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Energy Tomorrow Blog

Energy Operators Will Weather the Coronavirus

oil markets  energy demand  oil and natural gas production 

Lem Smith

Lem Smith
Posted April 23, 2020

While the current decline in crude oil demand and market uncertainty present significant challenges, America’s natural gas and oil producers – especially those using hydraulic fracturing and horizontal drilling – are resilient and remain financially viable, supported by the world’s need for energy.

Contrary to some narratives, our industry is poised to fuel renewed growth once the U.S. and other nations get past the COVID-19 crisis. Natural gas and oil have and will again power modern economic expansion.

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Oil Futures and Fundamental Oil Demand

oil markets  demand  oil and natural gas production 

Mark Green

Mark Green
Posted April 21, 2020

Experienced industry hands say they’ve never seen anything like Monday’s trading on May futures contracts for West Texas Intermediate crude oil (WTI), which closed in negative territory.

While the natural gas and oil industry certainly isn’t alone in weathering the COVID-19 crisis, our impacts probably are more visible than most other sectors, underscored by Monday’s negative trading on oil futures. Three things to know ...

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Black Gold. Texas Tea. TxOPEC?

oil production  texas  demand  supply 

Dean Foreman

Dean Foreman
Posted April 16, 2020

Amid talk in Texas of production quotas (“proration”) and other extreme policies that have been suggested to address the oil demand downturn, API’s Monthly Statistical Report (MSR) shows that supply is responding in real time and that U.S. crude and refined storage capacities have some flexibility to adjust to the COVID-19 driven demand decrease – helping to alleviate the need for blanket policies or government interventions.

Notably, recent federal actions may help provide additional flexibility to the entire energy value chain. For example, the U.S. Department of Energy’s opening of crude oil storage capacity within the Strategic Petroleum Reserve (SPR) to individual companies provides much-needed flexibility. Separately, Federal Reserve measures to either purchase corporate bonds or provide loans may perform additional triage for the energy industry and across the broader economy.

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The Perils of a Proposal to Prorate Texas Production

texas  oil production  demand  price of oil 

Mark Green

Mark Green
Posted April 13, 2020

We understand the oil demand-side circumstances that have led to calls for artificial market interventions such as tariffs and quotas – including a proposal before natural gas and oil regulators in Texas to mandate oil production cuts in the United States’ No. 1 oil-producing state.

Tough market conditions are no reason to implement bad remedies, such as the Texas proposal, which is problematic at best.

That’s not just an API view. Economics and history argue strongly against veering from the principle of markets dictating production levels, which is a core principle of our industry.


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More On Demand and U.S. Production

oil and natural gas production  russia  saudi arabia  opec 

Mark Green

Mark Green
Posted April 6, 2020

OPEC+ members continue to discuss a meeting, reportedly Thursday, to address the price war between leading members Russia and Saudi Arabia, whose production increases amid a significant decrease in demand are deepening the crisis for the global oil industry.

There’s speculation the United States will be asked to participate in a deal with additional production cuts beyond what U.S. producers have already implemented in response to the marketplace, which we addressed in this post. In a new interview with CNN, API President and CEO Mike Sommers reiterated that markets should dictate production decisions, not government interventions, and that Russia and Saudi Arabia should change their production policies.


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OPEC+ Turmoil Underscores Need for U.S. Oil Diplomacy

oil and natural gas production  us energy security  saudi arabia  russia 

Mark Green

Mark Green
Posted April 5, 2020

Although OPEC+ has delayed a planned meeting Monday to address differences between leading members Russia and Saudi Arabia, there were encouraging signals from the White House after the president’s meeting with a number of natural gas and oil industry leaders, including API President and CEO Mike Sommers.

The continuing oil price war between Russia and Saudi Arabia, which has the two nations increasing production amid a slump in world oil demand, is broadly concerning. The administration is correct to focus strong diplomacy on finding a resolution, the urgency of which is underscored by the postponement of Monday’s OPEC+ meeting. 

