Is the Russian ruble more weakly linked to oil than before?
Clinging to the notion that they are protecting market share, several OPEC members continue to overproduce deliberately, as do Russian operators, ensuring that the global market remains saturated.
According to the U.S. Energy Information Administration (EIA), U.S. crude oil and lease condensate proved reserves increased for the sixth consecutive year in 2014.
The number of producing gas wells in the U.S. held steady last year, despite gas prices remaining stubbornly low.
The total number of active, producing oil wells in the U.S. dropped slightly during 2015, a trend that looks set to sharpen this year, as the oil price decline begins to exact its toll on the industry.
Who knew? After the rapid decline in crude oil prices from mid-2014, most analysts expected 2015 to be a year of recovery, when prices would creep back toward $70/bbl.
The catastrophic oil price decline wreaked havoc on the U.S. rotary rig count during 2015, with the industry bracing for a continued slowdown this year.
Looking at the spending plans of roughly 300 E&P companies worldwide, and factoring in recent oil price declines, North American spending may fall 40-50% in 2016. Capital expenditures, internationally, are set to post a second, consecutive 15% decline.
Looking back at 2015: What happened, what didn’t, and hope for the future
Making the case for a Saudi oil production cut
Not since 1986 has the global upstream industry seen such a 12-month period of oil price erosion, punctuated by rapid-fire reductions in operator, vendor and contractor activity.
Low oil prices are constricting drilling activity worldwide with a couple of exceptions. Meanwhile, production and reserve levels have gained, spurred by last year’s stout drilling effort.
Less than a year after the enactment of Mexico’s new energy reform law, which was promulgated in June 2014, the Director General of national oil company Pemex, Emilio Lozaya, announced significant new oil and gas discoveries in the country.
In response to the prolonged oil slump, operators have slashed spending, postponed large-scale projects and laid off staff. Canada’s industry associations have downgraded their 2015 forecasts, as well.
Although this year’s major upstream downturn is inflicting considerable pain on producers and equipment/service companies, alike, it also is stimulating additional technical creativity and progress across all disciplines of the North American industry.
The year 2014 has been a period of not only great profitability for the global upstream industry but also a time of considerable volatility.
After reaching a plateau last year, worldwide E&P activity is set to resume additional growth, led by a very strong drilling market.
Despite a variety of interfering factors, U.S. activity remains at a high level, aided by the industry’s technical and efficiency gains. Canada continues to slowly rebound on the strength of oil activity, while Mexico remains at a lower level.
Sustained high oil prices, the sanctioning of major projects and the delivery of a large number of offshore rigs, in both 2014 and 2015, are driving the projected increases in international E&P spending.