Oil & Gas Predictions for 2017

Oil & Gas Predictions for 2017

You might be thinking that last year’s ridiculously numerous developments in the oil and gas industry couldn’t possibly be matched. You might be muttering thanks as you catch your breath, grateful that finally, the 2016 hurricane has cleared; you might take comfort in some certainty that you and those invested in O & G can at last kick back and enjoy the sweet, uninterrupted trickle of stability. You might be very wrong. Of course, it’s never easy to predict anything about an industry whose recent trend charts more closely correlate with a profile of the Himalayas than anything resembling stable. Nevertheless, with the following list I will do my best to sketch you at least a semi-coherent picture of what 2017 has in store for the O & G industry. OPEC countries wiggle around production standards – Each year, the Organization of Petroleum Exporting Countries sets a production quota which limits how much oil member countries are allowed to drum up, and every year, member countries dream up new and innovative ways of skirting these strictures. This year should be no different, which means peace between oil supply and oil demand might again be postponed.   Trump’s relationship with Russia leaves a mark – If Trump continues his crusade to improve relations with Russia, it will likely lead to a number Obama’s sanctions being lifted, leaving Russia free to produce more oil. The old administration’s original deal was slated to last six months, so the second half of 2017 might likely see Russia ramping up its exports.   Companies benefit from Trump’s deregulation –  The Obama administration’s disdain for...

The Oil and Gas Industry: A Recap of 2016 Events

To say the least, 2016 has been a tumultuous year for the Oil and Gas (O &G) industry. In truth, market events year have blasted O & G like the pressurized spray of hydraulic fracking drill rips through shale, sending investors, prices and predictive analyses on a whirling, white-rapid roller coaster of a route, eventually ending in a place altogether alien. Yes, the industry has moved on and if 2016 events are any indication, those invested in O & G should accustom themselves to quick, ambiguous shifts as modern energy practice continues its metamorphosis.   Any year this memorable begs a recap, so with the following list let’s examine 2016’s major oil and gas happenings, and brace ourselves for the moment when pressure strikes the market again.     Drilling costs took a dive – Costs of installing and operating wells have plummeted, with a significant number of companies reporting a 50% decrease in expenses involved in installing wells throughout 2016’s later months. This price dive owes itself to the industry tradition of consistently innovating new and efficient drilling and rig tech.       Expected ultimate recoveries climb – EURs, or predictions for net recoverable product in a given area, flew to new heights this year, subsequently dropping economic barriers for the startup of new drilling projects. Technical tweaks like advanced hydraulic fracking techniques and fine-tuned detection equipment have contributed to this, since workers can now more efficiently target large, concentrated pockets of oil.       Oil booms in the Permian Basin – The US Geological Survey estimates that around 20 billion barrels worth of oil flows...

Shifting Industry Trends Could Combat Oil and Gas Bust

It is hardly a secret that the oil and gas industry has been racked with struggles in recent years. Extensive supply and waning demand have borne a global price plummet which blindsided investors and left oil execs itching to seek out innovative and efficient ways to streamline production and heal financial hemorrhages. Andreas Kleinshimdt, in an article for Siemens, one of the world’s largest energy and engineering companies, states   “The low price of oil is both a challenge and an opportunity for the industry. Well-run oil and gas (O&G) companies that are strong today are likely to emerge even stronger after prices rebound. While the availability of oil fields and the associated equipment is always paramount for them, during a slump they have every reason to also focus on cost-effective production.” For O & G to optimally shrug off price drops and re-stimulate industrial growth, the industry must adapt to a changing landscape where resource scarcity is no longer an issue and advances in oil production methods mean a one-size-fits-all approach to operational procedure is no longer ideal. Creating a less centralized and more agile management structure could allow companies to mediate challenges rapidly and efficiently. A loose, informal, team-based management style would take advantage of individual expertise to quickly generate specific, objective-based operational prototypes and quickly respond to issues. Innovations in digital analytics and monitoring tools are another agent of optimization; digital tech could allow companies to act proactively to avoid profit pitfalls such as machinery breakdown and dwindling reservoirs. According to projections by Mckinsey and Company, applying digital technologies to the oil and gas sector could...

Pirates Posing a Threat to Oil and Gas

Pirates may seem like an issue of the past, but in some parts of the world, they’re still a very real threat to ships, especially those carrying valuable cargo like oil and gas. Because oil tankers are traditionally older, larger ships, they don’t have the speed like the smaller speedboats of the pirates do. They also don’t often carry weapons, whereas pirates will board ships with machetes and guns, then incapacitate the crew so they can have easy access to the oil. Not only does the piracy of tankers harm the oil and gas industry, it harms the lives of those who work on these ships and also the people and environment around where the ships travel. Recent news The biggest hotspot of pirate attacks against oil tankers occurs in the South China Sea. Many tankers travel in this area, shipping oil amongst the hundreds of islands. Due to the high density of waterways and islands, pirates have taken advantage of these conditions. Sophisticated organizations have been established and grown much longer, so they can plan elaborate attacks, often multiple times in a week, against oil tankers, taking millions of dollars over a few attacks. It’s possible that the pirates began as simple fishermen in the area who were driven by desperation to make some quick money. Unfortunately, highjacking these oil ships is incredibly lucrative, so a huge organized crime system has developed around it, pushing more and more people to turn to piracy in exchange for the rewards it offers. The South China Sea also isn’t the only location where oil tankers are targeted. In the waters around...

Fracking and Local Economies

  Despite having its roots in US energy production dating back to the early 1900s, fracking has long been looked at as an unconventional and perhaps temporary means of producing natural gas and oil within the United States. I’ve written in the past on TonyVanetik.com about how fracking was conceived and how the process actually plays out, disspelling some of the fears around the process of collecting oil and gas within the United States. For at least 65 years, it has been used in a commercial capacity, helping to reduce the United States’ dependence on foreign oils and spur on the surge in domestic energy production. While the process does present environmental concerns when done at enormously high volumes, fracking has allowed for tremendous increases in US energy, revolutionizing the energy industry as a whole. Fracking has reduced the cost of energy production hugely across the nation–the so called fracking revolution has caused gas prices to drop by about 47% according to Brookings. Fracking wells as a whole produced the good majority of US natural gas across the nation–two third according to the Energy Information Association. In short, the fracking boom has hugely influenced the US economy and energy production. Few people will debate the large-scale economic benefits of increasing nationwide fracking, environmental concerns aside. But how does fracking affect local economies? Even in scenarios in which the national economy is bouncing back or doing well at large, there are always struggling local economies. Without a booming populous or a bustling business center, some small cities and towns struggle to keep themselves afloat. Fracking, though, in areas in which...