The best message from the White House is what’s not on the table: additional U.S. production cuts. As the president said, the global oversupply problem has been worsened by the Russian and Saudi production increases, and those countries bear the responsibility of changing their policies.

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Keystone XL's Construction is Good for U.S., U.S. Energy

keystone xl pipeline  jobs  us energy security  canadian oil sands  economic growth 

Mark Green

Mark Green
Posted April 2, 2020

TC Energy’s announcement that it will proceed with building the Keystone XL crude oil pipeline is a big deal in terms of vital energy for America, jobs, economic growth and North American security. The 1,210-mile pipeline – able to safely deliver 830,000 barrels per day from Canada’s oil sands region in Alberta to the U.S. heartland – figures to be a significant, long-awaited progress toward helping secure this country’s future energy needs.

I say “long-awaited” because my first API writing assignment was about the KXL – nearly nine years ago!

Over that time the pipeline became a political football – a debate in which the basic facts were mostly incontestable: thousands of good jobs during KXL’s construction, tens of millions of dollars in property and income tax revenues to different levels of government and no significant effect on the climate or environment, according to the U.S. State Department, which conducted six comprehensive scientific reviews.

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For Good Reasons, Industry Doesn’t Want Tariffs or Quotas

oil and natural gas  trade  us energy security 

API CEO Mike Sommers

Mike Sommers
Posted March 23, 2020

As the world grapples with the ongoing spread of the coronavirus, the decision by Russia and the OPEC nations to increase energy supplies while demand is dropping has contributed to ongoing market instability and delivered a shock to America’s evolving energy picture.

Since the late 2000s, the U.S. has emerged as the world’s leading producer of natural gas and oil—last month producing at estimated record levels of 13 million barrels of oil and 96.5 billion cubic feet of natural gas to meet consumer demand. Innovative technologies like hydraulic fracturing have enabled producers to reach abundant U.S. shale reserves, and thus changed America’s trajectory from energy scarcity to abundance and from importing energy to exporting it. 

It is not surprising, then, that some global energy players are threatened by American energy leadership and have actively tried to prevent its progress. Russia and other nations’ push to increase global energy supply despite lower demand in the short term is a reaction to America’s new paradigm as a global energy superpower. This is a challenging situation, compounded by the impact of the coronavirus, but interventions like protectionist trade measures are not the answer.

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API Reports Capture Market Uncertainties

monthly-stats-report  oil and natural gas production 

Dean Foreman

Dean Foreman
Posted March 19, 2020

As much as any other sector, global energy has felt the impact of the coronavirus (COVID-19) combined with lowering world demand and Russia and Saudi Arabia raising oil supply. We’ve seen crude oil prices cut in half within three months, which if sustained could rank among the most severe oil price downturns on record. Let’s discuss the most significant points for U.S. consumers, industry and the broader economy.

Details may be found in API’s latest Monthly Statistical Report, based on February U.S. petroleum data. Using weekly surveys of 90% of the natural gas and oil industry, we publish monthly data and analysis two months ahead of the U.S. Energy Information Administration (EIA). 


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Don’t Bet Against U.S. Natural Gas and Oil

crude markets  us energy security  oil prices 

Mark Green

Mark Green
Posted March 17, 2020

Much of the news surrounding the U.S. natural gas and oil industry is fairly challenging right now: some of the lowest global crude oil prices in years; world energy demand, which already was slowing, has been further affected by the coronavirus; Russia and Saudi Arabia, the world’s No. 2 and No. 3 oil producers, plan to increase output, launching a price war that also might be aimed at clawing back market share lost to U.S. shale producers in recent years.

Even so, don’t bet against the U.S. natural gas and oil industry. Ours is an industry of innovation and technological expertise that historically has risen to overcome serious circumstances, playing a key role in building U.S. economic strength and increasing the nation’s global security.


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