More than a third of shale producers surveyed by the Dallas Fed said that they will resume oil production by the end of this month. This will hopefully put an end to the decline in production which started when oil prices collapsed earlier this year.
The survey also provided some insight on how the besieged shale sector is responding to recent price increases - WTI oil closed this week above $ 40 a barrel for the first time since March.
In April, prices fell below $ 20 and became negative for a short while due to the extremely low demand and excess supply caused by the quarantine.
Now, despite the gradual recovery in prices, the US oil industry is still suffering. According to the report published by the Dallas Fed, 80% of the respondents said that US drilling and oil production will not return to their previous prices, at least until next year. Another 16%, meanwhile, do not expect the industry to return to its previous levels again.
During the second quarter, activity in oil fields in the area of Texas and parts of Louisiana and New Mexico fell to the lowest level in the entire four-year history of the study.
"It was gloomy during the blocking," said one of the respondents. "This will continue for quite some time, maybe 2022 or longer, before activity will return to pre-crisis levels".
Meanwhile, in Canada, citizens sent over 2,000 letters asking the federal government to invest in the offshore oil and gas industry of Newfoundland and Labrador. They sent the letters to the members of parliament, including the Minister of Natural Resources Seamus O'Regan, Minister of Finance Bill Morneau, Minister of Environment and Climate Change Jonathan Wilkinson and Minister of Infrastructure and Communities Catherine McKenna, to urge the government to amend the tax regime to support offshore development and exploration so that the industry can be competitive in the global market and people can return to work.
As of the moment, more than 6,500 Canadians rely directly on offshore to support their families and pay bills. Without federal investment to support it, all of this is at risk.
The offshore industry of Newfoundland and Labrador, with its continued commitment to safety and environmental friendliness, can supply the generated energy to the world while continuing to generate significant revenue for Newfoundland, Labrador and Canada.
It plays an important role in the global and domestic market.
Demand will recover when the pandemic has been defeated and quarantines have been lifted. It is estimated that global demand for oil and natural gas will continue to grow for decades, while other offshore jurisdictions such as Norway will change their tax regimes to attract investment. Newfoundland and Labrador must follow these steps, otherwise the investment will flow to other jurisdictions.
