In Denver visit, U.S. Energy Secretary paints optimistic view in O&G industry

DENVER — U.S. Energy Secretary Dan Brouillette painted a rosy picture of the oil and gas industry across the country on Wednesday, saying that the current COVID-19-related economic turmoil is presenting an opportunity for American producers to take a larger share of the world’s demand.

Brouillette was in Denver, along with American Petroleum Institute president Mike Sommers, to meet with Colorado state legislators and leaders within unions, businesses and economic development groups.

Brouillette also visited the National Renewable Energy Laboratory in Golden on Wednesday, where the lab held a groundbreaking ceremony on a new research center.

While he said he supports efforts there to develop renewable sources of electricity to scale, he views the renewables sector and the traditional energy industry as “hand in glove” for the next several decades with natural gas creating the base amount of energy to power the country’s electrical grid.

“The renewable industry will be dependent on this industry,” he said.

However, the early effects of COVID-19 kneecapped demand for fuel across the country and the world during the spring as people sheltered in place. That has thrown operators across the country, and in Colorado’s largest oil-producing county, into dire financial straits. Two major operators in Weld County have filed for Chapter 11 bankruptcy since the pandemic began, and oil production in the county dropped almost 60% between March and April.

Broillette acknowledged the months long dip in demand, coupled with some producers having heavy debt burdens, will cause some of them to collapse.

“Some of those folks are going to go away as a result of the free market process, and while that’s hard and painful, that’s the process we have here in the United States,” he said. “

Speaking to reporters after, Brouillette declined to directly answer a question about how much he believes oil demand is tied to COVID-19-related closures of commerce, saying instead that the answer to that lies in state and local officials who are handling the pandemic response in their jurisdictions.

However, he said efforts to restart broad economic activity across the country and abroad will lead to a recovery for the industry.

“That’s not to say you won’t have hotspots or localized conditions that need additional attention… but if you look at the overall picture in the last month or so, you’ll see some broad reopenings of world economies,” he said.

The U.S. Energy Information Administration estimates global oil consumption dropped from a little over 100 million barrels per day at the start of 2020 to almost 80 million in the first quarter, and expects a gradual recovery through the year.

Brouillette’s visit comes days after national news outlets reported the Trump Administration and the U.S. Environmental Protection Agency plan to roll back Obama-era rules that require oil and gas companies to install monitoring equipment to detect methane leaks in wells, pipelines and storage points

The International Energy Agency places methane release as the second-largest cause of global warming in the world. Oil and gas operations release methane via flaring after removing liquified minerals.

Brouillette said the same innovation that the oil and gas industry is taking on its own behalf to improve production figures will provide better results than a federal mandate.

“If (the industry) continues to do that unabated, it will solve these environmental problems,” he said.

on Facebook on LinkedIn