Combating the COVID-19 Crash in the Oil and Gas Industry

As the oil and gas industry continues to combat the massive impact that COVID-19 has had on the industry, we are seeing things that are truly unprecedented. Wells are being shut in at an alarming rate, regulators are scrambling to try and pass new legislation for relief and companies are unsure of what their future holds. Although times are difficult, the oil and gas industry, from field operators and foremen to accountants and geologists, is resilient and agile; we will get through this.

Steps Towards Small Producer Relief in Texas

In early May, the Texas Railroad Commission (RRC) voted against limiting oil production in the state. The plan had been proposed to ensure the economic future of smaller operators, as they face unprecedented volatility in the market while regulators in states like Oklahoma, Kansas, and North Dakota watched closely as this could facilitate a broader production agreement in the U.S.

Although the above is unfortunate for small producers, a task force called the Blue Ribbon Task Force for Oil Economic Recovery made up of eight Texas-based industry associations was formed to recommend solutions aimed at reducing the financial burden on smaller producers (those producing 1000 barrels or less).

From the Blue Ribbon Task Force Recommendations for Small Producer Regulatory Relief:

“We have put forth a comprehensive approach intended to provide relief to operators in the Texas oilfields and to assist the oil and natural gas industry as they continue the battle to survive these catastrophic circumstances. Like you, we recognize that a strong energy sector is vital to national security and essential to economic recovery during these unprecedented times. Our review captured items outside of the Commission’s immediate jurisdiction and was expanded to include necessary efforts that can be sought from other state agencies, core legislative matters that will be essential to aiding a recovering industry as well as federal issues that should be useful as you interact with the Administration and our Congressional delegation.”

The recommendations included that the state implement a slate of permit, royalty and fee waivers. The task force also recommended assessing the amount of available crude storage among Texas refiners, carriers, and other storage options, and identifying methods to assist smaller producers in accessing these options.

The recommendations have not been implemented as of yet leaving smaller producers with some difficult choices to make so that they can stay afloat. Now is the time for small producers to maximize their resources and find innovative ways to continue operating efficiently.

Well Assessment and Analysis During Volatile Times

Oil and gas operators are having to make tough choices due to the crash caused by COVID-19. Although regulators in Texas are striving to provide relief for small producers, they have yet to see any massive change and other states, like Kansas and Oklahoma, haven’t seen much movement towards relief, either. This means that many companies are looking to see which wells can be temporarily shut in so that they can remain profitable.

For many companies, shutting in the well isn’t the issue – many can do this quickly – it is analyzing data in order to decide which wells to shut in first, what the costs of shutting in those wells will be, when they should shut in the well, and if they will need to permanently shut in wells. Unfortunately, most of the information being analyzed to make these important decisions is incorrect, incomplete, or has been duplicated because it was unintentionally entered by multiple parties. This is an issue because even one erroneous entry can drastically affect analysis.

Companies that are armed with accurate and easy to access data during volatile times have the upper hand when it comes to making these decisions. By using data management systems like PetrobasePro, oil and gas companies have all of the information they need to assess well data quickly and take action.

We understand that new technology can seem intimidating and likely isn’t at the forefront of most minds right now. However, working with the right data management solutions team and having the right software will allow you to have all of the important data you need and peace of mind, now and in the future.