Over the coming year, Texas energy companies will work to produce more energy to...
Over the coming year, Texas energy companies will work to produce more energy to capitalize on the needs of U.S. allies overseas, analysts predict. But they’ll do that against a shifting backdrop.It’s been a good year for oil and gas companies, with many making record profits while delivering much-needed fuel supplies to Europe amid Russia's war on Ukraine. Russia had been the continent’s primary supplier of oil, gas and fuel before it invaded Ukraine on Feb. 24.
Over the coming year, the industry will work to produce more energy to capitalize on the needs of America's overseas allies. But they’ll do that against a shifting backdrop tainted by an ongoing pandemic, inflation and a potential worldwide recession, analysts with S&P Global Commodity Insights said last week.
“China's demand was so weak last year, its imports of oil, LNG and thermal coal were all down year on year,” said S&P Global’s Dan Klein. “That was a key safety valve for a lot of markets, especially when Europe was scrambling for energy.”The continent will be getting even less gas from Russia than it got this year, the analysts said, straining anew the global gas market and driving demand for LNG along the U.S. Gulf Coast.
Displacing the 50-year partnership between Russia and its western neighbors will take time, said Michael Stoppard, the firm’s global gas strategy lead. “We will suffer the pain of that through 2023 and beyond.” Meanwhile, global gas markets will remain tight, straining power prices, too, Stoppard said. “There is no slack in the system. And so we can expect a continuation and a reinvigoration of the extreme market volatility that we've seen in both gas and power prices.”U.S. oil and gas production is projected to grow with Texas leading the way. U.S. shale basins are expected to produce 700,000 barrels a day of growth, mostly from Texas, said Shin Kim, the firm’s head of oil supply and production.
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