This week the energy story is still really all about Harvey and Irma – and how those storms continue to impact the energy markets – from both a supply and demand side.
One thing we know: There is a LOT of crude oil that was shipped to the gulf coast in front of Harvey and swelling storage there and in Cushing. That’s put the refiners under enormous pressure to restart operations as fast as possible and get product moving back down the line.
For the most part, all of that is going smoothly – lessons learned from super-storm Katrina had Gulf of Mexico assets sealed tighter than a drum and refineries also prepared to withstand the very worst. In all but a few cases, those refineries are coming back up without incident.
And the big Colonial pipeline, down for what seemed like a scary eternity but really only a bit more than a day is fully loaded and back to sending product up to the East Coast. The refiners are back to work with little long-term consequence.
Now, some other questions arise: What about the production side? How are the markets going to react to the restarts? Where did I put my lunch? (Actually, that last one is the easiest to answer).
Read this first. Goldman Sachs’ analysis says that DEMAND, not supply, will be the significant outcome from the two storms. I don’t buy it, but they ARE Goldman Sachs.
Then read this, discussing the restarts in the storm-affected Eagle Ford shale play and in the Gulf of Mexico – you may come up with a different outlook from those CEOs who claim that production guidances for 2017 haven’t changed at all because of Harvey. (Hint: They have)
Then, have a look at this, where a very handsome energy guy gives a very simple but hard to argue with the reasoning for the production side in the Gulf Coast area to lag going forward, making this restart a bit different from what most others are expecting for the next several weeks – or months. Smart guy.
Finally, something outside of the storms – this one sentence from the BHP Billiton conference call in August that went mostly unnoticed, but tells a CRITICAL tale about the opportunities in shale – not just in the United States, but all over the globe:
Translation: US shale oil will turn out to be a ONE TIME ONLY play.
Further translation: Correctly investing in US shale oil is a ONE TIME ONLY opportunity – requiring the best guidance you can get.
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