First oil
A survey last month by the Dallas office of the Federal Reserve System reveals a somewhat somber and wary mindset by U.S. producers and service firms toward the upstream oil and gas (O&G) sector. And that attitude is reflected in their plans for coping with the Covid-19-affected O&G market. Comments and data were collected from 165 E&P executives by the Dallas Fed during June 10-18 and released on Wednesday, June 24.
Shut-in production and re-starting. Asked whether they had shut-in production during second-quarter 2020, 82% of executives said “yes,” and 18% responded “no.” There was some optimism expressed, when executives were asked what date they expected to re-start their shut-in production. A majority, 56%, said either the end of June or end of July. The remaining 44% said sometime between the end of August and end of November, or later.
Asked what price is required for the industry, as a whole, to re-start production, 51% said a level of $41/bbl or higher. The remaining 49% that needed a price of $40 or lower to re-start included 30% that required $35 to $40.
Drilling outlook. Less positivity occurred, when executives were asked their attitudes on drilling. A plurality, 44%, said that U.S. drilling and completions work would return to pre-Covid-19 levels between fourth-quarter 2020 and fourth-quarter 2021. Of the remaining 55%, about 39% said “not before 2022, with another 16% saying “never.”
Asked when they expected global oil consumption to return to pre-COVID-19 levels, a solid 59% said sometime between fourth-quarter 2020 and fourth-quarter 2021. Another 36% said it will be from 2022 forward. Additional survey details can be found at dallasfed.org
Electric military vehicles? Where does an eventual transition to electrically powered vehicles leave the military? Is it possible to wage a war with electric vehicles, even partially? This editor put that question to some of our editorial advisors and got some interesting answers.
One advisor noted, “The new 2020 Hyundai Kona EV [has] a 258-mi range on battery only, but then it takes hours to recharge. Considering that an M1A2 Abrams tank weighs 62 metric tons, compared to the 2,900-lb Hyundai, it’s hard to see any technology today that can electrify a tank. I’d think battlefield-portable nuclear generators are more feasible.” Another advisor said, “I sure wouldn’t want to be a driver of an electric tank. In the heat of a battle, how many hours would it take to recharge my big dead battery vs. 5 to 10 min. to fill up with diesel ...?”
A third advisor recited various deficiencies. “Electric vehicles are hugely oversold. Range [is awful]…and they never account for running the AC or heat. They take forever to recharge, compared to a 5-min. gasoline fill-up…until batteries hold twice the charge for half the weight, electric vehicles with be niche only.”
However, a fourth advisor said that “the military is doing a lot in this area. A dozen years ago, we did some work with NAVSEA on electric guns. We are also working with the U.S. Navy on underwater electrically powered equipment.” The electric guns that he mentions are called “rail guns,” which sit on two rails. Using a magnetic field powered by electricity, a rail gun supposedly can accelerate a projectile to more than 52,000 ft (nearly 10 mi) per second. This would mean hitting a target 250 mi away in 6 min., vs. traditional Navy guns with a 12-mi range. While not practical in a highly mobile land war, these guns may be well-suited for naval vessel decks.
Finally, a fifth advisor said that “the military is certainly looking at electric-powered vehicles and even hydrogen-powered (drones and light aircraft, and land-based)…everyone recognizes issues, but there are some advantages for much quieter vehicles that, pound for pound, could accelerate much better. [At] some places we deploy, [there is abundant] solar energy, and it might be easier to recharge light vehicles than depend on shipping in fuel.”
