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Clouds of smoke and fire emerge during a controlled burn in an effort to clean up oil in the Gulf of Mexico following the Deepwater Horizon explosion. Justin Stumberg/U.S. Navy
Clouds of smoke and fire emerge during a controlled burn in an effort to clean up oil in the Gulf of Mexico following the Deepwater Horizon explosion. Justin Stumberg/U.S. Navy

Clean Power

COVID-19 Bankrupts 19 Energy (Oil & Gas) Companies

Several energy companies have filed for bankruptcy this year, citing the coronavirus pandemic and all that resulted as the cause. The U.S. has had its lowest energy consumption in 30 years this past spring, according to federal officials.

Photo by Justin Stumberg/U.S. Navy (public domain).

Several energy companies have filed for bankruptcy this year, citing the coronavirus pandemic and all that resulted as the cause. The U.S. has had its lowest energy consumption in 30 years this past spring, according to federal officials.

There were sharp drops in coal usage (for electricity) and oil usage (for gas/diesel for transport) around the globe as the pandemic gobbled up economies like Pac-Man. These trends are expected to reverse as the economy slowly reopens, but the damage to more than a dozen companies was done. On the flip side, of course, an annual decline in U.S. and global greenhouse gas emissions is expected.

In April of this year, overall U.S. energy consumption dropped 14% compared to 2019. That was the largest decrease recorded since data started being collected back in 1973. This drop is larger than the drop seen just after 9/11, when a mild winter also depressed electricity demand. Furthermore, it is the lowest monthly level since 1989.

New drilling activity declined in June for the seventh consecutive month, down to 11 million barrels daily, showing that demand continues to be abnormally weak despite economies getting back to somewhat normal openings.

It’s going to be even harder for coal companies, as that sector has been in steady or even strong decline since 2007 as renewable energy (particularly wind and solar energy) and natural gas have become more cost competitive. Coal consumption fell 27% in April compared to 2019.

Big Oil Going Bankrupt?

Oil-carrying ships parked in the Pacific Ocean due to low demand and oversupply in April 2020. Image courtesy U.S. Coast Guard, from video by Petty Officer Third Class Aidan Cooney (public domain). The appearance of U.S. Department of Defense (DoD) visual information does not imply or constitute DoD endorsement.

A total of 19 energy companies have filed for bankruptcy this year. These 19 new bankruptcies are not the only recent ones in the U.S. industry, though. There were a total of 51 bankruptcy filings from January–May in 2016, 12 in 2017, 18 in 2018, and 18 in 2019. In total, there are around 225 bankruptcy cases across the country in the energy sector that are still pending in federal bankruptcy courts as of May 31, 2020. Among the 19 newer ones are:

  • Gavilan Resources
  • Whiting Petroleum
  • Echo Energy Partners
  • Ultra Petroleum
  • Skylar Exploration
  • Diamond Offshore
  • Freedom Oil and Gas
  • Templar Energy

These 19 new filings reflect a debt of $13.1 billion. That’s just from these 19 new cases. Haynes and Boone reported that there have been 13 bankruptcies by oilfield services companies in 2020. These filings showed a total debt of $11.6 billion.

Clean Energy Is On The Rise

The International Energy Association (IEA) reported that in the first quarter of 2020, the global use of renewable energy was 1.5% higher than in Q1 of 2019. That increase reflected a rise of around 3% in renewable electricity generation. This followed the completion of more than 100 GW of solar PV and 60 GW of wind power projects in 2019. This was all well before lockdown measures took place in the U.S., of course. Furthermore, though, even while electricity demand fell strongly from the lockdown measures, wind and solar power continued to grow.

Demand for renewables is on the rise, lockdown or not, while fossil fuels are in decline, lockdown or not.

Globally, many regions saw record-high hourly shares of variable renewables in electricity demand during the lockdown. These included:

  • Belgium
  • Italy
  • Germany
  • Hungary
  • The Eastern United States

In Germany, the share of variable renewables was consistently higher in March, especially March 22 when the strict social distancing measures began. These shares were higher than around the same time in 2019. The IEA estimates that, for 2020, renewable energy demand will increase 1% from 2019 levels, in stark contrast to all other energy sources. While 1% isn’t much typically, comparing them to the energy industry’s drastically low levels shows that renewables are on a tear. Some of the pitfalls the fossil fuels sector has been hit with this year besides bankruptcies and the lowest demand in 30 years are:

  1. Oil prices dropped into the negatives.
  2. An oversupply of barrels of oil, with millions of barrels of unwanted oil.
  3. Major lawsuits due to oil & gas companies intentionally misleading consumers.
  4. The oil and gas industry has been in a recession for 11 years.
  5. IHS Markit expects the U.S. to halt 1.75 million barrels a day of oil production.

When compared to that 1% rise in renewable energy, it is clear to see that clean energy is on the rise and is in demand. As Maye Musk, Elon Musk’s mother, likes to tweet, #CleanEnergyWillWin. Indeed. We have a long way to go before fossil fuel projects are retired as much as needed and fossil fuels are granted their right to permanently and peacefully sleep below the surface, but the good news is that clean energy is winning more year after year.

Related: BP To Cut Oil Production 40% By 2030, And Invest Billions Into Green Energy


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Written By

Johnna Crider is a Louisiana native who likes crawfish, gems, minerals, EVs, and advocates for sustainability. Johnna is also the host of GettingStoned.online, a jewelry artisan and a $TSLA shareholder.

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