The only things rising are bankruptcies and distressed asset sales in the US shale industry
WE’VE never had a downturn like this, that affected shale on a global basis as much as this has,’ says Daniel Lippe, managing partner at Petral Consulting Company in Houston, Texas. ‘Never in 100 years has demand suddenly evaporated as it did in March of 2020.’
COVID-19 quarantines kept cars in driveways, planes in hangars and offices workers at home. With so many vehicles avoiding fuel stops, the oil and gas supply chain backed up.
Lippe observed: ‘The distribution system is a self-regulating mechanism. You cannot produce crude oil if the distribution system
is full. The amount of storage we have is a small percentage of the total production. We have enough crude oil inventory to last, at most, 30 days.’
DROPS IN OIL PRODUCTION
The system indeed having become full, production pullbacks were drastic...