August 27, 2020 Read More →

Hurricane Laura not likely to affect stormy future for oil and gas industry

Huffington Post:

Hurricane Laura struck the Gulf Coast on Thursday morning, barreling into the country’s largest cluster of offshore drilling rigs, refineries and export facilities as one of the most powerful storms to ever make landfall in the U.S.

In theory, it could have forced a turning point for the oil and gas industry. The coronavirus pandemic sent demand for fuel plummeting to historic lows, triggering unprecedented financial losses for oil companies already drowning in debt. At the same time, the Category 4 storm offered yet another sign of the warming caused by fossil fuel emissions on top of a heat wave thawing the Arctic, floods deluging Bangladesh and China, and wildfires scorching the American West.

Yet analysts predicted oil and gas companies would make a steady recovery. Halting production in the Gulf will do little to reduce the supply of oil, gas and refined products because industry stored vast amounts of the stuff when demand plunged in March. During past hurricanes, companies spilled oil and chemicals with impunity, so fines and environmental citations look unlikely. And even if the damage proves too catastrophic to repair, proposed projects in Alaska and the Pacific Coast could replace the capacity on the Gulf.

“Katrina triggered the fracking revolution because prices spiked and you suddenly had enough incentive for these companies that had been experimenting with fracking to take it big time,” said Clark Williams-Derry, an analyst at the Institute for Energy Economics and Financial Analysis.

Today, fracking dominates U.S. production, meaning far less of the industry is affected by a storm in the Gulf.

“I don’t expect anything like that this time because offshore is a much smaller part of the U.S. oil picture,” Williams-Derry said. “It’s less of a big deal in terms of supply.” 

[Alexander C. Kaufman]

More: Hurricane Laura Hit The Oil And Gas Industry When It’s Down. But Don’t Expect A Reckoning.

Posted in: IEEFA In the News

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