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The measure of success in RE may be location x 3, for the 2020 O&G sector, it’s all about storage.

September 10th, 2020

Unprecedented crude oil oversupply and lackluster energy demand continues to push up US onshore inventories. Many conventional and shale drilling operations in the upstream E&P segment are all but shuttered and there is little agreement on how to go about restarting wells once demand returns. Halting a well is a delicate process and extreme care must be taken not to compromise geological formations. Oil crossflow, water ingress, and accumulation of paraffin in the wellbore can render a well unusable. On Sept 4th, the US EIA’s cited a weekly increase of 2mm bbl. With U.S. crude oil inventories settling north of 500mm bbl, or 14% above the 5 year average, traders are running out of storage capacity and grudgingly committing to pre-contracted shipments. Crude carriers have become floating storage tanks as operators repurpose railcars, caverns, and pipeline assets for short term storage of crude and petroleum.

Ensuring the safety, compliance, and quality of these temporary storage assets is more important than ever before. For example, ingress of free water accumulating at the bottom of a tank can have a detrimental effect on petroleum by encouraging microbial activity. Over time, the resulting acids can corrode tank walls, pipes, fittings, and pump components.

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