First oil

As many of you are aware, we at World Oil released our early-year, initial forecast for U.S., Canadian and International drilling. While it is not a huge increase in activity envisioned for 2021, it does signal the beginning of a recovery that will extend into 2022 and gain momentum in the months ahead.

In the U.S., we expect drilling to improve 11.5%. Yes, this gain will be realized from a base figure that is the lowest annual total of wells drilled since 1898. Nevertheless, the expected increase this year is a start, and every region of the U.S. will post a gain. Details begin on page 23.

In Canada, meanwhile, the upstream industry is striving to pick itself up, off of the bottom. As Contributing Editor Bob Curran says so accurately, “The oil and gas business had an exceedingly difficult time in 2020. There are signs that activity may be improving, but it’s hard to compare against a year that felt like rock bottom.” However, on the positive side, most provinces will show at least minor improvement. For the complete Canadian picture, see page 41.

Internationally, we see activity jumping 7.3% higher, and six of eight regions will post increases. South America, Western Europe and Far East/South Asia will lead the charge. To see all the international details, see page 35.

The Texas mess. No sooner did we release our initial 2021 forecast on Feb. 12, then the news was disrupted by the worst bout of winter weather seen in Texas in well over 100 years. Several rounds of snow-and-ice storms hit the Lone Star State during the week of Feb. 14-19, dumping 4 to 6 in. of snow in Dallas-Fort Worth and 1 to 2 in. of ice and snow in Houston. These storms produced brutally cold temperatures, causing massive losses of electrical power and water supplies. At one point, more than 4.3 million Texas customers were without electricity. On Feb. 16, Dallas-Fort Worth International Airport recorded a record morning low temperature of -2^oF. In Houston, the Feb. 16 morning low was 12^oF.

The power and water losses were a combination of the weather and man-made failings. On the man-made side, the failures of ERCOT (Electric Reliability Council of Texas), which runs most of the Texas power grid, were striking. Due to lax state regulations, ERCOT has not required its power-generating companies to winterize their operations for extreme weather. A similar failing to winterize water supply facilities caused public water systems in 159 of 254 counties to fail. The result was many people having no electricity for up to 72 hr and beyond, and perhaps a quarter of the state having no water supplies for anywhere from one to four days. Several million people shivered in the dark with no water, while water pipes burst in their homes from a lack of heat.

Let us be clear: This situation also was a huge failure of government on all levels, and in all political party affiliations. Shame on Gov. Gregg Abbott and the Texas Legislature for allowing the ERCOT situation to go unsolved, without intervention, all the way since 2011, when the system’s failings were first pointed out. On the city level, based on television news reports that this editor saw, shame on Houston Mayor Sylvester Turner for having the temerity to lecture residents that “they think government is no good until they need it.” Given the mayor’s arguably mediocre, five-year track record, perhaps he should be quiet. Meanwhile, why did it take President Biden all the way until Friday, Feb. 19, to issue a federal disaster declaration for Texas, when he could have done it on Feb. 16?

Finally, shame on national and local media in Texas, for misleading residents to believe that the power shortage was nearly all the fault of fossil fuels. Statements refuting this misleading narrative were issued by the Texas Alliance of Energy Producers and Railroad Commissioner Wayne Christian. Both can be seen on our worldoil.com website, and are worth reading for the data and charts that they contain.

About the Authors

Kurt Abraham

World Oil

Kurt Abraham kurt.abraham@worldoil.com