Carbon Brief - A Week During Which Everything Changed For The Oil & Gas Industry

After a week in which US crude oil prices fell below zero for the first time in history, an article in the Financial Times explores the response from an industry facing unprecedented challenges. It quotes Gordon Ballard, head of the International Association of Oil & Gas Producers, who says that while there have been dips in the past “now it’s not entirely clear if things just come back as normal, everything has changed”.

While the article notes the disruption of the coronavirus pandemic has forced oil companies to make “trade-offs unthinkable just two months ago” there has been talk of significant changes to business models in preparation for a clean fuel transition. Both BP and Shell have “doubled down on net-zero emissions pledges in recent weeks”, it concludes. A piece in Reuters documents how US shale producers, refiners and pipeline companies are all “scrambling for cash”, with the threat of bankruptcy and likely restructuring hanging over them due to the on-going oil crisis. It quotes energy lawyers at law firm Haynes and Boone who say half of the nation’s top 60 independent oil producers “are in danger of restructuring”.

Meanwhile, another Reuters piece reports that two Democratic senators in the US have asked the nation’s Federal Reserve to reject a request by the energy industry to use funding from a $600bn emergency lending facility to help pay off their debts. They warn it would be “a short-sighted misuse of taxpayer resources” and that propping up the fossil fuel industry “would only increase the financial toll of climate change and the environmental degradation it has wrought”.

A Politico article provides further coverage of recent calls from officials, activists and analysts for the inclusion of green conditions in the trillions in stimulus funds being pumped by governments around the world into their economies to recover from the pandemic. Finally, another Reuters piece notes that oil prices rose on Friday, as some producers including Kuwait said they would cut output, however the prices are still expected to end the week “in the red”.

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https://www.carbonbrief.org/daily-brief/big-oil-faces-new-reality-where-everything-has-changed