The COVID-19 pandemic has brought industries across the world to a grinding halt. All non-essential verticals have been struck, chief among them the oil and gas industry. With people across the globe staying at home and travel restrictions in place, the demand for petrol, diesel, and jet fuel has drastically reduced.
The Impact of COVID-19
The COVID-19 pandemic has become an unprecedented global phenomenon that has brought life as we know it to its knees. Governments of all nations are encouraging, and in most cases enforcing, their citizens to stay at home and not leave unless necessary. While these drastic measures are required to help arrest the prolific spread of this dangerous virus, they have led to an economic downturn of alarming proportions. Few industries have been as adversely affected as the oil and gas space, which rely on mobility to help drive its demand. With much of the world’s population stuck at home, we find ourselves in a situation where supply for crude oil far outstrips demand, to the point where oil futures have capsized with per-barrel prices falling to a record low of negative $37.
Steps Taken to Stabilize Oil Futures
A negative price-tag essentially means that production conglomerates would have to pay their customers money to take barrels of oil off their hands. Of course, paying consumers to use your product is not a sound business strategy. As such, the Organization of the Petroleum Exporting Countries (OPEC) and its allies are set to halt production to help balance the scales. While this may prove beneficial for the end consumer, with fuel prices expected to see sizeable reductions soon, the situation appears much grimmer for the industry as a whole.
There has already been a slew of job cuts, with over 50,000 workers in the industry having been laid off to save money. With hundreds of millions of oil barrels just sitting around the world, cost-cutting measures are an adverse but not unexpected outcome. Things have gotten so bad here in the United States that President Trump announced on Twitter he has tasked both the Secretary of Energy and Secretary of the Treasury with creating a reprisal program for the oil and gas industry.
The Oil Storage Conundrum
Even with production levels restricted and layoffs in place, oil sales will not pick back up until the COVID-19 spread is minimized and regular service resumes. Until then, the logical next step for oil manufacturers is to hold onto their stocks. Still, that appears easier said than done, as holding on to stocks proves more challenging with storage facilities at a premium.
Storage tanks for oil have been left filled to the brim. Even temporary storage solutions like oil transport ships have been left anchored with a full payload. Reports suggest that 76% of the world’s oil storage capacity has already been utilized. As bulk oil storage tanks continue to fill and still more oil is produced, storage avenues are becoming scarce. The global oil and gas industry could see a surplus of over two billion barrels in stock by the end of the year. With such grim realities to contend with, this crude oil storage tank crisis has called for government intervention.
The latest development in this space comes in an announcement from The U.S. Department of Energy (DOE), which claims the federal body is in active negotiations with nine companies to store their U.S. produced crude oil in the Nation’s Strategic Petroleum Reserve (SPR).
U.S. Secretary of Energy Dan Brouillette elaborated, saying “When producing oil, you have two options – you either use it or you store it. With the impacts caused by the COVID-19 pandemic, we are seeing an enormous decrease in demand as our country works to contain the virus. This is why making storage capacity available in the SPR is so important. Providing our storage for these U.S. companies will help alleviate some of the stress on the American energy industry and its incredible workforce.”
While negotiations with these nine companies are ongoing, other solutions are also being entertained to help store excess oil and consolidate stocks for when the stay-at-home orders lift. This is where Ironclad Environmental Solutions can assist. Our range of portable oil storage tanks can offer a reliable solution for oil companies that are looking for temporary storage solutions. Our oil storage tank types include 21,000 Gallon (500 BBL) Closed-Top Frac Tanks and 21,000 Gallon (500 BBL) Closed-Top Frac Tanks – Round Bottom Dual Manifold, among others. We have decades of experience in liquid and solid storage and containment solutions space, and an extensive reach encompassing 23 locations across the United States. If you are looking for storage tanks for oil, request a quote today.