By: John Sinders
The majority of ongoing U.S. based storage terminal projects are concentrated in the Gulf Coast regions of Texas and Louisiana, strategically close to major production basins or refinery end markets. While companies and governments around the world began responding to COVID 19 with varying lockdown measures, one thing became quickly apparent amid the uncertainty the glut of oil and gas at current production levels would soon overwhelm storage capacity in the U S and worldwide. When oil futures plummeted into negative territory on April 20 practically, sellers were paying to have oil taken off their hands.
“In the middle of every crisis lies great opportunity”
However, as Einstein famously noted, in the middle of every crisis lies great opportunity. Despite market volatility, there are pockets of the energy universe that have seen positive impacts from COVID 19 namely oil and gas storage businesses. Despite major production cuts in 2020, IHS expects storage levels to remain near maximum capacity through year end, with total storage capacity growing steadily for the foreseeable future. Fixed roof tanks will continue to represent the largest storage market, while floating roof storage tanks and portable storage tanks are anticipated to grow significantly in the U.S. and worldwide. Even after the pandemic is under control, which is generally expected by late 2020 or early 2021 suppliers are expected to hold increased inventory counts to protect against future price fluctuations under the new normal.