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Oil Firms Do Not See A Lasting Impact From Harvey

Refinery

Most executives at oil and gas firms don’t expect Hurricane Harvey to continue to affect their business six months from now, the Q3 Dallas Fed Energy survey showed.

When asked to what extent they expect business to be negatively affected six months from now by Hurricane Harvey, 62 percent of respondents said “not at all”, 30 percent expect to still see their business slightly affected, and the other 8 percent expect business to be moderately or severely affected six months from now.

To the question about the impact on the broader energy sector, including midstream and downstream, 55 percent of executives expect Hurricane Harvey to still have slight negative effects six months from now. Another 24 percent of respondents see the sector experiencing moderately negative effects, 18 percent expect no impact from Hurricane Harvey six months from now, and 2 percent expect the sector to continue to be severely affected.  

Texas shale was hit hard by Harvey, taking offline roughly a fifth of US refining capacity, with the biggest refineries in the U.S. curtailing operations. In the upstream, the Eagle Ford took a hit, where operators shut in production.

Asked about where they see U.S. crude production at the end of 2018, the average response of 122 oil and gas firms was 9.9 million bpd. More than a third of executives responded exactly 10 million bpd, the Dallas Fed said.  

Related: Oil Analysts Baffled As Venezuela Ditches Petrodollar

In terms of the general business climate, business activity continued to increase in the third quarter, but at a slower pace, according to the oil and gas executives polled. On average, respondents expect WTI oil prices to be at $50.20 per barrel by year-end, with responses ranging from $40 to $63 per barrel, the Dallas Fed said.

“Domestic production will continue to increase in the $48–$52-per-barrel environment as access to capital will be sufficient to materially maintain capital expenditure budgets at least into the first half of 2018. As trite and overused as the statement has become ... the cure for low oil prices is low oil prices,” one executive at an E&P firm said in the comments from survey respondents that the Dallas Fed published.

By Tsvetana Paraskova for Oilprice.com

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