Dare we say it, as the fickle finger of fate could intervene just as quickly to render this hypothesis useless, but it’s beginning to “feel” like the global oil and gas industry, particularly in North America, may be finding a bottom to the 17-month price and activity slump. Of course, just because the industry may find a bottom to the decline, it doesn’t mean that the E&P sector is ready to climb out of the trough.
No, indeed, the industry could bounce along the bottom for months to come, much like an expensive automobile dodging the endless potholes and sharp bumps in the wagon-wheel-rutted goat paths that Houston Mayor Sylvester Turner calls “streets.” If there’s no sign that an uptick is eventually in the offing, then maintaining the bottom for months to come is about as helpful as a potential Saudi-Russian deal to freeze oil production levels at historic highs—it doesn’t improve anything.
Nevertheless, there are a few indicators that give one some hope. For instance, WTI futures prices on the NYMEX have not fallen below $35/bbl for a solid month (March 4 to April 5), as of this writing. There seems to be at least a modicum of stability, as the WTI price remains in a range between $36/bbl and $39.50/bbl. Similarly, the natural gas futures contract on the NYMEX also has shown some stability.
In addition, the Baker Hughes rig count decline has begun to slow from the hemorrhaging pace of January and February. In the six weeks between Dec. 31, 2015, and Feb. 12, 2016, the rig count lost 157 units, or an average weekly loss of 26.2 units. But in the seven weeks from Feb. 12 through April 1, the count lost 92 rigs, or an average weekly loss of 13.1 units.
So, there are signs that perhaps we are close to reaching the bottom, or we may have hit it already. Then again, it is always possible that this editor’s analytical skills may be impaired from watching too many U.S. presidential campaign speeches, debates, town halls and insult matches.
Preventing disruptions at future lease sales. Meanwhile, the presidential campaign seems to have brought out the worst in the American public’s behavior this year, even at a normally innocuous Gulf of Mexico lease sale, conducted by the Bureau of Ocean Energy Management (BOEM). In this season of “anything goes,” a large group of environmental protesters on March 23 crashed Central Gulf Sale 241 and Eastern Gulf Sale 226. Holding up signs while yelling and chanting, the protesters at one point even commandeered the podium microphone. One quick observation, as regards these sniveling, sanctimonius, self-righteous purveyors of environmental tyranny—the end apparently justifies any means.
While industry attendees of the sale looked on in confusion, the protesters chanted various tired slogans. One industry attendee tweeted out an observation that about a third of the protesters seemed to be “specializing in protesting shale fracing.” At some point, the BOEM managers decided to continue the lease sale, in spite of the noise. Eventually, they finished the sale. Ah, but was that the wisest course?
For answers, I contacted the BOEM media relations office in New Orleans. “Public involvement is important, and we welcome and encourage people to participate by sharing information, asking questions and discussing concerns and ideas with our staff,” said spokesman John Filostrat. “We respect the right to peacefully protest. However, the safety and protection of our personnel and the citizens, who are attending our events, is our first priority. We had said, ‘no signs and yelling.’ Obviously, that didn’t happen. We had two choices: clear the room or go forward with the sale. We went with the latter option.
“We have another sale coming in August, and we’re not going to speculate on what might or might not happen then,” continued Filostrat. “We haven’t chosen our next venue, but we will be going through our security protocols, as we make that choice. We have until July to issue a 30-day notice of the sale, so we have several months to come up with a venue to protect our folks, and the public.”
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