US crude exports and Permian Basin production may see ‘notable declines’
US crude exports and Permian production are expected to fall, according Port of Corpus Christi CEO Sean Strawbridge.
He said in a release that US crude exports and Permian Basin production “may soon see notable declines as the plunge in oil prices triggers a painful but possibly short-lived downturn.”
Register Now Crude exports from Corpus Christi started to dip in February, from the record highs seen in January as impacts from the coronavirus took hold. But Strawbridge said in an interview that larger declines are expected in the weeks and months ahead “now that Saudi Arabia and Russia are preparing to flood the market in a price war that’s sent oil prices down into the $30/b area”.
He said: “It is fully expected you’ll see a significant decrease in demand and, therefore, a significant decrease in US exports of crude oil. The question is how much of a decrease? The investment banker in me says they can always go to zero. Is that realistic? No. So the question is where do we think we’ll settle in at?”
But Strawbridge wouldn’t be drawn on specific predictions just yet and said instead that it’s simply far too early to tell. He said: “Given that the downturn is still relatively fresh, we haven’t seen any significant downturn at this point.”
Corpus Christi, (which is now the country’s largest exporter of oil after surpassing the Houston Ship Channel last year), peaked at a daily high of 1.8 million barrels in January, although the monthly average was 1.4 million b/d. Strawbridge said it’s closer to 1.3 million b/d in March so far and is likely to fall still more.
He said only a small handful of companies can make money with oil priced below $35/b, so pipeline volumes will decline and Permian crude production could fall below 4 million b/d, which would be well down from the federal government’s latest estimate of about 4.8 million b/d.
He added: “We fully expect there is going to be a consolidation and shake out with perhaps a bit of bankruptcies going on.”
His expectation is that neither the Saudis nor Russians will want a prolonged fight. While 2020 is looking particularly painful for producers, Strawbridge said he remains “bullish for 2021 and beyond”.
For more information visit portofcc.com
13th March 2020
