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Good morning, here's what the Oilman has for you today:

• Heat Pumps Go the EV Way

• Oilfield Industry Feels Gas Pinch

• Tweet of the Day

Heat Pumps Go the EV Way

Heat pump demand in Europe is in decline.

This is making heat pump makers sad and angry.

But it was bound to happen.

Going against market forces

Heat pumps are being advertised as greener than oil and gas.

They’re necessary, we’re told, to fight climate change.

They’re also expensive and don’t work in all circumstances.

And when I say expensive, I mean very expensive.

Five-figure expensive because of all the insulation that goes into achieving optimum conditions for the pumps.

Not everyone can afford that.

So people are not buying them.

But heat pump makers are churning them out, expecting climate policies to take care of the demand.

Well, they haven’t.

So now pump makers are stuck with their pumps and have to lay off people.

Nobody could have seen that coming

Actually, many did.

They kept warning heat pumps can’t live up to the hype.

They are too expensive for most.

But, of course, no one in government or the industry listened.

So, what we see now in Europe is the natural outcome of an attempt to challenge market forces.

It was bound to fail.

The question now is how governments will respond.

Will they mandate heat pumps?

Can they face the consequences if they try?

I’d say no to both, but European politicians may yet surprise us.

Hopefully, the fiasco would give our own politicians pause in peddling the pumps.

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Oilfield Industry Feels Gas Pinch

The oilfield service industry is bleeding jobs as Natgas drillers scale back.

The trend is likely to strengthen in the coming months across gas plays.

A very different year to 2023

Last year was a strong one for the oilfield service sector.

Hiring was strong as drilling increased and improved for that 1 million bpd in added output.

But that was in oil.

In gas, as prices slipped further down, appetite for drilling dried up.

And at the end of the year, companies started letting people go.

 In December and January, the industry laid off 4,680 people.

And there will be more.

Because gas drillers have warned that they will be curbing activity this year.

If only oil drillers in the Permian could stop the gas coming out of their oil wells.

It’s a cyclical industry, after all

Layoffs suck.

But in oil and gas, they’re part of the package.

If you work in a boom-and-bust industry, you’ve got to be ready for both.

And the good news is that busts don’t last forever, and a boom is always on the horizon.

The question is how long the bust would last.

Judging by gas demand forecasts, it shouldn’t take that long.

Shell just recently projected LNG demand is set to swell by 50% by 2040.

Associated gas alone won’t be enough to meet that surge.

Tweet of the Day

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