Deloitte Report: Shale in the Time of COVID

The last oil rig has officially left the premises. In Venezuela, that is. There, Nabors said it had shut down its final active drilling rig as of Monday.

Everyone inside and out of the energy industry knows by now why WTI futures fell below zero for the first time in history, so I won’t rehash the price war/pandemic storm all over again. It is worth noting, however, that this downturn is different than the ones that came before. Never have commodity prices, reduced demand, capital restraints, debt loads and health concerns all hit the industry in one fell swoop. A Deloitte report looks into this historic event and what can be done to come out of it.

Pre-pandemic energy demand is gone for good

The Deloitte report predicts that pre-pandemic energy demand levels are a thing of the past, most likely never to be seen again. This is due to:

  • The forced use of remote telecommuting has turned on a light, so to speak, for many companies. They see now how easy it can be. One study by the National Bureau of Economic Research found that 37% of all American jobs can be done from home. It’s the same for business travel. Why pay for flights and all the other associated costs when conferences can be conducted from home?
  • Natural gas is turning bullish. Says Deloitte, “Heightening volatility in the oil market, relatively stable industrial and electrification demand of natural gas, and a projected fall in associated gas production due to the cut in oil drilling will likely trigger an upcycle in natural gas prices in the medium term.”
  • The volatility of the oil market is making new-energy projects look more inviting.
  • The global impact of COVID-19 is making companies shorten supply chains which, like telecommuting, affects fuel demand.

Deloitte Report has a three-step plan to a new normal

All is not lost. This is an opportunity to evolve and thrive. Deloitte has a three-step program to help companies do just that:

  1. Respond: Safeguard the company by saving in every area possible from the field to the office.
  2. Recover: It is time to embrace new-age innovations such as nanotechnology, micro seismic monitoring, multidisciplinary advanced analytics, automation and digitalization. 
  3. Thrive: Operators who make it this far are going to have to reinvent themselves into a more IT-driven mindset.

What happens in the shale play, doesn’t stay there; it affects the world. Americans have adapted before, and we will do so again. And the world will be watching to see how we do it.

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