Dan Allford grew his company by building precision oil and gas field equipment with cutting-edge robots, and like many Texas businesses, he profited when energy prices rose and buckled down when they fell during the industry’s incessant cycles.
This downturn feels different, though, and Allford’s ARC Specialties is moving into other industries that promise a little less volatility, and perhaps, a more prosperous future.
“This has been one of the longest downturns, so that is one indication we need to look to other industries,” Allford, founder and CEO of ARC, told me. “We always have, but to be candid, when the oil patch is doing well, it’s lucrative and fun and challenging.”
ARC Specialties will never abandon its oil and gas clients, Allford insists, but they could play a much smaller role in the company’s future. If current trends hold, it may be the only way his company survives.
COVID-19 is sparking a lot of conversations about the future of oil and gas. The move to work-from-home has crushed gasoline demand, and the longer the pandemic lasts, the less likely people will return to the office.
TOMLINSON’S TAKE: Texas needs pipelines and a phase-out of oil and natural gas
Back in April, at the height of the shutdown, vehicle miles traveled in the United States dropped 64 percent, according to a new report from consulting firm KPMG. And while Americans are getting back in their cars, they may never again drive the 3 trillion miles they did in 2019.
Analysts at KPMG say new habits formed during the pandemic could eliminate 270 billion miles of travel a year, a reduction of 9.2 percent. An increase in the number of delivery vehicles on the road would not make up for the lost demand for oil because many of them will be electric.
“Energy demand and certainly mobility demand will be lower even when this crisis more or less (is) behind us,” Royal Dutch Shell CEO Ben van Beurden said in an interview with IHS Markit, an energy consulting firm. “Will it mean that it will never recover? It’s probably too early to say. But it will have a permanent knock for years.”
With more than 1 billion barrels of oil in storage, and prices below the breakeven point for most companies, drilling activity will remain low for at least the next year, if not longer, especially in North America. Allford is finding new…
Read More: Robotics company growing profits outside of oil patch
