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Monday, January 25, 2021

Alex Mills: Paris violence renews oil and gas safety concerns

The terrorist attacks in Paris on Nov. 13 have caused concern in the U.S. about protection of oil and gas infrastructure. Officials also wonder what impact any resulting military action will have on crude oil supplies and price.

Texas Railroad Commission Chairman David Porter wrote a letter on Nov. 16 renewing his call for heightened security along the state’s border with Mexico, which he contends provides a gateway for Islamic State terrorists to attack oil and gas pipelines and facilities as they have in the Middle East.

“It’s been more than a year since I first asked the Department of Homeland Security to take the threat of a terrorist attack against our critical infrastructure seriously, and we are still in the same position,” Porter wrote in a letter to Homeland Security Secretary Jeh Johnson.

“In light of the Paris attacks,” Porter added, “I am compelled to reiterate concerns I have vocalized about the security of our energy industry, which is the backbone of the Texas economy.”

Porter expressed fears to federal officials in 2014. He pointed out that the United States’ failure to secure the Texas-Mexico border endangers critical energy infrastructure in Texas. He noted that a significant portion of the state’s 425,000 miles of pipeline is located in South Texas’s Eagle Ford Shale, “which remains vulnerable due to its proximity to the unsecured border.”

Porter said there have been news reports of terrorist attacks on a natural gas plant in France and oil pipelines in Yemen.

“In light of these facts, I would encourage you to pressure the White House and instruct Customs and Border Protection to take these concerns seriously, instead of waiting until it is too late,” Porter wrote, offering his office to provide advice and council to protect Texas assets from “any and all nefarious groups.”

Some analysts predicted that crude oil prices will come under pressure to increase as the fighting escalates.

However, crude oil prices around the world remained flat through Nov. 18. Trading on the New York Mercantile Exchange (NYMEX) opened at $41.11 per barrel for 30-day delivery. West Texas Intermediate (WTI) traded at Cushing, OK traded at $37.75. Brent crude traded at $42.23 on the London exchange.

All of these prices were pretty much in line with the prices on Nov. 13.

After the attack in Paris, the French Air Force dropped bombs on crude oil storage facilities in Syria, which Islamic State operatives were using to trade crude oil.

Apparently crude oil traders believe that the removal of that crude oil from circulation will not have a major impact on oil supplies around the world.

Some analysts said they believe the outbreak of violence will hurt demand and will have a negative effect on the economy. A reduction in demand will put more downward pressure on crude oil prices because of the huge oversupply worldwide.

Alex Mills is president of the Texas Alliance of Energy Producers.

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