The Comeback Of Fossil Fuels: US Oil And Gas Industry Defies Clean Energy Push

By the mid of 2020, the Covid-19 pandemic and the lockdowns lead to the significant drop in oil & gas revenue, ultimately resulting in the companies filing for bankruptcy protection due to its over-ambitious expansion.

Yet, in the first nine months of last year, Chesapeake generated $1.3 billion of profit, and also distributed $800 million in dividends among its shareholders.

 Additionally, its stock price more than doubled in 2021 after the company relisted its shares.

Interestingly, despite the push for clean energy by the Biden led administration & a history of erratic investments and heavy debt-dependency, fossil fuels have shown a remarkable resilience owing to many factors such as the Russian invasion of Ukraine and the U.S economic recovery.

The production of natural gas, which is Chesapeake's area of expertise, has reached all-time high levels in the U.S.

 While crude oil production is yet to match the levels of 2019, it is still at a peak. Exports of both natural gas and crude oil have also reached new highs, easily surpassing overseas sales of aircraft, pharmaceuticals, food and cars.

Despite The Biden Govt's  Efforts To Restrict Drilling  On Federal Lands, Oil & Gas  Companies Have Turned To  Tapping The Nation's Vast  Private Shale Reserves To Drive Production Higher. 

As global demand for U.S. oil and gas has skyrocketed, resulting in high profit margins for producers, the  President has accused them of profiteering  during the crisis.

Recently, mild winter temperatures caused natural gas prices to drop below $4 per million British thermal units, however, experts predict that exports will help maintain high prices in the years to come.

Chesapeake Was One Of  The First To Use Horizontal  Drilling And Hydraulic  Fracturing To Unlock Large  Amounts Of Natural Gas &  Now They Are Extracting 1.6B  Cubic Feet Of Gas Per Day  From The Haynesville Basin.  

While they drew gas from shale formations, they also  acquired millions of acres of mineral rights with  billions in debt. 

However, Overproduction  Caused Gas Prices To Drop, Resulting In Diversifying  Production & Downsizing  Operations.  

 Despite these struggles, they are betting on the world's continued reliance on fossil fuels and natural gas as a bridge to renewable energy.

The U.S. Is Expected To  Double Exports Of LNG To  Nearly 24 Billion Cubic Feet  Per Day By 2030 & Much Of The Supply Will Come From  The Haynesville.   

However, domestic energy costs have not  decreased due to lack of infrastructure. Increasing  exports and global gas market prices have resulted in higher domestic prices, and it is unlikely that prices  will return to pre-pandemic levels of less than $3/million BTU.

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