Remember in 1999-2000 when there was a blip on the world economic radar somewhere over by Asia and the price of a barrel of oil went to $10.60?
Think that today’s economic calamity is on three orders of magnitude greater than what happened in 2000 but so far the price has not collapsed although the $40-45/bbl it’s hovering around today is not going to sustain the offshore business for very long. Yesterday they announced all available crude storage capability on land is nearing 95% and tankers are sitting on anchor acting as floating storage. Obviously this does not portend well for the oil price. Once there is no further storage to use then owners will have to dump oil just because they simply have no place to sit on it.
Can oil go down to under $20/bbl and if so then what will be the outcome for us working in the offshore Gulf? What projects will be suspended, postponed or outright cancelled? There is talk of lots of fancy foreign offshore vessels on order being cancelled do to lack of financing and companies who placed orders for jackup rigs getting out from under their commitments.
Still, the majors might have learned from their past mistakes which is to stop all exploration and developing new production during times when oil prices are low only to regret that when the demand (and prices) recover. I sure hope this is the case this time.