From New Mexico and Texas to Oklahoma and North Dakota, oilfield operations are declining everywhere, and tens of thousands of US oil producers are losing their livelihoods.
“I’m scared I can’t even sell it”, – the Texas oilman told me how an entire U.S. industry is collapsing…
Mike Shellman, an oilman of the second generation and head of MCA Petroleum Corporation, told about it in his commentary to Reuters.
According to him, for forty years of work in the industry, one has never seen such a catastrophic situation for American oil producers. Thus, price reduction is not the biggest problem.
“It’s scary that I can’t even sell it”, – Shellman admitted.
He said he had been expanding his business for decades, drilling new wells and actively selling oil to American refineries. Now he had to give up drilling and even postponed some maintenance work. Shellman admitted that for the first time in his life he was actually considering closing most of his production.
The fact is that buyers of raw materials, with whom MCA Petroleum cooperated, warn that they may refuse to renegotiate contracts after the expiration of the old agreements. Some are ready to continue cooperation, but the prices they want will not even pay off the production costs. The fate of many contracts will be decided already in April, that is why Shellman is preparing to take radical measures.
There’s nowhere for American oil workers to store their raw materials.
Reuters stresses that the measures taken to reduce oil production are simply not enough to compensate for its oversupply. As a result, prices are still far below the cost for many US producers, especially for the oil shale segment. According to analysts of Rystad Energy, in 2020 the oil sector will be reduced to a quarter of a million jobs.