The US rose over the last decade to become the world’s largest oil producer. Does the pandemic spell the industry’s decline?
Texas oilman Allan P Bloxsom III still remembers the taunts of “college boy” that greeted him on the offshore drilling rig where his father, desperate for his wayward son to shape up, sent him to work one summer.
“Against my wishes I went and it changed my life,” says Mr Bloxsom, now 63 years old and the president of Fort Apache Energy, a small company that operates oil and gas wells in Texas and Louisiana. “I was hooked.”
That was decades ago. Since then, his home state of Texas has more than doubled its crude oil output, helping to turn the US into the world’s biggest oil producer.
But as oil prices tumble – briefly falling below zero in a first last month – following a dramatic drop in energy demand because of the Covid-19 pandemic, the industry is going into reverse.
Coronavirus: ‘Thousands’ of North Sea oil and gas jobs under threat
Saudi Arabia: Just how deep are its troubles?
India coronavirus: Can the Covid-19 lockdown spark a clean air movement?
Giants such as Exxon and Chevron and fracking firms such as Diamondback Energy have shut in wells and slashed investment in recent weeks, helping drive down US crude oil production by nearly one million barrels per day from March to April – the third largest monthly decline in a century.
Mr Bloxsom cut his typical output of 800 barrels per day by more than half. Others have gone even further.
“Right now everything I have is shut down. Everything,” says Bill D Graham, president of Midland, Texas-based Incline Energy, which has 80 wells that in more typical times would about 275 barrels per day.
The supply cuts are not unique to the US.