Overnight Energy: Trump reportedly opposes royalty cuts for oil, gas companies | House GOP presses Saudis to ease oil production | Exxon Mobil cuts budget amid industry slump

by Rebecca Beitsch - 04/08/20 6:00 PM ET

HAPPY WEDNESDAY! Welcome to Overnight Energy, The Hill’s roundup of the latest energy and environment news. Please send tips and comments to Rebecca Beitsch at rbeitsch@digital-staging.thehill.com. Follow her on Twitter: @rebeccabeitsch. Reach Rachel Frazin at rfrazin@digital-staging.thehill.com or follow her on Twitter: @RachelFrazin.

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ALL ABOUT OIL:

Treated like royalty… President Trump opposes giving widespread royalty cuts to companies that drill for oil and gas on public lands and waters, Bloomberg reported Wednesday.

Two people told the news outlet that he expressed opposition to such a policy during a Tuesday meeting.

The report follows recent letters by mostly Republican lawmakers urging him to lessen royalties paid by companies using these lands and waters as the industry faces sinking demand and international production standoffs.

The White House declined to comment on Bloomberg’s report.

Interior Department spokesperson Nicholas Goodwin told The Hill in an email that the department already “has established processes by which companies can apply for discretionary royalty relief.”

“Such requests may be granted in cases where an operator is prevented from operating or producing on a lease for reasons beyond or outside their control,” he said.

Growing pressure: Last week, a group of more than 40 House Republicans wrote to President Trump asking him to provide royalty relief, among other measures, for the industry which has been hit by sinking demand and international production standoffs.

Prior to that, a group of 13 Republicans and one Democrat sent a letter to Interior Secretary David Bernhardt asking him to reduce or waive royalties for oil and gas leases in the Gulf of Mexico.

A party split: Most Democrats are not on board with those calls. This week, a group of 16 House Democrats wrote to Bernhardt to remind him of “tight legal restrictions that exist on unilateral action” for reducing royalties.

We’ve got more on the story here.

And speaking of royalties… A number of House Republicans are warning Saudi Arabia to ease oil production as a trade war between the kingdom and Russia has flooded markets and depressed oil prices.

Lawmakers, led by House Republican Whip Steve Scalise (R-La.), said they were concerned “with the Kingdom’s actions to artificially distort global crude oil markets as countries around the world struggle to address a growing economic and health crisis fueled by the COVID-19 novel coronavirus pandemic.”

The letter to Crown Prince Mohammed bin Salman comes as the Organization of the Petroleum Exporting Countries (OPEC) prepares to meet Thursday to discuss production levels.

Oil prices in March hit the lowest level in 18 years, with prices now hovering in the mid $20 range after remaining around $55 in February.

While coronavirus has limited people’s ability to travel, the global market has been overwhelmed with supply – harming U.S oil producers who must rely on the more expensive fracking process to produce oil.

“As a result of the Kingdom’s March decision to artificially depress global crude prices, thousands of American workers employed directly by our country’s oil and gas producers, as well as thousands more employed in related industries, face increased financial and economic uncertainty. While other global actors use oil and gas markets as political leverage, the Kingdom must be a model of leadership,” lawmakers said.

President Trump has floated that both Russia and Saudi Arabia may be willing to reduce production by 15 million barrels.

But those comments have been followed by threats to possibly impose tariffs on foreign fuel sources – a concerning idea to many in the oil industry – or imposing production cuts on U.S. producers.

House Republicans alluded to the potential for consequences amid slumped oil prices.

“Failure to address this energy crisis will jeopardize the joint efforts between our nations to collaborate economically and militarily,” they wrote. “If the Kingdom fails to act fairly to reverse this manufactured energy crisis, we would encourage any reciprocal responses that the U.S. government deems appropriate.”

The Saudi Arabian embassy in Washington did not immediately respond to request for comment.

Read the full story here.

Cutting back… Exxon Mobil is slashing its budget in response to falling oil prices and is one of the latest companies to limit production as demand falls due to the coronavirus outbreak.

The oil giant announced Tuesday that it would cut its capital budget by 30 percent, some $10 billion, while cutting its operating expenses by 15 percent.

Oil companies rely on such budgets to drill new wells, an expensive activity key to keeping oil supply steady as existing wells dry up.

The news comes as the U.S. Energy Information Administration (EIA) forecast oil production would drop in April, potentially continuing through the rest of the year.

Exxon said the move “put us in the strongest position when market conditions improve.”