Posted on: 03. 19. 21
Without the oil and gas industry, life as we know it could stall to a total halt. During recent winter storms, many Texans quickly realized how critical oil and gas is to our daily lives.
Unfortunately, a stall in the oil and gas industry means that as a whole less cash is flowing in and out of our market. When cash runs thin at an oilfield or production facility, production slows down and the costs for production substantially increase.
Many people think that because of its size and scope, the oil and gas industry is sustainable without consistent cash flow. Unfortunately, this isn’t true and is why so many experts have concerns for the market’s future after the recent power failure and impacts of the global pandemic.
Here’s a closer look at three of the biggest financial concerns our industry currently faces as it recovers from over a year of “unprecedented events.”
Cash Flow Influences Industry Equipment Investment
The oil and gas industry is one that requires mass amounts of equipment investment when new drill sites open up or a current manufacturing facility expands. Without reliable equipment like natural gas coolers or equipment found in compressed natural gas packages, new sites are unable to spread their wings and get off the ground.
As with every industry, finances are necessary to invest in new equipment. So, even the slightest halt in a production company’s cash flow can have a significant impact on its prospective progression in oil & gas extraction.
Lack of Funds Means Lack of Progress
Drill site development isn’t as simple as buying up property and gathering resources. Staff needs to be hired, studies need to be conducted, and above all, drill rigs need to purchase for the project. These rigs alone rest within the price range of 18 and 50 million dollars!
As you can see, cash flow is essential to getting new and exciting industry projects off of the ground. So, when business is forced to halt, even a two-week recovery period can substantially set back the possibility of future projects.
The difficulty of creating future projects is where the problem lies. In an age-old profession like American oil and gas; without progression, eventually the competition will pass us up and our national industry loses its competitive edge.
Without Steady Cash Flow, Jobs Are At Risk
Aside from equipment expenses, companies still have to meet payroll for the employees who make the sites a functioning possibility. When an issue like massive power loss or a pandemic shut down large portions of our industry several financially damaging issues start to pop up within facilities and sites:
- Production drops and incoming cash decreases
- Payroll deadlines become difficult to meet
- Jobs are forced into temporary or permanent obsoletion
- Thousands of loyal oil and gas workers quickly become unemployed, further crippling the success of our industry
Follow the Oil and Gas Recovery Process With Pro-Gas, LLC
The oil and gas industry is part of the market that the Pro-Gas Services team calls “home.” We care about the developments of the facilities and oilfields our equipment serves and are happy to have our finger on the pulse on the ebb and flow of our industry.
If you are the manager of a production facility or oversee a local drill site, we want to be your source for reliable updates and equipment that keeps your business goals moving forward.
Contact us today to learn more about our available products and services.
