Storage for Oil and Gas Could be a Huge Opportunity for Profits
When Saudi Arabia and Russia disagreed on production limits, the Saudi's did what they have done many times before. They determined to take radical action and increased production, flooding the world with new oil, and driving oil prices down so low, as to "cripple" Russia. In the process, the Saudi's hurt oil drillers and producers all over the world. Oil dropped as low as $10 in the futures markets, but in a cash market oil went from $56 per barrel of oil to $20 per barrel. This created a "rush to shut down" production among independent oil producers in the Permian Basin, and created alarm among investors and bank lenders of the oil industry. Carlsbad, New Mexico immediately felt the pain. "Carlsbad had been seeing a gradual slow down in the oil and gas industries, but the move by the Saudi government was harmful and punishing to the industry. Now we are seen hotel occupancy rates fall, "man camp occupancy" for the thousands of oil field workers which were full a few months ago, now are struggling to find tenants. Retail and oil and gas support industries have cut back." said Erst Diener a student of the Permian Basin and it's economy. So now, so much oil production has hit the world markets that there is a desperate need for "Storage". Oil companies are storing oil in oil storage ships and paying them simply to sit idle at sea, to store the flood of oil. Now slowly the price of oil is recovering, but Saudi Arabia's move has left multiple thousands of workers out of jobs, and many oil and gas companies essentially downsized or shut down. Big operators such as BP and EXXON have the capital to last through these temporary times, but this coupled with the recession and lower demand for fuel because of dramatic reduction in travel by people on airlines, and even autos, has caused a "recessionary" fear that has cost American oil and gas companies billions.
"Americans and the American Government is again learning that Saudi Arabia's leadership is not a friend of America, and it has cost thousands if not millions of jobs in the USA" said Diener.
We give credit and wish to reprint the following article about storage. Why? Carlsbad is an ideal location to create a huge storage tank center for the oil and gas industry. Indeed, those who can build and create such facilities, or investors who wish to find a profitable investment direction might consider this a potential area, that could employ huge numbers of contractors, engineers, builders, and petroleum industry experts. As Ben Boothe of Boothe Global Perspectives has said: "The greatest times of crisis, often create the greatest opportunity for new wealth"....if you are quick on your feet, informed and willing to jump.
Enjoy the following and our credit to Market Watch.
April 21, 2020, from MARKET WATCH: 
“With such high stock builds, the highest in history, the availability of storage is a key issue and the subject of much current debate,” the IEA said. Data suggest that “at the end of January, the 6.7 billion [barrels] of global crude oil storage capacity was holding 4.2 billion bbls, representing a utilization rate of 63%.”
“We assume that 80% of this nameplate capacity is the maximum operational level; this means that there was about 1.2 billion bbls of spare capacity at [the end of] January” and “stocks could approach this operational capacity limit by mid-year,” it said.
Indeed, most analysts are expecting the U.S. to reach full oil storage by late April or early May, with global storage reaching full capacity by early June,” said David Grumhaus, co-chief investment officer at Duff & Phelps Investment Management.
Tanker storage may offer an alternative to land storage, but it is “very pricey” and there are not enough tankers available to solve the problem, he told Market Watch, adding that rates for very large crude carriers, or VLCCs, have skyrocketed above $100,000 a day for a three-month charter.
At its high Tuesday, shares of Teekay Tankers Ltd. TNK, +6.13%, the largest operator of mid-sized tankers, traded at the highest level since June 2016, according to Dow Jones Market Data.
Read:These U.S. oil companies are most at risk in the danger zone
Also read:The biggest oil ETF is down more than 30% this week, with retail investors the biggest losers
Railroad tank cars, “theoretically” may also “come to the rescue,” said analysts at Cowen, in a note dated Tuesday. Cowen estimates that there are at least 30,000 Class 3 flammable liquid tank cars, with a capacity of over 30,000 gallons each in North America that can be deployed to hold oil. Use of tank cars for storage is unlikely at this point, but Cowen suggests that Trinity Industries Inc. TRN, +0.62% would be among the equipment supplies positioned to benefit.
Read Using railroad tank cars to store excess oil: It’s ‘possible but improbable’ for now
Meanwhile, the negative oil prices for the May West Texas Intermediate crude contract on Monday offered a clue to the ultimate solution for the industry’s excess oil.
