[Editor’s note: A version of this story appears in the February 2021 issue of Oil and Gas Investor magazine.]
Lately it seems my inbox is full of more news about the so-called energy transition and alternative energies than about oil and gas, the latter of which has been in a sort of COVID-19-induced, low-oil-price lull anyway. Admittedly, once you click on some topic like the energy transition, you start getting inundated. For example, we learned that New York just selected Equinor to provide the state with offshore wind power, in one of the largest renewable energy procurements seen in the U.S. to date. BP is a partner.
After the traumas of 2020, we see some positive signs in traditional oil and gas, although we are not naïve enough to think the industry will have smooth sailing from here on. The price of oil has recovered fairly well, although it’s anybody’s guess what lies ahead. LNG prices in Europe and Asia are soaring, which we hope will backstop U.S. gas producers this year. (Gas-focused producer and NGL exporter Range Resources Corp. already has been cited as the U.S. E&P whose stock rose the most last year.)
The oil and gas activity index in the 10th Federal Reserve District (this includes northern New Mexico, Colorado, Oklahoma and other energy-producing regions), jumped from 4 to 40 in fourth-quarter 2020, suggesting that a recovery has started, according to the Federal Reserve Bank of Kansas City in its quarterly survey of energy executives. Respondents told the bank they think drilling activity “will increase sharply” when oil and gas prices average $56 per barrel and $3.28 per MMBtu.
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