How the Coronavirus Is Impacting the Energy Industry in Eastern Ohio
Posted March 9, 2020
At this point we’ve all been affected by the coronavirus in some way. Travel and events have been cancelled. Schools and businesses have shut down. Many people have self quarantined or are working from home. Daily life looks very different than it did just a month ago.
The energy industry has not been immune to the virus either. Here are a few of the ways the coronavirus is impacting oil and gas here in Ohio:
COVID-19 is bringing more uncertainty to an industry already on shaky ground
Prior to the arrival of coronavirus and the huge negative effect it has had on the economy, the oil and gas industry was already experiencing a downturn. High production of natural gas in the United States over the past few years mixed with a warmer-than-average winter led to supply exceeding demand—creating a low-price environment.
When you add COVID-19 into that equation, the outlook becomes even more foggy for the energy industry. That uncertainty could have an effect on how companies big and small choose to operate in the Utica shale, and how much they decide to invest in the area in the near future.
While drilling continues in many areas of the Utica, slowdowns are to be expected
Like a lot of businesses nationwide, oil and gas companies are moving many of their employees to work from home to help slow the spread of coronavirus and flatten the curve. Obviously, that becomes a little trickier in the field where there are wells, pipelines, and drill sites that require operators on-site.
To keep these operations up and running, many companies have put in place policies such as only having small teams working together, employing social distancing, incorporating additional cleaning practices, and taking other precautions. But even with these practices, production slowdowns are inevitable. In the coming weeks, most companies will have fewer people active on fewer sites—if not closing down some field operations altogether.
The coronavirus will cause many landowners to see reduced mineral royalties
With the industry already struggling with a low-price environment, COVID-19 having a major impact on global economies and markets, and drilling slowdowns or shutdowns expected in many areas, this situation will in all likelihood have an impact on Ohio landowners who have leased their mineral rights or royalties.
If you are currently receiving royalty checks for your minerals, your royalties will go down if oil and natural gas prices continue to drop, production on your land decreases, or delays keep your minerals from reaching the market. If you have recently leased your mineral rights and your land has not been drilled yet, you will likely experience a longer waiting period until production begins on your land. That could mean months or even years.
Gateway Royalty is here to answer your questions and help in any way we can
Despite everything that’s going with COVID-19 and the challenges facing the oil and gas industry right now, we want to assure everyone that Gateway Royalty is available to landowners and we are still actively purchasing mineral rights.
We are well-funded and remain committed to providing local landowners upfront payment for your oil and gas minerals or royalties, so you can put your cash to work immediately. With the financial difficulties facing many Ohioans as a result of the coronavirus, we think our services may be more valuable to landowners right now than ever before.
If you’re an Ohio landowner who wants to learn more about selling your mineral rights or royalties, please don’t hesitate to drop us a line.
Stay safe, everyone!