The toll the coronavirus is taking on the all-but-shuttered U.S. economy that has left more than 22 million Americans unemployed is also hurting the oil industry, including in North Dakota where the largest producer is reported to be halting production.
Based on an unnamed source “familiar with the matter,” Reuters reported on the development on Friday, just days after oil prices fell into negative territory for the first time in history. This means suppliers turned to paying people to take oil because of a lack of storage space:
Shut-ins have been particularly swift in North Dakota, which produced more than 1.4 million barrels per day (bpd) of oil in 2019, making it the second-largest U.S. producing state after Texas. State officials say production has already dropped by about 300,000 bpd.
This month, rival operator in North Dakota Whiting Petroleum (WLL.N) became the first major shale producer to file for bankruptcy.
Continental had reduced its production through May by 30 percent before the latest price crash and suspended its dividend. Coming into this year, Continental produced nearly 150,000 bpd in the Bakken, according to company figures.
Reuters’ reporting made the connection between President Donald Trump and Harold Hamm, who owns Continental, is a Trump supporter, and is an “informal adviser” who has been critical of Russia and Saudi Arabia’s oil dumping practices.
“[Hamm] has also said Texas energy regulators should consider mandating 25 percent production cuts to boost prices and called for probes into Monday’s collapse in crude prices,” Reuters reported.
Bakken crude sold this week regionally at roughly $3 a barrel, far below the $16.50 U.S. benchmark, Ron Ness, president of the North Dakota Petroleum Council, said.
Follow Penny Starr on Twitter.