Forecast ///
Dr. Anas Alhajji, Contributing Editor
Making the case for a Saudi oil production cut
Kurt Abraham, World Oil
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.
Kurt Abraham, World Oil
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.
Mauro Nogarin, Contributing Editor
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.
Robert Curran, Contributing Editor
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.
Kurt Abraham, World Oil
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.
Pramod Kulkarni, Kurt Abraham, Roger Jordan, Steven McGinn, World Oil
An oversupplied market spells a difficult year ahead for operators, although less so for activity outside North America.
Kurt Abraham, World Oil
The number of producing gas wells in the U.S. rose significantly over the course of the last year, despite prices that seldom crept above $4/MBtu. In 2013, there were 485,000 active producing gas wells in the U.S. In 2014, that number rose to 514,782.
Kurt Abraham, World Oil
The number of producing oil wells in the U.S. rose 3.5% in 2014, to an estimated 600,679. This figure is in line with the 2012-2013 improvement of 3.5%.
Kurt Abraham, World Oil
Crude oil and condensate. U.S. crude oil production surged broadly across different regions in 2014, particularly in the Bakken and Eagle Ford shale plays of North Dakota and Texas, respectively. Crude oil prices spent much of the summer of 2014 hovering above $100/bbl, which kept operators’ gaze firmly fixed on petroleum liquids. As prices declined modestly into the fall, production kept up a blistering pace, surpassing 9 MMbpd in October.
Kurt Abraham, World Oil
While the ongoing oil-price decline is bound to affect the U.S. rotary rig count in the coming year, 2014 saw a significant increase over the previous year—especially in the regions where one might expect that to happen. The average rig count for 2014 was above 1,860 rigs running, a 6% increase year-over-year, or about 100 rigs higher. The Permian basin of West Texas and New Mexico experienced the greatest increase in activity, with the rig count rising 16% to 17% on average, or about a 60-rig improvement. Activity in the Eagle Ford shale region of south-central Texas shot up about 35%, or an average of 16 additional rigs running for the year.
Dr. Roger Bezdek, Contributing Editor
A Republican tsunami in the 2014 midterm elections could be good news for the energy industry. With solid majorities in both houses of Congress, Republicans are in a position to heavily influence the direction of U.S. energy policy. However, many new oil & gas-related regulations are being considered and implemented.
David A. Pursell, Brandon Blossman, Tudor, Pickering, Holt & Co.
An $85/bbl oil price outlook is maintained for 2016, as weak oil prices, balance sheets, and significantly reduced drilling activity will create a net, non-OPEC supply decline in 2016. For North American natural gas, it is much the same story—less drilling activity makes for less gas production growth in 2016, and a much tighter market.
James West, Samantha Hoh, Alexander Nuta, Cameron Schnier, Evercore ISI
E&P spending may fall below $700 billion in 2015, as budgets will be dictated by cash flow and access to capital, according to a survey of the spending plans of approximately 300 companies worldwide.
Kurt Abraham, World Oil
The year 2014 has been a period of not only great profitability for the global upstream industry but also a time of considerable volatility.
Kurt Abraham, World Oil
After reaching a plateau last year, worldwide E&P activity is set to resume additional growth, led by a very strong drilling market.
Kurt Abraham, World Oil; Robert Curran, Mauro Nogarin, Contributing Editor
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.
James West, Barclays
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.
Dr. Roger Bezdek, Contributing Editor
While a potential Republican takeover of the Senate could benefit upstream oil and gas, a large threat looms in the form of Obama’s massive executive bureaucracy, which vows to bypass Congress.
The global E&P industry is riding the crest of a wave, and nowhere is that more true than in the U.S. For the last three years—and for this fourth year as well—drilling activity has remained in a narrow band of not more than 4,000 wells’ difference.