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 beneath the Wolfcamp shale play in Texas’s Permian Basin oil region, blowing away previously underwhelming predictions regarding the outlook of US oil supplies.
- US oil exports nearly doubled – This wasn’t much of shock following the US congressional repeal of the 70’s era restrictions on crude oil exports late in 2015. Energy reports illustrate an unsurprisingly giant leap from 394,000 barrels exported daily in January 2016, to around 694,000 daily barrel exports in September.
- The US is now a net exporter of natural gas – Discoveries of huge reserves of natural gas hidden in Southwestern US shale plays, as well as the construction of continental pipelines which ship gas to Canada and Mexico, sent LNG (liquefied natural gas) exports rocketing past previous records. The US now exports more natural gas than it imports, a phenom unimaginable even a decade prior.
- Fracking is absolved of its environmental sins – Inaccurate media reports claiming the EPA had reversed its findings regarding fracking’s non-impact on natural water sources had no bearing on actual EPA findings, which indicated that fracking itself has no widespread impact on the stability and safety of America’s underground water stores.
With the election of a president who certainly seems to be pro O & G, and the cabinet and congressional powerhouse shaping up much the same, it seems oil production companies which struggled coming into 2016 might at last breathe a sustained sigh of relief as the new year dawns and passes. Or not. Whatever happens, I, for one, am enthusiastic to see how 2017 plays for O & G.