Back in late March and early April, U.S. refineries responded to the sudden falloff in demand for jet fuel and motor gasoline by quickly ramping down their operations. Similarly, E&Ps in recent weeks have reacted to sharply lower demand for crude oil by slowing — or even suspending — their drilling activity and shutting in wells. Midstream companies’ actions have generally been more muted, though. While many midstreamers have ratcheted back their planned 2020 capital spending plans, the bulk of their major crude oil, natural gas and NGL projects already under construction are staying on-plan. Most of the rest are only being delayed by a few months, and a handful are either being reworked or deferred indefinitely. Today, we consider the midstream sector’s seemingly modest response to the crashes in crude oil prices and demand.
As we said earlier this month in Baby Break It Down, when refineries were confronted with a big drop for their products, they rapidly dialed down their capacity utilization — from 87% in the week ended March 20, to 69% in the week ended April 10 — and at least a couple of refineries were simply taken offline. As for U.S. producers, they’ve been responding with a vengeance to this spring’s collapse in crude oil prices and refineries’ demand for crude by “choking back” wells to reduce their output, shutting in thousands of wells and slashing the crude rig count by nearly 60% in two months’ time. As a result, U.S. crude production is down by more than 11% over the same period — the kind of decline that typically happens only in the wake of major hurricanes in the Gulf of Mexico.
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In announcements and earnings calls in late March, April and early May, U.S. midstreamers of all sizes and stripes discussed their plans to pull back on 2020 capex. Enterprise Products Partners, for example, announced a $1.1 billion cut, to between $2.5 billion and $3.0 billion, while Energy Transfer said it would trim its original $4 billion capital spending plan by at least 10% and as much as 20%. Targa Resources now expects to spend about $750 million on growth projects this year, or 40% less than the midpoint of its initial plan for the year.
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About the song
"Finish What Ya Started" was written by Eddie Van Halen, Sammy Hagar, Alex Van Halen and Michael Anthony. It appears as the third song on side two of Van Halen's eighth studio album, OU812. It is one of the few Van Halen songs to feature a clean guitar sound. Eddie Van Halen recorded the song using a Fender Stratocaster plugged straight into the mixing board. Hagar added the rhythm guitar part using a Gibson acoustic guitar. "Finish What Ya Started" was released as the third single from the album in September 1988. It went to #13 on the Billboard Hot 100 Singles chart. Personnel on the record were: Sammy Hagar (lead vocals, rhythm guitar), Eddie Van Halen (lead guitar, keyboards, backing vocals), Michael Anthony (bass, backing vocals) and Alex Van Halen (drums, percussion).
OU812 was recorded between September 1987 and April 1988 at Van Halen's 5150 Studios in Studio City, CA. It was produced by the band and Don Landee. The cover art of the album featured a black-and-white portrait of the band in half shadow, as a nod to the cover portrait of The Beatles on their 1964 release, Meet The Beatles. OU812 went to #1 on the Billboard Top 200 Albums chart, and has been certified 4x Platinum by the Recording Industry Association of America.
Van Halen is an American rock band formed in Pasadena, CA, in 1972. The band has had eight members pass through its ranks, the most noteworthy change being a period during which Sammy Hagar replaced David Lee Roth as Van Halen’s lead singer. Eddie and Alex Van Halen are the only original members that have remained in the band's line up since its inception. Van Halen has sold more than 80 million records worldwide, and has had 13 #1 hits on the Billboard Modern Rock Singles chart. The band has released 12 studio albums, two live albums, two compilation albums and 56 singles. Van Halen has won one American Music Award, one Grammy Award and four MTV Video Music Awards. The future of Van Halen is uncertain at this time, as the band has been on hiatus since the fall of 2015.