Prices for May WTI crude US:CLK20 lost 306% to settle at a negative $37.63 a barrel Monday, which implied that investors needed to pay buyers to take delivery of crude oil amid an excess of crude oil and lack of storage space. It expired Tuesday at $10.01 a barrel. The new front-month June contract US:CLM20 ended Tuesday at $11.57, down 43.3% for the session.
Read:U.S. oil’s June contract drops over 43% to 21-year low as May contract expires at $10 a barrel
“There is one answer, and it is the one that no wants to hear: shut-in production,” said Grumhaus. “And shut-ins are going to happen because the price will fall low enough to make it happen.”
Analysts have said that an agreement reached earlier this month between the Organization of the Petroleum Exporting Countries and its allies including Russia, to cut 9.7 million barrels of oil from the world market starting May 1 through June, wasn’t enough to offset demand losses.
“It seems as if things are moving too fast to stop the tidal wave that is coming,” said Grumhaus.
It is estimated that 20 million to 30 million barrels a day of oil demand have been curtailed by COVID-19, and there is just no place to put all that extra oil, he said. “U.S. production is going to have to fall by 2-3 [million barrels a day] over the coming months.”
For now, Texas, the largest oil-producing U.S. state, has refused to take action.
The Railroad Commission of Texas, which regulates the state’s oil-and-gas industry, formed a task force with an aim to research what can be done to “aid the industry” in these difficult times for oil, TRRC Chairman Wayne Christian said during a commission meeting Tuesday.
However, the commission decided not to vote on oil output cuts. Commissioner Ryan Sitton had proposed a cut of 20% in Texas oil production starting June 1, or roughly 1 million barrels per day, with the proration tied to market demand and contingent on other U.S., Canadian and OPEC+ producers cutting another 4 million barrels per day of oil.
Christian said that the commission needs to make sure that any motion they make for peroration fits legal requirements and doesn’t get stuck in court.
“With such high stock builds, the highest in history, the availability of storage is a key issue and the subject of much current debate,” the IEA said. Data suggest that “at the end of January, the 6.7 billion [barrels] of global crude oil storage capacity was holding 4.2 billion bbls, representing a utilisation rate of 63%.”
“We assume that 80% of this nameplate capacity is the maximum operational level; this means that there was about 1.2 billion bbls of spare capacity at [the end of] January” and “stocks could approach this operational capacity limit by mid-year,” it said.
Indeed, most analysts are expecting the U.S. to reach full oil storage by late April or early May, with global storage reaching full capacity by early June,” said David Grumhaus, co-chief investment officer at Duff & Phelps Investment Management.
Tanker storage may offer an alternative to land storage, but it is “very pricey” and there are not enough tankers available to solve the problem, he told MarketWatch, adding that rates for very large crude carriers, or VLCCs, have skyrocketed above $100,000 a day for a three-month charter.
At its high Tuesday, shares of Teekay Tankers Ltd. TNK, +6.13%, the largest operator of mid-sized tankers, traded at the highest level since June 2016, according to Dow Jones Market Data.
Read:These U.S. oil companies are most at risk in the danger zone
Also read:The biggest oil ETF is down more than 30% this week, with retail investors the biggest losers
Railroad tank cars, “theoretically” may also “come to the rescue,” said analysts at Cowen, in a note dated Tuesday. Cowen estimates that there are at least 30,000 Class 3 flammable liquid tank cars, with a capacity of over 30,000 gallons each in North America that can be deployed to hold oil. Use of tank cars for storage is unlikely at this point, but Cowen suggests that Trinity Industries Inc. TRN, +0.62% would be among the equipment supplies positioned to benefit.
ReadUsing railroad tank cars to store excess oil: It’s ‘possible but improbable’ for now
Meanwhile, the negative oil prices for the May West Texas Intermediate crude contract on Monday offered a clue to the ultimate solution for the industry’s excess oil.
Prices for May WTI crude US:CLK20 lost 306% to settle at a negative $37.63 a barrel Monday, which implied that investors needed to pay buyers to take delivery of crude oil amid an excess of crude oil and lack of storage space. It expired Tuesday at $10.01 a barrel. The new front-month June contract US:CLM20 ended Tuesday at $11.57, down 43.3% for the session.
We at BootheGlobalPerspectives (www.bootheglobalperspectives.com) see storage as a good investment with good rates of return.
We also see, through: www.benboothe.com a potential for storage facilities to be in high demand for some time to come. If that is the case, not only is a good rate of return on investment, but potential price/value appreciation.