be invalid at least wrt. fossil fuels in general since natural gas was still regulated by them.

$this->bbcode_second_pass_quote('', '[')b]Texas Railroad Commission Sets Gas Production Allowables for January 2004.

Odessa American (Odessa, TX)
December 29, 2003

Dec. 29--The Texas Railroad Commission last week set January 2004 natural gas production allowables for prorated fields in the state to meet market demand of 31,064,501 Mcf (thousand cubic feet).

For these fields, the January 2004 allowable represents an increase of 605,265 Mcf when compared to actual production of 30,459,236 Mcf in January 2002.

In setting the January 2004 allowable, the commission used historical production figures from January 2003 and producer forecasts for the January 2004 demand, and then adjusted the figures to account for such factors as well capability, new wells in a field, etc.

Texas natural gas storage reported ...

[Subjectivist]

Question for those in the US Oil Industry. Could the TRRC order producers to reduce the volume they put on the market from North Dakota or Texas if they wanted to drive the WTI price up to match Brent prices?

Would producers comply with such an order or ignore it, or sue the TRRC in court?

[Tanada]

Stumbled upon a piece that is relevant to this thread,$this->bbcode_second_pass_quote('', 'O')ne year ago Al Jezeera published a series of four videos called The Seven Sisters. I have no idea why I am just now hearing about them. It tells the story of the seven major oil companies, Exxon, Mobil, Chevron, Gulf, Texaco, BP and Shell, who held 85% of the world’s oil reserves up until the late 60s. Each video is 47.5 minutes long. Apparently they were created for four one hour shows including commercials. But if they were ever broadcast in the USA I have never heard of it. Anyway thanks to Steve of SRSrocco Report for alerting me to these videos.

Some of the things revealed in these videos will startle you. I know, Al Jezeera has an agenda. But everyone has an agenda and the major oil companies, in all their press releases and advertisements, most definitely has an agenda.