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The Federal Reserve Bank of Dallas’ quarterly survey of operators and service companies shows an industry still confident in its near-term growth prospects. However, concerns remain about a number of issues, ranging from the steel tariffs to crude oil price differentials in the Permian. Energy activity has shown solid expansion, but to increase drilling, companies need a higher average oil price compared to last year’s surveys, reflecting a steady increase since 2Q and 4Q in 2017. The ability to find workers and limited pipeline capacity could limit near-term growth. Aggressive drilling growth in the Permian and other shale plays belies the cost of those wells, which in many cases are in the red.
Oil and natural gas are the lifeblood of modern economies. Together, they account for close to 60% of global commercial energy consumption. So why are prices so volatile? For young professionals, understanding the governing principles of oil price and connecting them with facts is key to facing the price turmoil.
Shutting in a well in the oil and gas industry is not like locking a house without a tenant; turning the tap off is akin to demolishing the house in many cases. With new options for connectivity, and the growing popularity of LTE connections, there is a huge opportunity for remote connections to close the digitalization gap. Premium acreage costs in the Permian have increased industry interest in acreage swaps, divestment, and M&A activity. As the Permian Basin has boomed again, recent conversations focused on how pipeline takeaway capacity limits the ability of operators to develop the basin to its full potential. In addition to solving the takeaway problem, water management is another bugbear waiting to be addressed.
The oil and gas sector’s annual stock performance over the past 5 years has lagged behind the S&P 500. This article recommends ways the industry can recover investor confidence and capital by understanding the changing type of investors. Sandy Kusano worked through the cycles of oil prices, seeing it soar from $4.87/barrel in 1978 to $125/barrel in 2008, working at one company, ConocoPhillips. While oil price and public perception may act as near-term threats to the industry, an industry in flux is an opportune time for new entrants to make their mark. In an interview with TWA, Hollub shares her leadership experience and company strategy.
Despite the global downturn, the long-term transition to net zero presents a major opportunity to create new multibillion industries based around the North Sea. Cross-sector collaboration and major state/private sector intervention, together with strong leadership, will be key. Now more than ever, safely managing the role of digitalization and the demand for decarbonization while efficiently balancing the books will be critical for companies to survive and thrive. What will the landscape of this industry look like when the dust of the current price crash settles? The business will realign, as it always does. This may bring big changes to the future of technology development.
Gas demand is expected to grow by just 2 Bcm in 2020, down from previous expectations of 6 Bcm. The Netherlands, UK, Germany, and Spain are expected to see the biggest impact. More than 200 companies could become insolvent in the UK and Norway. This number may be larger when including the rest of Europe. Global OPEX is falling, and the UK has emerged as a cost-cutting powerhouse among global offshore regions feeling the squeeze of uncertain oil prices.
Nymex WTI crude opened Monday on track for its worst day on record, falling nearly 40% to $11.05/bbl on the back of excess supply vs. low demand and dwindling storage capacity. The market in 2020 will be oversupplied by 3–5 million B/D and global inventory will surpass 400 million bbls over the next few months, according to ADI Analytics. The oilfield services and equipment sector, while optimistic, has not yet seen the effects of the improved oil price in the recovery of its overall business. As the debate continues about oil prices and supply and demand, the SPE Production and Facilities technical director examines data published by various organizations on the short- and long-term industry outlook. Can aggregative contingent estimation (ACE) improve the quality of oil price forecasts and even project performance?
The sale of the Appalachia position is in line with Shell’s strategy to focus on its shales strategy. Cutbacks in oil and gas production and drilling and completions will result in a decrease in produced water and will also lead to a reduction in water infrastructure investment. The market in 2020 will be oversupplied by 3–5 million B/D and global inventory will surpass 400 million bbls over the next few months, according to ADI Analytics. Because offshore project lead times are longer than in shale, production is likely to come on line in 2–5 years when oil prices may be higher. But the number of FPSOs to be sanctioned this year may be cut by half.