Page 9 - NorthAmOil Week 04

NorthAmOil PERFORMANCE NorthAmOil
North American oil and gas bankruptcies surge in 2019
NORTH AMERICA
The shale boom continues to contribute to ongoing downward pressure on oil prices.
THE number of oil and gas company bank- ruptcies in the US and Canada rose 50% y/y in 2019 owing to the lower oil price, with the trend expected to continue this year. The fig- ure was reported earlier in January by law firm Haynes and Boone, which tracks oil industry bankruptcies.
The law firm found that bankruptcies among US and Canadian exploration and production firms totalled 42 in 2019, up from 28 in 2018. A further rise is anticipated in 2020 as oil prices are predicted to remain low, exerting continued pressure on producers and hitting their earnings.
“This increase in year-over-year filings indi- cates that the reverberations of the 2015 oil price crash will continue to be felt in the industry through at least the first half of 2020,” Haynes and Boone said in its latest report on oil patch bankruptcies.
A total of 208 oil and gas production com- panies have filed for bankruptcy protection between 2015 and 2019, according to the report, involving roughly $121.7bn in aggregate debt.
Oilfield service companies have also been hit hard by the ongoing oil price slump, with the number of bankruptcies among service provid- ers nearly doubling from 12 in 2018 to 21 in 2019. The largest among these was the $7.4bn filing by Weatherford International in July. Midstream companies fared better, however, with only two bankruptcies in 2019 out of a total of 28 since the beginning of 2015.
Haynes and Boone noted in its report that the oil market now appeared to be resistant to sustained crude price increases related to sup- ply disruptions as a result of major geopolitical events. The events in question occurred in the Middle East – the September 14, 2019 attack on Saudi Aramco’s oil facilities and the January 7, 2020 drone strike on Iranian Major-General Soleimani, which led to heightened tensions in the region amid fears of war breaking out.
The fact that oil prices have been relatively unaffected by such events, apart from short-term spikes, has been attributed to global oversupply, to which US shale is a major contributor.™
POLICY
New Jersey unveils plan to cut natural gas use 80% by 2050
NEW JERSEY
THE State of New Jersey has unveiled a 30-year plan to eliminate man-made greenhouse gas (GHG) emissions, which centres on major reductions in natural gas use by homes and businesses. The plan calls for cutting gas usage in the state by at least 80% by 2050, which New Jersey aims to achieve by plugging leaks, shifting to electric heating and replacing older pipelines.
“Public gas utilities must assess existing pipe- line capacity and plan for a gradual reduction in system use,” the plan, released on January 27 by New Jersey Governor Phil Murphy, stated. He signed an executive order that will also require state agencies to consider the impacts of climate change in permit approvals for construction projects.
“In breaking from our fossil fuel habit, New Jersey will lead,” Murphy said in a speech at Stockton University.
The plan also includes expanding the use of electric vehicles (EVs), accelerating the growth of New Jersey’s renewable energy sector, strengthening energy efficiency standards and expanding the clean energy economy.
The announcement comes as some states and cities are looking more closely at how they can reduce GHG emissions and meet climate change targets. A handful of cities in California – plus one in Massachusetts most recently – have banned gas connections in new buildings being constructed. Others are considering following suit. New Jer- sey’s initiative is thought to be the broadest – and most specific – attempt to leverage land-use rules to reduce emissions from new construction.
However, the plan was not positively received by some politicians in the state, with Murphy – a Democrat – coming under fire from New Jer- sey Republicans. Among them was New Jersey Assemblyman Jay Webber, who described the plan as irresponsible and called on the state leg- islature to stop it from moving forward.
“Not only are 75% of our homes and busi- nesses heated with natural gas, but about 50% of our electricity is generated from it. Natural gas also is critical as a raw material for manu- facturing,” Webber said. He was also among the Republicans warning that Murphy’s plan could cause energy prices to go up in the state.™
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