We have all heard about the shale boom and how it may lead to lower long-term energy costs and energy independence. But what does this mean for the workboat industry?
It’s good, and also could be bad. It could hurt offshore energy E&P while tank barge operators are already seeing a pickup in crude oil demand for their equipment.
Lately, there has been discussion from officials like Harold Hamm, chairman and CEO of Continental Resources, pushing for a repeal of the ban on U.S. oil exports. Hamm, who has made a fortune as one of the largest Bakken shale producers in North Dakota, told the Senate Energy and Natural Resources Committee on Jan. 30 that “experts including Raymond James, Citi and the International Energy Agency all agree we will be energy independent in terms of crude oil within a decade or two.” Hamm closed his testimony by saying, “Americans and consumers of all nations would benefit from the immediate lifting of restrictions that inhibit the export of crude oil produced in the U.S.”
That sounds all well and good for the country as a whole, but as Bill Pike wrote in the March issue of WorkBoat, this would favor onshore vs. offshore E&P. The average operator can make more developing onshore shale oil and gas versus deepwater. Thus, a pickup in U.S. E&P activity as a result of lifting the export ban would not necessarily mean an increase in offshore activity. In fact, Pike writes that it could actually have the opposite effect in the long term.
On the inland side, however, the outlook is more promising. The barge market for domestic crude oil is relatively new (it was almost nonexistent in 2010) and has been growing. Barges are a lower-cost alternative to railroads and pipelines. Crude oil now makes up more than half of all petroleum moving by barge from the Midwest to the Gulf Coast, according to River Transport News, which tracks the barge industry.
Kevin Horn writes in the March issue of WorkBoat that while forecasts for “new, dynamic markets are difficult and often short lived,” he expects to see the continued growth of domestic crude oil barge shipments.