Lisa Murkowski (R-AK), chairman of the Senate Energy and Natural Resources committee, is urging the Department of Energy’s Energy Information Administration (EIA) to publish data on oil storage capacity as a warning indicator of potential shut-in oil production.
“I am growing increasingly concerned about the resilience of the American energy system to the shock of vastly oversupplied crude oil, on the one hand, and the destruction of demand in consuming sectors of the global economy, on the other,” Murkowski said in a letter to EIA Administrator Linda Capuano Tuesday. “This situation cannot persist indefinitely: either supply will decrease, as costs overwhelm producers, or demand will increase, due to the effects of economic stimulus and ultimate recovery from the pandemic…
“Based on my conversations with energy experts, I believe that we must prioritize the collection and analysis of data related to petroleum storage. Producers will continue to produce, filling up all kinds of tanks and tankers, until capacity is reached. Available petroleum storage can serve as a gauge of the potential for shut-in production, providing us some measure of both imminence and severity.”
A string of North American producers, struggling to deal with the global oil price war, have reported furloughs and capital spending cuts in recent weeks.
U.S. production is forecast to “bear the largest impacts” through 2021 from the price war and economic impacts of the coronavirus pandemic, according to IHS Markit researchers. U.S. oil output alone is forecast to crater by 2-4 million b/d over the next 18 months.
Potential resolutions to the oil price war under consideration by the Trump administration have included luring Saudi Arabia away from the Organization of the Petroleum Exporting Countries (OPEC) and into an alliance with the United States, according to U.S. Energy Secretary Dan Brouillette.
At least one Senate Republican believes the United States should embargo oil from both Russia and OPEC nations in response to their efforts “to distort energy markets.” Nine others, led by Murkowski and Dan Sullivan (R-AK), have called on Secretary of Commerce Wilbur Ross to investigate “excessive dumping of crude oil” by Russia and Saudi Arabia.
President Trump said Tuesday he has discussed the global oil situation with Russian and Saudi leaders.
“We had a great talk with President Putin, we had a great talk with the Crown Prince. We also discussed more so with President Putin, in this case, the virus, because Russia is being hit pretty hard. And we discussed many things -- trade. We discussed a lot of things with both.”
According to DOE, Brouillette and Russian Minister of Energy Alexander Novak “had a productive discussion on the current volatility in global oil markets” the same day. Brouillette and Novak “discussed energy market developments and agreed to continue dialogue among major energy producers and consumers, including through the G20, to address this unprecedented period of disruption in the world economy,” DOE said.
Trump is planning to meet Friday with the heads of Exxon Mobil Corp., Chevron Corp., Occidental Petroleum Corp. and other U.S. energy companies, according to a Wall Street Journal report Wednesday.