Bankruptcy looms over U.S. energy industry, from oil fields to pipelines

Bankruptcy looms over U.S. energy industry, from oil fields to pipelines

The industry was already struggling to satisfy investors unhappy with weak returns, even as the United States surged to become the world's largest oil producer in the last few years.. The sudden rout came despite substantial spending and output cuts having already been announced by U.S. producers, and reflected a price environment well below levels that companies and advisors had modeled in worst-case scenarios, according to energy lawyers.. More shale producers are expected to seek bankruptcy protection in coming weeks, industry and banking sources say, following Whiting Petroleum ( WLL.N ), which announced such steps earlier this month.. A number of the midstream operators borrowed heavily to finance pipeline systems, built to support producers developing new, costlier shale plays when oil prices were higher, but are no longer profitable.. The sale "solves some short-term problems for them," said one person familiar with the transaction, but cautioned that this alone will not stabilize the company unless fuel demand begins to recover.. Demand is down by roughly 25% in the United States, and oversupply is expected to linger for months..