‘March Madness’ has taken on a whole new meaning this year. Since our last water weekly digest last Wednesday morning, it feels like the world has changed (ended?).

March 2020 has been marred by the arrival of a two-headed black swan event in the global oil market: i) OPEC+ collapse on the supply side, ii) COVID-19 crushing demand.

The shale E&P outlook is materially impacted to the downside, and operators are scaling back activity quickly as you’ll see in our news digest below.

So… water midstreamers are now grappling with what this means for formation water volumes in their pipes. Source water purveyors are wondering how many fracs will still need water. And water service and technology providers are caught up in the uncertainty now gripping the full-cycle oilfield water markets.

Our team at Oilfield Water Connection certainly doesn’t have all the answers. But we have spent decades working in the US onshore oilfield industry – and we’ve lived through some dark times similar to these. The one thing we’ve come to know and trust to be a universal truth in the oilfield is: change is constant.

Business conditions can change on a dime – for good or for bad. And although things just got very nasty out there, the sun will shine again. How could this new two-headed black swan meet its demise sooner rather than later? Well, here is your daily dose of optimism:

• Oil Demand Black Swan Skeptic. We heard a great quote about COVID-19 stats: “the stats you see today are like looking up at a star – the light you see today was emitted a long time ago.” The point is there was a great deal of travel between US and China AFTER the virus emerged but BEFORE it was detected. If the highly contagious novel coronoavirus has been among us for much longer than the stats from a limited sample of tests (which only started in March) show and is as lethal as the stats imply, then why haven’t our hospitals been overrun already? Could it be that everyone is looking in the rear view mirror thinking they are looking forward? While things may certainly get worse and we are closely monitoring the US situation, there is still a strong possibility that today’s press-fueled hysteria could burn out by April or May. Over the next four to six weeks, more hard data may potentially show that the economic and lifestyle impact is not nearly as lasting or severe as the mainstream media headlines suggest.
• Oil Supply Black Swan Skeptic. Saudi and Russia clearly aren’t bluffing in their price war. They took material actions over the weekend. But how long can they withstand the impact of $30 or $20 oil? There will be public unrest and serious financial losses for their governments if their draconian measures are sustained. What if this week’s aggressive moves by the Kingdom and the Kremlin quickly get the other side back to the table and a deal is reached in the next month or so? Things could look much better headed into May / June…

Finally, before the news… here is a quick conference update. We are continuing full steam ahead with the planning of our Oilfield Water Markets 2020 Conference at the Gaylord Texan Resort in Dallas Fort Worth on May 26-28. We are closely monitoring the COVID-19 situation and proactively developing contingency plans that will be attractive to all participants in an unexpected scenario where worse-comes-to-worse. But for now, the event is on track and developing according to plan with a great turnout, content, and networking opportunities expected. Events like this one are crucial in downturns, as they facilitate the discovery of efficiencies, innovations, solutions and new partners that can help firms navigate troubled waters.

Our event is now eleven weeks away, and sponsors and attendees and speakers continue to sign on. Today, we are excited to announce the event’s latest sponsor: Twenty20 Solutions has joined the event as a Silver+WIFI sponsor. Twenty20 Solutions provides security and automation solutions that allow pipeline and SWD operators to monitor and react to threats and maintenance issues in real-time, before a loss or breakdown occurs. We are thrilled to have their team as part of the event, and we believe that smart solutions like theirs (and those provided by our other sponsors) are more critical than ever as the industry’s cost reduction focus escalates in this environment.

And now, here are the top oilfield water industry headlines of the week…